Evolution of SALGA and Sustainable Service Provision in Local Government

1. Portfolio Committee: CoGTA • 8 March 2016 SALGA APP FOR 2016-17 (Incl. Progress Report, Strategic Priorities and Budget) Cllr Thabo Manyoni National Chairperson

2. Scope and Outline • Evolution of SALGA and current status • Evolution, mandate and current strategy • 20 years of supporting LG (successes in implementing mandate and strategic priorities) • 15 years of democratic LG – trends and analysis • Key highlights over the last 12 months (since last meeting) • Readiness to guide and manage the transition (for SALGA and sector) • Current challenges and imperatives informing the APP (incl. B2B 10 point plan) • 2016-17 flagship priorities and major events • Key indicators for the 2016-17 APP • MTREF Budget for 2016-17 to 2018-19 • Financials, revenue and expenditure • Operational sustainability, savings and cost containment measures

3. 1. Evolution of SALGA and sector • Successes in implementing our mandate and strategic priorities • 15 years of democratic local government – analysis and trends • Key highlights over the last 12 months (since last meeting)

4. Evolution of SALGA to its current state • This year (2016) marks 20 years since SALGA was formally established by municipalities • Members then mandated the organisation to: • Represent, promote and protect the interests of LG in our cooperative governance and IGR system (reason for existence) • Assist in the transformation of LG, particularly in establishing the structures, systems, policies and procedures for effective, accountable & people centered LG • Assist the sector to entrench a developmental culture, focused not merely on service delivery but on transformation of spaces and places • Knowledge sharing, peer learning and innovation in the quest to do things ‘differently’ • White Paper advocated need to find innovative ways to be developmental, and charged SALGA to play a key role

5. THEREFORE WE SHAPED OUR ROLE TO SALGA Mandate

6. 15 Years of Democratic & Developmental LG

7. Wall-to-Wall Municipalities 1999 to 2000

8. 15 Years of Democratic & Developmental LG • There could be no doubt about the enormity of our LG’s twin challenge: • Service delivery and extend basic services to as many (if not yet all) South Africans as possible to restore decency and dignity • Transformation - spatial legacy of apartheid and build integrated human settlements and social cohesion through greater integration of spaces into liveable places • LG has had a profound impact on the lives of ordinary South Africans in expanding the provision of services to so many more millions of people • Clearly, the official and disaggregated statistics show that tremendous progress has been made particularly in historically neglected areas like former homelands • Eastern Cape, Limpopo, KZN, Free State and Mpumalanga), despite continually chasing a moving target due to our population growth and in-migration • Substantial progress has been made in developing communities…

9. Local Government has made a huge contribution to ensuring delivery of basic services to the poorest of the poor & to improved dignity & quality of life. Concerns however remain in certain services in certain geographic areas Ensuring Sustainable Service Provision to Communities

10. Service Delivery Trends • Macro trends in the provision of water, electricity for lighting, sanitation and refuse removal (using 2011 as a baseline against present performance) • By 2013 we had significantly improved the lives of our people to the extent that, of the total of 15.2m households at the time: • 11.7million households received basic water services (85%) • Of which 5,2m received free basic water services (just under 45%) • Just under 10m households received electricity services from municipalities in 2013, with total household coverage at 84% • Free basic electricity was provided to over 2,5m households (25%) • Just under 10m households received sewerage and sanitation services (63%) • Of which 3,1m received free allocations (31%) • Just over 8,4m households received solid waste management services (60%) • Of which 2,5m received free allocations (just under 30%) • Provision of water has increased nationally from 84% in 2002 to 90% in 2014 • Provision of electricity for lighting purposes, the national average increased from 58,2% in 1996 to 84,7% in 2011 to 89.4%in 2014 • In the 3 years of 2011 to 2014, electricity reached 5.3% more of the total population

11. Institutional resilience has been strengthened during this term • Importantly, re the development of LG institutions and their institutional resilience • Financial reports and trends over the last 10 years demonstrate growing capacity and capability of municipalities to spend their capital and operational budgets • averaging around 90% for local and secondary cities as well as metros Establishment of • Municipal Public Accounts Committees • Audit committees • Internal audit units • These structures are now established and are growing in functionality • Focus for next period is supporting them to strengthen functionality

