The Ad Hoc Committee on Provincial and Local Government, having considered Budget Vote 5: Provincial and Local Government, reports as follows:


  1. The budget review of the Ministry and Department of Provincial and Local Government and the statutory bodies accountable to the Ad Hoc Committee was undertaken on 1, 2, 3, 4 and 7 June 2004.
  2. In view of the general elections and the brevity of this first term of the new parliament, the Ad Hoc Committee had very limited time to prepare for the budget hearings.
  3. The majority of the Ad Hoc Committee members are new. The budget briefings also served to introduce new members to the Department and acquaint them with the plans, programmes and projects of the Ministry and Department of Provincial and Local Government. This also limited the space to fully scrutinize the Ministry and Department’s budget, as well as the budgets of the statutory bodies for which this Committee has oversight responsibilities.
  4. The report is longer than usual. This is because there are many issues that we have to follow up on and because it contains elements of the Ministry’s, Department’s and our own programmes for the overall five-year term of this new parliament.


  1. Those who appeared before the Committee included Minister F S Mufamadi; Deputy Minister N E Hangana; Director-General Ms L Msengana-Ndlela; Deputy Directors-General Mr E Africa, Mr P Flusk, Ms J Manche, and Ms M Molapo; Chief Directors Mr L Buys, Ms G Gumbi-Masilela, Mr N Jack, Ms B Leon, Ms C Makotoko, Mr P Matomela, Ms B Mdaka, Ms T Mketi, Mr L Mosia, Ms M Montwedi, Mr Sol Morathi, Mr Y Patel, Mr M Ratanga, Ms X Sibeko, Ms Y Silimela and Prof W M Sobahle; Directors Mr A Fray, Mr S Muthotho and Ms B Mkulu; and Chief Financial Officer Mr C Clerihew.
  2. The South African Local Government Association (SALGA) was represented by members of the Executive Committee Mr A J Lamont, Mr G M Lobelo, Mr R T Matseke, Mr S Somyo, Ms E Waugh and Mr M Xaba; and CEO Mr T Mokwena. The Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities was represented by Dr M Guma and Ms M Bethlehem. Local Government: Water and Related Services SETA (LGWSETA) was represented by its Chairperson Mr S J Mohlala; Chief Executive Officer Mr W Nkosi; Western Cape Provincial Manager Mr S Jappie; Administration and Communications Manager Mr E Mnyakeng; and Learnership Manager Mr S Mofekeng. The Municipal Demarcation Board was represented by its Chairperson Dr V Mlokoti; Chief Financial Officer Mr R M Somanje; Head of Research Mr R G Williemse; and Manager Mr R H Monare. The National House of Traditional Leaders was represented by its Chairperson Inkosi M B Mzimela; Deputy Chairperson Morena M F Mopedi; members Khosi F Kutama, Hosi P C Ngove, Kgoshi C Mathebe and Prince Z S Makaula; Chief Executive Officer Mr M E Gobe; and Communications Officer Mr S P Nkosi. The delegation from the Municipal Infrastructure Investment Unit (MIIU) consisted of Board Member Ms N Mjoli-Mncube; Chief Executive Officer Ms K Mathebula; and Financial Manager Mr J Lesaoane.


  1. The Minister for Provincial and Local Government, Mr F S Mufamadi, identified the key challenges as unemployment, poverty and underdevelopment. He referred to the President’s stress in his State of the Nation address on the "challenges of exclusion and inclusion which are occasioned by the duality that characterizes our national economy"
  2. The "macro-organisation of state organs", which includes the establishment of three spheres of government, was intended to "provide a framework for alleviating the reproduction of duality in the economy and for realizing the goal of sustainable development."
  3. The Minister referred to the many benefits of the transformation, including the "equitable share", increased levels of social spending, and the potential to empower local government.
  4. He also pointed to the challenges. "The increase in social spending has resulted in a balance between social expenditure and investment in growth which is not right". The first decade of democracy has "seen a significant decline in levels of private and public investments." He also pointed to the lack of capacity of municipalities.
  5. "We aim to significantly increase the stock of public investments in the economy through such programmes as the Expanded Public Works Programme and the Municipal Infrastructure Grant…We intend to be out there, working with municipalities and taking them through a process of learning-by-doing. We want to help improve their capacity for addressing the needs of the indigent and for operationalising government’s policy on free basic services. We shall be working with provinces in order to ensure that they too pay systematic attention to issues of economic development." The Minister also stressed the need to strengthen ward committees.
  6. In response to questions from Committee members, the Minister clarified the following, among other, issues:
      1. The time frames set out by the President in his State of the Nation Address would be adhered to. The Committee might also want to define its role in this regard.
      2. The "trouble-shooting" unit to be established by the Department will serve to act swiftly to deal with problems in local government. Provinces will also set up such units, and the Department will work closely with them.
      3. Cabinet has taken a decision to do away with cross-boundary municipalities. Legislation would be brought to parliament soon to effect this.
      4. The Department was engaged in discussions with the Department of Water Affairs and Forestry to ensure the transfer of water projects to municipalities was dealt with appropriately.
      5. The important Intergovernmental Relations Bill will be introduced to parliament later this year.
      6. The Department would work closely with the provinces to finalise their Provincial Growth and Development Strategies that will take into account municipal IDPs.
      7. The Department would assist municipalities with their responsibilities in respect of the Expanded Public Works Programme.

