1. 05-06 September 2012 MEC: CLIFFORD MOTSEPE
Limpopo CoGHSTA Presentation to Portfolio Committee on Cooperative Governance and Traditional Affairs
05-06 September 2012
MEC: CLIFFORD MOTSEPE

2. Focus of the Presentation
Financial Management:- Audit Outcomes and Provincial Intervention measures to address the status
Governance:- Institutional stability and anti-corruption measures.
Services Delivery:- Basic Services and Infrastructure Development
Provincial Intervention in crisis-oriented municipalities

3. I. Financial Management: Audit Outcomes Overview & Provincial Intervention Measures

4. CoGHSTA Audit Outcome 3 yrs Overview
2009/10
2010/11
2011/12
Unqualified
Clean Audit –
Unqualified with no matters of emphasis

5. 2010/11 Municipal Audit Outcome Overview
Overall net regression in the province
Fetakgomo & Waterberg received clean audits. Fetakgomo maintaining the clean audit outcome.
Capricorn District Municipality & Mookgopong improved from disclaimer to qualified audit outcome
Thabazimbi improved from qualified to unqualified.
Six municipalities regressed while 14 maintained negative audit outcomes (qualified; disclaimer& adverse)

6. 2010/11 Audit Outcome Overview
5 best Performers
(3 Unqualified
2 Clean Audits)
13 Bad Performers
(Qualified) 12
Worse Performers
(4 Disclaimers & 8 Adverse )

7. Audit Outcome 5YR Trend Overview
Audit Opinion
2010/11
2009/10
2008/09
2007/08
2006/07
Disclaimer
(D) 8 9 13 19 23
Adverse
(A) 4 2
Qualified
(Q) 11 5 1
Unqualified
(U)
Clean Audit
(C)
8/2/2018

8. Best Performance in the last years
Municipality
10/11
09/10
08/09
07/08
06/07
Fetakgomo C U Q
Waterberg
Maruleng D
Mogalakwena
Thabazimbi
Legend C= C unqualified with no matters of emphasis; u= unqualified; q=qualified; d= disclaimer
8/2/2018

9. Worse Performance in the last five years
Municipality
10/11
09/10
08/09
07/08
06/07
Modimolle A Q D
Letaba U
Aganang
Belabela
Legend: A=Adverse; Q=qualified U=unqualified; D=disclaimer
8/2/2018

10. Worse Performers in the last five years
10/11
09/10
08/09
07/08
06/07
Sekhukhune D
Makhuduthamaga
Baphalaborwa A
Molemole
Giyani Q U
Makhado
Lepelle-Nkumpi
Ellias Motsaoledi
Legend: D= disclaimer; Q= qualified; A=adverse; U= unqualified
8/2/2018

11. Common AG findings
3/30 municipalities did not submit the 2010/11 AFS on time
Blouberg:- could not finalise AFS in time due to labour protest action
Lepelle-Nkumpi:- could not finalise AFS in time due to incomplete audit file and asset register
Sekhukhune:- could not finalise AFS due to unresolved outstanding prior years findings

12. Common AG Findings Accounting for assets- (GRAP 17)
According to new accounting standards all municipalities are now expected to register all capital assets, i.e infrastructure pipelines, farms, all vehicles etc
The challenge is incomplete asset registers or lack of asset registers
Some municipalities can not provide the evidence of asset registered in their asset register during the audit process
8/2/2018

13. Common AG Findings
2. Accounting for water transactions between WSA and Water Service Providers
District Municipalities enter into SLA with Water Services Providers(WSP)
However the challenge is accounting for revenue raised
WSP must provide evidence of billing, financial records must show total revenue raised through water services trading
8/2/2018

14. Common AG Findings 3. High level of irregular expenditure
4.Poor record keeping
Poor record keeping of contracts and general performance evidence
During the audit process top management must ensure availability of evidence
5. Lack of Daily, Monthly and Quarterly Processing and Reconciliation of municipal transactions
8/2/2018

15. AG identified Pervasive root causes
Mayors and councillors are not taking full ownership of controls
Lack of consequences for non compliance
Lack of consequences for poor performance