12. Expenditure Trends The recent spate of quarterly MFMA section 71 review reports paint a picture of positive trends showing progress in key areas • On financial management, the quarterly MFMA section 71 review reports paint a picture of some positive trends showing progress in key areas (at end June 2015) – • Against the perception that municipalities do not spend what they get, total expenditure was R305.8 billion (88%) of the total adjusted budget of R347,3 billion • Aggregate billing and other revenue stood at 93.2% (R319 billion) on average of the total revenue budget • Municipalities expenditure on capital budgets stood at R53,2 billion or 81% • Aggregate expenditure on conditional grants was 91.9 % of the R25.5 billion direct allocations to municipalities • When billed revenue is measured against adjustment budgets, the performance of metros shows surpluses across three of the four core services (however, doesn’t take into account actual collection rates) • Actual collection rate was 90% among metros • Metro expenditure amounted to 92.8% and secondary cities at 86.6% • As at 30 Sept 2015, total investments by muns amounted to R27.1 billion

13. Improvement in overall audit outcomes: 2007 – 2013 2013-14 MFMA Unqualified with no findings Unqualified with findings Qualified with findings Adverse with findings Disclaimed with findings Audits outstanding 335 auditees 333 auditees 330 auditees 327 auditees 321 auditees 338 auditees

14. Audit Outcomes 07 – 14: Key Trends • Improvements in all categories of audit opinions & over the 6 year timeframe reflects a positive trend • Unqualified opinion with no other matters (“clean audit opinions”) from 30 to 58 • Reduction in adverse, disclaimers and audits not finalized reflects that the trend is positive • Adequate consequence management in 50% of auditees which reflects a significant improvement compared to the prior financial year where this was at 29% = clear indication that accountability is improving within LG • While the situation must improve further, the AG report confirms this general trend of positivity in all the three critical areas, namely – • improved financial management and accountability practices; • improvements in complying with legislation; and • improvements in meeting performance targets • Thus, the number of municipalities obtaining good audit outcomes also steadily increasing and those with qualified audit outcomes decreasing…

15. Audit Areas of Concern • AG report trends have also noted areas of regression in: • Supply chain management practices; Financial health of municipalities; increased unauthorized expenditure • Among those with poor audit outcomes are key problem areas affecting their ability to collect revenue (AG cites slow response to address internal controls as key issue) • ICT Governance (systems) and Controls • Proper record keeping • Regular and accurate reporting

16. All 4 pillars in a municipality need to be strong and functioning effectively in order for a municipality to obtain and sustain unqualified audits and good service delivery • SALGA is confident that the MASP (based on these 4 Pillars of Support) cover the risk areas and root causes identified by the AGSA as well as the three aspects audited SALGA introduces Municipal Audit Support Programme (MASP) in 2014 Institutional Capacity Financial Management Leadership Governance

17. Latest Audit Outcomes 2014-15

18. Latest Audit Outcomes 2014-15 % improvement

19. 2014-15 Audit Outcome Highlights • Overall improvement in audit outcomes across all provinces except Limpopo • Free State Province registering it’s first unqualified audit with no findings • Unqualified with no findings: 32% improvement nationally • Approximately 46% of local municipalities moved out of red zone • SALGA provided direct support to 8 of the municipalities that moved out of red zone • 43% reduction in disclaimers nationally • Previous perennial disclaimers reduced by 54% • Red zone reduced to 40 municipalities, of which 14 are perennial disclaimers

20. SALGA contribution to audit outcomes

21. SALGA MASP Highlights • Research which provided baseline • Collaboration with AG, National Archives, SITA, DCoG on facilitation of provincial records management seminars • Bi-weekly video conferencing with provincial colleagues on implementation progress and challenges • Consolidated quarterly reporting framework initiated • Training for cllrs in Gauteng on interpretation of AFS (to be rolled out to all cllrs post elections) • E-Support Portal initiated for CFO during audit (to be rolled out to all pillars)

22. Cllr Induction Programme since 2011

23. Senior Managers Training Support ______________________________________________________________________

24. Analysis of Overall Trends • These positive service delivery, spending and capacitation trends could only point towards an increasing capacity of municipalities to plan and execute their programs • StatsSA data confirms the pace of delivery continues despite chasing a moving target to constant population growth and migration • Ability to accurately report on budgets and financial statements, and improved audit outcomes (including performance measurement) • compared to a decade ago, shows a maturing sector rapidly developing the capability to take on more responsibility in accelerating social transformation interventions on basic services and integrating settlements • Impact of SALGA’s work starting to yield increasing dividends, contrary to the doom and gloom picture

