Statement by Minister of Water and Environmental Affairs Mrs Edna Molewa on progress made in Re-Engineering the Business Processes of the Department of Water Affairs – Cape Town, 16 April 2012

1. Historical and Policy Context

Before turning to a brief review of performance challenges the Department of Water Affairs has faced in the last eighteen years, it is necessary to sketch out, in broad terms, the political, economic and ideological context of the current state of water.

• The current National Water Resources Strategy is to a large extent configured within the political geography of apartheid South Africa, and has been framed away from universal access and towards market-based models in which the goal is to subject the poor to the rules of the market. Furthermore, Catchment Management Agencies, as currently constituted, tend to exclude water users from historically marginalised and poor communities.
• Fortunately, the idea of a democratic, developmental, and capable state has opened the way for a new mode of state regulation and social control that affects the daily lives of the poor.
• The developmental state brings the poor into a direct relationship with the state, a relationship that historically has been essential to the expression of the collective agency of poor communities.

2. About the Report: Appointment of Business Process Re-engineering Committee

• This year is of great significance for South Africa. The African National Congress, the party in government, is celebrating its centenary and reviewing progress on a remarkable commitment it made a hundred years ago. The Millennium Development Goals set out to halve world poverty by 2015. But we are now three years to that date and the South African government has still to fulfil its pledges to the poor. Nowhere is this clearer than in water, where the country is behind in progress to fulfil those solemn pledges. If that is to change the Department of Water Affairs must act now.
• In July last year, we brought together thirteen people to form the Business Process Re-engineering Committee. They were invited in their individual and personal capacities rather than as representatives of government or institutions. The majority came from social sciences and have varied experience as political leaders, policy analysts, planners, project managers, chartered accountants, organisational design and human resources development experts, engineers, IT specialists, advocates, public servants and also the private sector. The task they were set was: to define the challenges facing the water sector, and to provide clear recommendations on how to support the changes needed to promote growth, infrastructure development, job creation, and equity.

3. Preconditions for a Turnaround Strategy

Here, in brief, are the preconditions for an effective water sector that is driven by the need to address national development objectives, as well as the hypothesis we see emerging from the analysis above:

• At the regulatory level, identifying and dealing honestly with the major constraining systemic features and contextual factors that have dominated the past and continue to dominate the present scenario, and which have either not been addressed or have been tinkered with for reasons of political expediency, will be fundamental to meaningful and sustainable change in the management of water resources and services;
• A mindscape shift from a regulatory to an institutional level search for solutions with wider stakeholder participation and greater tolerance of difference and diverse needs and interests to proposed solutions may facilitate the change process more effectively than dodged reliance on paths that have been habitually followed, which are considered standard;
• In the spheres of organisational design and capacity building, there needs to be a more deliberate focus on the national goal of social cohesion, equity, deliberation and participation, the extension of political democracy to the domains of technology and work, national integrity, and accountability, in addition to the technical competencies that will enable officials to achieve these goals;
• These are glaring inadequacies in the education and training system that fail to address the role of water in the national developmental programme, in both the short and the long term;
• The need to build water education and awareness in youth; so far, policy makers and water officials have neglected youth with the result that they are unable to organise themselves for effective deliberation and participation; the dearth of water experts, across the entire water value chain, from historically marginalised and poor communities, and the urgent need to work with educational institutions in reforming curricula; and setting clear direction over a period of 20 to 30 years for the water sector, for both water resources management and water services delivery, across the entire spectrum of clearly delineated water user segments.
• Strategic leadership by water executives and managers.
• Effective long-term financial planning over at least a 30 years period to enable water needs to be adequately managed across all water user segments.

