BUDGET REVIEW MUNICIPAL DEMARCATION BOARD SELECT COMMITTEE ON

BUDGET REVIEW: MUNICIPAL DEMARCATION BOARD SELECT COMMITTEE ON LOCAL GOVERNMENT AND ADMINISTRATION Vuyo Mlokoti – Chairperson Morongoa Letsoalo –Deputy Chairperson Hillary Monare - CEO Richard Somanje - CFO 08 May 2007

REPRESENTATION AND DOCUMENTS l l 2 From the Board: Ø Dr Vuyo Mlokoti – Chairperson: MDB; Ø Ms Morongoa Letsoalo – Deputy Chairperson: MDB; Ø Mr Hillary Monare – Chief Executive: MDB; Ø Mr Richard Somanje – Chief Financial Officer Document Tabled: Ø Draft Annual Report 2006 – 2007 Ø Strategic Plan 2007 - 2011

PAST BRIEFINGS IN 2006 l l Two Briefings – 14 March & 17 October 2006 At both briefings, the following issues were covered: Ø l l 3 We confirmed our written explanations to the Select and Portfolio Committees of concerns and reservations raised previously by members of this and the Portfolio Committee with respect to: - Expenditure on Professional Fees, Office Expenses, Staff Remuneration, Board Members Remuneration, Travel and Accomodation, Consultants; There had also been concerns raised about the Board possibly spending its money on things that are irrelevant in as far as its core mandate is concerned, and thus the financial difficulties it faced, which we explained. We also reported to the Select Committee on the Board’s mandate, and how we had performed in pusuit of that mandate in 2005/06. There was also a range of administrative and other financial issues that we addressed you on. In this regard, we submitted a report to the Portfolio Committee in March 2006 to substantiate under funding problems. Furthermore, we presented to you our medium term strategy for the period 2006/07 to 2009/10.

OVERVIEW: TODAY’S PRESENTATION 4 Overview on mandates and performance (Hillary Monare) In 2006/07 a number of Strategic Themes were identified around the board’s mandate, including: l re-determination of municipal and ward boundaries, l declaration and withdrawal of DMA declarations; l capacity assessments; l alignment of service delivery boundaries; l relationships with key stakeholders; l good governance and organisational capacity. Slides to follow will deal back to back with performance in 2006/2007, and the way forward 2007/8 -2010/11. Budget Review (Richard Somanje) l The Budget review will cover, amongst others, budget trends, income and expenditure, assets and other related financial matters.

Mandate: Determine and re-determine municipal boundaries, and delimit wards for local elections 2006/2007 l Changes to municipal boundaries on hold from 20 Feb 2004 to 2006 for ward delimitation and local elections on 1 March 2006 l March 2006 process resumed - 119 outstanding cases. l Some finalised/ some in process: some Provincial boundaries; some affects boundaries of traditional areas; some in section 26, 21 or 21(5) process. l A total of 80 DEMS (61 plus 19 cross boundary DEMS) as well as any new DEMS are to be finalised by mid 2008. 5

Mandate: Determine and re-determine municipal boundaries, and delimit wards for local elections (cont) 2007/8 – 2010/11 l Focus to shift to planning for the next national, provincial and local elections l Consultation with other stakeholders to commence and processes to start to ensure successful elections l Draft work plan to follow is based on the assumption that legislation will not change, and that National and provincial elections will be held in April 2009 and local elections will be held in March 2011 l Legislation not a mandate of Board but we can make contributions eg the criteria for ward delimitation or any other legislation affecting the Board etc 6

Mandate: Determine and re-determine municipal boundaries, and delimit wards for local elections (cont) Key performance area: Finalise as many changes as possible to outer boundaries of municipalities by May 2008 7 Dec 2007 Board approve last sec 26 notices. Jan 2008 Last section 26 notices published before the local elections in 2011 March 2008 Last section 21 notices published before the local elections

