Department of Cooperative Governance & MISA 2020/21 APP; with Deputy Ministers

Meeting report

The Chairperson noted an apology from Minister Nkosazana Dlamini-Zuma who was unable to attend the meeting as she was attending to regulations for Level 3 of the lockdown.

Mr G Michalakis (DA) questioned the absence of Minister Dlamini-Zuma and said that while he appreciated the presence of both Deputy Ministers, they were not part of the Cabinet or National Command Council. In the past year, the Minister had not appeared before the Committee apart from once apart from once in recent weeks which she had to leave early. He requested that the Minister meet with the Committee in the near future.

The Chairperson said the Minister had met with the Portfolio Committee last week and had made a presentation, but the Select Committee had been unable to join the meeting. The Minister was dealing with finalising Level 3 of the lockdown and he sympathised with her preoccupation and the work that she was doing. While the Deputy Ministers were not part of Cabinet, they understood the mandate and vision of the Department and were up to the challenge to deal with the matters at hand. The Minister would join a meeting with the Committee in future and she respected the work the Select Committee has been doing.

Deputy Minister overview
Deputy Minister Parks Tau stated that the Department of Cooperative Governance (DoCG) aimed to create an integrated cooperative governance system through the District Development Model (DDM). Two outcomes in the Strategic Plan focus particularly on the DDM. The first is effective and efficient governance of the implementation of the model. The second is efficient governmental relations through the model. The Department plays the pivotal role of pulling all of government together. The plan is about integrated government, service delivery and the enhancement of service delivery in municipalities and other areas of government. Long-term financial viability of local government is particularly important as over 100 municipalities were in financial distress before the current COVID-19 pandemic. The Department anticipates that more municipalities will get into distress through this crisis.

The Department is aiming for good municipal governance at a local government level in addition to improved disaster management mechanisms. Two national disasters have been declared in South Africa: the COVID-19 pandemic and prior to this the drought in the country was declared a national disaster. The Department is looking at improving disbursing funding to address these challenges. While the Department of Cooperative Governance has declared a disaster, it is the responsibility of other departments such as Water and Sanitation, Agriculture and others to carry out measures to address these disasters.

The Annual Performance Plan indicates a commitment to reviewing the way in which the Department manages disaster management in the country and improving its systems. Two items are critical in the plan: Improving the way in which the Department invests in infrastructure in municipalities with support through Municipal Infrastructure Support Agent (MISA). The Department is also looking at expanding the MISA mandate in the functions it performs to support infrastructure investment and development. In line with the new Urban Agenda of the United Nations, South Africa has developed a national urban policy agenda: the Integrated Urban Development Framework (IUDF).

Deputy Minister Tau noted that after the adopted budget has been amended to factor in COVID-19, it will be presented to Parliament and the Department will be able to indicate how it has impacted its Annual Performance Plan.

Department of Cooperative Governance (DoCG) Strategic Plan / APP & budget
DoCG Director General Avril Williamson said the presentation covers the DoCG Strategic Plan for 2020-2025, but it is focusing on 2020/21. The Department's work is centred on the 44 districts and 8 metros. The Department 2020/21 budget will be later revised once the Special Adjustment Budget for 2020/21 is presented in Parliament by the Finance Minister. The Committee will be briefed on the Department's work around COVID-19 and its contribution to the broader local government’s economic response. The Department is working on long-term sustainability for the sector in a post-COVID-19 economic strategy which is in line with the national strategy. The Department has also considered the implications of COVID-19 in its Strategic and Annual Performance Plans. The Department of Planning, Monitoring and Evaluation (DPME) has issued a communique in line with the 2020/21 adjusted process and departments will be expected to revise and re-table budgets for 2020/21 and 2020-2025. A formal communication will be made about the adjusted budgets.

