Transcript Slide 1

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Municipal Planning and
Infrastructure Implementation
Support
A Sustainable Governance
Framework
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Planning is a Pre-requisite for
Implementation
“FAILING TO PLAN
IS
PLANNING TO FAIL”
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Infrastructure Development Challenge
a)
Increased infrastructure funding needs -(R251 bn over 5 years):
– Metros: R95 bn, secondary : R50 bn and under resourced municipalities: R105 bn
b)
Increased funding gap - (R105 bn over 5 years):
– Metros: R36 bn, secondary: R10 bn and under resourced municipalities: R58 bn
c)
Capital transfers to municipalities, despite growing, not sufficient to bridge the gap.
d)
Municipal revenues growing slowly and under pressure
– Metros down to 21% of capital budgets from 30 % in 2006.
– Secondary municipalities down to 20% of total capital budgets from 38 % in 2006.
– Under resourced municipalities down to 17% of total capital budgets from 32% in 2006.
e)
Municipalities under spending for infrastructure – Metros under spending of 21%, capacity
constraints secondary and under resourced municipalities under spending of 40%.
f)
Changes in the nature and location of poverty – migration to metro, consumers under pressure,
unemployment high, poverty levels between 40-55% in smaller municipal areas.
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Actual CAPEX Spending
30,000,000
Other
Borrowing
Grants and subsidies
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
2009/10
2010/11
2011/12
M1
Metros
 84% CAPEX expenditure
 93% expenditure of planned
borrowing
 77% expenditure of grant funding
2009/10
2010/11
2011/12
Secondary M2
municipalities
 70% CAPEX expenditure
 50% expenditure of planned
borrowing
 69% expenditure of grant funding
2009/10
2010/11
Actual: CAPEX
Budget: CAPEX
Actual: CAPEX
Budget: CAPEX
Actual: CAPEX
Budget: CAPEX
Actual: CAPEX
Budget: CAPEX
Actual: CAPEX
Budget: CAPEX
Actual: CAPEX
Budget: CAPEX
Actual: CAPEX
Budget: CAPEX
Actual: CAPEX
Budget: CAPEX
Actual: CAPEX
Budget: CAPEX
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2011/12
M3 municipalities
Under resourced
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71% CAPEX expenditure
37% expenditure of planned
borrowing
71% expenditure of grant funding
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National Treasury: Local Government Section 71 Reports for the financial years: 2009/10, 2010/11 and 2011/12
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Future Budget Transfers
Projected infrastructure transfers to secondary municipalities:
2012/13 to 2016/17
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Projected infrastructure transfers to under resourced municipalities:
2012/13 to 2016/17
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Capital budgets growing on
average with 8.1% per annum
over period
Grant transfers remain main
source of expenditure
Borrowing projected at only
between 6 and 9% of the annual
budget and showing downward
trend by 2017.
Capital budgets under pressure
and aggregate 7.3% growth
projected.
Grant transfers remain main
source of expenditure
Borrowing projected at only 1%
of the annual budget by 2017.
National Treasury Local Government Data Base,
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Borrowing Trends
a. Total municipal debt grew from R18.7 bn
in 2005 to R48 bn in 2011 (40% over past
three years)
b. During the past three years the DBSA’s
contribution to municipal debt declined:
i. From 46% during 2009 to 37%
September 2011.
ii. DBSA’s share of the 2011/12 annual
borrowings declined to 11%.
c. DBSA significant role player in:
i. Under-resourced
municipal
market (84% of total debt).
24%
debt
ii. Secondary municipal market (73% of
total debt).
iii. Under-resourced
municipalities
constitute 3% of total municipal debt
from all sources.
25%
22%
24%
Borrowings as %
of total annual
capital
expenditure
19%
20%
45%
28%
31%
29%
20%
DBSA as %
of annual
borrowings
11%
Trends in annual municipal borrowings: DBSA and other funders (adapted estimations)
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Macro-Level Development Planning
PLANNING FRAMEWORK
CRITICAL REQUIREMENTS
Consultation / priority needs
IDP (5 year strategy)
Identify gaps in planning
MTEF (Budget alignment)
Identify funding gaps
Gap analysis
Technical Assistance
Sound municipal policies, process
and procedures
SDBIP – Implementation plan
PMS
In year reporting
(Implementation and monitoring)
Skilled and experienced management
and staff
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Project Level Planning
1. Conceptualisation / Scoping
2. Pre-Feasibility / Feasibility
3. Business plan/registration
4. Pre-design
5. Procurement
6. Construction and implementation
7. Project evaluation
8. Operations and maintenance
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DBSA’s Lessons of Experience
a) Large number of municipalities slow to deliver infrastructure due to various issues, amongst
others capacity constraints.