25. Key highlights of SALGA support over last 12 months (since last meeting commitments)

26. Highlights over last 12 months (since last meeting) SALGA made numerous policy and legislative submissions on new policies and amendments of legislation by Parliament • SALGA made several submissions on Draft White Paper on Safety and Security; the Draft White Paper on the Police as well as the Disaster Management Amendment Bill (now Act) • SALGA advocated for the funding of municipalities on the provision of safety and crime prevention programmes in communities as well as disaster management; and the proposed amalgamation of the Metropolitan Police into the SAPS (‘single police service’ concept by national govt) • SALGA lobbied the National Department of Human Settlements on changes/inputs to Revised Strategy for Accreditation and supporting the next wave of municipalities applying for accreditation, to prepare their applications and build their capacity • SALGA as part of the grant review working group team and steering committee member has substantially affected the LG infrastructure grant review to primarily focus on the implementation of the NDP and Integrated Urban Development Framework (IUDF) • SALGA made several submissions to Winter Budget Forum (June) and Budget Forum (October) on legislative and fiscal policy issues affecting the sector, including LG fiscal sustainability, debt owed to and by muns, as well as demarcation and transitional support)

27. Highlights over last 12 months (since last meeting) A number of major milestones and groundbreaking events were hosted • A collective bargaining agreement was concluded with the relevant parties and significant progress on working towards a service charter agreed upon • The agreement covers 270 000 employees in 278 municipalities, for period 2015-2018 • The inaugural SALGA-SASCOC Conference was successfully held on 10-11 July 2015 (Mangaung) to clarify roles & responsibilities and forge common programmes on S&R • The 4th SALGA Women’s Commission National Lekgotla was convened with the main objectives of the Lekgotla was to revive the 50/50 campaign • The programme involved engaging on the current male and female imbalances ahead of the upcoming 2016 Local Government Elections • SALGA successfully co-hosted (with Jhb, CoGTA and SACN) the 2015 AfriCities Summit in Sandton, Johannesburg, from 29 Nov to 3 December 2015, showcasing SA LG to the world and building strategic partnerships for implementing Agenda 2063: The Africa we Want and the global SDGs • SALGA’s position successfully incorporated into the UN Habitat III Africa Position to shape the new global urban agenda • 2015 LG Week (in partnership with NCOP) was held under the theme ‘’Celebrating 15 years of democratic and transformative LG - entrenching cooperative govt for people centered dev”

28. Highlights over last 12 months (since last meeting) • SALGA organised provincial dialogues on Anti-fraud and Anti-corruption and held a national roundtable on Responsive and Responsible LG in collaboration with the GGLN • The inaugural SALGA Small Towns Conference (#SmallTownmustRise) was successfully hosted on 22 and 23 October 2015 in Mangaung, to create a platform for key stakeholders to shape the agenda of revitalising small towns as well as share lessons and good practice in STR • SALGA is now rolling out the STR programme by focusing on 4 key areas, chief among which is to assist municipalities to mainstream regeneration in their IDPs and ensure that key stakeholders across small towns typologies play a meaningful role in the revitalization • A total of 18 pilot towns for the roll out of the Small Town Regeneration (STR) programme were identified and a standard baseline report for STR inception was developed • Assessment of the “state of economy” of each town was conducted & baseline report developed • SALGA continues to provide dedicated support to muns with adverse audit outcomes in the current year • Support provided so far ranges from risk management, internal audit matters, financial management, governance and ICT control • Hands on support continues to be provided to municipalities on HR, labour relations and performance related issues 

29. 2. Guiding and Managing the Transition • Current challenges informing our APP (incl. B2B 10 point plan) • Readiness for the transition (SALGA support) • SALGA major events and strategic ‘flagship’ priorities for 2016/17 • Profiling LG • Key targets for the 16/17 year per strategic (apex) cluster

30. Current challenges and imperatives informing our APP Current macro-economic constraints bears relevance to LG and informs our APP response: Rising unemployment and increasing indebtness of citizens (middle class and poor) • Growing consumer indebtedness and ability to pay for services • Growing indigency / Free Basic Services Bill (declining household income) • Studies = 58% of people living within municipalities are unable to pay for rates or services • General increases in provision at micro-level have increased against a backdrop of declining revenues derived • For eg, from 2005 to 2014, the national percentage of people paying for water has declined from 61.9% to 43,7% 9 (decreasing revenue base) • Ballooning outstanding debt (govt, business and residents), nowover R115 billion(historic debt accumulated - gross debtors, interest growth) • These amounts include debts older than 90 days and most of it is not realistically collectable • Realistically collectable amount is estimated around R26 billion (National Treasury) • Metros are owed R63.1 billion (2007 = R23 billion) & secondary cities over R22.9 billion (mostly household debt) • Jhb = R21.1 billion ; Ekurhuleni – R13.4 billion • Tshwane – R7.2 billion ; Cape Town R6.5 billion

