Budget Vote Speech by Dr Nkosazana Dlamini Zuma, Minister of Cooperative Governance and Traditional Affairs, in the National Council of Provinces
18 July 2019
It is an honour to stand before you to present to you this Budget Vote of the Department of Co-operative Governance & Traditional Affairs (COGTA),
Let me start by congratulating our national netball team who have won all five of their games of the World Cup to advance to the Semi Finals, we wish them all the best for the rest of the competition.
Honourable members, we are gathered here on Madiba’s birthday, who would have turned 101 as we celebrate 25 years of our democracy.
When justice triumphed over the evil apartheid systems and replaced it with a participatory democracy. It was through the inclusive and participatory process that parliament developed our constitution, which adopted a government with three spheres which are distinctive, interdependent and interrelated.
For government to effectively deliver services all spheres must function optimally. COGTA is mandated to ensure cooperative governance and inter-governmental relations. This means that we have a responsibility to support provinces to fulfill their constitutional objectives at all times.
Each municipality has a constitutional obligation to provide democratic and accountable government for local communities. It must also ensure provision of services to communities in a sustainable manner, promote social and economic development, promote safe and healthy environment and encourage the involvement of communities and community organisations in matters of local government. They also have a developmental duty to provide social and economic development with the community, the private sector labour and traditional authorities.
Our department together with provincial administrations have the distinct responsibility of supporting and strengthening “the capacity of municipalities to manage their own affairs”[1]. In this regard and in accordance with the Constitution when a municipality cannot or does not fulfil an executive obligation the provincial executives are called upon to intervene by taking appropriate steps. In undertaking this task the provincial administration is called upon to consult with the Minister responsible for local government affairs as well as the provincial legislature and NCOP. Equally so when a provincial administration is unable to fulfill their executive obligations section 100 of the Constitution calls upon national government to step in.
Currently, the North West Province is the only province under section 100, which intervention started last year and should hopefully end when conditions allow. There are also 40 Municipalities that are currently under section 139 administration, and many more that are dysfunctional or struggling. Of the municipalities under administration 1 municipality is in the Western Cape, 1 in Northern Cape, 3 in the Free State, 2 in the Eastern Cape, 10 in KZN, 2 in Limpopo, 2 in Gauteng, 14 in the North West, and 5 in Mpumalanga.
This is congruent with the findings of the Auditor General which found that 65 percent of the budget controlled by municipalities was without adverse findings.
This translates to 101 municipalities who had unqualified audits with findings and 18 municipalities had unqualified audits with no findings. Municipalities with disclaimers marginally decreased to 26 from 31 in 2016/17, while the number of audits that are still outstanding is 24.
The major challenges facing these municipalities are weak governance, non-compliance with legislation, poor quality of annual financial management, internal control weaknesses, supply chain management, performance challenges as well as the lack a lack of service delivery. This is compounded by technical capacity constraints wherein there is a 15% vacancy rate with 39 without CFOs. Only 55 out of the country’s 257 municipalities have qualified engineers to assist in the rolling out of infrastructure projects.
Some of the problems of municipalities are structural. The advent of wall to wall municipalities extended service delivery to previously neglected communities at the cost of the fiscus, often beyond the previous boundaries of municipalities which were defined in terms of a concrete rates base that enabled them to raise their own revenue.
The current funding model for municipalities over emphasises population size with limited regards to the revenue generation potential, poverty, inequality and unemployment challenges of respective municipalities. For instance Statistics South Africa informs us that 81% of the rural population are poor if the upper bound poverty line is utilised.
Our current funding model does not address the spatial distribution of poverty. Consequently in this budget vote, Gauteng receives R 13,2 billion, Kwazulu Natalgets R 13,5 billion, Eastern Cape gets R 9,6 Billion, Limpopo gets R 9,4 billion, North West and Mpumalanga each get R5,9 billion, Western Cape gets R 5,2 billion, Free State gets R4,1 billion and Northern Cape municipalities get R1,8 billion of the equitable share.
