1. Presentation to the Portfolio Committee on Cooperative Governance and Traditional Affairs
2012/13 Annual Report
Representation Team led by
Mr LJ Mahlangu
Chairperson: Municipal Demarcation Board
?? October 2013

2. OUTLINE Last Briefing: 19 March 2013 2012/13 Strategic Direction
2012/13 Outputs and Developments
2012/13 Financial Results
Regulatory Audit Outcomes
Medium Term Expenditure Framework (MTEF 2013 – 2016)
Strategic direction going forward
General
Status of Demarcation Process
Challenges
Concluding remarks

3. LAST BRIEFING: 19 MARCH 2013
Briefed the Committee on the Broad Process and timelines within the current Legal framework
Gave progress report on performance up to March 2013.
Appraised the committee on the strategic objectives as per the Annual Performance Plan.
Appraised the committee on the public participation process of the Board and public meetings, scheduled for April 2013, in terms of Section 28 of the Municipal Demarcation Act.

5. LAST BRIEFING: SECTION 26 LEGAL PROCESS
Total number of cases considered by the Board broken down per province per type
Province
Total Number of DEMs
TYPE A
TYPE B
TYPE C
Eastern Cape
225
135 83 7
Free State 86 54 26 6
Gauteng 85 61 9 15
KwaZulu-Natal
276
150 91 35
Limpopo 99 47 49 3
Mpumalanga 74 55 4
North West 63 2
Northern Cape 39 1
Western Cape 81 78
Total
1028
669
285

6. LAST BRIEFING: SECTION 26 LEGAL PROCESS
Cases published for public views and representation in term of section 26
Province
Total Number of DEMs
TYPE A
TYPE B
TYPE C
Eastern Cape 35 14 19 2
Free State 10 3 4
Gauteng
KwaZulu-Natal 51 12 28 11
Limpopo 13 9
Mpumalanga 6 1
North West 25
Northern Cape 21 20
Western Cape 39 37
Total
204
113 72

7. 2012/13 STRATEGIC DIRECTION Programme 1 Operations and Research
Strategic Objective 1
To determine & re-determine boundaries of local, district and metropolitan municipalities
Strategic Objective 2
To delimit wards for all local and metropolitan municipalities for the 2016 local elections
Strategic Objective 3
To assess the capacity of metropolitan, district and local municipalities in line with the revised model
Programme 2
Financial Management and Accounting
Strategic Objective 1
To ensure sound financial management
Strategic Objective 2
To ensure good corporate governance

8. 2012/13 STRATEGIC DIRECTION Programme 3 Corporate Services
Strategic Objective 1
To ensure that the Board maintains effective and efficient organisational processes, systems and practices
Strategic Objective 2
To ensure maintenance of proper administrative systems and practice as well as the necessary support for governance structures
Strategic Objective 3
To enhance and maintain effective stakeholder relations

9. 2012/13 OUTPUTS AND DEVELOPMENTS
The 2012/13 Annual Report is tabled to the Committee for review.
It presents some of the achievements and highlights of the Board for the year under review;
The primary areas of performance for the period were:
On-going review of municipal boundaries;
On-going assessment of municipal capacity;
Re-organisation of the institutional administrative structures;
Enhancement of stakeholder relations and communications;
Enhancement of operations through national and international studies;
Maintenance and improvement of governance structures;
On-going compliance with relevant legislative and regulatory requirements.

10. 2012/13 OUTPUTS AND DEVELOPMENTS
On-going review of Municipal Boundaries
Continued with the programme which commenced in 2011/12;
Review process needs to be completed by October 2013 to allow for process of ward delimitation to commence in preparation for 2016 LG elections;
Total of cases were received of which 824 was rejected. The reasons for rejection included:
Reason 1: Cases which have been consolidated;
Reason 2: Lack of functionality i.e. proposal to align to magisterial boundary;
Reason 3: No stakeholder support and concurrence;
Reason 4: Non compliance with legislation.
166 meetings were held in different provinces and included visits to key stakeholders such as MEC’s, SALGA, IEC and Provincial Houses of Traditional Leaders, communities which submitted applications.
Board published Section 26 notice on (204 of the cases) in Nov 2012.
After consideration, Board resolved to close 22, and to investigate 80 of the 204 published cases.
Short time frames were a challenge in publishing Section 27 notices for major investigations and public meetings.

11. 2012/13 OUTPUTS AND DEVELOPMENTS
On-going assessment of municipal capacity
A new and revised approach to capacity assessment was adopted;
Assessment was conducted with the context of three interdependent, but key LG performance barriers:
Socio-geographic and legacy factors;
Constrained capacity which includes resources, skills & competencies;
Leadership and governance challenges.
The end result of the assessment of municipal capacity was:
National analytical report
Municipal comparison report
District-level report card
In-depth qualitative assessment report for nine district municipalities.
The introduction of an online questionnaire posed initial challenges. In future more support will be afforded to municipalities with low IT capacity.