4. Profile of Key Challenges and Interventions

a) Financial Mismanagement: Shortage of Requisite Level and Kind of Skills

i) Challenges

The first and most important task has been to address the Auditor-General’s Report and Management Letter 2011 with respect to both the Water Trading Account and Main Account, with the view to formulating detailed turnaround plans, indicating recommended corrective action addressing queries and findings raised in the Auditor-General’s Report and Management Letter of 2011. The task has also involved addressing the objectives of Operation Clean Audit 2014 through the elimination of the Audit Disclaimer and qualifications raised in favour of an Unqualified Audit Opinion.

ii) Interventions

• A major project is underway for the reorganisation of the Finance Branch, focusing also on the capacity and capabilities required to provide ideal support to the Department’s mandate.
• A Chief Financial Officer has been appointed.
• A list of current projects of the Construction Branch is being compiled for the selection of the appropriate sample, and processes are being mapped.

b) Infrastructure and Asset Management Improvement

i) Challenges

South Africa is facing a number of challenges with regards to water provisioning, some waste water treatment works are dysfunctional (green drop report), and ageing and deteriorating infrastructure is a major contributor. It is estimated that the national water resources infrastructure (dams and major conveyance systems) maintenance backlog is in the order of R15bn. There have also been problems and audit findings with the valuation, inventory and depreciation of DWA’s infrastructure assets, particularly those under the Water Trading Entity. The only way to sustainably deal with these issues is through improved asset management that is robust from both a financial and engineering perspective.

Sustainable infrastructure asset management should:

• Maximise the service potential of existing assets by ensuring that they are appropriately used; maintained, safeguarded and that risks are mitigated;
• Optimise the life cycle costs of owning and using these assets by seeking cost-effective options throughout an asset’s life cycle;
• Reduce the demand for new assets through optimal use of existing assets and management of demand through the use of non-asset service delivery options; and
• Establish clear lines of accountability and responsibility for performance.

ii) Interventions

• 90% of water assets have already been captured on the SAP system.
• Different models are being considered for more efficient management of infrastructure assets, focusing on streamlining the operations management of water infrastructure assets.
• A mechanism for continuous asset evaluation is being developed.
• The existing Operational Strategy has been evaluated, and the valuation regime needs to be formally agreed and adopted.
• Desk study of other potential Infrastructure Asset Management Systems is in process, as well as applications based on clear definition of user requirements.
• All current leases are being investigated

c) Organisational Design and Human Resources Development
Challenges

• Ladies and gentlemen, another area that has proved challenging is that of human resources and the recruitment of appropriately skilled individuals from the very limited skills pool in our country. A new operating model has been developed and is currently under consideration it will include the establishment of multi-disciplinary teams in Human Resources. The re-engineering of the entire recruitment process is also underway with a view to reducing the time it takes to recruit staff as well as to ensure the appointment of good quality candidates. We are delighted to tell you that, although not fully implemented the initiative has already resulted in much smoother and more thorough recruitment and selection.

Interventions

• A comprehensive and integrated process has been initiated to develop a more people-driven, democratic and human resources partner model.
• The Department’s recruitment process is being re-engineered and refined.
• Senior management staff performance contracts have been completed
• Earnest efforts are being made towards more effective talent management and the transformation of institutional culture. In-depth interviews with officials have been conducted.
• The recruitment process is being re-engineered both qualitatively and quantitatively and we have appointed people to the following Senior Management Service positions since the last briefing:

Director General, Acting Chief Financial Officer for Water Trading Entity, Chief Financial Officer for the Main Account, Chief Director: Policy and Regulation, and Chief Director: Legal Services.

d) Information and Communication Technology

i) Challenges

The current IT operating model for the Department is already in the process of being re-evaluated to improve IT governance and better use IT as an enabler of all processes at the DWA. The use of the Enterprise Resource Planning system will be assessed to ensure that maximum return on investment is achieved. A major step was taken in October 2011, after an extensive consultation process, to invoke the provisions of the current outsourcing contract to “transition” to a new service provider by April 2013. The procurement process is well advanced in this regard and a tender was advertised on 8 April 2012. As I speak there is a tender briefing session taking place for the outsourcing of IT services.

