PRESENTATION TO THE BUDGET SELECT COMMITTEE BRANCH : FREE BASIC SERVICES AND INFRASTRUCTURE By: Patrick Flusk

Overview : Branch Activities Chief Directorate Objectives CONTENTS Key Focus Areas Budget Allocations Main purpose Overview : Branch Activities Chief Directorate Objectives Milestone 2003/04 Challenges Overview : 2004/05 Business Plan Conclusions 2

DDG : Mr. Patrick Flusk 4 Chief Directorates CHIEF DIRECTOR Ms Gabi Gumbi-Masilela FBS Ms Molatelo Montwedi MIG Ms Xoliswa Sibeko Public Participation And Empowerment Mr Muthotho Sigidi MSPs 6

FBS: Key Focus Areas Addressing backlogs through infrastructure provision Enhanced service delivery through integration and coordination Enhanced access to basic services Full rollout of free basic services Enhanced public participation Strengthening the role of PPPs

Budget Allocations: Administration Subprogramme Expenditure Outcome Adjusted appropriation Medium-term expenditure estimate Audited Preliminary Outcome R Thousand 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 Management - 3 000 3 443 3 497 4 028 Municipal Infrastructure 7 015 6174 8 509 11 662 16 622 20 114 21 849 Free Basic Services Co ordination 267 350 935 1 260 3 247 4 085 5 415 Municipal Service Partnerships 2 294 2 420 2 541 Public Participation and Empowerment 4 094 903 1 755 3 094 3 383 3 610 5 429 Total 11 376 7 427 11 199 19 016 28 989 33 726 39 262 4

Budget Allocations: Fiscal Transfers Subprogramme Expenditure Outcome Adjusted appropriation Medium-term expenditure estimate Audited Preliminary Outcome R Thousand 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 Provincial Transfers - Consolidated Municipal Infrastructure Programme 51 887 38 408 Municipal Infrastructure Grant 40 733 43 558 46 171 Local Government Transfers Consolidated Municipal Infrastructure Programmme 851 100 996 002 1 670 767 2 246 253 47 000 4 445 943 5 192 602 5 987 058 Local Economic Development Grant 80 459 86 944 110 565 117 000 Total 931 559 1 082 946 1 833 219 2 448 661 4 486 676 5 236 160 6 033 229 5

OVERVIEW OF THE BRANCH PROGRAMMES FREE BASIC SERVICES 7

FBS MILESTONES 2003/04 Free Basic Electricity pilot projects Contracting the Free Basic Non Grid Energy pilot in Limpopo and KwaZulu Natal. Rollout of the Free Basic Electricity by metros and bigger municipalities. Implementation in the smaller municipalities delayed due to some challenges experienced by municipalities Development of the Funding Agreement to guide implementation of Free Basic Energy between the municipalities and the service providers

FBS MILESTONES 2003/04 The National Free Basic Services Task Team made up of dplg, DME, DWAF, ESKOM, DPE, STATSSA, NER was established to facilitate the rollout of the free basic services by municipalities. DPE resolved the financial concerns raised by Eskom regarding the non-energy costs of providing Free basic services. Standard Tariff across the board negotiated with NER Established Provincial task teams to facilitate and support implementation of FBS

FBS MILESTONES 2003/04 Stabilised the service authority /service provider relationships between municipalities and service providers Developed and facilitated the signing of the funding agreement between Eskom, Energy concessionaries and the municipalities for the implementation of the free basic services. Initiated the assessment study on the challenges in the implementation of FBS (phase 1 completed in March 2004)

CHALLENGES Poor communications between municipalities and communities Lack of adequate capacity support from some province Lack of internal capacity in most municipalities to deliver FBS Insufficient funding compounded by lack of data on actual beneficiaries High cost of providing alternative FBS in areas where infrastructure is not available

Free Basic Services CHALLENGES Poor monitoring mechanisms Ability to pay vs. willingness to pay Lack of impact indicators of success Poor linkages with other social grants Poor metering and billing systems Poor communication Funding constraints for poor municipalities

Free Basic Services Overview : 04/05 Business Plans Develop guidelines for indigent policy Develop a monitoring system to measure impact Develop a credible database for all municipalities Consolidate the monitoring teams at provincial level to ensure synergy Develop capacity of municipalities to enhance deliver of FBS Develop communications guide for municipalities Review FBS policies

OVERVIEW OF THE BRANCH PROGRAMMES MUNICIPAL INFRASTRUCTURE GRANT (MIG) 13

Municipal Infrastructure Grant Main outputs of MIG Program: Funding basic infrastructure development Enhancing the EPWP Enhancing LED Job Creation Partnerships Inter-governmental coordination (MITT & MIT3) 14

MIG MILESTONES 2003/04 CMIP: R2,246 billion transferred to municipalities. 42,79% of the total allocated to nodes. Employment opportunities created Training provided (31% youth, 20% women). 336 SMME’s utilised in construction. 15

MIG MILESTONES 2003/04 R40.9m of the R47m utilised for MIG pilots MIG Policy Framework / MIG Formula Finalized MIG- DORA, cross-cutting and sector specific conditions DORA Allocations for 2004/05 determined: 96% (R4,4b) - Municipal infrastructure (includes committed DWAF and CMIP as well as uncommitted funds) 3% (R133m) SMIF (guidelines under development) 1% Program Management (R44 m) The PMUs at municipal level have been identified MIG funding agreement completed 16

