Municipal Demarcation Board Annual Report 2011/2012

1. ANNUAL REPORT 2011/2012MUNICIPAL DEMARCATION BOARDPRESENTATION TO THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS10 October 2012 REPRESENTATION TEAM Mr LJ Mahlangu Chairperson: Municipal Demarcation Board Ms N Gwayi Deputy Chairperson: Municipal Demarcation Board Mr. SM Radebe Chairperson: Audit & Risk Committee Mr. LD Tsotetsi Board Member : of the Municipal Demarcation Board (Former Acting CEO) Ms G Gumbi-Masilela CEO: Municipal Demarcation Board Ms MS Mahlangu Acting Chief Financial Officer

2. OUTLINE • VISION • BACKGROUND • BROAD PROCESS AND TIMELINES • THE 2011/12 AUDIT OUTCOME • KEY PERIODS FOR PUBLIC PARTICIPATION • HIGHLIGHTS IN THE ANNUAL REPORT • FINANCIAL RESULTS 2011/12 • SUMMARY OF FINANCIAL RESULTS • RECEIPTS FOR THE YEAR ENDING 31 MARCH 2012 • EXPENDITURE FOR THE YEAR ENDING 31 MARCH 2012 • BREAKDOWN OF EXPENDITURE FOR THE YEAR ENDING 31 MARCH 2012 • REPORT OF THE AUDITOR -GENERAL • MEDIUM TERM EXPENDITURE FRAMEWORK • STRATEGIC DIRECTION • DEVELOPMENTS AT MDB POST STRATEGIC PLANNING JULY 2012

3. VISION “The Board's vision is the full realization of the Constitutional and Local Democracy in South Africa through functional and viable municipalities, spatially configured so that its boundaries and wards coverthe entire territory of the Republic of South Africa, including productive and inclusive metropolitan municipalities, sufficiently and optimally capacitated district and local municipalities which are supported by a sound local government system. ”

4. BACKGROUND • The 2011/12 Annual Report is tabled with the backdrop of the Mid-term of the tenure of the current Board; • It presents some of the achievements and highlights of the Board in the year in review. • A major highlight has been the review of the Municipal Capacity Assessment model which identified gaps and weaknesses as well as a need for improved methodology • During the last quarter of 2011/12 the MDB issued the following circulars: Circular 1/2011 with applications submitted before the local elections followed by Circular 1/2012 to kick-start the outer boundary review process; • This was followed by Circular 2/2012 , wherein further elaboration and differentiation of redetermination was outlined. • During this process the MDB received approximately 1000 proposals from a cross section of stakeholders on all types of boundary changes • The anticipated outcomes out of these proposals include among others; • the re-alignment and adjustment of boundaries; • Consolidation of certain municipal areas • Mergers and amalgamations of two or more municipalities • This process may also result in the re-categorisation of certain municipalities in the country.

5. Prepare for local elections Delimit wards Re-determine municipal boundaries 2016 2015 2015 2014 2013 2013 2012 2011 Consultation and legal process June 2011 to Oct 2013 Consultation and legal process Nov 2013 - June 2015 IEC process July 2015 - April 2016 Broad process and timeframes within current legal framework:2011 - 2016

6. Key periods for public participation MDB provides information Meetings per district area Deadline for new requests Further visits Section 26 Sub- missions Public meetings Section 21 objections Aug/Sept 2011 15 Dec 2011 Jan-Mar 2012 Apr-May 2012 Sept-Oct 2012 Aug 12-Jan13 Municipalities consult affected communities, and encourage participation More information: MDB Circular 1/2011: www.demarcation.org.za

7. HIGHLIGHTS IN THE ANNUAL REPORT • Progress made in the acceleration of the consultative process with affected stakeholders as required in the legislation. form of circular 2/2012 and visits to municipalities • Proposals received were characterized into three types for ease of reference and processing: • Type A : re-determinations- catering for minor technical boundary adjustment , aligning to the cadastral features • Type B- this dealt with more significant adjustments that may re-align a community, ward or farm. Has some effect on the lives of communities but may be necessary and the impact may be positive • Type C – These are major configurations of municipalities that may include amalgamation or demarcation od a new type of municipality • A new capacity model was finalized and implemented • The review of the functioning of the Board led to a major organizational structure review to ensure proper positioning of the Board to deliver on its mandate • Good governance remainsa major cornerstone of the Board

8. FINANCIAL RESULTS 2011/12 • SUMMARY OF FINANCIAL RESULTS • RECEIPTS FOR THE YEAR • FINANCIAL PERFORMANCE FOR THE YEAR ENDED MARCH 2012 • BREAKDOWN OF EXPENDITURE

