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Highlights of SoNA 2016: Implications for COGTA

Highlights of SoNA 2016: Implications for COGTA. COGTA Presentation to the Portfolio Committee 16 February 2016. Highlights of SoNA 2016. Economic prospects and turnaround plan The State of the Nation address focused strongly on the current economic situation.

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Highlights of SoNA 2016: Implications for COGTA

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  1. Highlights of SoNA 2016:Implications for COGTA COGTA Presentation to the Portfolio Committee 16 February 2016

  2. Highlights of SoNA 2016 • Economic prospects and turnaround plan • The State of the Nation address focused strongly on the current economic situation. • The President reiterated the importance of the National Development Plan and the radical economic transformation agenda in fostering a resilient and fast growing economy. • Government embarked on an aggressive infrastructure development programme to stimulate growth. • The country is affected by global constraints in growth and declining investment in developing economies and domestic factors such as electricity constraints and instability in industrial relations. • The country seems to be at risk of losing its investment grade status from ratings agencies, which means it will become more expensive to borrow money from abroad to finance programmes of building a better life for all especially the poor.  • The President indicated that the current situation require an effective turnaround plan.  2

  3. Highlights of SoNA 2016 • Cost containment measures • We have made an undertaking to spend public funds wisely and to cut wasteful expenditure, but without compromising on the core business of government and the provision of services to our people.  • Excessive and wasteful expenditure has been reduced, but there is still more to be done to cut wastage and the Minister of Finance will announce more measures • The President invited the Premiers of all nine provinces as well as mayors to join in eliminating wasteful expenditure within government.  3

  4. Highlights of SoNA 2016 • Nine point plan to respond to growth • The President reported progress on the Nine Point Plan announced in 2015 consisting of: • Revitalisation of the agriculture and agro-processing value-chain; • Advancing beneficiation adding value to our mineral wealth; • More effective implementation of a higher impact Industrial Policy Action Plan; • Unlocking the potential of SMME, co-operatives, township and rural enterprises; • Resolving the energy challenge;Stabilising the labour market;Scaling-up private-sector investment; • Growing the Ocean Economy; • Cross-cutting Areas to Reform, Boost and Diversify the Economy; • Science, technology and innovation, Water and sanitation, Transport infrastructure, Broadband rollout; State owned companies.  4

  5. Themes of the SoNA Besides economic prospects, the State of the Nation Address also gave attention to issues such as: • Governance and management of SOEs • Empowerment of SMME’s • Promotion of domestic tourism • Economic transformation and black empowerment • Improving competitiveness and financial skills development • Consideration of the maintenance of two capitals • Drought • Water infrastructure • National minimum wage and labour relations • Operation Phakisa • Broadband roll-out • Education funding • Supply of anti-retrovirals • Improving police management • International relations and peace and security in Africa 5

  6. LOCAL GOVERNMENT ISSUES IN SONA • LOCAL GOVERNMENT ELECTIONS • Local government elections will be held within three months after the 18th of May, the date of the last elections.  • The President urged all citizens who are over the age of 18 to register to vote during the first registration weekend, 5 and 6 March 2016.  • The President urged the youth in particular who are turning 18 years of age this year, to register in their numbers for this first ever opportunity to cast their votes. 6

  7. LOCAL GOVERNMENT ISSUES IN SONA • IMPLEMENTATION OF B2B • The Back to Basics local government revitalisation plan was launched in September 2014 and 2015 has been the year of intensive implementation. • In this second phase of implementation, national government will engage in more active monitoring and accountability measures.  • This includes unannounced municipal visits, spot checks of supply chain management processes, the implementation of recommendations of forensic reports, site visits of Municipal Infrastructure Grant funded projects, and increased interventions to assist struggling municipalities. 7

  8. LOCAL GOVERNMENT ISSUES IN SONA • TEN POINT PLAN OF B2B PRIORITY ACTIONS • A 10 point plan of Back to Basics priority actions has been developed to guide this next phase. • The plan includes the promotion of community engagement, which is absolutely critical to enable communities to provide feedback on their experience of local government. 8