Mandate: Determine and re-determine municipal boundaries, and delimit wards for local elections (cont) Key performance area: Hand over of outer boundaries to IEC, and ensure that formula and the number of councillors are gazetted 8 April 2008 Closing date for sec 21 objections May 2008 Last section 21(5) notices published before the elections and IEC informed June 2008 IEC publishes all outstanding sec 23 notices July 2008 MECs publish all outstanding section 23 notices Aug 2008 Municipal boundaries provided to IEC Aug/Sept 2008 IEC align VD boundaries to municipal boundaries Sept/Oct/Nov 2008? Registration of voters for national and provincial elections Feb 2009? Certify national common voters roll and gazette it Feb 2009? Divide national common voters roll into municipal segments March 2009 Publish formula for the number of councillors (problem area) March 2009 MECs determine and publish number of councillors for each municipality (problem area)

Mandate: Determine and re-determine municipal boundaries, and delimit wards for local elections (cont) Key performance area: Ward delimitation and public consultation 9 Apr 2009? National and Provincial elections Apr 2009 Formal consultation between MDB and IEC as required by Structures Act Apr-Jun 2009 MDB prepares first set of draft ward boundaries Jul/Aug 2009 Public consultation process commences (circular/media ads) 31 Aug 2009 Closing date for public comments Sept/Oct 2009 Consider public comments and prepare map set 2 for public hearings Nov/Dec 2009 Maps and notices distributed and logistics finalised for public hearings Jan/Feb 2010 Public hearings March 2010 Finalise map set 3 and gazette ward maps in Provincial gazettes for objections

Mandate: Determine and re-determine municipal boundaries, and delimit wards for local elections (cont) Key performance area: Consider public objections and publish final ward boundaries 1 April 2010 Closing date for objections Apr/May 2010 Consider public objections Jun 2010 Final ward boundaries handed to IEC Jun/July 2010 Alignment of VD boundaries to ward boundaries Aug 2010 Gazette final ward boundaries Aug 2010 Election date gazetted Aug – 2010 10 Nov Registration of voters Nov 2010 – Feb 2011 Preparations for elections March 2011? Local elections

Concerns l l l 11 It appears that provinces and municipalities still lack interest in demarcation issues Towards the end of 2007 time for consultation will decrease drastically Late/urgent applications may adversely affect already tight timeframes New legislation (if any) may adversely affect timeframes and preparations for the elections Previous delays pertaining to formula and number of councillors may occur due to national and provincial elections.

Mandate: Declare District Management areas (DMAs) and withdraw declarations Legal provisions & history l DMAs are not a fourth category of municipalities l Structures Act: DMA to be established where it is not conducive to establish category B municipalities. l Original policy: Declare deserts and semi-arid areas and State protected and conservation areas as DMAs l Policy review: Only national parks/areas of international significance l Declaration of 6 DMAs withdrawn prior to local elctions l Effect of changes to provincial boundaries on DMAs eg Kruger Park – weight of councillors & performance of functions l Legislation does not provide for the declaration of DMAs in metropolitan areas. National Parks such as the Table Mountain National Park can therefore not be declared as a DMA as it falls within the area of a metropolitan municipality. 12

Mandate: Declare District Management areas (DMAs) and withdraw declarations (cont) 2006/07 l To determine the advisability to continue with a local government system comprising of 3 categories AND DMAs l The system has been cleaned up by removing cross-boundary municipalities l Shouldn’t the system also be cleaned up with respect to DMAs l Further review of declarations to be investigated l DMA Survey re performance of functions by DCs 2007/08 OPTIONS FOR INVESTIGATION l Retain the status quo. l Retain only national parks as DMAs l Clean up the local government system and withdraw all DMA declarations If at all possible project to be finalised before changes to outer boundaries close – meaning that draft doc for consultation should be ready by mid 2007 for consultation in the second half and the legal process early 2008. 13

Mandate: Alignment of service delivery boundaries, TA Boundaries and assessment of boundaries 14 Cabinet resolution 2002 Alignment Survey 2006/07 l Alignment Survey June 2006 l Intensive work with Justice and SAPS l Review of magisterial districts and SAPS boundaries as a result of changes to Provincial boundaries l Commenced with 2 projects: Creating a credible set of TA boundaries/Assessment of boundaries 2007/08 l Justice/SAPS project to be completed in Aug 2007/08 – 2010/11 l Assist other departments where necessary with alignment l Ongoing work on 2 projects

