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Financial Reporting and Oversight Since 2010 most SACN member cities have improved the quality of their financial management and reporting and, since 2011, have had improved audit findings: seven of the nine cities achieved unqualified audits in 2014 (Table 7.1). Table 7.1: Summary of audit outcomes (2010–2015) 2010 2011 2012 2013 2014 2015 Johannesburg Qualified Qualified Qualified Unqualified Unqualified Unqualified Cape Town Unqualified Unqualified Unqualified Unqualified Unqualified Unqualified eThekwini Unqualified Unqualified Unqualified Unqualified Unqualified Unqualified Tshwane Qualified Unqualified Unqualified Unqualified Unqualified Unqualified Ekurhuleni Unqualified Unqualified Unqualified Unqualified Unqualified Unqualified Nelson Mandela Bay Unqualified Adverse Qualified Qualified Qualified Qualified Mangaung Disclaimed Disclaimed Outstanding Qualified Unqualified Unqualified Buffalo City Qualified Adverse Qualified Qualified Qualified Qualified Msunduzi Qualified Unqualified Unqualified Unqualified Unqualified Unqualified Source: SACN (2015) The Public Expenditure and Financial Accountability (PEFA) 1 sub-national study of three Gauteng metropolitan municipalities found that the municipalities are demonstrating relatively sound financial management practices in relation to international good practice. Reforms continue at national and local levels that seek to improve further municipal financial management. Some cities have established municipal audit committees to strengthen internal audit processes. Payroll and procurement are two large expenditure areas where controls can be improved. 1 The most comprehensive framework to assess the quality of budget systems and institutions is the Public Expenditure and Financial Accountability (PEFA) Performance Measurement Framework for public financial management (PFM). This framework has 31 indicators, and measures institutional arrangements at all stages of the budget cycle. It also addresses cross-cutting dimensions, budget credibility and donor practices. The framework was designed to provide a benchmark for donors and governments to measure PFM performance and track progress over time. (https://www.pefa.org/en/content/pefa-framework) 240 State of South African Cities Report 2016
In 2013/14, unauthorised, irregular as well as fruitless and wasteful expenditure combined accounted for only 6% of metropolitan municipal expenditure, 2 demonstrating that the metros seem to be performing relatively well (with the larger metros performing notably better). Across local government, the Auditor-General has noted that management responses to audit reports are not yet systematic and timely within all metros (AGSA, 2013; 2014). National Treasury has issued 75 circulars to provide guidance on how to improve compliance with the Local Government: Municipal Finance Management Act (No. 56 of 2003) (MFMA) and the application of good practice in municipal finance management. On 15 June 2007, the Municipal Regulations on Minimum Competency Levels were issued, requiring officials who are responsible for financial management to have higher education qualifications, work-related experience, and managerial, financial management and supply chain management (SCM) skills. All municipalities and their municipal entities were given fiveand-a-half years to implement these requirements (i.e. by 1 January 2013). The aim was to ensure that the responsible officials have the necessary skills to manage municipal finances in accordance with the provisions of the MFMA and the regulations governing local government finances, including the relevant reporting standards. This deadline was subsequently shifted to 1 January 2015. For the first time, in March 2015, disciplinary procedures were instigated against 36 senior municipal managers who did not have the required academic qualifications for their jobs. 3 None of the SACN member cities, except for Nelson Mandela Bay (whose municipal manager was dismissed) were implicated. In addition to providing clear guidelines on the competency standards, National Treasury has made training material available for use by training providers. Accredited training programmes are offered by approximately 78 tertiary training institutions, including universities, further education and training (FET) colleges and private training institutions. Each municipality or municipal entity carries the cost of training and the time-off given to officials to achieve the required competence, which has placed a noticeable burden on the cities. Reports on the value of the training are mixed. Some experienced senior officials without formal qualifications have found the training a waste of time, and many have started but not completed various modules. Less-experienced officials and officials, who would like to build careers in local government, are more positive about what they have gained from the training. 4 The MFMA regulates financial reporting and oversight, and the key external stakeholders are depicted in Figure 7.1. 7 2 A response from the finance minister on 20 February 2015 to a question raised in the National Assembly. http://www.treasury.gov.za/ publications/other/MinAnsw/2015/Reply%20to%20PQ%20366%20[NW394E].pdf 3 Rand Daily Mail, ‘Thirty six “unqualified” government officials fired’, 10 March 2015. http://www.rdm.co.za/politics/2015/03/10/36- unqualified-government-officials-fired 4 Various informal interviews with municipal officials in 2014 and 2015. Finance and Innovation 241
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State of south african cities Repor
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The cities covered in the SoCR Limp
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FOREWORD by the Chairperson of the
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Buffalo city ekurhuleni ethekwini J
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Overview: State of South African Ci
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CH3 PRODUCTIVE CITIES Spatial trans
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INTRODUCTION Our cities: status quo
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State of Cities Reporting Over the
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Figure 1.2 shows the projected grow
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The consequence of this rapid urban
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LEARNING ACROSS BRICS: from city-re
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Addressing these challenges require
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TRANSFORMING OUR WORLD: THE 2030 AG
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Key issues for South African cities
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! ! ! ! ! ! ! ! ! ! ! ! Cities and
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Figure 1.8: Population change total
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Figure 1.10 shows that, while popul
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Significant densification through b
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Increased densities and demand have
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Global networks versus domestic res
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Informed by five years of research
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Key Messages 1 2 3 4 5 Spatial tran
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In cities, economic and social ineq
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Undesirable current spatial configu
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neighbouring municipalities are not
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! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !
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Built environment investments not s
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The cost of fragmentation In additi
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associated land uses benefit all, n
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Local government is best placed to
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Competing land interests need to be
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PRE-1994 building POLICY 1994-2003
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The 2011 State of South African Cit
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The most recent National Household
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Figure 2.6: Alternate transport-urb
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SPATIAL TRANSFORMATION: Tracking tr
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Spatial transformation needs respon
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What is Required to Transform South
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Transformation of management and ca
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PRODUCTIVE CITIES Spatial transform
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Introduction South Africa is headin
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Congestion and pressure on resource
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transportation networks. Land-use p
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strategies in separate silos, with
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The Economic Role and Performance o
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• Johannesburg is South Africa’
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Nevertheless, recent economic fores
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• In the last five years, Tshwane
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Figure 3.7 shows the average labour
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Over the last 10 years, at a sector
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There is a marked correlation betwe
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Figure 3.13: Estimated city share o
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Figure 3.15: City gross fixed-capit
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development role set out in the 199
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Table 3.3: Key economic development
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• eThekwini has an active economi
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Both types of township are low-inco
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Informal economy and self-employmen
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South Africa’s Expanded Public Wo
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PRODUCTIVE CITIES 123 3
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Key Messages 1 2 3 4 5 6 Cities sti
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Andile’s story This is based on a
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of that ward participate in making
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Cape Town metro Mangaung Mamre Pell
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These service delivery gains have c
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YOUTH STUDY: Youth potential and vu
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However, when the NWAC is superimpo
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Tshwane, Figure 4.7: Johannesburg C
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As mentioned, urban integration is
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Table 4.2: Change in lowest income
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Ethekwini metro Northdale Hambanath
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Urban safety South Africa’s citie
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City’s unemployment rate is about
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Collective violence 7 Two main dime
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Towards More Inclusive Cities Citiz
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Furthermore, citizen education and
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South Africa requires a spatial pol
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SUSTAINABLE CITIES Leveraging the t
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Introduction Since 1994, the govern
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will need to have low-emissions gro
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Most of South Africa’s energy con
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Figure 5.3: Average baseline energy
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• Tshwane initiated its A Re Yeng
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WASTE: legislation, policies and pl
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500 0 400 200 0 2011 2013 2015 2017
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facility (i.e. waste is sorted manu
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Figure 5.10: Depiction of in- and o
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As Figure 5.12 shows, Cape Town and
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Accelerating the transition to sust
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disadvantaged groups, through facil
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Accelerating the transition to food
Page 189 and 190: Biodiversity South Africa is the th
Page 191 and 192: Open spaces Ecological and social o
Page 193 and 194: in the city and in their homes then
Page 195 and 196: Emissions reduction to mitigate cli
Page 197 and 198: Principles of a Sustainable City Ur
Page 199: Recommendations Develop and embed a
Page 202 and 203: Key Messages 1 2 3 4 5 Cities have
Page 204 and 205: informal political and social cultu
Page 206 and 207: Section 51 of the Municipal Systems
Page 208 and 209: While these dynamics are critical a
Page 210 and 211: Blurred intergovernmental responsib
Page 212 and 213: Access to information As many ward
Page 214 and 215: Figure 6.5: Turnout for national an
Page 216 and 217: COMMUNITY-BASED PLANNING: Strengthe
Page 218 and 219: The right people are not necessaril
Page 220 and 221: Local government will require new k
Page 222 and 223: All the cities have performance man