  9. Current and future COGTA activities supporting the SoNA: Local government elections 9

  10. Current and future COGTA activities supporting the SoNA: Local government elections Municipal Demarcation Process – Legal changes A New clause 38 has been added to the 2016 Divisions of Revenue Bill to set out the transitional measures for the municipal election in 2016, including the impact of new demarcations. The decision to re-demarcate a number of municipal boundaries in 2016 necessitates the inclusion of transitional provisions in the Bill. The changed boundaries will come into effect from the date of the 2016 local government elections, which could be held in May, June, July or August 2016. This means that the election could be held before or after the start of the 2016/17 municipal financial year on 1 July 2016. 10

  11. Current and future COGTA activities supporting the SoNA: Local government elections - DoRA • Allocations in the 2016 Division of Revenue Bill tabled in February 2016 will be published for the new municipal demarcations. • These new demarcations will be in effect for the majority of the 2016/17 municipal financial year. All formulae and other allocation methodologies will be updated to take account of the impact of demarcation changes. • The municipal demarcation transition grant allocation is being increased to subsidise the additional administrative costs in respect of the re-demarcations. This includes increased allocations for demarcations approved in 2013 and allocations for demarcations approved in 2015. 11

  12. Current and future COGTA activities supporting the SoNA: Local government elections • Municipal Demarcation Process • Following the municipal demarcation process, the number of municipalities has been reduced from 278 to 257. • This includes 8 metropolitan municipalities (unchanged from 2011), 205 local municipalities (compared to 226 in 2011), and 44 district municipalities (unchanged). • Ward delimitation • There is a 15% reduction in wards with a final figure at 4 392. • At this point, the voting station network stands at 22 513 voting stations and is estimated to finally reach +/- 22 600. • This represents a improvement in terms of access to voting stations voters and compares favourably with the 20 859 voting stations in the 2011 Municipal Elections 12

  13. Current and future COGTA activities supporting the SoNA: B2B Second phase orientation Developmental local government remains the visionary foundation for the continuing reconstruction and development of our country; • The B2B Programme must be implemented by all spheres and all Departments of government - as a Presidential priority; • Therefore the B2B programme does not belong only to specific Unit in a Department, nor to COGTA, but it is a collective responsibility for which we are all responsible and accountable; • Continue and accelerate the hands-on approach; • Prioritise and focus on campaigns, programmes and projects that have high visibility, broader mobilisation, impactful on delivery and messaging of core B2B objectives in the pre & post election period 13

  14. Current and future COGTA activities supporting the SoNA: B2B Second phase orientation • Ensuring accelerated delivery of basic services re water, sanitation, electricity, roads and storm-water and waste removal. • Tackling corruption • Tackling “dysfunctional” municipalities, moving “at risk” municipalities to “doing well” and preventing any municipalities from regressing – special focus for dysfunctional municipalities. • Mobilise multi-departmental teams to tackle dysfunctional municipalities (mobilise national and provincial resources) • Improving support and intervention to address weaknesses in support programme and interventions being designed and implemented. 14

  15. Current and future COGTA activities supporting the SoNA: B2B Second phase’s focus • Despite the efforts and initiatives implemented by Government, there are remaining challenges. These challenges are priority areas and include: • Service delivery and backlog challenges , e.g. housing, water and sanitation; • Challenges of aging infrastructure, poor maintenance, cost for refurbishment and replacement of infrastructure; • Poor communication and accountability relationships with communities; • Problems with the political administrative interface; • Corruption and fraud; • Poor financial management, e.g. negative audit opinions; 15

  16. Current and future COGTA activities supporting the SoNA: 10 Point Plan • Positive Community Experiences • Prioritise Municipalities Receiving Disclaimers over 5 Years; • Support Revenue Enhancement Programmes; • Appointment of Senior Managers with Appropriate and Requisite Skills in Municipalities; • Quality Service and Maintenance of Infrastructure; • Implementation of Forensic Reports; • Metropolitan B2B Programme; • Strengthening Roles of District Municipalities; • Spatial Regional Integration Zones/Spatial Contracts; • Strengthen Capacity and Role of Provincial CoGTA Departments 16

