ADDRESS BY THE DEPUTY MINISTER OF COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS, MR OBED BAPELA, at the 87TH INSTITUTE OF MUNICIPAL FINANCE OFFICERS ANNUAL CONFERENCE
03 October 2016 – Durban
IMFO President, Ms. Jane Masite
IMFO Chief Executive Officer Mr Abbey Tlaletsi
Executive Mayor of eThekwini Metro, Cllr Zandile Gumede
City Manager, Mr. Sibusiso Sithole
Mr. Sonwabo Gqegqe SALGA
Ms. Caril Venter World Bank
Municipal Finance Managers
Senior Government Oficials
Members of the Media
Ladies and Gentlemen and
It is a pleasure to address you today, in this your 77th year of existence. This certainly underlines the importance of the work you do as an organization that brings credebilty to the work of Municipal Finance Managers.
I am glad the Institute for Municipal Finance Officers (IMFO) chose the beautiful city of Durban to host their annual gathering. The IMFO Conference is the premier gathering for finance officials in the local government sphere.
Charles Dickens Qoute: â€œIt was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.â€ UQouteâ€¦
I choose this particular qoute for a purpose which I will make a connection later in my address.
The theme that youâ€™ve chosen for this yearâ€™s conference is indeed thought-provoking one, â€œSustaining Municipal Viability amidst the Economic Distress.â€ The World Economic Forumâ€™s Global Competitiveness Report 2016-2017, released last week, saw South Africa improve by two places to 47, out of 138 countries.
Despite this competitiveness report, and the fact that the economy grew by 3,3 percent in the second quarter, (let us be mindful that this is just an indicator in the quarter of September we might get a different result, as the economy is globally was hard pressed including South Africa). South Africa still faces the prospect of almost minimal growth. It is under these circumstances that we must all function effectively. And it is under these conditions that your theme is most appropriate. Minimal growth translates into less funds to spend. Municipalities will also carry this burden.
Your work is therefore even more vital, as you will be expected to do more with less.
After perusing the programme, I have noted with great interest the topics that you will tackle are the revenue value chain, risk management, budgeting, internal audit, the impact of ICT as well as the role of traditional authorities on good governance and oversight. It is on the latter that I address you today.
In August the city of Durban also hosted the Traditional Leaders Indaba as we sought to determine how to take forward the institution of traditional leadership. The institution of traditional leadership is centuries old.
It is a reality that is with us. Many South Africans in both urban and rural areas still pay homage to the institution. Chapter 12 of the Constitution recognises the relevance and importance of traditional leadership, in this modern era.
As you know, in August this year we hosted yet another successful local government elections that saw over 15 million voters take to the polls. In September, working with the South African Local Government Association (SALGA) and other stakeholders, we saw the rollout of the Integrated Councillor Induction Programme.
The programme aims to better equip councillors to execute their responsibilities. For the first time traditional leaders will be involved in the Councillor Induction.
We believe this will contribute towards advancing a common understanding on the roles and functions of both parties, and assist in giving effect to legislation that provides for the participation of Traditional Leaders in Municipal Councils, ward committees and other government structures in the local government sphere.
The need for such a collaboration is also reinforced by the launch of the government-wide Back to Basics Programme in 2014, which is underpinned by five pillars, namely, putting people first and engaging communities, delivering basics services, good governance, sound financial management, and building institutional capability.
Last week SALGA in collaboration with the Financial and Fiscal Commission (FFC) released the â€œCost of Municipal Basic Servicesâ€ report. The report found that annual administrative costs across local government stood at R42bn compared with overall operating expenditure to deliver services to the poor at R35bn.
The report takes into account the costs associated with providing Electricity, Water, Sanitation, Solid Waste, Roads and Storm Water, Cemeteries, Fire Services and Municipal administration. These service offerings are fundamental to all municipal activities.
The results of the study require some policy shifts on the side of government. Among the proposals are to:
- Investigate the development of norms and standards to address the current unhealthy ratio of administrative costs to service delivery costs,
- Investigate spatial optimisation to address the high capital spending on roads
- Municipalities must prioritise the renewal of municipal infrastructure
- Emphasise the redistributive policy approach but with special emphasis on balancing urban and rural service delivery provision.
This approach is essential to municipalities being able to fulfil their socio-economic obligations. Which brings us to the role of traditional leaders and the part that they can play in ensuring that municipalities are able to deliver services effectively to citizens. Almost a third of South Africaâ€™s population still live in rural areas, especially in areas controlled by traditional leaders.
