Mr LJ Mahlangu - Municipal Demarcation Board

ANNUAL REPORT 

2011l12

• The Speaker National Assembly 

• The Chairperson National Council of Provinces 

• The Speakers Provincial Legislatures 

MUNICIPAL DEMARCATION BOARD 

ANNUAL REPORT 

1 APRIL 2011 / 31 MARCH 2012 

In terms of Section 39 of the Local Government: Municipal Demarcation Act, 1998 the Municipal Demarcation 

Board hereby submits its annual report on its activities during the above mentioned financial 

year as well as the audited financial statements. 

Yours sincerely 

MR LANDIWE J MAHLANGU 

CHAIRPERSON: MUNICIPAL DEMARCATION BOARD 

MUNICIPAL DEMARCATION BOARD - Annual Report 2012 i

ANNUAL REPORT: 

MUNICIPAL 

DEMARCATION BOARD 

To our Leadership 

The Municipal Demarcation Board 

It is my pleasure to present to you the Annual Report of the Municipal Demarcation Board (the Board/ 

MDB) for the financial year 1 April 2011 to 31 March 2012. 

I would like to record my appreciation to you, for the support you have given the entire Board staff in the 

year under review. We value your profound guidance and leadership and we once again pledge our 

support and commitment to you, in fulfilling the Board’s mandate to the best of our abilities. 

MR LEBINA D TSOTETSI 

ACTING CHIEF EXECUTIVE OFFICER: MUNICIPAL DEMARCATION BOARD 

ii MUNICIPAL DEMARCATION BOARD - Annual Report 2012

MESSAGE FROM THE 

CHAIRPERSON 

Mr L.J. Mahlangu 

Chairperson 

“ The Board’s vision is the full realisation of 

Constitutional and local democracy in South 

Africa characterized by functional and viable 

municipalities, spatially configured so that its 

boundaries and wards covers the whole territory 

of the Republic, including productive and inclusive 

metropolitan municipalities, sufficiently 

and optimally capacitated district and local municipalities 

which are supported by sound local 

government system. ” 

The raison d’être of the Municipal Demarcation 

Board (MDB) remains the transformation 

of spatial arrangements in South Africa 

by systematically undoing and reversing the 

apartheid geography, and the promotion of local 

democracy. In the past twelve years of its existence, 

the MDB has been able to achieve significant 

milestones in its historic mission, the first of 

which was the rationalisation and integration of 

racially divided and fragmented local government 

structures into the current system of local government, 

characterised by wall to wall municipalities. 

The establishment and delimiting of the first ward 

arrangement, based on the principle of electoral 

equality, marked the beginning of deepening democracy 

at the local level. The other significant 

achievement was the creation and subsequent 

dis-establishment of district management areas, 

and that ensured a much more consistent application 

of legislation across all categories of municipalities. 

The further categorisation of two additional 

secondary cities into category A (Metros) 

municipalities signified the recognition of the growing 

challenge and opportunity of urbanisation in 

South Africa. In terms of the current legislation, it 

is the metro’s that are best equipped to deal with 

urbanisation and growth at local level. The focus 

of the Board, will be much more on the refinement 

of these boundaries and the sustainability and viability 

of the current municipal structures. 

In the last quarter of 2011/2012 financial year MDB 

issued a circular, Circular 1/2012, which kick-started 

the outer boundary review process. The Circular 

1/2011 was followed by Circular 2/2011, where 

further elaboration and differentiation of redetermination 

was outlined. The possible outcomes of the 

boundary review process may be the re-alignment 

and adjustment of boundaries; consolidation of 

certain municipal areas, and mergers and amalgamation 

of two or more municipalities. This process 

may also result in the re-categorisation of certain 

municipalities. The MDB has received a number of 

proposals and submissions from a cross-section 

of stakeholders on all types of boundary changes. 

In line with the MDB’s commitment to maximise 

stakeholder involvement and participation, the 

MUNICIPAL DEMARCATION BOARD - Annual Report 2012 iii

MDB embarked on a programme of Municipal visits 

and to consult with the affected stakeholders in 

the third and last quarter of 2011/12 financial year. 

The Board has further enhanced the participation 

of stakeholder involvement by issuing Circular 

2/2012 wherein a further round of visits to Municipalities 

was undertaken. The Board also simplified 

the redetermination process by the differentiation 

and articulation of types of boundary redeterminations. 

This outer boundary process happens on 

the back of very successful local government elections 

that took place on May, 2012. 

The last financial year also saw the finalisation of 

the revised capacity assessment model, which will 

be released shortly. The revised model took longer 

than expected due to challenges some municipalities 

experienced in engaging with the new on-line 

questionnaire, an instrument of the model. It is my 

sincere belief that the benefits of the new capacity 

assessment Report will be profound, and will well 

justify the costs and delay. The 2011/12 financial 

year, also marked the finalisation of the new organisational 

design, which was part of an organisational 

development exercise. The new structure 

will provide a sound platform with much more 

strengthened managerial leadership, and capabilities 

in the Board. It will also improve staff morale 

and incentives for superior performance. 

The sustainability, stability and viability of municipalities 

are key considerations that inform the work 

and the determinations of the MDB. Similarly, at 

the ward level the Board will endeavour to ensure 

stable wards with minimal changes in their configurations 

to further enhance the social cohesion 

and social capital that has been generated at that 

level while further deepening local democracy. 

The maintenance of stability and consistency in 

the municipal territorial boundaries and warding 

arrangements will be further enhanced in view of 

the very important developments in the Board’s 

strategic and policy environment, some of which 

impact directly in the work of the Board. Two of 

such developments, at the policy level is the opening 

up of the discussion on the Two-Tier system 

of local government; as well as the proposal for a 

iv MUNICIPAL DEMARCATION BOARD - Annual Report 2012 

single election for all spheres and levels of government. 

The MDB will monitor and where possible 

engage actively in the policy dialogue, and provide 

advice where necessary. Perhaps the most important 

development which is of strategic significance 

to the Board is the publication of the National Planning 

Commission’s Development Plan and the 

completion of the National Census, by Statistics 

SA. The Planning Commission has developed a 

comprehensive vision and strategic plan for the 

country, which also includes spatial vision, and a 

requirement for a capable state. For the first time 

in the history of the country we have a vision and 

long term plan that can serve as a guide and reference 

point for all the development endeavours in 

the country, and as such, it should serve as an anchor 

to the Board’s decisions and determinations. 

Similarly the completion of national census will 

enhance the credibility to the demographics and 

other statistics particularly at the local level and 

even at much more granular level. 

The 2011/12 financial year marks the mid-term in 

the tenure of the current Board, having been appointed 

in 2 current terms ending in 2014. As we 

embarked on the second half of our tenure I wish 

to express my gratitude to all our stakeholders and 

principals, including the Portfolio Committee of 

Co-operative Governance and Traditional Affairs, 

the Minister and Acting Minister responsible for 

Co-operative Governance and Traditional Affairs 

during the year under review, for their guidance 

and support, fellow Board members and staff for 

their commitment to the course of spatial transformation. 

I thank you! 

Mr Landiwe J Mahlangu 

Chairperson

CONTENTS 

Foreword from the Chairperson ................................................................................................. iii 

Organisational Structure as at 31 March 2012 .......................................................................... 1 

Mandate, Vision, Mission & Values ............................................................................................ 2 

Board Members ........................................................................................................................ 3 

Composition of the Board ......................................................................................................... 4 

Staff........................................................................................................................................... 5 

Overview by the Accounting Officer ........................................................................................... 6 

Overviewbythe AccountingOfficer(continuation)....................................................................... 7 

Overviewbythe AccountingOfficer(continuation)....................................................................... 8 

Chapter 1: Operational Clusters at the Board ....................................................................... 9 

Cluster 1: Administration and Human Resources Management ................................................................. 10 

Cluster 2: Finance and Supply Chain Management ................................................................................... 12 

Cluster 3: Gis and IT Support ..................................................................................................................... 13 

Cluster 4: Research and Implementation ................................................................................................... 14 

Chapter 2: Performance Report ............................................................................................. 19 

Chapter 3: Summary of Financial Results ............................................................................. 31 

Chapter 4: Management Report ............................................................................................. 33 

Report Of The Audit and Risk Committee .................................................................................................. 42 

Chapter 5: Annual Financial Statements ............................................................................... 44 

Report of the Auditor-General .................................................................................................................... 45 

Statement of Financial Performance ......................................................................................................... 47 

Statement of Financial Position ................................................................................................................. 48 

Statement of Changes in Net Assets ......................................................................................................... 49 

Cash Flow Statement ................................................................................................................................ 50 

Accounting Policies ................................................................................................................................... 51 

Notes to the Annual Financial Statements ................................................................................................. 61 

Chapter 6: Human Resources Oversight Statistics ............................................................. 72 

Chapter 7: Strategic Direction ................................................................................................ 77 

1. Strategic Outcome Oriented Goals of the Institution............................................................................... 77 

2. Programme Performance: Programme Structure................................................................................. 78 

Programme 1: Operations and Research.................................................................................................. 79 

Programme 2: Financial Management and Accounting............................................................................. 84 

Programme 3: Corporate Services............................................................................................................. 87 

3. Financial Resource Capacity to give Effect to the Board’s Mandate...................................................... 94 

MUNICIPAL DEMARCATION BOARD - Annual Report 2012 v

SENIOR 

RESEARCHER: 

COMPLIANCE 

EXECUTIVE 

COMMITTEE 

(EXCO) 

HEAD: RESEARCH & 

IMPLEMENTATION 

RESEARCH OFFICER 

(VACANT) 

SENIOR 

RESEARCHER: 

BOUNDARIES 

AUDIT COMMITTEE 

IT SPECIALIST GIS ANALYST GIS ANALYST 

SENIOR GIS OFFICER SENIOR GIS OFFICER 

MEMBERS OF THE BOARD 

CHAIRPERSON: FULL TIME 

REMUNERATION AND 

HUMAN CAPITAL 

COMMITTEE 

MDB ADMINISTRATION 

(LED BY CHIEF EXECUTIVE OFFICER) 

BOUNDARIES, POWERS 

AND FUNCTIONS 

COMMITTEE 

HEAD: GIS/IT CHIEF FINANCE OFFICER HEAD: ADMIN & HR 

JUNIOR GIS OFFICER 

SENIOR FINANCE 

OFFICER: FINANCIAL 

MANAGEMENT 

1 MUNICIPAL DEMARCATION BOARD - Annual Report 2012 

SENIOR FINANCE 

OFFICER: FINANCIAL 

ACCOUNTING REPORTING 

PROCUREMENT 

OFFICER 

FINANCE OFFICER 

ADMIN ASSISTANT 

RECORDS/ 

ADMINISTRATIVE 

OFFICER 

HR ASSISTANT 

PERSONAL 

ASSISTANT 

AUXILLARY 

SERVICES OFFICER 

RECEPTIONIST

MANDATE 

The Board’s mandate derives from: 

The Constitution of the Republic of South Africa, 

1996 (Act No 108 of 1996) 

• The Board is mandated in terms of sections 

155(3)(b) to and 157(4)(a) to determine municipal 

boundaries, and to delimit wards independently. 

Local Government: Municipal Demarcation 

Act, 1998 (Act No 27 of 1998) 

• Section 3 provides that the Board is a juristic 

person, is independent and must be impartial 

and must perform its function without fear, favour 

or prejudice. 

• Section 4 provides that the Board must determine 

Municipal boundaries in accordance 

with this Act and other appropriate legislation 

enacted in terms of Chapter 7 of the Constitution, 

and must render an advisory service in 

respect of matters provided for in this act and 

other appropriate legislation. 

Local Government: Municipal Structures Act, 

1998 (Act 108 of 1998) 

• Delimit wards in compliance with Schedule 1 

to the Act. 

• In terms of section 85 the Board must consider 

the capacity of District and Local municipalities 

to perform their function and to exercise 

their powers, and provide advice to MEC’s responsible 

for Local Government. 

• Section 6 empowers the Board to declare District 

Management Areas. 

Cabinet resolutions 

• In 1998 Cabinet resolved that departmental 

service delivery boundaries must be aligned 

to constitutional boundaries (National, Provincial 

and Local) and should be finalised by 

departments in consultation with the Municipal 

Demarcation Board. 

VISION 

The Board’s vision is the full realisation of 

Constitutional and local democracy in South 

Africa characterized by functional and viable 

municipalities, spatially configured so 

that its boundaries and wards covers the 

whole territory of the Republic, including 

productive and inclusive metropolitan municipalities, 

sufficiently and optimally capacitated 

district and local municipalities which 

are supported by sound local government 

system. 

MISSION 

To perform its functions and to exercise its 

powers in such a manner as to empower 

municipalities to fulfil their constitutional 

obligations, primarily the provision of democratic 

and accountable local government, 

and effective, efficient and sustainable service 

delivery within sound boundaries. 

VALUES 

1. Accountability 

2. Dedication 

3. Effectiveness 

4. Impartiality 

5. Integrity 

6. Professionalism 

MUNICIPAL DEMARCATION BOARD - Annual Report 2012 2

Back, from left to right: Khosi TJ Ramovha, Mr A Adam, Ms L John, Ms G Castle, Prof N Streytler, Ms W Ovens and 

Mr LD Tsotetsi. 

