ANNUAL REPORT 2010/2011
MUNICIPAL DEMARCATION BOARD
PRESENTATION TO THE PORTFOLIO COMMITTEE ON
COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS
18 October 2011
REPRESENTATION TEAM
Mr LJ Mahlangu
Chairperson: Municipal Demarcation Board
Ms N Gwayi
Deputy Chairperson: Municipal Demarcation Board
Mr SM Radebe
Chairperson: Audit & Risk Committee
Mr RH Monare
CEO: Municipal Demarcation Board
Ms MI Mathatho
Chief Financial Officer
Ms MP Leburu
Senior Finance Officer
1
OUTLINE
Last Briefing: 24 May 2011
 Outputs and Developments 2010/11
 Strategic Direction
 Progress to date on current strategy
 Financial Results 2010/11
 Receipts for the year ending 31 March 2011
 Expenditure for the year ending 31 March 2011
 Report of the Auditor General
 Medium term expenditure framework (MTEF 2011 – 2014)
 Conclusion
Additional Slides:
 Research Study on Criteria for Determining Municipal Boundaries and
Categorisation of Metropolitan Boundaries
 Research Study on Sizes of Municipalities in South Africa

2
LAST BRIEFING: 24 MAY 2011


Briefed the Portfolio Committee on:

MDB Performance in 2010/11 (Unaudited at the time);

Strategic Plan 2011/12 – 2014/15;

Proposed Developments going forward;

Financial Results 2010/11 (Unaudited at the time);

Medium Term Expenditure Framework 2011/12 – 2013/14
We advised the Portfolio Committee that:

The ward delimitation process was successfully completed for the 18 May
2011 local elections, despite having started well after schedule by four
months.

The Board was now set to commence with a process of reconfiguring and
aligning outer municipal boundaries.

Bids had been called for a service provider to develop a new model on the
assessment of the capacity of Municipalities.
3
LAST BRIEFING: 24 MAY 2011



The Board adopted to a new way of carrying out its mandate, in a number
of core areas of the Board’s work.
Research has been done on key subjects:
 Review of the Capacity Assessment Model;
 Sizes of Municipalities
 Criteria for Demarcation of Municipal Boundaries.
Current system and processes for ward delimitation is time consuming and
costly, and needs to be reviewed.
4
OUTPUTS AND DEVELOPMENTS 2010/11

During the period under review, a number of key outputs and developments
were realised:
a. Facilitate accountable local government and contribute to free and fair
local elections and promote democracy:
 During this period focus was on the delimitation of electoral wards within
local and metropolitan municipalities, in preparation for the 2011 local
government elections;
 The process on 15 July 2009 when the National Minister of CoGTA
published the formula for the number of councillors, based on the 2009
national common voters roll as divided into municipal segments.
 To improve on past ward delimitation processes, especially with respect
to consultation with stakeholders:
 Time was set aside to allow municipalities to consult widely with
communities in their areas;
 A very localised process called for by the Board;
5
OUTPUTS AND DEVELOPMENTS 2010/11
The primary aim of allowing time for wide consultation, was to facilitate a
process whereby the final wards would be a product of community
consensus.
Provision was also made for cases where consensus could not be reached in a
municipality, during the consultation process;
Provincial Departments of Local Government, as well as SALGA and CDWs,
were requested to assist communities in their preparation of submissions to the
Board;
The Board also made its own human resources available to all communities for
assistance;
Some 50% of municipalities were able to reach consensus with communities
and other stakeholders, while others could not reach consensus, or submitted
alternative ward configurations which did not comply with legislative provisions;





6
OUTPUTS AND DEVELOPMENTS 2010/11



Ward delimitation process was finalised in August 2010, and the final wards
were officially handed over to the IEC on 1 September 2011.
Preparations for the next round of municipal boundary redeterminations began
soon after the handover.
The Board faced a number of court challenges during the period under review.
7
OUTPUTS AND DEVELOPMENTS 2010/11
b.
Assessment of Municipal Capacity
c.
Assessment of Municipal Capacity did not take place in 2010/11 (as
well as in 2009/10).

The existing model of capacity assessment that had been used since
2001 was still being reviewed.

