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Overview

South African Local Government Reforms. Overview. Intergovernmental Foundation. Constitution. Chapter 3. Co-operative governance Spheres: national, provincial and local are distinct, independent, and inter-related Emphasis on co-ordination and support. Chapter 7. Status of municipalities

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Overview

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  1. South African Local Government Reforms Overview

  2. Intergovernmental Foundation Constitution

  3. Chapter 3 • Co-operative governance • Spheres: national, provincial and local are distinct, independent, and inter-related • Emphasis on co-ordination and support

  4. Chapter 7 • Status of municipalities • Developmental duties • Municipal by-laws • Municipal councils • Functions: Schedules 4 and 5

  5. Chapter 13 • Equitable share • National government regulate transparency, accountability and effective management of economy • Municipal fiscal powers: rates on property, surcharges on fees for services, other taxes as allowed by national government, “no municipality may impose income tax, vat, general sales tax or custom duties”

  6. Intergovernmental Foundation Intergovernmental Fiscal Relations Act of 1997

  7. IGFR Act of 1997 • Forums for intergovernmental fiscal relations • Budget Council (Minister of Finance, National + Member of Ex Committee, Province + Finance and Fiscal Commission ) • Budget Forum ( Same as above + Organised local government + Minister of Local Government)

  8. Mechanism Annual Division of Revenue Act

  9. Division of Revenue • Equitable share • Provincial • Local • Conditional grants • Agency payments • Withholding of funds

  10. Improving National Transfers • Rationalising infrastructure grants • ensuring sustainability of investments • Rationalising capacity building grants • coordinating approach - initially focusing on financial management • Encouraging municipal restructuring • improving efficiency and maximising benefits to national economic development • Support and build new structure - municipalities

  11. Constitutional Institutions Financial and Fiscal Commission

  12. Financial and Fiscal Commission • Established by constitution and Act 99 of 1997 • Independent and impartial • Local government has two seats on the commission

  13. Contents Municipal Finance Management Bill 2002 Currently before Parliament

  14. Primary Aims of the Bill • Extend principles of good governance, public accountability, transparency through proper process of consultationand understandable regular reporting • Allow managers to manage • Provide councillors the financial information needed to set policies and priorities • Promote transparency in planning, budgeting, revenues, expenditure, accounting, fiscal reforms, etc. • Create an environment for an active municipal bond market

  15. Contents of the Bill • Municipal borrowing (5) • Financial emergencies (10) • Entities and municipalities (8) • Budget process (4) • Control & usage of revenues (3) • Financial reporting (9) • Financial responsibilities of officials and financial misconduct (6 & 12) • National and provincial supervision (2 & 11)

  16. Municipal Entities • Compliments multi jurisdictional service partnerships / public private partnerships / public public partnerships • Enables restructuring of municipalities through functional budgeting and reporting • Prohibits creation of entities for speculation or to avoid regulatory mechanisms • Promotes transparency and accountability

  17. Budget Process • Promotes transparency and citizen involvement • Budget must be balanced • Facilitates good financial management and sound decision-making • Minimum standards for budget documents and in-year reporting • Adjustments and virements allowed, but regulated

  18. Revenues • All funds received must be deposited in bank accounts • Any details in cash management including investmentsaddressed in framework prescribed in regulations • (key issues - preservation of capital and minimising risky investments with public funds)

  19. Financial Reporting • Must produce financial statements within two months of year end • Must prepare in accordance with generally recognised accounting practice • Entities created by municipalities must submit audited financial statements to council

  20. Responsibilities • Municipal manager = accounting officer • Accounting officer assigned financial management and reporting responsibilities • Accounting officer liable to fine or conviction for “wilfully or in a grossly negligent way” failing to comply with certain sections • Member of Council can be sanctioned for influencing manager to contravene a provision of the Act.

  21. Benefits of this Bill • To encourage improved financial management in municipalities • To ensure citizens are informed and councillors have the information necessary to set policy and priorities • To develop an environment for a municipal bond market • To build a strong financial foundation on which municipal services can be improved and extended unserved citizens.

  22. Own Source Revenue Property Rates Bill RSC Levy Municipal Finance Mgt. Bill Demarcation Constitution Capacity Building White Paper Structures Act Intergovernmental Transfers Municipal Systems Act Infrastructure, Capacity, Restructuring & Transformation Structural Systems Fiscal Local Government Transformation Programme

  23. SIYABONGA RE A LEBOHA BAIE DANKIE

  24. Thank you For your attention

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