COOPERATIVE GOVERNANCE AND
TRADITIONAL AFFAIRS
BACK-TO-BASICS
Walking the talk through Effective Governance
Presentation prepared for the
INSTITUTE OF MUNICIPAL FINANCE OFFICERS
5 October 2015
PURPOSE
To present the Gauteng
State of Local
Government: Back-toBasics on Sound
Governance in Local
Government
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RSA Constitution (1996) & White Paper on Developmental Local Government (1998)
Constitution (1996)
(S152) The objects of local government are:
a) to provide democratic and accountable
b)
c)
d)
e)
government for local communities;
to ensure the provision of services to
communities in a sustainable manner;
to promote social and economic
development;
to promote a safe and healthy environment;
and
to encourage the involvement of
communities and community organizations
in the matters of local government.
Outcomes




Provision of household
infrastructure & services
Creation of livable, integrated
cities, towns and rural areas
LED
Empowered communities
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RECONSTRUCTION AND DEVELOPMENT PROGRAMME (RDP)
“No political democracy can survive and flourish if the
mass of our people remain in poverty, without land,
without tangible prospects for a better life. Attacking
poverty and deprivation must therefore be the first
priority of a democratic government”.
This RDP assertion is still relevant today… and
“According to the 2012 NPC report, there is a need to
tackle the triple challenges facing the country, namely:
poverty, unemployment & inequality”.
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NATIONAL PLANNING COMMISSION - DIAGNOSTIC REPORT RESULTS
THE FOLLOWING FINDINGS OF THE NPC’S DIAGNOSTIC
REPORT REQUIRE PUBLIC SERVICE ATTENTION:
Few people work;
Public services are uneven and often of poor quality;
Corruption levels are high;
South Africa remains a divided society;
Infrastructure is poorly located, inadequate & under
maintained;
The quality of school education for black people is poor;
The public health system cannot meet demand or sustain
quality; and
Spatial divides hobble inclusive development.
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PROBLEM STATEMENT
Debt level of the State
has doubled from R
627billion to R 1.3
trillion.
There is a shortage of
skilled personnel and
high turnover rate in
the Public Service
(NDP, 2012).
The administrative
capacity of government
at all levels is stretched
(OECD economic survey,
2013).
The Public Sector
wage bill has grown. It
is currently around
45% of the total
budget, thus
compromising the
delivery of basic
services (National
Treasury).
The public service is not
performing at optimal
level. There is no value
for money (PSC Report,
2011).
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PROBLEM STATEMENT
cont.
The triple challenges are very real: Poverty, Unemployment
and Inequality (Just over 40% of the working age
population is employed compared to the OECD
average of 65%) (OECD economic survey, 2013).
Weakening of the State and emergence of a
tender state. The use of consultants in the Public
Service accounted for an amount of R 24, 6 billion
for the period 2008/09 – 2010/11 financial years
(Source: AG report on use of consultants, January
2013).
Applying same standards across the public service
requires innovative approaches and fundamental
Urban poverty
social changes in the culture and capabilities of the
public service (PSC: State of the Public Service report
2011).
“No amount of political freedom will satisfy the hungry
masses” Vladimir Lenin
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PROBLEM STATEMENT
cont.
Corruption in all spheres of government has
worsened. (OECD economic survey, 2013 rates
RSA at 40 percentile).
Increased citizen expectation for improved service
delivery, including innovative delivery tools.
Experience of violent service delivery protest actions;
and
Bureaucratic nature of the state stifling growth. The
existing systems do not give us speed, flexibility &
control necessary to deliver set of processes to
improve efficiency and collaboration.
“For the bureaucrat, the world is a mere object
to be manipulated by him” Karl Marx
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SOCIO-ECONOMIC PROFILE OF GAUTENG PROVINCE
 Gauteng Province is the smallest of the nine (9) in terms of
land size.
 It measures approximately 1,4% of South Africa’s land area
(only 18 178 km2 of the total land mass of 1 221 037 km2).
 The discovery of gold in the 19th century saw Johannesburg
developing to become an economic focal point of South
Africa.
 Gauteng is the biggest contributor to the gross domestic
product (GDP), nationally and continentally.
 Gauteng is the most urbanised province (approx. 97% of its
people living in urban areas).
 Currently the only province with more than one metropolitan
municipality in South Africa, i.e., Johannesburg, Tshwane and
Ekurhuleni metros.
 It is host to four major financial institutions and Africa’s
largest stock market, the Johannesburg Stock Exchange (JSE).
