Select Committee on Finance National Treasury FMG/RG/MFMA 26 February 2007

1. Select Committee on Finance National Treasury FMG/RG/MFMA 26 February 2007

2. FMG Aim • Implement financial management reforms Conditions • Council commitment to MFMA reforms • Progress in multi-year budgeting, improving accounting & producing timely in-year reports; • The employment of an appropriately skilled CFO; • Capacity building - promotion of the internship programme in financial management; • Ongoing review and revision of implementation plans; and • Address weaknesses in financial management.

3. FMG - Implementation • Grant to assist municipalities in implementing financial management reforms and the MFMA • developing policies, • reviewing and improving processes and procedures, • improving consultation and information flows, • updating budgeting, monitoring, accounting, reporting systems, • paying costs of interns and support financial management training and capacity building • Second year of the phase-in of the MFMA to high and medium capacity municipalities

4. FMG- ReportingSept 06 to Feb 07

5. FMG – Spending Jan 07

6. FMG - Support/Monitoring/Actions • Letters, emails, faxes, telephone calls made to municipalities on a weekly basis, • Officials will follow up progress during municipal visits, • Transfers delayed during 2006, • Support and closer monitoring resulted in improvements - non compliance reduced from 28% in September 06 to 2% in February 07, • Letters advising of possible re-allocation sent to non-compliant muni’s, deadline 22 Feb 2007 – 6 responded, • Consider re-allocation of funds during March/July 2007, • Similar steps implemented during 2007 - consider re-allocation of funds for municipalities slow spending and funds not committed, • Close monitoring will continue during medium term

7. FMG - Transfers

8. FMG - Administration

9. Restructuring Grant Aim • Support large municipalities with restructuring initiatives Conditions • Municipality develop restructuring plans • Adopt resolution committing to implementing plans • Show progress in quarterly reports • Transfers will depend upon the progressive implementation and achievements of agreed milestones • Grant agreements continue until 2008 • Grant has been incorporated into the Equitable Share for local government in the outer year of the MTEF

10. RG - 2006/07

11. RG – Expenditure (Dec 06)

12. RG - Measures • Feedback on evaluation of performance - quarterly basis • Visits undertaken 2nd Quarter: • City of Tshwane; Mangaung and Emfuleni • Issues addressed: • Grant conditions and non compliance with reporting • Improvement in the submission, quality and content of reports • Low levels of expenditure • Confirmation of commitment • Notice with intention to withhold allocations • Continue to follow up outstanding matters • Varied degree of commitment and ownership • Changes in institutional landscape slows implementation

13. RG - eThekwini • Backlogs in free basic electricity, supply of water and sanitation show significant improvements, • Staff placement and redeployment process almost complete, • Stability in senior management promotes continuity, • Improving and high payment levels for services, • Unqualified audit reports for last few years, • Improved credit rating, • However, service delivery agreement with Eskom not yet signed.

14. RG - Cape Town • Obtained positive credit rating, • Improvements in oversight structure, • Unqualified audit report, • Steady achievement of financial ratios, • LED implementation underway, • Improved commitment to achieve RG conditions during last quarter, • Improvement in stability with appointment of CFO, • However, still experiencing some delays in finalisation of staff placements, • Spending on grant

15. RG - Tshwane • Positive credit rating, • AFS submitted to AG on time, • Implementation and integration of financial and reporting systems underway, • HR strategy – learnership & apprenticeship introduced, • Establishment of Eco Dev Agency, • Qualified Audit outcome, • Spending on capital, repairs and maintenance, • Institutional re-organisation and changes to senior management slowing implementation, • Council approval processes, • Low grant spending

16. RG - Emfuleni • Greater emphasis placed on addressing water and sanitation challenges, working with DWAF, • Raised awareness by investors on UDZ Tax Incentive, • Establishment of PMU to assist in MIG projects with almost all funds committed, • Quality of plans and budgets starting to improve, however, spending levels still low, • Reliance on consultants, • Appointment of MM and CFO should stabilise leadership, • Require more focus on balanced implementation of restructuring plan, • Need to improve revenue collections

17. RG - Buffalo City • Overall compliance with conditions, • Improvement in credit rating, • Implementation of Activity-Based Costing, • Stable institutional environment, • Improvement in service delivery levels, • Improvement in general valuations, • Adoption of single tax & tariff structure, • Improvement in revenue collection, • Qualified Audit

18. RG - NMBM • Poverty alleviation urban agriculture strategy, • Installation of Human Resource system, • Development of Property Valuation Project Plan, • Improvement in delivery of free basic service, • Submission of AFS on time, • Completion of development plans, • Qualified audit report, • Appointment of MM, • Partial compliance with financial conditions, • Slow expenditure on repairs and maintenance, • Spending on grant

19. RG - Mangaung • Payment of previous tranches delayed, • Fluidity in senior management structure, • Commitment to achieve grant conditions, • Qualified audit opinion, • Low revenue collections, • Lack of comprehensive and consistent reports, • Progress in achieving restructuring outcomes

20. MFMA Training • Promote broader knowledge of MFMA through guides, circulars and multi-media facilities, • Using modern technology and simple assessment methodology, • Certificate issued after completion of modules, • Additional free support for formal training, • Foundation being laid towards formal and regulated competency levels in financial management

21. MFMA - Benefits for learners & Progress • Contributes towards MFMA competencies • Contributes towards accredited courses • Forms part of a portfolio of evidence • Refresher for existing councillors & officials • Induction for new councillors & officials • Currently 3,220 persons registered • Approximately 200 completed all 6 modules

22. MFMA - Primary Audience • Municipal and municipal entity role players • Mayor & Councillors involved with finance • MM, CFO, All Senior Managers • All finance staff including interns • Corresponding roles in municipal entities • National & provincial officials supporting LG • Treasury departments • Local government departments • Other • SALGA (national and provincial) • Universities

28. MFMA – Training Register

30. MFMA • Regional workshops planned for March and April 07, • Raise awareness on competency levels and training opportunities, • Targeting universities, technikons, training providers, MM, CFO, Interns, other officials • A senior official must be appointed to act as Mentor/coach for the interns • A Personal Development Plan must be prepared for each intern on commencement of the internship • During the internship, a workplace rotation plan must be put in place to ensure that interns are exposed to all areas of Municipal Finance • Accredited Education and Training Providers must be used for the provision of the theoretical and practical components of the programme

31. MFMA – Internship programme

32. Thank You