Other critical challenges include the R21.1 billion debt that the municipalities owe to Eskom. The Inter-ministerial Task Team on Electricity Reticulation and Distribution is still in assisting municipalities in this regard, and it has assured parliament that this critical matter is being attended to.
Municipalities are also owed R139 billion for municipal services, which then makes it difficult for them to pay Eskom, water boards and other debtors.
Many municipalities have been unable to spend the Municipal Infrastructure Grant, and this means people cannot obtain the services they need such as water or roads and electricity. There are 226 municipalities in the country that are receiving the Municipal Infrastructure Grant funds. Over the MTEF period, national government has made an allocation of R47.6 billion and R16 billion is allocated for 2017/18 financial year.
In the past five years, since 2012/13, a total of R3.4 billion in MIG transfers was stopped and was reallocated from underspending municipalities to better spending municipalities because the municipalities lack the skills, for example.
What should be done?
We must support the municipalities to deliver on their duty to provide basic services, as well as their developmental duties in order to restore balance in the system of cooperative government and for government to continue to deliver services effectively efficiently.
This means that in all municipalities, we should put measures in place to
1. Improve Governance,
2. Engage Political parties to channel their influence to root out corruption.
3. Build capacity
4. Help municipalities implement their strategic projects.
Governance
As part of our turnaround strategy, a strong focus will be paid to reversing these negative outcomes, starting with the COGTA’s own audit outcomes. We must urgently address the issues raised in the disclaimer by the auditor general, specifically as it relates to management of assets in CWP.
In order to ensure that municipalities provide services to the people efficiently and professionally, and that they put people first, in line with Batho Pele principles, we must appoint the right people with the right qualifications to key positions in municipalities. We must not compromise on that aspect.
The NCOP, which is the closest house of parliament to the provincial and local government, has a significant oversight role to play to ensure accountability and sustainability of municipalities and to identify areas that need our urgent intervention.
As part of building a strong institutional capacity, functional oversight committees such as Audit Committees and Municipal Public Accounts Committees are in place, must be capacitated in order to guarantee their full functionality. We are also promoting the leadership and institutionalisation of the Code of Conduct for Councillors and Official in order to promote accountability and consequence management.
We will engage and challenge political parties to use their influence to root out corruption at our municipalities.
We have also developed a database that will ensure the blacklisting of any manager who is dishonourably discharged from service in any municipality in the country. This will prevent the practice where discharged employees can simply move to other municipalities.
As we call upon municipalities to shape up and improve the way they work, the people must also play their role. We need active citizens if we are to clean our towns, cities and villages. Citizens have to be involved in ward committees, which in turn play a critical role in reinstalling trust levels and also critical to improving the delivery of services and closing the distance between leadership and the communities and government at large.
Citizens must also be involved in the development and implementation of the Integrated development Plans (IDPs.
Building Capacity
In building the capacity at municipalities, we are in discussion with the School of government to develop and deliver training programmes that are specific to municipalities. We will also assist municipalities to plan and deliver strategic infrastructure projects, while capacitating them with the skills to maintain municipal infrastructure. In the process, we will look at alternative ways to build our infrastructure, including using paving municipal and access roads in rural areas.
Through the Municipal Infrastructure Support Agent (MISA), we have already deployed engineers to develop and transfer skills where they are needed.
Honourable members in order to strengthen our developmental orientation we introduced the Community Works Programme to provide skills and meaningful employment for the unemployed, with an emphasis on women and young people. The CWP has a budget allocation of R 3, 879 Billion for the 2019/20 financial year, which is distributed across the provinces where Eastern Cape is allocated R689 million, R640 million allocated to KZN, R 423 Million for Limpopo, R 391 Million to Mpumalanga, R 368 million Free State, R328 million for Northern Cape, R313 million for North West, while R265 million of the CWP budget is allocated toWestern Cape and R 242 Million to Gauteng.