  17. PROGRESS ON BACK TO BASICS IMPLEMENTATION Observations: Uneven municipal performance; After 1 year of implementation, still too early to detect trends and report significant shift/movement within the B2B categorization. However some indications are beginning to emerge from monthly reports by reporting municipalities on their performance in respect of each pillar; Weak capacity in provincial CoGTA departments correlates with extent of regression in municipal performance in those provinces; Dysfunctional municipalities still characterised by political instability, weaknesses in governance and poor delivery of services; There is correlation between poor political leadership, senior management vacancy rate, poor appointments and lack of functionality of municipalities; Bloated organogram not aligned to core business, weak human resource management systems, weak internal controls, no consequence management and accountability and non adherence/or disregard of basics related laws and regulations; Debt owed to Eskom and water boards still remains a challenge; 17

  18. PROGRESS ON BACK TO BASICS IMPLEMENTATION Observations: Some municipalities continue to experience perennial systemic challenges that are beyond their control, e.g. viability, low or non existent revenue base, inability to attract qualified expertise, tariff setting and non revenue losses on services (water and electricity); Section 139 interventions not yielding the desired result due to lack of sustainability and the inability to resolve perennial systemic challenges; Citizen engagement generally weak in municipalities categorized as dysfunctional and at those at risk, in terms of their reporting back to communities, complaints management systems and functionality of the ward committee’s; Inability to plan, procure, project - manage infrastructure delivery resulting in poor infrastructure grants spending, fraud and corruption, etc Poor budgeting for maintenance, refurbishment and replacement of aging infrastructure resulting in poor quality and breakdown of service; Whilst progress is being made in addressing government debt, municipalities are still owed huge amounts by governments, business and households; 18

  19. BACK TO BASICS NEXT PHASE 10 POINT PLAN 19

  20. POSITIVE COMMUNITY EXPERIENCES • Implementing a ward based service delivery dashboard; • Community feedback mechanism; (sms community feedback system) • Implementation of ward improvement plans that addresses basic services, e.g. cutting of grass, working street lights and robots, water leaks, etc.; • Improvement of complaints management systems and municipal frontline offices; • Use of Community Development Workers, Community Work Programme participants and Ward Committee members into the implementation of B2B programme 20

  21. MUNICIPALITIES CONSISTENTLY RECEIVING DISCLAIMER AUDIT OPINIONS • Prioritise and target municipalities receiving disclaimers for more than 3 years; • Analysis of the AG management letters and Post Audit Action Plans of municipalities; • Implementing hands on programme to reverse this trend with clear and achievable interventions based on issues consistently raised AG management letters; • Mobilise and work with critical stakeholders such as, AG, PT and SA Institute of Auditors, etc.; and • Minister and MEC’s engagement with these municipalities; 21

  22. REVENUE ENHANCEMENT PROGRAMME Consider a workable model for allocation and distribution of powers and functions, e.g. District performing both WSA and WSP functions against roles of Local municipalities; Consolidated Bill for municipal services rendered to residents; Issues of metering and credibility of data and bills; Address tariff setting challenges; Non-revenue electricity and water, e.g. System losses (e.g. leaking pipes, house connection leaks, storage overflow), Commercial losses (e.g. billing anomalies, metering errors, water theft, Electricity theft Address government debt, municipal debt, business and residents debt; and Other critical issues related to revenue generation by municipality. 22