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SOCIO-ECONOMIC PROFILE OF GAUTENG PROVINCE
 High population numbers (12.72 million) and migration are
key attributes of the province.
 The provincial population growth rate was 2.7% and 3.6%
for the periods 1996-2001 and 2001-2011, respectively
(2011 Stats SA census). The population has been growing
rapidly due to in-migration and natural growth.
 Gauteng currently accounts for 24% of the country's total
population, the highest share followed by KZN province
with 19.73% ( GHS, 2013).
 Millions of migrants from neighbouring countries settle in
Gauteng in pursuit of economic and employment
opportunities, which ultimately puts pressure on
infrastructure and service delivery in the province.
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SOCIO-ECONOMIC PROFILE OF GAUTENG PROVINCE
Basic Service Delivery Performance in the province (GHS, 2013):
Piped water (95.9%),
Electricity (83.6%),
Access to flush toilets
(90.2%); and
Refuse removal by local
authorities (90.1%).
This illustrates how the exponential population growth rate presents a serious challenge to the
municipalities in the province, more so noting the fact that the heightened population growth
rate is not only due to a natural growth, but also to other factors such as migration (only 56%
of the population of Gauteng was born in Gauteng, according to GCRO QoL Survey).
This rapid population growth also leads to, among others, the proliferation of informal
settlements, which pose a further challenge to the delivery of basic services by Gauteng
municipalities.
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SOCIO-ECONOMIC PROFILE OF GAUTENG PROVINCE
The Gauteng City Region is also the
engine of the regional economy,
and a gateway to the rest of the
continent. Gauteng’s share of GDP
increased to 36% in 2013. During
the year 2011, the province’s GDP
was R675 billion, depending mainly
on the tertiary sector, finance and
business services, including the
services sector.
The official unemployment rate for
Gauteng in 2011 was estimated at
26.3%, and has subsequently
declined to 24.6% during the fourth
quarter of 2014, according to
Statistics South Africa’s Quarterly
Labour Force Survey for Quarter 4
of 2014.
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NDP 2030… MARCHING ORDERS
Chapter 13 of the NDP on Building a Capable State:
 building of a professional public service
 a state capable of playing a transformative and developmental role
in realising the vision 2030.
This requires:
 a well run and effectively co-ordinated state institutions;
 staffed by skilled pubic servants who are committed to the public
good; and
 capable of delivering consistently high quality services for all South
Africans, while prioritising the nation’s developmental objectives.”
As articulated in the NDP, we need to:
 Stabilise the political-administrative nexus;
 Make the public service and local government careers of choice. For
example, recruitment should be based on experience and expertise;
and
 Development of technical and professional skills for the state to fulfil
its core function at all levels.
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GAUTENG’S TEN-PILLAR PROGRAMME - TMR
 According to the Back-to-Basics Diagnostic Exercise, Gauteng has 10 municipalities that
are “Doing Well”
 However, having ten (10) out of twelve (12) municipalities categorised as “doing well”
does not mean that Gauteng province and its constituent municipalities have overachieved and therefore should not focus on the basics of local government.
 Instead, it is rather important to note that as a city-region that benchmarks itself
against some of the most competitive city-regions globally, the province and the
Gauteng City Region (GCR) at large, has set itself very high standards in terms of
governance, service delivery performance that is beyond simply the basics, as well as
having initiated institutional and economic transformation platforms that will make the
Gauteng City Region a destination and investment node of choice.
Through the provincial government’s programme of radical Transformation,
Modernisation and Re-industrialisation (TMR), the viability, performance and
sustainability of the different regions, municipalities and Development Corridors are
highlighted as the cornerstone of a successful and globally competitive Gauteng City
Region.
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GAUTENG’S CORRIDORS OF
DEVELOPMENT
CENTRAL CORRIDOR: CITY OF JOHANNESBURG
 City of Johannesburg - Advancement of the metro’s
position as the hub of finance, services, information
communications technology (ICT) and pharmaceutical
industries.
 Other programmes include the revitalisation of the
Joburg CBD and the establishment of New Development
Bank (BRICS Development Bank) within the City of
Johannesburg’s area of jurisdiction.
The New Development Bank (NDB), formerly referred to as
the BRICS Development Bank, is a multilateral development
bank operated by the BRICS states (Brazil, Russia, India, China
and South Africa) as an alternative to the existing USdominated World Bank and International Monetary Fund. The
bank is set up to foster greater financial and development
cooperation among the five emerging markets.