7. The Minister emphasized the important role the Committee has in monitoring the Ministry and Department and ensuring that deadlines are met. The Committee also has a crucial role in mobilising sections of society in playing an important role in matters of governance and development.

8. The Committee congratulated the Minister and Deputy Minister on their appointments and wished them well. The Committee welcomes the Minister’s presentation. It was pointed out that there is considerable synergy between the approach set out by the Minister and that of the Ad Hoc Committee. It was noted too that many of the issues raised by the Committee previously were being addressed by the Ministry and Department. The Committee welcomes in particular the decision that all provinces will finalise Provincial Growth and Development Strategies in this financial year. The Committee continues to express its concern however about the transfer of water projects from the national department to municipalities. Many municipalities are not yet ready to take over these projects. The hand-over should be phased in, taking into account the specific capacity of each municipality. Essentially, the Committee stresses that we believe that the two big challenges for local government are in the areas of finances and capacity-building, and much of our programme over the next five years will be oriented around this.

9. The Committee’s work has focused mainly on local government. The Committee is not clear about what precisely its role is in respect of provincial government. The Committee needs to engage with the relevant authorities in parliament to arrive at a clear definition of this. The Committee’s role will have to take into account the provisions in the Constitution on provinces as a sphere of government, the role of the provincial legislatures and the National Council of Provinces, and other considerations.

10. The Committee believes that with our legislative load having been reduced, there will be more time over the next five years to more effectively fulfill our oversight role.



  1. The Director-General reviewed the achievements of the first decade of democracy. She pointed to the fundamental transformation of the state which "saw a shift from over 1200 racially-based local authorities, four provincial administrations and ten Bantustans into 284 democratically elected municipalities, nine provinces and a strong national government." She referred to the establishment of a new system of developmental local government, and the increasing co-operation across spheres of government on key national programmes such as municipal infrastructure investment, free basic services, and the Urban Renewal and Integrated Sustainable Rural Development Programmes. Through these and other programmes "massive public and state resources have been set aside to create quality jobs and alleviate poverty."
  2. The Director-General said that "2004 has provided our Department with an opportune moment of strategic reflection, informed by the voices of our people during election period. The budget for the 2004/5 financial year and the medium-term has therefore been informed by the electoral mandate that our government has received from the people and the appreciation of the road we have traversed thus far."
  3. The Department’s priorities and programmes have been aligned to government’s broad strategic outlook, which includes:
    1. Building a people’s contract that will unite South Africans in efforts to create work, fight poverty and reinforce national pride.
    2. Improving the performance of the State through focused implementation, better integration, and alignment across all spheres of government and direct contact with the people.
    3. Addressing the consequences of social transition, including interventions to address the two economies paradigm and better focus on the National Spatial Development Perspectives (NSDP).
    4. Improving the regional environment and implementing the New Partnership for Africa’s Development (NEPAD), including interventions to restore socio-political normalcy and achieving high growth in the Southern African Development Community (SADC).
  4. The Strategic Plan of the Department has the following key focus:
    1. Bringing greater stability and predictability to the entire governance system, including the intergovernmental system.
    2. Building key capabilities of a developmental state in all spheres of government in order to address the challenges of the two economies.
    3. Establishing and implementing sustainable monitoring and evaluation systems and indicators to assess performance and service delivery.
    4. Strengthening the Department’s corporate capability, which includes staff and institutional capacity, training, corporate systems and a public sector service excellence orientation.
  5. The above strategic focus areas are based on: challenges and priorities arising from the first ten years of freedom; the fifteen areas of intervention for local government transformation adopted by the President’s Coordinating Council; the State of the Nation Addresses by the President on 6 February and 21 May 2004; and the discussion of the Cabinet Lekgotlas of January and May 2004.
  6. The Department’s budget increased from R9, 4 billion last year to
  7. R12, 8 billion this financial year, an increase of 35,8% over the medium term. The budget is expected to increase to R14,3 billion in 2005/6 and R15,9 billion in 2006/2007.

  8. The Department transfers 98,3% of its budget to provincial and local government and to statutory bodies. Last year the Department spent 99.7% of its budget.
  9. The equitable share allocation to local government has increased from R6,3 billion last year to R 7, 6 billion this financial year, an increase of 20,6%.
  10. As mandated by Cabinet and the President in his State of the Nation Address, the Department will work with the National Treasury and Financial and Fiscal Commission (FFC) to review the intergovernmental fiscal relations system, especially as it relates to local government.
  11. The Director-General explained that the Municipal Infrastructure Grant (MIG) represents a rationalization of several different grants. R15,6 billion has been allocated for the MIG over the next three years, of which
  12. R4,4 billion is earmarked for this year. The aims of the MIG essentially are to improve access to basic services, facilitate Local Economic Development (LED), and increase job opportunities. A major focus of the infrastructure programme will be the 21 urban and rural development nodes.

