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Presentation to the Portfolio Committee on Cooperative Governance and Traditional Affairs 2012/13 Annual Report Representation Team led by Mr LJ Mahlangu Chairperson: Municipal Demarcation Board ? ? October 2013
OUTLINE o o o Last Briefing: 19 March 2013 2012/13 Strategic Direction 2012/13 Outputs and Developments 2012/13 Financial Results Regulatory Audit Outcomes Medium Term Expenditure Framework (MTEF 2013 – 2016) Strategic direction going forward General Status of Demarcation Process Challenges Concluding remarks
LAST BRIEFING: 19 MARCH 2013 o Briefed the Committee on the Broad Process and timelines within the current Legal framework 2011 -2016. o Gave progress report on performance up to March 2013. o Appraised the committee on the strategic objectives as per the Annual Performance Plan. o Appraised the committee on the public participation process of the Board and public meetings, scheduled for April 2013, in terms of Section 28 of the Municipal Demarcation Act.
LAST BRIEFING: SECTION 26 LEGAL PROCESS Total number of cases considered by the Board broken down per province per type Province Eastern Cape Free State Gauteng Kwa. Zulu-Natal Limpopo Mpumalanga North West Northern Cape Western Cape Total Number of DEMs TYPE A TYPE B TYPE C 225 86 85 276 99 74 63 39 81 1028 135 54 61 150 47 55 54 35 78 669 83 26 9 91 49 15 7 3 2 285 7 6 15 35 3 4 2 1 1 74
LAST BRIEFING: SECTION 26 LEGAL PROCESS Cases published for public views and representation in term of section 26 Province Eastern Cape Free State Gauteng Kwa. Zulu-Natal Limpopo Mpumalanga North West Northern Cape Western Cape Total Number of DEMs TYPE A TYPE B TYPE C 35 10 4 51 13 6 25 21 39 204 14 3 2 12 4 2 19 20 37 113 19 4 28 9 3 6 1 2 72 2 3 2 11 0 0 0 19
2012/13 STRATEGIC DIRECTION Programme 1 Operations and Research Strategic Objective 1 To determine & re-determine boundaries of local, district and metropolitan municipalities Strategic Objective 2 To delimit wards for all local and metropolitan municipalities for the 2016 local elections Strategic Objective 3 To assess the capacity of metropolitan, district and local municipalities in line with the revised model Programme 2 Financial Management and Accounting Strategic Objective 1 To ensure sound financial management Strategic Objective 2 To ensure good corporate governance
2012/13 STRATEGIC DIRECTION Programme 3 Corporate Services Strategic Objective 1 To ensure that the Board maintains effective and efficient organisational processes, systems and practices Strategic Objective 2 To ensure maintenance of proper administrative systems and practice as well as the necessary support for governance structures Strategic Objective 3 To enhance and maintain effective stakeholder relations
2012/13 OUTPUTS AND DEVELOPMENTS ● The 2012/13 Annual Report is tabled to the Committee for review. ● It presents some of the achievements and highlights of the Board for the year under review; ● The primary areas of performance for the period were: ü On-going review of municipal boundaries; ü On-going assessment of municipal capacity; ü Re-organisation of the institutional administrative structures; ü Enhancement of stakeholder relations and communications; ü Enhancement of operations through national and international studies; ü Maintenance and improvement of governance structures; ü On-going compliance with relevant legislative and regulatory requirements.
2012/13 OUTPUTS AND DEVELOPMENTS On-going review of Municipal Boundaries o Continued with the programme which commenced in 2011/12; o Review process needs to be completed by October 2013 to allow for process of ward delimitation to commence in preparation for 2016 LG elections; o Total of 1 028 cases were received of which 824 was rejected. The reasons for rejection included: ü Reason 1: Cases which have been consolidated; ü Reason 2: Lack of functionality i. e. proposal to align to magisterial boundary; ü Reason 3: No stakeholder support and concurrence; ü Reason 4: Non compliance with legislation. o 166 meetings were held in different provinces and included visits to key stakeholders such as MEC’s, SALGA, IEC and Provincial Houses of Traditional Leaders, communities which submitted applications. o Board published Section 26 notice on (204 of the 1 028 cases) in Nov 2012. o After consideration, Board resolved to close 22, and to investigate 80 of the 204 published cases. o Short time frames were a challenge in publishing Section 27 notices for major investigations and public meetings.