There are challenges with its model in its current form, CWP is not currently meaningful employment. This week I visited a CWP site in KZN as part of an assessment of the effectiveness of the programme, and there is little impact on the ground. Consequently, we will urgently review the delivery model of the Community Works Programme (CWP).
We have to ensure that the programme becomes consistent in its delivery if it is to achieve its objective of proving employment and that it is delivered through project that develop and benefit the community. We will also urgently address the issues raised by the Auditor General on the management of the CWP program which are the source of the department getting a disclaimer in its audit outcome for 2017/18.
Honorable members, through the Department of Traditional Affairs we are mandated to work the institution of traditional leadership for the development of vibrant and sustainable communities. We will continue our work towards clarifying and strengthening the involvement of traditional leaders in socio-economic development and government programmes and driving their communities to be part of the agrarian reform. With regards to agrarian reform and land use, we have engage commercial farmers to assist small and emerging farmers.
We must also change the face of rural areas and our municipalities in these areas through agrarian revolution. The plan is to utilise the communal land in the hands of traditional leaders and rural communities. This matter has received active support from the National House of Traditional leaders.
Through the programme, traditional leaders will participate at the centre of economic development at district level. They will identify land for cultivation, drive ploughing and harvest programmes and engage in building livestock herds and create markets for the people in rural areas. The National House of Traditional Leaders and the Department of Traditional Affairs are currently in the process of acquiring land that can be used for the programme.
Working closer with traditional leaders will enhance the participation of this institution in building social cohesion, and in the implementation of the country’s strategic development goals particularly in traditional and rural communities.
We continue to provide support to our traditional leaders through the Department of Traditional Affairs. We are addressing the concerns of traditional leaders about the tools of trade, such as transport, security as well as support staff. We are also looking into the refurbishment of traditional councils and courts. Discussions are also taking place with the Department of Cooperative Governance and SALGA on best options for participation of traditional leaders in municipalities.
We have tabled three Bills in Parliament, namely, the Traditional and Khoi-San Leadership Bill, the Traditional Leadership and Governance Framework Amendment Bill and the Customary Initiation Bill, in order to address gaps in legislation in our sector.
We also appeal to all consumers to pay their municipal bills. Municipalities are struggling in part due to the culture of non-payment for services by households and also by the private sector and government departments. This culture must be eradicated.
Local government is everybody’s business. We shall continue to work with provincial and local government, the business community, traditional leaders, religious leaders and other sectors of society in building efficient and functional municipalities. In working with these stakeholders and chamber we also hope to strengthen our governance and legislative frameworks starting with the adoption of the amendment to the Municipal Structures Act.
We therefore welcome the R90.7 billion allocation for the 2019/20 financial year. In this budget, an amount of R86.2 billion is provided for basic services, including free basic services such as electricity, water and sanitation to the poor and indigent.
Honourable Chairperson, In this Administration we have to deal with the current challenges in local government in the short and mid-term in the spirit of Khawuleza, but we must also look at long term strategies for service delivery that will make a deep impact in the lives of the people of South Africa.
We hope that we will work with the NCOP through the select committee to effect an early warning system that will allow us to detect red flags and act through co-operative government mechanisms provided by section 154, and only use section 100 and 139 as the last resort. In instances where we have applied the mechanisms of last resort, we have to ensure that those interventions are sustainable by always including capacity building as a non-negotiable part of the intervention.
In conclusion we wish to thank the Chairperson and members of the selct committee who have provide guidance to our departments. We also extend our gratitude to the MECs, Directors General, HODS and the officials for their hard and contribution to this Budget Vote.
It is our singular honour to request the honourable members to support the Budget 2019/20 of the Department of Cooperative Governance and Traditional Affairs.
I thank you.
Issued by the Ministry of Cooperative Governance and Traditional Affairs, 18 July 2019
