Parliamentary Briefing Performance and strategy of the Municipal Infrastructure Investment Unit

1. Parliamentary BriefingPerformance and strategyof theMunicipal Infrastructure Investment Unit Alwyn Naidoo MIIU Project Manager NCOP Briefing

2. Contents • Performance report for the year under review 2004/05 • Background • Project performance and KPIs • Expenditure • The exit plan NCOP Briefing

3. Performance report for the year under review 2004/05 NCOP Briefing

4. Background • Cabinet Memorandum No. 14 of 1997 created MIIU as short-term arrangement to be wound up in five years (2003) • This term was extended by Cabinet Memorandum 4A of 2002 for an additional three years, to 31 March 2006 • Mandated “To encourage and optimise private sector investment in local authority services on a basis that is sustainable for both local authorities and at a national level.” NCOP Briefing

5. Background • Non-profit private Company established in April 1998 • USAID Donor support for technical assistance (PADCO) • Project Preparation Fund • Grants & TA to support local MSPs NCOP Briefing

6. Project performanceAuditable (PFMA) KPIs (1) NCOP Briefing

7. Project performanceAuditable (PFMA) KPIs (2) NCOP Briefing

8. Project performanceAuditable (PFMA) KPIs (3) NCOP Briefing

9. Project performanceInternal KPIs (1) NCOP Briefing

10. Project performanceInternal KPIs (2) NCOP Briefing

11. Completed projects (MSP) • Uthungulu Water (KZN) • an interim O & M contract with WSSA for operations of all rural schemes • CPT drop–off (solid waste) (WC) • establishment of four green waste drop-off centres • CPT SMMEs (solid waste) (WC) • CBO waste collection contracts in disadvantaged areas,e.g Bloekombos, Kalkfontein, Khayelitsha • Epping Fresh Produce Market (WC) • sale of a non-core asset for R16m. A 20yr lease was entered into with the new owner, with repair, maintenance & expansion risk transferred to new owner. Proceeds of the sale to improve water and sanitation infrastructure. Winner of the Africa Investor Award in November 2004. NCOP Briefing

12. Revenue Management & Loan Guarantee Mogale City (GA) data cleansing, debt review and audit of customers, meters, connections, tariffs, etc resulting in significant saving of lost revenues. Private partner entered a shared risk contract with municipality, earning a reward only in the event where the municipality saves revenues relative to set revenue benchmarks. Ugu District (KZN) data cleansing, debt review and audit of meters, connections, etc to improve revenue. Private partner is recommending a replacement of the existing revenue management systems to improve coordination of all billing systems that have existed in the individual B municipalities. Thembisile (MP) data cleansing, debt review and audit of meters, connections, etc to improve revenue. Dr J S Moroka (MP) data cleansing, debt review and audit of meters, connections, etc to improve revenue. Loan Guarantee MIIU has recently refined the implementation methodology and tender document for banks to bid on. NCOP Briefing

13. Distribution of Projects in SA NCOP Briefing

14. Distribution of projects by sector NCOP Briefing

15. Expenditure NCOP Briefing

16. Efficiency NCOP Briefing

17. Income Statement NCOP Briefing

18. Statement of Changes in Equity NCOP Briefing

19. Strategic plan 2005/06 (“the exit plan”) NCOP Briefing

20. Background • Cabinet Memorandum No. 14 of 1997 created MIIU as short-term arrangement to be wound up in five years (2003) • This term was extended by Cabinet Memorandum 4A of 2002 for an additional three years, to 31 March 2006 • In year 2005/06 the exit plan will be implemented as follows: • Closure of projects on the pipeline • Archiving of project deliverables • Packaging of institutional memory for dplg as executive authority NCOP Briefing

21. Why exit now? • Discussions between management and BOD with dplg (as executive authority) on the prospect of continuity for MIIU date as far back as June 2004 • A decisive position from dplg on the continuation of MIIU has not been forthcoming • At BOD meeting of 24 June 2005, directors resolved to proceed with exit plan NCOP Briefing

22. The exit plan • Background • Project activity • Management contract with DBSA • USAID-funded contracts • Other donor issues • Risk analysis • dplg • National Treasury • Knowledge and information management • Communication strategy • Financial reporting • Closure housekeeping • Succession arrangements • Action plan NCOP Briefing

23. Project activity • Pipeline of active MSP projects has been audited. Projects classified into 3 classes of priority • All other activities are ongoing, but with succession arrangements per activity are being crafted for continuity (dplg as natural successor) NCOP Briefing

24. Management contract with DBSA • Provides MIIU with: • Treasury and accounting function • Employment contracts & HR services • Office rental • Administrative and IT services NCOP Briefing

25. USAID-funded contracts • Provisions: • Expatriate staff contracts • Assets • Commitment agreement for DCA implementation NCOP Briefing

26. Other donor issues • DFID commitment agreement • Mega-Tech funding • Cities Alliance (World Bank) NCOP Briefing

27. Risk analysis • HR risk – staff retention • Financial risk – incurring of liabilities • Legal risk – breach of grant funding agreements • Reputational risk – resulting from exiting from funding agreements NCOP Briefing

28. Department of Provincial and Local Government • MIIU is a PFMA Schedule 3A public entity (of dplg). Whilst certain responsibilities are expected of dplg, these cannot be taken for granted. MIIU needs to strategise without dependency on dplg. • Expected responsibilities of dplg in winding up MIIU: • provide funding for the final year • de-list MIIU as a public entity • disengage the Board of directors • disengage company members • provide a custodian by September 2005 • take cession of assets, liabilities and institutional memory NCOP Briefing

29. National Treasury • A business case for delisting of a public entity should include • financial statements of the final year prepared on liquidation basis • transfer (cession) of the entity’s function to a successor • transfer of surpluses, assets and liabilities • risk analysis of de-listing • closure of budget line, bank accounts, etc NCOP Briefing

30. Knowledge and information management • MIIU to package the following for handover purposes to a suitable repository: • Projects on the pipeline • Archived project deliverables • Institutional memory NCOP Briefing

31. Communication strategy • Pronouncement by dplg as executive authority • Communication from MIIU (in collaboration with government) to: • municipalities • engaged consultants • PADCO, USAID, DFID • Press release • Website updates NCOP Briefing

32. Financial reporting • Functional closure to be 31 March 2006, but financial closure to be 31 August 2006 • Caretaker arrangement necessary for the March – August period • Audit and Annual Report to be prepared (liquidation basis) • Cash flow management to be done monthly to aim for zero balance at 31 March 2006. NCOP Briefing

33. Closure and succession arrangements • To be managed in collaboration with dplg • Archiving • Handling of new requests from municipalities • Transition out of ongoing project activity from January 2006 • Identification of areas where specialist successor to MIIU is required to support dplg NCOP Briefing

34. Budget 2005/06: Monthly cashflow NCOP Briefing

35. Action plan: Key milestones • Recommend adoption of plan by BOD on 4 August 2005 • Submit budget to dplg reflective of exit plan • Set up custodian arrangement • Communication strategy • Handover to dplg by 30 January 2006 • Caretaker arrangement required March – August 2006 NCOP Briefing

36. Thank you NCOP Briefing