Select Committee on Finance

National Treasury

FMG/RG/MFMA

26 February 2007

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FMG

Aim• Implement financial management reforms

Conditions• Council commitment to MFMA reforms

– Progress in multi-year budgeting, improving accounting & producing timely in-year reports;

– The employment of an appropriately skilled CFO;

– Capacity building - promotion of the internship programme in financial management;

– Ongoing review and revision of implementation plans; and

– Address weaknesses in financial management.

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FMG - Implementation

- Grant to assist municipalities in implementing financial management reforms and the MFMA- developing policies,- reviewing and improving processes and procedures,- improving consultation and information flows, - updating budgeting, monitoring, accounting, reporting

systems,- paying costs of interns and support financial management

training and capacity building

- Second year of the phase-in of the MFMA to high and medium capacity municipalities

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FMG- ReportingSept 06 to Feb 07

SLOW SPENDING Sept - 24 : Feb - 4

INCONSISTENT REPORTING

Sept - 56 : Feb - 4

COMPLIANT Sept - 203: Feb - 275

TOTAL 283

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FMG – Spending Jan 07

Under 25% 39 municipalities (14%)

Under 50% 53 municipalities (19%)

Under 75% 108 municipalities (38%)

Over 75% 83 municipalities (29%)

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FMG - Support/Monitoring/Actions

• Letters, emails, faxes, telephone calls made to municipalities on a weekly basis,

• Officials will follow up progress during municipal visits,• Transfers delayed during 2006,• Support and closer monitoring resulted in improvements - non

compliance reduced from 28% in September 06 to 2% in February 07,

• Letters advising of possible re-allocation sent to non-compliant muni’s, deadline 22 Feb 2007 – 6 responded,

• Consider re-allocation of funds during March/July 2007, • Similar steps implemented during 2007 - consider re-allocation

of funds for municipalities slow spending and funds not committed,

• Close monitoring will continue during medium term

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FMG - Transfers

Months No. of Muni Total Paid

R m

JULY 146 75

SEPTEMBER 57 29

NOVEMBER 23 12

UNPAID 57 29

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FMG - Administration

EXPENDITURE AMOUNT

R

Personnel costs 200 000

Telephone/Fax 15 000

Filing/ Photo, etc 15 000

Other incidentals 20 000

Total - Approx 250 000

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Restructuring Grant

Aim – Support large municipalities with restructuring initiatives

Conditions– Municipality develop restructuring plans– Adopt resolution committing to implementing plans– Show progress in quarterly reports– Transfers will depend upon the progressive implementation

and achievements of agreed milestones• Grant agreements continue until 2008• Grant has been incorporated into the Equitable Share for

local government in the outer year of the MTEF

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RG - 2006/07

Municipality2006/07 Allocation

(R'm)Roll-over from

05/06 (R'm)Rivised 06/07

allocation (R'm)September '06 transfers (R'm)

Still to transfer for 06/07

Buffalo City 35 0 35 15 20Emfuleni 35 35 70 20 50eThekwini 75 0 75 50 25City of Cape Town 75 30 105 25 80City of Tshwane 75 0 75 25 50Mangaung 0 10 10 0 10Nelson Mandela Bay 55 20 75 25 50Totals 350 95 445 160 285

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RG – Expenditure (Dec 06)

Nelson MandelaBay Buffalo City

MangaungCity of Tshwane

EmfulenieThekwini

City of CapeTown

Spending patterns (ending Dec '06)

0

10

20

30

40

50

60

70

80

90

100

Per

cen

tag

e

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RG - Measures • Feedback on evaluation of performance - quarterly basis • Visits undertaken 2nd Quarter:

– City of Tshwane; Mangaung and Emfuleni- Issues addressed:

- Grant conditions and non compliance with reporting- Improvement in the submission, quality and content

of reports- Low levels of expenditure- Confirmation of commitment - Notice with intention to withhold allocations

• Continue to follow up outstanding matters • Varied degree of commitment and ownership • Changes in institutional landscape slows implementation

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RG - eThekwini

• Backlogs in free basic electricity, supply of water and sanitation show significant improvements,

• Staff placement and redeployment process almost complete,

• Stability in senior management promotes continuity,• Improving and high payment levels for services,• Unqualified audit reports for last few years,• Improved credit rating,• However, service delivery agreement with Eskom not

yet signed.