Front, from left to right: Mr LJ Mahlangu (Chairperson) and Ms N Gwayi (Deputy Chairperson). 

3 MUNICIPAL DEMARCATION BOARD - Annual Report 2012

The Board assumed office on 20 February 2009, and will remain in office until 19 January 2014. Membership 

of the Municipal Demarcation Board is as follows: 

Mr Landiwe Mahlangu Chairperson: MDB (Full-Time); 

Chair: Executive Committee; 

Member: All Board Committees. 

Ms Nondumiso Gwayi Deputy Chairperson: MDB; 

Member: Executive Committee; 

Chairperson: Boundaries, Powers & Functions Committee. 

Prof Nico Steytler Member: Remuneration and Human Capital Committee. 

Khosi Tshililo Ramovha Member: Executive Committee; 

Member: Audit and Risk Committee; 

Chairperson: Remuneration and Human Capital Committee. 

Mr LD Tsotetsi Member: Audit and Risk Committee; 

Member: Remuneration and Human Capital Committee; 

Ms Grace Castle Member: Audit and Risk Committee; 

Member: Boundaries/Power & Functions Committee. 

Ms Wendy Ovens Member: Audit and Risk Committee; 

Member: Boundaries, Power & Functions Committee. 

Ms Lynelle John Member: Remuneration and Human Capital Committee; 


Mr Ashraf Adam Member: Audit Committee; 


One vacancy exists in the Board. 

The Chairperson of the Audit and Risk Committee is Mr Seth M Radebe, an outside person, and a practising 

Accountant and Auditor. 


27 

18 

17 

26 

1. Ms Gabusile Gumbi-Masilela 

(newly appointed CEO) 

2. Nalini Zoller 

3. Irene Mathatho 

4. Robert Willemse 

5. Fazel Hoosen 

6. Vanie Naidoo 

7. Ayanda Monkhe 

8. Matankiso Mahlangu 

9. Zeone Adams 

10. Liz Mazibuko 

11. Nongomso Jacobs 

12. Evans Molepo 

13. Bongiwe Baloyi 

14. Karl Konar 

10 

19 

9 

15. Nomsa Hlangawane 

16. Maureen Lepono 

17. Portia Mulaudzi 

18. Maggie Somanje 

19. Sipho Moloele 

20. Thabiso Plank 

21. Sinenhlanhla Sigwaza 

22. Godfrey Maluleka 

23. Jonathan Robson 

24. Shane Athmaram 

25. Rotakala Netshithuthuni 

26. Kamal Khadua 

27. Hester Marais 


20 

16 

4 

21 

11 

8 

25 

22 23 

12 13 

2 

15 

3 

7 

24 

1 

14 

5 

6

OVERVIEW BY THE 

ACCOUNTING OFFICER 

Mr L.D. Tsotetsi 

Acting CEO 

Maintenance and improvement of Governance 

Structures 

“ Governance arrangements that are existing 

at the Board have been maintained throughout 

the year. Adherence to best practice, legislation, 

policies and procedures and internal controls 

and sound financial management remains 

important and measures will be continued to 

be pursued to continually improve on them. ” 

This annual report reflects on the performance 

of the Municipal Demarcation Board 

(“the Board”) against pre-determined objectives, 

as well as challenges encountered by the 

Board in the 2011/12 financial year. The report 

contains a summary of the Board’s Strategic priorities 

and objectives for the period under review. 

We also provide details of Financial Statements 

and the Oversight Report as required in terms of 

the Local Government: Municipal Demarcation Act 

(No 27) of 1998, and the Public Finance Management 

Act (No 1 as amended by No 29) of 1999. 

CONSISTENT PURSUANCE OF THE BOARD’S 

MANDATE 

The Board has once again been impeccably consistent 

in pursuing its Constitutional mandate in 

terms of the Local Government: Municipal Demarcation 

Act (No 27) of 1998, and the Local Government: 

Municipal Structures Act (No 118) of 1998. 

Our emphasis has been on: 

RE-DETERMINATIONS PROJECT 

The MDB follows two broad cycles between local 

elections. Immediately after local government 

elections municipal boundaries are reviewed. This 

first cycle takes around two years. After the review 

of municipal boundaries wards are delimited for 

the next local elections. This second cycle takes 

around 18 months. Elections were held on 18 May 

2011, and the review of municipal boundaries 

commenced in June 2011. 

The 2011/2012 financial year was marked by indepth 

consultation with municipalities, traditional 

leaders, the provinces, and other stakeholders on 

possible boundary changes. Stakeholders were 

also requested to submit new proposals for the 

redetermination of municipal boundaries. In total 

over 1000 proposals will be considered by the 

MDB. The majority of these cases are minor technical 

alignments (Type A re-determinations), while 

some (Type B) are more significant, while others 

(Type C) are proposals for major configurations to 

municipal boundaries such as the amalgamation 

of municipalities, and the demarcation of new cat- 


egory A municipalities. During the 2012/13 financial 

year all these proposals will be further investigated 

by the MDB. Though it is too early to predict 

the end result at this point in time, it is likely that 

some proposals will be entertained favourably by 

the MDB. 

The MDB and its administration are aware of 

the disruptive consequences of major boundary 

changes, and will endeavour to finalise all changes 

within the timeframe so as to allow sufficient time 

for attention to other important matters in preparation 

for the 2014 national and provincial elections, 

and the 2016 local elections, such as the review 

of establishment notices of municipalities, re-alignment 

of voting districts, the delimitation of wards 

and electoral processes. 

NEW CAPACITY ASSESSMENT MODEL 

The Board conducted its last Capacity Assessment 

for 2007/08 financial year. A decision was taken to 

review the existing capacity assessment model. 

Some key features of the new model include: 

a) An on-line questionnaire to be completed 

electronically by each municipality, (although 

technical support was provided, call centre assistance, 

visits to certain municipalities etc.); 

b) Metropolitan Municipalities included in assessments; 

c) An in-depth capacity assessment study for 

20% of districts per year over a period of 5 

years; 

d) The use of secondary data obtained through 

stakeholder consultation, e.g. questionnaires 

were pre-populated with financial data obtained 

from Treasury; and 

e) Complete reliance on municipalities to participate 

(at their own discretion) actively in the 

process. 

The online questionnaires were launched on 24 

October 2011. Response from the municipalities 

was not as positive as expected. The first deadline 

communicated was 18 November 2011, at which 

point more than 60% of the municipalities had not 

yet attempted the questionnaire, 3 more deadlines 

were communicated and at the official close of the 


data collection process on 30 April only 9 municipalities 

had not participated at all. 

All MECs were requested to submit three districts 

(of which the MDB will choose only 1) within their 

province to have the in-depth study done for the 

2011/12 assessment. Some MECs responded and 

others did not, in which case a district was chosen 

by the MDB. 

The final reports based on the new model will be 

available from 31 July 2012 and will include: 

• A Strategic National Report; 

• 9 district qualitative reports; and 

• A Report on process learning. 

This will be followed by a workshop on the reports 

as well as a knowledge sharing seminar. These reports 

serve as useful information sources amongst 

local government stakeholders. 

ALIGNMENT OF SERVICE DELIVERY BOUNDARIES 

WITH MUNICIPAL BOUNDARIES 

In line with a Cabinet Resolution the MDB is assisting 

Government Departments to align their service 

delivery boundaries with municipal boundaries. 

We have assisted the Department of Education 

and the Department of Health to adopt the MDB’s 

District Municipalities as their service delivery 

boundaries by supplying them with the updated 

boundaries as at 18 May 2011. We are currently 

assisting Department of Justice and Constitutional 

Development technically and as advisors on alignment 

to municipal boundaries. 

RE-ORGANISATION OF THE INSTITUTIONAL 

ADMINISTRATIVE STRUCTURES 

The process that was started by the Board to significantly 

restructure the organisation’s establishment 

to bring about far reaching changes and to 

significantly change the way of doing things at 

the Board in a number of core areas of work will 

continue during the year. Existing staff have been 

migrated to the new structure. The Board’s intention 

is that at the beginning of the financial year a 

process of appointing staff to new key positions in 

the new organisational structure will be in place.

MAINTENANCE AND IMPROVEMENT OF 

GOVERNANCE STRUCTURES 

Governance arrangements that are existing at the 

Board have been maintained throughout the year. 

Adherence to best practice, legislation, policies 

and procedures and internal controls and sound 

financial management remains important and 

measures will be continued to be pursued to continually 

improve on them. 

FUTURE DIRECTION: STRATEGIC PLAN FOR THE 

FISCAL YEARS 2012 TO 2017 

Our medium term strategy for the fiscal years 2012 

to 2017 has been approved by the Board. We will 

continue to pursue our mandate, with respect to 

a number of Strategic Objectives which we have 

identified, as follows: 

• To determine and re-determine boundaries of 

local, district and metropolitan municipalities 

• To delimit wards for all local and metropolitan 

municipalities for the 2016 local elections 

• To assess the capacity of metropolitan, district 

and local municipalities in line with the revised 

model 

• To ensure sound financial management 

• To ensure good corporate governance 

• To ensure that the Board maintains effective 

and efficient organisational processes, systems 

and practices 

• To ensure maintenance of proper administrative 

systems and practice as well as the necessary 

support for governance structures 

• To enhance and maintain effective stakeholder 

relations 

Mr Lebina D Tsotetsi 

Acting Chief Executive Officer 


Chapter 1 

OPERATIONAL CLUSTERS 

AT THE BOARD 

Original Total MTEF Allocation R38,482,000 

Other income R641,000 

TOTAL R39,123,000 

AIM 

In terms of Section 39 of the Local Government: 

Municipal Demarcation Act, 1998 the Municipal 

Demarcation Board is accountable to Parliament, 

and must annually submit to both Houses of Parliament 

a written report on the activities of the Board. 

The report must be submitted within six months after 

the end of the financial year, and must include 

audited financial statements. 

CONSTITUTIONAL, LEGISLATIVE AND POLICY 

MANDATES 

The Board, comprising of one full time member 

and eight part time members, is in terms of section 

55 of the Constitution, the Local Government: 

Municipal Demarcation Act, 1998 and the Local 

Government: Municipal Structures Act, 1998, an 

independent authority responsible for: 

• The determination and re-determination of 

municipal boundaries 

• The delimitation of wards for local elections 

• The declaration of district management areas, 

and the withdrawal of such declarations 

• The assessment of the capacity of district and 

local municipalities to perform their functions 

• The rendering of an advisory service in respect 

of matters provided for in the applicable 

legislation. 

In addition Cabinet mandated the Board to assist 

government departments to align their service delivery 

boundaries to municipal boundaries. 


FUNCTIONAL ACTIVITIES OF THE BOARD’S 

ADMINISTRATION 

The Board’s twenty four staff members are divided 

into four clusters namely GIS and IT, Research, Administration 

and Human Resources, and Finance. 

The aim of the administration of the Board is to: 

• provide the Board with the administrative, logistical 

and technical capacity to carry out its 

mandate; 

• carry out the decisions of the Board. 

KEY OBJECTIVES 

In dealing with its mandate the Board and its administration 

have focused on six Strategic Themes 

to determine its objectives, targets, expected outcomes 

and programmes: 

Theme 1 Determination and re-determination 

of municipal boundaries and categorisation 

and re-categorisation of municipalities 

Theme 2 Assessment of the capacity of metropolitan, 

district and local municipalities 

Theme 3 Board supported by effective and efficient 

organisational processes, systems 

and practices 

Theme 4 Ensuring good governance 

Theme 5 Ensuring sound financial management 

Theme 6 Stakeholder relations 

In the 2011/12 financial year, significant progress has 

to date been made with regards to these objectives, 

even though challenges still remain. The Board’s 

achievements to date are highlighted in this report.

CLUSTER 1 

ADMINISTRATION AND 

HUMAN RESOURCES MANAGEMENT 

AIM 

The aim of the Administration and Human Resources 

Cluster is to support the Board with high 

standards of efficient, effective and economical 

administrative operations to enable the Board to 

achieve its strategic objectives, and to support the 

Manager and Cluster Heads in developing competent 

and committed staff. 

The Cluster provides administrative and logistical 

support to the Board and staff, in the following areas: 

a. Administration and Internal Controls 

b. Human Resource Management 

c. Travel and Accommodation 

d. Board and Committee support 

e. Equipment Procurement and Maintenance 

f. Media Liaison 

g. Carry out any other function or activity that will 

enhance the administrative efficiency and effectiveness 

CLUSTER DEVELOPMENTS 

During the period under review, the following key 

developments occurred in the Cluster: 

• Document Management: The Paper Trail 

document management system has been procured, 

training was given to staff. At the moment 

it is only utilised by registry and thereafter 

it will be fully fledged in the organisation. 

All documented information was effectively 

and efficiently managed and filed in compliance 

with relevant legislation. 

• Security Services: During the period under 

review the contract of the existing security 

services was due to expire. The tender for security 

services was advertised and a new service 

provider was duly appointed at the Municipal 

Demarcation Board’s premises. Security 

at the Board’s offices have been strengthened 

by the addition of cameras, CCTV cameras 

and day and night security guards on site. 

