DEPARTMENT OF COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS PRESENTATION TO THE STANDING COMMITTEE ON APPROPRIATIONS Municipal Infrastructure Grant (MIG) Projects and Funding February 2015

Outline of Presentation 1.BACKGROUND 2.SUMMARY OF MIG EXPENDITURE BY PROVINCE AS AT END JAN EXPENDITURE IN LAST SEVEN MONTHS OF FINANCIAL YEAR 4.MIG EMIG ALLOCATION, BENEFICIARIES AND EXPENDITURE PER SECTOR 5.EXPENDITURE PER SECTOR AS AT JAN CHALLENGES 7.SUPPORT TO MUNICIPALITIES 8.STOPPING OF MUNICIPAL INFRASTRUCTURE GRANT (MIG)

Background Municipal Infrastructure Grant programme is the largest local government infrastructure development funding in South Africa. The programme was introduced as part of major reforms implemented by government to improve service delivery in a coordinated manner (that involves all government spheres). The Department of Cooperative Governance manages the MIG by exercising its mandate to foster cooperative governance and to develop capacity in the local government sphere. The MIG was started in 2004/05, through the merger of: –Consolidated Municipal Infrastructure Programme, –Local Economic Development Fund, –Water Service Capital Grant, –Community Based Public Works Programme, –Building for Sports & Recreation Programme and –Urban Transport Grant.

Summary of MIG Expenditure by Province as at end January 2015 Province Allocated (R'000) Transferred to date Expenditure to date Expenditure as % allocation Expenditure as % transferred Balance Unspent Eastern Cape %87.34% Free State %62.63% Gauteng %68.07% KwaZulu Natal %72.87% Limpopo %61.98% Mpumalanga %77.39% Northern Cape %80.83% North West %78.53% Western Cape %75.51% TOTAL %74.45%

Expenditure in last seven months of the municipal financial year (June 2014 – Jan 2015) Province Spent by Province July August September October November December January Eastern Cape Free State Gauteng KwaZulu Natal Limpopo Mpumalanga Northern Cape North West Western Cape TOTAL

MIG Allocation, Beneficiaries and Expenditure per Sector Province Water and SanitationRoads and Storm water Allocation Planned Households ExpenditureAllocation Planned Households Planned Kilometers of Roads (km) Expenditure Eastern Cape Free State , Gauteng , KwaZulu Natal Limpopo Mpumalanga Northern Cape North West Western Cape TOTAL

MIG Allocation, Beneficiaries and Expenditure per Sector Province Community LightingSport Facilities Allocation Planned Households ExpenditureAllocation Planned Households Expenditure Eastern Cape Free State Gauteng , , ,727 35,631,665 KwaZulu Natal Limpopo Mpumalanga Northern Cape North West Western Cape TOTAL

MIG Allocation, Beneficiaries and Expenditure per Sector Province Public FacilitiesSolid Waste Allocation Planned HouseholdsExpenditureAllocation Planned HouseholdsExpenditure Eastern Cape Free State Gauteng ,248 6,588, ,224 2,678,502 KwaZulu Natal Limpopo Mpumalanga Northern Cape North West Western Cape TOTAL

Challenges The following depicts some of the challenges identified and are being addressed : –Inadequate planning in the context of Integrated Development Planning. –Lack of Intergovernmental cooperation (Municipalities, provinces, and sector departments involvement in MIG implementation) –Lack of capacity to manage MIG projects (Project Management Units) –Appointing service providers or contractors who cannot deliver –Late payment of service providers –Council decisions take too long (approval of projects and budgets) –Delays in Technical reports and Environmental Impact Assessment (sector departments) –Use of MIG funds for operational budget pressures

Support to municipalities CoGTA’s main responsibility speaks towards the oversight on MIG processes and procedures which promotes sound inter governmental relations, coordination between stakeholders, stakeholder support to municipalities and stakeholder participation in MIG project pre- implementation and implementation phases: –Supporting municipalities during the pre-implementation phase of projects by supporting and guiding municipalities to meeting the objectives of the MIG Programme. Infrastructure programme planning support to ensure that municipalities will have projects aligned to deal with remaining backlogs Projects verification support to municipalities to ensure that projects to be implemented by municipalities do meet the cross cutting and sector specific conditions of the grant MIG implementation planning support to ensure that MIG projects are appropriately planned and scheduled for implementation. Support municipalities to set spending trajectories on their MIG programmes

Assisting municipalities during the implementation phase of projects by supporting and guiding municipalities to meeting the objectives of the MIG Programme. –Support municipalities by ensuring that positive spending trends are maintained as per the pre-set payment scheduled. This includes frequent engagements with municipalities on maintain spending discipline (under expenditure) and set remedial actions on how to overcome poor expenditure trends –Coordinated site visits to targeted projects in which all relevant stakeholders participate to confirm that projects are implemented as approved. COGTA with the cooperation of provinces has established teams that are visiting specific municipalities to address identified challenges Support to municipalities

MUNICIPAL SUPPORT STATISTICS MUNICIPAL SUPPORT STATISTICS 12 Province B2B Dysfunctio nal B2B functio nal not doing well B2B doing well LGTAS MISA Supported Municipalities From LGTAS List From Siyenza Manje Prog. Requests from Provinces Total EC NW NC WC FS GP MP KZN LP National NB. Back to Basics actual support will be factored upon finalization of the assessment and provincial action plans. 2 municipalities. In LP were not assessed but the province identified them under ICU.

