Address by Mr Andries Nel, MP,
Deputy Minister for Co-operative Governance and Traditional Affairs at the Annual Conference of the Chartered Institute of Government Finance, Audit and Risk Officers (CIGFARO),
Emperors Palace, Ekurhuleni
9 October 2018
Outgoing President, Dr Krish Kumar,
Incoming President, Peet du Plessis, Vice President, Sidwell Mofokeng, and Vice President Cheryl Reddy, and other CIGFARO members,
Colleagues from the Local Government Sector,
Ladies and Gentlemen.
A very good morning to all present here today, and thank you for the opportunity to address the Annual Conference of CIGFARO.
CIGFARO’s mission is: “To provide effective financial accounting advice, as well as setting and maintain high financial standards and controls in public finance and governance, to all levels of government to benefit the community.”
We thank Dr Krish Kumar for his consistent and committed leadership as the President of CIGFARO, and congratulate him and the entire membership and leadership of CIGFARO for his award as the 2018 Public Sector Chief Financial Officer of the year.
The focus of the conference this year is on reclaiming governance and accountability in the public sector. This is vital and timely.
The New Dawn for the Public Sector
When President Ramaphosa delivered the State of the Nation Address in February this year, he spoke of a new era of hope for the country, and pledged to tackle corruption, unemployment and inequality.
The President declared in no uncertain terms that: “We are determined to build a society defined by decency and integrity that does not tolerate the plunder of public resources, nor the theft by corporate criminals of the hard-earned savings of ordinary people.”
The President made a clarion call to public servants to adhere to the principles of Batho Pele, of putting the people first, by:
- Everyone in public service undertaking their responsibilities with efficiency, diligence and integrity,
- By doing things correctly, doing them completely and doing them timeously, and,
- By become agents for change.
The President also emphasised the need for the work of government to be effectively aligned across all three spheres of government: national, provincial and local, to ensure that the state, in its entirety, responds to the pressing needs of citizens.
In June 2018, President Ramaphosa reiterated his zero-tolerance stance on corruption at a meeting with professionals.
The President declared emphatically that: “How we deal with corruption will define this new dawn. We are firm and going to ensure that we root out corruption from the face of South Africa. We need to return to those principles of our forbearers – principles of truthfulness, doing things correctly and putting our people first…those are the principles that underpins the new dawn.”
This requires the energy, resources and long-term commitment of the whole of government and the whole of society.
Improving municipal financial management
Because, indeed, the transformation of local government, and the improvement of municipal performance is a long term project.
This is not an excuse or a rationalisation. It is a reality. There are no quick fixes – just work, hard, and hopefully also smart, work together.
Despite significant progress made, there is still a long way to go before all 257 municipalities are fully functional engines developmental local government envisaged by the Constitution.
CoGTA will continue to focus on facilitating the implementation of the five pillars of the Back to Basic (B2B) programme.
Back to Basics rests on five pillars:
- Pillar 1: Putting people and their concerns first,
- Pillar 2: Ensuring the delivery of quality services,
- Pillars 3 and 5: Good Governance and Building institutional resilience and administrative capacity, clearly defined legal and institutional arrangements are critical. These include the structures of Council, the human resource capacity, the reporting ability, the internal controls, the Internal Audit, decision-making and performance management.
- Pillar 4: Sound financial management,
CoGTA will intensify efforts to build functional municipalities nationwide through an intensive Municipal Recovery Programme.
This consists of a package of support and interventions focussed on three areas, namely: governance, service delivery and financial management.
CoGTA and National Treasury jointly identified a prioritized list of 87 municipalities and developed Integrated Municipal Recovery Plans.
CoGTA and National Treasury have set up Joint Teams to work with their provincial counterparts to address the following priority financial management support and intervention measures:
- Development of credible, funded and cash backed budgets;
- Development of simplified revenue generation plans;
- Support with the development of financial recovery plans;
- Monitoring of expenditure and procurement processes;
- Support with the implementation of audit remedial action plans;
- Implementation of MSCOA (Municipal Standard Chart of Accounts).
A major aspect of improving institutional capabilities is ensuring the appointment of suitably qualified personnel.
CoGTA has developed systems to monitor and support the area of recruitment and selection of appropriately qualified and competent senior managers.
The objective is to realize the professionalization of local government administration and to enable municipalities to perform their constitutional obligations.
During the 2017/2018 financial year, 423 appointments were concluded with competent and suitably qualified senior managers.
We have also taken measures to ensure that senior staff who are dismissed in one municipality, do not occupy a position in another municipality.
CoGTA is implementing the following measures to increase institutional capability:
- Monitor the functionality of municipal oversight committees such as Audit Committees and Municipal Public Accounts Committees;
- Promote the leadership and institutionalization of the Code of Conduct for Councillors and Officials in order to promote accountability and consequence management;
- Ensure that ward committees are established and functional; and
- Ensure that Municipal Community Complaints Management Systems are in place and communities actively participate in governance processes of the municipality.
