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South Africa Municipal Infrastructure Investment Unit Annual Portfolio Budget Hearing 14 March 2003

Detailed overview of MIIU operations, budget review, and grant process. Learn about active projects, revenue & expenses, and performance review for 2002-03.

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South Africa Municipal Infrastructure Investment Unit Annual Portfolio Budget Hearing 14 March 2003

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  1. South Africa’sMunicipal Infrastructure Investment Unit Annual Portfolio Budget Hearing 14 March 2003 Presented by MIIU Board Directors & Management

  2. Presentation Overview 1. Policy & Operation 2. 2002-03 Budget Review 3. 2002-03 Performance Review 4. 2003-04 Business Plan & KPIs 5. 2003-04 Budget 6. Lessons Learned

  3. Policy & Operations

  4. What is the MIIU? • Cabinet Memoranda: 1997 & 2002 - Life-span extended to 2006 • Non-profit Sect. 21 Company, est. 4/98 • Financial & tech. support from USAID • PPU & Project Preparation Fund • Grants & advice to support local MSPs • Administrative support provided by DBSA

  5. MIIU Mandate • Facilitate private sector investment in municipal services – on a controlled, sustainable basis • Help create a market in Municipal Services Partnership (MSP) services to provide advice to local governments

  6. The MIIU Board Independent BOD, representing: • Private sector banks & investors • DPLG & National Treasury • DBSA • Private individuals and business people • Local governments • Awaiting restructuring of Board in terms of Cabinet Memorandum

  7. The MIIU Grant Process:How Does it Operate? • Municipality applies for MIIU assistance • MIIU assesses chances for success & development impacts – Project Preparation Report • Formal grant agreement signed • Municipality contributes partial funding (local ownership) • MIIU provides quality control

  8. The Project Development Process • Feasibility Study of MSP options • Council decision on option (with MIIU advice on recommendations and implications of options) • Prepare bid documents, draft contract • Selection of public or private partner • Negotiate & sign contract • Financial close -- begin implementation • Initiate contract compliance monitoring

  9. Completed MSPs:MSPs vs. Non-MSPs • MSP’s 31 • Non-MSPs* 34 All MIIU projects to date: 65 *Internal improvements and/or judged non-viable as MSPs

  10. 2002-03Budget Overview

  11. MIIU Budget 2002-03 Financial Mgmt. Goals: • Maintain MIIU pipeline – 70 in pipeline • Accelerate disbursements; draw down surplus – aiming to meet target by end March 2003 • Explore new donor funding – DFID monitoring system • Continue new activities: diagnostics; public awareness – 4 new ones • Accelerate transformation with new staff – performance reviews

  12. Revenues - 2002-03 BudgetCurrentVariance Budget allocation 6,000 6,0000 Donor grant 0 0 0 Interest 2,500 2,521 21 Expense recovery 90 116 26 ------- ------- ------- TOTAL 11,090 9,419-1,671

  13. Revenues - 2002-03 Var Explanation Budget 0-- Donor grant0 -- Interest 21Higher IR than expected Exp recovery 26More recovered from contractor ------ TOTAL-1,671

  14. Admin. Expend. - 2002-03 BudgetCurrentVariance BOD expenses 7010 -60 DBSA admin fee 2,2151,570 -645 General admin 1,451 731-720 Marketing/Comm 340 38242 Trainee Programme 130 0-130 ------- ------- ------ TOTAL 4,2062,693-1,513

  15. Admin. Expend. - 2002-03 Var. Explanation BOD expenses -60 Remun. budgeted, not approved DBSA admin fee -645Timing difference re new FY General admin -720 Timing difference re new FY Marketing/Comm 42Extra recovery re Conference Trainee Prog. -130Interns vs. permanent staff ------ TOTAL -1,513

  16. Project Spending - 2002-03 BudgetCurrentVariance MIIU pipeline 7,652 4,489-3,163 Project Expend.:Var. Explanation MIIU pipeline -3,163Additional spending expected before FY end