Mr Seabelo Molefi, DoCG Executive Manager: Corporate Planning and Governance, said the Department has set three specific indicators to drive efficient and effective governance systems. One of the key projects is to ensure that in the next five years, the Department achieves an unqualified audit opinion as over the past three years it has received negative audit outcomes. The Department has developed projects to prevent irregular and fruitless and wasteful expenditure. The Regional and Urban Development and Legislative Support programme will be driving the District Development Model to ensure that the Department achieves Priority 5 of spatial integration, human settlements and local government. The Department has set the outcome of integrated service delivery to ensure that it establishes hubs under districts. Sections of the Intergovernmental Relations Act will be revised to enable intergovernmental coordination. All IDPs need to be aligned to the District plan.

To ensure that there is improved municipal financial viability, as a five-year outcome, DoCG has developed a financial viability tool that will be implemented by all municipalities on their financial status. The Department has considered items causing audit disclaimers for municipalities and other negative audit opinions. It has therefore set targets to deal with unfunded budgets by municipalities and reduction of the debtors book. DoCG has continued with its project to roll out the revenue management system across all municipalities.

The Municipal Structures Amendment Bill currently being considered by the National Council of Provinces will be finalised and the Department will facilitate the implementation of the Act. The key projects for the National Disaster Management system are a reduction in the turnaround time to manage disasters in prevention, responsiveness, recovery and rehabilitation. Another project will incorporate an impact-based early warning system and some other plans will be revised to ensure that DoCG responds accordingly based on the current COVID-19 pandemic.

In an effort to improve service delivery DoCG will be collaborating with the Municipal Infrastructure Support Agent (MISA) to ensure that there is proper monitoring and support before having Section 139 interventions. DoCG aims for the Intergovernmental, Monitoring, Support and Interventions (IMSI) Bill to be approved by Cabinet and the Act implemented by 2025. DoCG has received negative audit opinions and it aims for a clean audit. It discussed redesigning the Community Work Programme model to take into consideration all the challenges so that it can complements government's work of reducing unemployment and poverty. A new project will ensure 10 agrarian projects per district are established through the CWP. DoCG will form partnerships with private and government entities to drive the Community Work Programme.
It will revise the IUDF implementation plan and ensure that the Capital Expenditure Framework is rolled out. Key focus areas will include assessing compliance of senior managers and municipal councils. Smart Cities Framework will be developed and approved by the Minister this year.

MISA and Department of Trade and Industry are working together with provinces to ensure that it monitors and reports on the implementation of COVID-19 Disaster Management Regulations. DoCG senior officials are manning the National Disaster Centre on a daily basis and they provide reports to management and the Executive Authority. The strategic partners it is working with include Departments of Health, Transport, Water and Sanitation, Social Development and National Treasury as it practices its cooperative governance approach in tackling the COVID-19 pandemic. There are also private sector contributors to this work such as Telkom, Development Bank of Southern Africa (DBSA) as well as Department’s own interactive WhatsApp tool that manages the participation of individuals in how they report any complaints in local government.

Chief Financial Officer, Ms Dorothee Burger-Snyman, noted the total DOCG budget for 2020/21 will increase by 7.2% to R111 billion. There is a decrease under Programme 4 which deals with disaster relief funds and this is because DoCG has not received an allocation for the Disaster Recovery Grant as yet as this is only provided when the need arises. The baseline allocations for Compensation of Employees (COE) were further decreased over the MTEF period. There is a ceiling on this expenditure and the Department must manage the COE expenditure within the limits provided. Purchased services increased to R5 billion from R4 billion and the Community Work Project was the driver of this budget. Payment for capital assets increases over the three-year MTEF by 10.9%. The budget for transfers and subsidies increased from R91 billion to R106 billion. DoCG had its own budget vote in 2020/21 which was Vote 15. The operational budget of DoCG itself amounts to .73% of the total budget allocation.