In supporting effective service delivery, we made a commitment that CoGTA would, through our implementing agent the Municipal Infrastructure Support Agent, (MISA) urgently support struggling municipalities to spend their Municipal Infrastructure Grant allocations while at the same time building internal capacity to plan, deliver, operate and maintain infrastructure.
The importance and urgency of this work is underscored by the fact that only 55 municipalities out of 257, have registered engineers leading their technical divisions.
We are following the whole of government, whole of society approach advocated by our National Development Plan, encapsulated by President Ramaphosa as Thuma Mina!
We are working with business organisations to assist us in ensuring that municipalities have the required skills to function optimally.
These include black professionals in various sectors, as well as organisations such as Business Unity South Africa and Business Leadership South Africa.
In the meantime, we have deployed District Support Teams consisting of engineers, construction and project managers, financial accountants, town and regional planners, as well as governance and administration experts in 55 of the priority distressed municipalities.
16 District Support Teams, comprising 84 MISA officials (40 Civil Engineers, 14 Electrical Engineers, 14 Town Planners, 7 Chief Engineers and 9 Provincial Managers) have been established and deployed to support the municipalities
Each of the identified priority municipalities have been supported to develop a municipal capacity development plan as a blueprint towards strengthening internal capacity.
Municipal Project Management Units are used as entry points for building municipal capacity. Capacity development will focus on the individuals, the organisations and the enabling environment.
The following steps have been taken to build capacity and skills in affected municipalities:
- At least 500 municipal officials will receive technical training in the 2018/19 financial year;
- 150 young graduates will be placed in municipalities for work exposure and to provide support;
- The young graduates will be provided with mentors for structured support towards registering as professionals. This is a measure step towards building a skills pipeline in local government and professionalizing the sector;
- 102 Artisans and process controllers have been placed in municipalities that are struggling with infrastructure operations and maintenance; and
- There are more than 230 apprentices hosted by municipalities for work exposure and support with operations and maintenance.
Improving Audit Outcomes
Worryingly, the Auditor-General’s report on South African municipalities for 2016-17 noted a regression in audit outcomes and an increase in irregular expenditure.
Of particular concern are the 28 municipalities with disclaimer audit opinions, some have received disclaimers for five years or more in a row.
This is unacceptable. This is disappointing. But it is also a call to action.
The root causes of these lies in: Leadership instability, ineffective governance structures, lack of consequence management on poor performance and transgression, poor records management, bulk reconciliation of accounting records at year-end, poor delivery and maintenance of municipal infrastructure, poor implementation of audit remedial action plans, inadequate internal controls, lack of compliance with laws and regulations
Of particular concern is a leadership deficiency in addressing the lack of accountability by implementing consequences against those who flouted basic processes that hampered effective municipal governance.
The AG also reported weaknesses in internal control and the risks that needed attention in local government.
Municipalities are urged to intensify internal controls, mitigate the aforementioned root causes to realise change.
The audit remedial action plans must be an integral part of performance agreements. This will promote a culture of accountability.
The Municipal Public Account Committees (MPACs) are important structures to promote good governance, transparency and accountability in the use of municipal resources.
As at the end of September 2018, a total of 254 (99%) of municipalities have established MPACs.
They play a critical role in ensuring that public funds are spent effectively and efficiently for the benefit for the public.
However, the comments from the Auditor-General suggest that even when MPACs are in place, committee members are not necessarily equipped to ensure a robust committee engagement and careful scrutiny of the activities and decisions taken by the executive and the administration.
To further improve the oversight and accountability roles of MPACs, CoGTA in partnership with National Treasury, SALGA and GIZ developed a MPAC Guide and Toolkit.
The Guide and Toolkit were developed to assist councillors serving on MPCAs, as well as all key stakeholders to perform their oversight and related responsibilities.
The Guide and Toolkit provides that the MPAC should comprise solely of councillors appointed by resolution of a full council meeting.
This committee should exclude any councilor who serves as Mayor, Deputy Mayor, Speaker, Chief Whip, a member of Mayoral Committee or member of the Executive Committee.
On 27 November 2017, CoGTA in collaboration with the Association of Public Account Committees (APAC), launched the National Association of Municipal Public Accounts Committee (NAMPAC) to further entrench the oversight role of MPACs in municipalities.
NAMPAC is a vehicle that enhances effective and efficient oversight practices.
This is done through platforms where information, knowledge and experiences are shared and status-quo thinking is challenged.
NAMPAC will ensure that local government oversight issues receive the attention they deserve.