b) Under spending on CAPEX mainly attributed to:
• Poor capital budgeting (capital budgets not adequately funded, funding sources not
credible)
• Capacity constraints (planning and technical in terms of preparing tender documentation)
• Poor capital expenditure planning (implementation planning at the beginning of the
financial year which leads to a slow start to spending)
• Poorly managed procurement processes leading to further delays to spending
c) In some cases pace of infrastructure delivery influenced by the availability of transfers, which
are spread over the MTEF period.
d) Under resourced municipalities have limited balance sheets, making it difficult to attract
bridging and other credit facilities to accelerate the pace of development in their areas.
e) To accelerate municipal infrastructure provision (especially in under resourced municipalities)
options include the pledging of conditional and other NT grant transfers to municipalities.
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Possible Alternative Models for Delivery
• Internal Institutional Capacity
• In-sourcing / Project Management Units
(PMU’s)
• Shared Services
• Third party Consulting
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DBSA’s Support Programmes
Provision of development finance and delivery capacity to deliver infrastructure
Infrastructure funding
Drive investments focusing on:
• Sectors: energy, water and sanitation, transport,
ICT, health, education,
• South Africa (municipalities, state-owned
enterprises, other public, private-public
partnerships, private sector intermediaries
• Rest of SADC
• Grow development assets
• Leverage third party funds
• Diversify product offering in support of
infrastructure development
Direct delivery
Support key government priorities:
local government, health, education and regional
integration
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DBSA Support to Municipalities
Municipal Planning
Support Unit
Financing Unit
Municipal Implementation Unit
Planning Support
Financing/Lending
Project origination
Pre-Implementation
Support
o Implementation
readiness assessment
o Review of project
concept, specifications,
TOR for PSPs, technical
documentation, designs,
etc. to ensure quality
and appropriateness of
technical solutions
o Support with respect to
the development of
procurement strategies
and the expedition of
supply chain
management processes
Financing
o Direct
interventions
o Subsidized lending
o Bridging finance
o Application
o Bilateral
agreements
Implementation Support
o Review and validation of implementation
plans
o Compliance check and reviews
o Programme and project management
support.
o Contract management support
o Progress monitoring and reporting support
o Evaluation and impact assessment support
o Capacity building
Operations & Maintenance Planning
o Review and assist with the development of
credible O&M Plans
o Development of strategies for the reduction
of water and electricity losses
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Stakeholders and why we engage
How we engage
On what we engage
Government (shareholder representative)
To facilitate the alignment of the DBSA
national priorities
Regular meetings with
Governor, National
Treasury
DBSA’s development role
Long-term sustainability
Financial performance
Conditional Grants pledging
National and Local government
To meet legislative requirements
Regular communication
and meetings with inter
alia:
•COGTA – MISA
•DWA
•DOE
Compliance requirements
Needs and expectations
Technical hands on support
INEP
Conditional Grants
Infrastructure delivery
Clients (Municipalities) and partners
To understand our clients and partners’
needs and enhance our development
impact
Clients and partners
meetings/forums
Road shows
Client’s needs (funding and
non-funding support)
Infrastructure planning
support
Collaboration/partnership
Development impact
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DBSA PROCESS
Municipalities
approach DBSA for
assistance
(Select/Prioritize
based on needs)
Value proposition:
Infrastructure
Planning, Funding,
Project
implementation
support
Partnership /Loan
Agreement
Infrastructure delivery
assessment t/ due
diligence for funding
Agree on areas that
require support &
enhancement
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Conclusion: Benefits of Effective Planning
1. Increasing capital spending
2. Deepening service delivery impact
3. Leveraging borrowing capital to do
more
4. Growing the economy of the regions
5. Attracting more budget transfers
6. Social development
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CONTACT INFO
Development Bank of Southern Africa
Headway Hill
1258 Lever Road
Midrand
South Africa
PO Box 1234
Hallway House
1685
South Africa
www.dbsa.org
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