MEDIA BRIEFING BY THE MINISTER FOR PROVINCIAL AND LOCAL GOVERNMENT, FS MUFAMADI

Monday, 12 August 2002

Representatives of Local Government
Members of the Diplomatic Corps
Ladies and Gentlemen from the Media

We welcome you all to this Ministerial parliamentary briefing

The process of establishing and stabilising a strong development local government sphere is firmly on track. The task of transforming our local government system has been conceived of in three distinct yet overlapping phases:

• the stabilisation phase
• the consolidation phase
• the sustainability phase

The stabilisation phase has been marked by progress in a number of areas:

• The local elections in December 2000 resulted in the establishment of new municipalities. New municipal institutions (metropolitan, district and local municipalities) and new political systems have been established.
• All municipalities either have or are in the process of establishing the structures and systems as required by the Municipal Systems Act, e.g. the majority of Integrated development Plans have been completed, Performance Management Systems are being developed, and various service delivery agreements are being finalised

January 2002 marked the entry into the second phase of the local government transformation process - the Consolidation phase from 2002 to 2005 - with a major focus given to:

• integrated development,
• improving and extending service delivery, and
• strengthening the institutions of governance for the country as a whole.

A cross-cutting challenge of the present phase will be to consolidate the municipal systems of governance into the work of government of the other two spheres.

Resolutions of the PCC Workshop on Local Government Transformation

The Special President's Coordinating Council (PCC) focussing on local government in December 2001, adopted a set of resolutions under five strategic themes:

1. building of a strong local government sphere and enhancing its status within a stable co-operative governance framework;
2. building stable institutional and administrative systems in local government
3. deepening local democracy and accountability;
4. improving and accelerating service delivery and economic development; and
5. building financially viable local government.

Based on the above, a comprehensive plan of action has been prepared for the current phase of consolidating local government. This POA focuses firstly on national policy, and secondly on the building and the development of capacity for local governance through a series of support programmes. Successful implementation of both parts of the Action plan will lay the basis for realising developmental local government.

Substantial progress has been made in taking forward this Plan of Action. The following is a summary of positive progress to date:

integrated development

In terms of the Municipal Systems Act, 2000 (MSA), all municipalities are required to prepare Integrated development Plans (IDPs). The majority of municipalities have completed their IDPs. At a municipal level, there has been a much more participative approach to the formulation of IDPs, and a lot more extensive buy-in from all municipalities as a sound planning tool. Unlike the Interim IDPs this process had full commitment of most municipalities and was less consultant-driven and more driven by communities, officials and politicians. This has brought a lot more realism in the formulation of IDPs, and therefore the sequencing and prioritisation of projects.

The consultation on the powers and functions between category B and C has been finalised and the recommendations will be submitted to Cabinet in August 2002.

The report on proposals to deal with the cross-boundary municipalities will be submitted to the PCC soon and then to Cabinet thereafter.

The first draft report on the possible alignment of the conditions of service and salaries of officials in all spheres of government has been produced, and will be submitted to Cabinet.

improving and extending service delivery

The gains made by the Inter-Ministerial Committee resulted in a major increase in fiscal allocations to local government. Total transfers to local government increased from 6.5bn in 2001/2 to 8.6bn in 2002/3. The equitable share allocations increase from R2,6 billion in 2001/02 to R5,5 billion in 2004/05, while infrastructure grants increase from R2,2 billion in 2001/02 to R4,7 billion in 2004/05. This enabled us to deal with some of the fiscal pressures around free basic services, and infrastructure investment, especially in the urban and rural development nodes.

Presently 210 of the total of 284 municipalities are providing "free basic water" (73,9 percent). This means that 57 percent of the country's population have access to free basic water.

The Property Rates Bill is in the process of finalisation and will be introduced into Parliament in the current parliamentary session.

strengthening the institutions of governance

The City Learning Network has been established focusing on big cities. It will be launched on 7 October 2002.

A joint DPLG - SALGA initiative focusing on a Learning and Knowledge Sharing Facility for the other municipalities has been developed.

An outreach programme targeting municipalities that are in financial difficulty has been launched. The programme is a joint effort with provinces, and builds on the province-specific initiatives.

