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Sunday's RIVER VALLEY MUNICIPALITY intervention STATUS REPORT PRESENTED TO SELECT COMMITTEE 19 OCTOBER 2010 PARLIAMENT – CAPE TOWN. Table of content. Introduction Problem Statement Achievements - Finance Achievements – Institutional Development Turn Around Focus Area – Service Delivery

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  1. Sunday's RIVER VALLEY MUNICIPALITY intervention STATUS REPORTPRESENTED TO SELECT COMMITTEE19 OCTOBER 2010PARLIAMENT – CAPE TOWN

  2. Table of content • Introduction • Problem Statement • Achievements - Finance • Achievements – Institutional Development • Turn Around Focus Area – Service Delivery • Turn Around Focus Area – Governance • Turn Around Focus Area – LED • Critical success factors • Conclusion

  3. INTRODUCTION • Section 139 (b) intervention with effect from 18/2/10 • Administrator assumed duties on 23/2/10 • Areas of intervention • Finance • Human resources • Infrastructure and service delivery • Legal • Public participation/stakeholder engagement

  4. INTRODUCTION • Turnaround Strategy and Plan adopted by council on 25/3/10 • A detailed Turnaround Plan was developed and implemented over the past seven months, was subsequently updated after the MUTAS capacity assessment • Financial Recovery Plan integrated into Turnaround Plan

  5. PROBLEM STATEMENT - FINANCE • THE TURNAROUND PLAN AND THE FINANCIAL RECOVERY PLAN MUST ADDRESS THE FOLLOWING MATTERS AT THE TIME: • Non payment for services rendered • DEBT BOOK AT R55m and >30% INDIGENT CONSUMERS • Poor collection rates at about 30% • Tariffs setting is poorly structured, grossly undercharged and not considering cost of service provision • Limited financial competencies and skills • Completeness and validity of accounting records

  6. PROBLEM STATEMENT - FINANCE • Failure to implement Credit and Debt Management policies and by-laws • Poor indigent policy and system • Inadequate structure and high vacancy rate • No optimal use of financial management systems • Lack of adequate financial policies and procedure manuals • Complete disregard of procurement policies • Non-credible budget • No proper budget monitoring and control

  7. ACHIEVEMENTS - FINANCE • CREDIT CONTROL AND DEBT MANAGEMENT POLICY REVIEWED AND ADOPTED BY COUNCIL 25/3/10 • STAFF COMPLIMENT INCREASED AT FINANCE WITH 13 NEW POSITIONS, OF WHICH 10 HAVE BEEN FILLED • MANAGEMENT POLICIES WERE DEVELOPED FOR COUNCIL APPROVAL BY 31/5/10 • DELEGATIONS MANUAL WORKSHOPPED ON 13/4/10 AND APPROVED 0N 13 MAY 2010 • ADJUSTMENT BUDGET APPROVED ON 25/3/10 • DRAFT IDP AND BUDGET 2010-11 APPROVED ON 31/3/10 AS PER TREASURY REGULATIONS • IDP, BUDGET AND SDIBP CONSOLIDATED AND APPROVED BY COUNCIL ON 31 MAY 2010 • TARIFFS REVIEWED TO TAKE INTO CONSIDERATION COST OF SERVICE PROVISION • COST CUTTING MEASURES IN PLACE, E.G. TELEPHONE AND 3G CARDS, TRAVELLING AND FLEET MANAGEMENT

  8. CURRENT FINANCIAL SITUATION • DEBTOR’S STATUS: • TOTAL DEBTORS OUTSTANDING FOR SEPTEMBER 2010 AMOUNTED TO R66 829 771 • THIS INDICATES AN INCREASE FROM THE LAST SIX MONTHS AND THIS IS DUE TO THE UPDATING OF THE BILLING SYSTEM AND INCREASE ON THE INDIGENTS • NEW INDIGENT REGISTRATIONS AND NO SUBSIDY ALLOCATIONS • THE ANNUAL CHARGES FOR RATES 2010-11 • CONSUMERS HAVE RESPONDED POSITIVELY ON THE NEW INCENTIVE SCHEMES, SO EVEN THOSE WHO WERE NOT BILLED ARE NOW ON THE SYSTEM AND STARTING TO PAY • DISCONNECTIONS EFFECTED WEEKLY AND PAYMENT IS SLOWLY FLOWING IN

  9. CURRENT FINANCIAL SITUATION • CREDITOR’S STATUS: • TRADE CREDITORS AS AT 30 SEPTEMBER 2010 AMOUNTED TO R35 664 203.28. • LONG OUTSTANDING CREDITORS DECREASED WITH AN AMOUNT OF R4.4 MILLION FROM R37.9 MILLION TO R33.5 MILLION. • CURRENT INVOICES AMOUNTED TO R790 945 FOR SERVICES RENDERED DURING SEPTEMBER 2010. • THE MUNICIPALITY HAS ENTERED INTO PAYMENT ARRANGEMENTS WITH THE FOLLOWING CREDITORS: • THE AG - R 193,106.55/ MONTH FOR 6 MONTHS – AUDIT FEES • ESKOM - R 217 364.67 /MONTH FOR 2 MONTHS – BULK ELECTRICITY • SALARY EXPENDITURE AMOUNTED TO R2 060 031 DURING SEPTEMBER 2010 • ALL STATUTORY DEDUCTIONS ARE PAID UP TO DATE EXCEPT SARS WHOM WE OWE AN AMOUNT OF R1 701 224-29, WHICH IS ALREADY INCLUDED IN TRADE CREDITORS.

