1. INDUCTION PACK 1 NDPG Administration & Reporting

2. 2 Understanding why & how NDPG is different to other grants Concepts & terms → what do they mean? –Funding Envelope –Multi-year budgeting –Schedule 6 & Schedule 7 of NDPG Funding components & importance of planning activities for MPS Approval points Funding flows Financial operational management → the 5 rules Sequencing Municipal responsibilities

3. 3 Budget Concepts: Funding Envelope Project 1  Project 2  Project 3  Project 4  Project 5  Project 6  Project 7  Project 8  Project …  ++++++++ = Project Funding Envelopes Approved NDPG Funding Envelope  Approved Portfolio Funding Envelope  Approved Portfolio Funding Envelope  Approved Portfolio Funding Envelope  + + = 100 projects @ R10 bn in 10 years CD & PDs DDG DG NDPG Reference Group Excludes leverage of other funding

4. 4 Budget Concepts: Multi-Year Budget Funding Envelope ≠ annual gazette amounts! MTEF total forecasts vs. one-year detailed budgets Alignment of financial years → Treasury: 1 April & Municipality: 1 July Yr 1Yr 2Yr ++Yr 3 Funding Envelope Sch 7 Sch 6 Sch 7 Sch 6 Sch 7 Sch 6

5. 5 Schedule 6 Direct Transfer to Municipality Schedule 7 In-kind to Consultant Schedules 6 & 7 1 Programme Management & Coordination 2 Strategic Planning (SQ TRS, concept, etc.) 3 Detailed Design 4 Construction/Implementation Management 5 Construction/Implementation 6 Operating Status Quo, TRS & Concept Business Plan Programme plans → MPS

6. 6 Approval Points Status Quo, TRS & Project Concept –Project concept in respect of TRS –In alignment with NDPG –Interactive process with NDP –Authority to proceed Business Plan –Plan on how to implement –Plan on how to utilise capital grant as catalyst for TRS –Capital spending priorities identified –Rationale for choices made –NDP to approve –Then only can release capital

7. 7 Schedules 6 & 7 NoBroad CategoryTypical Outputs 1Programme Management & Coordination Coordinated & managed programme, could also be dedicated capacity for, and in, municipality (e.g. member of staff dedicated to NDPG with short-term contract for programme & development management), if needed. NDP would seek to limit exposure & council should also contribute. 2Strategic planningTRS, business case development & high-level business planning, feasibilities, detailed investigations, exit plans & M&E. 3Detailed designDetailed design work to build capital asset funded by the capital as per Schedule 6 fund. 4Construction managementOutsourced construction/project management for implementation if needed. 5ConstructionCapital for construction. 6Operating fundingKick-start operating funding (BIDs, ops, etc.), if needed.

8. 8 Operational Financial Matters NDPG → Hybrid grant Definitions of Schedule 6 & 7 Importance of MPSs ItemSchedule 6Schedule 7 ForConstructionPlanning mainly TransferDirect transferIn-kind transfer FromNational TreasuryPDF (PPP) via NDP ToMunicipalityService Provider WhatFor work to be done in next quarter Progress payments Time+1 week+4 weeks VATExcludedIncluded

9. 9 NDP Unit Municipality Service Provider PDF (PPP Unit) Sch 7 Approved invoices from municipality Funding agreement Sch 7 Payments Sch 7 Invoices from municipality Invoices for Sch 7 amounts to municipality Service Level Agreement Sch 6 tranches Contractor Capital works contract (Sch 6) Payment claims (Sch 6) Funding Flows Payments (Sch 6) Contract & appointment letter (Sch 7)

10. 10 Financial Management Rules (1) Allocating & reallocating budgets for municipality DoRA → Section 10 Allocations of Budgets –MTEF (3-yr) Forecast & Yr 1 in detail –Workings in September/October –Due for April of next year –Published in DoRBill in December/January of the next year → MTEF → NB for muni as these are the numbers for municipal overall budget prep –Also published in Government Gazette (DoRA) in April of next year Reallocation of Budget –Adjusts only current year of expenditure → in-year adjustment –Workings in September –Due for October –Published in Government Gazette (DoRA Adjusment Gazette) in December Government Gazette each time Importance of programme plan & MPS → No info → we guess! To assist in multi-year projects & provide certainty of cash-flow

11. 11 Financial Management Rules (2) Stopping – (3) Withholding (2) Stopping –Process to take allocation back to Treasury if not used –DoRA → Section 26 –Once a year → in March for NT financial year ending at end March –Funding Envelope generally not affected but can be if warranted Material & persistent non-compliance with DoRA Non-spending If not in alignment with NDPG framework (3) Withholding –Suspension of portion of funds if funds are not spent for 3 months in accordance with MPS –DoRA → Section 25 –Progress reviewed monthly but withholding generally done once a quarter –Funding Envelope generally not affected → cash-flow management by Treasury –Gazetted allocation not affected but Adjustment Gazette process takes lack of progress on board & downwards adjustments are possible & likely

12. 12 Financial Management Rules (4) Roll-Overs – (5) Reporting (4) Roll-overs –Generally not supported –However, any Schedule 6 transfers made in March are accounted for in current financial year of Treasury but can still be spent by municipality in April-May-June (i.e. before end financial year of municipality) (5) Reporting –Monthly reporting requirements in legislation MFMA → Section 71 & 72 DoRA → Section 10 NDPG grant framework –Submissions by muni –Progress reports on internet per award One –pager One per award Pre-populated with data by NDP 10 minutes to do Completion dates → 1 st to 10 th every month Non-submission → Treasury can hold back payment requests of Schedule 6 & 7 amounts

13. 13 Municipal Responsibility Committing to a longer-term township regeneration programme Implementing the NDPG catalytic component Management & coordination of entire development process –Striving to improve Quality of Life –Leveraging in public & private sector funds Managing processes –Procurement of consultants & their management MFMA, SCM, etc. applies Ensure Value-For-Money Get quality outputs PSP Panel role –Obtaining Council approvals –Ensuring capacity is in place Budgeting & cash flow management & reporting

14. 14 Next Step Brief your management structures Get your foundations in place –Sign Funding Agreement & Schedules –If no Council resolution, get one! –Sort out your delegations –Sort out capacity – even if short-term –Set up initial development coordination structure Political Administrative Getting ready for 3 year funding commitments for forward predictability Resources in your pack –Financial Policy & Procedures –Benchmark Costings (draft) –Schedule 3 of Funding Agreement: MPS –Guidance Note: VAT