• The Occupational Health and Safety Act: 

The Occupational Health and Safety Act (Act 

85 of 1993) was adhered to and incidents of 

occupational health and safety contraventions 

were reported except for two staff members 

who were involved in a motor vehicle accident. 

This matter was referred to the Compensation 

Commissioner as this was injury on duty. 

• Recruitment and Resignations: In line with 

the approved budget allocation there were 

three interns recruited and four contract employees 

appointed in the respective clusters. 

The three resignations were from the support 

clusters and the exit interviews indicated that 

they were leaving for better job and salary opportunities 

with benefits. 

• Contract: The five year contract of the CEO 

terminated on the 31 January 2012. The position 

has been advertised and the process of recruitment 

is underway in the new financial year. 

• The employment equity report was submitted 

to the Department of Labour as required of all 

designated employers. The MDB is committed 

to ensure compliance with the Employment 

Equity Act and the EE targets during the 

recruitment and selection process. Table 6 in 


Chapter 6 reflects the employment equity status 

of the organisation as at 31 March 2012. 

• Employee Wellness Programme: The MDB 

has endeavoured to promote HIV and AIDS 

awareness in the workplace. As part of its responsibility 

a service provider was appointed 

to address staff on HIV and AIDS. 

Also as part of the wellness programme, staff 

was addressed on financial fitness and stress 

management at the MDB’s offices. Counselling 

and professional assistance was made 

available to some staff members by the service 

provider. 

• Employee Relations: An employee satisfaction 

survey was undertaken on a half yearly 

basis to assist in directing programmes to address 

staff issues, aspirations and development 

needs, with regards to establishing and maintaining 

sound employer-employee relations. 

• Transport Management: Efficient transport 

and travel services were rendered in compliance 

with the organisation’s requirements. No 

accidents were recorded with regards to the 

MDB vehicles. 

• Performance Management: The performance 

agreement and performance contracts 

were signed and submitted by all clusters. 

The final performance reviews were completed 

and submitted by all staff at the end of 

March 2012. 


• The existing Performance Management System 

functionality was customised to facilitate 

the organisational processes, policies and procedures 

of the Municipal Demarcation Board. 

• Skills Development and Training: For the 

period under review, employees were afforded 

the opportunity to attend short courses relevant 

to their work. Approximately four employees 

were granted study aids for the following 

courses and fields of study: GIS and Public 

Relations. 

• The process of registering for Skills Development 

is underway with LG Seta. The MDB is 

in the process of formulating the Workplace 

Skills Plan/Annual Training Report. 

• Policy Development: During the period under 

review new policies were developed, and 

some existing policies were reviewed, approved 

and implemented. 

• Board and Committee support: The Board 

and its’ committees met regularly during the 

year. All logistical arrangements were made 

for the Board and its’ committees. 

• Office Alterations: Due to the implementation 

of the outcomes from the OD initiative, it 

became imperative that additional space be 

created to accommodate the additional staff 

that are to be employed at the Municipal Demarcation 

Board. There were challenges and 

delays with the commencement of the alterations 

and the delivery of furniture, but this will 

be finalised early in the next financial year.

CLUSTER 2 

FINANCE AND 

SUPPLY CHAIN MANAGEMENT 

AIM 

The aim of this Cluster is to provide overall Financial 

Management/Accounting and Procurement Control 

to the Board and staff, in the following areas: 

a. Financial Planning 

b. Budgetary Control 

c. Operational Accounting 

d. Payroll Management 

e. External and internal Financial Reporting 

f. Procurement Control 

g. Assets Management 

h. Risk Management 

i. Information technology 




• Internal controls at the Board were reviewed 

and monitored throughout the year. 

• Aligned Supply Chain Management process 

with the new Preferential Procurement Policy 

Framework Act (PPPFA). 

• New policies were developed, and some existing 

policies have been amended and implemented. 

• Implemented reporting on monthly management 

accounts. 

• Supply chain management identified as the 

area to be capacitated to ensure proper segregation 

of duties and compliance with laws 

and regulations. 

• The risk assessment workshops were conducted 

and the risk register has been updated. 

• All statutory returns have been completed and 

submitted regularly. 

• Two interns were appointed for duration of 

12 months, this is expected to continue over 

MTEF. 

• Asset management has also improved during 

the year. 

• Budget management has substantially improved 

during the year. 

• Overall compliance with rules and regulations 

e.g. PFMA has substantially increased. 

• Financial systems e.g chart of accounts were 

realigned to the new organisational structure. 

• One person was seconded from National 

Treasury to assist finance cluster. 

• Monthly cluster meetings were held to keep 

staff informed and involved in decision making. 


CLUSTER 3 

GIS AND IT SUPPORT 

AIM 

The GIS cluster broadly has the responsibility for 

overseeing the spatial and information technology 

(IT) needs of the Board and providing all mapping, 

data, information services, research and analysis 

in support of the Boards’ mandate. 

More specifically, the clusters’ aims are the following: 

• Providing analysis, information and mapping 

requirements in support of the Board’s mandate 

to determine and re-determine municipal 

boundaries in accordance with relevant legal 

provisions; 

• Providing analysis, information and mapping 

requirements in support of the Board’s mandate 

to delimit each municipality that qualifies 

to have wards, into wards; 

• Providing advice, analysis, information and 

mapping requirements to departments on 

the alignment of functional/service delivery 

boundaries with municipal boundaries; 

• Within its areas of competence, provide advice, 

information and analyses to stakeholders; 

• Supporting the Manager of the Municipal Demarcation 

Board to build an effective and efficient 

administration to support the Board in 

the performance of its functions. 

CLUSTER COMPOSITION 

Following recent organisational changes and initiatives 

at the Board, the GIS and IT cluster was 

renamed to GIS and Database Administration 

cluster. Three GIS members of this cluster were 

redeployed to other clusters on the 1 April 2012. 

Mr Fazel Hoosen remained the Cluster Head with 

two GIS Specialists and three IT members. 





Boundary re-determinations 

The 2009/2010 ward delimitation process was followed 

by successful local government elections 

held on 18 May 2011. On 28 June 2011, the MDB 

released circular 1/2011 which outlined in detail 

the MDB programme and timeframes for the redetermination 

of municipal boundaries. 

MDB visited many of its immediate stakeholders:- 

• Visits to all provincial MECs (all MECs visited 

except Western Cape) 

• Visits to National House and Provincial Houses 

of Traditional Leaders (All provinces visited except 

GT, NC & WC). 

All visits were completed by some staff jointly with 

Board members and the Chairperson of the Board. 

The re-determination of municipal boundaries commenced 

in June 2011. To date, the Board has fully 

embarked on an informal consultation process. The 

GIS Cluster jointly with Research and Implementation 

Cluster analysed and mapped 558 cases which 

were listed in Circular 1/2011 and were discussed 

with stakeholders in 2011 at meetings arranged per 

district and metropolitan area, and stakeholders were 

invited to submit additional requests for boundary 

changes. These cases are still under consideration, 

and the MDB will inform you of its decisions before 

the commencement of the legal process. 

The closing date for additional submissions was extended 

up to January 20, 2012. Municipalities and 

stakeholders were expected to provide feedback 

in the process by submitting forms C1, C2, and D 

as per circular 2/2011. In response to the Circular 

1/2011 invitation, 453 requests have been received 

for the review of municipal boundaries. These 

were also analysed and mapped jointly by the GIS 

Cluster and Research and Implementation Cluster. 

Municipalities will be visited in May/June 2012 to 

consult on these 453 re-determinations.

CLUSTER 4 

RESEARCH AND IMPLEMENTATION 

AIM 

This cluster performs the core functions of the 

Board and its main aim of the cluster is to support 

the Board in achieving its vision and mission and 

to fulfil its mandate to: 

• Determine and re-determine municipal boundaries 

in accordance with relevant legislation; 

• Delimit each municipality that qualifies to have 

wards, into wards; 

• Manage the assessment of the capacity of 

municipalities to perform their powers and 

functions; 

• Within the Board’s areas of competence, 

provide advice, information and analyses to 

stakeholders; 

• Support the Manager of the Municipal Demarcation 

Board to build an effective and efficient 

administration. 

CLUSTER COMPOSITION 

Following recent organisational changes and initiatives 

at the Board, the Research and Implementation 

cluster was dissolved and members of this 

cluster were deployed and placed in the new organisational 

structure which came into effect on 

1 April 2012. Mr Robert Willemse, the former 

Head: Research and Implementation cluster will 

now head the Delimitations and Redeterminations 

cluster after his deployment. Mr Kamal Khadua 

and Mr Thabiso Plank were both placed in the new 

Delimitations and Redeterminations cluster as 

Specialists. In addition, two staff members from 

the GIS cluster, Mr Shane Athmaram and Mrs Ayanda 

Monkhe, were placed, as additional members, 

into the Delimitations and Re-determinations 

cluster as Specialists, bringing the total number of 

staff in the cluster to five (5). 


Boundary re-determinations 

The 2009/2010 ward delimitation process was followed 

by successful local government elections 

held on 18 May 2011. Later on 28 June 2011, 

the MDB released circular 1/2011 which outlined 

in detail the MDB program and timeframes for the 

redetermination of municipal boundaries. 

The abovementioned program and timeframes 

was envisaged as follows: 

PROVISIONAL PROGRAMME AND TIMEFRAMES FOR THE RE-DETERMINATION OF MUNICIPAL 

BOUNDARIES PRIOR TO THE WARD DELIMITATION PROCESS FOR THE 2016 LOCAL ELECTIONS 

June – Dec 2011 • MDB Chairperson and Board members visit Minister and MECs responsible 

for local government to explain process. 

• Inputs by stakeholders on current outstanding boundary changes. 

• Stakeholders submit new requests for boundary changes to the MDB. 

• Visits to municipalities where necessary. 

Nov - Dec 2011 • Mapping of new proposals. 

Jan – March 2012 • Follow up communication and visits to municipalities, where necessary, to 

refine maps, and descriptions. 

March - May 2012 • Prepare and publish Section 26 notices. 

• Distribute notices to stakeholders. 

• Communication campaign to inform public to submit views and representation 

on section 26 notices. 

30 May 2012 • Closing date for the submission of written views and representations on 

Section 26 notices to the MDB. 


PROVISIONAL PROGRAMME AND TIMEFRAMES FOR THE RE-DETERMINATION OF MUNICIPAL 

June/July BOUNDARIES 2012PRIOR TO THE • MDB WARD considers DELIMITATION public views PROCESS and representation. 

FOR THE 2016 LOCAL ELECTIONS 

• Re-map boundaries where necessary. 

• Prepare section 21 notices. 

• Prepare for formal investigations, or public hearings, where necessary. 

Aug 2012 • Publish sec 21 notices approved by the MDB for objections. 

• Publish notices for public meetings in terms of section 28, if necessary. 

Sept 2012 • Close period for objections on section 21 notices approved by the MDB. 

• Publish notices for public meetings in terms of section 28, if necessary. 

Sept – Oct 2012 • Public meetings and investigation as per the published programme. 

Nov/Dec 2012 • MDB considers outcomes of investigations/public meetings, to decide on 

re-determination of boundaries, and to approve section 21 notices. 

• Publish (second round) section 21 notices. 

Jan 2013 • End of period for public objections for (second round) section 21 notices. 

Jan - March 2013 • Analyse and map objections. 

• Prepare reports and draft section 21(5) notices. 

April 2013 • Board considers all objections and decides to confirm, vary or withdraw its 

re-determinations. 

May 2013 • Publish Board decisions in terms of section 21(5). 

• Provide section 21 and section 21(5) notices to the IEC and the MECs, and 

other stakeholders. 

• Close changes to municipal boundaries. 

May 2013 • All changes to municipal boundaries finalised and closed by the MDB. 

June – Oct 2013 • IEC and MECs gazette section 23 notices. 

Nov/Dec 2013 • Strategic planning and strategic guidance from Board on the ward delimitation 

process. 

Jan/Feb 2014 • Formula and number of councillors gazetted. 

Feb 2014 • New Board appointed. 

March 2014 • MDB commence with ward delimitation. New Board to decide on the process. 

June 2015 • Hand over of final ward boundaries to the IEC. 

July - April 2015 • IEC prepares for the 2016 local elections. 

May 2016 • Local elections. 

A number of visits to MDBs immediate stakeholders 

were completed as follows: 

• Visits to all provincial MECs (all MECs visited 

except WC), 

• Visits to National House and Provincial Houses 

of Traditional Leaders (All provinces visited 

except GT, NC & WC). 

All visits were completed by some staff jointly with 

Board members and the Chairperson of the Board. 


The re-determination of municipal boundaries 

commenced in June 2011. Since June up to date, 

the Board has fully embarked on an informal consultation 

process. Up to 558 cases were listed in 

Circular 1/2011 and were discussed with stakeholders 

in 2011 at meetings arranged per district 

and metropolitan area, and stakeholders were 

invited to submit additional requests for boundary 

changes. These cases are still under consideration, 

and the MDB will inform you of its decisions 

before the commencement of the legal process.