Municipal Infrastructure Support Agent (MISA) Strategic Plan / APP & budget
Mr Ntandazo Vimba, MISA CEO, said MISA assists municipalities through several mechanisms that include the infrastructure delivery management system. The municipal grants will ensure that municipalities build and maintain infrastructure. MISA has joined COGTA to remodel the Municipal Infrastructure Grant.

The role of MISA in the District Development Model programme is to monitor coordination of the infrastructure. MISA also works with Department of Water and Sanitation and other departments. MISA has worked with other social partners to mobilise and respond to COVID-19 such as the IDC's Tirisano Construction Fund which has contributed R50 million toward water and sanitation interventions.

MISA aims to improve access to services in municipalities and create reliable municipal infrastructure. Mr Vimba outlined its Strategic Plan outcomes and outcome indicators:
• MISA would like to maintain its unqualified audit opinion with no material findings which it achieved in 2018/2019. MISA would like to reduce irregular, wasteful and fruitless expenditure and thus far we have achieved this.
• In water management, MISA would like to stabilise non-revenue water loss in municipalities. South Africa has a serious problem with non-revenue water across all municipalities and in the next five years this will be reduced in selected municipalities.
• MISA intends to address operational challenges where allocated expenditure is spent on repairs and maintenance. Municipalities are currently spending 0.8% on maintenance on average across municipalities, but required to spend at least 8% of its operational budget on this. This has manifested in a number of ways across the country where there is infrastructure, but no water due to a lack of maintenance.
• It will be focusing on economic transformation and job creation and its outcome is efficiency in infrastructure management. Municipalities spending their Municipal Infrastructure Grant (MIG) will be increased to 90% as currently only 66% are doing so.
• MISA has been given additional responsibilities which do not focus solely on infrastructure delivery and it is working with other stakeholders to assist municipalities in securing alternate sources of funding.
• It will support technical capacity through the employment of engineering and other programmes.
• In long-term municipal infrastructure investment MISA intends to support municipalities in all 44 districts and is working closely with the IUDF programme.
• The economic transformation and job creation priority will be implemented through the District Development Model.
• It will aid in equal access to social services and economic opportunities in rural areas.
• It will increase climate change mitigation and support 25 municipalities to access funding for this cause.
• It will support 44 districts to increase access to water and sanitation services and reduce waste disposal to landfill sites.

Its Annual Performance Plan 2020/21 intended outcomes are: improved governance, administrative support systems and ethical practices. The Annual Risk Management Plan, Annual Internal Audit Plan, ICT and operational plans must be implemented. Outcome indicators noted for 2020/21 were:
• enrol at least 100 youth in its apprenticeship program and 150 in the MISA young graduate program.
• award 75 bursaries to deserving youth with technical qualifications this financial year.
• placing 25 qualified artisans in positions
• MISA had trained a number of waste water controllers who would be placed soon in municipalities to address challenges of leaks and loss of non-revenue water.
• train 250 municipal officials in municipal structure management.
• Infrastructure Delivery Management Support Program will implement plans and framework contracts.

MISA 2020/21 budget allocation is R359 million and the bulk of this budget is spent on technical support programmes for engineering technical capacity. R94 million has been allocated to Administration. MISA may not achieve some of its indicators due to the COVID-19 pandemic. Therefore MISA has already begun the process to review its Strategic and Annual Performance Plans due to the impact of COVID-19.

Discussion
Mr A Gxoyiya (ANC) commented that COVID-19 has revealed a capacity for service delivery that we were unaware government had. Moving forward government should try to keep this momentum despite its limited resources. Committee members had jointly complained that the Minister has never appeared before it and the Committee wanted to interact with her in the next meeting. He said nothing had been done to change smaller municipalities using the Municipal Infrastructure Grant for other purposes such as paying salaries. The Committee needs to be informed on medium term expenditure framework (MTEF) goals and targets. Some small municipalities cannot afford to pay high salaries - what is being done to ensure that these municipalities attract better schemes. What will be done to support municipalities as some cannot account for billions of litres of water. Sometimes individuals with no training fill the position of director of infrastructure in municipalities. He asked what would be done about this.