  17. Budget Summary - 2002-03 BudgetCurrentVariance 2001-02 surplus 17,211 17,211 0 Revenues 8,590 8,637 47 Admin. Expend. 4,206 2,693 -1,513 Project Expend. 7,6524,489 -3,163 2002-03 surplus 13,943 18,666 4,723

  18. MIIU Budget 2002-03 Conclusions: • Budget 02-03 numbers are current, not actual • FY change accounts for major variations • Pipeline growing again – affects of demarcation, powers & functions starting to diminish • Importance of consistent MTEF allocations. • Need to explore new donor funding.

  19. 2002-03Performance Review

  20. Business Plan Objectives • Key focus areas for MSP project development work 2. Diagnostic Studies 3. Government policy & legislation • MIIU Transformation & skills transfer

  21. MIIU Pipeline To date • 70 active projects – the most ever • 23 in concept stage – reflects new growth • 35 in feasibility study – key step in process • 9 in bid/negotiation stage • 33 in solid waste • All provinces included – for the first time • 65 projects completed; 31 MSPs

  22. 1. Focus Areas: 5 Signed MSPs • Concessions: Mogalakwena water • Metros:Cape Town waste • Cs: Ugu, Amatola feasibility studies • Bs: Mbombela electricity & rev. mgmt. Theewaterskloof waste

  23. 1. Focus Areas: in Process • Concessions: Durban waste • Metros:Pretoria & CT power • Cs: Ilembe water; uThungulu waste • Bs: Mangaung Water; Rich. Bay water [70 active projects at 2/2003]

  24. 2. Diagnostic Studies

  25. 2. Diagnostic Studies • Quick assessment of the service needs • Report in 4-6 weeks • No obligation to accept findings • Guaranteed MIIU follow-up help if partnerships identified • Recommendations for dealing with other problems (esp. with budgets)

  26. 2. Completed Diagnostics • Alfred Nzo 8. JS Moroka • Nelson Mandela 9. Kgalagadi • Mangaung 10. Central Karoo • Ugu 11. Umkhanyakuda • uMgungundlovu 12. Matatiele* • Msunduzi 13. OR Tambo* 7. Sekhukhune 14. Lukhanji* *New in 02-03 15. Bushbuckridge*

  27. 3. Govt. Policy & Legislation:

  28. 3. Govt. Policy & Legislation: 1. MSA, Sect. 94(1)(c) 2. Meetings/testimony on MFMB 3. DWAF water policy White Paper • EDI Restructuring Ring Fencing 5. Advice to munis re MSA Sect. 78

  29. 4. MIIU Transformation & Skills Transfer

  30. 4. MIIU Transformation & Skills Transfer 1. New SA CEO: Ms. Karin Pearce 2. New long-term expatriate advisor: Ms. Jacqueline Levister 3. 2 South African Project Managers: Danai Magugumela; Asha Bassa 4. Secured two L-T advisors from DFID 5. MIIU BOD has approved recruitment of two new MIIU project managers

  31. 2003-04 Business Plan

  32. STRUCTURE OF PRESENTATION • STRATEGIC ISSUES FOR LOCAL GOVERNMENT • MIIU APPROACH TO ADDRESSING THESE ISSUES • MIIU KEY PERFORMANCE AREAS • KPI’S • BUDGET

  33. OVERALL STRATEGY • Policies, planning;legislation;restructuring are in place – the challenge for all sectors of society is sustainable implementation of services and growth • HOW CAN MIIU HELP TO ACHIEVE THIS, IN 3 YEARS? • MIIU is uniquely placed alongside all spheres of government, has implementation experience and skill, has credibility in the market and has the confidence of municipalities, to facilitate implementation through investment by both the public and private sectors; service delivery solutions within and between both the private and public sectors • Therefore, the next 3 years for MIIU are about “MAKING IT WORK”