EMERGING CHALLENGES

Notwithstanding the successes in transforming the system of local government, a number of challenges remain:

• The Department has undertaken a thorough capacity audit of the different categories of municipalities. It is clear that the challenges differ between metropolitan and larger urban municipalities and that of district and more rural local municipalities. 55.4% of the country's population live and work within the large urban municipalities (6 metros and 17 large municipalities). Challenges include rapid urbanisation, urban poverty and economic development.
• District Municipalities face key challenges around a low tax base, revenue collection and low economic development activity Rural municipalities are very reliant on fiscal transfers. Most of these municipalities have substantial infrastructure backlogs and have daunting capacity constraints.
• The major challenge facing government in the funding of local government is in ensuring efficiency and equity in spending decisions. The challenge now is to translate these increases into coherent, targeted and coordinated spending patterns so as to maximise the impact of these investments.
• The work on the powers and functions of categories B and C municipalities has been completed. This will take us some way in positioning District municipalities to play the kind of developmental role we originally envisaged, and bring in some level of certainty in the system. A key challenge will be to implement the recommendations to be approved by cabinet on the division of powers and functions between category B and C municipalities.
• One of the biggest threats to our development objectives is the financial difficulty that municipalities are experiencing. The growing debt of municipalities undermines our ability to deliver on the mandate of a developmental local government. The underlying causes of the staggering debt situation of municipalities are largely administrative. There is an urgent need to attend to the political leadership at the local level. An Indaba is envisaged in the near future between the Minister, Mayors, MEC's for Local Government and Municipal Managers to develop and agree on a strategy to deal with the growing debt problem.
• A comprehensive national support system has been put in place by the Department of Provincial and Local Government to assist municipalities with the IDP process. A key challenge will be to implement this support system in an effective, targeted manner with the assistance of various donors and stakeholders.
• The process of strengthening the link between IDPs and municipal budgeting is currently being undertaken by DPLG and National Treasury. This is also currently being addressed in the Municipal Finance Management Bill process in parliament.

DISASTER MANAGEMENT

The recent snow and fire disasters in the five provinces namely, KZN, Eastern Cape, North West Province, Mpumalanga and the Free State have significantly increased the developmental challenges for a number of municipalities. A number of Ministerial visits have already taken place and an inter-departmental task team has been established to deal with both immediate relief and medium to long-term reconstruction challenges. In terms of the MSA, municipalities are required to have a disaster management component within their IDPs. This matter is receiving priority attention by government.

A demonstration of government's efforts is an initiative whereby my Ministry together the Minister of Water Affairs have signed an agreement to initiate a R10m project to train fire-fighting crews. They will be attached to helicopters to fight fires at its infancy stage and thereby reducing the phenomenal costs incurred by farmers during fires.

TRADITIONAL LEADERSHIP

I am pleased to confirm that a draft White Paper on Traditional Leadership and Governance has been finalised and will be presented to Cabinet in September after consultation with key stakeholders. Shortly thereafter a White Paper Task Team and Legislation Drafting Team will be appointed to finalise this process.

INTEGRATED SUSTAINABLE RURAL DEVELOPMENT PROGRAMME and URBAN RENEWAL PROGRAMME

Steady progresses in being made in implementing both the URP and ISRDP. All the necessary institutional and funding pre-conditions are in place to ensure the continued roll out of the programmes in all 21 nodes.

In all national line departments are investing R832m during the current financial year for infrastructure development in both urban and rural nodes. The IDPs of all rural nodes are finalised. In most instances there have been attempts to link anchor projects to the IDPs.

All of the eight urban nodes have identified anchor projects. A core challenge of the URP at the Municipal level is putting sufficient dedicated capacity in place to manage and drive the programme. The focus on anchor projects is meant to test and experiment with a new approach to identifying, resourcing and managing the implementation of projects.

Together with the other challenges highlighted above, a much more realistic and modest timeframe, at least in the short term, with respect to the transformation trajectory is called for. The challenges faced require of us to get some of the elementary basics right first. The system of local government is fairly young and maturing, and we should focus on getting the simple things such as getting functioning administrations, right first.

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