The closing date for submissions was extended 

up to 20 January 2012. Municipalities and stakeholders 

were expected to provide feedback in the 

process by submitting forms C1, C2, and D as per 

circular 2/2011. In response to the Circular 1/2011 

invitation, some 453 requests have been received 

for the review of municipal boundaries. 

Due to time constraints it was not possible for individual 

Board members to meet with the different 

teams as was envisaged during the January 2012 

Board meeting. However, the Core Boundaries 

and Powers and Functions Committee and staff 

met on 15 and 20 March 2012. 

Due to the extension of the closing date to 20 January 

2012 for submitting comments on the Circular 

1/2011 cases, and for submitting new proposals, 

and due to the time that was required to deal with 

the new proposals, it was not possible to arrange 

the meetings with municipalities from January to 

March 2012 as was envisaged in Circular 1/2011. 

The programme and timeframes have been reviewed, 

and has been approved by the Board. 

PROVISIONAL PROGRAMME FOR THE REDETERMINATION OF MUNICIPAL BOUNDARIES 

20 April 2012 • Municipalities confirm venues for the dates as per the visits programme. 

26 April 2012 • Logistics in place for MDB teams to visit municipalities as per the visits 

programme. 

May - June 2012 • Visits to municipalities. 

July - Aug 2012 • Prepare for the legal process. 

• Publish all section 26 notices to invite views and representation on cases 

that will be taken forward. 

Aug/Sept 2012 • Closing date for the submission of written views and representations in 

terms of section 26. 

Sept 2012 • Analyses of section 26 inputs, and review of maps. 

Sept – Oct 2012 • Determine the need for formal public hearings, and further investigations, 

and public notices in this regard. 

Nov – Dec 2012 • Formal section 28 public hearings, where necessary. 

• Prepare section 21 notices for objections. 

Dec 2012 - Jan 2013 • Publish section 21 notices for objections. 

Jan - Feb 2013 • Closing date for section 21 objections. 

Feb - March 2013 • Consider objections and decide which boundary changes should be confirmed, 

varied or withdrawn. 

April - May 2013 • Publish Board decisions in terms of section 21(5). 

June – Oct 2013 • IEC and MECs gazette section 23 notices. 

Nov/Dec 2013 • Strategic planning and strategic guidance from Board on the ward delimitation 

process. 

Feb/March 2014 • Formula and number of councillors gazetted. 

Feb 2014 • New Board appointed. 

March 2014 • MDB commences with ward delimitation. New Board to decide on the 

process. 

June 2015 • Handover of final ward boundaries to the IEC. 

July - April 2015 • IEC prepares for the 2016 local elections. 

May 2016 • Local elections. 


Some 446 Circular 1/2011 cases were recommended 

for rejection by the Board. 

Some 112 Circular 1/2011 cases were recommended 

for the section 26 process to test public 

opinion. 

Municipalities will be visited in May/June 2012 to 

consult on these re-determinations that have not 

been addressed during the 2011 visits. Some 453 

cases were listed in Annexure C of circular 1/2012. 

Municipalities are expected to give feedback to 

the Board in terms of Annexure C on or before 20 

April 2012. MDB staff/Representatives will attend 

one meeting per District/Metro during May/June 

scheduled visits. A draft program and schedule for 

visits was attached to Circular 1/2012. 

REPORTS 

1. Size of municipalities 

The MDB commissioned a study on the size 

of municipalities. The available empirical data 

and government and academic literature suggest 

that there is no conclusive evidence to 

show that the size of a municipality has been 

a major problem impeding the performance of 

municipalities, and service delivery. The international 

literature on size and performance 

on municipalities did not produce any ideal or 

optimal size for local government. Changing 

the size of municipalities should be treated 

with circumspect, especially to address governance 

issues, and to prevent reorganisation 

fatigue. 

With regard to wards a number of problems 

were identified with the ward process such as 

the unclear definition of what a community is; 

the utilisation of the voters’ roll of the previous 

local national and provincial elections; the 

legal provision that the number of registered 

voters in each ward, may not vary by more 

than 15% from the norm, leads to the creation 

of dysfunctional wards; and the review of 

wards every five years disallows the utilisation 

of wards as basis for long-term planning. 


2. Criteria 

The MDB commissioned a study on the criteria 

for the demarcation of municipal areas. 

The study envisaged to expand the definitions 

of the criteria set out in Sections 24 and 25 of 

the Demarcation Act, 1998, and section 2 of 

the Structures Act, 1998, and to develop quantifiable 

indicators, benchmarks and thresholds 

for each criterion. Many of the criteria/indicators 

are interdependent which makes it difficult 

to determine an importance hierarchy for the 

different categories of municipalities. Criteria 

should be given varying weight and importance 

depending on the unique circumstances 

of an area. Public participation, in particular, 

was raised as being an important component 

of boundary reform. 

3. 2010/11 Redesigning and Implementation 

of revised Capacity Assessment model 

In 2010 the MDB commissioned an evaluation 

of the model and methodologies in order 

to identify areas of strength and improvement. 

Having consulted a wide range of stakeholders 

through the evaluation process, we have 

gathered valuable feedback and recommendations 

for enhancing this important process. 

Building on the strengths of previous capacity 

assessments, the MDB is launching a revised 

and improved Municipal Capacity Assessment 

process in 2011. 

Integrated data collection methods 

One of the key recommendations coming out of 

the review of the Municipal Capacity Assessments 

was the need to better co-ordinate and integrate 

national data collection processes which focus on 

municipal data. In addition to the work being done 

by the MDB, the National Treasury and StatsSA 

also collect information from municipalities on an 

annual basis. 

Web based questionnaire 

An online tool was created to allow all municipalities 

with internet access to fill out the questionnaire.

Qualitative assessments 

A deeper qualitative investigation into powers and 

functions in all municipalities over a five year period 

will be conducted. This year nine districts 

will be assessed, roughly 20% of all municipalities. 

The general criteria used to select the nine 

districts include at least one district per province 

and should include a contestation of high priority 

functions. A letter was sent to MECs in December 

2011 to nominate three districts within their province. 

PRESIDENTIAL HOTLINE 

The Presidential Hotline Committee is a forum 

which was jointly initiated by the Presidential Hotline 

and the MDB. Initially, the Presidential Hotline 

approached the MDB and indicated that the 

Presidency has been inundated with enquiries 

relating to the demarcation issues and the department 

was unable to deal with such queries comprehensively. 

This resulted in the establishment of 

this committee which was formed mainly to deal 

with these issues and empower the Presidential 

Hotline members with information required to deal 

with any boundary issues. This committee meets 

frequently to tackle issues related to municipal 

boundaries and keep members up to date with information 

in this regard. 

LETC 

This Committee comprise of officials of DCoG, the 

IEC and the MDB and meets on an ad hoc basis to 

coordinate interdependent activities in preparation 

for elections such as the formula for the number 

of councillors, the determination of the number of 

councillors, and the utilisation of voting districts as 

building blocks for the delimitation of wards. 


Chapter 2 

PERFORMANCE 

REPORT 

REPORT OF THE PERFORMANCE RESULTS AGAINST PREDETERMINED OBJECTIVES 

INTRODUCTION 

In terms of section 55(2)(a) of the Public Finance 

Management Act No 1 of 1999, as amended, the 

Accounting Officer of a public entity has additional 

responsibilities to ensure that the annual report 

and audited financial statements fairly present the 

performance against predetermined objectives of 

the public entity. This chapter reports on how the 

Municipal Demarcation Board has achieved on 

key areas, as measured against predetermined 

objectives, for the year ended 31 March 2010, 

as outlined in the approved strategic plan of the 

Board for the period 2009/10 to 2012/13. 

The Municipal Demarcation Board is an Institution 

that was established in terms of the Constitution 

of the Republic of South Africa, 1996 (“the Constitution”), 

and the Local Government: Municipal 

Demarcation Act, 1998 (“the Demarcation Act”). 

In terms of Section 39 of the Demarcation Act the 

Board is accountable to Parliament. During the 

period under review, the Board accounted to the 

Portfolio Committee on Cooperative Governance 

and Traditional Affairs and the Select Committee 

on Cooperative Governance and Traditional Affairs, 

who maintained oversight over the Board; 

an Audit and Risk Committee which ensured the 

Board maintains a sound financial and risk management 

and internal control system; and external 

auditors, the Auditor-General, who are responsible 

for auditing the Board’s financial statements and 

performance information. 

MANDATE 


Section 4 of the Demarcation Act provides that the 

Municipal Demarcation Board is responsible for: 

• The determination or re-determination of the 

outer boundaries of the three categories of 

municipalities as identified in the Constitution 

i.e. Category A (Metropolitan), Category B (Local), 

and Category C (District) municipalities; 

• Rendering an advisory service in respect of 

matters provided for in the Demarcation Act 

and other appropriate legislation. 

Other functions of the Municipal Demarcation 

Board are provided for in the Local Government: 

Municipal Structures Act, 1998 (“the Structures 

Act”). The Municipal Demarcation Board is, 

amongst others, responsible for: 

• Assessing the capacity of all local and district 

municipalities to perform their functions as reflected 

in Schedules 4B and 5B of the Constitution. 

In this regard, Metropolitan Municipalities 

are excluded. 

• Advising provincial MEC’s for Local Government, 

on the division and allocation of powers 

and functions between Local and District 

Municipalities. 

• Delimiting wards for each metropolitan and local 

municipality qualifying to have wards, for 

each general local election. 

• Performing various advisory functions, such 

as the alignment of functional or service delivery 

boundaries with constitutional boundaries.

As part of its advisory service, the Board, assists 

government departments, amongst others, to align 

their service delivery boundaries with constitutional 

boundaries e.g. the alignment of magisterial district 

boundaries to municipal boundaries as far as 

practically possible. However, the prime responsibility 

for the determination of functional service 

delivery boundaries remains the responsibility of 

the line function departments. 

STRATEGIC CONTEXT 

The Municipal Demarcation Board’s strategic goals 

and objectives for the period under review define 

the institution’s direction and the strategic results 

it aimed to achieve in pursuance of its mandate. 

The strategic goals and objectives were translated 

into more concrete activities that were aimed at 

achieving the intended strategic performance results. 

Our strategic goals, priorities and objectives 

for the period under review, with key performance 

indicators, targets, performance results and reasons 

for variance, are outlined below. 

STRATEGIC PRIORITIES AND OBJECTIVES 

The Board’s Strategic priorities and objectives for 

the period under review were as follows: 

STRATEGIC THEME 1: DETERMINATION AND RE- 

DETERMINATION OF MUNICIPAL BOUNDARIES 

AND CATEGORISATION AND RE-CATEGORISATION 

OF MUNICIPALITIES 

The 2011 – 2015 Strategic Plan once again builds 

on the substantial progress that has been recorded 

since the Board’s establishment in 1999, while at 

the same time taking into account enhancements 

to the re-determination process as envisaged by 

the Board. Following the delimitation of wards in 

preparation for the 2011 local government elections, 

and the handing over of the final wards to 

the IEC, the process of reconfiguration and alignment 

of boundaries is set to continue after the upcoming 

local government elections, which must, 

by law, take place by 31 May 2011. 

In addition to the numerous municipal boundaries 

that have been re-determined over time, the Board 

also works closely with other organs of state dealing 

with boundary issues. In this regard the Board 

works on an ongoing basis with institutions such 

as the Provincial Departments of Local Government, 

IEC, StatsSA, CSIR, and the National Departments 

of Cooperative Governance and Traditional 

Affairs (DCoG & DTA), Rural Development 

and Land Affairs and others. Close working relations 

will be maintained with DCoG, DTA, IEC, 

SALGA, Water Affairs and the Provincial Departments 

of Local Government in an endeavour to 

create a credible set of boundaries for traditional 

areas. 

Changes to municipal boundaries is a continuous 

process and all stakeholders are involved in trying 

to ensure the creation of a spatial environment 

that would promote and enhance sound elections, 

planning, service delivery and development within 

municipal boundaries. In this regard the Board 

receives on an ongoing basis requests from various 

persons, traditional leaders, institutions and 

organs of state to change municipal boundaries. 

The Demarcation Act, 1998, provides that the 

Board can take the initiative to change municipal 

boundaries, or that boundaries can be re-determined 

by the Board on the request of the Minister 

of Provincial and Local Government, the nine 

Provincial MEC’s responsible for Local Government, 

or the affected municipalities. In order to 

enhance local consensus on any proposed boundary 

change the Board would, in general, not initiate 

changes to boundaries, and prefers that any 

proposed changes be negotiated locally with the 

involvement of all affected municipalities, communities 

and the provincial government. Once 

consensus has been reached the MEC and/or the 

affected municipalities can submit a request to the 

Board to re-determine the boundaries after which 

the Board will follow the necessary procedures as 

provided for in the Demarcation Act, 1998. 