2012/13 OUTPUTS AND DEVELOPMENTS o On-going assessment of municipal capacity o A new and revised approach to capacity assessment was adopted; o Assessment was conducted with the context of three interdependent, but key LG performance barriers: ü Socio-geographic and legacy factors; ü Constrained capacity which includes resources, skills & competencies; ü Leadership and governance challenges. o The end result of the assessment of municipal capacity was: ü National analytical report ü Municipal comparison report ü District-level report card ü In-depth qualitative assessment report for nine district municipalities. o The introduction of an online questionnaire posed initial challenges. In future more support will be afforded to municipalities with low IT capacity.
2012/13 OUTPUTS AND DEVELOPMENTS Enhancement of stakeholder relations and communication o The following circulars were issued: ü Circular 2/2012 contained: − Revised timeframes; − Commencement of legal process; − Reminder to submit motivations. ü Circular 3/2012 contained: − Information regarding newspaper containing Section 26 notices in November 2012; − Invitation to submit views and representation by 10 December 2012 deadline. o The following number of visits per Province were conducted: Eastern Cape 26 Limpopo 16 Western Cape 8 Mpumalanga 14 Northern Cape 17 Free State 15 North West 10 Kwa. Zulu Natal 44
2012/13 OUTPUTS AND DEVELOPMENTS Enhancement of operations through National & International studies o Research unit was established to manage research and internal municipal capacity assessment; o Recruitment processes are underway to appoint a Head and staff. Maintenance and improvement of governance structures o Head: Legal and Secretariat was appointed in January 2013; o Board Charter and Code of conduct were drafted and are currently being refined. On-going compliance with relevant legislative and regulatory requirements o Compliance to legal provisions remain the cornerstone of the Board. Re-organisation of the institutional administrative structures o The process to significantly restructure the organisation was continued during the period; o Appointment of staff to new key positions is underway pending the review of the financial position of the Board.
2012/13 FINANCIAL RESULTS o Summary of Financial Results o Receipts for the year ended 31 March 2013 o Expenditure for the year ended 31 March 2013 o Breakdown of expenditure for the year ended 31 March 2013 o Expenditure trends
SUMMARY OF FINANCIAL RESULTS o Total income for the period - R 41, 3 million o Total Expenditure for the period - R 34, 3 million o Resulting in surplus of R 6, 9 million o Expenditure budget variance of R 6, 6 million o % of Revenue spent during the period - 82% o Commitments at year end - R 4, 4 million o Accumulated surpluses of R 27, 2 million
RECEIPTS FOR THE YEAR ENDED 31 MARCH 2013 Original MTEF allocation Receipts from Local Government SETA Other income TOTAL REVENUE GENERATED R 40, 362, 000 R 35, 000 R 926, 000 R 41, 323, 000
EXPENDITURE FOR THE YEAR ENDED 31 MARCH 2013 Description Budget Actual 40, 362, 000 40, 397, 000 35, 000 497, 000 926, 000 429, 000 Total revenue 40, 859, 000 41, 323, 000 464, 000 Less Total Expenditure -40, 862, 000 -34, 195, 000 6, 667, 000 - -156, 000 -3, 000 6, 972, 000 6, 975, 000 Government Grants Other Income (exchange and non-exchange) Loss on disposal of Assets (DEFICIT) / SURPLUS Variance