Mandate: Capacity Assessments Purpose of assessments l Advise to MEC to ensure equitable and sustainable service delivery Process l Data collection, verification, analyses & reports l Outsourced project but staff involved in data collection for internal capacity building 2006/2007 l 100% return of questionnaires from 46 DCs & 231 Local munics l 46 DC reports – Dec 2006 l 9 Provincial overview reports – Feb 2007 l 1 National overview report – March 2007 Recommendation l Recommend a special meeting with Portfolio Committee and Select Committee for a briefing on 2006/2007 findings on the capacity of district and local munics to perform their function. Data collection project l MDB Annual collection in Aug l Work with Treasury, Stats. SA and others on data collection from municipalities/standardisation of questions and reductions of questionnaires to municipalities. 15

Relationships with key stakeholders 2006/2007 Key stake holders involved in committee, task teams and projects l Joint Boundary/Powers and Functions Committee – All provinces, DPLG, IEC, SALGA, DWAF and other departments l TA boundary project – DPLG, DLA Provinces l Alignment project – All departments – focus on SAPS and Justice 2007/8 – 2010/11 l Projects, where necessary to continue, but focus will shift to projects related to elections and ongoing consultation with key stakeholders: Ø IEC Ø Minister/DPLG Ø MECs/Provincial officials Ø Municipalities Ø SALGA l Plans are also underway to launch the Board National Report on the 2006/07 Municipal Capacity Assessments, during the course of May 2007. l Invitations to the launch will be forthcoming soon, and we hereby ask for the Select Committee’s support in this regard. 16

MDB Organisational and Governance Issues 2006/2007 General improvement of internal matters such as: l Successfully implemented the following systems: Ø Integrated Payroll and HR Management system Ø Leave Control system linked to payroll Ø Balanced Scorecard Performance Management System Ø l l 17 Human Resources oversight statistics. Business Continuation Plan completed Various policies drafted or reviews and improved by the Board Recruitment and Selection carried out for the following positions: GIS Analyst; Senior GIS Officer; Financial Officer and Head : GIS/IT However, 34% positions still vacant due to funding problems

MDB Organisational and Governance Issues (Cont) 2007/8 l Interventions pertaining to allocation of a more reasonable budget, l Improve compliance with applicable financial laws and regulations l Revise Finance organisational structure l Implement the Business Continuity Plan to address all risks l Refine and enforce Policies and Procedures governing employment matters. l Refine Performance Management System (Balance Scorecard) l Improve on the training and development of staff (skills auditing and monitoring). l Finalise a suitable and generally acceptable way in which the staff remuneration structure ensures fair remuneration to staff. 18

BUDGET REVIEW 19 l This part of the presentation deals with historic figures and estimates for the future. l The audited financial statements for 2006/2007 will be included in the final 2006/2007 Annual Report to be submitted to Parliament later this year.

Financial Management: Objectives l l l l 20 Manage the preparation of annual operational and capital budget Develops an expenditure forecast on a monthly and quarterly basis Physical assets strategic plan Provides timely and accurate reports for strategic decision making Manage the preparation of monthly, quarterly and annual budget reports Manages expenditure in terms of budget and funding constraints Control expenditure versus the budget

OVERVIEW: EXPENDITURE TRENDS: 2001 - 2006 21

OVERVIEW: BUDGET SUBMITTED VS ACTUAL RECEIPTS: 1999 -2011 22

OVERVIEW: 1999 – 2013: BUDGET SUBMITTED vs RECEIVED 23

OVERVIEW: BUDGET TRENDS 2000 - 2010 24

EXPECTED OTHER INCOME 2007/8 25 2008/9 2009/10 2010/11 Sale of maps SA Explorer 60, 500 66, 550 73, 205 65, 880 5, 000 0 Interest received Total 99, 000 103, 950 114, 345 102, 910 164, 500 170, 500 187, 550 174, 190

