1. Select Committee on Finance (SCoF) National Treasury 10 October 2007
Restructuring Grant
Select Committee on Finance (SCoF)
National Treasury
10 October 2007

2. Restructuring Grant Aim Conditions
Support large municipalities with restructuring initiatives
Conditions
Municipality develop own restructuring plans
Contractual obligations on 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 end in 2008
Continue to monitor the grant beyond its projected life

3. 2006/07 transfers

4. Withholding for 2006/07
Withheld R180 million for the 2006/07 financial year for C ape Town (R80 m), Tshwane (R50 m) and Nelson Mandela Bay (R50 m)
Reason for withholding:
City of Cape Town – Slow organisational transformation, inconsistent reporting, significant and persistent under expenditure on the grant (39%)
City of Tshwane – Slow spending (41%), inconsistent reporting, slow implementation of institutional conditions and slow execution of capital budget (25%)
Nelson Mandela Bay – Non compliance in meeting obligations to creditors, slow organisational transformation, slow spending on capital budget (14.7%) and slow spending on grant (52%)
National Treasury

5. Issues addressed
Feedback on evaluation of performance - quarterly basis
Visits undertaken:
City of Tshwane; Nelson Mandela Bay; City of Cape Town and Emfuleni
Issues addressed:
Grant conditions and non compliance with reporting
Improvement in the submission, quality and content of reports
Confirmation of commitment
Low levels of expenditure
Continue to follow up outstanding matters during this quarter
Improvements in commitment and ownership to achieving grant conditions
Regular meetings with some municipalities to resolve the above issues
National Treasury

6. Expenditure levels: April - June 2007

7. 2007/08 Budget

8. Expenditure levels as at Aug 2007

9. Financial Management Grant
National Treasury

10. Conditions
Councils and Municipal Managers’ commitment to promote all aspects of the financial management reforms
Establishment of a budget and treasury office with positions filled by appropriately skilled staff
Establishment of SCM and Internal Audit units in all municipalities
The Employment of an appropriately skilled CFO
Ongoing review, revision, and submission of implementation plans to address weakness in financial management
Acquisition of a financial management system that can produce multi-year budgets, in-year reports, SDBIP, annual reports,etc.
Expansion of the financial management graduate internship programme to all municipalities

11. 2006/07 OUTCOMES Grant transferred to all 283 municipalities
Transfers made in July 06, September 06, November 06 and March 07 due to challenges to obtain resolutions and commitment
Grant for certain municipalities initially withheld due to inconsistent reporting and slow spending

12. Status of reports submitted and spending patterns of 283 municipalities as at June 2007

13. Status of reports submitted and spending patterns of 283 municipalities as at August 2007

14. Number of Municipalities
Transfers for 2007/08 F/y
Payment period
Number of Municipalities
Paid (R m)
July 2007
118 29
August 2007
108 56
Unpaid 57 60
TOTAL
283
145

15. Outcomes 2007/08
Municipalities not complying with the conditions of the grant at 30 June 07 were sent letters requesting written representations indicating reasons for slow spending and inconsistent reporting
Allocations temporarily withheld for July and August
Follow up procedures instituted resulting in 28 positive responses
No responses from 29 municipalities without CFO’s, new officials being appointed, promises not kept

16. General findings Slow spending and inconsistent reporting
Interns resigned or were permanently retained by municipality
Vacant posts not filled
Allocations received later than anticipated
Funds set aside for:
capacity building and training for the 2007/08 financial year
the establishment and re-organisation of B.T.O.
conversion of AFS
skills development programmes
HR information system upgrade
Assets valuation, asset registers and cleaning of billing systems
interns salaries, IT requirements and systems enhancement with financial software

17. Monitoring and Reporting
Letters sent to munis clarifying channel and method of reporting
Follow-ups being made to ensure compliance by all munis and subsequent payment of outstanding FMG transfers
Ongoing review and analysis of reports and monitoring of outcomes assisting to refocus Financial Management support initiatives

18. Thank You
National Treasury

19. MFMA - Outputs
Improved and sustained graduate internship programme on financial management reforms
Upgrading of IT systems to deliver reports required for financial reforms thus ensuring compliance with the MFMA
Preparation and implementation of multi-year budgets meeting uniform norms and standards
The implementation of SCM reforms, accounting reforms, producing quality and timely financial statements as reflected by improved audit opinions
Improvements to internal and external reporting on budgets, finances, SDBIP, etc.
Implementation of the MFMA

20. MFMA /07 outcomes
Report on performance against reform objectives by capacity category for those that have responded

21. MFMA - AVERAGE FMG SPENDING BY CAPACITY CATEGORY

22. Restructuring Grant Indicators Institutional and Organisational
Optimal staff complement
Frequency of meetings
Structure of organisation
Service delivery mechanisms and service levels
Economic Development
Innovative programmes
Job creation activities
Financial
Credit ratings
Debt ratios
Revenue collection ratios
Infrastructure spending levels
Budget implementation
National Treasury