Even though South Africa is predicted that 80% of traditional communities would be urbanized by 2050, as people move to towns and cities for better opportunities.
Unless we adopt a model like China which is bringing development in rural communities, you can find Robots, Roads, Malls with movie and Centers of communication by growing rural economy. In this way they still keep people to cultivate the land and supply food to the cities and exports to other countries.
China is growing Rural Country side communities as the resource of growth in the country.
In giving strength to the department and alignment to the NDP goals, our strategic focus would be outlined in the following Five-Point Plan: (Five Pillars)
- Building Sustainable Institution of Traditional Leadership and resolving all outstanding disputes, to stabilize and strengthen the Institution.
- Protecting, Preserving and Promoting the African Cultural and Traditional and Customary way of life.
- Transforming the Traditional Institution, Reviewing and AdaptingÂ Â of Policies, Legislation and Regulations in the democratic dispensation.
- Revival and promotion of the Socio-Economic activation to achieve a better life for people in Cities, Towns, Rural, and Traditional Communities.
- Coordination of Interfaith to Promote Social Cohesion and Nation Building.
It is our collective responsibility as we model our budgets to take into consideration the importance of projects aimed at providing services, too many of our people who fall under the jurisdiction of traditional leaders.
It is is of importance of budgeting is to ensure that officials work within the allocated funding for projects and minimize any over spending and ensure sound financial accountability.
Integration of Traditional leadership governance with local authorities
Ladies and Gentlemen:
The institution of traditional leadership has been in existence on the whole continent of Africa from time immemorial. Incorporating traditional leadership in the democratisation process contributes to the criteria of representation and legitimacy while eliminating the possibility of excluding integral members of society from their input in governance.
â€˜â€™â€™Moreover, traditional leaders are vital as active members in political institutions to guarantee that government is responsive to its constituents by fostering feedback mechanisms between government and the public.
Traditional leaders in rural communities have a significant level of trust placed on them by their people. They have the ability to direct behaviour and decisions, and exercise their influence by engaging in activities such as solving disputes and managing resources. We saw this role played effectively in the run-up to the elections, where the role of traditional leaders was vital to bringing peace and stability to Vuwani.
However, traditional leaders have argued that the provision is too vague and that the role needs to be clearly spelt out as is done with elected municipal councillors. The traditional leaderâ€™s role is subject to the Constitution, which at the same time extends elected municipalities, to areas under the jurisdiction of traditional leaders, assigning them specific powers and functions.
It does not spell out a specific role for traditional leaders, but awards power to the national legislature to pass legislation to provide for the role of traditional leadership as an institution at local level (sphere) on matters affecting local communities.
Although traditional leadership is enshrined and recognised in the Constitution and other legislation, they lack a clarified role in local governance.
This has brought confusion to rural areas, which has weakened democracy, and in particular, caused deficiencies in governance in these areas. Citizens who live under these dual systems of authority do not draw a sharp distinction between hereditary chiefs and elected local government officials.
Traditional leaders of all political persuasions are dissatisfied with their constitutional and legal position with regard to governance.
They argue that their status and powers and functions have been whittled away under the Constitution and the post-1994 government. These leaders further argue that the Constitution should have spelled out their functions as it did for municipalities.
Unfortunately, since 1994, this controversy has been raging over the role of traditional leaders in local government. Acts such as the Local Government Transition Act, the Local Government Municipal Structures Act, and the Local Government Demarcation Act, provided for a restructured local government system, the demarcation of municipalities, and the 2000 municipal elections that ushered in a new system of local government. Controversy arose because these Acts established wall-to-wall municipalities over the whole country, including the rural areas, which were under the jurisdiction of traditional leaders. Currently, in rural areas, municipalities have powers and functions that largely overlap with those exercised by traditional leaders.
As a result, and by virtue of the constitutional provisions in Chapter 7 of the Constitution, which spells out the functions of â€œwall-to-wallâ€Ÿ municipalities, the powers and functions of traditional leadership and traditional authorities, whether under customary law or statute, are by implication curtailed. The impact hereof is compounded by the fact that traditional leaders are afforded ex officio council observer status by the Constitution.
Ladies and Gentlemen:
Although the Constitution establishes their ex officio status, the Municipal Structures Act relegated their influence to a non-voting role.
The reduction of the status of traditional leaders unleashed a political battle, which came to the fore in the run-up to the 2000 elections, and has remained largely unsolved to date. Therefore, still, traditional leaders seek recognition in local government in rural areas i.e. in category C municipalities.