  13. The Director-General explained that the Department was more active in the SADC. The Minister chairs the SADC Local Government Forum which is to be strengthened. The Department is also contributing to the establishment of an African Union committee of ministers of local government. "In the long term", noted the Director-General, "international initiatives will bring further impetus to our domestic programme on good governance."
  14. The Committee welcomes the greater clarity, coherence and focus of the Strategic Plan. The restructuring and streamlining of the Department’s programmes and subprogrammes are also welcomed. The Strategic Plan and Programmes are also much easier to understand and more user-friendly. However, the Committee feels that the Department needs to disseminate more information about its work in a popular form and in different languages so as to reach people on the ground more effectively.


  1. The allocation to administration has increased by 17,4% to

R 88 266 000. 75% of this is allocated to corporate services.

2. The Department finalised its restructuring process in March and has now streamlined its functions. This has allowed for better planning and strategic direction.

  1. Some of the functions are now performed through three newly created branches – free basic services and infrastructure, urban and rural development, and corporate governance, compliance and due diligence.
  2. The Department has established two chief directorates on communication. One will be internally focused and the other will deal with external communication and market the Department’s programmes.
  3. The Department has also developed a new information management system to assist it to more effectively monitor its performance.
  4. 751 posts have been approved for the Department. Only 261 have been filled. There are 146 females and 115 males employed. 82,1% of senior managers are black, 35,7% are women, and 1,2% people with disabilities. The Department explained that vacant posts will be filled in a prioritized manner within the available budget.
  5. The Department acknowledged that a significant number of its staff has left. But most of them have taken other jobs in the public sector and so they are not a loss altogether. However, the Department is to develop a retention strategy to avoid a high staff turn-over.
  6. The Department is still having difficulties in attracting people with disabilities but is to attend to this.
  7. The Committee welcomes the finalization of the Department’s restructuring and the improvements that have flowed. The Committee is concerned that less than half of the Department’s posts have been filled. The Committee welcomes the establishment of the Corporate Governance, Compliance and Due Diligence Unit. The Committee is concerned by the turn-over of staff, and hopes that the Department’s retention strategy will be effective.



1. The allocation to this programme has increased by 36,5% to R 26 978 000. The key sub-programmes are Intergovernmental Relations (IGR), Provincial Coordination and Support, Development Planning, LED and Traditional Leadership and Institutions.

2. R6 641 000 has been allocated to the IGR sub-programme. This represents an increase of 36,8% from last year.

3. The Department, over the past financial year, completed a draft IGR Bill and framework; phase one of the review of Schedule 4 and 5 powers and functions; an assignment framework; and amendments to the Municipal Systems Act.

4. The priorities for 2004/5 in the IGR sub-programme are to introduce the IGR Bill to parliament; secure Cabinet approval of the IGR framework; complete phase two of the review of schedule 4 and 5 powers and functions; secure cabinet approval for the assignment framework; and finalize a policy framework for implementing sections 100 and 139 of the Constitution.

  1. R1 558 000 has been allocated to the new Provincial Co-ordination and Support Programme. This is aimed at supporting the Premiers offices to co-ordinate IGR and strengthen provincial government support for local government.
  2. R4 576 000 has been allocated to the Development Planning sub-programme, a 5% increase on last year. The Department has completed guidelines for MECs on IDPs. 47 Planning and Implementation Management (PIMS) Centres have been established.
  3. The priorities in the Development Planning sub-programme for this financial year are securing Cabinet approval of the Intergovernmental Planning Framework; the full roll-out of IDP Nerve Centres; ongoing support for PIMS Centres; and further development of IDP guidelines.
  4. R3 120 000 has been allocated to the LED Chief Directorate, a 4% increase on last year. The LED Fund has been incorporated into the MIG.
  5. 3040 jobs were created by the LED. 1551 of these were permanent jobs. 55% of the jobs were taken by women and 14% by youth.
  6. The priorities for the LED sub-programme for this financial year are to get Cabinet approval of LED policy and implement LED more effectively through support programmes for provinces and municipalities.
  7. The Committee is keen to engage further with the Department on its IGR work, and awaits the Bill. The Committee welcomes the new Provincial Co-ordination and Support Programme. The Committee would like to see more effective PIMS Centres and believes much more work needs to be done on LED. The Committee will follow up on the joint meeting it had with the Trade and Industry Committee on LED last year, and engage further with the Department on this.


1. R 9 878 000 has been allocated to this programme, representing an increase of 67,5% over last year. The allocation for monitoring and evaluating the Urban Renewal Programme (URP) and Integrated Sustainable Rural Development Programme (ISRDP) has been doubled.

2. The Department does not use consultants to co-ordinate this programme anymore, but has established a branch to do so.

3. Over the past financial year all nodes have finalised their IDPs; PIMS Centres have been established and the Independent Development Trust delivery structures have been put in place in the ISRDP nodes; political and technical champions have been determined; anchor projects have been increased in respect of scope and content; and a communication strategy developed.

  1. Compared to 115 anchor projects in the ISRDP last March 2003, there were 177 projects in March 2004. The value of the projects was
  2. R168, 5 billion in December 2003, and the investments by the national departments was R5, 9 billion.