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EASTERN CORRIDOR: CITY OF EKURHULENI
 Focus is entrenching City of Ekurhuleni’s position as
the manufacturing hub, with multiple logistics and
transport industries.
 The Aerotropolis mega projects will include 29
initiatives to revitalise manufacturing, aviation,
transport and logistics industries linked to OR
Tambo - Aerotropolis footprint to Lanseria and
Wonderboom.
 ACSA, DENEL, and other major private sector companies are positioning themselves in
line with Aerotropolis imperatives.
 PRASA, a state-owned enterprises, will be rolling-out of 7 224 new rolling stock units and
a R123 billion investment and 30 000 jobs over 20 years.
 Transnet will also invest in the development of Tambo Springs and Sentrarand inland
ports. The former involves a R7.5 billion investment over a 5-year period, and an
estimated 110 000 jobs over 15 years.
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NORTHERN CORRIDOR: CITY OF TSHWANE
 City of Tshwane - The administrative capital
and hub of automotive sector.
 The city is the main anchor for research,
innovation and the knowledge-based
economy in Gauteng.
Key developments in the Northern Corridor will include the
following:
 West Capital development project: development of a student village, sport incubatory
centre, retail and commercial components, inner city housing and health facilities.
 African Gateway in the heart of Centurion: biggest Convention Centre, massive hotel,
residential, commercial and additional office space.
 Business Process Outsourcing Park in Hammanskraal: Investment of R525 million,
creating over 1 000 jobs during construction and over 1 000 indirect jobs, as well as
on-site training, technical support and incubators for SMMEs.
 Automotive Industry Development Centre (AIDC): Continued support for the
automotive sector in the Rosslyn cluster. Establishment of freight and logistics hub to
support automotive industry is being investigated.
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WESTERN CORRIDOR: WEST RAND DISTRICT
 The Western Corridor - focus on the creation of new
industries, new economic nodes, and new cities.
 Transformation, modernisation and diversification of the
West Rand economy, including the revitalisation of the
mining towns, will be the primary objective in this Corridor.
 Focus will be placed on the green and blue economy
initiatives, tourism, agro-processing and logistics. Lanseria
Airport and Maropeng Heritage Site will serve as the main
anchors.
Key projects:
o The Lanseria Airport logistics hub (R500 million in Capital
expenditure for airport development)
o R10 billion investment expected in Lanseria over the next 15
years.
o The Randfontein milling facility will transform the agricultural
sector and ensure food-security in the Western Corridor.
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SOUTHERN CORRIDOR: SEDIBENG DISTRICT
 In the Southern Corridor, focus is on the creation of new
industries, economic nodes and cities, and a Hydropolis.
 There will be economic shift away from overreliance on
steel industry and diversify to include tourism and
entertainment, agro-processing and logistics.
 The creation of New Vaal River City, which will unlock potential of the
waterfront developments, with an investment of more than R4
billion.
 The complete development is estimated to be worth between R7 and
R11 billion. Approximately 7 500 jobs will be created in the
construction phase alone. Sod-turning for this project was on
21 March 2015.
Key other projects are as follows:
Sedibeng (Agropolis): Aimed at unlocking the agricultural potential of Sedibeng as the food basket of the
Gauteng City Region. An estimated 32 black farmers will be supported to plant barley and maize to be supplied
to the nearby Heineken Brewery. About 1 000 permanent jobs will be created per annum over 3 years;
Gauteng Highlands development: a mixed-use development comprising of industrial and residential space,
with an investment value of R40 billion. About 25 000 direct and indirect jobs will be created; and
Sedibeng Waste Water Treatment Works: creation of regional bulk sanitation infrastructure for the Southern
Gauteng Region to address under-capacity of WWTT, to be completed August 2016.
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BACK-TO-BASICS PROGRAMME OF
THE 5th ADMINISTRATION
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BACK-TO-BASICS MODEL OF SERVICE DELIVERY
At the Presidential Local Government Summit hosted by the Minister for
Cooperative Governance and Traditional Affairs (CoGTA), Mr Pravin Gordhan, on
18 September 2014, the Honourable President of the Republic of South Africa, Mr
JG Zuma, launched the Local Government Back-to-Basics (B2B) Programme.
The Programme is aimed at strengthening the local sphere of government,
improving service delivery and promoting economic growth and development at
the local level. Key to the programme is the effective functioning of municipalities
to better serve communities by getting the balance right in terms of the five pillars
of B2B: putting people first, service delivery, good governance, financial
accountability, and building capacity within robust institutions.
