Transcript Slide 1

Lessons Learnt from
Capacity Building Programme
Municipal Infrastructure
Consultative Conference
24 November 2011
Mr Reuben Matlala
1
Introduction
DBSA Organisational Framework
Board of Directors
Board Sub-Committees
BCIC
Finance
Transformation
and Managing
Development
Risk
Governance
Office of the CEO/MD
Management
Committees
Social
Development
& Integration
SOUTH AFRICA
OPERATIONS
EXCO
Enablers
DIC, IT
Economic
Regional dev’t
Development & integration
INVESTMENT
BANKING
Financing in South Africa
Finance
CCC, RCC, PRMC
Treasury
ALCO
Risk
HRMC
Internal
Audit
PC, FMC
DPC
Corp Sec
HCMC
CKM
Institutional & human capacity
failure/weakness
Advocacy and
Implementer
Influence
Development
Fund
INTERNATIONAL
DIVISION
Financing outside
SA
Audit &
Risk
Development
Planning
• Capacity Development &
Deployment
• Rural Development
• Community Development
Facilitation
Human
Capital
Enabling processes and systems
Business
Technologies &
Facilities
Strategy &
Communication
2
2
Municipal Financing
3
DBSA Financing Lessons Learnt
Provincial Focus
1,600
1,400
Increased activities in Eastern Cape,
Limpopo and Mpumalanga
1,000
FY-2008
800
FY-2009
600
FY-2010
400
200
Eastern Cape Free State
Limpopo Mpumalanga North West
Province
Northern
Cape
10,000
9,000
Activities remain strong in Gauteng,
Western Cape and KZN
8,000
7,000
R million
R million
1,200
6,000
FY-2008
5,000
FY-2009
4,000
FY-2010
3,000
2,000
1,000
Gauteng
Kwazulu-Natal Western Cape
National
4
DBSA Financing Lessons Learnt
Approvals Sector Focus
Approvals per sector (value)
Water
16%
Education
3%
Transportation
5%
• DBSA continued to make infrastructure funding available to
the public sector
• Driven by approvals in energy, water and roads & drainage
• SA approvals: R30.7 bn and SADC: R6.4 bn cumulative over
the last 4 years.
• SA municipal approvals – very good progress in secondary
and under resourced municipalities
• Metro’s: R5 bn, secondary municipalities: R1.9 bn and
under resourced: R486 million.
Approvals per client category (value)
Other
6%
Private sector
intermediaries
12%
Sanitation
3%
Social
infrastructure
4%
Energy
49%
Roads and
Drainage
10%
Metro's (SA)
13%
Secondary
municipalities
(SA)
5%
Under
resourced
municipalities
(SA)
1%
Development
funds
4%
Other public
68%
5
6
Factors Limiting Municipal Debt Market
Large decline in
municipalities’ own
contributions to capital
expenditure
 Unable to obtain
loan tenures that are
in line with the
life span of
assets.
Short maturities
 Medium
on loans
term funds for
long life assets.
 Higher debt
service costs.
 Financial management
skills and capacity
constraints.
 No clear borrowing
strategies that support
infrastructure
investment programmes.
Lack of capacity
•
Municipalities have difficulty to
generate surpluses on their operating
budgets due to various cost
pressures.
Co-operation
with the private
sector and other
institutions
Creditworthiness
 Limited strategies
for
partnering
with the private
sector.
 Currently, municipal
borrowing are used to fund
social infrastructure.
 Impact on municipalitiesnegative creditworthiness
 With poor financial
performance– it reduces
the capacity to incur
further debt.
Municipal Capacity Building
7
National Objectives and Historical Footprint of the
Siyenza Manje Programme
Provincial boundaries
SM Municipalities including:
• 136 Project Consolidate municipalities
• Izimbizo municipalities
• 21urban & rural nodes
• Water Services Authorities
 Providing hands on capacity
building to municipalities
with:
o High infrastructural
backlogs
o Under spending MIG
allocations
o Poor financial management
and compliance with
MFMA
o Unable to recruit qualified
officials in key positions.
