PRESENTATION TO SELECT COMMITTEE ON FINANCE ______________________________ 20 NOVEMBER 2008

1. PRESENTATION TO SELECT COMMITTEE ON FINANCE ______________________________ 20 NOVEMBER 2008

2. CONTENTS • Introduction • Budget performance • Revenue collection • Performance of conditional grants • Intergovernmental relations • Alignment of IDP and PGDP • Compliance with MFMA • Service delivery • Other key projects • Assistance to the Poor Scheme • 11. Capacity constraints • 12. Credit rating outcome • 13. Conclusion

3. 1. INTRODUCTION • Population - 1,1 million • Households - 289 000 • Area covered - 1950 km² • Capital Budget - R1.9 billion • Operating Budget - R5.2 billion

4. 2. BUDGET PERFORMANCE

5. 2. BUDGET PERFORMANCE (continued)

6. 2. BUDGET PERFORMANCE (continued)

7. 2. BUDGET PERFORMANCE (continued)

8. 2. BUDGET PERFORMANCE (continued)

9. 2. BUDGET PERFORMANCE (continued)

10. 2. BUDGET PERFORMANCE (continued)

11. 2. BUDGET PERFORMANCE (continued)

12. 2. BUDGET PERFORMANCE (continued)

13. 3. REVENUE COLLECTION • Accurate account database. • Improved monitoring and maintenance of meters. • All Assistance to the Poor households on prepaid meters. • Improved Customer Care. • Prepaid holders in arrears - % of their purchases offset against arrears. • Continuous monitoring of water leaks.

14. 4. PERFORMANCE OF CONDITIONAL GRANTS

15. 4. PERFORMANCE OF CONDITIONAL GRANTS (continued) • Reasons for over-/underexpenditure • Financial Management Grant – increased spending due to training courses attended and improvement of financial systems, covered by the underspending of the grant in the previous financial year. • Municipal Infrastructure Grant – Additional allocation received for flood relief (R57 m). On track with spending in 2008/09. • Restructuring Grant – has been fully utilised. Grant ceased end of 2007/08. • MSIG – Expenditure for 2007/08 financial year relates to grant received in the 2006/07 financial year. Assist in implementing E Learning, Attorney and Query Management systems.

16. 4. PERFORMANCE OF CONDITIONAL GRANTS (continued) • World Cup Soccer (Stadium) – Funds received in the 2006/07 financial year, utilised in 2007/08. • World Cup Soccer (Transportation) – Delay in the awarding of certain contracts as a result of redesign. Five contracts have now been awarded (G Mbeki, Kempston, Harrower, Heugh, New Brighton and Fettes/Theale Roads) and construction is in progress. • Motherwell Urban Renewal Programme – Underspending due to unresolved land ownership issues for the Xhosa Village, land to be acquired for Motherwell Golf Course.

17. 4. PERFORMANCE OF CONDITIONAL GRANTS (continued) • ACHIEVEMENTS • Financial Management Grant – Employed five interns, who are being rotated in all • sub-directorates within Budget and Treasury. • Municipal Infrastructure Grant – Bulk Sewer and Water services installed, • water reticulation and sidewalks, all in previously disadvantaged areas. • Restructuring Grant – assisted in implementing the General • Valuation, new Billing System, fixed asset register. • MSIG – Interface with the new billing system, e.g. E Learning and • Attorney Management system. • Motherwell Urban Renewal Programme – Upliftment of previously • disadvantaged areas by providing essential services.

18. 5. INTERGOVERNMENTAL RELATIONS • The Municipality participates in intergovernmental relations structures, such as:  Premier’s Co-ordinating Forum  Technical Support Group  Munimecs (close liaison between municipal directorates and their counterparts)  Departmental Forums • Sector departments participate in the IDP process. • Further interaction is also taking place in the following areas: •  2010 FIFA World Cup • − Provincial Co-ordinating Committee • − Stadium costs • − Transportation infrastructure • − Operational hosting funding • Work with DBSA, especially with regard to MURP Project Management. • Possible external funding from DBSA will be pursued.