Mr G Michalakis (DA) asked why DoCG has taken this long to draft a Bill to regulate Section 139 interventions. What is the time frame for presenting it to Parliament? In the absence of a Bill what is the Minister currently using as a guideline to assist in making decisions on Section 139 intervention requests. Does DoCG monitor processes where interventions have been approved. Why are there cases of municipalities that become worse after interventions? He did not find the MISA presentation helpful and requested more in-depth information on MISA’s plans in the coming week.

Ms M Mmola (ANC) said 250 Community Work Programme (CWP) participants were trained annually and asked when the last training had taken place. She asked if municipalities had implemented Integrated Development Plan (IDP) for the five-year term. She asked how DoCG would monitor the Municipal Infrastructure Grant. How is MISA assisting municipalities with the Municipal Infrastructure Grant.

Mr S Mfayela (IFP) said that there were 44 districts and 8 metros in South Africa. Municipalities have been using the IDP as a way for municipalities to identify relevant projects over five years. The District Development Model has been established in the same space. He asked if DoCG found it easier to work with the Development Model or the IDP.

Ms Z Ncitha (ANC) asked how DoCG will mitigate where municipalities are in distress. It should lead by example in its audit outcomes. She pointed out that there was a decrease in disaster management funding but we are facing COVID-19 and a drought. When is DoCG expecting Treasury to allocate funds?

Ms C Visser (DA) said many municipalities collapsed due to a lack of accountability. Plans cannot be implemented without accountability. She asked how DoCG would resurrect collapsed municipalities to ensure service delivery and job creation.

Mr I Sileku (DA) pointed out that there was a lot of political interference in the administration of local government. He asked what DoCG's role is and how they would assist municipalities to ensure local government is professionalised. He asked for clarity on the criteria used to select youth for job opportunities as politics comes into play. As a result some people who are deserving will not get this opportunity. From which provinces will the youth come for the internship? Is DoCG certain it will achieve its objectives for 2020/21?

Mr E Mthethwa (ANC) commented on projects left unfinished. He asked for a breakdown of which provinces MISA would be doing projects in and how it would be assisting municipalities.

Ms S Shaikh (ANC) asked which provinces are the most affected by the drought and what are the implications of the lockdown on the drought programme.

Mr C Dodovu (ANC) said the Department must lead by example and obtain an unqualified audit and it had not inspired any confidence prior to this on its audit. The presentation did not give a practical sense of how it would achieve a clean audit. Municipalities have collapsed and are under a Section 139 intervention and this would be compounded by COVID-19. MISA should support municipalities in infrastructure investment and development, but the MIG is in a crisis as the grant is not spent on what it is intended for. He asked about MISA's capacities – how many engineers does it have per province and how many have been deployed to assist in municipalities?

DoCG responses
Deputy Director-General: Local Government Support & Interventions Management, Mr Themba Fosi, replied that the Section 139 intervention is a constitutional provision and the Constitution requires that this legislation must be developed. In the absence of this legislation, the Department has done a number of things to guide provinces such as developing check lists which provide guidance on the triggers for intervention. The Bill is being considered by Cabinet at the moment and DoCG is awaiting approval for it to be sent to Parliament. He admitted that DoCG has experienced challenges with the way the Section 139 intervention had been applied across provinces. DoCG has also sent its own teams to assist in the interventions.

