Budgetary Review and Recommendation Report of the Portfolio Committee on Co-operative Governance and Traditional Affairs, dated 23 October 2012

The Portfolio Committee on Co-operative Governance and Traditional Affairs, having considered the performance of the departments of Co-operative Governance and Traditional Affairs for the financial year 2011/12 and the first two quarters of 2012/13, reports as follows:



1. Introduction


The purpose of the report is to provide a reflection on the performance of the

Department of Co-operative Governance and Traditional Affairs against predetermined objectives. Further, the report provides an assessment of the financial performance of the Department for the first two quarters of the current financial year. In the final analysis, the report provides for observations, conclusions and recommendations from the Portfolio Committee on Co-operative Governance and Traditional Affairs.


1.1   The role of the Committee


Mandate of the Committee, including provisions of Section 5 of the Money Bills Amendment Procedure and Related Matters Act, No 9 of 2009


As a National Assembly committee, whose powers are enumerated in Chapter 4, and according to the Rules of the National Assembly, the Committee is required, in respect of its mandate to:


  • consider, amend, approve or reject legislation;
  • consider and approve budgets and monitor expenditure of the Department and entities reporting to it;
  • consider progress reports from line-function departments, and provincial and local government authorities and entities on their respective mandates;
  • ensure that all appropriate executive organs of state are held accountable for their actions; and
  • conduct oversight over the national executive authority and any other organ of state.


According to Section 5 of the Money Bills Amendment Procedure and Related Matters Act, the National Assembly, through its committees, must annually assess the performance of each national department. The Committee must submit an annual Budgetary Review and Recommendation Report (BRRR) for each department that falls under its oversight responsibilities, for tabling in the National Assembly. These should be considered by the Standing Committee on Appropriations when it is considering and reporting to the House on the Medium-Term Budget Policy Statement (MTBPS). The Portfolio Committee on Co-operative Governance and Traditional Affairs considered the Budget of the Department of Co-operative Governance and Traditional Affairs on 31 May 2011. The Committee considered the Department of Co-operative Governance’s Annual Report 2010/11, as well as the annual reports of the entities reporting to the Department, on 12 & 18 October 2010.


1.2 The Department




The primary mandate of the Department is to:

  • develop and monitor the implementation of national policy and legislation seeking to transform and strengthen key institutions and mechanisms of governance to fulfil their developmental role;
  • develop, promote and monitor mechanisms, systems and structures to enable integrated service delivery and implementation within Government; and
  • promote sustainable development by providing support to provincial and local government.




An integrated, responsive and highly effective governance system working with communities to achieve sustainable development and improved service delivery.




The Department’s mission is to facilitate co-operative governance and support all spheres of Government, the institution of traditional leadership and associated institutions through:


  • development and implementation of appropriate policies and regulatory mechanisms to promote integration of government development programmes;
  • achievement of social cohesion through the creation of enabling mechanisms for communities to participate in Government; and
  • monitoring and evaluation of co-operation amongst Government stakeholders to achieve improved service delivery.


2. Department’s Strategic Priorities and Measurable Objectives


2.1 Strategic Plan of the Department


A summary of the Department’s 5-year strategic plan:


The Department seeks to:


  • contribute to building a developmental state in National, Provincial and Local Government that is efficient, effective and responsive;
  • strengthen accountability and clean government;
  • accelerate service delivery and support the vulnerable;
  • foster development partnerships, social cohesion and community mobilisation;
  • strengthen the Department of Co-operative Governance’s organisational capability and performance for it to deliver on its mandate; and
  • strengthen the Department’s organisational capability and performance for it to deliver on its mandate.


2.2 Measurable Objectives of the Department


The Department’s core function, given its new expanded mandate, is set out in the five strategic priorities for the Ministry and Department for the next five years, 2009 - 2014.

Strategic Priority 1: Contribute to building the Developmental State in National, Provincial and Local Government that is efficient, effective and responsive.

Measurable objectives

·         The establishment of a new development planning system ensures funding and implementation of priorities agreed between government and communities as expressed in the IDPs.

·         The existing pieces of legislation on intergovernmental relations and provincial and local governance and accountability will be reviewed, strengthened and implemented to ensure improvement and alignment with the new role of the Department.

·         Capacity of institutions and structures to enhance co-operative governance and service delivery are strengthened, monitored and evaluated.

Strategic Priority 2: Strengthen Accountability and Clean Government.

Measurable objectives:

·         Monitoring and oversight of Provincial and Local Government is carried out by National Government and by communities.

·         Service delivery, accountability and transparency are significantly improved within provinces and municipalities.

·         Corruption is combated and ethics and integrity is promoted.

·         Provinces and municipalities achieve clean audits by 2014.


Strategic Priority 3: Accelerating Service Delivery and supporting the vulnerable.

 Measurable objectives:

·         Municipal infrastructure and basic services are provided to communities, and the quality and extent to which municipalities plan for, fund, and budget for, operate and maintain infrastructure and deliver sustainable services.

