The Budgetary Review and Recommendation Report of the Portfolio Committee on Co-operative Governance and Traditional Affairs, dated 2 November 2011.


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 2010/11 and the first two quarters of 2011/12, reports as follows:



1. Introduction


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

Department of Cooperative 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 Cooperative 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 the mandate of the Department of Co-operative Governance and Traditional Affairs,


  • 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 Departments’ 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 Plans of the Department


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


  • 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 supporting 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

·         Facilitate the alignment of provincial growth and development strategies and integrated development plans with the medium-term strategic framework and the national plan by reviewing and implementing the framework for integrated development planning before 31 March 2011;

·         Improve vertical and horizontal co-ordination and alignment by reviewing the Intergovernmental Relations Framework Act (2005) and other related legislation, interventions and oversight support programmes by 31 March 2011;

·         Reform the regulatory and support mechanism for municipal councils and ward Committees by developing funding mechanism for municipal councils and ward Committees by 31 March 2011;

·         Develop legislation in relation to Provincial intervention in Local Government by 31 March 2011;

·         Commence legislative reform on the municipal systems and structures in consideration and response to lessons learned by 31 March 2011; and

·         Strengthen the capacity of municipalities by supporting them in the development and implementation of municipal specific turnaround strategies.

Strategic Priority 2: Strengthen Accountability and Clean Government.

Measurable objectives:

·         Clean cities and clean towns programme conceptualized, popularized; co-ordinated across municipal areas and implementation supported by target date;

·         Total number of Municipalities receiving support on financial management by March 2011;

·         Improved governance by supporting all provincial government Departments  and municipalities through development   and implementation of anti-corruption  policies and programmes  by March 2011;


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

 Measurable objectives:

·         Strengthen the capacity of municipalities by supporting them in the development and implementation of municipal specific turnaround strategies by March 2011; and

·         Total number of Districts supported with the intergovernmental relations capacity-building programme (total 46 districts) by March 2011.


Strategic Priority 4: Fostering Development Partnerships, Social Cohesion and community mobilisation.

 Measurable objectives:

·         Improve vertical and horizontal co-ordination and alignment by reviewing the Intergovernmental Relations Framework  Act (2005) and other related legislation, interventions, and oversight support programmes by March 2011;

·         Maximise the communication efforts on all Departmental programmes and initiatives by conducting communications and marketing campaigns; and

·        Improve Regional and International relations by fostering Development partnerships and co-ordinating donor relations by March 2011.

Strategic Priority 5: To Strengthen the capacity and capability of the Department to deliver on its mandate

Measurable objectives:

·        Provide a comprehensive legal services support to the Department and key stakeholders in order to maintain and improve on Compliance and Due Diligence by 31 March 2011;

·        Improve and manage the COGTA Strategic Management and Governance processes in order to enhance organisational capacity and capability in relation to ICT, Human Resource Management and Development, by 31 March 2011; and

·        Improve the Department’s implementation capacity and information management systems by introducing information and business technologies by 31 March 2011.


3. Analysis of Section 32 Expenditure Reports

The Department is undergoing changes to suitably address structural and systemic challenges in local government. The Department had only five programmes in the year just ended and, due to the reorganisation, there are currently seven programmes, which means that there are many budget shifts in relation to programmes. The two additional programmes, albeit the functions are not new, are Provincial and Municipal Government Systems, on one hand, and Infrastructure and Economic Development, on the other.




Nominal Rand change

Real Rand change

Nominal % change

Real % change

R million













-  6.5



Policy, Research and Knowledge Management





-  2.2

-  4.3



Governance and Intergovernmental Relations

 30 666.4

 34 213.9

 37 684.1

 40 077.5

 3 547.5

 1 980.5



Disaster Response Management









Provincial and Municipal Government Systems





-  2.9

-  14.3



Infrastructure and Economic

 10 217.5

 12 307.9

 14 986.2

 15 804.9

 2 090.4

 1 526.7



Traditional Affairs



















 41 748.5

 47 933.7

 53 842.8

 57 120.9

 6 185.2

 3 989.8






The total allocation of the Department is R48 billion in the 2011/12 financial year, which represents a 9.56% increase from the R41.7 billion in the year just ended.