In order to lay a firm foundation for having things 

to be done differently and to improve the manner 

in which the boundary re-determinations process 

unfolds, the Board in 2010/11 commissioned research 

projects on core areas of the Board’s work: 

• Unpacking, clarifying and expanding on Criteria 

for Demarcation of Municipal Boundaries; 

• Seeking to understand issues around Sizes of 


Service providers have since submitted reports to 

the Board, and the Board has resolved to: 

• Adopt the position on sizes of municipalities, 

as espoused in the research work submitted; 

• Develop and clarify the work on demarcation 

criteria, to enhance buy-in from the stakeholders. 

• Hold public hearings and/or investigations 

for every boundary re-determination request 

case. 

As a result of the above developments, the following 

activities and objectives are to be pursued in 

the MTEF period and the period of this Plan: 

• Planning and preparation for the next round 

of boundary re-determinations, which will be 

considered by the Board for implementation 

after the 2011 local elections; 

• Develop further the work on Criteria for boundary 

re-determination, to minimise ambiguity in 

application, and to enhance buy-in of all the 

stakeholders in the process; 

• Develop and adopt a revised process, to engage 

in a more transparent process going forward, 

which includes public hearings and/or 

investigations as a matter of course, to ensure 

sufficient buy-in of all the stakeholders in the 

process; 

• Action all section 22 requests received, as 

well as all initiatives taken by the Board. 

Changes to municipal boundaries also impact on 

national, provincial and local elections, as voting 

district boundaries are aligned to municipal bound- 


aries by the IEC. Close co-operation will therefore 

continue to be pursued and enhanced between 

the Board and the IEC in this regard. 

STRATEGIC THEME 2: ASSESSMENT OF THE 

CAPACITY OF METROPOLITAN, DISTRICT AND 

LOCAL MUNICIPALITIES 

The Municipal Demarcation Board’s Municipal 

Capacity Assessment process, which has taken 

place annually from 2001/02 until 2008/09, makes 

an important contribution in addressing the need 

for data on local government capacity. 

Section 156 (1) of the Constitution provides that a 

municipality has executive authority in respect of, 

and has the right to administer the local government 

matters listed in Part B of Schedule 4 and 

Part B of Schedule 5. 

Since 2001/2002, capacity assessments have 

been based on the provisions of section 85 of the 

Municipal Structures Act. Section 85 (9) provides 

that the MEC’s responsible for local government 

in provinces must regularly review the capacity of 

relevant municipalities and reallocate a function 

or power to a municipality when that municipality 

acquires the capacity to perform its function or exercise 

its power. 

A re-allocation must be made with the concurrence 

of the receiving municipality or, in the absence 

of such concurrence, after having consulted the 

Municipal Demarcation Board. Section 85 (4) requires 

that the Municipal Demarcation Board considers 

the capacity of a district or local municipality 

to perform the functions and exercise the powers 

vested in the municipality in terms of section 84 

(1) or (2) when determining or re-determining the 

boundaries of the district and the local municipality, 

or when so requested by the MEC for local government 

in the province concerned. 

For the period of this strategic plan and going 

forward, the Board will shift to a new and revised 

model of municipal capacity assessments, following 

a comprehensive review of the model that the

Board has used from 2001/02 to 2008/09. The 

review identifies a number of shortcomings with 

the model that the Board has used, and concludes 

that, while the Capacity Assessment helps the 

MDB to fulfill a purpose closely linked to our system 

of local government: 

• The two-tier system of local government on 

which the current capacity assessment model 

is based, is neither effective nor efficient; 

• While designed to possibly mitigate the risks 

of a two-tier system, adjustments by MECs of 

scheduled functions have arguably exacerbated 

the problem; 

• The definition of municipal capacity, which 

informs the framework for adjustments, is 

considered to be inadequate and too narrow 

in shaping the conceptualization of municipal 

capacity; 

• Understanding the environmental capacity of 

municipalities is fundamental to the demarcation 

process, with institutional capacity playing 

a secondary role. The Capacity Assessments 

addresses only this secondary consideration 

and are therefore not useful for the process of 

adjusting municipal boundaries. 

• The foundation of the model that has been 

used to date, relies on a limited and narrow 

set of capacity related indicators, which are 

informed by a self-assessment by municipalities. 

There is therefore significant scope to improve 

the depth and breadth of the conceptual 

understanding and measurement of capacity, 

as well as the enhancing objectivity of the 

process of assessing capacity. 

• While the Capacity Assessment data and reports 

have come to fill an important space 

in terms of building an understanding of local 

government capacity in South Africa, the 

review of the data and outputs suggest that 

Capacity Assessments have much more potential 

in terms of analysis and there is thus 

scope for the Capacity Assessments to make 

an even greater contribution as a resource for 

municipal level analysis. 

The Municipal Demarcation Board will then pursue 

a new approach to capacity assessments that 

seeks to: 

• Address the limitation that capacity is insufficient 

information on which to make recommendations 

on re-assigning a function; 

• Position the Capacity Assessment as Strategic 

Resource; 

• Revise the Capacity Assessment Model; 

• Conduct a Qualitative Review/Investigation of 

Powers and Functions; 

• Revise the data collection methodology; 

• Revise the Output. 

STRATEGIC THEME 3: BOARD SUPPORTED BY 

EFFECTIVE AND EFFICIENT ORGANISATIONAL 

PROCESSES, SYSTEMS AND PRACTICES 

Building and enhancing the capacity of the Board’s 

internal machinery remains a priority for the Board. 

Previous Strategic Plans had a number of strategic 

objectives, aimed at building capability within 

the administrative arm of the Board, in order to 

improve performance. The Strategic Plan 2011 – 

2015 must continue to pursue this strategic objective 

and find more innovative ways of facilitating 

the implementation of its objectives. 

In 2010/11, the Board appointed an Organisational 

Design (OD) specialist to carry out an investigation 

into the Board’s organisational structure, as 

well as significant restructuring of the organisation’s 

establishment. The service provider’s brief 

was to investigate and to write a report with recommendations, 

on ways of improving the effectiveness 

of the Municipal Demarcation Board and its 

members, particularly staff members, by means of 

systematically planned interventions. 

The service provider has since delivered on the 

brief, and the Board has resolved to bring about 

far-reaching changes in levels of some positions in 

the Board’s organisational structure, as well as significant 

restructuring of the organisation’s establishment 

– this in order to have things done differently, 

in a number of core areas of the Board’s work. 


As a result of the above developments, the following 

activities and objectives are to be pursued in 

the MTEF period and the period of this Plan: 

• The Board will outline to staff and other relevant 

stakeholders a plan of action to implement 

changes to the organisational structure 

at the MDB; 

• The Board will lead the full process to effect 

the changes, including identification and securing 

of the necessary financial and other resources 

to realise the changes. 

The Board will provide a strategic approach to the 

management of its people through: 

• Providing a clear strategic focus for workforce 

management; 

• Ensuring that human resources policies and 

practices provide transparency, honesty and 

fairness in the management of its people; 

• Ensuring that all employees are provided with 

adequate resources, such as training and 

equipment; 

• Promoting leadership and supporting Cluster 

Heads to effectively manage their subordinates; 

• The promotion and adherence to equal employment 

opportunity objectives; 

• Creating a safe, supportive and equitable work 

environment for employees which sustains 

high levels of satisfaction, empowerment, commitment 

and accountability; and 

• Maximising the Board’s return on its human investment. 

The key issues which impact on the management 

of people are clearly shaped by the operating environment 

in the organisation. The Strategic plan 

will support the Board’s mission, vision and values 

by providing a strategic approach to the management 

of its people through specifically focusing 

on employee attraction and retention, equal opportunity, 

employee learning and development, 

performance management, workplace health and 

safety, employee relations and human resources 

management system at the Board and this will be 

addressed in the Human Resources Plan. 


STRATEGIC THEME 4: ENSURING GOOD 

GOVERNANCE 

The Municipal Demarcation Board will continue 

to endeavour to ensure that good governance arrangements 

are in place throughout the organization, 

to support the Board processes effectively 

and comply with legislation. Good governance arrangements 

at the Board will be under constant 

examination and review, to ensure that an appropriate 

set of checks and balances on the stewards 

of the organization, is maintained at all times. 

The following activities and objectives are to be 

pursued in the MTEF period and the period of this 

Plan: 

i. Actions to maintain and, where applicable, 

to improve compliance with legal frameworks 

• As a constitutional institution, in terms of 

the PFMA, funded from appropriations by 

Parliament, the Board is compelled to comply 

with various legal frameworks such as 

the Public Finance Management Act, the 

Municipal Demarcation Act and others. 

• Policies and procedures have been developed 

in most areas of the Board’s work to 

guide our compliance. However, actions 

must continue to solidify IT Governance 

and Contract Management, as well as risk 

assessment and risk management. 

ii. Continued actions to improve the efficiency 

and effectiveness of administrative 

processes and systems 

While a substantial amount of work has over 

the years been done to implement policies, 

procedures and best practice at the Board, 

there remains a significant scope to improve in 

enhancing capacity in relevant areas, in order 

to improve the lead times of key processes. 

These include: 

• establishment and appropriate staffing of 

the Board Secretariat to provide the necessary 

support to the Board;

• appropriate staffing of the Risk management 

component in the Finance Cluster; 

• appropriate staffing of the IT section, to 

improve IT Governance; 

• establishment of a stakeholder management 

unit at the Board and appropriate 

staffing of the Unit. 

iii. Continued actions to improve the quality 

and usage of management information 

This is key to ensure sound management, decision-making 

and good governance. A central 

initiative in achieving this objective is to 

maintain and improve on the Board’s in-house 

information management system to provide 

relevant and regular updated information, and 

internal communications. 

STRATEGIC THEME 5: ENSURING SOUND 

FINANCIAL MANAGEMENT 

Doing more with less is one of the major challenges 

facing the public sector today. Budgetary pressures 

are compounded by increasing costs, rising 

expectations and legislative mandates. Eventually, 

organisations have to decide how to provide 

the right services with the appropriate resources, 

while attaining strategic objectives and managing 

performance. The Board is no different from any 

other public sector entity in that it is also facing 

the challenge of limited resources in the coming 

medium term expenditure period. 

This theme addresses effective financial management 

of allocated resources to ensure that it 

achieves its legislative mandate. In this regard, 

the sound financial management is informed by 

five principles, detailed as below: 

• Manage resources to accomplish strategic 

goals – To ensure that program priorities 

are achieved within provided funding levels, 

systems must be in place, that provide management 

with timely insight into trends and 

financial results. Therefore, management 

monitors budget execution, including moni- 

toring projects, tasks, program accomplishments, 

and the overall financial health of its 

operations to ensure that plans and priorities 

are achieved. 

• Effectiveness of financial planning – Financial 

planning encompasses budget preparation 

for the medium term informed by the work 

programs of the various clusters at the Board. 

Budgets are formulated with programmatic 

insight, resulting in justifiable requests for resources 

to satisfy mission needs. 

• Ensure adherence to laws, regulations and 

contractual obligations – The Board has the 

responsibility to ensure that all applicable laws 

and regulations are carried out to make certain 

that there is responsible use of taxpayers’ 

money and the protection of the Board’s assets 

against fraud, waste, abuse and mismanagement. 

The primary laws which the Board 

should adhere in respect to financial management 

are the Public Finance Management Act, 

the Preferential Procurement Policy Framework 

Act and the Treasury Regulations issued 

in terms of PFMA. The target is to achieve an 

unqualified audit opinion as expressed by the 

Auditor-General on an annual basis. 

• Ensure effective and efficient use of resources 

– Management takes responsibility 

to ensure that scarce resources are being utilized 

economically and efficiently. Oversight 

efforts and analyses focus on the high impact 

areas. In this regard, regular cost control 

measures have been put in place to monitor 

adherence to budget allocations for each program. 

• Accurate and relevant financial reporting – 

Financial reporting entails external reporting 

as required in terms of the PFMA and internal 

reporting for various governance structures, 

i.e. Audit Committee, Exco and the Board. Financial 

information is essential to planning, real 

time decision making and assessing program 

performance. This information is presented in a 

useful format that addresses the needs of those 

structures. 



STRATEGIC THEME 6: STAKEHOLDER RELATIONS 

Today’s organisational challenges and the need 

to achieve sustainable development make it important 

to engage both with current stakeholders, 

as well as those stakeholders that have not in the 

past been engaged adequately, on new issues 

and new ways. As a constitutional institution, it 

is important for the Board to reinforce the need to 

engage with all stakeholders in a structured manner, 

to realise specific organisational goals as well 

as to meet broader social, environmental and economic 

challenges. The need for engaging stakeholders 

in a structured manner, is also reinforced 

by the fact that stakeholder relations is one of the 

core functions of the Board, in terms of the corporate 

governance principles as outlined in the 

King III report, to which the Municipal Demarcation 

Board subscribes. 

This theme addresses the need to have a stakeholder 

management function at the Board which 

must, over the short to medium term, do the following: 

• Prepare a Stakeholder Management and Governance 

Framework; 

• Develop a Stakeholder Engagement Plan for 

2011/12 – 2014/15; 

• Develop a Stakeholder Communication Strategy 

for 2011/12 – 2014/15; 

• Prepare and enter into Service Level Agreements 

between the Board and all of its stakeholders; 

• Set up a Stakeholder Management Unit, including 

a proposed budget for the entire service.