  3. Urban nodes have 98 anchor projects valued at R1, 95 billion in December 2003. The investment by national departments is

R4, 2 billion.

6. The challenges confronting this programme include the need to optimize funding to nodes via nodal financing protocols; a target funding mechanism for the nodes; capacity-building; greater variety of nodal projects, in addition to infrastructure; and improved co-operation across the spheres.

7. The Committee finds it difficult to get a clear enough sense of progress in respect of this programme. The Committee is to visit the nodes next year. The Committee welcomes the greater emphasis being paid by the Department on monitoring and evaluating this programme. The Committee feels that the Department should communicate progress on this programme to the public. This programme constitutes an important test of the government’s capacity to deliver and also the quality of our IGR system. It is also an important test of the capacity of public representatives in all three spheres, the private sector and civil society generally to accelerate delivery and development. All of us have a role to play in ensuring the effective implementation of this programme.



1. The decrease from R74 481 000 last year to R 64 819 000 this year for this programme is due to the roll-over of funds from the 2002/03 financial year to the 2003/04 financial year which had the effect of inflating the allocation in the latter year.

2. With most of the legislation defining the new system of local government finalised, the Department will be concentrating on strengthening the system and building the capacity of municipalities to implement the new model and accelerate service delivery and development.

3. Over the past financial year, the Department processed the Property Rates Bill through parliament; finalised the "equitable share" modeling; submitted proposals on funding municipal health; introduced a new web-based system for monitoring municipal finance; commenced a study on the remuneration of councillors; held a conference on and finalised guidelines on ward committees; finalised the Disaster Management Framework; and launched the Vuna Awards for best performing municipalities

4. In the present financial year, the Department intends to finalise policy on the incorporation of local government employees into a single public service; introduce a regulatory framework for the abolition of cross-boundary municipalities; introduce legislation on the rationalization of outdated legislation; launch an anti-corruption campaign; complete an audit of municipal capacity; finalise a training programme for new councillors; implement a web-based early warning system and data-base on municipal transformation; finalise the division of fiscal powers and the restructuring of the RSC levies; finalise indigent policy; and launch the Local Government Leadership Academy, as well as attend to several other matters.

5. The Department reported that through its revenue enhancement programme it recovered R 900 000 000 owed by government departments to municipalities.

6. The Department is finalising work on assisting municipalities to sell a part of their debtor’s book to the private sector.

7. The Committee welcomes the more streamlined and focused approach of this programme. The Committee would like to focus in particular on local government capacity-building. The Committee intends to follow up on the capacity-building and training workshop it organised last May. The follow-up workshop will be held within the next six months. The Committee still feels that there is a need for greater co-ordination of the various service providers who offer capacity-building programmes. Some of these programmes are far from adequate and certainly do not offer value for money. The Department is requested to attend to this in co-operation with SALGA. The Committee welcomes the pending establishment of the Local Government Leadership Academy and would like to see the Academy address the constant concerns the Committee has raised about the inadequacies of capacity-building and training programmes. The Department should consider organizing a major conference on local government capacity-building and training along the lines of the successful Conference on Ward Committees it organised and develop guidelines for municipalities and service providers on capacity-building and training.

8. The Committee recognises that many municipalities lack the capacity to raise the arrears due to them, and the private sector can play a useful role in this regard. But the Committee is concerned that with the engagement of private sector agencies there would be a drastic increase in service cut-offs for people who cannot pay for services. The Committee feels that the Department should provide very firm guidelines in terms of which municipalities may engage the private sector to retrieve arrears owed to them. Any private sector engagement must be located firmly within a more developed indigent policy. Provision should also be made for the transfer of skills from the private sector to the municipalities so that they are better equipped to retrieve their own arrears over time.

9. The Committee would like to get a better grasp of the debt owed to municipalities and the Department’s comprehensive responsive to this, and will meet with the Department within six months to pursue this.

  1. The Committee refers the Department to its views on the remuneration of councillors as expressed in various reports.
    1. The Committee is concerned that the allocation to disaster management is to be reduced from R25 075 000 this year to R13 413 000 next year in terms of the MTEF projections, especially in view of the need for adequate funding to implement the new Disaster Management Act.
    2. The Committee welcomes the Department’s decision to organize workshops for municipalities on the Property Rates Act. It is important for the Department and SALGA to organize a public education programme on property rates, and disseminate information on the Property Rates Act in all languages.



  1. The allocation to this programme has increased from R19 016 000 to

R28 989 000, an increase of 52,4%. The most significant increase is for municipal infrastructure, which goes up from R11 662 000 to

R16 662 000.

2. The number of people receiving free basic water has increased from 24,5 million in 2002/3 to 26,3 million in the 2003/4 financial year. 258 000 households are currently receiving free basic electricity, and 266 000 households benefited from the provision of sanitation in the last financial year.

3. The target for this financial year for the free basic services programme is to increase access to these services to 50% of households where infrastructure is available.

4. The Department believes that there needs to be better co-ordination of social grants with municipal indigent policies. The Department intends to finalise a national policy on the indigent during this financial year. The Department is working on what it costs to provide free basic services as part of the process of reviewing the "equitable share" allocation to local government. The Department is also undertaking work on how to develop a credible database on poor households and improve billing systems. The Department is seeking to strengthen its monitoring of the delivery of free basic services.