31. Current challenges and imperatives informing our APP • Less people are paying more for services; but expectation that services will be provided by LG is increasing • This has huge implications on under funding and cost of services… • Municipalities that are considered technically bankrupt = 6 / insolvent = 83 based on 13/14 audited figures / 29 red zone insolventmuns • Positive trends highlighted earlier signify both progress as well as the current economic climate and consequent threats to erosion of some of the gains we have registered… Other challenges • Economic decline and fiscal constraints; • Mining and manufacturing slowing down rapidly resulting in large scale closure of business in many towns – (hence our #SmallTownsMustRise campaign) • Climate change – drought, heat waves and shortages of water • Energy pressures and bulk water provision demands • Of course municipalities, whether or not responsible, are at the coalface and receiving end of citizens’ experience of the these realities

32. A municipal view of Community Protests

33. Municipalities believe Community Protests can be reduced

34. B2B – Residual Challenges

35. B2B 10 point plan informing our APP • Build positive community experiences • Prioritise and target municipalities receiving disclaimers for more than 3 yrs • Prioritise and target municipalities receiving disclaimers for more than 3 years • Hands on programme to reverse this trend • Revenue enhancement programme • Metering and credibility of data and bills • Address tariff setting challenges • Appointment of senior managers in municipalities • Monitor post- election new appointments & meeting appropriate skills rqmts • Affordable organogram aligned to core business • Basic and technical services and infrastructure • 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 a national framework contract

36. B2B 10 point plan informing our APP • Implementation of forensic reports • Monitor implementation of consequence management and accountability • Metropolitan programme • Provision of interim services to informal settlements • Infrastructure investment that stimulate economy • These cities are key drivers of economic growth – metros and large towns produce 80% of the country's GVA and are home to 69% of the population • Strengthening role of district municipalities • Clarify allocation and distribution of powers and functions • Shared service model and support plans for weaker local municipalities • Spatial regional integration (Zones and Spatial Contracts) • Develop spatial strategy for various localities and spaces (District, Locals, small vibrant towns, mining towns and possible new towns) • Develop infrastructure implementation plan (of catalytic projects)

37. Our 16-17 APP therefore responds in large part to these pressing challenges

38. Readiness for transition • 2016 LG elections will take place between May 2016 and August 2016 • Final date not as yet determined • In order to ensure a smooth transition, SALGA will provide substantial support to municipalities before, during and after the election • SALGA Framework for the Transition was adopted by the SALGA NEC in November 2015, and is currently being implemented • Following key support components: • Support to municipalities undergoing transition (restructuring of municipalities due to the boundary re-determination) • All 8 prov govts with municipalities involved in major restructuring have constituted Change Management Committees & DCOG has a Municipal Demarcation Technical Committee consisting of DCOG, SALGA, prov govts, MDB, IEC & other role players  • SALGA participates in the Change Management Committees in all 8 provinces • Critical aspect is the placement agreement and guidelines to move employees from the municipalities to be disestablished into the newly established municipalities – a draft placement agreement has been developed

39. Readiness for transition • Governance stability – rules of order • Development of guidelines/circular on • Appointment and terms of reference for MEOs (draft available and needs to be updated) • Continued meetings of Mayco, Exco, Council during period (first draft done) • Funding of municipal activities related to elections (draft available to be updated) • Preparation of Mayco/Exco report on most strategic issues on horizon • Protocol related to overall administration of municipalities during transition • Extent of delegation of powers to heads of administration during transition • Role of MM during transition (draft available) • Development of “Day 1” guidelines/circulars • Councillor support and benefits to incoming and outgoing councillors (will depend on the benefits, but draft document available) • Convening of Mayoral/Executive Lekgotla for briefing on electoral priorities, state of municipality • The said documents will be ready by the end of March 2016 • Councillor induction programme (immediately after elections) • Social protection and empowerment plan cllrs • Skills development training • Once off gratuity • Financial management • Entrepreneurship development