ii) Interventions

• Project Plan for the ICT Award Project has been reviewed with all stakeholders and risks and gaps have been identified; and outsourcing re-appointment project process has been established and is being implemented.
• Steps are in progress for the appointment of a higher level process management team.
• A risk register and mitigation plan has been established.
• Job profiling and evaluation is in progress, and IT department organisational structure has been agreed.
• The outgoing service provider will review the schedule and align it to revised timesheets.
• A more suitable ICT governance structure is being developed.
• To address the most recent findings of the Auditor General, controls are being implemented.
• The suspension of the Communications and Information Director has been lifted.
• Roles for contractors/mentors (architecture and Business Analysts) and hire for agreed period are being reviewed.
• An on-going skilling programme for ICT is being developed.

e) Regulatory Framework: Policy, Legislation, and Administration

i) Challenges

• To understand the regulatory framework within which the Department of Water Affairs operates, and to determine how best to promote a rational, coherent, and just water system across the national, provincial and local spheres of government, it is necessary to consider the statutory relationship between them; and benchmark it against international “best practices.” In reviewing water policies and laws, it is necessary to assess the extent to which they support and enable water development, equitable water allocation, efficient and prudent water use, and sustainable water services provision.
• Recognising that the legal and policy empowerment of the poor experiencing difficulties in accessing quality water and sanitation is key to redressing historical imbalances and enhancing integrated economic development, careful consideration needs to be given to the development of a national redress and equity water strategy.
• There is a gap in the current Water Act regarding enforcement of Equity. There is no explicit mandate to address this.

ii) Interventions

• We have reviewed the White Paper on Water in light of lessons learned from policy implementation in the last eighteen years and have adopted a new Framework of Policy Principles which informs the legislative review process, the development of a new National Water Resources Strategy and a National Water Services Plan.
• The Department is also reviewing the National Water Act, the Water Services Act as well as the Water Research Act, with the view to improve water management and equity going forward. Acts will be amended through the General Laws Amendment Bill.
• It is recommended that the potential to expand the scope of the Tribunal to impose civil penalties for non-compliance should be investigated. This will significantly enhance our ability and to be seen to be serious about the matter. It might even be able to be developed in a way that it addresses both water and environmental non-compliance.

f) Institutional Arrangements

i) Challenges

The water sector is characterised by: lack of leadership and management skills; administrative complexities due to multi-level governance; elitist and undemocratic decision-making processes, and inadequate water literacy and water education programs leading to relatively poor institutional performance.

ii) Interventions

• Consideration of the various options led to the preferred institutional arrangement for the financing, development, and management of national water resources infrastructure through an agency ring fenced within the Department of Water and Environmental Affairs.
• Nine Catchment Management Agencies be established with strong stakeholder involvement and be within tightly managed timeframes.
• A differentiated establishment of regional water utilities is under consideration. The intention is to reduce the number of water boards through merging some of them, and to extend their foot-prints, and through this to build fewer, stronger, more financially viable institutions with a strong focus on supporting local government as well as their primary function as bulk services providers.

g) Equity

i) Challenges

The lack of equity in the allocation and use of water resources, seventeen years after independence, is the symptom of the ills of post-apartheid South Africa. The state of the country’s poor, deprived of equitable access to water in 2011, shows that there are enormous challenges that need to be met before the country can earn a clean bill of health.

Interventions

• To change this condition, my department has embarked on a massive project to review and re-engineer all business processes in the water sector. The framework for meeting the water needs of the poor is being stretched to cover the increasing demands of expanding urban settlements, industrial sectors, and commercial agriculture.

There is also the fear that existing policies and institutions are not able to cope with the disregard for water rights, eroding commitments to redress and equity, out-dated practices and attitudes in the management of water resources, and the tendency to neglect the poor in policy and planning processes. We are changing that and are moving at a very fast pace.

5. Conclusion: Putting in Place an Effective Monitoring Mechanism

To add extra momentum to the delivery of the Business Process Re-engineering Committee’s recommendations, a mechanism, which will reflect the consultative approach of the Department of Water Affairs, will be established to monitor and report on progress.