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Date : 05/12/2003
Source: Ministry for Provincial and Local Government
Title: Mufamadi: Vuna Awards ceremony


SPEECH DELIVERED BY THE MINISTER FOR PROVINCIAL AND LOCAL GOVERNMENT, F S MUFAMADI, ON THE OCCASION OF THE CELEBRATION OF THE THIRD ANNIVERSARY OF THE NEW LOCAL GOVERNMENT SYSTEM AND THE INAUGURATION OF THE NATIONAL VUNA AWARDS FOR MUNICIPAL PERFORMANCE EXCELLENCE, Gallagher Estate, Johannesburg, 5 December 2003

Mr Programme Director, Tim Modise;
Premier Popo Molefe;
Deputy Minister Ntombazana Botha;
MECs responsible for Local Government Affairs;
Mayors and Councillors from all our country's municipalities;
Members of Parliament and members of Provincial Legislatures;
Traditional Leaders of our people here present;
Officials from our three spheres of government;
Esteemed Partners representing the Development Bank of Southern Africa, and the National Productivity Institute; and the South African Local Government Association;
Distinguished Guests;
Ladies and Gentlemen:

1. Introduction

This day, three years ago, we embarked on an undertaking which launched our country on a long-term project of high priority. Through our participation in the local government elections on the 5th of December 2000, we signalled our collective resolve to consign into the past, a local government system which was characterised by racial segregation, unequal resource distribution and the exclusion of the majority from participation in our country's economic and political processes. Making a covenant with history, we undertook to establish a system of local government which will deliver stability and functional effectiveness appropriate for us to meet the challenges posed by the persistence of the legacy of apartheid political economy.

We have chosen to mark this day in a way which allows us to reflect on the balance-sheet. Indeed, to evaluate the present we need to see where it has come from. We need a historical perspective to gauge the direction and pace of change, but also to assess the foundations upon which further construction could be based. When we approach our task this way, we place ourselves firmly in the cockpit to direct the progression of history towards the fulfilment of our major social objective: "making South Africa a better place for all who live in it".

2. The Past

Historically induced disabilities continue to find expression in the conditions of underdevelopment which are acutely visible in the former Bantustan and Black township areas. They are well pronounced in the abject poverty which afflict many of our people, both in the urban and in the rural areas of our country. These inequities were spawned by, and embedded in, the governance architecture as it evolved over time. Indeed, successive apartheid colonial regimes went to great lengths to fund the exclusionary logic entailed in the black local authorities, the Bantustan system as well as the so-called R293 towns. In the process, massive debts were incurred and the peonage thereof, became the inheritance of the democratic state.

3. The New Constitutional Dispensation

Our Constitution envisions a society which could only be realised by introducing changes to the role and place of local government in the country's intergovernmental system. It puts forward the notion of developmental local government which is not confined to the idea of the mere delivery of services, but also becomes a major player in addressing the priorities of poverty alleviation, job creation and development. This developmental role of local government was further defined in the White Paper on Local Government and finds daily application in the implementation of such programmes as the Local Economic Development Programme, the Urban Renewal Programme, the Integrated, Sustainable Rural Development Programme and the Consolidated Municipal Infrastructure Programme. These programmes seek to socialise local government to its assigned mandate of providing services, creating conditions for socio-economic development and therefore addressing poverty through locally driven economic development initiatives.

Our own reading of global and local demographic trends enabled us to anticipate the recently released results of South Africa Census 2001. It was in February 2001 that we adopted two projects which target areas of poverty-endemicity, both in the urban and rural sectors of our country. We have it on good authority that this makes us the only known country on earth which is implementing such programmes conterminously.

World trends show that 47% of the world's population currently resides in cities. It is projected that by 2025, about 57% of the world population will be urban-dwellers. Our own Census 2001 shows that 58% of our people now reside in urban areas, and this is projected to increase to 64% in 2030. These demographic pressures are bound to put a lot of strain on our existing infrastructure, given that urbanisation in our country has not always been attended by concomitant levels of infrastructure development, or even of industrialisation. Of those who reside in the urban areas, 40% are defined as decidedly poor - a situation which calls for targeted interventions that will reduce the growing urbanisation of poverty and maximise the potential of urban economic development.

