BRIEFING ON THE STATE OF LOCAL GOVERNMENT IN THE FREE STATE PROVINCE
Select Committee on Local Government and Administration; 06 September 2005, Cape Town
An overview of financial state of Municipalities
- Consumer debt level stood at R2.56 billion as at end June 2005 and this mark a growth rate of 2.43 % for the past six months;
- The figure exclude a balance of R560 mil written off by Mangaung and Matjhabeng as irrecoverable debt;
- Mangaung and Matjhabeng are owed R427 mil and R681 mil respectively;
- On average the provincial payment rate level stand at 72.25%
Introduction
- Municipalities has made a significant contribution towards laudable achievements notched by the country in the past ten year as articulated in the "Ten Year Review Report";
- In the past four years, municipalities have succeeded in:
- Managing the establishment phase (delegation frameworks, appointment of municipal managers, etc) with only one Municipality (Kopanong) constrained by inherited onerous financial liabilities;
- Providing Free Basic Water and Free Basic Electricity;
- Implementing CMIP and MIG and thereby created temporal work opportunities
Content
- An overview of financial state of municipalities;
- Readiness to implement the Municipal Finance Management Act (MFMA);
- Project Consolidate Municipalities and issues addressed;
- Levels of service delivery; and
- Accreditation of municipalities with housing responsibility
Introduction…cont
- Challenges facing municipalities currently are:
- Effective revenue collection mechanisms;
- Leadership development ( administrative and political components);
- Effective implementation of strategic service delivery programmes
- Effective implementation of new system of local government (IDPs, PMS, community
- participation, LED and service delivery);
- Financial viability given limited revenue bases;
- Evolving mechanisms for sound administrative and political interface in municipalities
- Enhancing technical capacity (financial management, contract and project management, engineering and management of service delivery infrastructure)
An overview of financial state of Municipalities…….cont
- Nketoana and Mangaung has payment rate of 100% on their current account;
- For Nketoana the payment rate has contributed towards reducing their consumer debt levels
- We have not seen a marked decrease in the consumer debt levels as a result of effective revenue collection;
- In the past three years the Office of the Auditor - General has raised the following issues:
- Weakness in internal control;
- Creditors management and escalating consumer debt levels;
- Establishment of internal audit sections;
- Unauthorised and fruitless expenditure, etc
Readiness to implement MFMA
- The majority of municipalities in the province are complying with the 12 urgent MFMA implementation priorities set by Treasury (see page 11 &12);
- Institutional governance has been strained in some of the municipalities (standoff between council and administration)- Phurnelela, Dihlabeng, Matjhabeng,
Project Consolidate Municipalities and issues addressed
- Maluti-a-Phofung
poverty alleviation, resources mobilisation, ward committee system, effective service delivery (replacing service delivery fleet);
- Phumelela
- resource mobilisation, understaffed financial and technical departments; provision of housing, provision of services, maintenance of service delivery infrastructure, etc;
- Setsoto
- resource mobilisation, effective implementation of MIG projects using EPWP principles, provision of housing and services (water), effective project management
Project Consolidate Municipalities and issues addressed….cont
- Xhariep
- limited revenue base, resources mobilisation, LED, acquisition of personnel;
- Kopanong
-revenue collection and effective accounts management, onerous financial liabilities, provision of housing and services (water and sanitation), mechanisms for accounting for council decisions, etc;
- Mohokare
- water availability, provision of services (sanitation and bucket eradication), provision of housing, implementation of policies, understaffed technical and finance departments
Project Consolidate Municipalities and issues addressed…cont
- Matjhabeng
- billing system, revenue collection, provision of housing, finalisation of organisational PMS and concluding performance agreements, provision of services, upgrading of service delivery infrastructure;
- Nala
- implementation of PMS, provision of housing, provision of services, upgrading of service delivery infrastructure, etc;
- Tswelopele
- provision of services, upgrading of service delivery infrastructure, provision of housing, effective service delivery (replacement of service delivery fleet)
Project Consolidate Municipalities and issues addressed….cont
- Tokologo
- water availability, effective water management, provision of housing and services, revenue collection, LED, etc;
- Naledi
- financial viability, effective management of service delivery infrastructure, resources mobilisation, provision of housing and services, etc; and
- Moqhaka
- effective water management, ugrading of service delivery infrastructure, provision of housing and services, electrification of RDP houses, etc
Levels Service Delivery
Provision of Free Basic Water (FBW)
- 92% (1,801,350) of poor households are served with FBW;
- 79% (1,914,327) of population with infrastructure are served with FBW;
- 96% (2,818,630) of the total population in the Free State is served with FBW
Challenges:
- Extending FBW to all households;
- Leveraging money to ensure access to reliable water sources-(Kopanong and Tokologo);
Levels of Service Delivery
Provision of Free Basic Electricity /Energy (FBE)
All municipalities in the province are providing FBE though differently;
Achievements:
- 17 (20) of these municipalities are providing free basic electricity and have entered into a funding agreement with Eskom;
- Metsimaholo and Phumelela Local Municipalities (LM) are crediting the accounts of its consumers with monetary value equalling 5OkWh; and
- Nala LM is purchasing coupons over the counter and distribute them to the indigents monthly
Levels of Service Delivery ... cont
Challenges i.r.t. FBE:
- Disparate approaches in provisioning of FBE (targeted versus broad based approach);
- Lack of capacity, requisite infrastructure, and appropriate technology (systems) at municipal level for implementation of FBE;
- Lack of policy framework on alternative sources of energy that would be used in lieu of FBE and this mean that poor communities without access to requisite infrastructure will not access this service;
Levels of Service Delivery..cont
Challenges:
- Encourage and expedite rollout of Regional Electricity Distributors (REDS); and
- Auditing and validating of information of indigent lists by municipalities and ESKOM.
Accreditation of municipalities to perform housing responsibility
- No accredited municipality in the Province, albeit Mangaung has been identified for a pilot programme. Municipal Accreditation Framework and Implementation Guidelines and corresponding service level agreement to be concluded soon