PERFORMANCE AGAINST PREDETERMINED STRATEGIC OBJECTIVES ( AS AT 31 MARCH 2012) 

OUTPUT KPI TARGET TARGETED RESULTS ACTUAL RESULTS VARIANCE 

RELATED 

OBJECTIVES 

STRATEGIC THEME 1: MUNICIPAL BOUNDARIES 

None 

Planning finalised. Policy, timeframes 

& workplan, visits programme, request 

form submitted and approved. Stakeholders 

informed of process and visits 

programme as per Circular 1/2011. 

MEC’s briefed. Visits to municipalities 

commenced in August 2011 as per visits 

programme. Issued Circular 2/2011. 

Policy review for redeterminations commenced. 

Maps and reports database 

developed and implemented. 

Planning for the re-determination 

process: Policy, 

timeframes & workplan, visits 

programme, request form in 

place. Outstanding DEMs 

identified. QA on DEM reports 

and maps, develop a redeterminations 

database for 

all DEMs. Reporting to Board 

on all Circular 1, new and 

re-opened cases. 

100% of requests for 

changes to boundaries 

actioned in compliance 

with the Demarcation 

Act, Policies and 

Procedures. 

Percentage of requests 

for changes to 

boundaries actioned 

in compliance with the 

Demarcation Act, Policies 

and Procedures. 

Proactive and Reactive 

process: Receive and 

record boundary requests 

in terms of section 22 of 

the Demarcation Act. 

To commence in 2012 To commence in 2012 None 

100% section 26 

notices published. 

Publish section 26 

notices. 


notices to invite public 

views and representation 

on each proposed 

re-determination. 

Determination 

and redetermination 

of municipal 

boundaries, 

and categorisation 

and 

re-categorisation 

of 



100% section 21 



notices. 

Publish section 21 notices 

to invite objections 

to re-determinations. 


100% section 21(5) 


Publish section 21(5) 

notices. 

Publish section 21(5) 

notices to confirm, vary 

or withdraw a re-determination. 

Roundtable discussion session on 

metros was held on 9 June 2011. 

Report was tabled and discussed in the 

Board Strategic planning session held 

in October 2011. 

Convene a Roundtable 

discussion session on metros 

with stakeholders and prepare 

a report. 

Board hosting a Roundtable 

discussion on 

category A municipalities. 

Engage where necessary, 

at administration 

level with stakeholders on 


Support Board in engaging 

with stakeholders on 


Assist Board 

to initiate discussions 

with 

stakeholders 

on category A 

municipalities 

MUNICIPAL DEMARCATION BOARD - Annual Report 2012 26 

None 

No requests received. None 

Action requests for category 

A status. 

Action 100% of 

decisions taken by the 

Board. 

Percentage of requests 

for categorisation of 

some areas as category 

A municipal areas 

actioned in compliance 

with Board resolutions, 

legislation, policies and 

procedures.


RELATED OBJECTIVES OUTPUT KPI TARGET TARGETED RESULTS ACTUAL RESULTS VARIANCE 

STRATEGIC THEME 2: ASSESSMENT OF THE CAPACITY OF DISTRICT AND LOCAL MUNICIPALITIES IN ORDER TO ADVISE MEC’S FOR 

LOCAL GOVERNMENT IN THEIR DECISION TO ADJUST POWERS AND FUNCTIONS BETWEEN DISTRICT AND LOCAL MUNICIPALITIES 

None 

Board required readvertisement 

of tender, and approved 

appointment of consultant, 

Palmer Development Group 

on 1 August 2011. 100% 

secondary data collected by 

24 October and 30% primary 

data collected by 15 December 

2011. Total of 96% data 

obtained. 

Evaluation of tenders and appointment 

of consultant. Service 

provider to be appointed to collect 

100% primary data and 100% 

secondary data. 

All reports submitted to 

the Board by end March 

2011. 

Reports compiled 

by due date. 

Municipal Capacity 

Assessments to comply 

with the requirements 

of section 85 of the 

Structures Act. 

Alternative model implemented 

as part of the methodology of 

the project. 

Implement alternative model as 

part of the project. 

Alternative model 

implemented as part of 

the 2011/12 capacity 

assessments and 

reflected in the capacity 

assessment reports by 

end March 2012. 

Capacity assessments 

based on 

alternative model 

implemented by 

due date. 

Capacity assessments 

model as developed 

and adopted by the 


Provide quality 

Municipal Capacity assessments 

and recommendations 

to MECs 

for local government 

regarding adjustments 

of powers and functions 

in compliance with 

Section 85 of the Local 

Government: Municipal 

Structures Act, 1998 


None. 

STRATEGIC THEME 3: ENHANCE AND ENSURE THAT THE BOARD IS SUPPORTED BY AN EFFECTIVE AND EFFICIENT ORGANISATIONAL 

STRUCTURE 

None. 

Organisational Development 

Implementation Report and 

Plan, as well as the Organisational 

blueprint considered and 

accepted by the Board. Migration 

Committee considered 

staff complement and migrated 

and re-deployed all staff members 

by 31 March 2012. New 

organisational structure to 

become effective 1 April 2012. 

Board has engaged and approved 

the implementation plan and 

organisational blueprint report. 

Board to approve: Remuneration 

Strategy, Salary Structure - Job 

Evaluation & Salary Benchmarking, 

migration Policy and establishment 

of Migration committee. Migration 

Committee to consider staff 

complement and migrate, redeploy 

or displace all staff members by 31 

March 2012. 

100% of actions taken 

to implement the outcomes 

of the Organisational 

Development 

(OD) Exercise. 

Percentage of actions 

to implement 

the outcomes of 

the Organisational 

Development 

Exercise (OD) as 

maybe adopted by 

the Board. 

Actions to implement 

the outcomes of the 

Organisation Development 

Initiative (OD). 

Implement the outcomes 

of the Organisational 

Development 

Initiative (OD).


STRATEGIC THEME 3: ENHANCE AND ENSURE THAT THE BOARD IS SUPPORTED BY AN EFFECTIVE AND EFFICIENT ORGANISATIONAL 

STRUCTURE 

None 

Performance Management system 

reconfigured and implemented. 

Consultants appointed to upgrade the existing 

Performance Management System and 

configure the functionality for optimal use. 

100% 

Submission of 

Quarterly EmployeePerformance 

reports. 

Quarterly EmployeePerformance 

reports. 

Monitor individual 

performance contracts 

that supports strategic 

objectives. 

8% (resignation 

of 

interns) 

100% 92% 

Assess and sustain 

organisational competence 

and performance. 

Retain the 

necessary staff 

complement 

Retain the 

necessary staff 

complement. 

Maintain an Internship 

programme to mitigate 

risks associated with 

staff turnover. 

Above 

target 

50% 63% 

Conduct quarterly staff 

meetings and obtain 

50% return submission 

of half yearly employee 

satisfaction surveys. 

Quarterly staff 

meetings and 

carry out half 

yearly employee 

satisfaction 

surveys. 

Percentage of 

training cost to 

total employee 

Improve employee 

relations at all 

levels within the 


Maintain acceptable 

employee satisfaction 

levels. 

Above 

target 

1.5% 1.5% 1.73% 

Continuous training 

of staff. 

Develop and nurture 

capability at all levels 

within the Board. 

cost. 

Above 

target 

45% 56% 

Minimum of 45% gender 

equity. 

Workforce composition: 

Gender 

equity ratio 

and affirmative 

action. 

Recruit candidates 

that support 

employment 

equity. 

Compliance with 

Employment Equity 

legislation. 

STRATEGIC THEME 4: ENSURING GOOD GOVERNANCE 

Draft unaudited annual report for 

the year ended 31 March 2011 

duly submitted to the Auditor- 

General on 31 May 2011. Annual 

financial statements submitted to 

National Treasury by 31 July 2011. 

Annual report tabled in Parliament 

by 28 September 2011. MDB received 

an unqualified audit report 

with emphasis of matter. 

Annual Financial Statements fully prepared 

for the year ended 31 March 2011, in 

terms of GRAP. First draft of the annual 

report submitted to the Auditor-General by 

31 May 2011, for external audit. Annual 

financial statements consolidation template 

submitted to National Treasury by 31 July 

2011. Annual report tabled in Parliament 

by 30 September 2011 and receiving 

unqualified audit opinion. 

Unqualified audit 

opinion. 

Audit opinion 

by the Auditor- 

General. 

Improve effectiveness 

of the internal 

audit function 

by ensuring full 

compliance to 

Treasury regulations 

regarding 

Internal Audit 

Methodology. 

Compliance with legal 

frameworks. 


None



STRATEGIC THEME 4: ENSURING GOOD GOVERNANCE 

Policy to be considered 

by the Board for 

approval only in the 

second quarter. 

Policy on IT Service level Agreements 

duly developed and tabled with the Audit 

and Risk Committee at its meeting of 27 

May 2011. Recommended for approval 

by the Board. 

Policy on IT Service Level 

Agreements developed and 

tabled before the Audit & Risk 

Committee for consideration 

and approval by the Board. 

Policies and procedures 

reviewed 

every three years. 

Frequency of 

review of policies 

and procedures. 

Review 

policies and 

procedures. 

Improve efficiency and 

effectiveness of administrative 

processes and 

systems. 

Target not met in the 

current financial year. 

Target not met in the current financial 

year. 

Appoint staff to perform the 

functions. 

Secretariat and 

Stakeholders 

Management unit 

operational. 

To establish 

Board Secretariat 

and 

Stakeholders 

Management 

unit. 

Establish 

Board Secretariat 

and 

Stakeholders 

Management 

unit. 



processes and 

systems. 

Migration on hold to 

avoid jeopardising 

redetermination process. 

80% Migration of 

data to be completed 

in Quarter 4 of 

2012/13. 

Purchased and installed software at 

MDB. Scoping within GIS and Research 

clusters completed. 

Purchase and install software 

at MDB. Scope processes 

within all clusters. 

System 100% 

operational. Incrementalimplementation 

of content over 

three year MTEF 

period as per action 

plan. 

In-house 

information management 

system 

developed and 

implemented. 

Development 

and implementation 

of in-house 

information 

management 

system. 



processes and 

systems. 

STRATEGIC THEME 5: ENSURING SOUND FINANCIAL MANAGEMENT 

Effective 

management 

of working 

Manage Resources to 

accomplish strategic 

goals. 


Current ratio 2:1 2:1 6:9 4:8 

capital. 

100% / 1:1 100% / 1:1 90% 10% 

Actual expenditure 

to budgeted 

income. 

Prepare short 

and long term 

budgets. 

Effective Financial 

Planning. 

Internal audit average rating 2 Rating of 2 None 

Internal audit average 

rating of 2. 

Internal audit 

rating. 

Internal audits 

Ensure adherence to 

laws, regulations and 

contractual obligations. 

100% / 1:1 100% / 1:1 80% 20% 

Actual expenditure 

to grants 

received. 

Control costs 

consistently. 

Ensure effective 

and efficient use of 

resources.


STRATEGIC THEME 6: STAKEHOLDER RELATIONS 

None 

Therisano appointed on a contract from 1 April 

to 30 November 2011 for support on media 

relations and media engagement. AITB duly 

appointed to prepare a stakeholder and communication 

strategy for the Board. Litha Communications 

appointed 12 March 2012 to assist 

the Board on media relations and stakeholder 

management. 

Service providers appointed 

to support the Board on media 

relations and stakeholder 

management and communication 

strategy. 

Conclude by September 

2011. 

Conclude 

Service Level 

Agreements by 

due date. 

Service Level Agreements. 

Formulate and enter 

into Service Level 

Agreements between 

Service Providers and 


None 

The stakeholder management function was 

adequately provided for in the organisational 

design blueprint report that was tabled with the 

Board at its meeting of 15 June 2011. 

The stakeholder management 

function adequately provided 

for in the new proposed organisational 

structure coming 

out of the OD process. 

Established by 

October 2011. 

Establish StakeholderManagement 

Function. 

Stakeholder Management 

Function 

established at the 

Board by due date. 

None 

The service provider duly started with the work 

with respect to the preparation of the stakeholder 

relations strategy. 

Service providers already 

engaged in the process of 

preparing the stakeholder relations 

strategy. 

Approved by the 

Board by June 

2011. 

Finalise Stakeholder 

Relations 

Strategy and 

submit to Board 

Stakeholder Relations 

Strategy finalised 

and approved 

by due date. 

for approval. 

Stakeholder Management 

function to drive 

strategies and implement 

Plans. 

None 



engagement plan. 

Service provider already 


preparing the stakeholder 

engagement plan. 



2012. 

Finalise StakeholderEngagement 

Plan and 


for approval. 

Stakeholder Engagement 

Plan finalised 

and approved 

by due date. 



communication strategy. 

Service provider already 


preparing the stakeholder 

communication strategy. 



2012. 

Finalised 

Stakeholder 

Communication 

Strategy and 


for approval. 

Stakeholder Communication 

Strategy 

finalised and approved 

by due date. 


None 

None 

Meetings and engagement with stakeholders 

attended as opportunities presented. 

Various engagements with 

stakeholders as the opportunities 

present. 

All/100% attendance 

and participation. 