BREAKDOWN OF EXPENDITURE FOR THE YEAR ENDED 31 MARCH 2013 Expenditure item Employee benefit costs Audit fees Depreciation and amortisation Project expenses Other operating expenses Administrative expenses Total expenditure Loss on disposal of assets Gross Expenditure % of total expenditure 13 084 000 38% 819 000 2% 1 190 000 3% 3 280 000 10% 5 769 000 17% 10 053 000 29% 34 195 000 99. 5% 156 000 0. 5% 34 351 000 100% Amount
BREAKDOWN OF TOTAL EXPENDITURE 0% 29% 38% Employee benefit costs Audit fees Depreciation and amortisation 17% Project expenses 3% 10% Other operating expenses Administrative expenses 2% Loss on disposal of assets
BREAKDOWN OF OTHER OPERATING EXPENSES Expenditure Item Licence renewals Travel and accommodation 2013 % of expenditure 58 000 1% 2 738 000 47% Other operating expenses Licence renewals 4% 0% 1% Travel and accommodation Courier and delivery charges Data acquisitions Consumables Rental of buildings Rental of machinery & equipment Repairs and maintenance Total 48 000 1% 304 000 5% 70 000 1% 2 311 000 40% 224 000 4% 16 000 0% 5 769 000 100% 47% Data acquisitions Consumables 5% 1% Rental of buildings 1% Rental of machinery and equipment Repairs and maintenance
EXPENDITURE TRENDS: YEAR ON YEAR GROWTH TRENDS Expenditure item Employee benefit costs Audit fees Depreciation and amortisation Project expenses Other operating expenses Administrative expenses Total expenditure Loss on disposal of assets Gross Expenditure 2013 13 084 000 819 000 1 190 000 3 280 000 5 769 000 10 053 000 34 195 000 156 000 34 351 000 2012 % change 12 061 000 8% 797 000 3% 1 009 000 18% 4 943 000 -34% 6 833 000 -16% 10 168 000 -1% 35 811 000 -5% 1 000 15500% 35 812 000 -4%
EXPENDITURE TRENDS: YEAR ON YEAR GROWTH TRENDS
REGULATORY AUDIT OUTCOMES o Achieved an Unqualified Audit Opinion o With Emphasis of matter with respect to material under spending of the budget o Deficiencies in expenditure management resulting in irregular expenditure
STEPS TAKEN TO ADDRESS INTERNAL CONTROL WEAKNESSES o Appointment of SCM officers to ensure: ü Adequate capacity to respond to demand for SCM services; ü Segregation of duties. o Bid evaluation and Bid Adjudication committees in place; o Implementation of Administrative controls: ü Compliance checklists, Annual Procurement plans and registers for deviations. o Assurance provided by Internal Audit prior to awarding of significant contracts.
MEDIUM TERM EXPENDITURE FRAMEWORK (MTEF 2013 -2016) o o 2013 MTEF amounts to R 42, 1 million. Allocation for 2013/14 increased by R 1, 8 million. Representing a 4, 4% increase. In 2014/15 and 2015/16 grants increased by 5% and 3, 5% respectively. Grants Amount 2013/14 R’ 000 42, 152 2014/15 R’ 000 44, 230 2015/16 R’ 000 45, 793
o STATUS OF DEMARCATION PROCESS At the end of 2013 financial, section 26 views and representations were received and processed by the Board; o During the current financial year the following developments have taken place: • 26 Public meetings were held by the Board with respective stakeholders; • 33 Formal investigations were conducted prior to publication of Section 21 notices for objections; • In addition, 21 community consultation meetings were held; • In August 2013, the Board published section 21 notices, inviting the public to submit objections to municipal boundary re-determinations; • The closing date for objections was 16 September 2013; • After considering the objections, the Board envisages completing the entire Demarcation process by end October 2013.