The Board resolved to devote time and resources to the ward
delimitation process.
Ensuring that the Board is supported by an effective and efficient
organisational structure

Building and enhancing capacity of the Board’s internal machinery was
a major priority during the period under review.

The Board appointed an Organisational Design (OD) specialist to carry
out an investigation into the Board’s organisational structure, as well as
significant restructuring of the organisation’s establishment.

8
OUTPUTS AND DEVELOPMENTS 2010/11
c.
Ensuring that the Board is supported by an effective and efficient
organisational structure (Cont.)



The service provider’s brief was to investigate and to write a report with
recommendations, on ways of improving the effectiveness of the Municipal
Demarcation Board and its members, particularly staff members, by means
of systematically planned interventions.
The service provider has since delivered on the brief, and the Board has
resolved to bring about far-reaching changes in levels of some positions in
the Board’s organisational structure.
Also to significantly restructure of the organisation’s establishment – this in
order to have things done differently, in a number of core areas of the
Board’s work.
9
OUTPUTS AND DEVELOPMENTS 2010
d.
e.
Ensuring Good Governance

Continued to endeavour to ensure that good governance arrangements
are in place throughout the organization.

The Audit and Risk Committee was fully operation during the period
under review, to oversee and ensure the effectiveness of the systems
of controls.

There was also an effective internal audit function in place. The function
is outsourced.

At the end of the period under review, the Board was monitoring action
by management to attend to issues of concern raised in the IT
Governance Audit, including a complete revamp of the Board’s website.
Ensuring Sound Financial Management

During the period under review we were able to maintain:

Effective management of working capital

Preparation of short and long term budgets

Effective internal audits
10

Consistent cost control.
OUTPUTS AND DEVELOPMENTS 2010
f.
Improving and Enhancing Stakeholder Relations



As a constitutional institution, it is important for the Board to reinforce the
need to engage with all stakeholders in a structured manner, to realise
specific organisational goals as well as to meet broader social,
environmental and economic challenges.
The need for engaging stakeholders in a structured manner, also reinforced
by the fact that stakeholder relations is one of the core functions of all Board,
in terms of the corporate governance principles as outlined in the King III
report, to which the Municipal Demarcation Board subscribes.
At the end of the period under review, the process to develop a Stakeholder
Management and Governance Framework, Stakeholder Engagement
Plan, as well as the Stakeholder Communication Strategy was underway.
11
STRATEGIC DIRECTION
The Municipal Demarcation Board has for the current Strategic Plan identified
strategic themes to focus and guide the organisation over the next few financial
years (2011/2012, 2012/2013, 2013/14 and 2014/15)
Theme 1
Determination and re-determination of municipal boundaries and
categorisation and re-categorisation of municipalities
Theme 2
Assessment of the capacity of metropolitan, district and local municipalities
Theme 3
Ensuring that the Board is supported by effective and efficient organisational
processes, systems and practices
Theme 4
Ensuring good governance
Theme 5
Ensuring sound financial management
Theme 6
Improving and enhancing stakeholder relations
12
STRATEGIC DIRECTION
Strategic Objective
Boundary
Theme 1
determinations
Capacity
Theme 2
assessments
Organisation
Theme 3
and
Administration
Good Corporate
Theme 4
governance
Theme 5
Financial
management
Stakeholder
Theme 6
management
TOTAL:
2010/2011
2011/2012
2012/2013
2013/2014
6,787,118
6,566,881
6,967,250
6,738,727
5,000,000
5,180,000
5,569,000
5,566,000
17,440,766
19,175,483
20,536,690
22,306,858
3,035,556
4,242,420
3,345,693
3,646,420
2,696,474
2,974,216
3,116,367
3,413,195
2,652,086
1,200,000
1,320,000
1,386,800
37,612,000
39,339,000
40,855,000
43,058,000
13
PROGRESS TO DATE ON CURRENT STRATEGY
a.
Determination and re-determination of municipal boundaries and
categorisation and re-categorisation of municipalities

Circular 1 of 2011 was issued to all municipalities and other key
stakeholders, to communicate the programme for the re-determination of
municipal boundaries, and to also to provide especially new municipal
councillors with some background information on the MDB and its mandate.