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CORNERSTONE OF BACK-TO-BASICS
The pillars of the programme are defined as follows:
Put people and their concerns first, and ensure constant contact with communities
through effective public participation platforms.
Create conditions for decent living by consistently delivering municipal services to
the right quality and standard. This includes planning for, and delivery of
infrastructure and amenities, maintenance and upkeep, including the budgeting to
do this. Municipalities must ensure that there are no failures in services and where
there are, restore them with urgency.
Be well governed and demonstrate good governance and administration - cut
wastage, spend public funds prudently, hire competent staff, ensure transparency
and accountability.
Ensure sound financial management and accounting, and prudently manage
resources so as to sustainably deliver services and bring development to
communities.
Build and maintain sound institutional and administrative capabilities
administered and managed by dedicated and skilled personnel at all levels.
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BACK-TO-BASICS ASSESSMENT IN GAUTENG
According to the Back-to-Basics assessment conducted by the National
Department of CoGTA in 2014, Gauteng province does not have dysfunctional
municipalities. However, Westonaria and Randfontein Local Municipalities were
found to be municipalities “at risk”. These municipalities are situated in
distressed mining towns in the West Rand District, where there are high
unemployment levels, poverty and inequality levels due to eroding economic
activity and plummeting performance of mining houses. The socio-economic
plight of these municipalities is also receiving special attention from the
Presidential project on the revitalisation of the mining towns.
According to the B2B Approach, municipalities that are considered to be “at risk”
are those that demonstrate a fair amount of financial and records management,
reasonable feedback through community meetings, reasonable access to basic
services, and that their councils sit fairly regularly. This is in contrast with those
that are regarded as “doing well” on one end, and those that are “dysfunctional”
on the other.
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STATE OF MUNICIPALITIES IN SOUTH AFRICA
70
60
8
50
40
18
14
2
30
20
10
0
13
9
18
35
7
2
10
8
Eastern Cape Free State
Gauteng
Doing Well
KZN
At Risk
15
16
8
6
7
7
7
Limpopo
Mpumalanga
8
6
15
11
4
4
Northern
Cape
North West
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Western
Cape
Dysfunctional
 Gauteng province does not have dysfunctional municipalities, but two of the
twelve (Westonaria and Randfontein LMs) are at risk.
 Support interventions implemented in these two municipalities are geared
towards improving the status of these municipalities.
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OPERATION CLEAN AUDIT
In Gauteng, a clean audit outcome is a prerequisite and non-negotiable. Therefore,
those who achieve it cannot be over appreciated.
Why clap hands for fish, for swimming?
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AUDIT OUTCOME IN GAUTENG 2014/15 FINANCIAL YEAR
In Gauteng, we have seen significant improvement in audit outcomes of
municipalities with more of them receiving clean audit in 2014/15 financial year.
MUNICIPALITY
2013/14
2012/13
2011/12
2010/11
2009/10
Ekurhuleni
Clean audit
Unqualified
Unqualified
Unqualified
Unqualified
City of Tshwane
Unqualified
Unqualified
Unqualified
Unqualified
Unqualified
City of Johannesburg
Unqualified
Unqualified
Qualified
Qualified
Qualified
Sedibeng
Clean audit
Clean audit
Unqualified
Unqualified
Unqualified
Midvaal
Clean audit
Unqualified
Unqualified
Unqualified
Unqualified
Lesedi
Unqualified
Unqualified
Unqualified
Unqualified
Unqualified
Emfuleni
Unqualified
Unqualified
Unqualified
Qualified
Qualified
West Rand
Unqualified
Unqualified
Unqualified
Unqualified
Unqualified
Westonaria
Adverse
Qualified
Qualified
Unqualified
Unqualified
Merafong City
Unqualified
Unqualified
Unqualified
Unqualified
Unqualified
Randfontein
Qualified
Qualified
Qualified
Qualified
Unqualified
Mogale City
Clean audit
Unqualified
Unqualified
Qualified
Qualified
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REQUIREMENTS FOR SOUND GOVERNANCE IN
TERMS OF BACK-TO-BASICS
SOUND FINANCIAL MANAGEMENT AND ACCOUNTING
Prudent financial management and sound accounting practices is critical for the
efficient and effective management of local government institutions. It is through
financial prudence and good accounting practices that community services can be
delivered optimally and sustainably even with limited financial resources at the
disposal of government. Reduction of the qualification audit outcomes, and
possibly eliminating them, coupled with increased percentage of revenue
collection, development of cash-backed budgets, servicing of municipal debts are
among the most critical areas of focus under in B2B.