19. 5. INTERGOVERNMENTAL RELATIONS (continued) • Intergovernmental relations challenges:  Unfunded mandates • − Libraries • − Health • − Provincial roads • − Housing delivery and lack of multi-year housing budget allocation •  Delay in processing of EIA’s. •  Delay in receipt of DWAF invoices for bulk water purchases. •  Payment of outstanding service charges (Government debt) • (current amount due: R53 million). •  Electricity tariff increase by ESKOM and threats to investment.

20. 6. ALIGNMENT OF IDP AND PGDP The IDP and PGDP are aligned in terms of key performance and focus areas, as reflected below:

21. 7. COMPLIANCE WITH MFMA • The Council complies fully with the 14 key MFMA priorities set by National Treasury. • The Council’s Supply Chain Management Policy was adopted in October 2005. • The following Bid Committees are in place: •  Specifications Committee •  Evaluation Committee •  Adjudication Committee • Annual Financial Statements were submitted by 31 August 2008. • Audit Steering Committee is in place and operational. • The Municipality has a functional Internal Audit Division. • Audit fees to the Auditor-General are paid fully and timeously.

22. 7. COMPLIANCE WITH MFMA (continued) • Audit qualifications reduced from 17 in 2005/06 to 1 in 2006/07. • 2007/08 Audit complete and awaiting Auditor-General’s report • (no basis for qualification has been identified as yet). • Annual reports and the Council’s Oversight reports that comply with legislation • are produced annually. • Positive feedback was received from National Treasury regarding the Municipality's • oversight and annual reports for 2006/07 financial year. • Cluster System was adopted by Council to ensure integrated and • co-ordinated service delivery. • Quarterly financial and non-financial performance reports are • produced through SDBIPs. • Budget Performance Reports are submitted quarterly to the • Council’s Budget Performance Monitoring Forum.

23. 7. COMPLIANCE WITH MFMA (continued) • Integrated IDP/Budget Process Plan is annually developed and implemented, taking into account stakeholder involvement and timelines. • Section 71 reports are submitted timeously. • Budget and Treasury Directorate structured as per the MFMA. • Performance agreements are in place for the Municipal Manager and other Section 57 employees. • Annual risk audits were performed and risk registers developed in line with annual audit plan.

24. 8. SERVICE DELIVERY Total number of households in the Metro – 289 000 households • Electricity provision  Three renewable energy projects are under implementation.  The Municipality is working with Coega to find other alternative sources of energy.

25. 8. SERVICE DELIVERY (continued) • Water and sanitation provision  93% of households have access to a basic level of water.  100% of households in the Metro will have access to water within a 200 m radius through the installation of standpipes in informal areas. - On target to meet December 2008 deadline.  91% of households have access to basic level of sanitation. • Alternative sanitation methods are under investigation for use in the informal settlements, to meet the 2010 target. • December 2007 target met for the eradication of buckets in the formal areas. • 100% of formal households have access to sanitation, except in two areas, namely - Kuyga and Kleinskool, where contractors abandoned sites. - Kuyga: Contractor on site due for completion in April 2009. - Kleinskool: To commence in January 2009 due for completion in October 2009. • Currently, 15 000 buckets are still in circulation in informal settlements as a means of sanitation (will be addressed in conjunction with housing delivery programme).

26. 8. SERVICE DELIVERY (continued) • Refuse removal  Approx. 99% of residents have access to a basic level of refuse removal.  Illegal dumping remains a challenge. • Ward-based cleaning programme has been introduced in 24 wards and will be expanded to cover 30 wards during the current financial year.  8 Co-operatives are also assisting in litter-picking and street sweeping. • Educational programmes are being implemented, as well as identified official dumping sites.