·         Infrastructure and services stimulate local economies and the extent to which investment in local areas is increased.

·         Provincial and municipal services benefit the vulnerable.

·         Responses to disasters is accelerated and improved across all three spheres of Government and the extent to which municipalities invest and improve emergency and fire services.


Strategic Priority 4: Improving the Developmental and Governance Capacity and Capability of Traditional Affairs, the Institution of Traditional Leadership and the Khoisan Leadership

 Measurable objectives:

·         The traditional communities as well as the Khoisan Communities, including their respective leadership, are enabled and supported by Government to contribute towards development and service delivery.

·         The institution of traditional leadership and the Khoisan leadership have established functional and effective partnerships with municipalities, organs of state, national and provincial government departments, civil society, communities and the private business sector in matters relating to development and service delivery, rural development, local economic development, alternative energy, indigenous knowledge systems, fighting poverty and promoting peace.

·         Well-functioning and effective Inter-Governmental Relations (IGR) structures, chaired by the DTA at national and provincial level, to ensure that the appropriate implementation of the above by the three spheres of Government has been established.

·         The supportive role and place of the institution of traditional leadership and Khoi-San leadership in South Africa’s governance system and its contribution to development is known and appreciated across society; and Traditional Affairs including the traditional leadership and Khoi-San leadership have contributed to ensure that current levels of underdevelopment, poverty and unemployment are reduced.

Strategic Priority 5: Fostering development partnerships, social cohesion and community mobilization

Measurable objectives:

·        A shared development agenda and support amongst key stakeholders on Integrated Development Plans (IDP)

·       Communities have trust in the work and decisions of Government and state institutions and work together with communities in providing services and implementing development programmes.

·       Communities are mobilised for their own development rather than remaining passive recipients of services and development programmes.

·       Social cohesion, non-racialism and nation building are enhanced amongst residents at the local level.

·       International partnerships are developed and bilateral and multilateral programmes and agreements are implemented.

3. Analysis of Section 32 Expenditure Reports

In the previous year the Department underwent operational changes.



Funding priorities of the Department:













The total allocation for the Department in the 2012/13 financial year is R54.7 billion, which represents a 17.18% real increase from the R48.2 billion in the previous year. Notably, the largest increase is in the Infrastructure and Economic Development Programme which received an increase of 19.03% in real terms.


There are three programmes that take up a larger share of the budget. Governance and Intergovernmental Relations which received a R34.2 billion in the previous year and has been allocated R38 billion in the current year, which represents a 4.03% increase in real terms. The Disaster Response Management programme got a substantial decrease from R816 million in the previous year to R555.2 million in the current year. It is unclear why such a decrease has occurred in light of recurrent floods and other disaster associated with climate change. Further, cognisant of the need for construction of District Disaster Management Centres, the budget allocation for this programme should be increased instead of being cut.



4. Analysis of the Department’s Annual Report and Financial Statements


There are numerous performance indicators that reflect substantive progress; however there are few areas where failures are evident. In the following section, more focused attention is paid to detailed programme performance.






This programme is the apex of the Department which is supposed to steer and provide impetus to the strategic direction of the Department in order to achieve the results of Outcome 9, as well as the MDGs. The budget for this programme has actually decreased from R205.4 million to R201.4 million in the current year. The decrease emanates from the reduction of the allocation to the Ministry and Chief Operations Officer sub-programmes.


Compensation for employees has also decreased from R97 million to R80.8 million in the 2012/13 financial year.


Over the medium term, expenditure is expected to increase to R225.5 million, at an average annual rate of 3.2%, to provide for increased accommodation and to build capacity in support services to accommodate the growing number of personnel in the Department for the traditional affairs function. Over the medium term, spending on consultants is expected to increase to R14.1 million, at an average annual rate of 7.7%. The consultants will be used to review the risk management strategy.[1]




The overall objective of this programme is to improve research and policy analysis, and improve reporting and monitoring, as well as information management through Information Communication Technology. The total allocation for this sub-programme is R46.1 million. A substantial increased is recorded for the Information, Communication and Business Technology which amounts to R24 million and which represents a 4.92% real increase from R21.6 million in the 2011/12 financial year. Over the medium term, the focus will be on improving the Department’s ICT infrastructure aligned to the knowledge management strategy.





Essentially, this programme focuses on sound intergovernmental relations, good governance and sound intergovernmental fiscal relations. This programme involves transfers to municipalities through the Local Government Equitable Share, as well as transfers to statutory entities such as the South African Local Government Association and the Municipal Demarcation Board. Needless to say the largest portion goes to transfers, particularly the Local Government Equitable Share, which takes up R37.9 billion in the current year.