CLUSTER BUDGET: MTEF R’ 000 2008/9 2009/10 2010/11 Finance 3, 648 4, 222 4, 885 5, 553 GIS 3, 269 5, 558 10, 097 6, 581 Research 6, 651 8, 198 21, 791 19, 295 Admin 3, 376 3, 880 4, 489 5, 190 Management 2, 163 2, 599 3, 007 3, 418 Members 1, 558 1, 767 2, 053 2, 327 20, 664 26, 224 46, 323 42, 365 Total 26 2007/8

CLUSTER CHART 27

2007/8 CLUSTER CHART 28

EXPENDITURE HIGHLIGHTS: 2007/8 – 1010/11 (SELECTED ITEMS) R’ 000 2008/9 2009/10 2010/11 Members 1, 312 1, 508 1, 755 2, 009 Ward GIS 0 1, 000 4, 300 500 4, 410 4, 836 5, 280 6, 425 Ward. Notice 0 0 9, 000 5, 000 PH Notice 0 0 5, 000 Rent 1, 084 1, 106 1, 226 1, 348 Salaries 7, 728 9, 611 11, 467 13, 065 Cap Ass 29 2007/8

ACQUISITION OF FIXED ASSETS 2007/8 Desktops Laptops Server Network upgrade Computer Software Printers/fax Total 30 2008/9 2009/10 2010/11 87, 500 131, 500 159, 500 130, 000 12, 500 100, 000 12, 500 25, 000 39, 500 208, 500 26, 500 87, 500 186, 000 242, 500

MAINTENANCE OF FIXED ASSETS 2007/8 2008/9 2009/1 2010/1 0 1 Hardw are mainta nce Total 31 10, 000 10, 000

RECEIPTS FOR THE YEAR 2006/07 MTEF Allocation (total allocation 16, 827) (R’ 000) Donor Funding 2, 673 Map & Explorer Sales 70 Disposal of Assets 18 Other Income TOTAL INCOME AT OUR DISPOSAL 2006/07 32 16, 827 145 19, 733

ESTIMATED EXPENDITURE FOR THE YEAR 2006/07 (Audit still to be done) Expenditure Item (R’ 000) Percentage of Total Income Administrative Expenses 4, 063 20. 6 Staff Costs 7, 627 38. 7 Audit Fees 1, 012 5. 1 Project Expenses 3, 995 20. 2 Payments from Donor Funding 2, 674 13. 6 496 2. 5 27 0. 1 662 3. 4 20, 556 104. 2 (823) -4. 2 Other operating expenses Finance Costs Depreciation and Amortisation TOTAL EXPENDITURE Surplus (deficit) for the year 33 Amount

BREAKDOWN OF EXPENDITURE: 2006/2007 ADMINISTRATIVE EXPENSES –Travel and Subsistence in respect of operating leases ØBuildings ØPlant, Machinery and Equipment 996 –Rentals -General and Administrative Expenses ØCleaning Services ØConferences ØCourier ØWater ØISP and Seminars Services & Electricity and hosting services ØPostage 34 921 64 Services 33 67 72 94 220 12

BREAKDOWN OF EXPENDITURE: 2006/2007 35 General and Administrative Expenses Internal audit fees Publications, Notices and gazettes Insurance 271 402 311 Printing and photocopying Stationery Subscription Telephone expenses, etc 57 75 70 265

Conclusion l l l 36 Taking into consideration our limited staff, budget and infrastructure we are satisfied with our achievements during the 2006/7 financial year. However, we are disappointed that no special research could be conducted during the past financial year due to financial constraints. All queries raised by our internal auditors and the Auditor-General have been resolved, or are in process of being resolved, and we expect a clean report for 2006/2007. Adequate funding remains a challenge that we have not been able to resolve. This not only adversely affected our statutory duties but also the filling of vacancies, and infrastructure. We trust that our detailed Strategic Plan and interim annual report will give members some insight in the activities of the Municipal Demarcation Board.

Thank you 37