TECHNICAL RESOURCES PER PROVINCE 13

MISA Focus Areas of Support - Engineering PMU and Project Management Support to fast track MIG expenditure Contract Management, O&M Support Basic Water & Sanitation Services Support Audit of existing infrastructure projects Bulk Water Supply – Planning & Construction of Regional Water Scheme Exploration and development of boreholes for water extraction Maintenance and refurbishment of water purification works Revamping of ageing infrastructure Funding Model for Waste Water-Roads-Electrical-Water Infrastructure O&M Support Infrastructure Master Plans to ensure sustainable infrastructure development Integrated Waste management Plans Dolomite Risk Strategies, Water and Sanitation Asset registers Environmental Impact Assessments Geo-technical Studies 2016/03/18 14

The following planning support is currently provided to various municipalities in nine (9) provinces through MISA Planners and Professional Service Providers (PSPs). Infrastructure Master Plans (water, sanitation, energy, solid waste and roads & storm water) to ensure sustainable infrastructure development Spatial Development Plan Reviews Water Conservation and Water Demand Management Land-use Management Systems Water Conservation and Water Demand Management Infrastructure Asset Registers Infrastructure Asset Registers, Infrastructure Asset Management Plans Operations and Maintenance Plans By-laws (Technical and Town Planning) IDP Review 2016/03/18 15 MISA Focus Areas of Support – Town Planning

CURRENT SUPPORT Municipalities Receiving Support MunicipalitiesKind of Support 9. North West Cont.: Tswaing, Ratlou, Moretele, Kgetlengrivier, Mamusa, Moses Kotane, Madibeng, Ventersdorp, Dr Ruth Mompati DM, Lekwa-Teemane, Ngaka Modiri Molema DM, Naledi and Kagisano-Molopo (13) Institutional Arrangements of Water and Sanitation Provision Roads and Storm Water Master Plans Develop Energy Master Plan Operations & Management 2016/03/18 16

IMPACT OF MISA SUPPORT 17 MunicipalityBeforeAfter Chief Albert Luthuli Bushbuckridge Dipaleseng Dr Pixley ka Seme These mentioned municipalities had landfill sites which were not compliant to provide environmental friendly communities against the negative impact of waste disposal activities. Identified landfill sites within the four mentioned municipalities have been licenced through the assistance of MISA.

IMPACT OF MISA SUPPORT 18 MunicipalityBeforeAfter Siyancuma, John Taolo, Ga-Segonyana, Joe Morolong, Gamagara, Khai Mai, Kamiesberg, Thembelihle 5000 buckets were identified to be replaced by proper sanitation facilities in the Northern Cape Province Removal of 1600 buckets by constructing water borne sanitation facilities for these communities through the implementation of Bucket eradication programme with Human Settlements and DWS. Lesedi Local MunicipalityLesedi LM housing backlog was estimated at 6000 and through Obed Nkosi project a reduction in the backlog was realised. Through MISA support a total of 699 households were constructed and also access to water, sanitation and waterborne sanitation. 200 temporary jobs were also created during implementation.

IMPACT OF MISA SUPPORT MunicipalityBeforeAfter Vhembe DMPreviously water was provided on a 12 hourly basis and run out of circulation. Poor operation and maintenance of water and waste treatment plants resulting in poor quality of drinking water and a supply shortage due to the low capacity of staff required to operate the water treatments plants towards efficient supply within the District The district has confirmed that there is 60% improvement in water quality and its provision. After the intervention the supply of water has substantially improved to 24hour provision. Kgetleng Local MunicipalityA total of 6 dysfunctional sewer pump stations where dysfunctional in Koster – Kgetleng Local Municipality from June to November To date a total R2.8million has been secured from DWA under ACIP to deal with the emergency of sewer spillages. To date the 6 sewer pump stations are functional and managed to save the community from diseases such as cholera and other diseases. Dipaleseng, Lekwa, Govan Mbeki and Emalahleni No Energy Master Plans, Roads and Storm Water Master Plans Integrated Waste management Plans Improved asset management including planning for these municipalities

Stopping of Municipal Infrastructure Grant (MIG) 20

Implementing Division of Revenue Act: withholding, stopping and reallocation The DoRA provides for Transferring Officer (DCOG) to: –withhold (delay) the transfer of a grant (MIG) –Recommend stopping of funds to National Treasury –Re-allocate the stopped funds to same or other municipalities in consultation with NT On the grounds of: –The province or municipality does not comply with any provision of this Act; –Roll-overs of conditional allocations approved by the National Treasury in terms of section 21 have not been spent; or –Expenditure on previous transfers during the financial year reflects significant under-expenditure, for which no satisfactory explanation is given. This is done to: –Facilitate compliance with the Act –Minimize the risk of under spending

Definition of Terms With holding : This refers to the application of s17 of DORA when transfers are eminent (Delaying transfer for 30 days) Stopping : Revise the allocation and cut in terms of section 18 of the DORA Re-allocation : Funds are re-allocated to other municipalities. Funds could also be allocated to the same municipality depending on improvements demonstrated Off-setting : Reduction of the ES to pay for unspent grants back to national revenue fund

Based on the Municipal Infrastructure Grant (MIG) analysis of the end of January 2015 MIG expenditure report, the DCoG anticipated that some of the municipalities receiving the MIG would substantially under-spend on their allocations by end of June The DCoG will recommended to the National Treasury that a portion of some of those municipalities’ 2014/15 allocation be stopped and the National Treasury to send notices of intention to stop the MIG transfers to the affected municipalities. The DCoG wrote and will meet with the municipalities that had reported an expenditure of 40 percent and below, of their 2014/15 MIG allocation, as at end January Following the engagements with those municipalities, the DCoG will engaged with the National Treasury and further recommended to the National Treasury that a portion of some of those municipalities’ 2014/15 allocation be stopped. 23 Rationale for stopping

Recommendations The Committee to note : –the performance of municipalities regarding the implementation of MIG Programme; –COGTA support to municipalities through MISA programme, and –the challenges affecting municipal performance and on-going support provided to municipalities

THANK YOU!