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Mufamadi: Parliamentary Media Briefing (17/02/05)

17th February 2005

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Date: 17/02/05
Source: Ministry of Provincial and Local Government
Title: Mufamadi: Parliamentary Media Briefing

Presentation by Provincial and Local Government Minister, FS Mufamadi, on behalf of Social Sector II Cluster

17 February 2005


Urban Renewal and Rural Development
Introduction
The inception of the Integrated Sustainable Rural Development Programme (ISRDP) and the Urban Renewal Programme (URP) in 2001 ushered in a renewed focus on new approach to integration at a local level in South Africa. These nodal areas were identified in order to develop a model that would inform an overall strategy of government working in a new integrated way to produce results, a new way of operating that is work-focused. The express intention of government is to build on existing experience, replicable programmes and innovative service delivery.

Therefore, it is expected that the implementation of these two programmes will increase integration and the impact of development in nodal areas. The capacity of the state to deliver in a cost effective, efficient and seamless manner is very critical is we are to enhance our efforts in making a dent on poverty. The Intergovernmental Relations Bill will facilitate service delivery allowing all the three spheres of government to adopt an activist hands-on approach to deal with the challenges of poverty and underdevelopment. Project Consolidate will also allow the whole of government to deploy teams in these areas to address service delivery backlogs and impact skills where they are needed most.

Targeted interventions are required in the second economy to overcome poverty and unemployment and to create economic opportunities from which all citizens can benefit thus building a single economy.

The central focus of this cluster is to deal with the challenges of the second economy like poverty alleviation through a range of government programmes such as the Integrated Sustainable Rural Development Programme (ISRDP), and Urban Renewal Programme (URP). We do this through the Municipal Infrastructure Grant (MIG) the provision of free basic services; land restitution and housing, all of which seek to address income, human capital and poverty. The government has finalised the Financing Protocol, meant to integrate sector departments’ interventions and alignment in the nodes. Over and above Cabinet Ministers and Deputy Ministers, Premiers and Mayors have been appointed as political champions to oversee and actively drive the implementation of two programmes.

It is important to bear in mind that the ISRDP and the URP have a ten-year lifespan and 2005 marks the fourth year of implementation. During the first three years, the programmes focused mainly on structural and institutional arrangements. In the next years, 2005 to 2011, we will accelerate implementation, bringing visible local development and transformation.

Municipal Infrastructure Grant
Municipalities have made progress in delivering municipal infrastructure to the previously deprived areas with 56% of the R4,4 billion allocated for this purpose having been spent by the end of December 2004. The Municipal Infrastructure Grant (MIG) operates within the principles of the Expanded Public Works Programme, which emphasises labour intensive methods of construction. By the end of the local government financial cycle in 30 June 2005, municipalities would have spent the funds allocated to them. The total MIG allocation for municipalities over the medium term expenditure framework is R15,5 billion.

A total amount of R1,2 billion from MIG has been specifically allocated to the 21 nodes in the current financial year. As a result, there are about 1 million person days of employment created in both programmes. This has benefited approximately 656 000 households from infrastructure projects. The amount spent in the rural nodes and the one spent in the urban with equivalent number of beneficiaries indicates that infrastructure rollout is expensive in rural areas due to sparse densities.

Through the MIG programme, the Department of Water Affairs and Forestry (DWAF) has allocated R765 million for eradicating the water supply and sanitation backlogs in the nodes, while 48% of the total nodal population at present are served with Free Basic Water by their municipalities (and a sizable proportion of the remainder get free water from DWAF run systems).

Capacity challenges at local level
Notwithstanding progress made, service delivery backlogs still exist in key areas that affect the daily lives of our people who reside in these areas.

Where these backlogs coincide with poor municipal capacity, the result has been reflected in setbacks in government’s development agenda. This requires therefore, greater rigor and integrated interventions by all three spheres of government in crafting responses and implementing practical programmes at the coalface of service delivery.

Project Consolidate has recently been introduced to focus the effort of government and key stakeholders on providing hands-on support to identified municipalities, including and include those in developmental nodes. The long-term objective is to transfer skills to municipalities. If every municipality and every province on its own had the capacity to support local government, Project Consolidate would have been unnecessary. The reality is that a significant proportion of municipalities and provinces do not have that capacity, and national departments also require additional capacity and an orientation to engage and support municipalities.