40. Readiness for transition • Cllr induction programme (immediately after elections) • Draw in various subject matter experts to strengthen SALGA’s team to undertake; Content Review, Design, dev & delivery methodology, facilitator recruitment and development • Facilitator recruitment and development, curriculum development for the train the trainer course and drawing up a project plan to carry out these two phases • Training delivery enhanced through an online system that will be enable cllrs to register and complete an online skills profile for the purposes of identifying training needs • Online training delivery methodology for re-elected cllrs to offer them a refresher induction, whilst a face to face training delivery methodology will be retained for new cllrs • All these will be delivered by SALGA Centre for Leadership and Governance (SCLG) • The CIP 2016 modules will be accredited by LGSETA • The credits will lead to a full qualification • LGSETA accredited facilitators will be used and non returning councillors as support • Cllrs will receive statements of results (SORs) upon successful completion of programme • Social protection and empowerment plan cllrs • Skills development training • Once off gratuity • Financial management • Entrepreneurship development

41. SCLG Key Pillars

42. Articulation of CIP 2016 Programmes to Full Qualifications National Certificate: Local Government Councillor Practices NQF Level 3 (SAQA ID 58578) National Certificate: Municipal Governance NQF LEVEL 5 (SAQA ID 67467)

43. Programme breakdown The programme below is based on the CIP to be 10 days in duration. These topics are not exhaustive but give high level overview.

44. Readiness for transition • Social protection and empowerment plan cllrs, entailing • Skills development training • Once off gratuity payment to non returning councillors • COGTA and SALGA are working out proposals on this • Financial management • The Social Plan for Councillors is currently being developed • In the interim, the Financial Management Training for Councillors has started • Entrepreneurship development

45. Key Milestones for 2016 / 17 • Municipal Managers Forum (April) • Key transitional matters (systems amendment act implications) • NMA (18-20 May, Nelson Mandela Bay) • Managing the Transition and ushering in 4th democratic term of LG • 2016 Local Government Elections (May – August) • Transition in councils (257 municipalities – 205 locals, 44 districts and 8 metros; 4392 wards) • SALGA Induction Programme (new cllrs post elections) • Provincial Conferences (Sept – Oct) • New provincial leadership for SALGA • National Conference (22-25 November 2015, Msunduzi) • 20 Years of Inspiring Service Delivery • New NEC • Strategic Plan 2017 -22 adopted

46. Key Projects / Strategic Priorities for 2016/17 • Roll out of the Municipal Audit Support Programme • Roll out of SALGA Centre for Leadership & Governance programmes (covered above in highlights and transition slides) • Lobby for review of legislation to strengthen LG’s role in integrated planning, economic development and spatial transformation • Roll out of Strategic Profiling of LG (next slide) • Launch of SALGA knowledge / innovation products and services • Sustainable urban development programme is implemented • Guide and manage the transition in LG & SALGA (covered in prior slides)

47. Strategic Profiling of Local Government • Roll out of the profiling campaign takes place against the backdrop of the LG elections, the milestone of 15 years of democratic and developmental LG and 20 years of the Constitution and chapter 7 establishing and entrenching our local government system • These milestones in the LG calendar provide a good opportunity for SALGA to promote the achievements and successes since the establishment of the democratic and developmental LG, particularly in the face of negative narrative sustained against municipalities • Strategy is also a means to educate / inform South Africans on the functions of municipalities and the success stories which have not been told about how municipalities affect their lives

48. SALGA APP (Other key indicators for 2016/17)

49. 2016/17 Apex Priority 1: Legislative and Policy Review Purpose: • To decisively address, through appropriate policy and legislation, the deficit in public confidence in LGby consolidating decentralisation, strengthening LG and placing it at the forefront of leading spatial transformation and economic development Expected Outcome By end 2016/17: • Policy and Legislation that was targeted, reviewed and influenced by SALGA was supported by key stakeholders and adopted by Cabinet and/ or Parliament respectively Expected Impact By end of 2016/17: • Functioning of municipalities improved by revised or new policy / legislative frameworks that were influenced by SALGA & has resulted in spatial transformation, improved and sustained service delivery + accountability by municipalities & key role players in municipal space • Over- and inappropriate regulation is reduced, bottlenecks in the current legislative dispensation are unblocked to stabilise the sector & institutional consolidation is achieved

50. Key Indicators - Apex 1 • Electricity reticulation is delivered in accordance with the Constitution and LG legislative framework (currently not the case due to Eskom special regime) • Stronger role for LG in driving integrated & sustainable (urban) settlements, in line w NDP • Linked to B2B point # 7 3.Conduct municipal audit on accessibility of community facilities & provision of services • Linked to B2B point # 1 4. Lobby for the review of all development planning legislation and frameworks in order to ensure consistency with the provision of the SPLUMA & devolution of key functions to municipalities 5. Structured engagement with National and Provincial Legislatures and the Executive in respect of policy and legislation negatively impacting on LG (led by Parliamentary Review Committee)