Minimum Competency Regulations MUNICIPAL FINANCE MANAGEMENT ACT No. 56 of 2003 TV Pillay MFMA Unit

Background The White paper on Local Government - Systematic programme to develop high level management and front-line worker capacities in local government The Constitution - Section 154(1) - by legislative and other measures must strengthen municipal capacity Municipal Finance Management Act – meet the objectives and assist implementation Improving capacity and skills of officials (enhancing current and build new skills) Address financial management challenges Reinforce sustainable practices Leading to improved delivery of services

Research 278 Senior municipal managers - levels of qualifications EC FS GT KZN LM MP NC NW WC National % No Data 2 1   4 1.4 Pre-Matric 0.4 Matric only 15 5.4 Matric and Diplomas 8 11 13 7 27 6 85 30.6 Undergraduate degree 10 9 5 55 19.8 Undergraduate degree and Diplomas 3 35 12.6 Under and post graduate 14 66 23.7 Under/Post graduate and Diplomas 17 6.1 Total 29 31 44 25 60 24 28 12 278 100%

Research 278 Senior municipal managers - levels of qualifications by sector/type FS GT KZN LM MP NC NW WC National % No Data 2 1 4 1.4 Teaching 11 5 39 14.0 Finance 7 8 3 27 9.7 Legal 10 38 13.7 Public Admin. 6 13 12 34 103 37.1 Other 9 67 24.1 Total 29 31 44 25 60 22 28 278 100%

Background MFMA sections S 83, 107 - Municipalities/ Entities accounting officer, senior managers, CFO and other financial officials must meet financial management competency levels S 119 - Supply Chain Management accounting officer and all other officials of a municipality or municipal entity involved in the implementation of the SCM policy must meet the prescribed competency levels

Regulations Who do the regulations apply to? Accounting Officer / Municipal Manager Chief Financial Officers All other Senior Managers (directly accountable to AO) Financial Officials at middle management level Supply Chain Management - Heads of SCM and Senior Managers directly accountable to the AO/MM Differentiation by category (capacity & budget) Applies to municipalities & entities

Regulations Differentiation / Categories: Municipal capacity (High, Medium & Low) Functions performed Budget size: < R500 million: 250 municipalities > R500 million: 33 municipalities Must include the budget of municipal entities

Regulations Extensive consultation - dplg, SALGA, provincial departments, DPSA, municipalities 6 regional workshops (all provinces) – March and April All municipalities invited Total number of 558 participants 470 municipal officials 71 SALGA / dplg / Prov LG / Prov Treasuries 17 educational institutions Complements other government efforts Consistent with the principles of the Municipal Systems Act, including the Municipal Performance Regulations

Regulations Supports implementation Municipal Manager responsible for MFMA Assists in establishment of Budget and Treasury Office Strengthen skills of top management team SCM Unit - greater integration Support employment of qualified personnel Improve recruitment processes and adverts for MM, CFO, senior managers and SCM managers

Transitional Provisions All municipalities and entities to commence assessment of officials to identify competency gaps Enrol for SAQA recognised qualifications, registered service providers only (test based) Attainment of competencies to be included in performance agreements NQF 4 = matric NQF 5 = diploma NQF 6 = degree NQF 7 = honours & postgraduate

Prescribed Unit Standards NQF Level 5 NQF Level L6 Title   116339 Apply risk management in municipalities 116341 Conduct performance management to a municipal environment 116342 Apply approaches to managing municipal income and expenditure within a multi-year framework 116343 Apply the principles of ethics in a municipal environment 116345 Apply the principles of budgeting within a municipality 116348 Conduct stakeholder consultation around municipal finance programmes 116351 Conduct audits, planning and implementation in a municipality 116353 Participate in the design and implementation of municipal SCM 116358 Contribute to the strategic planning process in a municipality 116361 Interpret legislation and policy affecting municipal financial management 116362 Manage a municipality's assets and liabilities

Prescribed Unit Standards (cont) NQF Level 5 NQF Level L6 Title   116363 Prepare and analyse municipal financial reports 116364 Plan a municipal budgeting and reporting cycle 119331 Conduct working capital management activities in accordance with sound financial management policy 119334 Discuss the selected legislative regulatory framework governing the public sector management and administration environment 119341 Apply cost management information systems in the preparation of management reports 119343  Apply operations research principles and tools in the management of project activities and resources 119348 Apply selected GRAP to periodic accounting reporting process 119350 Apply accounting principles and procedures in the preparation of reports and decision making 119351  Apply principles of computerised systems to manage data and reports relevant to the public sector administration 119352 Apply principles of information systems to public finance and administration

Recognition of Prior Learning Is the process of recognising and assigning credit values to the learning that a person has undertaken on an informal basis, for example, in the form of work experience or the attendance of short courses Identify what the official knows and can do Match the official’s skills, knowledge and experience to specific unit standards and strategic priorities Assess the official against unit standards Credit official according to assessment These are activities carried out by an assessor (subject matter expert) accredited by SETA-ETQA

Guidelines Competency Competency GUIDELINES GUIDELINES Competency Accounting Officer Competency GUIDELINES Chief Financial Officer Competency REGULATIONS MFMA Competency GUIDELINES Senior Managers Competency GUIDELINES Finance Officials Middle Management Competency GUIDELINES Head SCM & SCM Senior Managers