The base of us u under siding the loca gov policy, is the White Paper on LG which gives greater plan. On traditional leaders. Section 81 of the structured act and their role is to be fully explained.
The Municipal Systems Act seeks to address the situation of traditional leaders in that it is very clear that municipalities must develop a culture of municipal governance that complements formal representative government with a system of participatory governance, and must for this purpose encourage and create conditions for a local community to participate in the affairs of the municipality.
As Municipal Finance drivers let us look at the – out of pocket expenses to support traditional leaders active participation in local government affairs, there are some municipalities who provide financial support, whilst there are others who donâ€™t provide such support, it is important that we create a single policy for the remuneration of traditional leders attendance of Council meetings.
The Municipal Structures Act consequently indicates that â€œTraditional authoritiesâ€¦may participate through their leaders,â€¦ in the proceedings of the council of a municipality, and those traditional leaders must be allowed to attend and participate in any meeting of the councilâ€ (Municipal Structures Act, 117 of 1998, S81(1).
It is further states that the number of traditional leaders that may participate in the proceedings of a municipal council may not exceed 20% of the total number of councillors in that council, but if the council has fewer than 10 councillors, only one traditional leader may so participate (Municipal Structures Act, 117 of 1998, section 81 (20(b)).
The Back to Basics (B2B) programme reinforced the role of traditional leadership. B2B reporting since October 2014 indicate that on average, the participation rates are generally much lower than the allowed percentages in the Municipal Structures Act. However, the Eastern Cape and Limpopo are making strides in this area.
The key problem that impedes traditional leaders in the promotion of municipal service delivery, is that by law municipalities are responsible for ensuring the delivery of basic services to all South Africans.
In my view, in order to carry out this responsibility, municipalities will need to have a joint service delivery initiative with traditional leaders. Correspondingly, governmentâ€™s objectives of municipal service delivery will be enhanced as soon as traditional leaders are fully integrated into, and are vested with legislative powers in the democratic structures of the country. The participation of traditional leaders in the promotion of municipal service delivery will add value in redressing municipal service delivery inequalities and imbalances in South Africa.
Partnerships between municipalities and traditional councils are important, and any partnership between a municipality and a traditional council must be based on the principles of mutual respect and be guided by principles of co-operative government.
Back to Basics: Pillar number 4 â€œEnsure Sound Financial Management and Accountingâ€
Madam President of IMFO:
One of the five pillars of the Back to Basics programme is that of ensuring sound financial management and accounting. We realised a long time ago that our people are at the heart of our efforts. In 2007 we created regulations that spelled out the minimum competencies for officials responsible for financial and supply chain management.
The regulations covered aspects such as minimum higher education qualifications; work-related experience,
core managerial and occupational competencies and the financial and supply chain management competencies required by municipal officials in order for them to discharge their duties under the Municipal Finance Management Act.
These minimum competency levels sought to professionalise the local government sector to make it a career choice for talented officials and to some extent mitigate some of the root causes of poor financial management and service delivery. Affected municipal officials had 8 years to attain the prescribed requirements.
In support of this, a structured training programme as well as a graduate internship programme, was introduced. We believed that this would go some way to mitigating the shortage of skilled financial management personnel within municipalities. The Financial Management Grant of just over R800 million was made available to municipalities. This in addition to funding from the donor community, LGSETA and the municipalitiesâ€™ own resources.
The final cut-off date to meet the minimum competency requirements was 30 September 2015. No further extensions were allowed. National Treasuryâ€™s database indicates that 9 700 municipal officials embraced the regulations, with varying levels of compliance.
While there were instances of non-compliance, this did not take into account other relevant qualifications held by officials. Non-compliance does not necessarily translate into incompetence.
Just this week we also released the Draft Municipal Staff Regulations, which will set out the competencies for a variety of positions. This will ensure that we have the requisite skill sets across the board and start building capacity within municipalities.
Corruption and Local Government
The Department of Cooperative Governance has been at the forefront of tackling the demon of corruption in the local government sector. To date 109 forensic reports were received. They focused on areas such as irregular, wasteful and unauthorised expenditure, procurement irregularities, appointment irregularities, as well as cash theft, fraud, corruption and malicious administrative practices.
Unfortunately, the challenge is that many of the recommendations emanating out of these reports are not being fully implemented, with municipalities themselves often being the main culprit. Municipal Council resolutions were not taken on how to actually implement these recommendations.
