Annual Report: Vote 5 2004/ 2005

1. Annual Report: Vote 5 2004/ 2005 Presentation to the Portfolio Committee on Provincial & Local Government by Ms Lindiwe Msengana-Ndlela Director-General: dplg Tuesday, 13 September 2005

2. A.Overview • Financial Performance and Highlights • Programme Performance • Outlook • Project Consolidate • B.Structure of the Annual Report • Programmes • C.Conclusion and Way Forward • Our commitment to Parliament for 2004/05 • Key Performance Areas for Local Government • Collective Action Contents 2

3. A. Overview 3

4. Financial Performance 6 860 172 6 849 332 2 495 422 2 483 381 46 967 61 375 658 311 4

5. Departmental budget under review: R13.1b. • Increase of 38,8% from R9.4 billion allocated in previous financial year. • Unqualified Audit opinion from the Auditor- General. Financial Performance and Highlights 5

6. R7,7 billion transferred directly to municipalities for basic services; • R4,5 billion for municipal infrastructure and job creation; • R130 million for drought relief in South Africa and R20 million for financial needs related to the East Asian (Tsunami) Disaster; Financial Performance and Highlights … 6

7. A total of R17,3 million to the South African Local Government Association, and R22,5 million to the Municipal Demarcation Board to prepare for the next Local Government Elections; • A total of R8,6 million to the National House of Traditional Leaders, R4 million to the Commission on Traditional Leadership Disputes and Claims and R9,7 million to the Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities; and • R224 million for the dplg operational budget. Financial Performance and Highlights … 7

8. Snapshot of the 2004/05 Financial Year Funding Injection of R12.8b (plus R0.29b in October 2004) for basic service delivery development and co-ordination directed towards Provincial Municipalities Focus on Gender 2nd Women in Local Government Conference Local Government Elections Preparatory Conference • IGR and Traditional Leadership • Intergovernmental Relations Framework Bill by Cabinet and introduction to Parliament • Establishment of the Commission on Traditional Leadership Disputes and Claims • Disaster Management • Domestic: Cabinet’s approval of R20m for financial needs related to the East Asian Tsunami and R130m for drought relief in South Africa • International: Government’s support programme together with other stakeholder to assist (financially and in-kind) in the aftermath of the Tsunami Disaster in South East Asia as well as in affected African countries January April August November September April, 2004 March, 2005 FOURTH QUARTER FIRST QUARTER SECOND QUARTER THIRD QUARTER July June March October December Free Basic Services Completed the development of Monitoring System and a Portal to support municipalities in implementing the FBS Policy Launch of PROJECT CONSOLIDATE A Hands-on Local Government Support and Engagement Programme Recognizing Excellence Second National Municipal Performance Excellence (VUNA) Awards held successfully Public Participation and Empowerment National Conference on Community Participation and sharing of best practice 8

9. Key milestones from recent past • The year 2004 in South Africa Outlook 9

10. 1.1 Since April 2005: • Service Delivery Facilitators (SDFs) have been mobilised and deployed to municipalities. • b) Through the Presidential and Ministerial Municipal Izimbizo Programme, we have directly engaged with more than 40 municipalities. • c) We are Monitoring and Evaluating progress through a systematic framework of Performance Areas and Indicators. Project Consolidate 10

11. Project Consolidate: Measure of Success at Municipal Level 11

12. 1.2 Expected Outcomes: • a) Improved capacity of provinces and municipalities to deliver on their mandate; • b) Accelerated delivery of quality services to communities; • c) Empowered participating communities in the governance structures and processes; and • d) 136 municipalities will emerge out of Project Consolidate and graduate through to the sustainability phase in terms of Local Government Transformation process. Project Consolidate … 12

13. B. Structure of Annual Report 13

14. Programme 1: Administration p17~23 • - Human Resource Management and Development(Increase from 264 to 342 staff members - 78, representing a 30% increase) • - Internal Audit and Risk Management • - Compliance and Legal Services • - Corporate Planning and Project Management • - Communications • - Information Technology and Management • - Corporate Secretariat Vote 5 - Programmes 14

15. Prog 2: Governance, Policy & Research p 24~28 • Intergovernmental Relations Framework Bill, now an Act • Commission on Traditional Leadership Disputes and Claims • Draft Policy on Municipal International Relations • LED Strategy and implementation framework • Provincial Support • Harmonisation of IDPs, PGDSs and NSDP • Provincial Bills on national framework legislation on the institution of traditional leadership. • Draft legislation on Provincial and Municipal International Relations. 15

16. Prog 3: Urban and Rural Development • p 29~35 • - ISRDP/URP Financing Protocol • - Cluster interventions in Nodes • - Monitoring and Evaluation 16

17. Prog 4: Systems and Capacity Building • p 36~41 • - Implementation of the Disaster Management Framework • - Guidelines and framework for implementation of Property Rates Act • - Performance Management • - Preparations for Local Government Elections 17

18. Prog 5: Free Basic Services & Infrastructure p 42~45 • - Roll-out of Free Basic Services • - Municipal Services Partnerships guidelines • - Public Participation and Empowerment 18

19. Prog 6: Provincial and Local Government Transfers p 46~47 • Provincial Transfers • - Local Government Capacity Building • - Municipal Infrastructure Grant • Local Government Transfers • - Equitable Share • - Municipal Systems Improvement Programme • - Municipal Infrastructure Grant • - Disaster Relief 19

20. Prog 7: Fiscal Transfers p 48~52 • Funds made available to public authorities and other institutions in terms of the agreements between government and the individual authority or institution. 20