The allocated budgets must be used for
intended purposes – service delivery.
Cut wastage and focus on the core
business.
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LOCAL GOVERNMENT IS NOT A PLACE FOR BOSSES, BUT LEADERS
The infighting between politicians and administration tend to lead to leadership
deficit and polarisation of the working environment.
The scandals in government are a symptom of amoral leadership. We are
experiencing profound moral vacuum and in search of authentic leaders.
Stabilisation of political-administrative nexus, with clear demonstration of
leadership in dealing with audit issues in municipalities is non-negotiable.
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REPORTING AND MONITORING
Sufficient in-year reporting and monitoring and ensuring that financial statements
are of good quality.
The quality of reporting on predetermined objectives.
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BUILDING A CAPABLE GOVERNMENT
Ensure that critical and scarce skill positions are filled and/or persons with
appropriate competencies are appointed in key positions.
Building the institutional capacity required to maintain adequate internal
controls, systems and processes.
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CONSEQUENCE MANAGEMENT
Consequence management is instituted for poor performance and transgressions.
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STRINGENT SYSTEMS AND PROCESSES TO COMBAT FRAUD AND CORRUPTION
That municipalities undertake their business according to universally acceptable,
rules and standards and not define their own rules.
Develop risk management policies and frameworks including risk appetite and
tolerance to reduce possibilities of fraud and corruption.
The financial misconduct regulations, MFMA and the code of conduct of
Councillors should also be used to report and manage cases of fraud and
corruption.
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RELIABLE AND CREDIBLE PERFORMANCE INFORMATION
Our expectation is that there should be fair presentation of portfolio of evidence that
support our performance information, e.g. how funds were spent? for what? when?
and where?
If this is not done…
“A claim that evidence has been eaten by a rat and we need RATEX” will be the order
of the day.
The result will be poor governance leading to the other undesirable behaviour.
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STRENGHENING OVERSIGHT FUNCTIONS
A demonstration of impeccable levels of discipline and oversight in financial
management and operational activities.
To ensure that local government structures adhere to stringent fiscal discipline,
there must be strong oversight committees that would enforce compliance with
rules and regulations.
The Section 79 Committees and internal audit structures comprised of
competent persons should be established. Regular reporting to these structures
should be promoted to avoid unnecessary shocks during audit period.
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A CLEARLY-DEFINED SCM POLICIES
Our fiscal regime calls for development and implementation of SCM policies to
prevent unwarranted processes during sourcing of goods and services.
Municipalities should have such policies and comply with them.
The new normal of “hostile subcontracting” by unsuitable suppliers ought to be
managed tightly within the confines of our regime. Our system should support
Township economy within established rules and not toyi-toyi by those who want
the slice of
outside established rules.
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APPORVAL OF BUDGETS IN LINE WITH THE LAW
Municipalities should comply with Section 16 (2) of the MFMA, which requires
the mayor of a municipality to table the annual budget at a council meeting at
least 90 days before the start of the start of the new budget year.
This include submission of the tabled budget to both the National and Provincial
Treasuries (Sec. 22 (b)), the publication of the tabled budget, and the tabling of
the budget in a format prescribed in Regulation 14(a).
Publication of the approved annual budgets on the websites as per section 75 of
the MFMA.
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ASSET MANAGEMENT SYSTEMS PROCESSES AND POLICIES
Municipalities should have credible management system processes and
policies. They must know the location, value and lifespan of their assets.
Necessary funding should be set aside to maintain assets, especially the
infrastructure assets in order to ensure that service delivery is not negatively
impacted upon.
There must be an asset management register which is updated on a regular
basis. This will ensure that all the assets are accounted for.
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OTHER SUGGESTED SOLUTIONS TO ACHIEVE SOUND FINANCIAL MANAGEMENT
Ensuring correctness and completeness of Data on Billing System and Receipting.
Updated and accurate property valuation roll.
Customer care and communication.
Effective credit control and debt collections.
Address water and electricity fraud and losses through partnerships with law
enforcement agencies.
Training and development of revenue management personnel.
Government Debt Strategy implementation.
Cost-reflective tariff models.
Politically-driven initiatives to curb the growing culture of non-payment for
services, and addressing the problem of “no-go areas”.
Drive more effective Communications and Customer Relations.
Income projections that are informed by realistic sources of revenue; and
Establish liquidity policy, borrowing funds and reserves policy.
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THANK YOU!
“Good government only happens
when the people working in it do
their jobs, and do them well.”
By: Matthew Lesko
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