Launch and Media announcement

Consultations meetings have been held with the following key stakeholders:
 All MECs for local government;
 All municipalities in every District Municipality in the country;
 MinMEC;
 The Chairperson of the NHTL;
 National and Provincial structures of SALGA and the IEC;
 Political and Civic Structures across the country.
14
PROGRESS TO DATE ON CURRENT STRATEGY
a.
Determination and re-determination of municipal boundaries and
categorisation and re-categorisation of municipalities (Cont)

Meetings with provincial houses of Traditional Leaders are still being arranged in
cooperation with the Chairperson of NHTL.
The purpose of the initial consultation meetings with was:

To give MECs and other stakeholders an opportunity to raise demarcations
issues with the MDB;

To inform MECs and other stakeholders of demarcations cases that are on
record for consideration by the MDB;

Clarify the process and timeframes for changes to municipal boundaries as
per Circular 1/2011;

Seek MECs’ and other stakeholders’ support for the process;

15
PROGRESS TO DATE ON CURRENT STRATEGY
a.
Determination and re-determination of municipal boundaries and
categorisation and re-categorisation of municipalities (Cont)




Request MECs and other stakeholders to assist in communicating contents
of Circular 1/2011 to provincial stakeholders;
Request MECs and other stakeholders to encourage participation;
Request MECs and other stakeholders to assist in ensuring that
municipalities comply with timeframes;
Request MECs that their Departments assist stakeholders wanting to make
representations for changes to municipal boundaries.
16
Broad process and timeframes
within current legal framework:
2011 - 2016
Prepare for
local
elections
Delimit wards
Re-determine municipal
boundaries
2016
2015
2013
2015
2014
2013
2011
2012
Consultation and legal process
June 2011 to Oct 2013
Consultation and legal process
Nov 2013 - June 2015
IEC process
July 2015 - April
2016
Key periods for public participation
MDB provides information
Meetings
per
district
area
Deadline
for new
requests
Aug/Sept 2011
15 Dec 2011
Further
visits
Jan-Mar 2012
Section
26
Submissions
Public
meetings
Section 21
objections
Apr-May 2012 Sept-Oct 2012 Aug 12-Jan13
Municipalities consult affected communities, and encourage participation
More information: MDB Circular 1/2011:
www.demarcation.org.za
PROGRESS TO DATE ON CURRENT STRATEGY
a.
Determination and re-determination of municipal boundaries and
categorisation and re-categorisation of municipalities (Cont)

A framework has been developed, based on the research study on criteria
for demarcation of municipal boundaries.
The framework provides information and guidelines that will empower
stakeholders to submit requests to the Municipal Demarcation Board for the
re-determination of municipal boundaries.
The framework puts together in one concise document, key relevant
information and guidelines, for stakeholders to motivate a boundary change
request.


19
PROGRESS TO DATE ON CURRENT STRATEGY
b.
Assessment of the capacity of metropolitan, district and local
municipalities
 A service provider was appointed for the implementation of the revised
capacity assessment model, building on the history of capacity
assessment data obtained in previous years.
 The review of the capacity assessment model has elicited a number of
weaknesses pertaining to the old model.
 Two-tier local government is neither effective nor efficient
 Lack of clarity on powers and functions
 MEC adjustments have exacerbated the problem
 Adjustments may undermine service delivery
 Framework for adjustments is insufficient
 Narrow conceptualisation of capacity
20
PROGRESS TO DATE ON CURRENT STRATEGY



Capacity assessments not useful for boundary adjustments
 Need to understand environmental & institutional capacity
Capacity assessment model inadequate
 Heavy reliance on subjective indicators of capacity
The review has subsequently come up with some recommendations:
 Advocacy recommendations
 Single-tier local government
 Legislation to assign powers and functions
 Capacity Assessment Model recommendations
 Suspend recommendations on adjustments
 Position Capacity Assessment as a strategic resource
21
PROGRESS TO DATE ON CURRENT STRATEGY
Revised model
 Financial data is critical
 Include measures of performance
 Identify norms and standards for benchmarking
 Include information on scarce skills
 Introduce qualitative assessment of Powers & Functions
Quantitative process has limitations and should be used as a trigger for a
qualitative review of powers and functions within a particular district
triggered by one of the following:

One or more municipalities performing a function less than adequately

One or more municipalities performing a function with less than
minimum capacity

Request by MEC for qualitative review

Programmatic qualitative investigations of all districts over a five year
period i.e. 10 districts qualitatively evaluated a year.