12. 2012/13 OUTPUTS AND DEVELOPMENTS
Enhancement of stakeholder relations and communication
The following circulars were issued:
Circular 2/2012 contained:
Revised timeframes;
Commencement of legal process;
Reminder to submit motivations.
Circular 3/2012 contained:
Information regarding newspaper containing Section 26 notices in November 2012;
Invitation to submit views and representation by 10 December 2012 deadline.
The following number of visits per Province were conducted:
Eastern Cape 26
Limpopo 16
Western Cape 8
Mpumalanga 14
Northern Cape 17
Free State 15
North West 10
KwaZulu Natal 44

13. 2012/13 OUTPUTS AND DEVELOPMENTS
Enhancement of operations through National & International studies
Research unit was established to manage research and internal municipal capacity assessment;
Recruitment processes are underway to appoint a Head and staff.
Maintenance and improvement of governance structures
Head: Legal and Secretariat was appointed in January 2013;
Board Charter and Code of conduct were drafted and are currently being refined.
On-going compliance with relevant legislative and regulatory requirements
Compliance to legal provisions remain the cornerstone of the Board.
Re-organisation of the institutional administrative structures
The process to significantly restructure the organisation was continued during the period;
Appointment of staff to new key positions is underway pending the review of the financial position of the Board.

14. 2012/13 FINANCIAL RESULTS Summary of Financial Results
Receipts for the year ended 31 March 2013
Expenditure for the year ended 31 March 2013
Breakdown of expenditure for the year ended 31 March 2013
Expenditure trends

15. SUMMARY OF FINANCIAL RESULTS
Total income for the period - R41,3 million
Total Expenditure for the period - R34,3 million
Resulting in surplus of R6,9 million
Expenditure budget variance of R6,6 million
% of Revenue spent during the period - 82%
Commitments at year end - R4,4 million
Accumulated surpluses of R27,2 million

16. RECEIPTS FOR THE YEAR ENDED 31 MARCH 2013
Original MTEF allocation
R40,362,000
Receipts from Local Government SETA
R35,000
Other income
R926,000
TOTAL REVENUE GENERATED
R41,323,000

17. EXPENDITURE FOR THE YEAR ENDED 31 MARCH 2013
Description
Budget
Actual
Variance
Government Grants
40,362,000
40,397,000
35,000
Other Income (exchange and non-exchange)
497,000
926,000
429,000
Total revenue
40,859,000
41,323,000
464,000
Less Total Expenditure
-40,862,000
-34,195,000
6,667,000
Loss on disposal of Assets -
-156,000
(DEFICIT) / SURPLUS
-3,000
6,972,000
6,975,000

18. BREAKDOWN OF EXPENDITURE FOR THE YEAR ENDED 31 MARCH 2013
Expenditure item
Amount
% of total expenditure
Employee benefit costs
38%
Audit fees 2%
Depreciation and amortisation 3%
Project expenses
10%
Other operating expenses
17%
Administrative expenses
29%
Total expenditure
99.5%
Loss on disposal of assets
0.5%
Gross Expenditure
100%

19. BREAKDOWN OF TOTAL EXPENDITURE

20. BREAKDOWN OF OTHER OPERATING EXPENSES
Expenditure Item
2013
% of expen-diture
Licence renewals
58 000 1%
Travel and accommodation
47%
Courier and delivery charges
48 000
Data acquisitions 5%
Consumables
70 000
Rental of buildings
40%
Rental of machinery & equipment 4%
Repairs and maintenance
16 000 0%
Total
100%

21. EXPENDITURE TRENDS: YEAR ON YEAR GROWTH TRENDS
Expenditure item
2013
2012
% change
Employee benefit costs 8%
Audit fees 3%
Depreciation and amortisation
18%
Project expenses
-34%
Other operating expenses
-16%
Administrative expenses
-1%
Total expenditure
-5%
Loss on disposal of assets
1 000
15500%
Gross Expenditure
-4%

22. EXPENDITURE TRENDS: YEAR ON YEAR GROWTH TRENDS

23. REGULATORY AUDIT OUTCOMES
Achieved an Unqualified Audit Opinion
With Emphasis of matter with respect to material under spending of the budget
Deficiencies in expenditure management resulting in irregular expenditure

24. STEPS TAKEN TO ADDRESS INTERNAL CONTROL WEAKNESSES
Appointment of SCM officers to ensure:
Adequate capacity to respond to demand for SCM services;
Segregation of duties.
Bid evaluation and Bid Adjudication committees in place;
Implementation of Administrative controls:
Compliance checklists, Annual Procurement plans and registers for deviations.
Assurance provided by Internal Audit prior to awarding of significant contracts.