STATUS OF DEMARCATION PROCESS Section 21 cases published Province Number % of total No of objections Eastern Cape 26 17% 17 Free State 6 4% 0 Gauteng 3 2% 9 792 Kwazulu Natal 37 24% 17 Limpopo 7 4% 1 Mpumalanga 2 1% 4 North West 20 13% 1 Northern Cape 21 13% 2 Western Cape 35 22% 1 Total 157 100% 9 835
STRATEGIC DIRECTION GOING FORWARD o Strategic links with key stakeholders and other key partners to enhance public participation and consultation on demarcation issues; o Strengthening our research capacity and capability; o Development of policy position to guide the Board through decision making in a changing world; o Enhancing internal capacity and becoming a public entity of choice; o Legislative amendments to provide clarity and certainty in a number of areas; o Improving communication capabilities within the organisation to improve our engagements with stakeholders; o Conducting awareness campaigns on matters of demarcation and delimitation; o Strengthening partnerships with Chapter 9 institutions and constituencies; o Finalising regulations for the LG: Municipal Demarcation Act.
CHALLENGES o Rapid expansion of stakeholder base; o Lack of regulations to support implementation of our legislation; o Insufficient consultation between municipalities and communities affected by boundary redeterminations; o Lack of understanding of the mandate of the Board and its processes; o Legislative gaps.
CONCLUDING REMARKS o The Board’s mandate continues to have huge pressure on the limited staff of the Board; o The funding of the Board need to be adjusted to assist the Board to reach communities better and create awareness on demarcation matters; o The legislative amendments of the current Act and development of regulations needs to be facilitated speedily and; o Stronger links with key stakeholders to enhance public participation.
Questions ? THANK YOU
GENERAL Criteria for Demarcation and Categorisation of municipalities o When determining municipal boundaries the Municipal Demarcation Board is enjoined to do it following the criteria as defined in terms of section 24 and 25 of the Local Government: Municipal Demarcation Act. o When determining the category of a municipality into a category A metropolitan municipality the Board does so in terms of section 2 of the Local Government: Municipal Structures Act. 23
Criteria for Demarcation Section 24 24 When the Board determines a municipal boundary its objective must be to establish an area that would- a) enable the municipality for that area to fulfil its constitutional obligations, includingi. the provision of democratic and accountable government for the local communities; ii. the provision of services to the communities in an equitable and sustainable manner; iii. the promotion of social and economic development; and iv. the promotion of a safe and healthy environment; b) enable effective local governance; c) enable integrated development; and d) have a tax base as inclusive as possible of users of municipal services in the municipality.
Criteria for Demarcation Section 25 a. the interdependence of people, communities and economies as indicated byi. existing and expected patterns of human settlement and migration; ii. employment; iii. commuting and dominant transport movements; iv. spending; v. the use of amenities, recreational facilities and infrastructure; and vi. commercial and industrial linkages; b. the need for cohesive, integrated and unfragmented areas, including metropolitan areas; c. the financial viability and administrative capacity of the municipality to perform municipal functions efficiently and effectively; d. the need to share and redistribute financial and administrative resources; e. provincial and municipal boundaries; 25
Criteria for Demarcation Section 25 26 f. g. areas of traditional communities; existing and proposed functional boundaries, including magisterial districts, voting districts, health, transport, police and census enumerator boundaries; h. existing and expected land use, social, economic and transport planning; i. the need for coordinated municipal, provincial and national programs and services, including the needs for the administration of justice and health care; j. topographical, environmental and physical characteristics of the area; k. the administrative consequences of its boundary determination oni. municipal creditworthiness; ii. existing municipalities, their council members and staff; and iii. any other relevant matter; and l. the need to rationalize the total number of municipalities within different categories and of different types to achieve the objectives of effective and sustainable service delivery, financial viability and macro-economic stability.
Criteria for categorisation of municipalities into a category A metropolitan municipality Section 2 of the MSA An area must have a single category A municipality if that area can reasonably be regarded as- a. a conurbation featuringi. areas of high population density; ii. an intense movement of people, goods, and services; iii. extensive development; and iv. multiple business districts and industrial areas; b. a centre of economic activity with a complex and diverse economy; c. a single area for which integrated development planning is desirable; and d. having strong interdependent social and economic linkages between its constituent units. 36