State of Municipal Performance 2015/2016: Mogalakwena Municipality Report

1. Briefing by MEC for COGHSTAState of Limpopo Municipalities& Detail report on Mogalakwena Portfolio Committee on CoGTA 11 August 2015 Parliament

2. OVERVIEW / BACKGROUND • KEY FOCUS AREAS 2.1 Municipal Transformation and Institutional Development 2.2 Basic Services Provision and Infrastructure Development 2.3 Financial Viability and Management 2.4 Local Economic Development 2.5 Good Governance and Public Participation • Implementation of the Back to Basics • Report on Mogalakwena Municipality State of Municipal Performance 2015/2016 State of Municipalities

3. 1. OVERVIEW / BACKGROUND

4. OVERVIEW The presentation happens at the backdrop of: • South Africa celebrating 21 years of democracy • Preparations for the 2014/2015 municipal audit underway • Implementation of the Back to Basics • Preparation for Gazzetting and Publication of the sec47 report for 2014/2015.

5. Legislative Requirements • Constitution of the Republic of South Africa, 1996 (Section 152 in particular); • Municipal Systems Act, 2000 (As amended) • Municipal Structures Act, 1998 • Intergovernmental Relations Framework Act, 2005 • Land Survey Act 8 of 1997 • Spatial Data Infrastructure Act 54 of 2003 • Traditional Leadership and Governance Framework Act 41 of 2003; • Limpopo Traditional Leadership and Institutions Act 6 of 2005; • Limpopo Houses of Traditional Leaders Act 5 of 2005; • Northern Province Circumcision Schools Act 6 of 1996;

6. Legislative Requirements • Municipal Demarcation Act 27 of 1998 • Municipal Electoral Act 27 of 2000 • Disaster Management Act 57 of 2002 • Spatial Planning and Land Use Management Act (SPLUMA)16 of 2013 • Municipalities authorities of first instance on land development and management; • Commencement date July 1, 2015 • LOCAL GOVERNMENT: REGULATIONS ON APPOINTMENT AND CONDITIONS OF EMPLOYMENT OF SENIOR MANAGERS

7. POLICY IMPERATIVES • National Development Plan; • Limpopo Development Plan • National Spatial Development Perspective; • New Growth Path; • National LED Framework; • Green Economy Plan; • Provincial Spatial Development Framework, 2007; • White Paper on Traditional Leadership and Governance, 2003;

8. dEMOGRAPHICS • Limpopo is the 5th largest province in South Africa and takes up to 10.3% of the country’s land area • According to census 2011, total population is at 5.405 million. An increase of 0.79% between 2001 and 2011. • 87% of the area is rural • Is comprised of 5 district municipalities and 25 local municipalities

9. 2.1 MUNICIPAL TRANSFORMATION AND INSTITUTIONAL DEVELOPMENT

10. Appointment of Senior Managers TO BE NOTED • Reluctance in the Filling of positions in Municipalities affected by the re-determination of boundaries ??? • Finding candidates to fill CFO positions beginning to be a huge problem

11. Appointment of Senior ManagersProvincial perspective

12. Appointment of Senior ManagersMOPANI

13. Appointment of Senior ManagersVHEMBE

14. Appointment of Senior ManagersCAPRICORN

15. Appointment of Senior ManagersWATERBERG

16. Appointment of Senior ManagersSEKHUKHUNE

17. 2.2 BASIC SERVICES PROVISION AND INFRASTRUCTURE DEVELOPMENT

18. Access to basic services

19. Projects implementation • A total of 367 projects were implemented during the financial year with the 2014/2015 MIG allocation • At end of financial year, these projects were at various stages of implementation • 62 were at tender and evaluation (planning for 2015/2016) • 219 were at various stages (%) of construction • 86 have been completed • The next slides provide details per municipality

20. SEKHUKHUNE DISTRICT

21. MOPANI DISTRICT

22. VHEMBE DISTRICT

23. CAPRICORN DISTRICT

24. WATERBERG DISTRICT

25. FUNDING FOR INFRASTRUCTURE PROVISION (MTEF)

26. Major infrastructure to be implemented for provision of access basic services Provision of Water: • Bulk Distribution pipeline from DeHoop to Steelpoort to be completed this year, • Bulk Distribution system from Flag Boshielo to Mogalakwena and Steelpoort to Mooihoek planned to start in current financial year. • Mokolo Crocodile Water Augmentation project, Phase 1 planned for completion in the current financial year. • Pipeline from Valdezia to Mowkop (in Louis Trichardt) on the Nandoni scheme has started and earmarked for completion in 2016. Electricity provision • 56 167 house holds are earmarked to be electrified in the current financial year

27. 2.3 FINANCIAL VIABILITY AND MANAGEMENT

28. Provincial pending patterns since MIG inception

29. Spending on 2014 / 2015 Municipal Infrastructure Grant In January 2015 • R539.909 million was taken away from poor spending municipalities • Of which R224.257 was re-allocated to municipalities in the province As at end of June 2015 • R1.994 billion (out of R2.748 billion) was spent (73%) • R753.941 million remained unspent • 6 municipalities have spent 100% • 6 municipalities have spent ≥ 90% and ˂ 100%

