PROGRESS ON SUMMIT PROGRAM OF ACTION

1
GPG (DLG GT)

• PROGRESS ON SUMMIT PROGRAM OF ACTION
• 24 OCTOBER 2008
• STANDING COMMITTEE ON FINANCE CAPETOWN

2
Contents

• GPG Partnership and Summit Background
• Gauteng Municipal Finance Summit was steered on
  five key focus areas
• Revenue Collection, Management and Finance
  Mobilization
• Governance of Municipal Finance
• Building Capacity to Manage Municipal Finances
• Financial Reporting
• Budgeting and Planning Municipal Finances

3
GPG Partnership and Summit Background

• Structured MOU and managed by TWT with
  representatives from both Departments
• Process leading up to the Gauteng Municipal
  Finance Summit
• Both Departments undertook extensive reviews and
  research within the Municipal Governance
  Finance discipline
• Both Papers yielded outcomes which required
  engagement with Municipalities
• This eventually culminated in the Pre - Summit
  held with CFO which laid the basis for the
  Municipal Finance later in July where a number of
  Resolutions were taken and consolidated into a
  Program of Action
• As collective it was also agreed that every 2
  Years we as a collective will review
  implementation of the POA
• This presentation is progress on the
  implementation of the POA

4
REVENUE COLLECTION, MANAGEMENT AND FINANCE
MOBILISATION.

• Gauteng Government introduced an initiative to
  assist all Gauteng Municipalities with Revenue
  Management through a partnership with PSU
  International FNB. Our support and assistance
  focused on
• Debt reduction
• Improved Billing integrity
• Improved Revenue collection and
• Monitoring of consumption efficiencies.
• Project closing Exit strategy to be aligned
  with Credit Control Policy framework
• AloeCap was appointed as an advisor to the
  Gauteng Province to undertake a feasibility study
  to accelerate the collection of municipal
  debtors. The primary focus areas of the
  feasibility study includes the following
• Integrity of the metering information, Account
  preparation process
• Financial system, Human Resource Capacity and
  Legal considerations.
• The outcome of the Due Diligence study will be
  presented to Municipalities where munis could
  explore the option of taking the outcomes of the
  feasibility study to the open market.

5
REVENUE COLLECTION, MANAGEMENT AND FINANCE
MOBILISATION..

• Finance mobilization
• GPG engaged the services of a consortium
  consisting of an advisory team with extensive
  experience in Municipal finance and the Bond
  Market
• Primary focus was to assess the viability of
  Munics to access the municipal bond market ,
  either jointly or individually.
• The following recommendations emanated from the
  municipal review
• Current market conditions are not favorable for a
  municipal bond issue, whether individual or joint
  
• Whether a single bond or a joint bond is
  considered, given the limited Municipal Treasury
  experience in respect of the capital market and
  how it works will have to be addressed.
• It was very unlikely that there will be any
  pricing advantage in the short term obtained by
  issuing bonds, compared to loans whether from
  DBSA or commercial banks.
• However Metros were encouraged to access the
  Bond market as it would appear that some munis
  are reaching their prudential limits in terms of
  lending.

6
GOVERNANCE OF MUNICPAL FINANCES

• Audit Committees and Internal Audit
• MFMA regulates the establishment of Audit
  Committees and Internal Audit.
• Availability of credible annual risk based plan -
  alignment to risk assessment
• A partnership has been developed by GPG with the
  Institute of Internal Auditors to play a
  strategic role towards strengthening the
  functioning and focus of the Internal Audit
  Function.
• Municipal Public Accounts Committees
• Hosted training initiatives for MPAC members in
  partnership with the Auditor General, National
  Accountant General and the Provincial SCOPA .
• The purpose of the workshops were to build a
  combined understanding of the Governance issues
  around the Audit and Oversight Process.

7
GOVERNANCE OF MUNICIPAL FINANCES.

• Engagement with the Office of the AG
• Facilitated ongoing engagements with between the
  GPG , Auditor General, Accountant General and
  Municipalities.
• Addressed issues pertaining to the audit process
  as well as challenges faced by both the AG and
  the municipality around the process.
• General Treasury Governance issues
• Regular representation to the Provincial Standing
  Committees on Finance LG and NCOP
• Quarterly Publication on the financial
  performance of Municipalities and tabled in the
  Provincial legislature every 30 days after the
  end of each quarter
• The establishment of Municipal Compliance
  Section will further strengthen the monitoring
  of compliance by all municipalities.
• CFO Forum remains a key platform towards the
  discussion and implementation of the resolutions
  of the finance summit and but also the larger
  deliverables around the MFMA Reform agenda.

8
Budgeting and Planning of Municipal Finances

• Acknowledge that the IDP is the principle
  strategic planning instrument for all of
  government in a Municipal Space
• IDP TSC was introduced to create awareness and
  shared understanding of needs, trends and
  potential as well as development trajectories
  within Municipal localities in the Province
• TSC will be further underpinned by TWGs who sole
  mandate it will be to see project implementation
  in line with the 2008/2009 IDP priority projects.
• TWGs work will be structured according to LG Key
  Performance Areas and will be constituted thus
• TWG 1 Service Delivery, Infrastructure and
  Spatial Planning
• TWG 2 Local Economic Development and Financial
  Viability
• TWG 3 Institutional Transformation and
  Governance
• Hence the aforementioned is indicative of our
  commitment to strengthen the alignment between
  Province and municipalities but more so to drive
  implementation and contribution towards service
  delivery.
• National Treasury will hopefully shortly make a
  pronouncement in terms Regulation around the
  Municipal Budget process.

9
Building Capacity to Manage Municipal Finances

• Gauteng Municipal Finance Intern Grant
• With effect from 1 July 2008 GPG augmented the
  current National Treasury initiative with this
  introduction of this grant initially introduced
  for 11 municipalities
• This grant is for the appointment of one
  financial intern with the intent to grow the
  applied skills base in terms of Municipal
  Finance.
• Gauteng Municipal Support and in partnership with
  DBSA provide technical support through
• Deployment of Civil Engineers (SAICE) The
  purpose is to accelerate Municipal Infrastructure
  development Capital spending and focus
  Project Manage MIG projects in munis
• Deployment of suitably qualified Accountants
  (SAICA) The purpose is to assist and advice
  municipalities in terms of financial management
  practices and help deal with AFS issues , deal
  with AG queries and enhance the munis ability to
  obtain an unqualified Audit Opinion
• Trough SAICA introduced Local Government
  Certificate (AAT)
• to address skills gaps in the lower level areas
  of the Finance area.

10
Financial Reporting

• Gauteng Municipal Information Portal (One Stop
  Data Warehouse)
• GPG has started talks on the establishment of an
  information portal hosting LG finance and
  non-finance data for all Gauteng Municipalities.
• Based on National Treasuries Survey on reporting
  requirements for municipalities
• Currently in talks with SITA towards entering a
  partnership in the development of this
  Information Portal and running a pilot test.
• We are grateful and blessed to have a good
• support from Provincial Salga in terms of
• support on issues of Municipal Government.

11
THANK YOU!!!