There are three programmes that take up a larger share of the budget. Governance and Intergovernmental Relations, which has R34.2 billion and which represents a 6.4% real increase from the previous year. The Disaster Response Management programme also got substantial increase from R293 million to R821 million in the current year. And finally, the Infrastructure and Economic Development receives R12.3 billion, which increases to R15.8 billion by 2013/14. The Municipal Infrastructure Grant allocation for 2010/11 is R9.5 billion, and increases to R14.7 billion in 2013/14. The targets for 2013/14 are: basic water: R2 million; sanitation: R1.2 million; roads: R1.7 million; community lighting: R768 150.


Over the medium term, expenditure is expected to increase to R57.1 billion in 2013/14, at an average annual rate of 11%. The substantial increase is due to additional allocations for disaster relief of R1.8 billion and R1.2 billion for the equitable share over the MTEF period, the transfer of the infrastructure component of the Siyenza Manje function from National Treasury, the community works programme and inflation-related adjustments.


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.






The performance of this programme on numerous indicators is uneven with many objectives partially achieved or not achieved at all. With respect to achievements, the monitoring and evaluation as well as IT Systems frameworks have been developed.


This programme has a variance of R7 million, most of which is derived from the Policy, Methods and Research Sub-programme.





Most of the work regarding developing discussion documents or legislation has been achieved; however, many of targets regarding fiscal relations are still outstanding, because some aspects are the responsibility of National Treasury.  These include improving the quality of financial statements and supply chain management regulations.


Of critical importance is the area of anti-corruption. The work of the Anti-corruption Inspectorate requires training of local officials and elected representatives, but this was put on hold to allow PALAMA to review the accredited course on anti-corruption and ethical conduct.




This programme is critically important in ensuring sustainable local economic development through implementation of LED strategies in municipalities, as well as intensifying the establishment of and support for co-operatives. This programme is also responsible for the implementation of Community Works Programme (CWP). However, substantive work on LED and co-operatives remains a challenge. Ward-based co-operatives have not been realised, due to a lack of financial and human resources. Regeneration of corridor towns in KZN, EC, LM and Mpumalanga have not been realised as well.


An important part of the mandate of this programme is the establishment of the Special Purpose Vehicle (SPV) or Infrastructure Development Agency, which will intensify the infrastructure roll-out programme to build new infrastructure, and rehabilitate and maintain existing infrastructure. The completion of the establishment and operationalisation of the SPV has not yet been done, and it is unclear when this will be concluded. The SPV is critical to the intensification of the provision of universal access to basic services such as water, sanitation and electricity. The bulk infrastructure will contribute to the effective, efficient and economic provision of Free Basic Services in municipalities, in accordance with credible Indigent Registers.


Presently, there is steady progress towards the achievement of objectives of provision of universal access to basic services such as water (1.6 million households), sanitation (936 379 households), roads (1 113 636) and electricity (554 977) as at December 2010.  These achievements are critically important for the attainment of the Millennium Development Goals (MDGs) by 2014. However, there is lack of monitoring and accurate reporting with regards to progress in provision of Free Basic Services to indigent households.




This programme deals with municipal performance monitoring and support in order to improve the service delivery capability. There is greater emphasis on legislative review and regulatory framework to enhance municipal performance. However, in the period under review, whilst some regulations have been concluded, others have not been completed, due to capacity constraints viz. councillor remuneration regulations and amendments of the Municipal Structures Act. An assessment report of all legislation that underpins service delivery has been finalized. Further, a progress report on the implementation of the Local Government Turn-Around Strategy has been developed. Provinces and municipalities have been assisted with implementation of the Municipal Performance Regulations. Municipal support towards improvement of the performance management system has been conducted through training and workshops.


Performance monitoring, by implication, requires the compilation of a report to discern patterns; however the Department has failed to undertake this task, due to capacity constraints.


In terms of capacity building in municipalities, the Department has failed to develop a recruitment and retention strategy. Further, the Department has failed to develop the institutional framework for the Public School for Local Government, as well as developing a framework for professionalization of Local Government.




With respect to Disaster Management, the Department has achieved the pre-determined objective or indicator of building 30 disaster management centres. However, the capacity for disaster risk reduction is inadequate, and models for indicative risk profile are incomplete in the period under review.  Further, reaction to foreseen natural disaster viz. the recent floods that affected Eastern Cape, Free State, Gauteng, KZN and Northern Cape early in 2011 indicate that the inadequacy of  response and recovery measures. This was evident in the affected municipalities during the oversight by the Portfolio Committee.