22
PROGRESS TO DATE ON CURRENT STRATEGY



Methodology

Improve integration with other data collection processes
 National Treasury, StatsSa, National Sector Departments

Web-based collection methodology with support
 Simplify and shorten questionnaire

Include metros
Outputs

One strategic and analytical report supported by
 Automated municipal reports
 District report
 Provincially aggregated district report

Accessible, interactive database with reporting
This year will pilot this methodology. Nine districts (roughly 20% of all
municipalities)
23
PROGRESS TO DATE ON CURRENT STRATEGY
c.
Ensuring that the Board is supported by effective and efficient
organisational processes, systems and practices

The following reports on the organisation design were submitted by
the service provider and approved by the Board:

The Blueprint Report with findings and recommendations, on the
restructuring of the organisation’s establishment, as well as
improvements.

The Board has also adopted a particular option in the report as the
best organisation design to enable the MDB to meet its mandate
more effectively.

The Implementation Report, which provides the MDB with an
implementation road map.

Job evaluation, which is the process of determining the worth of
one job in relation to that of other jobs in an organisation so that a
fair and equitable wage and salary system can be established.
24
PROGRESS TO DATE ON CURRENT STRATEGY
Salary benchmarking, which is a process where an organisation
tests its own pay practices against that of other outside
organisations.
 A new Remuneration Policy.
 Migration Policy, to regulate the movement of employees from
one post or position in the current Organization Structure to
another in the new Organization Design.
New structure envisaged to be operational at the beginning of the
2012/13 financial year.


25
PROGRESS TO DATE ON CURRENT STRATEGY
d.
e.
Ensuring good governance
 Draft unaudited annual report for the year ended 31 March 2011
considered by the Audit and Risk Committee. Duly submitted to the
Auditor-General on 31 May 2011.
 The Auditor-General has given an unqualified audit opinion, but with
emphasis of matter.
Improving and enhancing stakeholder relations

Service providers were appointed for a three month contract for support
on media relations and media engagement.

Other service providers were appointed to prepare a stakeholder and
communication strategy for the Board.

The stakeholder management function has been adequately provided
for in the organisational design blueprint report that was approved by
the Board.

The boundary redetermination process was kick-started with an
extensive programme of initial consultations with key stakeholders
26
across the country.
FINANCIAL RESULTS 2010/11




SUMMARY OF FINANCIAL RESULTS
RECEIPTS FOR THE YEAR
FINANCIAL PERFORMANCE FOR THE YEAR ENDED MARCH 2011
BREAKDOWN OF EXPENDITURE
27
SUMMARY OF FINANCIAL RESULTS








Total income for the period R37.9 million
Expenditure during the period R36.0 million
Resulting in a surplus of R1,9 million
Expenditure Variance of R1,6 million
Projections – Board has spend within budget
Current ratio = 6:1
Accumulated Surplus of R16,9 million
Commitments of R11,0 million
28
RECEIPTS FOR THE YEAR ENDING
31 MARCH 2011
Original MTEF allocation
Other income
TOTAL INCOME AT OUR DISPOSAL 2010/11
R37,187,000
R746,000
R37,933,000
29
EXPENDITURE FOR THE YEAR ENDING
31 MARCH 2011
Description
Government Grants
Other Income
Total income
Total expenditure
Loss on disposal of Assets
SURPLUS
YTD
Actual
37,187
746
37,933
35,992
39
1,902
YTD
YTD
Budget
Variance
37,187
0
425
(321)
37,612
(321)
37,612
1,619
(39)
1,902
30
BREAKDOWN OF EXPENDITURE FOR THE YEAR
ENDING 31 MARCH 2011
Expenditure Item
Percentage of
Total Income
Amount
Administrative expenses
13,840
38%
Employee benefits
11,322
31%
923
3%
Project expenses
3,580
10%
Other operating expenses
5,525
15%
802
2%
35,992
95%
Audit fees
Depreciation and amortisation
TOTAL EXPENDITURE
Loss on Sale of Assets
Surplus for the period
39
1,902
0
5%
31
REPORT OF THE AUDITOR GENERAL