8
Siyenza Manje Integrated Capacity Building Model
Project Business
Plans
Technical
Reports
Feasibility
Studies
On-the Job
Training & Skills
transfer to
Municipal
Officials
MIG Project
Registration
Deployments
in Sector and
Line
Departments
SA Operations Risk
Assessment &
Funding Appraisal
Accredited
Vulindlela
Academy
Courses
Procurement
Municipal
Deployments
Young
Professionals
Artisans
Operations &
Maintenance
Implementation
& Monitoring
Grant Funding
IDP
Operations &
Maintenance
9
SM Capacity Building and Support Focus Areas
National Level
Provincial Level
Local Government/ Municipalities
DWA:
DLGs:
Technical:
 Evaluating of technical reports and
business plans
 MIG MIS
 MIG/CAPEX planning
 Financial monitoring and support
 Supply chain management
 Development of systems and procedures
for management of water and sanitation
projects
 Assist municipalities resolve audit queries
 Contract management
 Advise the MECs on Section 139 and 106
interventions
 Project implementation
Human Settlements:
Planning:
 Support in the development of provincial
spatial development frameworks
 Spatial and development planning
processes, policy, procedures, regulations
 Programme management
 Assessment of condition and
functionality of WWTWs
National Treasury:
 Advice on budget reforms and regulations
 Advice on the administration of the
Municipal Fiscal Powers and Functions Act
(MFPFA) regulations
 Programme and technical management
support for the implementation of housing
programmes, hostels redevelopment &
informal settlement upgrading
Provincial Treasuries:
DCoG:
 MIG MIS
 Assessment Framework for Municipal
Turnaround Strategies (MTAS)
 Support implementation of Operation
Clean Audit
 Support MFMA and Municipal Finance
Monitoring Units
 Operations & maintenance
Finance:
 Compliance with 16 MFMA priority areas
 Improving financial planning , reporting
and management
Institutional:
 On-the-job skills transfer and capacity
building
 Mentoring of young professionals
 Oversee development, review and
implementation of municipal policies, bylaws, systems and plans
10
Siyenza Manje Achievements
Number of municipalities and departments supported
Number of municipalities and departments
supported
217
208
250
MIG expenditure unlocked
10
205
155
155
200
150
150
208
8.7
8
6
86 86
100100
50
217
205
R billion
200250
8.9
4.8
4
50
2.6
2
1.1
FY 2007
-
FY 2008
FY 2007
FY 2008
FY 2009
FY 2010
FY 2009
FY 2010
FY 2011
Growth – training by Siyenza Manje
deployees “on-the-job”
1,400
1,263
1,200
1,087
1,023
931
Number
1,000
948
521
600
165
63
143
2010/11
2006/07
280,000
260,000
240,000
220,000
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
Financial
2007/08
2008/09
2009/10
2010/11
Impact to Households
Jobs Created
Technical
2008/09
2009/10
338
400
200
2006/07
2007/08
800
0
FY 2011
2007/08 FY
Access to
Access to Water
Sanitation
2008/09 FY 2009/10 FY 2010/11 FY
11
Hand Over of Siyenza Manje
SM unbundling into 2 Streams
National Treasury (NT)
(Finance)
 Budget for SM finance deployment allocated to NT
 NT responsible for planning, implementation and monitoring
of Municipal Financial Improvement Programme (MFIP)
 National Treasury accountable and responsible for
performance and behaviour of finance deployees
 National Treasury will be reporting & accounting on the MFIP
to Parliamentary committees
DCoG
(Technical)
 Budget for technical infrastructure deployment
allocated to DCoG
 DCoG is establishing MISA
 DCoG taking over SM technical deployees
 DBSA will not run the programme in future but
limited to implementing agent
 DBSA will provide agency function to MFIP:
• Recruitment of finance deployees
• HR administration
• Maintaining accounting records, monthly & annual
financial statements on the MFIP grant.
