International Convention Centre, eThekwini
24 November 2022
Ladies and Gentlemen
Let me first thank you for inviting me to this milestone gathering. I am truly honoured to join you today for the first time during the fifth Annual National Local Government Asset Management Indaba.
This is an important platform which brings together professionals, influencers and game changers in the local government space to exchange ideas on how best to optimize the management of municipal assets.
This year’s indaba couldn’t be more aptly timed as it happens almost two months to the day when the Department of Local Government and Cooperative Governance hosted its Local Government Summit under the theme “Building a capable, ethical and developmental state”.
Discussions that emanated from that two-day summit highlighted the need for improved management of municipal assets. We have seen over time that the poor management of municipal assets leads to service delivery backlogs.
It is encouraging that a professional association such as CMAM (Centre for Municipal Asset Management) was able to sustain this annual gathering by working very closely with SALGA and other institutions for the past 5 years. We appreciate your capacity-building initiatives through the workshops and material you have produced over the years.
It is also heartwarming to see the dedication of councilors who have been a constant feature of this Indaba annually. South African municipalities face very pointed challenges in asset management. These challenges, if left unaddressed, will compromise the quality and reliability of the services we offer to our citizens. While we have been able to improve access to almost all basic services, our successes will be hollow if we are unable to maintain our assets. Having access to a service that is constantly discontinued is very unsettling for any resident. Management of assets helps to guarantee the reliability of the services. It would be good that as we go back to our various municipalities, we can then apply the knowledge we gained from this gathering in an effort to improve our asset management for better delivery of services.
It is therefore my wish that the discussions in this indaba will pave way in how we can improve the management our assets so that they can live to their expected life span.
Due to our historical background that created a huge inequality in the provision of services, municipalities are faced with tough decisions to make between the expansion of services through new infrastructure or ploughing more resources into the maintenance of the existing infrastructure. It is important to note that negating the infrastructure extension to households with no access to services is not an option for our democratic government.
We have seen that not investing enough into the maintenance of the existing infrastructure will limit its life span thereby demanding immature investments, frustrating economic development and compromising the financial viability of municipalities. The Asset Management Processes offer a practical and objective way to resolve this dilemma. In addition, asset management processes are an embodiment of various municipal functions making it the central theme for the mandate execution of a municipality.
Perhaps one glaring oversight has been the absence of grant funds to poor municipalities for maintenance activities. The Municipal Infrastructure Grant has, for many years been exclusively used for providing new infrastructure and eradicating of the access backlog. We seem to have assumed that municipalities will be able to raise their own funds to fund maintenance activities. Our equitable share formula has been exposed for its lack the distributive accuracy that was assumed when it was formulated. We know that both SALGA and National Treasury had an opportunity to revisit the formula in 2012. But the 2012 process was not enough in the sense that we restricted the changes to the formula to redistributing the same 9% allocated to local government through the Division of Revenue Act (DoRA) process.
National and Provincial governments still receive 45 and 44% of the equitable share respectively. This has not helped us enough to change the situation in local government. We must still boldly confront the assumptions we made about the local government’s ability to generate its own revenue. A platform like this is ideal to start asking those uncomfortable questions.
I am privy to the debate within the asset management fraternity about the difference between asset management and asset accounting. Accountants are doing asset accounting and calling it asset management. This has made engineers and other infrastructure units in the municipalities to assume that asset management is the responsibility of accountants only. Centre for Municipal Asset Management (CMAM) close relationship with the Durban University of Technology, Municipal Infrastructure Support Agent (MISA) and the University of Cape Town (UCT) gives us hope that we will bridge the knowledge gap between engineering units and finance officials in municipalities.
In the same vain of partnerships, MISA has partnered with SALGA, UCT and Engineers without Boarders South Africa (EWB-SA) to develop a programme called Data for Municipal Infrastructure Assets (DATA4MIA). This program recruits engineering students to compile useful data and on infrastructure assets. This gives students on-the-job training and compulsory vocational work for their engineering studies. They collect, verify, analyze and create asset knowledge information which serves as a baseline for asset care. It is partnerships like these that cut across the traditional understanding of public service that will enable us to have a 360-degree view of our problems and provide evidence-based solutions and interventions.
The National Treasury Guidelines give municipalities a target to spend 8% of the annual budget allocation on Repairs and Maintenance of infrastructure assets and as of 30 June 2022 the national expenditure average is below 5% by all municipalities. This demonstrates that we are not yet where we need to be in terms of expenditure on asset management.
Our goal must not just be achieving expenditure targets, it must also be about getting value for money in our operations. We cannot be outsourcing everything when we have so many unemployed youths that can be organized into cooperatives and assist in cleaning streets, doing basic plumbing, routine sewer pipe cleaning and many other activities.