In order to monitor the implementation of recommendations by municipalities, the Department is now establishing provincial forums with district municipalities. Some of the forensic reports are being referred to other investigating agencies, given the amount of time that has lapsed since the reports were commissioned. The Department is engaging with the National Prosecuting Authority, the Special Investigating Unit, Asset Forfeiture Unit and other law enforcement agencies to try to ensure that proper action is taken.
Another problem identified is that even after irregularities and transgressions were proven, there was often lack of consequence management by municipalities. The Department is monitoring disciplinary cases in municipalities, and those officials found to have transgressed would be included in a database of dismissed staff, held by the Department, to prevent them from simply moving to other municipalities.
We believe that our work is bearing results.
Auditor-Generalâ€™s Report on Audit Outcomes
The Auditor-Generalâ€™s Report on Audit Outcomes for the 2014-15 financial year, release in June, showed an encouraging improvement in audit results over the past five years from 2010-11 to 2014-15.
The number of municipalities that received financially unqualified audit opinions with no findings (commonly known as â€œclean auditsâ€) increased from 13 to 54. In addition to this, 18 municipal entities also achieved clean audit status, taking the total number of clean audits to 72 in the current period.
Regressions during this period stood at 13%, while 34% of municipalities recorded the same outcomes as in 2010-11.
There was also a significant reduction in adverse and disclaimed opinions, which decreased from in excess of 30% in 2010-11 to about 11% of municipalities in the current period.
These outcomes were the result of CoGTA working more closely with SALGA, National Treasury and the AGâ€™s office.
Back to Basic Pillar One of putting people first
Local government is the primary site for the delivery of services in South Africa. Since 1994 tremendous progress has been made in delivering services to the people. While local government has made significant achievements in delivering services to the previously marginalised communities, the backlog is still immense. This situation is further exacerbated by the growing inward migration into cities, resulting in the emergence of informal settlements and an increased demand for services escalating into a number of community protests.
In the local government sphere, municipal councils are obliged by law to develop a culture of local governance that shifts from strict representative government to participatory governance, and must for this purpose, encourage, and create conditions for residents, communities and other stakeholders in the municipality to participate in local affairs.
In addition, these laws require of local government to develop strategies and mechanisms to continuously engage with citizens, business traditional leaders, and community groups.
COGTA has developed a number of public participation platforms over the years to contribute to the attainment of public participatory governance. Ward Committees have emerged as one of the key institutional mechanisms intended to contribute towards bringing about people-centred, participatory and democratic local governance and Traditional leaders play an important role in ward committee as ex-officio. Ward Committees have been positioned as critical structures through which public participation in local government is to be achieved and most importantly form a link between Ward Councillor, traditional leader, the community, other relevant stakeholders and municipality.
The next phase of the B2B programme will see the implementation of a 10-Point Plan. This includes a focus on more meaningful engagements with communities â€“ rather than the provision of participatory mechanisms for compliance purposes.
Ladies and Gentlemenâ€¦
The institution of traditional leadership plays a vital role in our democracy. The Back to Basics programme has encouraged the participation of traditional leaders in the meetings of the municipal councils.
The involvement of traditional leaders in the Councillor Induction Programme has added a new dimension to the effectiveness of traditional leaders in the interactions at local government level. We believe that further participation and clarification of the roles of traditional leaders in the local government sphere will ensure greater accountability to citizens.
Let me end with Charles Dickens Charles, as per in my opening â€œit was the season of Light, it was the season of Darkness, it was the spring of hope.. Municipal Managers you are our only light to ensure that the budget is used correctly, you are our only hope that budget will end up in the planned projects, please can we take care of the Finances not to be dictated by those who are not in Finiancial Managers.
After the best of times, it was the age of wisdom, you have the wisdom and it is the age of wisdom now. It is the best of times in South Africa Local Government clean financial audit is in the rise so that we remain in the bed of times.
The professionalism of the sector has grown, more well trained people are in the field to abide by the polio and procedures MFA. To stop corruption and to be deafened. It was a season of light as we continue to be the beacon of hope in improving the quality of life.
It was a spring of hope to build a united county to end poverty and unemployment. We can still do more and better the issues of education and inequality are history.
Qoute â€œAs Martin Luther said â€œdarkness can’t drive darkness only light will drive darkness. All of us will see the vision.â€ UnQouteâ€¦
I wish you well with your deliberations over the next few days and look forward to hearing your suggestions on how we can improve the functioning of the local government sector.
I Thank You.