Page 224 and 225: Unethical behaviour is one of the r
Page 226 and 227: Figure 6.9: Municipal audit consist
Page 228 and 229: Service Delivery and Development As
Page 230 and 231: Still playing catch-up on basic ser
Page 232 and 233: knew anything about the city’s ID
Page 234 and 235: The established routines need to ch
Page 237 and 238: FINANCE and INNOVATION Sustainable
Page 239: Introduction With total expenditure
Page 243 and 244: Figure 7.2: Nelson Mandela Bay Muni
Page 245 and 246: The challenge is that the interface
Page 247 and 248: Phase 3: City autonomy and accounta
Page 249 and 250: National Treasury uses Uniform Fina
Page 251 and 252: As Figures 7.5 and 7.6 show, Johann
Page 253 and 254: In the case of property development
Page 255 and 256: distribution. Johannesburg’s capi
Page 257 and 258: • Despite this, the overwhelming
Page 259 and 260: Effectiveness of spending and servi
Page 261 and 262: cities have low capital expenditure
Page 263 and 264: An encouraging development is that
Page 265 and 266: 3. Political interventions • Some
Page 267 and 268: Smart city strategies Smart city st
Page 269 and 270: encourage non-compliance. If priced
Page 271 and 272: • Municipalities could rightfully
Page 273 and 274: Recommendations If spatial transfor
Page 275: Finance and Innovation 275 7
Page 278 and 279: Key Messages 1 2 3 4 5 A Call to Ac
Page 280 and 281: 1. The Spatial Transformation chapt
Page 282 and 283: Statements of intent in the SOCR St
Page 284 and 285: WARWICK TRIANGLE: A fragile public-
Page 286 and 287: Arguably, the primary constraint pr
Page 288 and 289: Figure 8.1: The quadruple helix - t
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• Completing the National Framewo
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development agency) that took place
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MILE’s strategic objectives are:
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Public participation should be the
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The implementation of CBP through t
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According to Cloete (2015) a partne
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The chapters in this State of Citie
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Overall Recommendations Urban space
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Ensuring city transformation throug
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Roadmap to the city dashboards All
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Buffalo City @refinedrevolt
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CITY FINANCE economy Municipal reve
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Overview of flagship programme The
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Reflections While the development o
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People and Households Size of city
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Design Capital Introduction Cities
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Manenberg Contact centre Source: P.
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City of Ekurhuleni @moography
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100% 80% 60% 40% 20% 0% CITY FINANC
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Overview of flagship programme Situ
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the corporate structure and governa
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Go!Durban Introduction Integrated p
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Go!Durban will include new railways
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City of JOHANNESBURG @jayjay_gregor
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100% 80% 60% 40% 20% 0% CITY FINANC
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Overview of flagship programme The
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However, the success of the Corrido
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Naval Hill Introduction Heritage is
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In December 2012, the redevelopment
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Msunduzi @natesvw
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100% 80% 60% 40% 20% CITY FINANCE e
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important tourist sites, there have
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In addition, the PURP includes the
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Safety and Peace through Urban Upgr
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A number of other projects have tak
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City of Tshwane @drae_savvides
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100% 80% 60% 40% 20% 0% CITY FINANC
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Wi-Fi is a significant enabler that
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The coverage map below shows the pl
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Introduction A key part of the deve
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These indicators were evaluated on
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SCODA is a partnership between citi
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Indicator PRODUCTIVE CITIES Definit
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Indicator SUSTAINABLE CITIES Defini
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2016 State of Cities Report Spatial
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Acronyms ACSA Airports Company Sout
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FIGURES Figure 1.1 State of South A
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. . . Figure 6.7 Percentage of seni
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References for Chapter 1 AfDB (Afri
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FFC (Financial Fiscal Commission).
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Cameron B. 2009. Integrated Rapid P
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References for Chapter 4 Balbo M. a
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Venter C and Cross C. 2014. Access
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DPME (Department of Planning and Mo
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National Treasury. 2006. Local Gove
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Tel: + 27 11 407 6471 • Fax: + 27
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