Project Consolidate focuses government and its stakeholders on the task of reconstruction and local development in spite of relative capacity constraints. In so doing, it will provide an opportunity for government to simultaneously develop provincial support, oversight and monitoring capacity to support local government.

It is within this context that the current roles of various functional departments were audited with a view to provide further analysis on proposed interventions and their appropriateness.

To fast track the delivery of housing there is a need for a greater alignment with DPLG, restructuring of the National Department’s responsibility to allow for monitoring and evaluation. Task teams are to be set up to intervene in provinces and municipalities to deal with implementation challenges.

DWAF has funded projects to the value of R129 million that prioritise the nodes in capacity building and sustainable management. These involve assistance in compiling and reviewing the Water Services Development Plans, which form part of the municipal Integrated Development Plans.

The Department also provides provinces, district municipalities with technical support that includes workshops and one-on-one sessions with municipalities in a range of areas such as sanitation provision.

Financing Protocol
The formulation of the Financing Protocol has commenced with national sector departments being assisted to identify support they currently provide in the nodes based on the needs and priorities of each node. Following the nodal audits by all national departments, the Department of Provincial and Local Government is assisting in drawing up cluster based nodal intervention strategies in the medium term. Further work is currently in progress to finalise the contribution that each cluster will be required to make in the nodes, culminating in the National Financing Protocol.

The Protocol for the ISRDP and URP is a funding, planning and performance-based mechanism that is intended to measure progress in the nodes through the achievement of clear outputs, to be set before the start of each Medium Term Expenditure Framework. This Protocol is a commitment by government to plan and fund the two programmes in a specific way. Prioritisation of the nodes would be reflected in the Division of Revenue Act. In an effort to speed up delivery with regard to ISRDP and URP, government is committed to ensure that all national departments and clusters support the implementation of the programmes in the nodes. Departments are to from now onwards, indicate in their Departmental Strategic Plans (2005 - 09) and Departmental Budget Votes, how they intend to support the nodes, translated into clear annual operational business plans.

Already the Department of Agriculture is establishing financial and agricultural cooperatives and capacitating the agricultural extension services, at a cost of R18 million. These extension services are the source of information for people in these nodes, in areas such as training. As part of the Financing Protocol, each department is required to align its strategic and business plans to reflect on these two programmes.

The Department of Labour has also established a best practice case in this regard with the Alexandra urban node, where they audited and costed the skills needs of this programme for the next three years. The Financing Protocol will therefore, replicate this emerging practice for all service delivery departments across the national and provincial spheres of government, inclusive of State Owned Enterprises. Contributions of the SOEs varies from one node to another. For example, In Kgalagadi, Eskom has contributed R4,2 million towards the integrated energy sector project which has creating employment opportunities and income generation. Another electricity project has electrified 95% of houses in the area. The Agricultural Research Council is part of the implementation of the goat project, also in Kgalagadi and it has 51 groups.

The Comprehensive Plan on Human Settlements supports the Integrated Rural Sustainable Development programme through the introduction of a programme that deals with a comprehensive range of rural housing related issues, such as tenure, livelihood strategies and broader socio-cultural issues. The programme responds to the needs of farm workers and farm dwellers. The program has necessitated a comprehensive revision of the current Rural Housing Subsidy Programme: Informal Land Rights to ensure that the applicability of the programme is enhanced and new momentum is generated towards delivery in these areas. The Rural Housing Loan Fund continues in this regard to provide funding for people in rural areas who are unable to benefit from banks in the same way that people in urban areas access finance. The Rural Housing Loan Fund has relationship with Post Bank to ensure that communities have easy access to funds.

Government will spend R1,2 billion in sustainable human settlement infrastructure development in rural nodes. The primary focus is fighting poverty through provision of houses, construction of pedestrian bridges and other large infrastructure projects aimed at ensuring that communities have all amenities.

Towards the end of 2004, the R1 billion Agricultural Credit Scheme concept document was developed and finalised. The Cooperatives Bill and the APEX will also be used to fast track the creation of small enterprises and thus, enhance economic activity in the nodes. Beneficiaries include farm and non-farm entrepreneurs such as farm workers, tenants and household producers. The intention of the scheme is to provide capital to increase support to agricultural activities in the communal land areas.