5. In respect of the CMIP Programme, which has been incorporated into the MIG, R2, 246 billion was transferred in 2003/4 to municipalities for infrastructure. Almost 43% of this was allocated to the nodes. 336 small, micro and medium enterprises were utilized. A MIG Policy Framework has been finalised and a MIG and letters of allocation sent to receiving municipalities.

6. In terms of its MIG sub-programme, the Department intends in this financial year to establish a MIG unit; develop a monitoring system; organise MIG workshops for municipalities; and carry out an independent macro control audit of the local programmes.

7. In terms of the Municipal Services Partnerships (MSPs) sub-programme, the Department established a national MSPs Task Team; organised a stakeholder workshop; conducted training for 360 councillors and officials; and formed a Support Unit for the Public Provision of Services.

8. In this financial year, the Department intends to undertake an audit of MSPs; finalise MSP guidelines; hold provincial workshops; develop an exit strategy for MIIU; conduct MSP training; and hold an international conference on service delivery and development.

9. In terms of its Public Participation and Empowerment sub-programme, the Department is to facilitate effective participation of communities in municipal decision-making.

10. The Department is also supporting the role of CDWs. It is to organise a CDW National Stakeholders Workshop. 740 CDW learnerships are in progress.

11. The Department also intends to take forward its programme to empower ward committees.

12. The Committee welcomes the significant increase in allocation to this programme for the full roll-out of free basic services. Municipalities will need more money, but they will have to develop the capacity to spend the money currently allocated more effectively to make the case for more money. The Committee is concerned that in some municipalities households end up paying for the first 6000 litres of water as soon as they pass the threshold. A stepped tariff system is not operative. The Department is requested to co-operate with SALGA in attending to this. The Committee awaits the finalisation of the indigent policy with keen interest.

13. The Committee feels the Department will have to be very supportive to municipalities in their roll-out of infrastructure. While recognizing the importance of private sector investment in municipal service delivery, the Committee welcomes the establishment of the Support Unit for Public Provision of Services. The Committee believes that the Department has a crucial role in developing CDWs. It would also like to see the Department effectively fulfill its sub-programme on community participation and empowerment.


J South African Local Government Association (SALGA)

    1. The municipal financial year is from 1 July to 30 June. This shapes the way SALGA expends money and reports to Parliament.
    2. SALGA reported that its total income for the 2002/03 financial year was R47 408 333. SALGA received R21 907 089 from its affiliates and R4 077 662 from donor funding. It received R22 000 000 from the national fiscus in 2002/3 and R20 250 000 from the national fiscus last year.
    3. R17 300 000 has been allocated to SALGA for the 2004/05 financial year. The amounts allocated in the 2002/03 and 2003/04 financial years included an amount for the SALGA restructuring exercise. Hence the allocation for the 2004/05 financial year does not provide a growth factor. SALGA feels, however, that its allocation is inadequate.
    4. SALGA reported that there has been significant progress in its restructuring process, and there is consensus on the need for a unitary structure. The final changes will be decided on at its conference set for September.
    5. Among its activities over the past year, SALGA pointed to:
        1. Its increasing involvement in the African Union of Local Authorities and its partnerships with national local government associations in the SADC region.
        2. Its role in ensuring increased national government funding for free basic services.
        3. Its participation in the restructuring of the electricity industry.
        4. Its role in ensuring that the provisions of the Municipal Finance Management Act do not undermine the integrity of the local sphere.
        5. Its participation in the Presidential Co-ordinating Council.
        6. The launching of the District Learning Network as part of the roll-out of the Knowledge Sharing Programme.
    6. SALGA stated that its priorities for this financial year include:
        1. Improving the internal skills base and external networks in order to provide better and effective on-site support to municipalities.
        2. Improving the participation of organized local government in intergovernmental relations structures and international affairs.
        3. Optimizing its administrative efficiency and effectiveness.
        4. Building provincial capacity.
        5. Championing the interests of local government in the context of the Communal Land Rights BILL and the Traditional Leadership and Governance Act.
        6. Developing an integrated energy strategy for local government.
    7. SALGA reported that its Municipal Support and Intervention Unit is to play a far more active role in supporting municipalities.
    8. SALGA’s report raised many issues that the Committee could not address in the limited time available. The precise outcomes of SALGA’s activities are not clear. It was agreed that the Committee would meet SALGA after its Conference, possibly in late October, to take issues further.
    9. The Committee feels, however, that it is not clear precisely what its oversight role with regard to SALGA is, as SALGA represents a specific sphere of government, raises most of its own money, and is part of the NCOP. This matter may have to be cleared up with the authorities in parliament, and discussed further with SALGA.
    10. The Committee believes that it is vital that SALGA is strong and effective, and hopes that its restructuring will contribute to it playing a more dynamic role. The Committee expresses its concern about the very high turn-over of staff at SALGA.
    11. The Committee notes SALGA’s concerns about the effect of the restructuring of electricity on municipal finances, and will seek to arrange a meeting in parliament of all the relevant stakeholders to take the matter further.
    12. The Committee stresses the need for effective co-operation between SALGA’s Municipal Support and Intervention Unit and the Department’s proposed "trouble-shooting" unit.
    13. The Committee congratulates Father Smangaliso Mkhatshwa, the chairperson of SALGA for being appointed President of the United Cities and Local Government.