On the other hand, we have witnessed significant movements of people into areas with weak, declining or non- existent economic activity, especially smaller towns and/or dense peri-urban or rural settlements. Observers have projected strong negative population growth in large parts of KwaZulu-Natal, the Karoo, the West Coast and virtually the entire Northern Cape. These developments have brought into sharp focus the need for additional innovative strategic interventions in order to attack urban and rural poverty and underdevelopment.

When we cultivate conditions for sustained economic growth in previously neglected areas, we in the result, contribute to the enhancement of the resilience of our overall macro-economic growth. It is for this reason that in the current financial year, we have allocated R120 million to the Local Economic Development Programme. As a result 79 new projects have been supported while 59 projects are also supported through additional funding.

To date, government has also made over R7billion available through the Consolidated Municipal Infrastructure Programme to help address the imbalances of the past in respect of municipal services. Infrastructure provisioning is meant to build the capacity of municipalities to deliver and to contribute to the creation of an environment conducive to local economic development. These conditions, once created, will ultimately lead to the creation of sustainable communities and municipalities.

As we go about doing our work, we must always keep the sustainability imperatives uppermost in our minds. President Thabo Mbeki correctly enjoined us to increase the rate of up-take with regards to the registration of deserving Social Grant beneficiaries. We have noted that as a percentage of GDP, Social Grants have risen from 2% to 4%. There is a definite imbalance between this rate of growth and that which affects productivity - enhancing investments. This state of affairs subtracts from the productivity levels of the overall economy and it has pernicious effects on the revenue - base of the state. The need cannot be overemphasised therefore, for us to find a proper balance between the two imperatives of increasing social expenditure to attack poverty as it obtains now, and investing in sustained growth. Part of the solution lies in finding proper synergies between provincial programmes and locally-driven programmes. We need a proper division of labour, underpinned by the necessary co-ordination between Provincial Growth & Development Strategies and Municipal Integrated Development Plans. Going forward, this will become one of the dimensions by which we assess municipal performance. Unless we do that, we shall continue to experience such untenable situations as we see now - a situation where provinces have budgeted total spending on social security grants to the tune of R44, 6 billion over the Medium Term Expenditure Framework period.

In order to impact these two important considerations, it is imperative that we have financially viable municipalities - that is, municipalities that have the ability to develop and manage resources that are aimed at enhancing social, economic and human development.

4. Financial Viability

In order to achieve financial viability, it is necessary for a municipal jurisdiction to have a relatively resilient and sustainable economic base - where people are working and earning living wages, and businesses, large and small, are facilitating the steady exchange of goods and services.

This resilient and sustainable economic base is indeed sustained by reliable municipal services and the local environments created for prosperity.

A fair level of understanding and appreciation has been reached about the importance of municipal financial viability. This level of understanding and appreciation is evidenced by the several initiatives that are ongoing in every province to support their respective municipalities - and also by the several strategic interventions that are driven by either municipalities themselves, or by the national government.

Initiatives are underway to support the achievement of financially viable municipalities. These include:

* The intergovernmental fiscal transfers reform programme - which focuses on simplifying and rationalising transfers to municipalities and introducing three-year allocations of these transfers so as to stabilise municipal budgeting processes by improving predictability;

* The budget reform programme - which focuses on improving resources allocation planning and management;

* The Municipal Support Programme - which provides technical assistance to municipalities in the areas of financial management. Human resources management, organisational development, community and development planning;

* New and refining national policies and legislation - aimed to improve the flexibility of the legal framework within which municipalities are expected to operate, and to improve the leadership, management and accountability in municipal governments; and

* The Municipal Revenue Enhancement Programmes - a nationally coordinated programme aimed to assist municipalities with revenue enhancement and management through a series of specialised and targeted interventions.

The outcomes and successes of some of these support initiatives are becoming more evident by the day. For example, over the past five months, provincial and national government departments have settled over R350 million of arrears and were owed to municipalities. There is an express commitment to settle all the verifiable arrears that are owed to municipalities - momentum echoed by both the executive and legislative branches of governments - and we expect that this momentum will be maintained.