Over the medium term, total expenditure is expected to increase to R43.8 billion, at an average annual rate of 8.3%. Over this period, the Green Paper on Co-operative Governance and the refined legislative framework for ward committees will be finalised. The programme will also finalise the Municipal Property Rate Amendment Bill for tabling in Parliament. The Bill seeks to regulate the rating of property by assessment and rating of properties.[2]





Parliament passed the Disaster Management Act (52 of 2002) and the central tenets of this legislation is around preventing, responding to, mitigating and adapting mechanisms for natural and human-induced disasters. In the recent past, Mpumalanga and later KZN experienced floods which caused damage to infrastructure and property, and loss of life. Despite this reality, the total budget decreased by -35.77%t from R816.2 to R555.2 million. The most significant cut is in the Disaster Relief Transfers sub-programme from R775 million to R510 million. The reduction of the total budget is a result of decrease in Disaster Relief Grant.

All sub-programmes had a decrease in their allocations with the exception of the Intelligence and Information Systems as well as Legislation, Policy and Compliance Management which increased from R14.7 million to R25.2 million and from R6.6 million to R7.2 million respectively. The increase in the Intelligence and Information Systems sub-programme represents 61.88% whilst the Legislation, Policy and Compliance Management increased by 3.01%.


Over the MTEF period, at an estimated cost of R5 million, the programme will continue to support the establishment and functionality of the 50 disaster management centres and the expansion of components of the national disaster management information systems to provinces and municipalities.[3]




The Programme has received a budget increase from R249.9 million to R284.7 million in the 2012/13 financial year which represents a 7.58% increase in real terms. The significant increases are in the Management: Provincial and Local Government Support which rose from R5.3 million in 2011/12 to R26.8 million in the current financial year. Another substantial increase is in the Development Planning sub-programme which received an increase from R4.9 million in the 2011/12 financial year to R8.5 million in the current financial year.

The Municipal Systems Improvement Grant (MSIG) has increased from R220.2 million in 2011/12 to R230.1 million in the 2012/13 financial year. Even though the increase is substantial in nominal terms, in real terms, in this sub-programme, there has been a negative growth – 1.33 due to the impact of inflation. Transfers from this sub-programme (Municipal Systems Improvement Grant) are used by municipalities to train staff in the areas of financial management, to improve the efficacy of administrative systems and to assist with the implementation of ward participatory systems.[4] Over the medium term, expenditure is expected to increase to R314.7 million, at an average annual rate of 8%, due to the increase in allocation for the Municipal Systems Improvement Grant as support for the municipalities to develop their own turnaround strategies.[5] The qualitative difference of the MSIG remains questionable given the weak systems and capacity in most municipalities.


Expenditure on consultants, which accounts for 0.5% of expenditure in this programme in 2011/12, is expected to increase from R1.2 million in 2011/12 to R3.1 million in 2014/15, at an average annual rate of 38.5%. The consultants were hired to develop and maintain Gapskill, a web-based skills audit system that supports the Department’s capacity building initiative in provinces.[6]




This programme is one of the most critical programmes in order for Government to be able to expedite service provision and meet the MDGs by 2014. This will be achieved through a vigorous programme of infrastructure investment, maintenance and development planning. The Municipal Infrastructure Support Agency is expected to eliminate infrastructure backlogs through dedicated technical capacity to municipalities in order to intensify infrastructure development and thus improve service provision, as well as free basic services. This programme has received R15.5 billion of which a large portion is for the Municipal Infrastructure Grant amounting to a total of R13.9 billion. The Community Works Programme also receives a substantial increase from R653 million in 2011/12 to R1.4 billion in the current year.


Over the medium term, expenditure is expected to increase from R12.3 billion in 2011/12 to R18.7 billion in 2014/15, at an average annual rate of 15%. This increase is mainly due to the Community Work Programme’s funding, which is expected to grow, at an average annual rate of 61.1%, to R2.7 billion over the MTEF period, with the aim of creating 250 000 job opportunities and growing the total number of sites participating in the programme.


The expenditure on Goods and Services also increases from R301.6 million in 2011/12 to R1.6 billion in 2012/13. The primary reason for this increase in spending on goods and services is the continued utilisation of consultants, as articulated hereunder. Expenditure on consultants increased from R4 million in 2008/09 to R49.3 million in 2011/12, at an average annual increase rate of 131.4%, due to community work programme implementation at local level done by implementing agents. This is expected to grow to R209.3 million by 2014/15, at an average annual rate of 61.9%.[7]  




The endorsement of the establishment of the Department of Traditional Affairs as a separate department was promulgated through a Presidential proclamation in 2010. However the institutionalisation of the Department is long overdue. 

The overall budget for this programme in the current year is R102.1 million, which represents a 15.05% increase from the previous allocation of R83.8 million.  The bulk of the increase is allocated to the CRL Commission, as well as the National House of Traditional Leaders.  Over the medium term, expenditure is expected to increase to R112.4 million, at an average annual rate of 10.3%, due to additional funding allocated to the Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities for policy research and capacity building.[8]


Expenditure on consultants represents 7.9% of goods and services in 2012/13, and is expected to decrease from R5.7 million in 2011/12 to R5.5 million in 2014/15, at an average annual rate of 1.3%. This is due to the Department terminating the contract of a consultant hired to review current traditional affairs legislation aimed at the consolidation of national legislation into a single Bill.[9]




On governance matters, the Audit Committee concluded that the internal audit controls were ineffective in the year under review. Further, the Audit Committee stated that this ineffective internal control was worsened by non-functioning of the Internal Audit Unit and Risk Management.  The Auditor-General’s report states that, in terms of governance, the Accounting Officer did not ensure that the Internal Audit Unit was adequately resourced and functioned in terms of risk identification and corrective action.