  23. APPOINTMENT OF SENIOR MANAGERS IN MUNICIPALITIES Analysis of the current state of affairs, data on vacancies, number of senior managers compliant with minimum competency regulations, number of senior managers affected by the National Treasury CPMD competency requirements, number of senior managers contract coming to an end; Strong oversight over the pre – election and post - election phases as it relate to illegal cancellation of contracts and removal of senior managers and costs implications and court challenges on municipal budgets; Strategy for monitoring the post- election tasks, in relation to new appointments and meeting appropriate skills requirements; Issues circular/guidelines or notices to clarify contract appointments and which positions are permanent in senior management level; NT and COGTA to provide coherent set of regulations on minimum competency requirements; 23

  24. SERVICES AND INFRASTRUCTURE State of municipal technical capacity and capability, in terms of Technical Units organograms, alignment of structure with core function, existing capacity and vacancies; Analysis of the municipal absorption capacity and capability to manage infrastructure grants, e.g. whether all critical post are filled with appropriate expertise and critical functions such as BTO’s and SCM’s are in place; Increase access to quality, reliable and sustainable basic levels of service in 27 prioritised districts, through diagnostic analysis leading to support and intervention to address key challenges Put in place regional support contractors to assist municipalities to improve infrastructure delivery and operation Mobilise more funding for rehabilitation, refurbishment and replacement of ageing infrastructure, from government grants and loan funding Make municipal infrastructure procurement more efficient and effective through putting in place national framework contract 24

  25. IMPLEMENTATION OF FORENSIC REPORTS • State of forensic reports, (collation of the forensic investigation undertaken by Province and Municipalities); • Analysis of the reports; • Status of reports in Councils and consequence management and accountability; • Monitor municipal implementation plans; and • Role of MEC and other agencies in enforcing consequence management 25

  26. METROPOLITAN B2B PROGRAMME Priorities issues that have immediate impact on the citizens; Better understanding of the complexity of urban voter/variety of needs and interest to serve; Effective complaints management systems and improving frontline services; Enforcement mechanisms for service norms and standards, quicker response times and improve communication/feedback to citizens; Provision of interim services to informal settlements; Role of Metro in the declining economy – infrastructure investment that stimulate economy (These municipalities are key drivers of economic growth and economic activity. Metropolitan cities and large towns produce 80% of the country's GVA and are home to 69% of the population) Visible and impactful spatial transformation and integration initiatives 26

  27. STRENGHTHENING ROLES OF DISTRICT MUNICIPALITIES • Clarify allocation and distribution of powers and functions; • Regional integrated planning and delivery of services • District and local IGR coordination model • Shared service model and strong district support plans for weaker local municipalities 27

  28. SPATIAL REGIONAL INTEGRATION ZONES/SPATIAL CONTRACTS The development of a spatial development strategy for various localities and spaces (District, Locals, small vibrant towns, mining towns and possible new towns) The development of an infrastructure development/implementation plan to underpin the spatial development programme. The plan should outline the infrastructure requirements (catalytic regional and local infrastructure projects) in support of the proposed development and financial modelling; The development of more detailed spatial development strategies for individual municipalities/towns/growth points which nest with the district strategies; High-level designs/conceptual frameworks for the new cities/towns; and The development of programmes of action (and the projects associated with each) at both District and municipal level and the sequencing of actions (across all spheres) that need to give effect to the plan. 28

  29. STRENGTHEN CAPACITY AND ROLE OF PROVINCIAL COGTA DEPARTMENTS Clarify core functions and mandates/structure (constitutional and Legislative) Empowering provisions and levers Capacity and expertise required Operational and Funding model Municipal support plans 29

  30. IMPLEMENTATION PLAN 10 point plan adopted and approved by LG MINMEC; Provincial Cogta departments are currently incorporating 10 point plan into their APP; Provincial COGTA working with Municipalities are translating 10 point plan in actionable plan aligned to municipal plans; National Sector Department to work with Cogta to implement integrated plans that responds to priority municipal challenges; 10 point plan reflected the Outcome 9 and MTSF priorities; Clear targets, indicators and funding streams to be finalized in the Departments Annual Performance Plans; Institutional coordination mechanisms in place to ensure coherent implementation of the programme 30

  31. Thank you 31

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