Number / Percentage 

of meetings 

attended. 

Participation in joint 

structures - CoGTA 

technical committee 

on TAS. 

Participation in Joint 

Structures and Initiatives.

Chapter 3 

SUMMARY OF 

FINANCIAL RESULTS 

FOR THE YEAR ENDED 31 MARCH 2012 

The total MTEF allocation for the year amounted to R38 482 000. Income from sales of maps amounted 

to R17 853 whilst interest earned from bank amounted to R623 216. The total revenue for the current 

financial year is R39 123 000 and R37 879 000 (2010/11), an increase of 3% from the previous year. 

The total expenditure for the year amounted to R35 817 766 resulting in a surplus of R3 304 344. The 

surplus for the year represents 9% of MTEF allocation. 

Detailed budget information is presented below, indicating the budget, actual expenditure and variance. 

Table 1: Actual Expenditure per Expenditure Item 

Revenue 

R 

Actual 


R 

Budget 

R 

Variance 

Government grants 38 482 000 38 482 000 - 

Interest received 623 216 857 000 233 784 

Sales of maps 17 858 - (17 858) 

Total income 39 123 074 39 339 000 215 926 

Expenses 

Advertisements & promotions 445 633 262 107 (183 526) 

Annual subscription 786 585 599 579 (187 006) 

External audit fees 796 675 950 000 153 325 

Internal audit fees 699 544 1 015 690 316 146 

Bank charges 23 490 28 001 4 511 

Capacity assessment 3 145 083 4 265 685 1 120 602 

Catering expenses 86 368 85 206 (1 162) 

Cleaning services 209 692 208 678 (1 014) 

Computer consumables 182 726 181 621 (1 105) 

Conference and seminars 342 423 342 997 574 

Consulting fees 1 798 296 1 955 562 157 266

R 

Actual 

R 

Budget 

R 

Variance 

Courier services 128 523 170 000 41 477 

Data acquisition 468 620 450 000 (18 620) 

Depreciation and amortisation 1 009 020 990 577 (18 443) 

Electricity and water 203 045 195 406 (7 639) 

General expenses 78 515 64 622 (13 893) 

Insurance 203 446 259 673 56 227 

Inventory written off 30 685 - (30 685) 

ISP 178 175 160 000 (18 174) 

Legal fees 315 368 492 595 177 226 

Members’ training expenses 54 035 50 000 (4 035) 

Members’ allowances 2 202 425 2 442 232 239 807 

Members’ travel expense 448 280 400 000 (48 280) 

Members’ meeting expenses 22 128 - (22 128) 

Minor assets less R2000 10 937 33 565 22 628 

Motor vehicle expenses 31 663 34 503 2 840 

Other subscriptions 119 195 116 943 (2 252) 

Postages services 34 555 38 000 3 445 

Printing & photocopying 429 416 340 190 (89 227) 

Professional subscription 23 258 36 641 13 383 

Publications notices and gazette 2 002 420 1 980 000 (22 420) 

Rent paid 2 351 429 2 340 734 (10 695) 

Repairs and maintenance 25 592 22 077 (3 515) 

Salaries 12 061 312 12 549 273 487 961 

Staff training 247 767 262 968 15 201 

Security services 176 569 175 823 (746) 

Stakeholder management 1 339 682 1 779 642 439 960 

Stationery 152 257 194 510 42 253 

Storage fees 22 928 19 089 (3 839) 

Telephone expenses 239 195 240 530 1 335 

Travel and accommodation 2 690 812 3 604 282 913 470 

Total expenditure 35 817 766 39 339 000 3 521 234 

Loss on disposal of assets (963) - 963 

Surplus for the year 3 304 344 - 3 304 344 


Chapter 4 

MANAGEMENT 

REPORT 

1. GENERAL REVIEW OF THE STATE OF FINANCIAL AFFAIRS 

DETAILS 

2007 2008 2009 2010 2011 

R'000 % R'000 % R'000 % R'000 % R'000 % 

Income 25,873 100% 21,022 100% 25,952 100% 35,287 100% 37,933 100% 

CoGTA 24,959 96% 20,664 98% 25,420 121% 34,557 98% 37,187 98% 

Donor 650 3% - 0% - 0% - 0% - 0% 

Other 264 1% 358 2% 532 3% 730 2% 746 2% 

Expenditure 22,408 100% 15,863 100% 24,619 100% 27,639 100% 36,031 100% 

Board remuneration 2,745 12% 1,177 6% 1,199 6% 1,006 4% 1,692 5% 

Salaries 4,949 22% 6,447 31% 8,224 40% 10,705 39% 11,322 31% 

Insurances 402 2% 176 1% 425 2% 166 1% 203 1% 

Professional Fees 6,115 27% 4,093 20% 4,417 21% 429 2% 3,580 10% 

Auditors costs 578 3% 932 5% 715 3% 1,003 4% 923 3% 

Donor expenses 647 3% - 0% - 0% - 0% - 0% 

Travelling costs 1,373 6% 1,297 6% 1,280 6% 1,677 6% 2,161 6% 

Telephone 298 1% 227 1% 179 1% 236 1% 243 1% 

Other 5,301 24% 1,514 7% 8,180 40% 12,417 45% 15,907 44% 

(Deficit) / Surplus 3,465 13% 5,159 25% 1,333 5% 7,648 28% 1,902 5% 


Financial management during the year 

The MTEF allocation for the year increased by 3% 

to R38,482,000 compared to the previous financial 

year. The total expenditure for the year amounted 

to R35, 817,766, resulting in a surplus of R3,304, 

344. Although some of the income was not spent, 

as at end of the financial year, the Board had commitments 

amounting to R4,587,725. It is apparent 

that the shortfall of the commitments will be 

financed by retained surplus. 

2. SERVICES RENDERED BY THE BOARD 

The Board supplies to stakeholders maps showing 

municipal boundaries on a cost to recover basis. 

Prices for maps are available for various sizes. A 

number of stakeholders have been provided maps 

or compact discs free of charge, at the discretion 

of the Manager: Municipal Demarcation Board. 

3. TRADING ENTITIES/PUBLIC ENTITIES 

There are no trading entities and public entities under 

the control of the Board. 

4. OTHER ORGANISATIONS TO WHOM TRANSFER 

PAYMENTS HAVE BEEN MADE 

None. 

5. PUBLIC/PRIVATE PARTNERSHIPS 

The Board has not entered into any such agreements. 

6. CORPORATE GOVERNANCE ARRANGEMENTS 

The Municipal Demarcation Board accepts that 

good corporate governance is essential to support 

the interests of its stakeholders. The Board 

therefore always aspires to conduct its business 

with integrity, and is committed to applying and 

enforcing appropriate corporate governance principles, 

policies and practices, in accordance with 

the guidelines of the King Report on Corporate 

Governance, 2002. 

An operating risk management committee is operational, 

and continues to review and manage the 

risks on a regular basis. 

Governance Structures are in place at the Board 

as follows: 

6.1 The Board 

The Municipal Demarcation Board (“the Board”) 

is an independent institution whose members are 

appointed for a term of five years. Members of the 

Board, and the Chairperson and Deputy Chairperson 

are appointed by the President of the Republic 

of South Africa, after a selection process which is 

laid out in section 8 of the Municipal Demarcation 

Act No 27 of 1998, for a term. There is no limit to 

the number of terms a member of the Board may 

serve, but any reappointment of a member of the 

Board is subject to the conditions and procedures 

set out in section 8 of the Local Government: Municipal 

Demarcation Act, No 27 of 1998 (“Demarcation 

Act”). The Board must be impartial and perform 

its function without fear, favour or prejudice. 

The functions and general powers of the Board are 

outlined in detail in the Local Government: Municipal 

Demarcation Act (Act 27 of 1998). 

The Board operates either as a full Board, through 

its Chairperson, or through a number of its committees. 

A formal system is in place for government 

to evaluate Board member participation and 

performance. 

6.2 The Chairperson: Municipal Demarcation 

Board 

The President of the Republic of South Africa appoints 

one member of the Board as the Chairperson: 

Municipal Demarcation Board (“Chairperson”), 

to lead the Board in all aspects of it carrying 

out its mandate, for the duration of the term of the 


The President also appoints another member of 

the Board as the Deputy Chairperson: Municipal 

Demarcation Board (“Deputy Chairperson”), for 

the duration of the term of the Board. 


The Deputy Chairperson acts as Chairperson if: 

• The Chairperson is absent or unable to carry 

out the functions of the Chairperson; 

• The position of the Chairperson is vacant. 

The Chairperson is delegated by the Board to do 

the following: 

• Is the Executive Authority of the Board in terms 

of PFMA; 

• Preside over Board meetings and Executive 

Committee meetings of the Board; 

• Responsibility to manage conflict of interest 

within the Board; 

• Evaluate Board and Board member performance; 

• Appoint Chairperson’s of Board Committees 

and other Adhoc Committees; 

• Serve as a link between the Board members 

and staff; 

• Lead the Board’s process of appointing the 

CEO; 

• Approve Board claims and other remunerative 

work undertaken by Board members for the 

Board; 

• Champion the Board’s work and its programme; 

• Is the custodian of all the MDB information; 

• Answer Parliamentary questions; 

• Liaise with principal stakeholders of the Board; 

• Issue press statements on behalf of the Board. 

6.3 The Manager: Municipal Demarcation 

Board 

The Board appoints the Manager: Municipal Demarcation 

Board, to be the Chief Executive Officer 

and Accounting Officer for the Board. 

The Manager: Municipal Demarcation Board 

(“Manager”) holds office for an agreed upon term 

not exceeding five years, but which may be renewed, 

and subject to the terms and conditions 

applicable to the employees of the Board. 

The roles of the Manager as Chief Executive and 

Accounting Officer are as follows: 


As Chief Executive Officer 

• Ensure efficient and effective administration; 

• Manage all employees; 

• Maintain discipline; 

• Carry out decisions of the Board; 

• Assign and re-assign functions between clusters 

and employees, in consultation with the 

Board, through the Chairperson. 

As Accounting Officer 

• Ensure proper financial controls; 

• Ensure effective, efficient, economical and 

transparent use of the resources of the Board; 

• Ensure that funds are collected and managed 

properly and diligently; 

• Maintain assets and manage liabilities of the 


• Comply with tax, levies, duty, pensions and audit 

commitments of the Board; 

• Settle debts and obligations within prescribed 

periods; 

• Report immediately unauthorised, irregular or 

fruitless and wasteful expenditure; 

• Take effective disciplinary steps against employees 

contravening provisions of the Demarcation 

Act, the Public Finance Management Act 

and other applicable legislation and/or policies; 

• Ensure lawful transfer of funds; 

• Ensure propriety, regularity and value for money 

when policy proposals are considered; 

• Ensure proper management of the budget; 

• Ensure proper maintenance of records, financial 

statements and reporting; 

• Ensure proper delegations. The Manager delegates 

aspects of his/her responsibilities to the 

Cluster Heads, but remains primarily accountable. 

6.4 Committees of the Board 

a. The Board may - 

i) establish one or more committees to assist 

the Board in the performance of its 

function or the exercise of its powers; and 

ii) may dissolve a committee at any time. 

b. The Board – 

i) must determine the function of a committee;

ii) must appoint the members of a committee; 

iii) must elect the Chairperson of the Committee; 

iv) may authorise a committee to co-opt advisory 

members within limits determined by 

the Board; 

v) may remove a member of a committee 

from office at any time; and 

vi) may determine a committee’s procedure. 

c. When appointing members to a committee, 

the Board is not restricted to Board members. 

d. All Board and Board committee meetings 

must be held in accordance with the Meetings 

Procedure Policy. 

e. All members of committees of the Board shall 

declare their interest at each and every Board 

or Committee meeting. 

f. The Board and all its Committee’s shall perform 

an evaluation of its performance, at least 

annually, to determine whether it functions effectively. 

g. The following intermediatories should complete 

the evaluations: 

i. The relevant Committee’s members; 

ii. All Board members. 

h. The results of the evaluations should be 

presented to the relevant Committee and 

then to the Board for discussion. 

i. Decisions taken at all committee meetings, 

including the management committee, 

must be recorded by way of formal 

minutes. All Board and Committee meetings 

will be recorded electronically. 

All committees through which the Board operates 

derive their mandate from the Board. They are 

able to request whatever professional service is 

required for the performance of their mandate. 

With the exception of the Management, Operating 

Risk Management and IT Steering Committee, all 

the committees of the Board meet with the concurrence 

of the Chairperson of the Board. 

The Municipal Demarcation Board has the following 

committees. 

Management Level Committees: 

i. The Management Committee 

The Management Committee is responsible for 

strategy implementation and managing the day 

to day affairs of the Municipal Demarcation Board 

and its Clusters in accordance with the policies, 

procedures and objectives approved by the Board. 