The Department is facing significant uncertainties as it is a defendant in various lawsuits; and, due to the fact that these matters have not been resolved, an amount of R4.4 million has been set aside as contingent liability in the financial statements. There is also an irregular expenditure to the amount of R419 million as stated in note 27.2 of the financial statements. Of this amount, R271 million was as a result of a contravention of the supply chain management procedures outlined in the PFMA and Treasury Regulations.


An amount of R336 000, paid as interest on legal fees, is recorded as wasteful and fruitless expenditure. This is so because, had the Department paid legal fees on time, t no interest would have been incurred


In terms of procurement and contract management, the Auditor-General reveals that Goods and Services with a value of between R10 000 and R500 000 were procured without inviting at least three written price quotations from suppliers, in violation of the PFMA.


In total, under-expenditure amounts to R76 million. The Department had an under-expenditure of R55 million, mainly in the Community Works Programme, which could not finalise all its intended projects in the year under review. The balance was due to transfers made to Ekurhuleni Municipality, which were withheld by National Treasury.


There is an amount of R51.9 million of aid that was unutilized in the year under review, which is more than the R32.4 million of unused aid funds in the previous year.



6.  Consideration of Other Sources of Information


A number of sources can be used to analyse the strategic and operational plans of Departments. These include:


·         The State-of-the-Nation address;


The State of the Nation Address delivered by the President on 9 February 2012 in Parliament was warmly received across the political spectrum, albeit the approach departed from past practice by adopting a mid-term review as opposed to the usual annual assessment. The SONA reflected this approach by reviewing advances and challenges experienced since 2009, in order to address the objective and subjective concerns in the medium term going forward. The decision to conduct a mid-term assessment was adopted at the January Cabinet Lekgotla, as the President explained. The mid-term review revealed significant progress and also highlighted the stubborn challenges. As the President indicated:


“The mid-term review indicated steady progress in various areas such as health, education, the fight against crime, human settlements, energy, water provision, rural development and others.


However, the triple challenge of unemployment, poverty and inequality persists, despite the progress made. Africans, women and the youth continue to suffer most from this challenge”.


These realities were used as the basis for developing priorities for the medium term. The structural challenges of unemployment, poverty and inequality highlighted by the President permeate the SONA, and sustainable ways of overcoming these intractable structural problems were presented to the nation. These challenges are a legacy of  Apartheid and are also reinforced by the fluctuating global economic system which continues to shrink the job market, as well as widening the gap between the rich and the poor. South Africa is the leading country in terms of inequality based on the Gini co-efficiency. Many people continue to live below the breadline or, more precisely ,below a dollar per day. The challenge to society and Government was put crystal clear in this manner:[10]


As we move forward, we want to take a medium-to-long-term approach to the challenges we face on the road to a South Africa of our dreams. We want to freshly and boldly identify the few key challenges around which the nation shall be rallied and mobilised. These are the triple, related challenges of unemployment, poverty and inequality. Principally, it is the Africans, women and youth who continue to carry a disproportionate burden of the challenges.”.     


These are the fundamental challenges of this epoch and the government committed to mobilise government resources and society in order to overcome these problems in an effort to build a non-racial, non-sexist, democratic and prosperous society. The present reality confronting South Africa is that all the democratic gains will potentially be undermined by instability created by poverty, inequality, underdevelopment and social exclusion.


Against this backdrop, the government has developed a National Development Plan to tackle current and ongoing challenges, as well as a medium-to-long-term development path. With respect to governance and service delivery, the SONA identified key priorities which as follows:


  • Bulk infrastructure development
  • Job creation and local economic development
  • Provision of basic services
  • Improving governance and institutional support
  • Recognition of Khoisan traditional leadership institutions.


It is worth noting that, with respect to local government, there is a relative state of calm in as far as the violent “service delivery” protests are concerned.  However, there are areas where there is a resurgence of protests by disgruntled communities. Some of the more urgent tasks include restoring the public confidence in municipalities and improving service delivery as indicated the Local Government Turn Around Strategy adopted in 2009.




The triple challenges of the current epoch alluded to by the President, which include unemployment, poverty and inequality, require a sustainable solution in order to realise the objective of a better life for all. In the SONA, the President postulates that the solution to these related challenges is “higher growth and job creation to reduce and ultimately eradicate poverty and inequality”. The President makes a distinctive assertion that, “As a developmental state that is located at the centre of a mixed economy, we see our role as being to lead and guide the economy and to intervene in the interest of the poor, given the history of our country”. This is the clearest indication that the government believes that the development of the country should not be left to the dictates of market forces that have their inherent failures. The current global economic crisis is testimony to the vulnerability of unregulated markets.