16. High Level Provincial Intervention

17. Projected Movement Towards Operation Clean Audit 2014
5 unqualified audit reports
Audit Reports
Unqualified 10 20
Audit Report
Reports
Audit 30
2010/11 BASELINE
2011/12 FY
2012/13 FY
2013/14 FY
8/2/2018

18. Deployed Technical Support on Financial Accountability
1. Commissioned 4 Accounting Firms (PWC; Ngobeni;; CorMD; SB&T) over a three years to provide technical support to all municipalities across the province; 2. Entered into outputs based Service Level Agreements with the accounting firms
8/2/2018

19. Strengthen Provincial Political Oversight
Established a MUNMECs, A Provincial Audit Outcomes Oversight IGR Forum constituted of MEC for CoGHSTA and Provincial Treasury, attended by District Mayors and Local Mayors on a quarterly basis.
The session will monitor implementation of municipal audit remedial action plans
The session will monitor revenue and debt management issues
The session will monitor infrastructure grant expenditure
8/2/2018

20. Strengthen Local Leadership Oversight
Local Political Oversight to ensure:
Functional District Political & Technical IGR Structures
Functional Political Management Team
Functional EXCO & Portfolio Committees
Functional Municipal Council
Monthly Management & EXCO sessions
Monthly report to MPACs on audit action plan
8/2/2018

21. Building HR Capacity for Budget & Treasury Unit
Filling of CFO post with appropriate skilled personnel
Ensure compliance with Treasury Regulation on Minimum Competency for financial management officials
Ensure placement of officials with appropriate skills in Budget and Treasury Units
Competence assessment of officials in Budget and Treasury Unit;
8/2/2018

22. Strengthen Governance Capacity
Municipal Council
Risk Management
Internal Audit
Audit Committee
MPAC
8/2/2018

23. Gov Debt Owed To Municipalities

24. Support to Municipalities
EXCO resolution obliging government departments to pay municipalities.
A Provincial Debt Forum led by CoGHSTA monitors the payment of debts and assist to address blockages.
Departments are paying on a monthly basis however the challenge is the huge backlog and interest charged on the outstanding amount.

25. PAYMENTS MADE TO MUNICIPALITIES AS AT QUARTER ENDING JUNE 2012

26. PAYMENTS AS AT JUNE 2012

27. OUTSTANDING DEBT AS OF JUNE 2012

28. Payment vs Outstanding Debt

29. Analysis of the payment trend
Although the payments are being made, the actual amount are very low to address the total outstanding debts, i.e
National Public Works paid R4, and the remaining total balance is R
Education paid R and the remaining total balance is R
Roads and Transport paid R and the remaining total balance is R

30. Key Challenges Government properties built on communal land.
Late and none submission of information by municipalities
Outstanding payments from schools for services.
Government properties registered under SADT, RSA, Lebowa Government etc ownership classification presents a challenge.

31. II. Service Delivery and Infrastructructure Development

32. High Level Infrastructure Intervention:
A total of R235 million has been allocated through the Integrated National Electrification Programme (ESKOM grant) to electrify households in Limpopo for the 2012/2013 financial year.
A further R2.463 billion has been allocated through Municipal Infrastructure Grant for provision of basic services to household in the province for 2012/2013 financial year.

33. High Level infrastructure Intervention:
The De Hoop dam in Sekhukhune is also nearing completion, and the impoundment of water will be started by end of September This was planned for August but was delayed by the labour protest at the project site.
About R889 million has been provided for bulk distribution network around De Hoop dam over the next three financial years through the Regional Bulk Infrastructure Grant programme.
Nandoni dam distribution, a contractor is on site for construction of bulk water supply line to address the pipes previously installed that did not meet the standard.