1. The National House of Traditional Leaders has been allocated R6 788 000, an increase of 11% over last year.

2. Over the past financial year the House consolidated its structures and focused on the Property Rates, Traditional Leadership and Governance Framework, and Communal Land Rights Bills. It also tried to address issues around poverty, unemployment and HIV/AIDS

3. In this financial year, the House intends to improve its working relationship with organizations within and outside the government, and intensify its programmes related to poverty alleviation, unemployment, HIV and AIDS and other diseases. The House has just organized a successful Conference on Initiation Schools.

4. The House believes that relations have improved with the government and parliament over the past financial year. However, the House believes its budget is inadequate, especially in view of the role traditional leaders have to play in terms of the Traditional Leadership and Governance Framework Act and the Communal Land Rights Bill. About 53% of the budget is spent on travelling and about 15% on allowances. The House feels very strongly that it needs a chamber in Cape Town to have its meetings. Three options have been identified: the use of the Old Assembly Chamber of parliament; the use of another building owned by the Department of Public Works, if a suitable building can be found; or the construction of a new building.

5. While the House believes that many of its concerns have been addressed in the Traditional Leadership and Governance Framework Act and the Communal Land Rights Bill, there are still outstanding issues that have to be pursued. The House maintains that the Constitution and the Municipal Structures Act still need to be amended.

6. The House is keen on becoming more active in NEPAD activities, and is working with traditional leaders in other countries on the possible establishment of a continental organization of traditional leaders.

7. The Committee believes that there has been significant progress in addressing the needs of the traditional leaders over the past year, particularly with the adoption of the Traditional Leadership and Governance Framework Act and the Communal Land Rights Bill. The House may have a case for an increase in its budget if it is to fulfill responsibilities set out in these two pieces of legislation – but its case would be strengthened if it used the money currently allocated to it more effectively. The Committee requests the Department to assist the House in reporting adequately on the use of its budget to parliament. While recognizing the challenges posed in dealing with matters of tradition, the Committee feels that the House should set out more clear targets to be achieved during a financial year and report on progress in achieving this. There needs to be an alignment between rands and cents spent and outcomes. To the extent possible and appropriate, the Committee will seek to offer assistance to ensure more effective reporting by the House. The Committee will seek to meet the House within the next six months to explore the possibilities of this, and discuss further issues.

8. The Committee has no authority to respond to the House’s request that it be allowed to use the Old Assembly Chamber for meetings. The matter will be raised with the Speaker.

9. The Committee requests the Ministry and Department to facilitate the enactment of provincial legislation in terms of the Traditional Leadership and Governance Framework Act and the formation of the Commission on Claims and Disputes relating to Traditional Leadership within this financial year.


L Local Government, Water and Related Services Sector Education and Training Authority (LGWSETA)

    1. The Local Government, Water and Related Services Sector Education and Training Authority (LGWSETA) reported that its mandatory grant income contributed by employers was R91 900 787 for the 2003/04 financial year. Of this amount only 15,09% was disbursed. R13 867 616 (60.36%) was disbursed for planning grants as at the end of 31 March 2004. The Implementation Grant of R68 925 590 (45%) is released upon the approval of the Implementation Report which is usually disbursed after the end of the financial year.
    2. The LGWSETA indicated that R165 857 946 was contributed by member companies as total gross levies (100%) in the 2003/04 financial year. It should be noted that this represents 12 months levies. The income for administration is subject to VAT and an amount of R14 209 287 was received from the Skills Development levies for the 2003/2004 financial year. The total operational expenditure for the 2003/2004 financial year was R13 784 680.

3. The LGWSETA reported that the compliance level of municipalities submitting WSPs in the 2002/03 financial year was 54% and in the 2003/4 financial year was 69%. Part of the non-compliance was due to fact that municipalities did not allocate staff to develop WSPs or did not have staff with the skills to do so. The LGWSETA spent R5 000 000 on the empowering and capacity building of Skills Development Facilitators in the 2003/4 financial year.

    1. The LGSETA reported that it had now had a stable governance structure and a new CEO, and that the problems that afflicted it in the past had been substantially addressed.

5. In the last financial year LGWSETA rolled-out various programmes, including on Adult Basic Education and Training; skills development facilitation; project management training; contract management training; water learnerships; finance and administration learnerships; community development workers; and councillor development, among others. About 10% of its learnerships are for the unemployed.

6. The challenges for this financial year include ensuring effective co-ordination between different institutions facilitating training in the sector, including SALGA and the Department; monitoring and evaluating the quality of the training that LGWSETA is providing; and getting more employers to take learners, especially the unemployed, on learnerships. The LGSWETA said that it saw its training of CDWs as very important.