Unqualified report with emphasis of matter
Irregular Expenditure of R726,012
Contravention of PPPFA
HDI Points scoring was not documented
32
MEDIUM TERM EXPENDITURE FRAMEWORK
(MTEF 2011-2014)




2011 MTEF amounts to R121.4 million
Allocation for 2011/12 increased by R1.3 million
Representing a 3% increase
In 2012/13 and 2013/14 grants increased by 5% in respective years.
Grants
2011/12
2012/13
2013/14
Amount
38,482
40,362
42,578
33
MEDIUM TERM EXPENDITURE FRAMEWORK
(MTEF 2011- 2014)
Income
Grants
Sundry income
Interest income
Expenses
Capacity Assessment
Publications
Boundary determination
Rental expense
Salaries
Depreciation
Members allowances
Audit expenses
Staff Training
Other expenses
Net surplus
2011/2012
39 339 000
38 482 000
857 000
39 339 000
5 180 000
0
4 804 795
2 310 848
13 013 685
710 517
1 713 155
2 056 000
195 205
9 354 795
0
2012/2013
40 855 000
40 362 000
493 000
40 855 000
5 569 000
0
5 078 668
2 310 848
14 167 091
710 517
1 725 265
2 210 332
212 506
8 870 773
0
2013/2014
43 058 000
42 578 000
480 000
43 058 000
5 566 000
0
4 587 000
2 310 848
15 847 500
710 517
2 067 935
2 431 364
237 712
9 299 124
0
34
MEDIUM TERM EXPENDITURE FRAMEWORK
(MTEF 2011- 2014)
Other expenses
2011/2012
2012/2013
2013/2014 *
168 000
170 000
172 000
35 000
37 625
41 388
Legal fees
165 000
181 500
199 650
Printing and publication
361 000
397 000
437 000
Venues and facilities
1 531 632
809 950
890 945
Travel and subsistence
1 104 629
1 187 352
1 406 087
36 000
102 000
166 000
119 115
131 026
144 129
1 573 800
1 728 680
1 901 548
Computer expenses
270 984
302 082
335 290
Other: insurance
332 750
366 025
402 628
Other: fleet expenses
29 709
32 679
35 947
Repairs and maintenance
49 500
54 450
59 895
159 500
175 450
192 995
Stakeholder management
1 200 000
1 320 000
1 452 000
Other: Admin and operations
2 218 177
2 641 919
2 408 485
Total
9 354 795
8 870 773
9 299 124
Advertising
Bank charges
Entertainment
Office expenses
Consulting fees other
Utilities
35
MEDIUM TERM EXPENDITURE FRAMEWORK
(MTEF 2011- 2014)
2011/12 Distribution
3,381,385
5,234,340
5,404,261
5,110,581
7,630,655
12,577,779
Finance
GIS
Research
Admin and HR
Manager
Board
36
Questions and Comments
37
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

The brief for the research study on demarcation criteria was to:

Expand on and precisely define the criteria implied, for an area to be
regarded as a Category A (metropolitan) area, as outlined in Section 2 of the
Local Government: Municipal Structures Act, 1998, including developing
quantifiable indicators, benchmarks and thresholds for each criterion;

Expand on and precisely define the criteria implied for municipal boundary
demarcation and, more specifically, the objectives of demarcation and factors
to be taken into account by the Board when it determines a municipal
boundary, as outlined in Sections 24 and 25 of the Local Government:
Municipal Demarcation Act, 1998.

The study was to develop quantifiable indicators, benchmarks and thresholds
for each or clusters of factors/criterions as outlined in section 25 Local
Government: Municipal Demarcation Act, 1998.;

Institutionalisation and precise application of the section 2 criteria as well as
the sections 24 and 25 demarcation objectives and factors.
38
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES
The study was to develop quantifiable indicators, benchmarks and
thresholds for each of the cluster factors/criteria as outlined in section 25
Local Government: Municipal Demarcation Act, 1998, including
recommendations/advice on data requirements, skills sets and other
resource requirements;

Recommendations as to which provisions in Section 2 of the Structures
Act, 1998, and Sections 24 & 25 of the Demarcation Act, 1998, would be
reviewed.
The methodology for the study involved:

International Survey of municipal boundary reform

Development of Data Base of Demarcation Indicators

Conducted desktop analysis of relevant South African documentation

Conducted Interviews with relevant experts


39
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

The study developed a database of indicators, by:

Collating data from Census, Community Census, MDB and IEC.

