1. Select Committee on Finance
National Treasury
FMG/RG/MFMA
26 February 2007
National Treasury

2. FMG Aim Conditions Implement financial management reforms
Council commitment to MFMA reforms
Progress in multi-year budgeting, improving accounting & producing timely in-year reports;
The employment of an appropriately skilled CFO;
Capacity building - promotion of the internship programme in financial management;
Ongoing review and revision of implementation plans; and
Address weaknesses in financial management.

3. FMG - Implementation
Grant to assist municipalities in implementing financial management reforms and the MFMA
developing policies,
reviewing and improving processes and procedures,
improving consultation and information flows,
updating budgeting, monitoring, accounting, reporting systems,
paying costs of interns and support financial management training and capacity building
Second year of the phase-in of the MFMA to high and medium capacity municipalities

4. FMG- Reporting Sept 06 to Feb 07
SLOW SPENDING
Sept - 24 : Feb - 4
INCONSISTENT REPORTING
Sept - 56 : Feb - 4
COMPLIANT
Sept - 203: Feb - 275
TOTAL
283

5. FMG – Spending Jan 07 Under 25% 39 municipalities (14%) Under 50%
Over 75%
83 municipalities (29%)

6. FMG - Support/Monitoring/Actions
Letters, s, faxes, telephone calls made to municipalities on a weekly basis,
Officials will follow up progress during municipal visits,
Transfers delayed during 2006,
Support and closer monitoring resulted in improvements - non compliance reduced from 28% in September 06 to 2% in February 07,
Letters advising of possible re-allocation sent to non-compliant muni’s, deadline 22 Feb 2007 – 6 responded,
Consider re-allocation of funds during March/July 2007,
Similar steps implemented during consider re-allocation of funds for municipalities slow spending and funds not committed,
Close monitoring will continue during medium term

7. FMG - Transfers Months No. of Muni Total Paid R m JULY 146 75
SEPTEMBER 57 29
NOVEMBER 23 12
UNPAID

8. FMG - Administration EXPENDITURE AMOUNT R Personnel costs 200 000
Telephone/Fax
15 000
Filing/ Photo, etc
Other incidentals
20 000
Total - Approx

9. Restructuring Grant Aim Conditions
Support large municipalities with restructuring initiatives
Conditions
Municipality develop restructuring plans
Adopt resolution committing to implementing plans
Show progress in quarterly reports
Transfers will depend upon the progressive implementation and achievements of agreed milestones
Grant agreements continue until 2008
Grant has been incorporated into the Equitable Share for local government in the outer year of the MTEF

10. RG /07

11. RG – Expenditure (Dec 06)

12. RG - Measures Feedback on evaluation of performance - quarterly basis
Visits undertaken 2nd Quarter:
City of Tshwane; Mangaung and Emfuleni
Issues addressed:
Grant conditions and non compliance with reporting
Improvement in the submission, quality and content of reports
Low levels of expenditure
Confirmation of commitment
Notice with intention to withhold allocations
Continue to follow up outstanding matters
Varied degree of commitment and ownership
Changes in institutional landscape slows implementation
National Treasury

13. RG - eThekwini
Backlogs in free basic electricity, supply of water and sanitation show significant improvements,
Staff placement and redeployment process almost complete,
Stability in senior management promotes continuity,
Improving and high payment levels for services,
Unqualified audit reports for last few years,
Improved credit rating,
However, service delivery agreement with Eskom not yet signed.

14. RG - Cape Town Obtained positive credit rating,
Improvements in oversight structure,
Unqualified audit report,
Steady achievement of financial ratios,
LED implementation underway,
Improved commitment to achieve RG conditions during last quarter,
Improvement in stability with appointment of CFO,
However, still experiencing some delays in finalisation of staff placements,
Spending on grant

15. RG - Tshwane Positive credit rating, AFS submitted to AG on time,
Implementation and integration of financial and reporting systems underway,
HR strategy – learnership & apprenticeship introduced,
Establishment of Eco Dev Agency,
Qualified Audit outcome,
Spending on capital, repairs and maintenance,
Institutional re-organisation and changes to senior management slowing implementation,
Council approval processes,
Low grant spending