34. High Level Infrastructure Intervention:
Regional Bulk Infrastructure
An allocation of R million through the Regional Bulk Infrastructure Grant for water projects has been made available in the 2012/2012 financial year to the province through the Department of Water Affairs for the following bulk projects:

35. High Level Intervention
Regional Bulk Infrastructure Grant
Implementation of 8 regional bulk infrastructure projects to the value of R million across the province
Sekhukhune (R125 million)
Nebo Bulk Water supply, Moutse bulk water supply, Mooihoek /Tubaste bulk water supply and De Hoop dam bulk distribution network
Waterberg (R137 million)
Mogalakwena bulk water supply
Vhembe
Sinthumule Kutama Bulk water supply;
Mopani (R454 million)
Giyani Bulk water supply and Mametja Sekororo.
Assessment of waste water treatment work (R4,7 million) has started.

36. Basic Services Backlog as of June 2012
Limpopo Total Households = 1, Limpopo Total Population =5,
(Stats SA: HH Survey 2009)
Basic services backlog as of June 2012
Water is at 10,26(DWA)
Sanitation is at 36,25%(DWA)
Electricity is at 16%(DOE)

37. Lephalale Local Municipality
The Scoping Report/ Municipal Infrastructure Investment Plan for Lephalale costing completed 2011.
National Treasury, has through National Human Settlements ‘Urban Settlements Development Grant (USDG) contributed R318m towards bulk infrastructure development in Lephalale.
Environmental Impact Assessment ROD has been obtained
Bulk Infrastructure development for water and sanitation as well as electricity has commenced in Lephalale;
Township establishment process for the integrated housing development is about to be finalised

38. Provincial Points: Tubatse, Musina & Makhado
A service provider for the development of the Regional Infrastructure Master Plan has started with the process in both Tubatse and Musina/ Makhado Corridor.
This Infrastructure Scoping Report will provide a comprehensive overview of the infrastructure needs and projections of the required funds to address them.
Musina Spatial Development Framework & Town Master Plan have been completed;
Makhado Spatial Development Framework has been completed

39. MUNICIPAL INFRASTRUCTURE GRANT EXPENDITURE OVERVIEW

40. 2011 / 2012 MIG expenditure
Provincial expenditure on MIG for the 2011 / 2012 financial year is 74%
About R531 million was unspent, of which:
R135 million by Sekhukhune District Municipality
R135 million by Mopani District Municipality
R80 million by Mogalakwena Local Municipality and
R69 million by Capricorn District Municipality
2012 / 2013 MIG Budget is R million + roll over of R134 million, therefore the total to be spent in 2012/2013 on MIG R million

41. Municipal Infrastructure Forward Planning Framework
Lack of forward planning is the main reasons for poor expenditure.
Provincial EXCO took notice and resolved on the matter as per EXCO resolution no's 12 of 2012/2013 (12.1) and 13 of 2012/2013 (13.2).
Municipalities should develop forward planning for their capital / infrastructure projects, such that planning for projects is done in the outer year and implementation thereof is done in the following year.
The Department developed a Provincial Framework for the Infrastructure Forward Planning. The framework obliges municipalities to finalise appointment of service providers before the commencement of the new financial year

42. III. Governance

43. Governance Targets
Political leadership to provide oversight & monitoring
Filling of top managements;
Establishment of audit committees;
Public participation;
Functionality of ward committees
Intergovernmental Relations
Oversight- establishment of MPAC

44. CURRENT PROVINCIAL STATUS OVERVIEWMM
TECHNICAL
CFO
CORPORATE
Vacancies
2/30 (6%)
6/30 (20%)
7/30 (23%)
Suspensions
1/30 (3%)

45. CURRENT PROVINCIAL STATUS OVERVIEW
MM (2)
TECHNICAL (6)
CFO (7)
CORPORATE (7)
Vacancies
Modimolle
Lephalale
Makhado
Makhuduthamaga
Tzaneen
Vhembe
Musina
Waterberg
Mutale
Elias Motsoaledi
Mopani
Giyani
Lepelle Nkumpi
Mogalakwena
Mookgophong
Fetakgomo
Ba-Phalaborwa
Bela-Bela
Suspensions
Capricorn District

46. Governance & Oversight
All 30 municipalities established Municipal Public Accounts Committee;
30 municipalities have Internal Audit units
30 municipalities have Audit Committees
A Provincial Debt Reduction forum is convened jointly by LPT and CoGHSTA
Provincial Municipal Internal Auditors Forum and Risk Management Forum are convened quarterly.