CoGTA has identified the following initiatives for empowering MPACs:
- The MPAC should report to the full council at least quarterly and bring items before council, as and when necessary;
- There must be more capacity building initiatives with the assistance of SALGA, National Treasury, APAC and provincial governments, utilising government resources and facilities;
- Members of the public and the media should be allowed to attend MPAC hearings to encourage open communication and transparency; and
- There must be better assessment of the progress of MPAC recommendations through council processes and resolutions.
This year, South Africa leads the world in celebrating the centenary of the birth of President Nelson Mandela.
We do not need to look elsewhere to find an example of outstanding ethical leadership.
We should take courage in his enduring legacy as a committed and principled servant of the people.
It is disconcerting that the Public Sector Ethics Survey of 2015 found that there is a clear disjuncture between what is prescribed by the law and what happens in practice.
According to the survey, the top five ethics risks related to local government are as follows:
- Political interference;
- Incompetent/unqualified people being appointed;
- Abuse of cadre deployment;
- Jobs given to friends and family; and
- Inconsistency in the application of rules and discipline.
The woes in the local government landscape, which include killing of councillors and violent community protests, could be indicative of a declining morality and a lack of ethical leadership.
The Batho Pele principles state the fundamental values of public service and the broader community, and how local officials should provide services to the communities in a responsible and accountable manner.
CoGTA has met with the Moral Regeneration Movement (MRM) to discuss possible collaboration to instill ethical leadership in local government.
Another laudable collaborative initiative is the Gauteng Municipal Integrity Project is an example of how ethical conduct can be promoted in municipalities.
Through the partnership with the Ethics Institute, the Premier’s Office and the Provincial Department of Cooperative Government and Traditional Affairs (GoGTA), nine local and metropolitan municipalities are part of the Gauteng Municipal Integrity Project.
This five-year project is funded by the Siemens Integrity Initiative and its purpose is to strengthen the integrity management capacity of municipalities.
Through the project, the Ethics Institute aims to build the internal capacity of municipalities to sustainably and independently govern their organisational ethics.
Since the launch of the Gauteng Municipal Integrity Project three years ago, more than 750 people have been trained including 40 ethics officers, 18 ethics trainers, 320 councillors and 350 officials.
CoGTA has produced a Municipal Integrity Management Framework as part of the 2015 Local Government Anti-Corruption Strategy.
This is part of the effort to inculcate a culture of ethical and accountable leadership.
This is required in an equal measure from both the political and administrative leadership.
In terms of this framework, municipal leadership should set the tone and drive good governance, organisational integrity and anti-corruption initiatives.
Municipalities should institutionalize integrity management initiatives based on the four pillars of: Prevention, Detection, Investigation and Resolution.
Allegations of corruption and related offences were reported through the National Anti-Corruption Hotline. 363 cases were referred to CoGTA of which 93% feedback was provided to the PSC.
Cases referred to law enforcing agencies are in different stages of investigation and completion.
The Special Investigating Unit has provided feedback on 15 cases for 2017/18, while the Asset Forfeiture Unit has provided feedback on 33 cases for 2017/18.
A total of 311 cases of municipalities are being investigated by the Directorate for Priority Crimes Investigation (DPCI) through the Clean Audit project.
Out of the 311 cases, 98 are in court, 178 are under investigation, while 35 are considered finalised or withdrawn.
Since 1 April 2017, 18 cases of corruption and related offences were reported to the Department relating to the following 5 categories:
- Fraud / Corruption relating to the allocation of RDP houses;
- Tender / Procurement irregularities;
- Appointment irregularities; and
- Corruption and related offences in general.
The Department continues to collaborate with provinces, municipalities and law enforcement agencies to ensure the implementation of recommendations emanating from forensic reports commissioned by provinces and municipalities.
Most of the forensic reports made recommendations that certain remedial or other corrective measures should be taken. However, some municipalities have failed to implement resolutions emanating from these reports.
The Auditor-General has repeatedly emphasised that municipalities should implement consequence management through appropriate and timely action against transgressors.
We are confident that the recent amendments to the Public Audit Act will assist in ensuring stronger action in cases of transgression.
The AG will now have the power to refer material irregularities to appropriate authorities to investigate.
The AG now also has remedial powers that can be leveled against transgressors. These remedial powers include the recovery of money lost as a result of the irregularities.
President Ramaphosa has appealed to every South African to lend a hand in the task of rebuilding the South African nation.
Let us honour the memory of Nelson Mandela and Albertina Sisulu and respond to this call.
The challenges in local government are indeed daunting, but not insurmountable. With commitment, hard work, and collaboration amongst all stakeholders we can move forward.
By taking practical steps and continue to focus on intervention and support programmes, we can move the local government sphere to a new trajectory of good governance and accountability, so that it can fulfill the constitutional objective of developmental local government.
Ngiyabonga, Ke a leboga, Baie dankie, Ndi a livhuwa, Thank you, Inkomu, Shukran