It is evident from the address that the solution lies in higher growth rates; however a different trajectory which will not result in jobless growth is required, hence the emphasis on infrastructure development, industrialisation and beneficiation of local minerals. This unequivocal statement therefore places local government at the centre of a sustainable development paradigm. The country’s growth, development and stability depend on a functional local government system that works to deliver services to the people, builds and maintains infrastructure, creates employment opportunities through Local Economic Development, enhances clean governance and fights corruption to ensure value for money for citizens. Local government, in fact, is the centre of gravity where all government service delivery functions ultimately find focus – thus the integration and coordination of all programmes becomes cardinal.   


Local government interests are fundamental to the objective of a developmental state and therefore priorities in this sector are generally cross-cutting and consistency in articulating these priorities is evident. A glaring example of the significance of the multi-facetedness of the mandate of local government is the task of provision of bulk infrastructure and basic services such as water, electricity, sanitation and housing. These functions involve a plethora of departments such as Human Settlements, Water Affairs, Energy, Transport and Public Works. To further demonstrate the point, the municipal Integrated Development Plan (IDP), which is a developmental planning framework for local government, incorporates transport, health and water services plans in order to respond comprehensively to the needs of the people.[11]


The following section provides a detailed account of the aforementioned priorities that emerge from the State of the Nation with regard to local government.  


Bulk infrastructure development


The backbone of the envisaged growth path is the direct public sector investment in massive infrastructure development which will create direct and indirect, short- as well as long-term employment opportunities. The infrastructure development becomes a catalyst for economic growth, including local economic development, as well as igniting small-scale and large business activity through reducing the cost of doing business and increasing economic efficiencies.


The massive infrastructure investment under the stewardship of the Presidential Infrastructure Co-ordinating Commission (PICC) epitomises the integration of various government policies such as the New Growth Path (NGP) and the National Development Plan (NDP). The two aforesaid policies highlight the significance of infrastructure development for sustainable growth. The NGP highlighted substantial public investment in infrastructure[12] as one of the key jobs drivers, whilst the NDP points to the fundamental necessity of linking bulk infrastructure development zones such as Coega, Waterberg/Liphalale as well as the freight corridor between Gauteng and Durban.[13]


The SONA highlighted a number of infrastructure projects:



Nature of project





Rail, road and water

Limpopo – Waterberg and Steelport




Rail transport





Logistics and industrial corridor

GautengFree State and Durban

Seven years

R300 Billion


Industrial and agricultural development

Eastern CapeNorthern Cape and KwaZulu Natal




Dam construction

Eastern Cape – Umzimvubu river




Iron-ore rail line

Sishen-Northern Cape and Saldanha Bay-Western Cape





Job Creation and Local Economic Development


As a point of departure, the President reflected on the progress made towards intensifying job creation as announced in the previous SONA. The President lauded the remarkable progress made in this regard as revealed by the fourth quarter figures, which indicated a decline in unemployment “from 25% to 23.9 % as a result of new jobs”. The President also acknowledged the accord signed between Government, Business and Labour on local procurement, skills development, basic education and the green economy. This accord bodes well for local procurement, which will increase local job creation and sustainable local business development, in particular small, medium and micro enterprises.


The large-scale, long-term infrastructure projects announced in the SONA will also generate jobs in the construction sector for the actual building of the infrastructure, as well as ongoing maintenance. The President stressed the significance of infrastructure development to employment creation when he said, “The massive investment in infrastructure must leave more than just power stations, rail-lines, dams and roads. It must industrialise the country, generate skills and boost much needed job creation”. These infrastructure projects will have spin-offs for local businesses to prosper. Infrastructure development, particularly transport (road and rail), will stimulate business development as well as increase business opportunities through interconnectivity to other market opportunities. The President, in his SONA, stated that “Our plans include the expansion of the iron-ore rail-line bwtween Sishen in Northern Cape and Saldanha Bay in the Western Cape, which will create large numbers of jobs in both provinces”. Accessibility of transport networks increases opportunities to explore new markets and expand products, and thus business growth.


There will also be positive spin-offs for secondary businesses in the areas of mining and mineral beneficiation. Another critical area that the President reflected upon was the development of agriculture in the Eastern Cape and KwaZulu-Natal in particular. In this regard, agriculture and agro-processing will also create markets which are under-explored in the two areas, as large tracks of land remain unproductive. In this way, co-operatives will contribute massively to improving the land utilisation and economic participation of the rural dwellers thus improving Local Economic Development and job creation capacity.  


