1. 1 Sustainability Lessons Learnt from Siyenza Manje Programme IMFO Conference 13 September 2011 Mr Chuene Ramphele

2. National Objectives and Historical Footprint of the Siyenza Manje Programme 2  SM was started to operationalise the Project Consolidate conceptual framework  Providing hands on capacity building to municipalities with: o High infrastructural backlogs o Under spending MIG allocations o Poor financial management and compliance with MFMA o Unable to recruit qualified officials in key positions. Provincial boundaries SM Municipalities including: 136 Project Consolidate municipalities Izimbizo municipalities 21urban & rural nodes Water Services Authorities

3. Siyenza Manje Capacity Building and Support Objectives 3  Siyenza Manje was conceptualised to support Government’s hands-on capacity building initiatives  Why Siyenza Manje Programme was introduced: Municipalities not spending MIG allocations Slow disbursing DF grant portfolio Classroom training was not sufficient, there was still a gap for on the job capacity building  Objectives of Siyenza Manje: To deploy capable human resources in municipalities with the purpose of building institutional and human capacity and unlocking service delivery blockages To enable distressed municipalities deliver basic services by fast tracking expenditure of Municipal Infrastructure Grant funding.  In aligning with Government programmes, Siyenza Manje deployment strategy prioritised:  Low capacity category B municipalities with water & sanitation infrastructure backlogs  Municipalities with low MIG expenditure  Municipalities with financial management challenges identified by Provincial Treasuries and DCoG.

4. Siyenza Manje Deployment Process PRE- DEPLOYMENT pre assessment Stakeholder engagement Recruitment ORIENTATIONEXECUTION DEPLOYMENT LOGISTICAL PLANNING & ADMIN Deployment logistical planning Pre deployment process Deployment is triggered by requests from municipalities, provinces & national departments 4 DBSA/Municipal Manager/Mayor: Set scene, clarify roles and reporting mechanisms DBSA/Municipal Manager/Mayor Sign formal agreement Municipal Manager On site inspection and orientation of deployees Municipal Manager Establish Working Steering Committee (WC/SC) WC Define roles & responsibilities & confirm business plan Deployment Negotiations commenced EXIT

5. National LevelProvincial LevelLocal Government/ Municipalities DWA:  Evaluating of technical reports and business plans  Development of systems and procedures for management of water and sanitation projects  Programme management  Assessment of condition and functionality of WWTWs National Treasury:  Advice on budget reforms and regulations  Advice on the administration of the Municipal Fiscal Powers and Functions Act (MFPFA) regulations DCoG:  MIG MIS  Assessment Framework for Municipal Turnaround Strategies (MTAS)  Support implementation of Operation Clean Audit DLGs:  MIG MIS  Financial monitoring and support  Assist municipalities resolve audit queries  Advise the MECs on Section 139 and 106 interventions Human Settlements:  Support in the development of provincial spatial development frameworks  Programme and technical management support for the implementation of housing programmes, hostels redevelopment & informal settlement upgrading Provincial Treasuries:  Support MFMA and Municipal Finance Monitoring Units Technical:  MIG/CAPEX planning  Supply chain management  Contract management  Project implementation  Operations & maintenance Planning:  Spatial and development planning processes, policy, procedures, regulations Finance:  Compliance with 16 MFMA priority areas  Improving financial planning and management Institutional:  On-the-job skills transfer and capacity building  Development of systems, plans, procedures and policies SM Capacity Building and Support Focus Areas 5

6. Siyenza Manje Integrated Capacity Building Model Municipal Deployments Young Professionals Artisans On-the Job Training & Skills transfer to Municipal Officials Accredited Vulindlela Academy Courses Grant Funding Deployments in Sector and Line Departments IDP Feasibility Studies Technical Reports Project Business Plans MIG Project Registration SA Operations Risk Assessment & Funding Appraisal Procurement Implementation & Monitoring Operations & Maintenance 6

7. 7 Financial Management Challenges in Municipalities as Experienced by SM ChallengePossible Cause / Effect Non Compliance to MFMA  Late compilation and submission of Annual Financial Statements  Negative audit AG Reports  Non compliance of supply chain management and procurement processes Poor liquidity  Cash Flow constraints and poor financial positions  Escalating creditors and debtors books High vacancy rates in key positions  Institutional challenges in attracting suitably qualified individuals  Unqualified people put in some s57 positions Low revenue base  Some municipalities that are not viable  Insufficient revenue generation capacity  High reliance on grant funds Lack of Financial Planning capability  Budgets not credible  No property cash flow planning and monitoring  Lack of capacity to plan, monitor and manage finances  Inadequate performance management of municipal officials and systems

8. 8 SM Financial Management Support Focus Areas (1) Financial Planning  Facilitate planning and drafting of annual budgets  Establishment of functional Budget & Treasury Offices  Facilitate alignment between IDP & Budget  SDBIP preparation and facilitate approval  Facilitate Cash Flow Management solutions  Facilitate GRAP 17 compliant Fixed Asset Registers Financial Reporting  Facilitate MFMA Reporting compliance with special emphasis on S71 (monthly financials), S72 (Mid-year Assessment), S74 (DORA Reports), S52 (Quarterly – Financial State), S121 (Annual Report)  Facilitate MFMA implementation aligned with 16 NT priorities through establishing of functional MFMA Implementation Steering Committees  Facilitate functional Supply Chain Management Units and Bid Committees  Annual Financial Statements quality assurance and submission within deadlines  Facilitate GAMAP/GRAP readiness and conversion.