In terms of the actual budget allocation and expenditure, the programme has a variance of R6.7 million.





On governance matters, the Audit Committee concludes 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 a contravention of the supply chain management according to the PFMA and Treasury Regulations.


An amount of R336 000, paid as interest in legal fees, is recorded as wasteful and fruitless expenditure. This is so because, had the Department paid legal fees on time, there would be no interest 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 assistance 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 covered a wide range of areas, most of which are embedded in local government, including building of small, micro and medium enterprises (SMMEs), local tourism, infrastructure and agriculture, to mention a few. The general thrust of the speech was on the imperative of job creation which remains an intractable challenge, due to a myriad of structural challenges the country faces. Local government plays an integral role in all these areas, as a locale of service delivery. Therefore the integration and co-ordination of government systems and implementation strategies in all spheres become ever more important.


The speech, with respect to local government, remains focused on the service delivery challenges of municipalities, but, more importantly, on the structural and systemic challenges that were highlighted in the State of Local Government Report adopted in 2009. The President was still firm on priorities of local government highlighted in his address in February 2010. These areas remain critical strategic areas to ensure a well-functioning system of local government, in line with the five priorities of government. These strategic priority areas are as follows:


·         Job creation and SMME development;

·         Continued implementation of the Local Government Turn-Around Strategy (LGTAS) to ensure correct management; administrative and technical skills, and customer care;

·         Provision of basic services, such as housing, water, sanitation, electricity, waste management and roads;

·         Informal settlements upgrade;

·         Eradication of corruption and fraud in procurement and tender processes; and

·         Disaster management.


The President noted with concern that, in some cases, the people’s experience of local government has not been a pleasant one. Further, the President expressed concern that the frustrations in some areas resulted in protests, which indicated the problems that existed in the local sphere of government. It must be stressed that the country was engulfed in flames for the most part of 2009, due to ‘service delivery’ protests. However, in certain areas, there has been a resurgence of these challenges in 2011.  




The maturity of the system of local government a decade after the inception of democratic municipal governance is a critical imperative for the country to achieve its commitment to citizens for better services, as well as defeating poverty in the medium term. The country’s growth, development and stability depends 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 co-ordination 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 multifacetedness of the mandate of local government is the task of provision of basic services such as water, electricity, sanitation, infrastructure 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.


There are numerous salient issues which have been highlighted in the past to ensure better and efficacious allocation of resources, and the elimination of duplication and disparities in remuneration. These matters concern the policy review of the provincial sphere, as well as the two-tier system of local government. In the 2010 State of the Nation Address the President alluded to the formation of a single Public Service, which would ensure that the financial years used by municipalities are brought in line with the two other spheres of government.


The following section provides a detailed account of the afore-mentioned priorities that emerge from the State of the Nation with regards to local government.  


Job Creation


The overarching theme of the Address was on creating employment for the millions of unemployed people in South Africa. There is an array of initiatives that the President highlighted in order to break the back of the structural unemployment confronting the country. The President highlighted six priority areas, namely infrastructure development, agriculture, mining and beneficiation, manufacturing, the green economy, and tourism.  Needless, to say, these priority areas will have an impact on municipalities’ revenue-generation capacity, but, more importantly, the Local Economic Development potential will be vastly improved by the successful implementation of development projects and investments in these priority areas.


The President, based on the understanding that job creation is everyone’s business, stated that “all government Departments will align their programmes with the job creation imperative. The provincial and local government spheres have also been requested to do the same.” Government Departments must develop their targets and specifically the Department of Co-operative Governance and Traditional Affairs needs to prioritise this imperative. The Department of Co-operative Governance manages the Community Works programme, which ought to employ many community workers. Municipalities must also, as matter of course, implement radical programmes to increase local employment.


The government continues to provide financial and non-financial support to small, medium and micro enterprises, small-scale agriculture, as well as co-operatives. The President noted that the campaign to pay SMMEs on time, within 30 days, is proceeding well. It is also important to note that the President emphasised the role and contribution of tourism to the economic growth of the country and this has a bearing on municipalities as well. 


