1. URBAN SETTLEMENTS DEVELOPMENT GRANT Briefing to the Portfolio Committee 27 May 2011

2. 2 Structure of Presentation Overview of Urban Settlement Development Grant (USDG) –Policy Framework –Grant Framework, Allocations & Payment Schedule in DORA –[IGR Framework; M&E Framework; Capacity Support to metros; Formulation, Submission and Assessment of BEPP’s] Towards Implementation –Evaluation of 1 st Draft BEPP’s –Cursory observations

3. 3 Context Recognition that Cities are the engines of economic growth as well as poverty; The importance/need of Cities to MANAGE rather than respond to urban pressures, amongst which economic growth and alleviation of poverty and inequality are priorities

4. 4 Provision of Bulk Connector, Link and Internal Services; Well located land and Public Amenities continues to plague the optimum performance of the human settlements sector, particularly Metros. Human Settlements mandate is being realised through the Delivery Agreements on Outcome 8 -“Sustainable Human Settlements and Improved the Quality of Household Life” Consolidation of funding a key issue for realisation of the human settlements mandate - HSDG + USDG Background

5. 5 Presentation to Special PCC in May 2010 identified the need for an appropriate funding model for human settlements National Treasury and Department of Co- operative Governance embarked on a process of consolidating grants and funding in an incremental manner Background

6. 6 MIG-Cities was established to promote integrated planning and funding of the urban built environment agenda in the large cities Cabinet decision in December 2010 that USDG be established and funding be allocated from the Human Settlements Development Grant (HSDG) and the previous MIG-Cities grant MIG-Cities has, since, been disestablished. USDG is intended as an instrument for metros to address linkage between public housing and economic growth to simultaneously contribute to Human Settlements Outcome Background

7. 7 Urban Settlements Development Grant USDG intends to integrate the release of well located land to the function of planning and funding of the built environment. Encourage cities to be proactive developers of infrastructure on well located land by mobilising domestic capital; Should compel improvement in development planning and also improve inter- governmental co-ordination (all 3 spheres) of development.Should compel improvement in development planning and also improve inter- governmental co-ordination (all 3 spheres) of development.

8. 8 Urban Settlements Development Grant USDG should address PRO POOR BIAS INCLUDING ECONOMIC GROWTH 1.economic growth, and at the same time 2.inequality and poverty alleviation and eradication Not either or, but both: USDG focus should be biased towards lowering the costs incurred by poorer households in accessing serviced urban land with secure tenure.

9. 9 USDG: DORA Schedule 4 Grant - Allocations to ….. municipalities to supplement the funding of metro capital investment programme Grant Purpose: “To improve the efficiency and coordination of investments in the built environment through: Providing large municipalities with appropriate resources and control over the selection and pursuit of investment programmes in the built environment.” USDG: Grant Framework – DORA 11/12

10. 10 Grant Outcome: Enhanced Sustainability human settlements and improved quality of household life in urban areas: Increased availability of serviced urban land parcels (reduction in average production cost and price of land) Increased access to suitable shelter (reduction in real costs of rental for a well-located housing unit) Increased average density of cities (city-wide average dwelling units per hectare) Increase security of tenure irrespective of ownership, or rental, formal or informal structures security (number of new freehold tenure units transferred to beneficiaries, rental agreements signed and legal protection provided). USDG: Grant Framework – DORA 11/12 Aligned to Outcome 8

11. 11 USDG: Allocation to Metros Allocations to Metros 2011/122012/132013/14 EASTERN CAPENelson Mandela 423,446 497,908 547,338 Buffalo City 502,626 588,100 648,074 Sub Total 926,072 1,086,008 1,195,412 FREE STATEMangaung 411,995 483,427 531,884 GAUTENGJohannesburg 1,094,276 1,297,640 1,421,452 Ekurhuleni 1,027,970 1,216,260 1,333,559 Tshwane 891,081 1,053,856 1,155,692 Sub Total 3,013,327 3,567,756 3,910,703 KWAZULU-NATALeThekwini 1,091,574 1,299,706 1,421,322 WESTERN CAPECape Town 824,030 972,615 1,067,485 Total 6,266,998 7,409,512 8,126,806

12. 12 USDG draft Policy in place and to be finalized by Aug 2011.USDG draft Policy in place and to be finalized by Aug 2011. Will revise 2011/12 Grant Framework for USDG in DORA ito Policy Framework (Aug 2011)Will revise 2011/12 Grant Framework for USDG in DORA ito Policy Framework (Aug 2011) 1 st Drafts of Metros’ Built Environment Performance Plans (BEPP), & USDG Plans received.1 st Drafts of Metros’ Built Environment Performance Plans (BEPP), & USDG Plans received. Evaluation of BEPPs currently underway (6 of 8 done)Evaluation of BEPPs currently underway (6 of 8 done) Final submission of BEPPs due by 24 June 2011Final submission of BEPPs due by 24 June 2011 1 st Tranche tfr to Metros by 7 July 2011.1 st Tranche tfr to Metros by 7 July 2011. Towards Implementation

13. 13 DHS working with NT in terms of guiding metros on the financial sustainability of their capital investment programmes while at the same time addressing the performance of the Built Environment with a specific focus on the intended outcomes of Human Settlements ProgrammesDHS working with NT in terms of guiding metros on the financial sustainability of their capital investment programmes while at the same time addressing the performance of the Built Environment with a specific focus on the intended outcomes of Human Settlements Programmes Compels improvement in co-ordination of planning at national, provincial and local spheres with the metro leading the processCompels improvement in co-ordination of planning at national, provincial and local spheres with the metro leading the process Compels metros to integrate HSDG projects into mainstream city development.Compels metros to integrate HSDG projects into mainstream city development. Institutional Arrangements

14. 14 BEPP: Current Conjuncture ALL 8 BEPP’s heavily biased in favour of inequality and poverty alleviation and eradication to support outcome 8 BUT not adequately being used for supporting metropolitan economic growth This will result in boosting performance targets for Outcome 8 rather than contributing to Outcomes

15. 15 BEPP: Current Conjuncture BEPP Submissions from all 8 metros have been formulated and submitted on time using the Grant Framework (DORA) and Submission Format - but in the absence of a policy framework (due to timing of establishment of USDG) Cities now have USDG but not HSDG (due to level of accreditation) and Provincial Human Settlements still running HSDG project on behalf of metros – this is not desirable since it pulls the city in 2 different directions in terms of efficiency of flow of funding

16. 16 BEPP: Current Conjuncture Rather than USGD supplementing capital budgets it is a dominant proportion and sometimes 100% of the metro’s capital budgets which have become increasingly grant dependent post 2010 spikes and in recession impact – National Treasury is addressing this matter

17. 17 USDG now part of the family of HS grants.USDG now part of the family of HS grants. Additional R 21 Billion for human settlements function over MTEF allocated directly to Metros.Additional R 21 Billion for human settlements function over MTEF allocated directly to Metros. USDG will augment and support grant allocations from provinces to municipalities under the HSDG, and must go further to address infrastructure and land requirements to promote economic growth.USDG will augment and support grant allocations from provinces to municipalities under the HSDG, and must go further to address infrastructure and land requirements to promote economic growth. Impact of USDG

18. 18 Thank You