Provision of Basic Services


The year 2014, which is the target year for achieving the MDGs by halving poverty, is fast approaching, and the unrelenting government commitment to the provision of basic services must be intensified. Key MGD areas relevant to this sector include electricity reticulation, water and sanitation services, which are functions of Local Government in line with Schedule 4 Part B of the Constitution 108 of 1996. In order to realise the constitutionally guaranteed imperatives in 2000, Government announced its policy-intent to provide free basic services to poor households. In this regard, water, sanitation and energy were identified as basic services to be supported by Government's programmes in respect of poor households.[14]


It is worth noting that the infrastructure development programme enables Government to expand access to basic services and to improve the quality of life. In this context the projects for provision of water, electricity and housing are imperative. The construction of water infrastructure in Waterberg and the dam in the former Transkei, using Umzmvubu River, will enable the extension of basic water on a widespread scale. The President noted that, “Government continues to extend access to basic water supply. However, clearly, water access is still a challenge”. With respect to the Mthatha revitilisation project, the President noted that, “Work is at an advanced stage to improve water, sanitation, electricity, roads, human settlements, airport development and institutional and governance challenges”.


Building of bulk infrastructure enables local municipalities to fulfil their constitutional mandate of provision of basic services such as water, sanitation and electricity. Construction of waste-water treatment plants, water plants and power stations enables Government to roll out these basic services to the remote areas in an affordable and sustainable manner. The President acknowledged that extension of water services has been delayed in some parts of the country, and he announced various water augmentation schemes:[15]


These are Olifants River Water Resource in Steelpoort in Limpopo Province, the Vaal River Eastern Sub-System in Secunda in Mpumalanga, Komati Water Augmentation Scheme in Nkangala in Mpumalanga, the raising of Hazelmere dam in KwaZulu-Natal and the Clanwilliam Dam in Clanwilliam in the Western Cape. In addition, nine out of 25 dams have been rehabilitated.


The condition of dams has been exposed during the latter part of 2011 when massive floods caused the overflow of many dams in Gauteng, Free State and KwaZulu-Natal, to mention a few. Thus the indication that 25 dams have been rehabilitated bodes well for the said dams’ capacity to withstand massive floods during rainy seasons.


The extension of affordable electricity specifically for the poor was stressed in the SONA and, accordingly, Eskom is requested to seek affordable pricing options. Extension of basic services in North West warranted specific mention in the SONA ,particularly the upgrading of road infrastructure to ensure viable and quality road infrastructure in the province.


Improving Governance and Institutional Support


The mandate of the Department of Co-operative Governance is to “improve cooperative governance across the three spheres of government, in partnership with institutions of traditional leadership, thereby ensuring that provinces and municipalities carry out their service delivery and development functions effectively”.[16] This mandate is derived from Chapter 3 of the Constitution which outlines the principles of co-operative governance. With respect to the infrastructure investment, the PICC undertakes the co-ordinating function, but the Department of Cooperative Governance is certainly part of this commission which includes premiers and metro mayors.


In the recent past, the Cabinet invoked section 100 (1) (a) and (b) of the Constitution, respectively, in various provincial government departments in Limpopo (5), Free State (2), Gauteng (1) and Eastern Cape (1). The invocation of section 100 means that there were severe weaknesses in governance, financial management, procurement and supply chain management. The Auditor-General of South Africa has cited weaknesses in various departments where there are weak internal controls, absence of strong internal audit functions, lack of compliance with supply chain management regulations which serve as breeding-grounds for fraud and corruption. Evidence suggests that, where there is strong leadership, these tendencies are minimised.


Ensuring strong, supportive and accountable leadership enhances the capability of departments and entities to comply with relevant regulations and thus obtain clean audit outcomes. It is imperative that the Department of Co-operative Governance provides support to provinces and municipalities in order to strengthen internal controls, ensure compliance with good governance principles and also ensure sustainable, affordable and economic utilisation of resources and effective and efficient delivery of services.


Recognition of Khoisan Traditional Leadership Institutions.


The SONA was categorical on the long-standing question of the recognition of Khoisan traditional leadership institutions. This issue has been contested, based on the  contention that, firstly, the current traditional leadership framework addresses the role, functions and status of all traditional leadership, including the Khoisan. Secondly, Khoisan traditional leadership, royalty and succession are not the same as in the other traditional leadership systems. Lastly, the Khoisan representatives have consistently argued on the basis of being granted “first nation” status, which will then mean they supersede other traditional groups.


The President also announced that, “Government will also table the National Traditional Affairs Bill, which makes provision for the recognition of the Khoi-San communities, their leadership and structures”.


It is important to note that Khoisan traditional communities are concentrated in the Western Cape and the Northern Cape. In the context of the Western Cape, the provincial government has been developing legislation to legitimise and recognise the Khoisan traditional leadership and thus provide for the establishment of the Provincial House of Traditional Leadership in the province of the Western Cape.


·         Reports of the Auditor-General of South Africa


The Department received an unqualified audit opinion with findings on predetermined objectives from the Auditor-General for 2011/12 financial year.


The basis for the findings was as follows:


The Department did not have an adequate system for identifying and recognising all irregular expenditure and there were no satisfactory alternative procedures that could be performed to obtain reasonable assurance that all irregular expenditure had been properly recorded. Consequently, the Auditor-General was unable to obtain sufficient appropriate audit evidence as to the completeness of the information on irregular expenditure.