Chief Financial Officer MUNICIPAL FINANCE MANAGEMENT ACT No. 56 of 2003 Municipal Regulations on Minimum Competency levels

Chief Financial Officer Higher education qualification Qualification Municipal capacity and budget At least NQF level 6, or Certificate in Municipal Financial Management (SAQA No. 48965) All Low capacity municipalities; Medium capacity municipalities with annual budgets of a value below R500 million for the current year; Municipal entities with annual budgets of a value below R500 million for the current year. At least NQF level 7, or Chartered Accountant (SA) All High capacity municipalities; Medium capacity municipalities with annual budgets of a value equal to or above R500 million for the current year; Municipal entities with annual budgets of a value equal to or above R500 million for the current year.

Definitions Calculation of the value of the annual budget includes: Total operating and capital expenditure In the case of a parent municipality, the aggregated value of the annual budget of the municipality + its municipal entity(s)

Chief Financial Officer Work related experience: Work-Related Experience Municipal capacity and budget 5 years at middle management level All Low capacity municipalities; Medium capacity municipalities with annual budgets of a value below R500 million for the current year; Municipal entities with annual budgets of a value below R500 million for the current year. 7 years at senior & middle management level (2 of the 7 years must be at senior management level) All High capacity municipalities; Medium capacity municipalities with annual budgets of a value equal to or above R500 million for the current year; Municipal entities with annual budgets of a value equal to or above R500 million for the current year.

Chief Financial Officer Competency areas: Unit Standards Strategic leadership and management - 2 Strategic financial management - 3 Operational financial management - 6 Governance, ethics & values in financial management-1 Financial and performance reporting - 4 Risk and change management - 1 Project management - 1 Legislation, policy and implementation -1 Stakeholder relations - 1 Supply Chain Management - 1 Audit and Assurance - 1

Chief Financial Officer Example - Unit Standards Strategic financial management CFO required to be competent in unit standard 116342 “Apply approaches to managing municipal income and expenditure in a multi-year framework”

Chief Financial Officer Unit Standards include – Specific outcomes and assessment criteria e.g.: Develop approaches to managing a municipality's revenue in a sustainable manner Apply the different approaches to forecasting municipal income and expenditure over the medium term Contribute to the design of rates, tariffs and user charges

Chief Financial Officer Supporting Guideline: “Guideline for Municipal Competency levels: Chief Financial Officers” Contains table of 11 competency areas (pages 6 – 18) Each competency area in table linked to: specific competencies required detail of knowledge & skills required

Chief Financial Officer Guidelines example: Strategic Financial Management (competency area 2) – page 7 “The ability to guide the management of an effective, economic and efficient finance function, supported by effective financial management policies and practices.”

Chief Financial Officer Strategic Financial management (cont): Examples of knowledge & skills required: Formulating and implementing finance strategies, which enhance good financial management and decision making practices across the finance function Developing and implementing financial policies and systems to ensure efficient and effective financial administration Developing, implementing and maintaining financial management guidelines, financial instructions, credit control procedures, debt collection and related financial policies

Consultation Consider similar competency regs for other sectors Apply higher levels for SCM officials Support training initiatives from SETA and SAMDI Further resources may be required for roll out Explore possibility for further exemptions M F M A

Monitoring and Support MUNICIPAL FINANCE MANAGEMENT ACT No. 56 of 2003 Municipal Regulations on Minimum Competency levels

Monitoring & Reporting Municipal Manager/ Chief Executive Officer responsible to monitor & ensure compliance Report twice yearly on compliance, as at 30 June & 31 December (using supporting schedule) Submit copy to National and Provincial government within one month Municipalities to include consolidated information on all entities Disclosure - copy of 30 June report to be included in the municipal Annual Report

Monitoring & Reporting Report to show the number of financial & SCM officials: employed that have undergone assessment who’s performance agreements include competency attainment that meet the competency levels

5 ½ years implementation Commencement Effective date: 1 July 2007 Fully operational: 1 January 2013 Phase-in 5 ½ years implementation

Guiding Implementation Steps for MM Establish steering committee, reporting to the Municipal Manager Staff competency assessment to identify gaps (assessor to be LGSETA accredited) Prepare training strategy and budget up to 1/1/2013 Staff to undertake SAQA recognised training to address identified gaps Performance agreements must incorporate attainment of competencies Recruitment procedures to include new competency requirements

National Treasury Support Ongoing guidance and support towards effective implementation Issuance of Circulars Review training provider material Engagement with service providers (WBS, Afrec, TuT) other universities MFMA Internship programme MFMA Foundation Interactive DVD Learning Workshops, seminars, events Finance Management Grant (partial support)

Training Providers SAQA recognised qualifications Certificate in Municipal Financial Management (SAQA ID No. 48965) National Diploma: Public Finance Management and Administration (SAQA ID No. 49554) NT validated training courses refer www.treasury.gov.za/mfma under “Training & Validation”

Municipal Regulations on Minimum Competency levels Thank You Website: www.treasury.gov.za/mfma Email: mfma@treasury.gov.za MUNICIPAL FINANCE MANAGEMENT ACT No. 56 of 2003 Municipal Regulations on Minimum Competency levels