Continued Implementation of the Local Government Turn-Around Strategy (LGTAS)


Cabinet approved the Local Government Turn-Around Strategy in December 2009 to improve local government performance and service delivery through the application of correct management and administration, and development of technical skills. The adoption of the LGTAS followed a process of assessment of municipalities which found that local government was in a state of distress and was confronted by a litany of problems ranging from governance, financial matters, and lack of skills to service delivery problems. The assessments were conducted between April and August 2009 and were actually designed to ascertain the root causes of the current state of distress in many of the country’s municipalities, in order to inform a National Turn-Around Strategy for Local Government. Between the years 2004 and 2008, there were 106 ‘service delivery protests’ throughout South Africa. However, in 2009 alone, there were 101 ‘service delivery protests’, in particular in Mpumalanga, Gauteng, North West and Free State. These protests have continued in 2010, and, in the current year, there has been a flare-up of protests in parts of Mpumalanga, particularly in Secunda and Ermelo. A decisive intervention and a determined effort are critical to ensure that the system of government as a whole works effectively and that all the gaps and anomalies in municipal governance are closed and eradicated.


The cornerstones of the LGTAS revolve around several key pillars:

·         Tightening the municipal supply chain management mechanisms.

·         Establishing a single window of co-ordination to curb overregulation of municipalities, as identified in the Inaugural IGR report.

·         Implementing Special Purpose Vehicles for infrastructure development, particularly in struggling municipalities.

·         Refining the model of ward Committees to give effect to participatory democracy in communities.

·         Establishing a single election at all three levels of government in order to save resources and build unity in line with the Single Public Service, as well as the financial terms of municipalities. 


Importantly, the LGTAS is not a ‘one-size-fits-all’ mechanism but provides an overarching guide by means of which municipalities are going to be assisted to develop a tailor-made Municipal Turn-Around Strategy to effectively discharge their responsibility in conditions of political stability, administrative efficiency and financial viability. There is emerging consensus that the co-ordination of government programmes is extremely important, as municipalities play a pivotal role in implementation. The planning instrument of municipalities, known as the Integrated Development Plan (IDP), is a critical tool which must be in accord with local priorities and integrate government developmental plans.  The IDP must incorporate a Water Services Plan, a Health Services Plan, Transport Development Plans and other spatial development considerations which demonstrate the multi-sectoral nature of local government functions.


Local government, by design, plays a fundamental role in the co-ordination of government services, as a sphere that is tasked with Integrated Development Planning encompassing a wide range of sectors. Experience indicates that the upper spheres of government do not take the IDP process seriously, and they show this either by not attending related meetings or by sending junior officials who cannot make commitments. The IGR forums that are a statutory obligation, do not regularly meet in order to ensure that concrete plans and budgets in line with predetermined objectives of the IDP are implemented, monitored and evaluated. There is a tendency by upper spheres of ‘dumping’ projects or fiscal dumping in municipalities without proper co-ordination, which in turn require services from municipalities without having budgeted for such service provision. For instance, national Departments do not indicate their intentions during the IDP process and, halfway through the year, come to municipalities and indicate that they wish to build housing units which require services which the municipality has not budgeted for.  This is not ideal; but, notwithstanding, it is not desirable for the municipality to reject projects from national or provincial government which are in the interests of community service delivery.


In terms of the Constitution, the upper spheres of government also have a responsibility to supervise, assist and intervene in struggling municipalities where evidence suggests that this component has been weak. Some of the municipalities that are engulfed in chaos currently, such as Thaba Chweu, are Project Consolidate municipalities, and the Provincial administration has already implemented interventions in terms of Section 139 of the Constitution. But post-intervention measures have proved insufficient, because service delivery problems persist.


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 MDG areas relevant to this sector include electricity reticulation, water sanitation services and waste removal, which are functions of Local Government in line with Schedule 4 Part B of the Constitution, 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.


In the State of the Nation Address the President maintained the historic commitment of Government to improve the quality of life and dignity of ordinary people by ensuring adequate access to basic services. In this regard, the President stated 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 function of provision of sanitation has been transferred to the Department of Human Settlements, as it is more appropriate there.