7. The Committee welcomed the LGWSETA’s comments that it had substantially addressed its governance problems. The Committee feels that the report given by the LGWSETA is much better than in previous years, but finds it difficult to really assess the outcomes of the LGWSETA’s work. The Committee would like to see a better alignment between the LGWSETA’s priorities and outcomes and the government’s priorities on job-creation and fighting poverty as it applies to the local government sphere. The Committee stresses the importance of the role of CDWs. The Committee has requested the LGWSETA to provide it with a list of the municipalities which have failed to provide WSPs. If any of these municipalities fall within the constituencies of members of the Committee, members will over the July constituency period approach these municipalities to encourage them to complete their WSPs.

8. The LGWSETA will be invited to the capacity-building and training workshop to be held later this year where matters will be pursued further. Should time permit and the need arise, the Committee will also arrange to meet the LGWSETA separately later this year.


M. Municipal Demarcation Board

    1. The Municipal Demarcation Board budget allocation has increased by 19% from R14 311 000 in the past financial year to R17 023 000 in this financial year. The Board argued that the allocated amount is inadequate to cover the costs of fulfilling the Board’s legislated mandate properly. On the ward delimitation process alone a shortfall of more than R5 000 000 is estimated, after a grant of R2 000 000 from the Norwegian government is taken into account.

2. A new Board was appointed with effect from 1 February 2004. The Board’s main activities over the past year have centred around boundary re-determinations; preparations for the ward delimitation process in 2004/5; the identification of non-viable municipalities; the adjustment of provincial boundaries to dispose of cross-boundary municipalities; a categorization study for possible future metropolitan areas; a study on district management areas; and assessments of the capacity of municipalities to perform their powers and functions.

3. The main focus of the Board in this financial year will revolve around preparations for the next local government elections. The Board is to review all ward boundaries. It also receives a significant number of requests to review municipal boundaries, and also corrects boundaries technically on an ongoing basis. The Board intends to complete the review of all ward boundaries by March/April 2005 so that the Independent Electoral Commission has adequate time to prepare for the elections. Depending on funds, the Board will, during this financial year, also continue work on municipal boundaries; annual capacity assessments of municipalities; a study on poor performing municipalities in terms of their powers and functions; the identification of non-viable municipalities for possible redemarcation; a study on future metros; a study on the performance by municipalities of the roads and transport functions; and the future of District Management Areas.

4. The Board raised the need for amendments to legislation and the Constitution affecting cross-boundary municipalities and other legislation affecting the Board’s work to be passed as soon as possible.

5. The Committee congratulated the members of the new Board, particularly its chairperson, Dr V Mlokoti, and wished them well. The Committee welcomed the Board’s work on non-viable municipalities, and referred to the Committee’s views on this expressed in various reports. The Committee will raise with the Minister and Department deadlines around the introduction of legislation relating to cross-boundary municipalities.

6. The Committee acknowledges that the Board has much work to do regarding the next local government elections, and feels that its case for increased funding is credible. The Board is requesting a minimum additional allocation of R5 553 000. The Committee, unfortunately, does not have the technical resources to undertake an effective audit of the Board’s case – but it seems a reasonable case. The Committee has, certainly, constantly observed that the Board has run a very tight ship, and used its limited resources in a very productive and effective way. Of course, it may be true that at times in the past some of the work undertaken by the Board had, strictly speaking, not been firmly within its mandate – but the work has been useful nevertheless. In view of the nature of the Board’s work this year, it does not seem reasonable to expect the Board to make up the shortfall in funds completely from donors. Government should at least ensure that sufficient funds are allocated to the Board so that it can comply with its legal obligations. Given the Board’s very effective use of its resources and its responsibilities to prepare for the next local government elections, the Committee feels the Board’s case for increased funding should be seriously considered. The Board indicated that the Department was considering allocating some funding, if possible. The Committee requests the Department to give sympathetic consideration to this. The Committee also believes that further representations should be made by the Board and the Department to the Treasury for increased funding for the Board, provided the Board presents a fully convincing case for this. The adjustment appropriation processes could cater for this.


N. Municipal Infrastructure Investment Unit (MIIU)

    1. The MIIU’s allocation has increased by 6% from

last year to R10 600 000. In addition to the R10 000 000 that the MIIU received in the last financial year from the national fiscus, the unit raised R1 400 000 from USAID, R3 500 000 from Cities Alliance and R2 540 000 from DFID.

2. The MIIU reported that a considerable part of the time of its limited staff was spent on meeting the requirements of the Public Finance Management Act (PFMA). The compliance costs made up about 20% of its operational budget. While it recognized the importance of the PFMA, the MIIU was not sure that it was fair to expect a small organization like it to meet the onerous requirements of the PFMA in the way that other larger public organizations are required to.

3. During the past financial year the MIIU’s work contributed to at least a further R1,8 billion being invested in or lent by the private sector to municipalities. In all, MIIU has contributed to about R7,5 billion in capital and skills being raised since its formation in 1998. The MIIU completed 9 projects during the last financial year. The MIIU has undertaken a further 12 projects on solid waste disposal, sanitation and water. The MIIU explained that previously most of its projects were on solid waste but now its focus is on water and sanitation and non-core services. The MIIU explained that many projects were held up at the feasibility stage because of the rigorous standards that had to be met. The MIIU had also done work on electricity ring-fencing and the restructuring of the electricity that it would like to share with the Committee at some stage.