There are a number of municipalities across the country that have begun obtaining unqualified audit opinions from the Auditor General. These municipalities must be recognised and congratulated. It is therefore most appropriate that one of the criteria in determining the winners of the provincial and national Vuna Awards was indeed financial viability.

These municipalities were previously among those that are still struggling to get order in their management practices. However, with support and tenacity, they have crossed this hurdle. Our observation has been that those that have been able to overcome this hurdle work tirelessly to ensure that they remain on that positive side.

In this regard, I wish to single at the Eastern Cape province for commendation. The Auditor General reports that in the Financial Year 2000-01, 39 out of 45 municipalities in the Eastern Cape had unqualified audit opinions. The Eastern Cape Department of Local Government, Housing and Traditional Affairs attributes this to the quality of support that municipalities received through the Municipal Support Programme. In Financial Year 2001-02, only 2 out of 45 municipalities had unqualified audit opinions. Again, this outcome was attributed to the premature withdrawal of support to those municipalities - before ensuring that their specific challenges had been sustainably addressed.

Next week, I am scheduled to meet with a group of Mayors to have a candid discussion about some strategic interventions that must be implemented in their respective municipalities so as to improve not only their viability, but through the successful implementation of these initiatives, open opportunities for other municipal as well.

As we move forward, it will become increasingly important that we work together to impact these important considerations. Mechanisms should be formalised through which to sound an alarm where necessary, design and lead interventions whenever appropriate; and to facilitate learning and solution development across the country.

5. Participatory Democracy

The democratic state we speak of has its political origins in our forebears' vision of a South Africa in which the people govern. Such a state must prioritise building institutions which approximate an ideal developmental state: one which has the infrastructural and mobilisational capacity to lead other social forces in the developmental effort. You will recall that in June this year, the Ministry and Department hosted a national conference to assess progress made in establishing functional ward committees, to share best practices and agree on measures necessary to strengthen Ward Committees.

Since then, provinces have taken steps to strengthen Ward Committees in their areas of jurisdiction. Currently, the national average establishment rate stands above 75% - with Eastern Cape and Limpopo acting as our pacesetters.

When we urged our people to participate in the 2000 local government elections, we said they must do so that democracy & development may happen in their local areas. We must continue to impress on them the fact that the future of any municipality is the responsibility of its residents - individual or corporate.

It was indeed gratifying to see that 220 out of the 284 municipalities submitted entries for the Vuna Awards. This must mean that in their estimation, leaders and residents of those municipalities believe that they have a realistic chance of winning. They believe there is something in their performance worthy of recognition as excellent. They have confidence in themselves and in the system of local government they are building. I must commend all of them for such a display of self-confidence and confidence in the system.

This evening, only three municipalities that stand head and shoulders above the crowd shall be identified. This does not take away the need to appreciate the courage of the other 217 municipalities who opened themselves up to scrutiny. We urge them to take careful note of the attributes which separated the winners from them. As a matter of fact, this must be a matter of municipal - wide discussions in all municipalities that are not part of the three. Using this, as material for introspection will help municipalities to benchmark their performance against best practices which definitely exist within our local government sphere. It bears emphasising that from a systemic point of view, the results achieved by some of our municipalities, including the 27 that were identified through the provincial stage of this process, underscore the point that we are properly focused. Nothing is pointing us in the fundamentally new directions of contemplation.

6. Conclusion

Mr Programme Director, I will be remiss if I sign off without pausing to extol the collective merits of members of the Adjudication Panel for the manner in which they performed their assignment. They devoted their time to this and their compensation was the satisfaction of knowing that their action adds to the happiness of others. This gives them a right to our expression of thanks and appreciation.

I have no intention, Programme Director, to prolong the anxiety, which this exercise of the Vuna Awards has created - both in this hall and in the rest of the country.

In these few words, please accept my best wishes for you. I wish all of you a merry Christmas and a prosperous New Year.

Source: Department of Provincial and Local Government (http://www.dplg.gov.za)

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