47. Municipal Turnaround Strategy
12 municipalities identified for the revitalisation of MTAS strategy in the priority municipalities.
Focus on ensuring institutional stability and enhance households access to service delivery;
Project to be monitored on a monthly basis

48. Functionality of IGR Structures
Premier-Intergovernmental Forum convened on a quarterly basis;
EXCO & Cluster Committee meeting on a monthly basis;
All District IGR Structures are functional
Additional consultative fora, MM, CFO, HOD’s Forum
Monthly EXCO outreach conducted across the Province.

49. Improved IDP credibility ratings
2010/11 IDP Rating
2012/13 IDP Rating
2011/12 IDP Rating
14 high
13 medium
3 low
21 high
8 medium
1 low
26 high
4 medium
0 low

50. Fighting corruption: Anti-corruption measures both in the department and in municipalities

51. Anti-corruption intervention within CoGHSTA
Housing projects:- Blacklisting of contractors
the department blacklisted 24 housing contractors for incomplete housing or shoddy work done over the past ten years
R1,5 million was recovered through this process as one service provider offered to reimburse the department.

52. Anti-corruption measures in municipalities
Special Investigation Unit (SIU) conducted investigation in the following municipalities
Musina Local Municipality
Vhembe District Municipality
Sekhukhune District Municipality
Ellias Motsoaledi Local Municipality
Thabazimbi Local Municipality
Maruleng Local Municipality
Greater Tubatse Local Municipality
Belabela Local Municipality

53. Provincial Intervention in terms of Section 105 of the Municipal Systems Act (2000)

54. Intervention in crisis oriented municipalities over the past 3 yrs
Blouberg:- the department seconded an official to act as Municipal Manager, the municipalities has since then stabilised
Molemole:- following the assessment of the state of affairs, the District Municipality seconded an official to act as Municipal Manager
Mookgopong:- rapid assessment conducted, Waterberg District seconded an official to act as Municipal Manager
Mogalakwena :- department reversed an illegal council resolution that seek to reinstated a fired director
Musina:- department suspended the MM and commissioned a forensic investigation

55. Mookgopong Intervention highlights
Department commissioned forensic investigation which found that CFO and MM were not complying with MFMA
MM & CFO were dismissed following disciplinary proceedings
The Municipality has stabilised, was able to move from persistent disclaimer audit reports to qualified 2010/11

56. Mogalakwena Intervention highlights
Municipal Council resolved to reject outcome of a disciplinary proceedings against a corporate services director;
Department intervened the resolution was reversed and the incumbent was fired;
Municipal Councillor are going to be held responsible for the fruitless expenditure incurred through their resolution.

57. Musina intervention highlights
The Department conducted investigation which recommended that the MM be suspended immediately and
A forensic investigation confirm the findings
The MM has recently resigned
The Hawks are in the process of instituting charges against the MM

58. Way Forward: Future Outlook

59. Strategic Intervention: Operation Clean Audit
4 accounting firms appointed to provide hands on support to municipalities on financial management
Scope of work entails providing hands on technical support on financial management with specific focus on financial accountability – addressing prior year audit issues, preparation of AFS,

60. Strategic Intervention: Economic Development & Spatial Planning
Strategic economic catalytic projects for
Musina-Makhado Corridor; Infrastructure scoping report
Lephalele Local Municipality; implementation of projects identified in the infrastructure scoping report
Tubatse Local Municipality; infrastructure scoping report
All 12 MTAS municipalities to have credible IDPs; Reviewed LED strategy; LUMS & SDF

61. Strategic Intervention: Human Settlement
Provincial Multi-Year Housing Development Plan completed
Municipal Housing Chapters completed
12000 sites to be serviced
Informal settlements audit completed
Formalisation of targeted Informal settlements in 12 priority municipalities

62. Strategic Intervention: Governance
Filling of top management positions and critical posts across all 12 municipalities
Functional MPAC
Full compliance with PMS requirements for top management
Roll-out of PMS implementation at least to second level of middle managers

63. Thank You