1. MUNICIPAL SYSTEM IMPROVEMENT GRANT QUARTERLY MSIG PERFORMANCE PRESENTATION TO SELECT COMMITTEE OF FINANCE 08 AUGUST 2006

2. OVERVIEW OF PRESENTATION 1.Purpose of presentation 2.Background 3.Measurable Outputs 4.Financial Performance 5.Overall Quarterly performance 6.Corrective measures to address financial performance 7.Overall Challenges 8.Response Strategy for future 9.Critical Success Factors 1

3. Purpose To brief the Select Committee of Finance on the performance of the Municipal Systems Improvement Grant (MSIG) and the strategy to improve performance. 2

4. Background MSIG started in 2002 as conditional grant to support municipalities in building basic municipal systems mainly implementation of the Local Government Municipal Systems Act, 2000 Allocations reconfigured to not only be directed to Districts but also include Categories A and B municipalities Allocation for 2004/05 was R 200 million MSIG Framework from 2004/05 embraced Project Consolidate as a new initiative Implication: Receiving municipalities increased from 47 Districts to a total of 198 receiving municipalities (Districts, Metros, Locals) Total allocation for MSIG from 2006/07 is R 600 mil over 3 yrs (200 mil per FY) 2

5. 1. Local Economic Development and Spatial Development: - The development of Spatial Development Frameworks, LED strategies, procedures and policies 2.Financial Viability: - Support the pilot Project Consolidate initiative to develop holistic customer care (billing) systems and specific revenue enhancement initiatives. - Annual Financial Statements support - municipalities that have failed to do so over the past two years. 3.Institutional Transformation and development: - Support to PIMS Centers. - Implementation of Section 78 of MSA - division of powers and functions - Implementation of Performance Management Systems - Review of IDP’s and alignment with Budgets and Provincial Growth & Development Strategies - Skills development 4.Good Governance: - Ensure functionality of Ward Committee Systems and promotion of Public Participation 2005/06 MSIG Framework outputs 3

6. Financial Performance - Quarter ending June 2006 4 ProvNo of munics Allocated (millions) Actual Exp (millions) Exp in %Average no of reports E.C2929 24417 69160.5%12 FS1816 34010 75366%8 GT1115 36810 86370.7%5 KZN4137 43616 17943.2%12 Limp2422 67814 14362.4%10 MP1920 67613 50165.3%8 NC2220 64412 82862.1%9 NW1719 54211 03956.5%8 WC1718 0729 83354.4%8 Total198200 000116 83158.4%80

7. Overall Quarterly performance IDPs Reviewed and aligned to budget. Processes for compilation of 2005/06 Annual Financial Statement started Training of new ward councilors started during May/June 06 Municipalities starting to implement the Municipal Property Rates Act (developing Valuation rolls) Service Delivery Facilitators deployed in 12 municipalities to implement Revenue Enhancement programmes 6

8. Corrective measures Letters of non-compliance sent to all non reporting municipalities to confirm the expenditure for quarter ending June 2006 Met provinces (Dept of LG) to assist in ensuring municipal compliance Visited municipalities with very low % of expenditure (through District) Compiled a database for responsible officials in individual municipalities 7

9. Challenges in the past and present Compliance:Non submission of monthly expenditure and quarterly reports by receiving municipalities Business planning system opened for many projects inconsiderate of implementation capacity Limited impact demonstrated/impact not traceable due to lack of reporting 7

10. Response strategy to challenges Redesign the reporting regime on the grant –Monthly Expenditure reports not to serve only the purpose of NT reporting but designed to capture progress on projects identified in the activity plans Introduce productive and participative mechanisms and processes –Enforce district-wide activity planning workshops facilitated by receiving District municipality –Mainstream Provincial MSIG Activity Plans workshops facilitated by LG Depts –Re-introduce Quarterly Review Workshops facilitated by LG Depts and the dplg output managers Strict application of the DORA in terms of “withholding” and “stopping” of allocations in case of material non-compliance 9

11. Critical Success Factors Continuous engagement with the DORA determination process to ensure observance and appreciation of cooperative governance principles. Improved planning and communication of MSIG modalities Continuous review of the MSIG policy and procedure manual Hands-on support and mobilization of other sector depts within the opportunity of Project Consolidate Effective implementation of the Intergovernmental Relations Framework Act provisions 14

12. THANK YOU