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

2. Outline of Presentation 1.BACKGROUND 2.SUMMARY OF MIG EXPENDITURE BY PROVINCE AS AT END JAN 2015 3.EXPENDITURE IN LAST SEVEN MONTHS OF FINANCIAL YEAR 4.MIG EMIG ALLOCATION, BENEFICIARIES AND EXPENDITURE PER SECTOR 5.EXPENDITURE PER SECTOR AS AT JAN 2015 6.CHALLENGES 7.SUPPORT TO MUNICIPALITIES 8.STOPPING OF MUNICIPAL INFRASTRUCTURE GRANT (MIG)

3. 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.

4. 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 2 916 227 1 663 196 1 452 71049.81%87.34% 210 486 Free State 813 654 566 378 354 70143.59%62.63% 211 677 Gauteng 453 318 331 732 225 82249.82%68.07% 105 910 KwaZulu Natal 3 207 141 2 176 888 1 586 36649.46%72.87% 590 522 Limpopo 3 064 058 1 514 828 938 96230.64%61.98% 575 866 Mpumalanga 1 707 250 1 126 639 871 95251.07%77.39% 254 687 Northern Cape 450 944 332 245 268 56459.56%80.83% 63 681 North West 1 598 850 952 582 748 02546.79%78.53% 204 557 Western Cape 472 393 362 154 273 46357.89%75.51% 88 691 TOTAL 14 683 835 9 026 642 6 720 56645.77%74.45% 2 306 076

5. 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 150 999 117 074 216 107 243 458 - 617 652 107 420 Free State 58 919 50 099 38 238 44 992 72 072 44 297 46 084 Gauteng 7 236 29 172 43 117 49 588 28 675 32 118 35 916 KwaZulu Natal 149 570 256 449 209 669 266 699 233 256 238 158 232 565 Limpopo 43 351 112 673 171 152 128 760 168 468 153 222 161 336 Mpumalanga 56 900 107 588 120 882 98 412 179 786 185 025 123 359 Northern Cape 32 768 43 310 45 866 43 915 68 110 19 183 15 412 North West 112 831 183 366 82 997 79 107 104 695 78 246 106 783 Western Cape 18 768 43 861 49 947 43 544 55 136 14 267 47 940 TOTAL 631 342 943 592 977 975 998 475 910 199 1 382 168 876 815

6. 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 Cape671 088 146283 374393 902 947384 991 78723226768139 845 915 Free State272 182 728265 078121 379 534 224 148 474 18381126,9095 667 650 Gauteng 76 010 181120 00727 065 925266 465 347 76,35143 099 320 KwaZulu Natal1 322 367 2361 814 562991 217 567388 172 900797 3890348 322 482 Limpopo 1 827 659 568488 413442 471 390971 180 22916 733362276 749 408 Mpumalanga 806 342 190635 846340 111 967 361 423 306 597 735 123 Northern Cape 224 298 156429 504147 672 139114 736 263 30 383133.2 40 072 188 North West549 252 765110 461255 218 518576 081 98866 8870204 901 498 Western Cape274 002 13145 663159 596 322121 192 720012 766.4677 697 425 TOTAL6 023 203 1014 192 9082 878 636 3093 408 393 014952 99914 0301 924 091 009

7. MIG Allocation, Beneficiaries and Expenditure per Sector Province Community LightingSport Facilities Allocation Planned Households ExpenditureAllocation Planned Households Expenditure Eastern Cape7 377 88615 0713 080 97551 624 28924 49914 232 053 Free State24 593 82872 8654 650 745148 498 460501 741283 328 343 Gauteng5 428 655 31,585 149,52949 724 129 152,727 35,631,665 KwaZulu Natal6 455 29148 5826 455 29171 736 815467 17371 736 815 Limpopo13 096 00025 999998 631119 288 452181 34237 061 428 Mpumalanga12 226 295 7 085 40746 169 15246 61835 017 232 Northern Cape394 08541 522928 16212 035 426317841 542 474 North West32 268 68740 09910 165 25146 249 25441 34921 684 762 Western Cape4 448 7891 666977 45757 940 65135 36323 404 802 TOTAL106 289 516245 80434 341 919603 266 6281 329 869488 007 909

8. MIG Allocation, Beneficiaries and Expenditure per Sector Province Public FacilitiesSolid Waste Allocation Planned HouseholdsExpenditureAllocation Planned HouseholdsExpenditure Eastern Cape81 553 85653 81035 730 3568 130 0008 9456 515 693 Free State98 137 330568 02654 837 65417 419 902141 0069 588 392 Gauteng 14 103 298 126,248 6,588,67311 915 133 212,224 2,678,502 KwaZulu Natal146 501 939837 577135 326 2194 615 863195 6484 615 863 Limpopo169 425 150120 63045 864 3201 625 46032 7661 004 106 Mpumalanga48 858 236379 53325 452 90310 480 896173 9936 370 506 Northern Cape18 936 69090 76613 645 228347 19614 761108 881 North West170 591 91468 96044 944 37269 853 652192 89233 407 994 Western Cape13 417 99812 5784 069 46214 009 62016 6466 100 380 TOTAL724 636 8662 205 624361 466 427132 601 618724 00069 710 184

9. 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

10. 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

11. 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

12. 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 EC141318191641 21 NW154485-8 13 NC15611137-10 17 WC282096-- 6 FS978109-- 9 GP021055-1 6 MP77799-3 12 KZN8183523 -- LP168612 -2 14 National867311910892425121 278 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.

13. TECHNICAL RESOURCES PER PROVINCE 13

14. 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

15. 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

16. 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

17. 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.

18. 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.

19. 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 2014. 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

20. Stopping of Municipal Infrastructure Grant (MIG) 20

21. 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

22. 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

23. 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 2015. 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 2015. 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

24. 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

25. THANK YOU!