27. 8. SERVICE DELIVERY (continued) • Roads  Road maintenance backlog (subsidised roads)

28. 8. SERVICE DELIVERY (continued) • Roads(continued)  Roads maintenance backlog (unsubsidised roads)

29. 8. SERVICE DELIVERY (continued) • Roads(continued) Progress with regard to roads during first quarter of 2008/09 financial year are as follows:

30. 9. OTHER KEY PROJECTS • Upgrading of various sports facilities: • The Municipality has set aside R120 million over a three-year period to provide and upgrade the following sports facilities: • New facilities: - New multipurpose centre, Despatch - R4,5 million - 2 informal sports fields, Despatch – R5 million (2009/10) - Versatile sports ground, KwaNobuhle – R4,5 million - Multipurpose Sports Facility, Northern Areas – R3,5 million - Develop new multi-purpose centre, Northern Areas – R4,5 million - Develop new multi-purpose centre, Missionvale Area – R4 million - New multi-purpose centre, Wells Estate – R4,2 million - New swimming pool, KwaNobuhle – R3,5 million

31. 9. OTHER KEY PROJECTS (continued) • Upgrading of facilities: - Jubilee Sports Field – R3 million - Finnis Street Sports Field – R2 million - Gelvandale Playing Fields – R50 000 - Kleinskool Sports Field – R2 million - Gelvandale Swimming Pool enclosure – R2,5 million - Gelvandale Stadium – R3 million - Reinstatement of Zwide Swimming Pool – R300 000 - Zwide Stadium – R1,5 million - Veeplaas, upgrading of changerooms and concrete seating – R2 million - KwaDwesi, new changerooms, soccer and cricket fields – R2,5 million

32. 9. OTHER KEY PROJECTS (continued) • Inner-city regeneration and urban renewal. • Establishment of municipal Police Service and exploring funding models. • The Municipality is on course to meet all 2010 FIFA World Cup requirements. • In addition to the stadium, the Municipality is currently implementing other major related projects focusing on roads and transport. • Bulk Services to support the Coega IDZ.

33. 10. ASSISTANCE TO THE POOR SCHEME • The Council adopted an Assistance to the Poor Policy. • An Outreach Programme focusing on the unregistered indigent took place • from April 2008 to August 2008: • − 10 000 new customers registered for the Assistance to the Poor • Scheme • Total ATTP: currently 106 682 out of a total of 289 000 households • ATTP Scheme currently provides the following: • − Free 8 kl water (monthly) • − Free 75 kwh electricity (monthly) • Total budget for Assistance to the Poor Scheme – R365 million • 81 unemployed people were trained as plumbers and are repairing • water leaks in indigent households throughout the Metro.

34. 11. CAPACITY CONSTRAINTS • FINANCIAL  Unfunded mandates; e.g. provision of health services, roads, libraries and housing.  Funds to provide for Coega Bulk Services (Water & Sanitation).  FIFA 2010 World Cup Budget [capital and operations].  Sustain the Capital Replacement Reserve [CRR]. • HUMAN RESOURCES  Technical skills shortage (especially civil and electrical engineers).  Balancing staffing requirements with personnel expenditure target. • SERVICE DELIVERY Lack of adequate funding for maintenance backlogs.  Secure and sufficient energy requirements for both domestic users and investors.  Cost of electricity.  Lack of external contractor capacity.  EIA delays in project approvals.

35. 12. CREDIT RATING OUTCOME • Aa3.za – Long-term issue rating with stable outlook. • Issued for both 2007 and 2008. • Rating based on Municipality’s strong financial performance, good liquidity • and cash management. • Multi-year budgeting clearly reflects goals for next three years.

36. 13. CONCLUSION • Issues that require assistance from Government: • Government debt to municipalities. • Unfunded mandates. • Zero rating on agency fees. • Hosting Costs for World Cup. • Exemption on import duties for World Cup related goods. • Housing delivery allocation to be gazetted timeously and on a multi-year basis. • Consideration of funding the tarring of gravel roads from housing subsidy programme.

37. THANK YOU