9. 9 SM Financial Management Support Focus Areas (2) Revenue Management  Facilitate implementation of strict Credit Control Policies  Facilitate functional Billing Systems  Facilitate credible Indigent Policies and Systems  Facilitate MPRA compliant valuation rolls  Facilitate establishment of customer care units  Debtor cleansing support  Initiate Revenue Enhancement Strategies  Support management of water/electricity losses  Municipal Fiscal Powers and Functions Act compliance facilitation Audit Management  Functional Internal Audit Units/ Audit Committees  Facilitate Risk Management  Facilitate AG Report action plans to address queries and improve audit outcomes  Facilitate functional Audit Steering Committees  Facilitate GRAP readiness and conversion  Support Operation Clean Audit Report – 2014.

10. 10 SM Financial Management Support Focus Areas (3) Capacity Creation  Facilitate capacitated Financial Departments (Organograms, Job Descriptions, Filling of Vacancies)  Assist with development and implementation of Municipal Turnaround Strategies  Assist with skills audits and the development of training plans  Skills Transfer to finance staff (On-the-job & Formal)  Mentoring of DBSA Young Professionals  Facilitate anti-corruption strategies to improve good governance  Support and coaching of NT interns at municipalities  Oversee development, review and implementation of all municipal policies, by-laws, systems and plans  Assist municipalities with all financial reconciliation challenges  Facilitate improved financial controls to enhance efficiency and prevent fraud  Facilitate the development, monitoring and maintenance of Performance Management Systems.

11. 11 SM Financial Capacity Building Support DBSA Performance Measures DBSA Key Finance Performance Indicators % SM Municipalities with an improved Audit Status/ Maintained unqualified audit report % SM Municipalities with an improved net cash position % SM Municipalities with MFMA reporting compliance % SM Municipalities with functional Internal Audit Units and Audit Committees % SM Municipalities with functional MFMA Implementation Steering Committees Number of people trained/capacitated On-The-Job: Finance

12. 12 131 municipalities on direct deployment and 57 on shared services basis supported. A further 20 provincial departments supported Siyenza Manje Achievements Growth – training by Siyenza Manje deployees “on-the-job”

13. 13 Sustainability Lessons Learned from SM (1)  Improved financial sustainability require a holistic needs driven approach involving all disciplines (Corporate, Finance, Technical & Planning)  Cash Flow Management is key to facilitate financial sustainability - SM developed Cash Flow Management Tool piloted in some Gauteng municipalities with rapid liquidity improvement  Credible and realistic budgeting critical for financial viability – need to prioritise NT Budget Reforms compliance  The filling of CFO vacancies a prerequisite to ensure sustainable on-the-job skills transfer to officials  Shared Service arrangements value proposition for low capacity municipalities with inability to attract skills.

14. 14  Government institutions need to progressively invest in the training of future CFO’s - 57 Finance Young Professionals successfully trained and qualified in MFMP qualification  Financial support initiatives should include a 2 phase approach - a short- term intervention to stabilise municipal finances followed by a medium- term capacity building component  Capacity Building as driver for financial sustainability  Effective financial management support should not respond to operational and administrative crisis in municipalities but rather focus on key aspects with sustainable financial viability impact (Operation Clean Audit, Cash Flow Management, GRAP Compliance, Budget Reforms, etc)  Key importance of coordination of all capacity building initiatives. Sustainability Lessons Learned from SM (2)

15. Sustainability Lessons Learned Siyenza Manje 3 Year Review (1) 15 Outputs and Immediate Outcomes SM highly relevant given the challenges facing local government Must align and support a focused national capacity development and municipal intervention strategy of Government The review revealed a wide variety of interpretations of the primary intervention approach for the SM programme. For instance, some deployees provide advice, while others saw their role very clearly as “gap filling”. Differentiation between capacity development and short-term gap-filling interventions. Capacity needs of municipalities vary between providing advise in high capacity municipalities and hands on support to low capacity municipalities Programme Objectives Enabled institutions to successfully implement infrastructure projects The Programme correctly identified the development of policies, systems and processes to enhance infrastructure delivery and financial management as a key component of capacity building Municipalities interviewed generally reported positively on deployee involvement in spearheading the introduction of new financial and project management systems and processes The high municipal vacancy rates constrain the on-the-job skills transfer to officials for sustainability of the intervention Some challenges in municipalities are structural and do not need skills deployment to improve functionality and sustainability Young Professional Programme should expand into a broader national governmental initiative.

16. Sustainability Lessons Learned Siyenza Manje 3 Year Review (2) 16 Implementation and Management Centralised programme management approach and the small number of programme managers has been inadequate Phasing in: Phasing in allows capacity to be build into the programme in an incremental and strategic way, rather than responding to operational and administrative crises and gaps in municipalities. Municipal buy-in and accountability: Municipalities need to be closer to the programme and be given defined responsibilities through negotiated agreements.

17. CONCLUSION  The experience gained and capacity created in the last decade provides a solid foundation for impact driven and aligned capacity building and development solution.  The national capacity building and development solutions must be enjoined by strategic orientation informed by enhancement of service delivery and infrastructure technical support.  DBSA is well committed to strategic partnerships with government in: Policy development, information & research, Capacity building Funding & implementation. 17IMFO Conference