Section 47 Report

2007/08

Section 47 process

Research methodology and structure of the report

Challenges

Executive summary/ general trends

Chapter 1: Geographic, Demographic, and Socio Economic Profiles

Chapter 2: Municipal Integrated Development Planning

Chapter 3: Municipal Transformation Institutional Development

Chapter 4: Basic Service Delivery

Chapter 5: Financial Viability and Management

Chapter 6: Good Governance and Public Participation

Chapter 7: LED

Chapter 8: Cross cutting matters

Chapter 9: Municipal Challenges and Achievements

Chapter 10: Provincial Support and Capacity Building Initiatives

Content of S47-Report

Section 47 Process(See Legislative overview in report for more detail)

Submission of financial statements by

municipalities

31st August

Completion of Audit process by 30 November

Completion of draft municipal annual report by

31st December

Tabling to Council by

31st January

(Make public after tabling for comments)

b

Finalise Annual report after taking into

account public comments and Council

adoption of oversight report by

31st March

(submit copy to AG,PT,MEC and provincial

legislature)

Compilation of Section 47 report

Third report of this nature

Completed after intense data collection from municipalities , provincial

departments and the Provincial Treasury

Information was categorised and analysed in accordance with the 5 National

KPA’s

Each KPA in separate chapter

A concise questionnaire was distributed to municipalities to collect additional

information not covered in annual reports

Other information utilised amongst others:

Municipal annual reports

Financial Statements

AG reports

IDP’s and assessments

In certain instances, the information reflects the current status (is indicated as

such)

Summary evaluation grid at the end of each chapter

Research methodology and structure of the report

Some information was received very late, some still outstanding to date

Incomplete questionnaires

Questionnaire still outstanding (Breede Valley)

Quality of data received still remains problematic, especially with regard to service

delivery

Some assessments hampered due to incomplete and quality of information

received, i.e. filled and vacant posts – dept. deleted question from questionnaire,

therefore no information in most cases

Provincial support chapter problematic

No data was received on provincial support from PT or any other provincial

department

Information for department itself not sufficient

Despite challenges, improvement in reporting format

Challenges

Period marked with slight improvement in service delivery initiatives and huge

improvement in audit outcomes

Witnessed changes in council leadership at 60% of the municipalities and changes

in administrative municipal management and leadership at 27% of the

municipalities

The lack of financial resources and the shortage of skills at municipal level

remains a challenge

Although there is a high level of technical and administrative compliance with

regards to integrated development planning, there are clear areas for

improvement.

Almost all municipalities indicated that a lack of funding for bulk services is

hampering their delivery in respect of basic services, especially with regard to the

provision of housing

Executive summary/ general trends

Almost all municipalities indicated that a lack of funding for bulk services is

hampering their delivery in respect of basic services, especially with regard to the

provision of housing

An analysis of municipal financial statements indicates that municipalities are very

reliant on capital grants to fund their capital expenditure. This gives an indication

that the revenue base of municipalities is insufficient to generate enough funding

for provision and maintenance of basic infrastructure

The average % of capital budget spent for the Province has improved to 76.24% in

2007/8, but the average % spent on the MIG grant have declined from almost

100% in the 2005/06 financial year to 84% in the 2007/08 financial year

The main reason cited by municipalities for under spending their capital budgets

and MIG is the lack of capacity/technical skills in their Engineering/Technical

Departments.

Most municipalities submitted their financial statements on time and there has

been a huge improvement in the audit outcomes for the 2007/08 municipal

financial year with three disclaimers.

Executive summary/ general trends cont.

General information chapter

Include

Geographic information per municipality & Demographic information per

municipality as per Gaffney’s 2007/08

Socio- economic information per municipality – PT 2007, same as last year

Political composition of municipalities – as at 11 December 2008

Treasury capacity classification

Chapter 1: Geographic, Demographic, and Socio Economic Profiles

Include

Vision and missions per municipality

General compliance for IDP processes – general questions in questionnaire

Whole chapter was reviewed by the IDP section

Analysis:

only 3 of the 30 municipalities were deemed to have not fully achieved credible IDPs

High level of technical and administrative compliance with regards to IDP, Lack of internal municipal ownership of the IDP across the administration and leadership, the tightening of the IDP-budget link, improving the ward-based deliverables

Thirteen municipalities indicated that the LGMTEC engagements did not positively contribute to their IDPs

Closer scrutiny of the 8 municipalities that have received IDP support during 2007/8, indicates implementation and operational constraints which points to internal staff capacity and how the IDP is managed within the municipality

Chapter 2: Municipal Integrated Development Planning

Analysis graph:

(Utilised IDP section analysis of IDP’s

Chapter 2: Municipal Integrated Development Planning

Include

Filled and vacant posts per municipality

Transformation statistics per municipality

Status with MM positions

Compliance with HR systems and policies, skills development, implementation of PMS and AG reports on performance

Analysis:

Vacancy rates in financial and technical posts are high and municipalities are experiencing huge challenges in the filling of these posts on all levels

The employment of female employees in Section 57 management positions remains a challenge in all the municipalities

Although all submitted skills development plans, barely 1% of budgets in most are expended to actually develop the skills of their employees. The success of the implementation of these plans is hampered by budgetary constraints and capacity.