Used the MIIF Classification as an illustrative tool:
 A-Metros
 B1-Secondary Cities
 B2 -Large Towns
 B3 -Small Towns
 B4 –Rural Areas
 C1 -Districts who are Not Water Service Providers
 C2 -Districts who are Water Service Providers
40
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES



The study has developed indicators for each of the criteria in section 24 and 25
of the Demarcation Act.
Also suggests a useful organisation of the criteria used for the demarcation of
municipal boundaries, into a collection of categories and/or subcategories.
This may enable greater flexibility were the emphasis with regard to a
particular case may be geared toward a particular set of criteria. However,
there are a number of caveats:

Many of the criteria/indicators are interdependent (i.e., one criterion may
influence the another criterion and vice versa);

Given the interdependence of many of the criteria, it is difficult to assert
a hierarchy to the criteria (i.e., that some criteria are more important than
others or that some are a perquisite for other application of other
criteria);
41
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES
Criteria should be given varying weight and importance depending on the
unique circumstances of an area.
The following are suggested as criteria for small municipalities:

the need for cohesive, integrated and compact areas

Political boundaries, including areas of traditional rural communities,
ward committees and local communities

Boundaries that enable the delivery of main municipal services,
particularly irrigation, water works, electricity and sewerage

The ability to generate a certain amount of revenue locally

topographical, environmental and physical characteristics of the area
including watersheds

boundaries sensitive to economic conditions of each small municipality


42
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

The following are suggested as criteria for District Municipalities:

within the framework of national redistribution there is a need to share
and distribute financial and administrative resources;

existing land use and transport planning.

the promotion of integrated social and economic development planning

the need for co-ordinated local, provincial and national programmes and
services.
43
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

Four main categories of municipal demarcation criteria are put forward in
the study:

Planning and Development Criteria: Many boundary adjustments
particularly in the form of municipal amalgamations are premised on the
need to provide better planning and economic development over an
extended area. This includes the socio-economic interdependence of a
given city-region. Section 25 (A, H, and J) Criteria and Indicators

Municipal Functioning Criteria: These include the collection of
indicators that measure the delivery of municipal services and the
administration of areas of municipal responsibility. Section 25 (D, G
and I) Criteria and Indicators

Municipal Financial Criteria: These include the impact of demarcation
on a municipality’s revenue and expenditures. Section ( 25 D, K)
Criteria and Indicators

Municipal Governance Criteria: Referring to indicators that measure
the decision making ability of a municipal government as well as
questions of good governance over the city-region. Section (25 B, E, F,
and L) Criteria and Indicators
44
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES



Public participation, in particular, is raised as being an important component
of boundary reform. International overview has pointed out that South Africa
excels at good boundary criteria but lags behind other nations on the
processes of reform.
It is suggested that the Board should be more transparent in releasing the
substantial deliberations of its decisions. It should provide local government
stakeholders with a written account of how it has applied the Section 24 and
25 criteria.
The option to hold public meetings is highlighted. Another way to improve
public participation is by making meetings compulsory for all boundary
investigations. The study suggests that the Board should always hold public
meetings before it makes boundary decisions.
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RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES



The study also suggests a need for provision to be made in legislation, for
annexation or technical redeterminations/corrections.
Annexation/technical redetermination often involves the incorporation of a
small piece of territory such as a farm. The Municipal Demarcation Act is
conspicuously silent on how to deal with this issue of annexation.
The suggestion is that this process must be dealt with in legislation along
the following lines:

Accommodation of growth by all municipalities must be accomplished
without encumbering the initiating municipality and the responding
municipality’s ability to achieve rational growth directions, cost
effective utilisation of resources and fiscal accountability;

An annexation must be supported by growth projections, availability
of lands within current boundaries, consideration of reasonable
development densities, accommodation of a variety of land uses and
reasonable growth options within each municipality (initiating and
responding municipality);
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RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES






An annexation must achieve a logical extension of growth patterns,
transportation and infrastructure servicing for the affected municipalities;
Each annexation must illustrate a cost effective, efficient and coordinated
approach to the administration of services;
Annexations must demonstrate sensitivity and respect for key
environmental and natural features;
Coordination and cost effective use of resources will be demonstrated
when annexations are aligned with and supported by integrated
development planning, economic development plans, transportation and
utility servicing plans and other related infrastructure plans;
Annexation proposals must fully consider the financial impact on the
initiating and responding municipality;
Inter-agency consultation, coordination and cooperation is demonstrated
when annexations proposals fully consider the impacts on other
institutions providing services to the area;
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RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES
Annexation proposals that develop reasonable solutions to impacts
on property owners and citizens with certainty and specific time
horizons will be given careful consideration and weight;

Annexation proposals must be based on effective public consultation
both prior to and during any annexation hearing or proceedings.
Finally, the study identifies implications for the Board’s skills sets.
There are two main approaches in this regard.
Firstly, the Board could use consultants to support them on boundary
investigations. This is largely the existing approach of the MDB and also is
the approach used by most of the international Demarcation Boards
sampled in this report.
The advantage of this approach is that enables the Board to draw on
specialised expertise and independent insight when investigating
boundaries. It is also a more cost-effective way of utilising resources given
that consultants are only used when needed.
The disadvantage is that the Board does not develop a critical mass of
internal capacity.






48
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES




The second approach entails the Board developing its own internal
expertise. If the MDB supports this approach it should employ empirical
Social Scientists to help disaggregate census data and other relevant data
bases (presuming that it does not have such people in its employ).
The advantage of this approach is that enables the Board to develop its own
in-house capacity.
The disadvantage is that it will have highly paid professionals in its employ
who may be underutilised in quiet periods.
The MDB’s preference is for the second approach.
49
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA


The brief for the research study on demarcation criteria was to explore:

Challenges faced by the new local government system in South Africa
towards realising the vision of developmental local government,
particularly those challenges that come with large, inclusive
municipalities;

The relationship between municipal size and the efficiency of the
delivery of municipal services. Is there an optimal size or range of sizes
for a municipality in the South African context, from the standpoint of
efficiency and to minimise duplication of resources and efforts?
The methodology for the study involved:

International Survey of Literature on Local Government Size

Development of Data Base of Demarcation Indicators

Conducted desktop analysis of relevant South African documentation

Conducted Interviews with relevant experts
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RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA






Conducted interviews with relevant stakeholders

MDB,

COGTA,

Treasury,

Provincial Governments

SALGA,

individual municipalities

Consultants
Semi-structured interviews.
The study explored the issue of Economies of Scale and Size explored.
Also looked at arguments from Public Choice Theory also looked at.
Democracy and Municipal Size.
How size is defined-by population, area, budget, employment or range of
services?
51
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA



On Economies of Scale and Size:

It is often argued that enlarging local government areas will enhance
local government efficiency.

Smaller municipalities lack resources and citizens.

Larger jurisdictions lead to bigger thresholds in populations, tax bases
and workloads.
Public Choice Theory:

Citizens have diverse preferences for local government

Fragmented local government will operate more efficiently.
Democracy and Municipal Size:

Literature suggests that local government needs to be local enough for
citizens to identify with.

Larger local units risk being remote.
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RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA








None of the criteria in Section 2 specifically require that the metropolitan
area be of a particular size. The definition does give some pointers in this
regard:
A conurbation, meaning something large,
Extensive development, implying that the metropolitan area is large,
The notion of complexity which implies question of scale,
With its strong emphasis on interdependency, a wider conceptualisation of
metropolitan government that would encompass the economically
interdependent suburbs, black townships, rural areas and informal
settlements.
Great Deal of Variation between metros in South Africa.
Three big metros (Johannesburg, Cape Town, Ethekwini)
Two reasonably big metros (Tshwane, Ekurhuleni)
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RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA




Three small metros (Nelson Mandela Bay, Buffalo City, Mangaung). Do not
meet OECD definition of 1,5 million population.
Limited data but no correlation of size with performance
With respect to District Municipalities little guidance in legislation.
MDB suggested four principles:

Functional linkages showing a coherent social and economic base eg
spending patterns, sectors of economic activity

Districts should not be too large-radius of 50-100 km

While the population of Districts should not be too large, for economies
of scale it was felt districts should have a base population of at least 100
000 persons; and that;

Wherever possible, there should be some coherence to the economic
and social base of districts.
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RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA






An analysis of District Municipalities indicates that no clear relationship
between size and population, operating and budget budgets, functions
performed, years experience of managers of managers and financial
managers and audit rating
With respect to local municipalities, the MDB decided on the following
principles based on Sections 24 and 25 of the Demarcation Act:
Capacity Assessment: Objective was to develop a critical mass of municipal
capacity (staff, assets, finances).
Resource Sharing.
Manageable Size: Indicators of 3500 square kilometres and 80 000 people
were suggested as norm
Functionality: Alignment of transport routes and physical features
55
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA

An analysis of local municipalities indicates that:

Density correlates with population size

Weak link with capital budgets but no link with operating accounts

There is no clear cut pattern when it comes to the percentage of
functions performed, the size of municipalities, the years of experience
of either municipal managers or financial managers and audit
relationship

The 50 000-100 category has performed better than the 100 000 to 200
000 category in respect of capital and operating expenditure, staff,
functions performed, the years of experience of municipal managers and
financial managers and COGTA’s spatial classification system per
population range. This may suggest that 50 000 to 100 000 is an optimal
size for smaller municipalities but more research is needed to verify this.
56
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA


With respect to Municipal Wards, an analysis indicates that:

A number of problems were identified with the ward process:

The unclear definition of what a community is;

The provision that the number of registered voters in each ward, may not
vary by more than fifteen per cent from the norm, leads to the creation of
dysfunctional wards. The strict application of this formula prevents the
creation of wards which promote local democracy and service
delivery/development;

The use of voting districts as the building blocks for wards is
problematic.
The following recommendations are made in respective of wards:

Repeal, the provisions providing for the determination of a formula for
the number of councillors by the Minister and the determination of the
number of councillors by the MEC s responsible for local government;

Provide for ward boundaries determined for the 2011 local government
elections to remain in place for local elections in the foreseeable future;
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RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA
Provide a continuous process to review ward boundaries with a view to
enhance service delivery and development but also to promote local
democracy. One needs to take into account population of ward,
consultation with ward committees, municipal development and service
delivery projects, and especially planning over a longer than the current
5 year period for the municipality as a whole.

Allow deviations from the 15% norm where it can promote service
delivery/ development and/or promote local democracy.
To what extent size has been a variable affecting performance, post 2000?
There are a number of problems bedevilling local government. Many of
these factors are not due to issues of size around local government e.g.
politics/administrative relationships, clientelistic practices, local electoral
system, the executive system.



58
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA






There is no conclusive evidence linking service delivery problems to the
size of municipalities.
The metros’ widely-drawn boundaries seem to have facilitated service
delivery.
There are hints by the government that the large size of wards is a factor
inhibiting the performance of ward committees but no evidence is produced
to support this.
There is also no conclusive evidence linking performance to the size of
integrated development plans.
Likewise the argument that councillors in rural communities have large
constituencies and this makes it difficult to represent communities
adequately is also untested.
The international literature on size and performance on municipalities did
not produce any ideal or optimal size for local government.
59
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA





The available empirical data and government and academic literature
suggest that there is no conclusive evidence to show that the size of a
municipality has been a major problem impeding the performance of local
government.
Changing the size of municipalities should be treated with circumspect.
If socio-economic interdependence, most notably commuting, is the
primarily basis for determining boundaries then the nature of settlement
patterns rather than population size becomes the major determinant of
boundaries.
Problem of Reorganisation Fatigue.
There may be opportunistic incentives for the creation of new councils by
local politicians.
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RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA
Future Research:
 The Board should investigate the possibility of undertaking a more
systematic analysis of the relationship between size and performance
between and within municipalities.
 It will entail inter alia looking extensively at customer surveys, auditor
general’s reports and other performance evaluation data. In order to be
scientific such a study will have to identify external constraints on councils
that could explain at least part of any apparent performance variation –
economic and social conditions, the needs and demands of local residents,
previous council policies and the behaviour of other organisations.
61