PROGRESS ON SUMMIT PROGRAM OF ACTION 24 OCTOBER 2008 STANDING COMMITTEE ON FINANCE CAPETOWN GPG (DLG & GT)

Contents GPG Partnership and Summit Background Gauteng Municipal Finance Summit was steered on five key focus areas: –Revenue Collection, Management and Finance Mobilization –Governance of Municipal Finance –Building Capacity to Manage Municipal Finances –Financial Reporting –Budgeting and Planning Municipal Finances

Structured MOU and managed by TWT with representatives from both Departments Process leading up to the Gauteng Municipal Finance Summit Both Departments undertook extensive reviews and research within the Municipal Governance & Finance discipline Both Papers yielded outcomes which required engagement with Municipalities This eventually culminated in the Pre - Summit held with CFO which laid the basis for the Municipal Finance later in July where a number of Resolutions were taken and consolidated into a Program of Action As collective it was also agreed that every 2 Years we as a collective will review implementation of the POA This presentation is progress on the implementation of the POA GPG Partnership and Summit Background

Gauteng Government introduced an initiative to assist all Gauteng Municipalities with Revenue Management through a partnership with PSU International & FNB. Our support and assistance focused on: –Debt reduction; –Improved Billing integrity; –Improved Revenue collection; and –Monitoring of consumption efficiencies. –Project closing – Exit strategy to be aligned with Credit Control Policy framework AloeCap was appointed as an advisor to the Gauteng Province to undertake a feasibility study to accelerate the collection of municipal debtors. The primary focus areas of the feasibility study includes the following: –Integrity of the metering information, Account preparation process –Financial system, Human Resource Capacity and Legal considerations. The outcome of the Due Diligence study will be presented to Municipalities where muni’s could explore the option of taking the outcomes of the feasibility study to the open market. REVENUE COLLECTION, MANAGEMENT AND FINANCE MOBILISATION….

Finance mobilization: GPG engaged the services of a consortium consisting of an advisory team with extensive experience in Municipal finance and the Bond Market Primary focus was to assess the viability of Munic’s to access the municipal bond market, either jointly or individually. The following recommendations emanated from the municipal review: –Current market conditions are not favorable for a municipal bond issue, whether individual or joint –Whether a single bond or a joint bond is considered, given the limited Municipal Treasury experience in respect of the capital market and how it works will have to be addressed. –It was very unlikely that there will be any pricing advantage in the short term obtained by issuing bonds, compared to loans whether from DBSA or commercial banks. –However Metro’s were encouraged to access the Bond market as it would appear that some muni’s are reaching their prudential limits in terms of lending. REVENUE COLLECTION, MANAGEMENT AND FINANCE MOBILISATION…..

GOVERNANCE OF MUNICPAL FINANCES … Audit Committees and Internal Audit –MFMA regulates the establishment of Audit Committees and Internal Audit. –Availability of credible annual risk based plan - alignment to risk assessment –A partnership has been developed by GPG with the Institute of Internal Auditors to play a strategic role towards strengthening the functioning and focus of the Internal Audit Function. Municipal Public Accounts Committees –Hosted training initiatives for MPAC members in partnership with the Auditor General, National Accountant General and the Provincial SCOPA. –The purpose of the workshops were to build a combined understanding of the Governance issues around the Audit and Oversight Process.

GOVERNANCE OF MUNICIPAL FINANCES. Engagement with the Office of the AG –Facilitated ongoing engagements with between the GPG, Auditor General, Accountant General and Municipalities. –Addressed issues pertaining to the audit process as well as challenges faced by both the AG and the municipality around the process. General Treasury Governance issues –Regular representation to the Provincial Standing Committee’s on Finance & LG and NCOP –Quarterly Publication on the financial performance of Municipalities and tabled in the Provincial legislature every 30 days after the end of each quarter –The establishment of Municipal Compliance Section’ will further strengthen the monitoring of compliance by all municipalities. –CFO Forum remains a key platform towards the discussion and implementation of the resolutions of the finance summit and but also the larger deliverables around the MFMA Reform agenda.

Budgeting and Planning of Municipal Finances –Acknowledge that the IDP is the principle strategic planning instrument for all of government in a Municipal Space –IDP TSC was introduced to create awareness and shared understanding of needs, trends and potential as well as development trajectories within Municipal localities in the Province –TSC will be further underpinned by TWG’s who sole mandate it will be to see project implementation in line with the 2008/2009 IDP priority projects. –TWG’s work will be structured according to LG Key Performance Areas and will be constituted thus: TWG 1: Service Delivery, Infrastructure and Spatial Planning TWG 2: Local Economic Development and Financial Viability TWG 3: Institutional Transformation and Governance –Hence the aforementioned is indicative of our commitment to strengthen the alignment between Province and municipalities but more so to drive implementation and contribution towards service delivery. –National Treasury will hopefully shortly make a pronouncement in terms Regulation around the Municipal Budget process.

Building Capacity to Manage Municipal Finances Gauteng Municipal Finance Intern Grant –With effect from 1 July 2008 GPG augmented the current National Treasury initiative with this introduction of this grant – initially introduced for 11 municipalities –This grant is for the appointment of one financial intern with the intent to grow the applied skills base in terms of Municipal Finance. Gauteng Municipal Support and in partnership with DBSA provide technical support through: –Deployment of Civil Engineers (SAICE) : The purpose is to accelerate Municipal Infrastructure development & Capital spending and focus & Project Manage MIG projects in muni’s –Deployment of suitably qualified Accountants (SAICA): The purpose is to assist and advice municipalities in terms of financial management practices and help deal with AFS issues, deal with AG queries and enhance the muni’s ability to obtain an unqualified Audit Opinion Trough SAICA introduced Local Government Certificate (AAT) to address skills gaps in the lower level areas of the Finance area.

Financial Reporting Gauteng Municipal Information Portal (One Stop Data Warehouse) –GPG has started talks on the establishment of an information portal hosting LG finance and non-finance data for all Gauteng Municipalities. –Based on National Treasuries Survey on reporting requirements for municipalities –Currently in talks with SITA towards entering a partnership in the development of this Information Portal and running a pilot test. We are grateful and blessed to have a good support from Provincial Salga in terms of support on issues of Municipal Government.

THANK YOU!!!