According to the recent statistics from the Department of Co-operative Governance progress on national access to basic services is as follows:


Water: 93%

Sanitation: 70%

Electricity: 82%

Refuse: 69%


These figures reflect provision of basic services according to RDP standards and not necessarily Free Basic Services statistics. Further, these figures do not seem to be verifiable, as has been the case previously. It is also critical to stress that these figures do not reflect the state of MDG delivery in informal settlements.


Upgrading Informal Settlements


The challenges of in-migration are resulting in expansion and/or proliferation of informal settlements in the urban fringes of many metropolitan areas. These informal settlements conform to the apartheid spatial logic of segregation on the basis of race, distance and time with regards to employment opportunities. The historical rural/urban divide has compelled many economically active rural dwellers to seek employment in the cities, usually locating themselves in the urban periphery, in areas which are deprived of services. The informal settlements and townships follow the distorted racially-based apartheid spatial framework, as they are located on the urban fringe and residents live in conditions that are often not fit for human settlement. Upgrading informal settlements is informed by the desire to break away from the apartheid culture of neglect in order to restore the dignity of the people.


In the 2011 State of the Nation Address the President asserts that “the construction industry is a known driver for work opportunities”. There are 1.2 million households living in the country’s 2 700 informal settlements. He further made a categorical commitment that, by the year 2014, 400 000, the 1.2 million households in informal settlements should have security of tenure and access to basic services. The 2010 ANC NEC lekgotla also noted with concern the issue of urban sprawl and, without providing details, made an undertaking to seek to discourage this situation. Processes of urbanisation and migration have pointed to the need to give greater attention to the acquisition of suitable land for the appropriate transformation of informal settlements and the need for better co-operation between national, provincial and local government. Steps must be taken to discourage the emergence of new informal settlements.


Eradication of Corruption and Fraud in Procurement and Tender Processes


The main issue that seems to be crippling service delivery, particularly in local government, is corruption, fraud and tender irregularities. To curb this scourge, the government is committed to implement Local Government Anti-Corruption Strategy. This Strategy has been rolled out to all municipalities. A particular focus must be on reviewing the Municipal Finance Management Act and the relevant regulations. Decisive and bold action must be taken against anyone found to be looting state and public resources. To give impetus to the fight against corruption and nepotism, the ANC NEC lekgotla has asserted that procurement and supply chain management processes must be strengthened to eradicate the scourge. As a result of this commitment, the Department of Co-operative Governance has tabled amendments to the Local Government: Municipal Systems Amendment Bill (B22 – 2010) which will prohibit re-employment in the local government service of municipal employees found guilty of fraud and corruption.


It is important to recognise that the fight against corruption has intensified, and there are several cases that have been prosecuted, ranging from the embezzlement of municipal funds, to tender irregularities and lack of compliance to supply chain management policy. There is a case in King Sabatha Dalindyebo which is currently in court in Mthatha in which six officials have allegedly defrauded the municipality of R2.3 million. The arrests by the Hawks follow an intense investigation by auditing firm PricewaterhouseCoopers. Some 38 municipalities around the country are being investigated by the Special Investigations Unit for fraud and corruption. The North West topped the list, with all of its 25 municipalities being investigated, followed by six in the Eastern Cape, five in Mpumalanga and two in Gauteng.


Disaster Management


The threats of climate change to South Africa are well documented and the recent extreme weather conditions are making the effects of climate change a reality. In the recent past the country experienced severe weather conditions. In some provinces there were severe floods and in other parts severe droughts, due to changing weather patterns. All nine provinces were affected in one way or the other. As a result 28 municipalities in seven provinces were declared disaster areas.


It must be noted that there were warnings issued in October last year, but it appears that these calls were not heeded by the relevant authorities. Consequently, there was damage to infrastructure and loss of human life. There are still some worrying projections which need thorough mitigation strategies to protect human life and property.


The government, as announced by the President, has set aside R800 million for immediate relief to assist communities. Further, the government is earmarking funding for post-disaster recovery and reconstruction. Municipal property, such as bridges, has been swept away by the floods. School buildings and people’s houses have also been severely affected. This funding will be welcome relief for the communities.  


·         Reports of the Auditor-General of South Africa


The Department received a qualified audit opinion from the Auditor-General for 20010/11 financial year.


The basis for the qualified opinion 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 irregular expenditure of R419 586 000 as stated in the financial statements.


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 Cooperative 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 for.