9. SUMMARY OF FINANCIAL RESULTS • Total income for the period R39.1 million • Expenditure during the period R36.0 million • Resulting in a surplus of R3,3 million • Expenditure Variance of R3,5 million • Projections – Board has spend within budget • Current ratio = 6:1 • Accumulated Surplus of R20,2 million • Commitments of R5,2 million

10. RECEIPTS FOR THE YEAR ENDING 31 MARCH 2012

11. EXPENDITURE FOR THE YEAR ENDING 31 MARCH 2012

12. BREAKDOWN OF EXPENDITURE FOR THE YEAR ENDING 31 MARCH 2012

13. REPORT OF THE AUDITOR GENERAL • Unqualified report with emphasis of matter • Irregular Expenditure of R627,675 • This was a proactive effort by the MDB to review all the activities during the period when the organization did not have adequate staff in the finance component • During this period there was no Chief Financial Officer nor Supply Chain Management staff with the assistance from consultants. • It was not out of mismanagement but non compliance with SCM procedures , • Became irregular through the contravention of the PPPFA • Poor filling system also problematic in the organization

14. MEDIUM TERM EXPENDITURE FRAMEWORK (MTEF 2012-2015) • 2012 MTEF amounts to R128 million • Allocation for 2012/13 increased by R1.3 million • Representing a 5% increase • In 2013/14 and 2014/15 grants increased by 5.6% in respective years.

15. MEDIUM TERM EXPENDITURE FRAMEWORK(MTEF 2012- 2015)

16. MEDIUM TERM EXPENDITURE FRAMEWORK(MTEF 2012- 2015)

17. MEDIUM TERM EXPENDITURE FRAMEWORK(MTEF 2012- 2015)

18. STRATEGIC DIRECTION The Municipal Demarcation Board has for the current Strategic Plan identified strategic themes to focus and guide the organisation over the next few financial years (2011/2012, 2012/2013, 2013/14 and 2014/15)

19. STRATEGIC DIRECTION

20. DEVELOPMENTS AT MDB POST STRATEGIC PLANNING IN JULY 2012 • Public Participation • As part of the process outlined in the background the board had to review its legislative mandate to accelerate public participation. A Thorough reflection was re-visited and endorsed at the July Strategic Planning session; • Board members were assigned to various provinces to enhance and elevate the status of consultation and public participation; • This process escalated our engagement processes and on other areas of our operations including the travel around the country to ensure effective participation

21. DEVELOPMENTS AT MDB POST STRATEGIC PLANNING IN JULY 2012 • Stake-holder Management unit • Build Capacity for Stakeholder Management and Public Participation requires a strategic management team • Develop a strategy • Align with major Public Participation structures on the ground • Profiling the work of the Board • Ensure critical awareness creation to all communities • Partner with DCOG to drive Public participation • Align with critical media such as community radio stations and local community newspapers to reach more communities • Board Members and staff on-going outreach and consultation • Need to review the Board’s operations • Position the Board in the policy debates on creating efficiency at local government level

22. DEVELOPMENTS AT MDB POST STRATEGIC PLANNING IN JULY 2012 • Research and Operations • The decisions of the Board are not easy and straightforward; • A need was identified to strengthen the research arm of the Board to enhance the decision making process especially on the cases that directly affect communities adversely; • A research unit is currently in the process of being set up to enhance the work of the board; • Managing and ensuring sustainability of the municipal Capacity Assessment over the period of this Board, managing trends and identifying critical areas • Creating partnerships with major stakeholder such as SALGA, STATSSA etc.

23. DEVELOPMENTS AT MDB POST STRATEGIC PLANNING IN JULY 2012 • Policy Development • The new Capacity Assessment Reportwill inform and support policy decisions by the MEC’s in determining the powers and functions • Need for review of the legislative and policy mandate of the MDB beyond just boundary re-determination to creating efficiency in the local government space

24. CHALLENGES • Inadequate internal skills and capacity in the organization to drive the strategy of the MDB efficiently; • Inadequate funding to fund all the strategic imperatives identified by the Board in the strategic planning session; • The budget cuts in the next three years will further hamper the effective implementation of the strategy • A part- time Board is unable to add much value to the organization

25. DEVELOPMENTS AT MDB POST STRATEGIC PLANNING IN JULY 2012 • Good Governance • Continued enhancement of good governance in the board • Review the current status of the board to a full time board • Enhance public participation, consultation and managing the research on the work of the board • Enhance efficiency of the board going forward

26. CONCLUDING REMARKS • The MDB remains focused on its mandate and the key strategic thrusts as outlined in the Constitutions and Legislation; • The board and staff has worked tirelessly to ensure levels of efficiency in the organization; • The board continues to provide leadership and guidance to achieve efficiency ; • The Board in engaged with enhancing the capacity of the organization at management level

27. THANK YOU