As part of government’s integrated approach to nodal delivery, more than 1 800 households within the rural nodes of Mbangweni, Mbila, Mabaso, Manzengwenya, Siqakatha and Ntsinde have received more than 17 100 ha of land through the Restitution programme. In addition, communities have been assisted with development grants totalling R65,7 million to enable them to participate in ecotourism, conservation, removal of alien plants and refuse as well as the initiation of sustainable projects within the 2003/004 budget.

In the Zululand node we have empowered the communities of Mbhatha, Kingsley, Hlahlindlela and Sibongweni where their land rights lost through racial land dispossession to the extent of 19100ha. We have injected R66,7 million as development grants to benefit more than 1 800 households from these poor communities.

In the OR Tambo Rural Node we have interacted with seven communities of Umkhambathi in an effort to address their developmental challenges. Government’s success in the intervention within the Mkhambathi Claim demonstrated the effective implementation of co-corporate governance as well as government’s commitment to nodal integrated development. To date, Umkhambathi has benefited more than 5 960 households with more than 17 000ha restored. The projects flowing from this settlement includes ecotourism, agriculture and conservation. The OR Tambo Municipality will play a central role in the implementation of this.

Political Championship
The political champions have been appointed in the national, provincial and local governments to service the 21 nodes. Their primary mandate is to promote the principles of the programmes as well as to remove blockages or impediments to the successful implementation of the programmes.

These political champions will be required to unblock and influence high-level strategic challenges at a political level that prevent nodal development priorities being achieved. They have to mobilise critical national level stakeholders (private sector, parastatals, donors, NGOs) for the purpose of harnessing additional resources that could add value to government’s efforts in the node, among others.

The Ministers will be expected to furnish the Presidency with a schedule of planned nodal visits for the year. Members of the media will be invited to accompany the political champions and celebrate achievements and experience challenges faced by the nodes.

Economic Development
Economic development remains a major challenge for the majority of nodes. This is attributable to a variety of factors, key amongst these being the desperate need for national guidance to local development nodes with regard to conceptualisation, utilisation of economic instruments and incentives for development.

The economic interventions in development nodes cannot be limited to infrastructure. There will be a clear demonstration of anchor projects and capacity building programmes directed at the economic emancipation of our people. When?
Within the nodes, the basket of selected services should assist income generation for those who have high potential for improvement, and should include poverty targeting programmes for those likely to be by-passed by new growth. Thus the selection of programmes should reflect the diversity of rural communities and contribute both to income generation and poverty reduction.

Nodes such as Maluti-a-Phofung in the Free State, although with minimum contribution to the Gross Geographic Product per Capita, are registering growth in the agricultural sector, while the manufacturing and commercial sectors are in decline. This highlights the need for interventions that grow the secondary sector, in particular considering the location advantage of areas such as Harrismith.

The urban nodes face a similar challenge with regards to employment, with localities such as Alexandra registering unemployment levels of up to 35 %. While the majority of urban nodes have limited access to land for agricultural purposes, their location in close proximity to markets, presents opportunities in the secondary and tertiary sectors of the economy.

The Government’s Comprehensive Human Settlement Plan supports urban renewal and integration of communities that were previously excluded from enjoying the social and economic benefits of cities and towns. In this regards regulations are being prepared to rezone land for residential purposes.

The social housing programme interventions are being made to renovate inner city buildings in and around Johannesburg and other major cities for purposes of medium density and rental. Government has provided incentives to small developers through tax breaks and other incentives.

Motherwell’s location for instance, in relation to the Coega Industrial Development Zone, presents Motherwell with opportunities to economic development such as logistics, warehousing and employment. The limitation is once again the requisite infrastructure and skills to meet Coega’s requirements.

Low education levels have resulted in both urban and rural nodes having very low skills levels, even in those instances where education levels are comparatively high there is a general mismatch between these and the skills required by the economy as the case in point in Motherwell.

In conclusion, it is evident that no single department or a sphere of government can achieve success in those nodes unless it coordinates with other departments and government as a whole. This points to the need for departments to work together in finalising these implementation strategies from now on until 2011.

With regard to monitoring and evaluation, a framework is being developed. From this year sector departments are to use the framework to indicate in their Departmental Annual Reports how they have supported the development nodes.

On institutional arrangements, each national department should increase its technical support to nodes in line with Project Consolidate objectives. Over and above all of this, national political champions have been deployed to ensure that government meets its objectives in the nodes, of improving the lives of our people.
Issued by: Ministry of Provincial and Local Government
17 February 2005
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