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 in order 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, twenty-two 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 provide 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.  Conclusions




Time frame

In the Committee’s BRRR recommendations of 2010, reference was made to the review of the funding model on equitable share. The Committee observed that on  Strategic priority 1, the  deadline for the developing of a funding mechanism for municipal councils by 31 March 2011, has been missed

The Department, SALGA, and National Treasury should relook the funding formula to take into account equitable share for smaller/rural municipality. The Department must revisit this objective and fast track the implementation thereof.

May 2012

Strategic priority 2: Support on financial management to Municipalities – the Department, as the driver of the Clean Audit programme, is not exemplary 

The Department should focus on obtaining a clean audit for the next financial year, so as to lead Municipalities by example towards achieving clean audits.


31 March 2012

 The Committee observed that some progress has been made on the implementation of the LGTAS however the impact on sevice delivery around strategy is not evident on local level

The Department must further capacitate municipalities to implement Municipal Turn-Around Strategies to improve service delivery.

On going basis

The Committee observed that the Department had established an Anti-Corruption inspectorate respond to the President’s call on fighting corruption. The Committee notes the Special Investigation Unit (SIU) investigations in various provinces.  

The Anti-Corruption Inspectorate should report on findings and progress made on a quarterly basis.

The Committee further recommends that all reports of investigation on fraud and corruption conducted in municipalities should be forwarded to the Committee by the Inspectorate.


On going basis

The Committee observed that of the 119 programme projects of the Department targeted and budgeted  for the financial  year, only 56 were achieved, 21 were partially achieved and 38 were not achieved at all.


The Committee recommends that the Department submit the list of incomplete or partly achieved projects, and the responsible officials, by the end of November 2011. The Committee further recommends that the Department provides them with an expenditure plan for projects for 2011/12 and submits monthly reports on the implementation thereof.


End of November 2011.

On the programme of Financial Governance and Management the Committee observed the following:

·         Irregular expenditure,

·         Fruitless and wasteful expenditure

·         that the Department does not have proper internal control measures,

·          non-compliance with supply chain management policies,

·         Non-compliance with legislation,

·         Non-compliance with Treasury regulations

The Department should establish  a fully functional  audit Committee;

Staff should be capacitated on supply chain management policies

The Department should implement stricter internal control measures and have measures in place for staff members that do not comply

Disciplinary action should be taken against officials that do not comply with supply chain management policies

With immediate effect.

The Committee acknowledges the progress made with regard to disaster management rehabilitation and notes that limited funding  and resources  delay progress.

The Committee recommends that the Department supply them with a plan of action on how this rehabilitation will materialize

End of November 2011

The Committee noted that the issue of Municipal Public Accounts Committees (MPACs) was emphasized at the SALGA conference

The Committee recommends that all municipalities should establish the MPAC which should be chaired  by either a member of the opposition or any councilor, except mayoral Committee members.

Before end of the financial year

Since the last BRRR recommendation that the Department brief the Committee on a monthly basis on progress with regard to LGTAS, the Committee noted that this did not materialize.

The Committee recommends that the Department report on progress on a quarterly basis

On a quarterly basis

It was noted that the legislation is in place to deal with  the issue of the hiring practice of potential employees at municipalities

SALGA and the Department of Cooperative Governance should organize workshops for all municipalities to educate and familiarize them with the amendments to the Local Government: Municipal Systems Act 2011.

End of November 2011

The Committee notes that a inter-departmental task team was set up to look at the recovery of municipal debt prior to 2008

The Committee recommends that this task team should report on progress on a quarterly basis

On a  quarterly basis

With regard to CWP, the Committee observed that there is no proper co-ordination, The Committee notes that the 2010 BRRR recommendations have not been implemented.

The Committee recommends that an expenditure plan be submitted to the Committee and further recommends that quarterly progress reports incl provincial reports be submitted to it.

On a quarterly basis

The Committee is aware that the President and the Minister signed and agreement on Outcome 9.

The Minister should brief the Committee on a quarterly basis on progress on Outcome 9,

On a quarterly basis

The Committee recommended, in the 2010 BRRR, that Eskom and Nersa  should engage SALGA on improving tariffs systems.

The tariff structure should be regulated before 1 July so as to be aligned with Municipal budgets.

Before July 2012


Report to be considered.