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RG - Cape Town

• Obtained positive credit rating,• Improvements in oversight structure, • Unqualified audit report,• Steady achievement of financial ratios,• LED implementation underway,• Improved commitment to achieve RG conditions

during last quarter,• Improvement in stability with appointment of CFO,• However, still experiencing some delays in

finalisation of staff placements,• Spending on grant

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RG - Tshwane

• Positive credit rating,• AFS submitted to AG on time,• Implementation and integration of financial and

reporting systems underway, • HR strategy – learnership & apprenticeship

introduced,• Establishment of Eco Dev Agency,• Qualified Audit outcome, • Spending on capital, repairs and maintenance,• Institutional re-organisation and changes to senior

management slowing implementation, • Council approval processes,• Low grant spending

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RG - Emfuleni• Greater emphasis placed on addressing water and

sanitation challenges, working with DWAF,• Raised awareness by investors on UDZ Tax Incentive,• Establishment of PMU to assist in MIG projects with

almost all funds committed,• Quality of plans and budgets starting to improve,

however, spending levels still low,• Reliance on consultants,• Appointment of MM and CFO should stabilise leadership,• Require more focus on balanced implementation of

restructuring plan,• Need to improve revenue collections

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RG - Buffalo City

• Overall compliance with conditions,• Improvement in credit rating, • Implementation of Activity-Based Costing,• Stable institutional environment,• Improvement in service delivery levels,• Improvement in general valuations,• Adoption of single tax & tariff structure,• Improvement in revenue collection,• Qualified Audit

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RG - NMBM

• Poverty alleviation urban agriculture strategy,• Installation of Human Resource system,• Development of Property Valuation Project Plan,• Improvement in delivery of free basic service,• Submission of AFS on time,• Completion of development plans, • Qualified audit report,• Appointment of MM,• Partial compliance with financial conditions,• Slow expenditure on repairs and maintenance,• Spending on grant

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RG - Mangaung

• Payment of previous tranches delayed,• Fluidity in senior management structure, • Commitment to achieve grant conditions,• Qualified audit opinion,• Low revenue collections,• Lack of comprehensive and consistent reports,

• Progress in achieving restructuring outcomes

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MFMA Training

• Promote broader knowledge of MFMA through guides, circulars and multi-media facilities,

• Using modern technology and simple assessment methodology,

• Certificate issued after completion of modules,• Additional free support for formal training,• Foundation being laid towards formal and

regulated competency levels in financial management

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MFMA - Benefits for learners & Progress

• Contributes towards MFMA competencies• Contributes towards accredited courses• Forms part of a portfolio of evidence• Refresher for existing councillors & officials• Induction for new councillors & officials• Currently 3,220 persons registered• Approximately 200 completed all 6 modules

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MFMA - Primary Audience

• Municipal and municipal entity role players– Mayor & Councillors involved with finance– MM, CFO, All Senior Managers– All finance staff including interns– Corresponding roles in municipal entities

• National & provincial officials supporting LG– Treasury departments – Local government departments

• Other– SALGA (national and provincial)– Universities

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MFMA – Training Register

  Registered Module 1 Module 2 Module 3 Module 4 Module 5 Module 6

National 66 13 13 11 9 10 9

Provincial 197 34 34 34 34 31 32

Municipal 2667 148 145 142 135 109 125

NonGovernmental 11 0 0 0 0 0 0

Other 229 3 3 3 3 2 3

Total 3170 195 192 187 178 150 166

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MFMA

  MM CFOFinance Professional

Fin Clerical

Other Managers- Non Finance

Other Professionals - non financial Other

Not currently employed

 

Total registered 45 264 554 523 404 227 1056 32

Modules Completed % % % % % % % %

Module 1 2.22 11.36 8.66 7.46 1.49 2.64 6.25 0

Module 2 2.22 10.98 8.48 7.46 1.24 2.64 6.25 0

Module 3 2.22 10.61 8.12 7.27 1.24 2.64 6.16 0

Module 4 2.22 10.23 7.22 7.27 1.24 2.2 5.97 0

Module 5 0 8.71 6.14 6.88 0.5 1.76 4.83 0

Module 6 2.22 9.09 6.50 7.27 1.24 2.2 5.49 0

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MFMA • Regional workshops planned for March and April 07,• Raise awareness on competency levels and training

opportunities,• Targeting universities, technikons, training providers, MM,

CFO, Interns, other officials• A senior official must be appointed to act as Mentor/coach

for the interns• A Personal Development Plan must be prepared for each

intern on commencement of the internship• During the internship, a workplace rotation plan must be

put in place to ensure that interns are exposed to all areas of Municipal Finance

• Accredited Education and Training Providers must be used for the provision of the theoretical and practical components of the programme

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MFMA – Internship programme

Province No. of municipalities with interns

Total No. of Interns

Total no. of Municipalities

EC 39 83 45

FS 21 50 25

GT 11 26 14

KZN 48 84 61

LP 24 52 30

MP 15 35 21

NW 16 35 25

NC 20 38 32

WC 26 59 30

TOTAL 220 462 283

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Thank You