BUDGET ALLOCATION Province CMIP (Rm) DWAF (Rm) New MIG (Rm) PMU (Rm) Total Fund (Rm) E/ Cape 687.623 117.858 54.503 20.332 859.984 F/ State 196.681 37.134 68.430 11.769 302.245 Gauteng 394.862 283.455 15.170 678.317 KZN 592.912 135.262 173.603 24.759 901.777 N/Cape 91.191 32.253 5.610 123.444 Limpopo 272.760 64.057 238.877 15.314 575.694 M/Langa 120.963 48.705 94.355 10.365 264.023 N/West 145.528 36.800 135.325 12.104 317.653 W/cape 221.508 6.899 16.562 8.214 244.969 Total 2 724.028 478.969 1 198. 487 124 000 4 401.484

Service projection for 2004/05 in respect of CMIP & DWAF committed projects (Includes upgrading, new and rehabilitation projects) R (millions) CMIP Estimated h/holds to be serviced DWAF Total (CMIP & DWAF) h/holds Average cost / h/hold Water 1085 355 000 335 000 109 000 464 000 R3 050 Sanitation 476 158 000 144 000 48 000 206 000 R3 300 Roads 705 182 000 R3 866 Solid Waste 80 167 000 R 478 Community lighting 79 72 000 R1 102 Community facilities 141 258 000 R 548

MUNICIPAL INFRASTRUCTURE GRANT An amount of R213 405 million is allocated to the nodal areas R26 449 million is allocated to the urban nodes and 186 956 million to rural nodes. There is a further 148 000 households that could benefit from new MIG funds at the total cost of R453,03 million for water. There is further 64 000 households that could benefit for sanitation at the total cost of R192 million. The two above projections are based on the formula. This could be changed by the IDP priorities.

Municipal Infrastructure CHALLENGES Institutional Activities The full establishment of MIG unit Establishment of MIG management structures (PPMUs & PMUs) Monitoring and Evaluation Develop the monitoring system Communication Technical MIG workshops to all Municipalities Clarification of sector roles MIG Launch Funding Vs Modeling of Infrastructure The quantification of capital and O&M budgets of municipalities as require by DORA 2004 Review the costing model and also creating a GIS linkage Develop the Municipal Infrastructure Investment Framework 18

MUNICIPAL INFRASTRUCTURE CHALLENGES Macro control Establishment of an independent macro control audit function LEDF Non-infrastructure commitments Determining municipal infrastructure investment levels and grant requirements Development of MIG business processes The quantification of capital and O&M budgets of municipalities as require by DORA 2004 17

Overview : 04/05 Business Plans Transfer, administer and manage capital funds. Special Municipal Infrastructure Fund (SMIF) The full establishment of MIG unit by 31 March 2005. Establishment of MIG management structures (PPMUs & PMUs by 30 June 2004, PMITT by 31 July 2004) Develop the monitoring system by end November 2004 19

Municipal Infrastructure Overview : 04/05 Business Plans Communication Technical MIG workshops to all Municipalities by 31 March 2005 Clarification of sector roles by September 2004. MIG Launch by end of July 2004 Funding Vs Modeling of Infrastructure Reviewing the costing model and also creating a GIS linkage by 31 March 2005 Develop the Municipal Infrastructure Investment Framework by 31 March 2005 Macro control Establishment of an independent macro control audit function 20

MUNICIPAL SERVICES PARTNERSHIPS (MSPs) OVERVIEW OF THE BRANCH PROGRAMMES MUNICIPAL SERVICES PARTNERSHIPS (MSPs) 21

Municipal Services Partnerships Objectives : Create an enabling environment for the participation of the private sector in service delivery Enhance the levels of delivery by the public sector as a preferred option Encourage the sharing of capacities for efficient service delivery Establish the MIIU to encourage private sector participation in service delivery 22

MSP MILESTONES 2003/04 National MSP Task Team established. MSP Stakeholder workshop MSP Training to 360 Councilors and officials Completion on the Support Unit for the Public Provision of Services (SUPPS) 23

Municipal Service Partnerships CHALLENGES Finalising MSP regulations and guidelines Further training on MSPs Impact assessment of MSPs Implement SUPPS model Develop exit strategy for the MIIU HR capacity of the Chief Directorate Current legislation constraints – time consuming and feasibility study too expensive 24

Overview : 04/05 Business Plans Audit existing MSPs in municipalities Hold provincial MSP workshops Publicize the MSP guidelines Develop an Exit Strategy for MIIU Complete the MSP training Organise an international conference on MSPs 25

OVERVIEW OF THE BRANCH PROGRAMMES Public Participation & Empowerment 26

Public Participation & Empowerment Objectives : Facilitate effective communication between municipalities and communities Support the establishment of the Community development workers Ensures proper linkages between the Ward Committees and the CDWs Ensures effective participation of communities in the decision making machinery of the municipalities 27

Public Participation & Empowerment Milestones 2003/04  CDW National Stakeholders workshop. CDW Rollout in 5 Provinces and Provincial CDW Task Teams established 740 CDWs in learnerships 28

Public Participation & Empowerment CHALLENGES Strengthen intergovernmental communication and coordination Develop monitoring and evaluation system Secure funding in three provinces namely:Western Cape, Free State and North West Encourage ownership of the program by municipalities 29

Municipal Service Partnerships Overview : 04/05 Business Plans Capacitate Ward Committees Strengthen CDW Program Develop monitoring & Evaluation system Hold provincial workshops Develop user friendly materials 30

I thank you.