The State of Local Government Report has confirmed that most of our municipalities are struggling with the maintenance of infrastructure, such as roads, water and wastewater treatment plants, as well as solid waste management. The rejuvenation or turn-around of Local Government lies in its ability to effectively implement asset management systems. Inevitably, this requires strong political and managerial-focused leadership. As the District Development Model (DDM) guides us, it requires the dissolution of silo-mentality and mandate gate-keeping and ensures that all stakeholders, especially communities are involved and participate in local government decision-making. To this effect, municipal leadership must ensure that in their IDP’s there is a prioritization of Asset Care programmes and make quality decisions on the deployment of resources to advance asset management of infrastructure in their respective areas.
Municipal assets such as roads, boreholes, dams, bridges, Water Treatment Works etc, are beyond just assets but they are enablers of access to basic services. Therefore, a hindrance to their functioning results in the infringement of basic human rights of the citizens. It is therefore important that municipalities through organized leadership must ensure that there is a full-time oversight role administered for the state of municipal assets. Furthermore, the advancement of monitoring and evaluation must be applied.
The Provinces of KwaZulu Natal and Eastern Cape will see the development of the New African Coastal City known as the Eastern Seaboard Development which is a flagship program of the District Development Model. The Eastern Seaboard development is a bold and multifaceted vision to develop a new smart city and to bring in new developments across KwaZulu-Natal and the Eastern Cape. It is a polycentric development with many development nodes based on the economic anchors and characteristics of each region. The objective is to unlock the economic potential across the four district municipalities of Ugu (KZN) Harry Gwala(KZN), OR Tambo(EC) and Alfred Nzo Districts(EC).
Since the launch last year, many plans and studies have been undertaken and a clear vision of the nature of the development has been formulated. While many other studies and research are underway, it has been resolved that physical work should commence soon. Through the Municipal Infrastructure Support Agent (MISA), the Department of Cooperative Governance and Traditional Affairs has mounted a multisectoral governance structure. This structure involves more than 10 National and Provincial departments, parastatals, and representation from all 17 Local Municipalities within the 4 districts. Extensive stakeholder consultations with a wide spectrum of social partners are underway. What began as a dream has surely morphed into a comprehensive plan ready for implementation.
All 21 Municipal authorities within the region have adopted the development initiative through council endorsements. Provincial governments of KwaZulu-Natal and Eastern Cape have formally endorsed the development through executive council resolutions. The National Department of Agriculture, Land Reform and Rural Development has gazetted the jurisdictional area of the 4 Districts as a unitary region on the 20th June 2022 (Gazette No 46573).
With researched evidence and benchmarking with similar developmental initiatives from across the world, it became obvious that a successful modern city-building project also requires a skilled workforce with the requisite depth and breadth of skills associated with a “smart” city. The eastern seaboard has the largest brain drain of all regions in the country. The region also lacks a critical mass of some of the basic and fundamental skills required to support a thriving economy.
We are calling a skills summit on the 8th of December 2022 to convene all the social partners from all sectors with a role in skills development. This summit will ensure alignment with regional and national priorities in skills development. It will delineate roles and functions across the partners and identify gaps and opportunities that must be exploited to mount an intensive training program.
Another key issue that we need to face head-on is the unfortunate impacts of the unprecedented climate change which are unfolding right in front of our eyes. The recent floods in KwaZulu Natal Province are an example of the challenges that are brought about by Climate Change. The challenges and events that are due to climate have prompted us to think differently about infrastructure development and go beyond the industry norms to lessen the burden on our communities. We need to build infrastructure which will withstand the increasingly harsh elements as we build towards the future.
Most importantly, communities need to be part of the asset management value chain by being part of safeguarding as well as maintaining municipal assets. Municipalities should make it their business to create awareness and educate the public about the importance of jealously guarding infrastructure, reporting any defects and even fixing and repairing some of the infrastructure.
I know this gathering is about asset management, but we must never lose the wider context of skills development and poverty eradication. Let us be innovative in linking our activities as municipalities, to more pressing local challenges of poverty and unemployment. We need to promote job creation and empowerment of youth and women through asset management initiatives as part of local economic development.
My department has undertaken restructuring the CWP program for more impact and relevance. You should tell us after this indaba, how can the management of assets be assisted through a National Program that is also eradicating poverty.
How can our solutions incorporate skills training even for the semi-literate. I am leaving you with the challenge to engage with each other on how this asset management drive can be used to address the important national imperative of tackling the triple challenges of poverty, unemployment and inequality.
This Indaba should make us think differently as leaders in the Local Government sector. We should awaken to the idea of the non-transferability of the accountability that lies on our shoulders with respect to ensuring efficient, effective and affordable service provision.
These discussions which will be taking place here over the next two days can assist government pave the way forward and avoid repeating previous mistakes as we have started rolling up our sleeves in working towards the city that we want.
I wish you well in your deliberations and look forward to resolutions that will inform and empower our work going forward.
I thank you.