On the abuse of the MIG, there are provisions for using it for other reasons or for operational costs. MISA has done a lot of work to assist municipalities in technical expertise, planning, designing and actual delivery of infrastructure. On the District Development Model, he said there is an intergovernmental mechanism which will ensure that DoCG addresses silo fragmentation. The plan that DoCG currently has will not be replacing IDPs in municipalities. The District Development Model will provide for all levels of government and include IPDs. The IDP should be informative as it expresses the needs of municipality. The District Development Model is the game changer and will ensure that there is one integrated and coherent plan. He gave as an example the entire COVID-19 response plan which is informed by health interventions such as looking at the spread of the virus and the health system readiness. To support municipalities in a sustainable way beyond COVID-19, following the submission of their Annual Performance Plans, DoCG will know how municipalities will be assisted. Measures have been put in place in terms of capacity, shared services will be deployed to municipalities to drive programs and establish hubs. Expertise will be deployed at a district level to ensure that all of governments plans are integrated and coherent in its response to the developmental challenges in those areas. There are regulations to ensure that we deploy competent officials to assist.

Ms Burger-Snyman replied about the Disaster Relief budget that the Disaster Recovery Grant has not been allocated as it is normally for specific purposes. Since the Disaster Management Centre worked with the municipalities and provinces, it would be able to identify certain areas where interventions are required.

MISA responses
Mr Vimba replied that MISA had a list of municipalities that require support and this has been adopted in the APP. Further details will be shared with the Committee tomorrow. MISA has deployed a number of professionals and sector specialists through a District Delivery Model which it has been implementing. Due to the challenges in municipalities, MISA could not reach every municipality and has organised itself in a district format. There are 16 multi-disciplinary teams currently deployed in all provinces to support municipalities. In 2017/18 MISA supported 45 municipalities classified as dysfunctional and out of the 45, 42 municipalities improved dramatically to a point that it was not affected by the stopping and reallocation of its grants. In 2019/20, MISA has stretched its resources given the magnitude of the challenges in the 87 municipalities that MISA supports. Those municipalities have also improved. The effectiveness of MISA’s support depends entirely on the effectiveness of other support programmes for municipalities to address governance and financial management challenges. Municipalities with governance challenges undermine the work done by engineers in its municipality.

To assist municipalities on improved spending, MISA has a number of initiatives such as supporting municipalities on infrastructure. There have been many delays in infrastructure delivery and MISA is supporting infrastructure procurement and has set up a number of framework contracts to avoid delays in procurement. MISA has supported municipalities in using the Infrastructure Development Management System (IDMS) which was developed by National Treasury. MISA has assisted in developing internal capacity, planning, monitoring and contract management.

MISA recruits young people by advertising in national and local newspapers and notices are placed in municipalities so that interested parties can apply. On projects left unfinished, MISA will follow up to ascertain why projects were left unfinished. The MISA written report on the breakdown of its support per province and municipality is available and it will be provided to the Committee. The Department is dealing with municipalities that have been using the MIG for other purposes.

Mr Sam Ngobeni, MISA Chief Director: Technical Skills, replied that the focus is on the entire value chain which means that MISA supports municipalities entirely and will provide mentorship programmes to employees. He highlighted that host municipalities are involved in the recruitment process for the youth.

Deputy Minister Tau emphasised that the support provided to municipalities need to be used with the District Development Model being a primary mechanism for ensuring that government undertakes its constitutional obligations in terms of Section 154 of the constitution which requires that support is provided to local government. Deputy Minister Tau reiterated what had been presented to the Committee and said he acknowledged that the support offered to municipalities did not solve all its issues. in relation to the impact of COVID-19 on municipalities, there are a number of initiatives that DoCG is undertaking. Through the Municipal Relief Grant, it is providing resources to municipalities to mitigate the impact of the virus. The Disaster Relief Grant is a limited resource base and said DoCG was considering other additional interventions as well as repurposing and restructuring the MIG, the Urban Settlements Development Grant in the metropolitan municipalities and other grants. As announced by President Cyril Ramaphosa, there is a special indication of the stimulus package of R20 billion which will be allocated to local government.

Mr K Motsamai (EFF) had technical difficulties and was disconnected from the meeting but had forwarded written questions. He asked how the Department would assist a municipality in the Section 139 intervention and what is its plan on investigations in municipalities.

The Chairperson asked that the Department respond to Mr Motsamai’s questions in writing.

Meeting adjourned.