  10. PROBLEM STATEMENT - INSTITUTIONAL DEVELOPMENT • Structure not aligned to the IDP • High vacancy rate & high staff turnover • Lack of required competencies in critical departments e.g. Infrastructure and Finance • Non-functioning of Local Labour Forum • No training and capacity building interventions • Lack of Procedure Manuals and critical policies • Performance Management not measured nor cascaded • Out-dated policies & Delegations and Rules of Order

  11. ACHIEVEMENTS - INSTITUTIONAL DEVELOPMENT • STRUCTURE REVIEWED TO ALIGN TO IDP (FINANCE APPROVED) • 10 OUT OF 13 NEW POSITIONS HAVE BEEN FILLED AT FINANCE • DBSA SPECIALIST SUPPORT HAS BEEN PROVIDED TO SRVM • TECHNICAL SUPPORT FROM DLGTA DEPLOYED TO SRVM • CACADU PROVIDING TECHNICAL SPECIALISTS FOR POLICY REVIEW AND DEVELOPMENT • ROLES AND RESPONSIBILITY MANUAL DEVELOPED APPROVED • RULES OF ORDER DEVELOPED, WORKSHOPPED AND APPROVED • DRAFT DELEGATIONS DEVELOPED TWORKSHOPPED AND APPROVED • MONTHS • POLITICAL AND ADMINISTRATIVE STABILITY PREVAILING

  12. ACHIEVEMENTS - INSTITUTIONAL DEVELOPMENT • STRUCTURE REVIEWED TO ALIGN TO IDP (FINANCE APPROVED) • 10 OUT OF 13 NEW POSITIONS HAVE BEEN FILLED AT FINANCE • DBSA SPECIALIST SUPPORT HAS BEEN PROVIDED TO SRVM • TECHNICAL SUPPORT FROM DLGTA DEPLOYED TO SRVM • CACADU PROVIDING TECHNICAL SPECIALISTS FOR POLICY REVIEW AND DEVELOPMENT • ROLES AND RESPONSIBILITY MANUAL DEVELOPED APPROVED • RULES OF ORDER DEVELOPED, WORKSHOPPED AND APPROVED • DRAFT DELEGATIONS DEVELOPED TO BE WORKSHOPPED AND APPROVED • MONTHS • POLITICAL AND ADMINISTRATIVE STABILITY PREVAILING

  13. ACHIEVEMENTS - INSTITUTIONAL DEVELOPMENT • Structure reviewed to align to IDP (finance approved) • 10 out of 13 new positions have been filled at finance • DBSA specialist support has been provided to SRV • Technical support from DLGTA deployed to SRV • Roles and responsibility Manual developed approved • Rules of order developed and work-shopped and approved • Draft Delegations developed to be work-shopped before 30/4/10 • Draft Telecommunications Policy developed and approved • HR policies under review

  14. ACHIEVEMENTS - INSTITUTIONAL DEVELOPMENT • HR Plan in place • Performance Management System workshop due in by 30/4/10 to revive process (only to be done on 25 may 2010) • Policy to be reviewed to include all levels by 30/06/10 • Local Labour Forum structure reviewed and has convened • Pro-active labour engagement (5 meetings to date) • Service delivery at the core of Council agenda, 5 council meetings have taken place in the last six (3) months • Political and administrative stability prevailing

  15. PROBLEM STATEMENT – SERVICE DELIVERY • Poor maintenance of infrastructure • No street lights or poorly maintained • Internal roads not maintained • Water and electricity losses • No adherence to service standards • Lack of Procedure Manuals • No infrastructure maintenance plan • Lack of capacity (staff and required competencies)

  16. PROBLEM STATEMENT – SERVICE DELIVERY • Inadequate budget for operations and maintenance • Housing development challenges/capacity

  17. TURNAROUND FOCUS AREA – SERVICE DELIVERY • Financial bailout is critical for the survival of the municipality (-+R20m) • Refunding of funds previously used for operating expenses solving a service delivery challenge to some extent however putting pressure on current obligations • Outsource capacity (DBSA intervention, Cacadu and provincial and national government – in process and under consideration) • Consideration of outsourcing water and sanitation to Amatola Water Board • Build in-house skills (critical vacancies provided for in 2010-11) • Prioritise infrastructure organisational review and vacancy filling