21. (A/R Page) • The Effectiveness of Internal Controls 56 • Internal Audit Function 56 • Quality of Management and monthly / quarterly reports submitted in terms of the PFMA and the Division of Revenue Act (DoRA) 57 • Evaluation of Financial Statements 57 Report of Audit Committee (p 55) 21

22. (A/R Page) • Report of the Accounting Officer 59 • Statement of Accounting policies and related matters 65 • Report of the Auditor-General 74 • Annual Financial Statements 78 Other details of financial results 22

23. For example: • Grants paid to Provinces & Municipalities • Transfers to Departmental Agencies and Accounts • Explanatory Notes in respect of Conditional Grants in terms of Section 18(1) of the Division of Revenue Act, 2004 (Act No. 5 of 2004) Annexures (p 106 ~ 190) 23

24. Annexures (p 191 ~ 215) • Human Resources Oversite Report • Legislation administered by the dplg • List of departmental publications 24

25. C. Way Forward 25

26. Our commitments to Parliament for 2004/5: • We said that we will pay priority attention to: • Leading and facilitating policy coherence on matters of provincial and local government • Intergovernmental Relations Bill passed • Alignment of NSDP, PGDG’s and IDP’s • Big ideas emanating from the IDP Hearings • Shared Sustainable Development Paradigm • Government’s Connectivity with Communities • Impact of Intergovernmental Investment in Localities • Provincial Development and Strategic Role • Improving the Credibility of IDPs Conclusion and Way Forward 26

27. Raising awareness and recognition of the depth of capacity challenges • Launch of Project Consolidate in October 2004 • Follow a systematic approach to addressing critical capacity challenges arising from decades of neglect, poverty and underdevelopment in poor and rural municipalities • Note our approach in addressing the 5 Key Performance Areas (KPA’s) for Municipalities Conclusion and Way Forward… 27

28. KPA 1: Municipal Transformation and Institutional Development • Stabilize administrative and political components within municipalities • Implement a systematic programme of capacity building • Municipal managers • Senior Managers (Section 57 of the Systems Act) • Professionals • Chief Finance Officers • Engineers, IT Specialists, Legal expertise • Artisans • All other staff levels • Front desk, Back Office – Systems and ‘Back to Basics” (Batho Pele) 28

29. KPA 1: Municipal Transformation and Institutional Development … • iii. Strengthen the Performance Management System • Implementation of organisation-wide performance management systems in the municipalities • Individuals and the whole Municipal Institution • Particular focus on PA’s of Municipal Managers 29

30. KPA 1: Municipal Transformation and Institutional Development … • Intensify hands-on support, short-to-medium term • Apply (immediately) the hands-on model of Project Consolidate that includes SDFs, Professionals, National and Provincial Government, Private Sector, SOEs. • Senior Managers in National and Provincial Departments to spend at least 5 days at the coalface during a performance cycle under Project Consolidate. National and Provincial Departments must re-orientate staff and where appropriate, restructure to provide support at local level whilst maintaining their policy development and M&E mandate. • Complete a Service Delivery Agency model that strengthens the role of the District Municipality working together with better resourced municipalities to support smaller municipalities. 30

31. KPA 1: Municipal Transformation and Institutional Development … • Implement staff recruitment and retention programme for local Government. • Focus on the Leadership development of new Councillors and Municipal Managers. • Apply Intergovernmental Relations Act and report on its impact to Parliament. • v. Long-term sustainability • Integrating the ideal of the developmental state, developmental local government and participatory democracy within the governance system as a whole. 31

32. KPA2: Municipal Financial Viability and Management • Improve municipal capacity in the following areas: • Long range Financial Planning and Budgeting • Cost and Management Accounting • Investment in social and economic infrastructure • Balanced rational and proportional spending on Capital Expenditure vs Operational Expenditure vs Salaries. • Revenue and Debt Management • Targeted support to municipal treasury departments. 32

33. KPA2: Municipal Financial Viability and Management … iii. Financial controls, implementation of MFMA and Regulations • Improve capacity as indicated in KPA 1 recommendations • Accelerate anti-corruption programme. iv. Financial Reporting • Note importance of this component with regard to quality decision-making processes. • Auditing • Internal: improve capacity and proactive action prior financial year end • External: Follow up on matters raised by the Auditor-General. 33

34. KPA3: Basic Service Delivery and Infrastructure • i. Visible and demonstratable roll-out of basic services: Instill an organisational-wide sense of urgency whilst focusing on systematic and sustainable improvement of capacity over the long-term. • ii. Monitor implementation, particularly in areas highlighted in the IDP Hearing Report [particularly: • sanitation, water, housing (including the deeds), • electricity, • waste management; and • environmental impact management, land and agriculture, roads and public works. 34

35. KPA 4: Local Economic Development • Note outcomes of IDP Hearings and ISRDP/URP audit, with regard to Local Economic Development • Mandate the Economic and Employment Clusters, both at National and Provincial levels to accelerate the implementation of Local Economic Development strategies. 35

36. KPA 5: Good Governance • Deepen community participation and empowerment. • Improve the functionality of Ward Committees and roll-out of the Community Development Workers Programme in this context • All three spheres to provide the necessary support to ensure effectiveness of Ward Committees and Good Governance 36

37. Collective Action Invaluable contribution and dedication towards the dplg in achieving its strategic objectives during the 2004/05 financial year. 37

38. General Enquiries: Ms Jeanny Morulane, Senior Manager: Communication Department of Provincial and Local Government, Private Bag X804, Pretoria, 0001, South Africa Tel: (012) 334-0631 / Fax: (012) 334-0852 Email: jeannym@dplg.gov.za / Web: http://www.dplg.gov.za Thank you! 38