    1. The MIIU raised concerns about the capacity of municipalities to meet the requirements of section 78 of the Municipal Systems Act when deciding on restructuring municipal services.
    2. The MIIU pointed out that its term comes to an end in March 2006, and that there is no clarity about whether it would continue to exist after that. The MIIU also suggested that there needs to be greater clarity on the role of the private sector in the context of the present focus of government on public sector investment and delivery.
    3. Among the issues the MIIU would focus on in this financial year are removing constraints to more projects being launched; recording MIIU’s institutional memory and project documentation; completing staff development processes and undertaking monitoring and community surveys on selected completed projects.
    4. The Committee complimented MIIU on the quality of its report. The Committee expressed its appreciation for the work done by the MIIU. The Committee is clear that the private sector has a crucial role to play in municipal service delivery within the regulatory framework; and that the more active role of the public sector is meant to stimulate private sector involvement, and not be a substitute for it. The Committee believes that the Ministry and Department should clarify the role of MIIU beyond 2006 reasonably soon.
    5. The Committee expresses its regret that the CEO, Ms Karen Mathebula is to be leaving MIIU.
    6. In view of the limitations of time, the Committee was not able to pursue several key issues with the MIIU, and is to seek a meeting with the MIIU within the next six months.


O. Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities

1. The Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities was established in December 2003, with 18 commissioners. It spent 17,5% of its R9 140 000 budget. The Commission and the Department are requesting National Treasury to allow the unspent R6 700 000 to be carried over to be used partly to cover the cost of the National Consultative Conference to be organized by the Commission in late November this year. R9 703 000 has been allocated to the Commission for this financial year.

2. Only the Chairperson of the Commission is full-time currently. The Minister is to phase in the appointment of three other commissioners as full-time.

3. The Commission has met with the Human Rights Commission and other "Chapter 9" institutions to discuss co-operation among them.

4. The Commission has begun a process of recognizing and defining community councils. It has undertaken road shows to five provinces in which it organized mini-conferences. These visits were also used to mobilize interest in the National Consultative Conference.

5. The main focus of the Commission this financial year is to consolidate itself; organize a successful National Consultative Conference; advance its work on Community Councils; explore the possibilities of launching a cultural dictionary; and identify a role for itself in responding to the challenges of managing cultural diversity in schools, among other issues.

6. In response to questions from members of the Committee, representatives of the Commission clarified that they had visited Israel on the invitation of the South African embassy there, and not the Israeli government. They also visited Palestine. In fact, they were invited to share experiences of the South African nation-building process as a way of encouraging dialogue between Israelis and Palestinians.

7. The Committee congratulated the Commission on its establishment and wished it well. The Committee explained that it sees the Commission as serving a very important role in creating greater understanding across the divides in South Africa and in contributing to the nation-building process. The Committee feels that it is vital that the Commission co-operate effectively with the Human Rights Commission and other "Chapter 9" institutions with which its work overlaps. It is vital too that the Committee fulfills its role effectively, as there is increasing concern within parliament and among the public about the value of some of the "Chapter 9" institutions and whether all of them are necessary anymore. The Committee will arrange to meet with the Commission before its National Consultative Conference to discuss issues further with it.



  1. With the major part of the Committee’s legislative programme over, we will have more time to fulfil our oversight responsibilities over the new five-year term of parliament. We need to engage with the Department and statutory bodies more often. But we also need to do so more effectively. We need to find ways to do this.
  2. To fulfil our oversight role effectively, we need to receive further training, especially in respect of budgetary issues. The Committee needs to explore the possibilities of an ongoing education and training programme for members.
  3. The Committee cannot effectively fulfil its oversight responsibilities without adequate research support. The Committee is often unable to properly assess the outcomes that are claimed by various participants in budget hearings. It would also be of value if we could commission independent research on the activities and achievements of organisations for which our Committee has oversight responsibility.
  4. To facilitate more effective engagement with organisations for which our Committee has responsibility, it would be helpful if budget hearings were better structured to ensure the emergence of more precise and concrete information and a better sense of the outcomes the organisations have achieved. Ideally, organisations should be more clearly briefed before the budget hearings on what precisely the Committee is seeking to establish. But to do this effectively, the Committee will need adequate research support.
  5. The Committee will raise these and other issues around its oversight role with the Budget Committee and the relevant authorities in parliament.
  6. While recognising the constraints of the Department, the Committee feels the Department should seek to monitor the work of the statutory bodies more effectively and support them where appropriate, without undermining their independence.
  7. The Committee will seek to meet the Department in August to get a better sense of the Department’s broad programme for this new five-year term and to engage with it over our oversight role.



  1. The Committee conveys its appreciation to the Ministry, Department and all the statutory bodies that participated in the hearings for their co-operation.
  2. The Committee also acknowledges the assistance of Mr Chris Sibanyoni and Mr Asanda Macanda in the preparation of this report, and Mr Llewellyn Brown, the Committee Secretary, in the organisation of the hearings.