Going forward
 Siyenza Manje is now split between the 2 departments, namely NT and DCOG
 The DBSA will no longer be responsible for SM
 All future enquiries and requests for municipal capacity support to be directed to either NT or DCoG depending
12
on the needs.
Capacity Building Lessons Learnt
13
Institutional Challenges in Municipalities as Experienced
by SM
Financial:
 Lack of efficient financial management and billing systems
 Non Compliance to MFMA
 Poor liquidity
 Low revenue base
 Lack of Financial Planning capability
 Unrealistic budget targets resulting in funding shortfalls, particularly due to low levels of funding
from internally generated funds.
Technical and Planning:
 Limited planning and project preparations capacity
 Insufficient funds to eradicate infrastructure backlogs
 Poor spatial planning and population growth result in overload of basic services e.g. water,
electricity
 Non-compliance of supply chain management and procurement processes
 High vacancy rates/turnover rate in key positions
 Inadequate performance management of municipal officials
 EIA’s slow approval
 Unstructured communication and lack of constant information feedback to communities
 Unresolved land claims
 Roles, functions and mandates
14
Lessons Learned from SM
Governance
 The filling of S56/S57 vacancies a prerequisite to ensure efficient and sustainable service delivery
 Capacity building programmes require vacancies to be filled to allow on-the-job skills transfer to
officials
 Performance management needs to be prioritised
 Shared Service arrangements value proposition for low capacity municipalities with inability to
attract skills
 Municipalities should invest in Young Professionals and interns and absorb them
 Importance of coordination of all capacity building initiatives.
Financial
 Government institutions need to progressively invest in the training of future CFO’s
 Improved financial sustainability require a holistic needs driven approach involving all disciplines
(Corporate, Finance, Technical & Planning)
 Cash Flow Management is key to facilitate financial sustainability.
 Effective financial management support should not respond to operational and administrative
crisis but focus on key aspects with sustainable financial viability impact (Operation Clean Audit,
Cash Flow Management, GRAP Compliance, Budget Reforms, etc).
Technical
 Efficient supply chain processes key at ensuring project implementation
 Importance of technical project planning linked to IDPs, LED for the municipality.
15
Lessons Learned
Siyenza Manje 3 Year Review (1)
Outputs and Immediate
Outcomes
• SM highly relevant given the challenges facing local government
• Must align and support a focused national capacity development and municipal
intervention strategy of Government
• The review revealed a wide variety of interpretations of the primary intervention
approach for the SM programme. For instance, some deployees provide advice,
while others saw their role very clearly as “gap filling”.
• Differentiation between capacity development and short-term gap-filling
interventions.
• Capacity needs of municipalities vary between providing advise in high capacity
municipalities and hands on support to low capacity municipalities
Programme Objectives
• Enabled institutions to successfully implement infrastructure projects
• The Programme correctly identified the development of policies, systems and
processes to enhance infrastructure delivery and financial management as a key
component of capacity building
• Municipalities interviewed generally reported positively on deployee involvement in
spearheading the introduction of new financial and project management systems
and processes
• The high municipal vacancy rates constrain the on-the-job skills transfer to officials
for sustainability of the intervention
• Some challenges in municipalities are structural and do not need skills deployment
to improve functionality and sustainability
• Young Professional Programme should expand into a broader national
governmental initiative.
16
Sustainability Lessons Learned
Siyenza Manje 3 Year Review (2)
Implementation and
Management
• Centralised programme management approach and the small number
of programme managers has been inadequate
• Phasing in: Phasing in allows capacity to be build into the programme in
an incremental and strategic way, rather than responding to operational
and administrative crises and gaps in municipalities.
• Municipal buy-in and accountability: Municipalities need to be closer to
the programme and be given defined responsibilities through
negotiated agreements.
17
CONCLUSION

DBSA currently supporting DCoG with the establishment of MISA

DBSA is well positioned to partner with government in:
• Policy development, information & research
• Funding & implementation
• Capacity building.
18