FINANCE DIRECTORATE,
SHAREHOLDING MANAGEMENT DEPARTMENT
MUNICIPAL ENTITY
QUARTERLY NEWSLETTER
Analyst
Quarter 3 – 1 January to 31 March 2007, ISSUE NO. 04
As parent municipality to the municipal entities we aim to keep our municipal entity boards of
directors and staff abreast of all current news, legislation and policies directly affecting the
municipal entities. This will enable directors to be continuously informed as well as ensuring that
we meet the legislative requirement as parent municipality to ensure that both the municipality and
the municipal entity comply with the Municipal Systems Act, the Local Government: Municipal
Finance Management Act and any other applicable legislation.
Contents
The newsletter’s intend to convey information relating to the Local Government: Municipal Finance
Management Act, Local Government: Systems Act, Companies Act, Corporate Governance and any
information relevant to municipal entities.
THE LOCAL GOVERNMENT LEGISLATION:
THE MUNICIPAL FINANCE MANAGEMENT ACT:

Exemption from Supply Chain Regulations
National Treasury has issued a regulation exempting municipalities and municipal entities
from Regulation 44 of the Supply Chain Management Regulations. Regulation 44 prohibits
any award to persons in the service of the state or to company where a director or principal
shareholder is in the service of the state. However the exemption specifically states that a
municipal entity may not make an award to any of its own directors. In the First Quarter
Issue 2 Newsletter, it was stated that the exemption lapsed on 30 June 2007. The
exemption actually lapses on 30 June 2010.
The following is an extract from the National Treasury Web site:
http://www.treasury.gov.za/legislation/mfma/reg_gaz/Gazette%20No%2028411.aspx
“The Municipal Supply Chain Management regulations (gazette 27636 dated 30 May 2005)
prohibits municipalities and their entities from making an award to a person in the service of
the state. This prohibition extends to the members of a board of directors of any municipal
entity. The Minister of Finance has exempted municipalities and municipal entities from this
regulation in respect to non-executive members of boards of directors of municipal entities,
until 30 June 2010 unless repealed earlier (see gazette no 28411 below - 18 January 2006).
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The National Treasury has further condoned departure from regulation 44 prior to this
exemption coming into effect.
This exemption does not apply to the municipal entity on which the non-executive member
serves, which remains fully bound by regulation 44. The illustration below will assist with
this explanation.”

Supply Chain Management: Checking the prohibition status of
recommended tenderers
National Treasury has issued MFMA Circular no 46 which deals with the process of checking
the prohibition status (blacklisting) of recommended tenderers. By e-mailing a request to
restrictions@treasury.gov.za , National Treasury undertake to reply within a day as to the
status of any recommended tenderer.
The Circular may be viewed at
http://www.treasury.gov.za/legislation/mfma/circulars/MFMA%20Circular%20No%20
46%20%20Supply%20Chain%20Management%20Checking%20the%20prohibition%20status%20of%2
0recommended%20bidders.pdf

MFMA Learning
National Treasury has designed a free interactive learning programme to assist in raising
awareness and broadening knowledge of the MFMA. The learning programme is distributed
on DVD to be downloaded on to a computer. To find out
http://www.treasury.gov.za/legislation/mfma/default.aspx

more
log
on
to
Annual Report Approval
The Council of the City approved the 2006/2007 Annual Reports of both Convenco and the
Khayelitsha Community Trust “without reservation” at its meeting on 27 March 2008.
Thanks to all those involved in the process.
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General:
Ernst and Young Report: Top 10 Risks for Global Business

The new Ernst & Young report identifies the top 10 strategic risks for global business by
analyzing the top risks identified for some of the world's most important industry sectors. It
also highlights the five fastest-rising threats that could also have a significant impact over
the next three to five years.
The top ten risks identified in "Strategic Business Risk" are:
Regulatory and compliance risk
Global financial shocks
Aging consumers and workforce
The inability to capitalize on emerging markets
Industry consolidation/transition
Energy shocks
Execution of strategic transactions
Cost inflation
Radical greening
Consumer demand shifts
The full report can be viewed at
http://www.ey.com/global/content.nsf/South_Africa/Business_Risk_Services_-_Overview
Welcome
On behalf of the City, the Shareholding Management Department would like to welcome Rashid
Toefy and Samela Titus. Rashid is the new Chief Executive Officer of Convenco. Samela is the new
Finance Manager for KCT.
We look forward to working closely with you.
Please contact Louise Muller (021 400 3940) or Richard Wootton (021 400 2701) if you have any
queries in respect of this newsletter.
Although every effort is made to check the accuracy and quality of the information supplied, The
City cannot be held responsible for any errors that may arise.
Copyright(c) City of Cape Town 2007. All rights reserved. No part of this newsletter may be reproduced or transmitted in any form
without written permission from the City of Cape Town, Finance Directorate, Shareholding Management Department.
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