16. RG - Emfuleni
Greater emphasis placed on addressing water and sanitation challenges, working with DWAF,
Raised awareness by investors on UDZ Tax Incentive,
Establishment of PMU to assist in MIG projects with almost all funds committed,
Quality of plans and budgets starting to improve, however, spending levels still low,
Reliance on consultants,
Appointment of MM and CFO should stabilise leadership,
Require more focus on balanced implementation of restructuring plan,
Need to improve revenue collections

17. RG - Buffalo City Overall compliance with conditions,
Improvement in credit rating,
Implementation of Activity-Based Costing,
Stable institutional environment,
Improvement in service delivery levels,
Improvement in general valuations,
Adoption of single tax & tariff structure,
Improvement in revenue collection,
Qualified Audit

18. RG - NMBM Poverty alleviation urban agriculture strategy,
Installation of Human Resource system,
Development of Property Valuation Project Plan,
Improvement in delivery of free basic service,
Submission of AFS on time,
Completion of development plans,
Qualified audit report,
Appointment of MM,
Partial compliance with financial conditions,
Slow expenditure on repairs and maintenance,
Spending on grant

19. RG - Mangaung Payment of previous tranches delayed,
Fluidity in senior management structure,
Commitment to achieve grant conditions,
Qualified audit opinion,
Low revenue collections,
Lack of comprehensive and consistent reports,
Progress in achieving restructuring outcomes

20. MFMA Training
Promote broader knowledge of MFMA through guides, circulars and multi-media facilities,
Using modern technology and simple assessment methodology,
Certificate issued after completion of modules,
Additional free support for formal training,
Foundation being laid towards formal and regulated competency levels in financial management

21. MFMA - Benefits for learners & Progress
Contributes towards MFMA competencies
Contributes towards accredited courses
Forms part of a portfolio of evidence
Refresher for existing councillors & officials
Induction for new councillors & officials
Currently 3,220 persons registered
Approximately 200 completed all 6 modules

22. MFMA - Primary Audience
Municipal and municipal entity role players
Mayor & Councillors involved with finance
MM, CFO, All Senior Managers
All finance staff including interns
Corresponding roles in municipal entities
National & provincial officials supporting LG
Treasury departments
Local government departments
Other
SALGA (national and provincial)
Universities

28. MFMA – Training Register
Registered
Module 1
Module 2
Module 3
Module 4
Module 5
Module 6
National 66 13 11 9 10
Provincial
197 34 31 32
Municipal
2667
148
145
142
135
109
125
Non
Governmental
Other
229 3 2
Total
3170
195
192
187
178
150
166

29. MFMA MM CFO Finance Professional Fin ClericalMM
CFO
Finance Professional
Fin Clerical
Other Managers- Non Finance
Other Professionals - non financial
Other
Not currently employed
Total registered 45
264
554
523
404
227
1056 32
Modules Completed %
Module 1
2.22
11.36
8.66
7.46
1.49
2.64
6.25
Module 2
10.98
8.48
1.24
Module 3
10.61
8.12
7.27
6.16
Module 4
10.23
7.22
2.2
5.97
Module 5
8.71
6.14
6.88
0.5
1.76
4.83
Module 6
9.09
6.50
5.49

30. MFMA Regional workshops planned for March and April 07,
Raise awareness on competency levels and training opportunities,
Targeting universities, technikons, training providers, MM, CFO, Interns, other officials
A senior official must be appointed to act as Mentor/coach for the interns
A Personal Development Plan must be prepared for each intern on commencement of the internship
During the internship, a workplace rotation plan must be put in place to ensure that interns are exposed to all areas of Municipal Finance
Accredited Education and Training Providers must be used for the provision of the theoretical and practical components of the programme

31. MFMA – Internship programme
Province
No. of municipalities with interns
Total No. of Interns
Total no. of Municipalities EC 39 83 45 FS 21 50 25 GT 11 26 14
KZN 48 84 61 LP 24 52 30 MP 15 35 NW 16 NC 20 38 32 WC 59
TOTAL
220
462
283

32. Thank You
National Treasury