There were emphases of matters on:


  • Irregular expenditure
  • Significant uncertainties
  • Restatement of corresponding figures
  • Fruitless and wasteful expenditure.


Report on other legal and regulatory requirements


  • Predetermined objectives – reliability of information
  • Compliance with laws and regulations
  • Internal control.



·         Entities reporting to the Department of Co-operative Governance and Department of Traditional Affairs


South African Local Government Association (SALGA)


The South African Local Government Association (SALGA) has a mandate to represent, support, advise on and profile organised local government interests. This mandate is reinforced by the resolutions their 2007 National Conference, which adopted critical resolutions to effectively put local government at the core of service delivery processes in an efficient and effective local government system. The Conference resolutions evolved, through a series of phases, into a 5-year strategic agenda, which is based on the following critical pillars;

·         Strategic profiling

·         Support and advice

·         Representation


SALGA received an unqualified audit report. The report also determined that it had achieved 86% of its key performance indicators for 2010/11. SALGA has conducted a Disaster Risk Management Assessment and developed a Guide on Disaster Risk Management for Local Government. Budgetary constraints were a major issue faced by SALGA, and it was as a result of this that SALGA was operating at only 68% of capacity. Only R43 million of the R96 million required was provided.


Commission for the Promotion and Protection of the Rights of Cultural,

Religious and Linguistic Communities (CRL Commission)


As its name suggests, the CRL Commission has a fundamental responsibility to promote the right of communities to develop their historically diminished progressive heritage.


The Cultural, Religious and Linguistic Commission (CRL Commission) presented its 2010/11 Annual Report. Twenty-nine cases had been referred to the Commission during that year, 22 of which had been investigated/mediated and resolved, and seven of which were outstanding.


The Commission received an unqualified Audit Report with Emphasis of Matters for: irregular expenditure; fruitless and wasteful expenditure; going concern under-funding; non-compliance with legal requirements; lack of predetermined objectives and lack of internal controls.


Municipal Demarcation Board (MDB)


The Committee had an interaction with the Municipal Demarcation Board (the Board).

The mandate of the Board in terms of the principal Act is to conduct:

  • the determination and re-determination of municipal boundaries;
  • the delimitation of wards for local elections;
  • the declaration of district municipal areas and withdrawal of such declarations; and
  • the assessment of the capacity of district and local municipalities and the provision of advice on matters connected hereto.


The Board made a presentation of its audit outcomes, as well performance issues. in terms of audit information. The Board has received an unqualified audit opinion with matters of emphasis. This was in relation to irregular expenditure of R726 012, which was in contravention of the Preferential Procurement Policy Framework Act. The Board recorded a total income of R37.9 million, with an expenditure of R36 million, resulting in an expense variance of R1.6 million


7.  Observations, Recommendations and Timeframes





Programme 1 – Administration: The committee noted that the Budget for this programme has decreased from R205.4m to R201.4m in the current year


The Committee notes that the endorsement of the establishment of the department of Traditional Affairs as a separate department was promulgated through a Presidential proclamation in 2010. The institutionalization of the department is long overdue.


The Committee noted that, during the period under review, a total departmental expenditure was R46.221b, which is 95% of the total adjusted budget of R48.204b, we also note that the department underspent on compensation of employees by R11.6m. This is attributed to the slow pace of recruitment process.

Over the term, expenditure for Programme 1 budget be adjusted/increased to fill the approved post  in the department for Traditional Affairs function.



The Committee recommends that National Treasury should consider tofinalize negotiations of concluding the matter of the department to have its own Vote.







The Committee recommends that, a database of unemployed competent people with relevant skills should be kept, so that it should be easy to draw in people where there are vacant post, to prevent this unnecessary under spending.









Implementation by the end of the next financial year













Ongoing basis









Programme 2: Policy Research and knowledge management:

The committee noted that in terms of this programme on service delivery, it has not performed well. Target dates on targeted legislation in terms of policy and state of the nation address on co-opting Khoisan communities into governance, were not met. Hence the amendment of the Traditional Affairs Bill has not yet been brought to Parliament


Committee further noted that in the Department’s Annual Report it is stated that various policy and legislative projects were processed in 2011 and would be taken to public domain in 2012 to be finalized.

The Committee recommends that, in terms of this programme, the department must fast-tract the issue of submitting the proposed legislation to Cabinet and to Parliament for processing












The Committee recommends that this programme should make sure that targets emanating from strategic plans should be met as per mandate.


Before the end of the first quarter


















Ongoing basis

Programme 3: the Committee noted that, as part of the Department’s intervention strategy, which the Committee also recommended in 2010 BRRR, there should be a deployment of technical experts in vulnerable rural municipalities, notes that by end February 2012 there were 93 technical experts deployed to 90 municipalities throughout the country.