Auditor–General reports (2007/08) and information submitted indicated that most municipalities have implemented or are in the process of implementing PMS

Chapter 3: Institutional Development and Transformation

Overall analysis graph:

HR Management

Chapter 3: Institutional Development and Transformation

Overall analysis graph:

PMS

Chapter 3: Institutional Development and Transformation

Overall analysis graph:

Chapter 3: Institutional Development and Transformation

Include

Level of services

Completion of sectoral plans

% capital budget spent

Free basic service, MIG, Housing

Analysis:

Hampered by lack of credible and insufficient information submitted

Lack of info of situation in rural areas

Main challenges with the delivery of services is the escalating costs of service provision and infrastructure development and maintenance, as well as the costs of backlog eradication

Most municipalities are reliant to a great extent on capital grants from other spheres of government to fund their capital expenditure

There is a considerable shortage of funds for maintenance, mainly for roads, storm water drainage and sewerage

Capital Spending improved from 66.67% in 2005/06 to 76.24% in 2007/08

Main reason cited for not spending capital budget is the lack of capacity and technical skills in its Engineering/Technical Departments.

MIG spending declined for 100% to 84%

Chapter 4: Basic Service Delivery

Overall analysis graph:

Chapter 4: Basic Service Delivery

Include

Performance against budgets , grants

Findings in AG Reports

Debt Management

Reliance on grants

Liquidity ratio’s

Analysis:

Average performance for the past three financial years against revenue and expenditure operational budgets are 99,3% and 96,6% respectively, of which salary bills formed the majority of around 30%.

Overall performance against conditional grants received decreased from 73% in 2006/07 to 66 % in 2007/08

Rely heavily on conditional grants such as MIG

Huge improvement from 11 to 23 from the 2006/07 to the 2007/08 financial year in the number of reports that are unqualified

The key findings that was indicated the most by the Auditor General were “Non- compliance with laws and regulations” and “Internal control/ internal audit weaknesses

73,5 % is for debt older than 90 days

Chapter 5: Financial Viability and Management

Overall analysis graph:

Chapter 5: Financial Viability and Management

Include

Good Governance Indicators

Ward Committees, Anti-corruption

AG Findings on governance

Analysis:

98% of Municipal Council and Executive/Mayoral Committees achieved the requisite quorums for meetings

Most municipalities adopted codes of conduct for Council and staff

Eleven municipalities reported Councillor and staff arrears and that mechanisms are being put in place to resolve arrears

Considerable progress has been achieved in establishing Ward Committees despite numerous challenges confronting municipalities and ward committees

There has been a general improvement (97%) in the development of Anti- Corruption Strategies and Plans across municipalities in the province

High level of non-compliance in matters of governance according to AG reports – 31% non-compliance with regards to operation of audit committees, 45% non-compliance with regards to fulfilling audit committee responsibilities, 69% non- compliance with regards to fulfilling internal audit responsibilities, 47% non-compliance with regards to implementation of previous external audit recommendations etc

Chapter 6: Good Governance and Public Participation

Overall analysis graph:

Chapter 6: Good Governance and Public Participation

Include

Development of strategies and implementation

URP and ISRDP

Analysis:

Analysis hampered by the unavailability of the majority of LED plans

All municipalities have an approved Local Economic Development Plan to inform the 07/08 Integrated Development Plan and without exception these plans were deemed to be the result of a transparent formulation process.

Implementation and subsequent are limited due to a shortfall in available funds, co-operation between stakeholders; low economic development potential and capacity

Although most of the strategies still focus on short term job creation and projects (total of 80 822 jobs created during EPWP programmes), a bigger emphasis is placed on facilitating economic development by assigning the responsibility to specific individuals at 87% of the municipalities

Chapter 7: LED

Chapter 8: Cross Cutting Matters

Include

Disaster management

IGR

Vuna

Chapter 9: Municipal Challenges and Achievements

Include

Summarised in tables

As identified by municipalities

As identified during Sec 47 process

Chapter 10: Provincial support

Provincial Treasury

Department Economic Development and Tourism

MIG and Housing

Chapters 8, 9 &10

Thank you

Questions