30. 2014/2015 MIG spending National Comparison

31. Expenditure PER MUNICIPALITY as at end June 2015SEKHUKHUNE DISTRICT

32. Expenditure PER MUNICIPALITY as at end of June 2015MOPANI DISTRICT

33. Expenditure PER MUNICIPALITY as at end June 2015VHEMBE DISTRICT

34. Expenditure PER MUNICIPALITY as at end of June 2015CAPRICORN DISTRICT

35. Expenditure PER MUNICIPALITY as at end of June 2015WATERBERG DISTRICT

36. Expenditure PER DISTRICT as at end of June 2015

37. FIVE YEAR MUNICIPAL AUDIT ANALYSIS

38. 2013 / 2014 AUDIT OUTCOMES • Mopani

39. ASSESMENT OF THE 2015/2016 MUNICIPAL BUDGETSLimpopo Provincial Treasury

40. MFMA s16(2) (1) states the mayor of the municipality must table the annual budget at a council meeting at least 90 days before the start of the budget year • Provincial Treasury assessed 27 tabled 2015/16 MTREF budgets • Mogalakwena and Greater Tubatse municipalities did not submit their budget timely for assessment, • Polokwane assessed by NT

41. ASSESSMENT CRITERIA • Credibility • To determine if the budget is funded in terms of Section 18 of the MFMA and whether the municipality adopted a budget process with sufficient political oversight and public participation • Relevance • To test if the budget is aligned to the reviewed Integrated Development Plan (IDP) of the municipality and the extent to which national and provincial priorities • Sustainability • To determine whether the budget gives effect to the long-term financial and operational sustainability of the municipality.

42. KEY OBSERVATIONS Credibility • Funding compliance measurement tables indicate that municipal budgets are funded however there are insufficient underlying assumptions to provide reasonable assurance that revenue projections are realistic. • Revenue projections for the MTREF period is increased on a static percentage without considering the changing economic factors within and outside a municipal jurisdiction. • Poor alignment of DORA conditional grants in the budget schedules • Proposed tariff were either not cost reflective and/or did not consider the communities affordability. • No contingency plans in place for the power outages which could result in loss of revenue.

43. KEY OBSERVATIONS Relevance • Municipal budgets were generally linked to the national priorities. • Budget documents and schedules were not complete, which distorts linkage between the IDP, and SPLUMA • Public participations were held by all municipalities with minor challenges; • Departments do not send officials with sufficient knowledge of their departmental plans and strategies to IDP participation sessions • Risk management activities were not integrated into the municipal budget process; hence no strategic risk register was prepared during the IDP and MTREF budget preparation process • None of the municipalities submitted the draft procurement plans, particularly for capital projects which should have been approved in the current financial year ending 30 June 2015 • Service standards for municipalities were not submitted to council.

44. KEY OBSERVATIONS • Sustainability • Poor revenue collection which renders municipalities unable to meet short term financial obligations and inability to retain sufficient cash reserve to maintain municipal infrastructure and replace assets. • Insufficient budget provided for the repairs and maintenance of infrastructure which renders sustainability doubtful. • Inability to quantify distribution losses. • Limited usage of number of households and future expected number of households in the budgeting process.

45. RISKS THAT MIGHT AFFECT BUDGET IMPLEMENTATION • Unavailability of land for development • Aging infrastructure which hinders development and external investment • Land invasion • Mushrooming of illegal business • Poor revenue collection • Under utilisation of infrastructure ( due to ESKOM inability to energise boreholes) • Quantification and disclosure of distribution losses. • Cash flow management. • Community protests which may result in fruitless and wasteful expenditure

46. CONCLUSIONS Based on the assessment and engagements held on the tabled budgets; Provincial Treasury and COGHSTA will embark on assisting these municipalities during their IDP / Budget review process to ensure: • credibility, relevance and sustainability, • the assumptions used to determine the revenue and expenditure budget projections are sufficient and justified.

47. 2.4 LOCAL ECONOMIC DEVELOPMENT

48. LOCAL ECONOMIC DEVELOPMENT • CWP implemented in 17 municipalities. • 22000 work opportunities created as opposed to 23000 during the previous quarter. The challenge with the decline is due to non replacements for those who withdrew. (There are budget constraints related to replacements). • Four(4) municipalities ( Musina, Greater Letaba, Elias Motsoaledi and Polokwane local municipalities) added to the new implementation of CWP with an anticipated creation of 2000 work opportunities. • 30 municipal LED Strategies have been assessed. • All LED District forums are functional

49. 2.5 GOOD GOVERNANCE AND PUBLIC PARTICIPATION

50. FUNCTIONALITY OF IGR STRUCTURES AND COUNCIL COMMITTEE • All municipal councils and committees of council are functional. • All District IGR forums are functional, however challenges have been experienced regarding non-attendance by local municipalities.