The Committee recommends that the support systems that the Department is extending to those identified municipalities should be extended also to those 81 municipalities identified for poor performance in audit outcomes. The Department should come out with clear programmes on how they are going to assist those municipalities to address issues on lack of record keeping and quality of financial system

End of first quarter

Programme 4: Disaster Response Management: despite the reality of the floods that we have experienced, the total budget for this programme decreased by 35.77% from R816.2m to R555.2m. This cut is on Disaster Relief fund.


The Committee further notes underspending of R19,3m due to delays of doing assessments and the non-working relationship between the DCoG and Department of Human Settlements.



The Committee recommends that National Treasury should look at the importance of increasing this allocation, taking into consideration issues of climate change.





The DCoG should look at streamlining the assessment process. The Committee recommends that these two departments should establish working relations by establishing a task team which will focus mainly on the Disaster programme and the Department of Cooperative Governance to lead this process.


Next financial year











Next financial year

Programme 5 - Provincial and Municipal Government Support - only 6 of the 19 targets were met.  The Committee is of the view that targets should be more realistic. 

Measures are implemented to ensure that realistic and measurable targets are implemented.


Programme 6 – to increase access to basic electricity, refuse removal, water and sanitation 66% was targeted, 77% achieved final figures will only be released in September

Committee recommends that the figure should be finalized to determine if target was met.

End of first quarter

The Committee noted that key strategic projects, such as the establishment of South African National Apex Co-operation (SANACO), were deferred to 2012/13 financial year. This resulted in the Department underspending by R20.6m on goods and services

The Committee recommends that such tendencies should be avoided because that reflects badly on the Department’s performance and the results of audit outcomes by A-G

Ongoing process

In the 2010 BRRR, the Committee noted that, in responding to the Presidents call on fighting fraud and corruption, the Department established an Anti-Corruption Inspectorate. In this financial year, little progress has been made. Workshops and training have been undertaken by senior officials on ethics management and fraud prevention plans. The Inspectorate inherited 251 cases that were reportedly not resolved, and only 10 cases were resolved. An amount of 241 cases are still outstanding.

The Committee recommends that the Department reports on the function of the unit, the outcome of cases forwarded to them..

Ongoing basis

The Committee notes that the almost all MPACs have been established however the functionality of the committees is not evident yet.

The Committee recommends the Department should come up with a mechanism to measure effectiveness of these committees, and report on what improvements have come to light since its establishment.


The Committee notes that an amount of R262m earmarked for non-returning councilors was unspent due to incomplete information received from municipalities and the process of obtaining tax clearance from SARS.

The Committee recommends that this issue should be taken seriously and be brought to closure, because it will reflect badly on the Department ‘s audit outcomes


The Committee notes that generally the performance of SALGA is satisfactory. The Committee commends SALGA for the training for councilors and this should be ongoing as 70% of the c council is new.

The committee recommends that SALGA should:

  • Focus on training on legislation for municipalities, eg MFMA, Municipal Systems Amendment Act, etc;
  • Explore the possibility of Risk cover for councilors;


Ongoing process

The Committee is satisfied with the financial performance of the Municipal Demarcation Board. Although strides have been made to encourage public participation in the determination of boundaries there is still room for improvement.

The Committee recommends that the MDB make use of party liaison officers at the Independent Electoral Commission (IEC) and constituency offices to improve public participation process.

Next financial year

The Committee notes that the in the past the department mentioned the Training institute for Local Government. This objective of this institution was for training on local government matters.


The Committee recommends that the Department brief them on this matter.

Before end of the financial year.

Committee notes with concern the downward pattern sof the MIG spending since 2008

Recommends that the Department does a presentation to the committee on the concrete measures to be implemented to ensure thath the spending improves


The committee acknowledges that the Department has established the Municipal Infrastructure Support Agency (MISA) to assist municipalities in spending its MIG funding.

The Committee recommends that the Department brief them on the support provided to the municipalities and the effectiveness of this support.

Ongoing basis


It is requested that the Minister should ensure the implementation of all of the above recommendations.


8.         Conclusion


A general observation is that most matters of emphasis as raised by the A-G are related to SCM regulation deviations. It should determine if this is due to lack of capacity, incompetence or ulterior motives. This matter needs urgent attention and needs to be dealt with in the appropriate manner.


The Department was allocated an amount of R48.9b, for the 2011/12 financial year. At the end of the third quarter, the Department had spent R31.6b or 65.6% of the allocated budget. In the 2012/2013 financial year the total allocation of the Department is R54.7b which represents a 17.8% real increase.


The Committee is looking forward for more improvement on the spending patterns of the Department and its performance


Report to be considered.


[1] Ibid

[2] National Treasury (2012) ENE

[3] National Treasury (2012) ENE

[4] Ibid

[5] National Treasury (2012)

[6] Ibid

[7] National Treasury (2012)

[8] Ibid

[9] National Treasury (2012)

[10] African National Congress, January 8th Statement (2012)

[11] Ngxiza (2010).

[12] New Growth Path (2010)

[13] National Planning Commission (2012) National Development Plan Vision 2030

[14] Department of Minerals and Energy (2003).

[15] President JG Zuma (2012)

[16] National Treasury (2011).