  34. STRATEGIC ISSUES • SUPPLY SIDE • AVAILABILITY AND ACCESS TO PRIVATE SECTOR FINANCE • SERVICE OPERATORS • CONSULTANTS AND BEE • DEMAND SIDE • CAPACITY TO PRIORITISE, MANAGE,MONITOR • COUNCIL COMMITMENT IN RELATION TO RISK • GENERIC ISSUES • STRATEGIC PLANS – INTERGOVERNMENTAL ALIGNMENT • LEGISLATION AND REGULATION

  35. APPROACH TOSUPPLY SIDE ISSUES • Stimulate the market’s appetite for water sector partnerships, through CHS in water and sanitation – public or private risk • Encourage municipal service partnerships in service delivery, based on public sector borrowing – public risk • BEE database and training opportunities

  36. APPROACH TO DEMAND SIDE ISSUES • MIIU project process: professional responsibility – council resolutions and implications • Ensure financial risk apportionment is appropriate to risk management functions in contract design with regards to the risk of non-payment • Facilitate access to “on-the job” training for sector specific, contract related matters

  37. APPROACH TOGENERIC ISSUES • STRATEGIC FOCUS ON ESSENTIAL SERVICES: Facilitate intergovernmental alignment between • National;provincial programmes and local government: DWAF;DPLG;DME;DEAT • categories of municipalities through projects: Multi-jurisdiction service delivery areas in water • LEGISLATION: Actively participate in the formulation of regulations appropriate to facilitating service delivery in local government: • MFM Act

  38. KEY PERFORMANCE AREAS • MSP’S IN ESSENTIAL SERVICES: Water and sanitation, waste and electricity. Some will be PPP’s, others will be public MSP’s. Focus is on MIIU disbursement to projects which enhance investment in and service delivery in the short term, and sustainability in the long term. Target: 80 active; 9 new • DIAGNOSTICS: Enhance the ability of rural municipalities to deliver through analysis of the status quo and recommendations on solutions within existing resource constraints of MIIU Target: 5 active; 3 new diagnostics

  39. KEY PERFORMANCE AREAS CONT. • UNFUNDED TECHNICAL ASSISTANCE: Enables practical implementation of alignment between and within spheres of government through timeous intervention and advice on request • Revenue Enhancement Programme -DPLG • National Infrastructure Cluster Committee – DPLG;DWAF;DEAT;DPE etc • DWAF national coordinating committee • DME/EDI Task Group • Treasury/PPP Unit: Regulations for MFM Bill • COMMUNICATION • Conferences/Seminars: less in number but more focused on impacting municipalities and the private sector • Monitoring and Evaluation system: establish in MIIU and begin M&E on 5 projects • Website: establish and keep up to date

  40. Auditable KPIs • No. of active projects 80 • No. of new completions 9 • Total disbursements R14.1m • No. of completed diagnostics 8 • No. of new diagnostic starts 3 • Diagnostic disbursements R0.6m • Disbursement-related opex to total grant expenditure 28.4%

  41. Internal MIIU KPIs • Establish a project monitoring system 1 • Value of MIIU TA to munis 20hr/mon • Value of MIIU TA to other govt. 20hr/mon • Completed electricity ring-fencings 3 • Reports on ring-fencing implications 3 • Established credit guarantee scheme 1 • Agreements for muni access to guarantee 1 • Development plans for MIIU’s SA staff 4 • Contract mgmt course for muni officials 1 • New funding for MIIU R14.9m

  42. 2003-04 Budget

  43. MIIU Budget 2003-04 – Approved by the BOD 2002 2002 2003-04 Summary: BudgetCurrentBudget Revenues 8,590 8,637 12,290 Admin. Expend.4,207 2,693 6,591 Project Expend.7,652 4,489 14,150

  44. MIIU Budget 2003-04 2003-04 Summary: BudgetExplanation Revenues 12,290 (+)New donor funding expected Admin. Expend. 6,591 (+)Two new SA staff Project Expend. 14,150 (+)Recovery from demarcation -related distractions, plus new project managers

  45. Lessons Learned

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