25. MEDIUM TERM EXPENDITURE FRAMEWORK (MTEF 2013-2016)
2013 MTEF amounts to R42,1 million.
Allocation for 2013/14 increased by R1,8 million.
Representing a 4,4% increase.
In 2014/15 and 2015/16 grants increased by 5% and 3,5% respectively.
Grants
2013/14
2014/15
2015/16
R’000
Amount
42,152
44,230
45,793

26. STATUS OF DEMARCATION PROCESS
At the end of 2013 financial, section 26 views and representations were received and processed by the Board;
During the current financial year the following developments have taken place:
26 Public meetings were held by the Board with respective stakeholders;
33 Formal investigations were conducted prior to publication of Section 21 notices for objections;
In addition, 21 community consultation meetings were held;
In August 2013, the Board published section 21 notices, inviting the public to submit objections to municipal boundary re-determinations;
The closing date for objections was 16 September 2013;
After considering the objections, the Board envisages completing the entire Demarcation process by end October 2013.

27. STATUS OF DEMARCATION PROCESS
Section 21 cases published
Province
Number
% of total
No of objections
Eastern Cape 26
17% 17
Free State 6 4%
Gauteng 3 2%
9 792
Kwazulu Natal 37
24%
Limpopo 7 1
Mpumalanga 2 1% 4
North West 20
13%
Northern Cape 21
Western Cape 35
22%
Total
157
100%
9 835

28. STRATEGIC DIRECTION GOING FORWARD
Strategic links with key stakeholders and other key partners to enhance public participation and consultation on demarcation issues;
Strengthening our research capacity and capability;
Development of policy position to guide the Board through decision making in a changing world;
Enhancing internal capacity and becoming a public entity of choice;
Legislative amendments to provide clarity and certainty in a number of areas;
Improving communication capabilities within the organisation to improve our engagements with stakeholders;
Conducting awareness campaigns on matters of demarcation and delimitation;
Strengthening partnerships with Chapter 9 institutions and constituencies;
Finalising regulations for the LG: Municipal Demarcation Act.

29. CHALLENGES Rapid expansion of stakeholder base;
Lack of regulations to support implementation of our legislation;
Insufficient consultation between municipalities and communities affected by boundary re-determinations;
Lack of understanding of the mandate of the Board and its processes;
Legislative gaps.

30. CONCLUDING REMARKS
The Board’s mandate continues to have huge pressure on the limited staff of the Board;
The funding of the Board need to be adjusted to assist the Board to reach communities better and create awareness on demarcation matters;
The legislative amendments of the current Act and development of regulations needs to be facilitated speedily and;
Stronger links with key stakeholders to enhance public participation.

31. Questions ?
THANK YOU

32. GENERAL Criteria for Demarcation and Categorisation of municipalities
When determining municipal boundaries the Municipal Demarcation Board is enjoined to do it following the criteria as defined in terms of section 24 and 25 of the Local Government: Municipal Demarcation Act.
When determining the category of a municipality into a category A metropolitan municipality the Board does so in terms of section 2 of the Local Government: Municipal Structures Act. 23

33. Criteria for Demarcation Section 24
When the Board determines a municipal boundary its objective must be to establish an area that would-
enable the municipality for that area to fulfil its constitutional obligations, including-
the provision of democratic and accountable government for the local communities;
the provision of services to the communities in an equitable and sustainable manner;
the promotion of social and economic development; and
the promotion of a safe and healthy environment;
enable effective local governance;
enable integrated development; and
have a tax base as inclusive as possible of users of municipal services in the municipality.

34. Criteria for Demarcation Section 25
the interdependence of people, communities and economies as indicated by-
existing and expected patterns of human settlement and migration;
employment;
commuting and dominant transport movements;
spending;
the use of amenities, recreational facilities and infrastructure; and
commercial and industrial linkages;
the need for cohesive, integrated and unfragmented areas, including metropolitan areas;
the financial viability and administrative capacity of the municipality to perform municipal functions efficiently and effectively;
the need to share and redistribute financial and administrative resources;
provincial and municipal boundaries; 25

35. Criteria for Demarcation Section 2526
areas of traditional communities;
existing and proposed functional boundaries, including magisterial districts, voting districts, health, transport, police and census enumerator boundaries;
existing and expected land use, social, economic and transport planning;
the need for coordinated municipal, provincial and national programs and services, including the needs for the administration of justice and health care;
topographical, environmental and physical characteristics of the area;
the administrative consequences of its boundary determination on-
municipal creditworthiness;
existing municipalities, their council members and staff; and
any other relevant matter; and
the need to rationalize the total number of municipalities within different categories and of different types to achieve the objectives of effective and sustainable service delivery, financial viability and macro-economic stability.

36. Criteria for categorisation of municipalities into a category A metropolitan municipality Section 2 of the MSA
An area must have a single category A municipality if that area can reasonably be regarded as-
a conurbation featuring-
areas of high population density;
an intense movement of people, goods, and services;
extensive development; and
multiple business districts and industrial areas;
a centre of economic activity with a complex and diverse economy;
a single area for which integrated development planning is desirable; and
having strong interdependent social and economic linkages between its constituent units.