  18. TURNAROUND FOCUS AREA – SERVICE DELIVERY • Review implementing agency status of SRV until the financial position and capacity challenges are resolved (revert developer role to DoH) • Develop an Infrastructure Maintenance Plan (2010-11) • Develop an Infrastructure Master Plan (2010-11) • Increase operations and maintenance budget (done in 2010-11) • Prioritise infrastructure that is critical to economic growth e.g . local road maintenance and street lighting (2010-11 budget) • Develop Service Standards and Procedure Manuals (outsource) • Implementation of 100 days service delivery plan to deal with quick wins (interim measure)

  19. PROBLEM STATEMENT - GOVERNANCE • Public participation was not effective • Poor relations between council and administration • Gross lack of policy compliance, especially procurement policy and other policies • Internal control environment generally weak at all levels • Disclaimers for successive years • No risk management nor anti-corruption and fraud measures • Management oversight/governance • No internal audit function • Performance management ineffective • Corruption allegations/ misconduct

  20. ACHIEVEMENTS- GOVERNANCE • Public participation and plan approved and implemented • Committee and council meetings taking place as scheduled • Five Internal Audit Steering Committee meetings with Auditor General and internal auditors have taken place • An Internal Audit Plan and comprehensive checklist has been developed and approved by audit committee • An Audit Committee and Internal Audit Committee Charter is being developed and these structures are seating

  21. ACHIEVEMENTS- GOVERNANCE • An Anti-Corruption and Fraud Policy has been approved and institutionalised • Investigations of allegations of corruption, maladministration and misconduct are being dealt with administratively but still awaiting SIU investigations outcome since June 2010. • Disciplinary processes and possible criminal charges have been considered for two officials at community services • One official on suspension for alleged fraud and corruption

  22. PROBLEM STATEMENT –LOCAL ECONOMIC DEVELOPMENT • LED Strategy a stand alone plan and not aligned to Spatial Development Framework and IDP • Strategy not specific about strategic objectives to be achieved and how those will be met • Other departments not aligning their plans and programmes to enhance LED • LED Strategy focusing on short term projects and not on a long term vision • No core pillars or strategic thrusts

  23. TURNAROUND FOCUS AREA -LOCAL ECONOMIC DEVELOPMENT • Funding for the master plan leveraged from DBSA and DEDEA • The outcome of the plans should be the following: • SDF • Infrastructure plan • Land use management • Precinct or nodal developments • Strategic or special projects • Environmental management plan

  24. TURNAROUND FOCUS AREA -LOCAL ECONOMIC DEVELOPMENT DEDEA and DBSA has been approached for potential funding of the Master Plan Cacadu may fund certain components of the Master Plan LED forum established

  25. CRITICAL SUCCESS FACTORS • FINANCIAL BAILOUT AND RECONCILIATION WITH HUMAN SETTLEMENTS HAS TO BE FINALISED • SERVICE STANDARDS TO BE IMPROVED AT ALL TIMES • PAYMENT FOR RATES & SERVICES CRITICAL FOR THE SUCCESS OF THE PLAN • AN UPDATED INDIGENT REGISTER vs EQUITABLE SHARE • PERFORMANCE DRIVEN CULTURE SHOULD BE INSTILLED • APPOINTMENT OF COMPETENT STAFF NOT TO BE COMPROMISED, TO SUSTAIN INTERVENTION ACHIEVEMENTS • COMMITMENT OF ALL STAKEHOLDERS IN SUPPORTING THE PLAN • A CORRUPT FREE ENVIRONMENT

  26. CONCLUSION The support that is provided by Cacadu district council in providing extensive capacity building has assisted the municipality in institutional development and transformation DLGTA, DBSA and Treasury have deployed resources in the past four months in finance and technical department and this value has been acquired There is improved political support to the Administrator Councillors and officials have been trained on various skills including training on Rules, Roles and Responsibilities

  27. CONCLUSION THE SUPPORT THAT IS PROVIDED BY CACADU DISTRICT COUNCIL IN PROVIDING EXTENSIVE CAPACITY BUILDING HAS ASSISTED THE MUNICIPALITY IN INSTITUTIONAL DEVELOPMENT AND TRANSFORMATION DLGTA, DBSA AND TREASURY HAVE DEPLOYED RESOURCES IN THE PAST FOUR MONTHS IN FINANCE, HR AND TECHNICAL DEPARTMENT AND THIS VALUE HAS BEEN ACQUIREDPORT THERE IS IMPROVED POLITICAL SUPPORT TO THE ADMNISTRATOR COUNCILLOR AND OFFICIAL HAVE BEEN TRAINED ON VARIOUS SKILLS INCLUDING TRAINING ON RULES, ROLES AND RESPONSIBILITIES AND POLICIES 2 LITIGATIONS RESOLVED SO FAR GOOD RELATIONS WITH UNION STILL SUSTAINED CASHFLOW SLIGHTLY IMPROVING THOUGH NO SIGNIFICANT IMPACT BECAUSE OF OUTSTANDING OBLIGATIONS RELATIONS WITH LINE FUNCTION DEPARTMENTS HAVE IMPROVED AND SHOULD BE SUSTAINED AS THEY ARE REVIVING A NUMBER OF PROJECTS WHICH WERE PREVIOUSLY BLOCKED.

  28. THANK YOU

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