PRESENTATION TO THE SELECT COMMITTEE ON FINANCE BY DEPARTMENT OF LOCAL AND PROVINCIAL GOVERNMENT
07 MARCH 2002

OUTLINE

· Context: Supporting Developmental Local Government
· Overview of DPLG's Conditional Grants
· Budget Allocations Summary
· Overview per individual Grant

CONTEXT OF DEVELOPMENTAL LOCAL GOVERNMENT

· Overall objective of all conditional grants is to support and build developmental local government

· Developmental Local Government is centred on working with local communities to find sustainable ways of meeting their needs and improve the quality of their lives

OVERVIEW OF SIX
CONDITIONAL GRANTS

A. GRANTS TO PROVINCES:
· Local Government Support Grant: 2001/2 - R160m; 2002/3 - Rl70m
· Consolidated Municipal Infrastructure Programme (CMIP): 2001/2 -R98.9m; 2002/3 - R 104,5m

B. GRANTS TO MUNICIPALITIES:
· Local Government Transition Grant: 2001/2 - R578m; 2002/3 -R200m
· Municipal Systems Improvements Grant: 2001/2 - R42.8; 200213 –R93.3m
· Consolidated Municipal Infrastructure Programme (CMIP): 2001/2 -R927m; 2002/3 - R 1654.5m
· Local Economic Development (LED) Fund: 2001/2 - R99m; 2002/3 –R98.5m
· Integrated Sustainable Rural Development (ISRDP) Grant: 2001/2 –R33.02m; 2002/3 – R31.98m
           

GRANTS TO PROVINCES
LOCAL GOVERNMENT SUPPORT GRANT

· PURPOSE: To assist municipalities experiencing severe financial problems to restructure their financial positions and organisations in the medium term.

· ALLOCATION PRINCIPLES: Allocation to provinces based on need. Provinces submit business plans and gazette approved allocations. Municipalities must have management support team.

· BUDGET PROVISION: 2002/3- R170m, 2003/4- R160m; 2004/5 - R143.8m

· PAYMENT SCHEDULE: Funds transferred to provinces in 2 or more tranches. First tranche is 50% of allocated amount. All funds disbursed by August 2002.

· ASSESSMENT OF PERFORMANCE: 170 municipalities put in more stable financial position. Auditor General and Eskom have seen positive improvements. Key lessons learnt in the implementation of credit control and debt collection policies.

· DPLG CAPACITY: Restructuring in the Department has put dedicated internal management in place for this Grant

· PROVINCIAL CAPACITY: Varied. One additional person set aside by provinces to assist

CONSOLIDATED MUNICIPAL INFRASTRUCTURE PROGRAMME

· PURPOSE: To provide support to Provinces to manage CMIP effectively and build capacity within municipalities.

· ALLOCATION PRINCIPLES: Based on a percentage of total grants to municipalities and escalated with inflation.

· BUDGET PROVISION: 2002/3 - R104.5m, 2003/4 - R110.7m; 2004/5 - R117.4m

GRANTS TO MUNICIPALITIES
LOCAL GOVERNMENT TRANSITION GRANT

· PURPOSE: To assist municipalities with significant off costs of amalgamating and establishing new structures following the municipal demarcation process

· ALLOCATION PRINCIPLES: Based on estimated off and incidental costs resulting from the demarcation process. Undertook national survey - determined individual estimated costs. 2001/2 and 2002/3 allocations unconditional. Incorporated into the Equitable Share in 2003/04.

· BUDGET PROVISION: 2002/3- R200m, 2003/4- R0m; 2004/5 R0m

· PAYMENT SCHEDULE: Funds transferred to municipalities in four (4) equal tranches.

· ASSESSMENT OF PERFORMANCE: All municipalities have prepared Interim IDPs and 90% have prepared Establishment Plans

· DPLG CAPACITY: Restructuring in the Department has put internal management in place to manage this Grant.

· PROVINCIAL CAPACITY: Varied. One additional person set aside by provinces to assist in managing the grant.

MUNICIPAL SYSTEMS IMPROVEMENT GRANT

· PURPOSE: To support municipalities in implementing the new systems as provided for in relevant local government legislation, e.g. development planning, performance management

· ALLOCATION PRINCIPLES: Municipalities must submit a capacity development framework~ Must support the establishment of PIMS Centres. Support to municipalities piloting the performance management system.

· BUDGET PROVISION: 2002/3 - R93.2m, 2003/4 -R100.4m; 2004/5 - R132.24m

· PAYMENT SCHEDULE: Funds transferred directly to municipalities in 2 tranches.

· ASSESSMENT OF PERFORMANCE: Contributed directly to establishing 17 PIMS Centres. PMS pilot municipalities received assistance.

· DPLG CAPACITY: Restructuring in the Department has ensured specific internal management. A national PIMS management support is in place.

· PROVINCIAL CAPACITY: Varied. Provinces are requested to assist with support and monitoring.

CONSOLIDATED MUNICIPAL INFRASTRUCTURE PROGRAMME

· PURPOSE: To assist municipalities in ensuring that all South Africans have access to at least a basic level of municipal services.

· ALLOCATION PRINCIPLES: Allocations based on a poverty-weighted formula which takes the following into account: no. of poor households, unemployment, households without access to basic water.

· BUDGET PROVISION: 2002/3- R1654.5m; 2003/4-R2096.3m; 2004/5 - R2374m

· PAYNIENT SCHEDULE: Funds transferred to municipalities in tranches.

· ASSESSMENT OF PERFORNIANCE: Over 12m beneficiaries to date. 1406 projects completed. 13m person days of employment opportunities provided. Minimal roll­overs.

· DPLG CAPACITY: The Department has dedicated management capacity for CMIP. Assisted by consultants.

· PROVINCIAL CAPACITY: Varied. All provinces have a programme management team.

LOCAL ECONOMIC DEVELOPMENT FUND

· PURPOSE: To assist municipalities in funding innovative local economic develop initiatives that are aimed at creating jobs, alleviating poverty and creating sustainable local economies.

· ALLOCATION PRINCIPLES: Funds are divided between provinces on a formula basis. Applications are submitted for projects that are part of the local IDP.

· BUDGET PROVISION: 2002/3 - R98.5; 2003/4 – R117m; 2004/5 - nil

· PAYMENT SCHEDULE: Funds are transferred to directly municipalities in tranches.

· ASSESSMENT OF PERFORMANCE: 186 projects supported since 1999/2000, 43 are completed.          

· DPLG CAPACITY: The Department has minimal capacity to manage the Fund. The merger with CMIP should address the under-capacity here.

· PROVINCIAL CAPACITY: Varied. Some provinces have LED support teams in place.

INTEGRATED SUSTAINABLE RURAL DEVELOPMENT PROGRAMME

· PURPOSE: To support the rural nodal district municipalities to establish institutional management capacity for planning, project initiation and implementation of the ISRDP

· ALLOCATION PRINCIPLES: Available to 13 rural nodes. Focus will be on project initiation in 2002/3. Grant terminates in 2003/4.

· BUDGET PROVISION: 2002/3 – R32m, 2003/4- nil; 2004/5-nil

· PAYMENT SCHEDULE: Two payments will be made in 2002/3 (July 2002/January 2003)

· ASSESSMENT OF PERFORMANCE: PIMS Centres established in all nodal district municipalities. Focus on building institutional capacity.

· DPLG CAPACITY: The Department has dedicated capacity for the ISRDP. The IDT is a support agency to government.

· PROVINCIAL CAPACITY: All relevant provinces are heavily involved in the ISRDP. Varied structures in place.