The Management Committee comprises: 

• The Manager: Municipal Demarcation Board 

(Chief Executive Officer) – Committee Chairperson; 

• Chief Financial Officer 

• Head: Administration and Human Resources 

• Head: GIS and IT 

• Head: Research and Investigation 

The Manager: Municipal Demarcation Board convenes 

meetings of the Management Committee to: 

• Review progress with all projects that are being 

undertaken by the administration, identify 

and resolve all problems and issues that may 

impede progress; 

• Consider and decide on all day to day matters 

with regard to: 

• Implementation of Board resolutions; 

• Office Administration; 

• Employment and deployment of Resources; 

• Adherence to policies and procedures; 

• Improvements to the work environment; 

• Concerns of staff members on various issues; 

• Budget Management; 

• Procurement of goods and services; 

• Compliance to relevant legislation and regulations; 

• Logistics for various Board-related events and 

work. 

ii. The Operating Risk Management Committee 

The Operating Risk Management Committee is 

responsible for identifying possible risks that the 

Board may face and the implementation of ways 

to mitigate those risks. 


The Operating Risk Management Committee comprises: 


(Chief Executive Officer) – Committee Chairperson 

• Chief Financial Officer (Risk Officer) 



• Head: Research and Investigation 

• Internal Auditors (By invitation) 

The terms of reference for the Operating Risk 

Management Committee are outlined in a separate 

document. 

iii. The IT Steering Committee 

The IT Steering Committee is responsible for 

aligning information management strategies with 

the organisational mission and vision, and to facilitate 

the achievement of optimal information management 

The IT Steering Committee comprises: 


(Chief Executive Officer) – Committee Chairperson; 

• Chief Financial Officer – Deputy Committee 

Chairperson 



• IT Specialist 

The terms of reference for the IT Steering Committee 

are outlined in a separate document. 

Board Level Committees: 

iv. The Executive Committee 

The Executive Committee oversees the strategic 

and operational activities of the Board, as implemented 

by management on a day to day basis. 

The Executive Committee will also act as the 

Board Affairs Committee. 


The purpose of the Executive Committee is therefore 

to ensure that the Board functions efficiently 

and effectively, through a more regular interaction 

with the day to day activities of the Board, and 

making crucial and timeous decisions on behalf of 


The Executive Committee comprises: 

• The Chairperson: Municipal Demarcation 


• The Deputy Chairperson: Municipal Demarcation 


• One other member of the Board; 

• The Chairperson of the Audit Committee (Outside 

expert) 


(Ex-Officio) 

The Chairperson: Municipal Demarcation Board 

or the Deputy Chairperson: Municipal Demarcation 

Board, as the case may be, convenes meetings 

of the Executive Committee. 

The terms of reference for the Executive Committee 

are: 

• Review the Board’s Corporate Governance 

Guidelines and related documents at least annually, 

and make such recommendations to 

the Board with respect thereto as it may deem 

advisable; 

• Provide comments and suggestions to the 

Board concerning committee structure of 

the Board, Committee operation, Committee 

member qualification and committee member 

appointment; 

• Establish and maintain procedures for interested 

parties to communicate with the Board 

members; 

• Establish and maintain procedures for the review 

of Board member interest; 

• Review any allegation that an Executive Officer 

or Board member may have violated the 

Board’s Standards of Business Conduct and 

report its finding to the Board and the Auditor- 

General;

• Provide oversight of the performance and effectiveness 

of the self-evaluation process for 

the Board and its Committees; 

• Take such other actions and do such other 

things as may be referred to it from time to 

time by the Board. 

v. The Remuneration and Human Capital Committee 

The Remuneration and Human Capital Committee 

(RemCom) oversees and reviews the overall operations 

and operational relations of the Board and 

its administration, and to make recommendations 

in this regard to the Board. The Committee evaluates 

the performance of all employees in its administration. 

It evaluates all senior management 

on its own, and works with the Manager to review 

the rest of the administration’s performance. 

The Remuneration and Human Capital Committee 

comprise: 

• Four members of the Board, with one as Committee 

Chairperson and another one as Deputy 

Committee Chairperson; 


(Ex-Officio). 

The terms of reference for the Remuneration and 

Human Capital committee are: 

• The Chairperson of the committee reports to 

the Board on the committee’s deliberations 

and decisions, and makes appropriate recommendations 

in this regard to the Board. 

• Consider and recommend to the Board policies 

relating to Human Resources at the Board 

and ensure the implementation thereof; 

• Oversee the effective and continued implementation 

of Performance Management practises 

and policies; 

• Oversee and ensure that performance management 

are linked to job descriptions during 

assessment time; 

• Acts as a performance assessment committee 

and a moderating body to oversee assessment 

remarks; 

• Oversee the effective and continued implementation 

of the recognition and reward practises 

and policies; 

• Oversee the overall performance management 

of the organisation; 

• Monitor and review disciplinary action/s taken 

in the organisation; 

• Oversee rank promotions of Board employees 

and be able to monitor objective implementation 

of that; 

• Consider and recommend periodically the review 

of the appropriateness of the organisational 

structure; 

• Ensure that employees’ service benefits conform 

to labour laws; 

• Monitor the environment and capacity of the 

Board’s organisation and to ensure that it is 

conducive for the Board to deliver desired outcomes; 

• Act as Selection Panel for all Senior Management 

Positions (Levels 13 & 14); 

• Oversee and make recommendations to the 

Board regarding the remuneration, allowances 

and other conditions of office of members 

of committees in terms of section 18 of the Demarcation 

Act. 

• Oversee the Human Capital Development, including: 

ͦ Training and Development; 

ͦ Recruitment and Selection; 

ͦ Employment Equity. 

• Oversee issues related to Labour Relations. 

vi. The Audit and Risk Committee 

The Audit and Risk Committee at the Board is responsible 

for improving management reporting by 

overseeing audit functions, internal controls and 

the financial reporting process. The Audit and 

Risk Committee has written terms of reference 

(the Audit Charter), which sufficiently describes its 

membership, authority and duties. 

The Chairperson of the Audit and Risk Committee 

is an independent financial and audit expert who 

is not a member of the Board. The majority of the 

members of the Audit and Risk Committee at the 

Board are financially literate. 


Duties of the Audit and Risk Committee at the 

Board include helping the Board and Management 

to comply with obligations under the Public 

Finance Management Act (PFMA) and providing 

a forum for communication between the Board 

Members, Senior Management and the Internal 

and External Auditors of the Board to ensure, inter 

alia, the adequacy of the Board’s internal controls. 

The Audit and Risk Committee comprises: 

• A Chairperson - an independent accounting 

and auditing expert who is not a member of 

the Board; 

• Five members of the Board, most of whom 

are financially literate and one whom shall be 

Deputy Committee Chairperson; 


(Ex-Officio); 

• The Chief Financial Officer (Ex-Officio); 

• Representative(s) of the Internal Auditors (by 

invitation); 

• Representative(s) of the External Auditors (by 

invitation). 

The terms of reference for the Audit and Risk Committee 

are outlined in the Audit and Risk Committee 

Charter. 

vii. The Boundaries, Powers & Functions Committee 

The Boundaries, Powers & Functions Committee 

oversee and monitors the overall work programme 

of the Board around municipal categorisation and 

re-categorisation and boundary re-determination, 

as well as Municipal Powers and Functions. 

The Boundaries, Powers & Functions Committee 

comprise: 

• Six members of the Board, with one as Committee 

Chairperson and another one as Deputy 

Committee Chairperson; 

• Invited representation from the Department of 

Co-operative Governance and Traditional Affairs 

(GoGTA), the South African Local Government 

Association (SALGA) and provincial 

departments of local government. 


The terms of reference for the Boundaries, Powers 

& Functions Committee are: 

• Monitor the work programme on municipal 

boundary re-determination; 

• Monitor the work programme on Powers and 

Functions; 

• Categorisation and re-categorisation of municipalities; 

• Serve as a consultative forum between the 

Board and stakeholders on matters of boundaries, 

categorisation, re-categorisation, powers 

and functions and ward delimitation. 

6.5 Meetings of the Board and its Committees 

The Board and its committees meet regularly to 

attend to business at hand. Details of Board and 

Committee meetings during the period under review 

are as follows: 

6.6 Approval Framework 

The Board has adopted a comprehensive set of 

policies and procedures, which outline an approval 

framework to govern the authorisation processes 

at the Board. 

6.7 Language Medium 

All documentation and/or correspondence of the 

Board will be in English, but reasonable requests 

may be directed to the Board to make documentation 

and/or correspondence available in any one of 

the official languages. 

6.8 Batho Pele (People First) Principles 

This is the service delivery flagship programme 

for the public service in South Africa. The 

programme applies to all constitutional institutions 

as well, and in this regard, the Board adheres to 

these principles. This programme is one of the 

government’s initiatives to improve delivery in the 

public service. 

For the transformation of public service delivery 

to succeed, Batho Pele requires service delivery

REMUNERATION BOUNDARIES, 

AUDIT & HUMAN POWERS & 

BOARD MEMBERS 2009 – 2014 

FIVE YEAR TERM COMMENCED ON 

FULL BOARD 

EXECUTIVE 

COMMITTEE 

AND RISK 

COMMITTEE 

CAPITAL 

COMMITTEE 

FUNCTIONS 

COMMITTEE 

20 FEBRUARY 2009 

M A % M A % M A % M A % M A % 

Mr LJ Mahlangu (Chair) 7 7 100 8 8 100 8 2 25 5 2 40 6 3 50 

Ms N Gwayi (Deputy Chair) 7 7 100 8 8 100 6 6 100 

Prof NC Steytler 7 6 85 5 2 40 

Khosi TJ Ramovha 7 2 29 8 5 63 8 2 25 5 5 100 

Mr LD Tsotetsi 7 7 100 8 7 88 5 5 100 

Ms SGS Castle 7 7 100 8 7 88 6 6 100 

Ms WL Ovens 7 4 57 8 7 88 6 2 33 

Ms LK John 7 5 71 5 5 100 6 3 50 

Mr AM Adam 

Legend: 

M. Meetings convened. 

A. Attendance by Board members 

7 7 100 8 6 75 6 5 83 

principles be implemented. These principles highlight 

the need to: 

• Regularly consult with customers 

• Set service standards 

• Increase access to services 

• Ensure higher level of courtesy 

• Provide more and better information about 

services 

• Increase openness and transparency about 

services 

• Remedy failures and mistakes; and 

• Give the best possible value for money. 

7. INTERNAL CONTROL SYSTEMS AT THE 


The internal control systems were introduced at 

the Board to provide management and the Board 

with comfort regarding the financial position of the 

Board, safeguarding of assets (including information) 

and compliance with related laws and regulations. 

Our internal auditors monitor the functioning 

of the internal control systems and make recommendations 

to management and to the Audit and 

Risk committee of the Board. 

The Auditor-General has considered our internal 

control systems as part of his audit and identified 

some deficiencies. All internal control systems do, 

however, have inherent shortcomings, including 

the possibility of human error and the evasion or 

flouting of control measures. Even the best internal 

control system may provide only partial assurance. 

The Board’s internal control and systems were 

designed to provide reasonable, and not absolute, 

assurance as to the integrity and reliability of 

the financial statements; to safeguard, verify and 

maintain accountability of its assets and to detect 

fraud, potential liability, loss and material misstatement, 

while complying with applicable laws and 

regulations. 

The Board evaluated its internal control systems 

as at 31 March 2012 with specific regard to financial 

reporting and safeguarding of assets against 

unauthorised purchases or use. During the period 

under review, the internal control system found no 

material shortcomings which led to a material loss 

that should be reflected in the financial statements 

or the external report. 


8. INTERNAL AUDIT 

The internal audit function is an independent appraisal 

mechanism which evaluates the Board’s 

procedures and systems (including internal control, 

disclosure procedures and information system), 

ensuring that these are functioning effectively. 

During the year under review, the internal audit 

function performed carried out its audits in terms of 

an approved internal audit plan. Details of internal 

audit activity are presented in Chapter 2. 

9. DISCONTINUED ACTIVITIES/ACTIVITIES TO BE 

DISCONTINUED 

None. 

10. EVENTS AFTER THE REPORTING DATE 

None. 

11. GOING CONCERN 

The financial statements have been prepared 

on the going concern basis, since there is every 

reason to believe that the Board has adequate resources 

to continue in operation for the foreseeable 

future. 

12. PERFORMANCE INFORMATION 

During the year, the Framework for Managing 

Program Performance Information issued by the 

National Treasury was implemented. This was to 

ensure that performance information is collected, 

verified and reported on a quarterly basis to the 

Board and the Department of Cooperative Governance 

and Traditional Affairs. Performance information 

includes predetermined strategic objectives, 

key performance indicators, results achieved 

and explanations where there are variances. Performance 

information for the year is presented on 

Chapter 2 of the Annual Report. 

APPROVAL 


The annual financial statements are hereby approved 

by the Accounting Officer. 

Accounting Officer 

31 May 2012

REPORT OF THE 

AUDIT AND RISK COMMITTEE 

Mr S.M. Radebe 

Chairperson 

Audit and Risk Committee 

“ The Audit and Risk Committee is satisfied 

that the internal audit function is 

operating effectively and that it has addressed 

the risks pertinent to the entity 

in its audit.” 

We are pleased to present our report for the financial 

year ended 31 March 2012. 

1. AUDIT AND RISK COMMITTEE MEMBERS AND 

ATTENDANCE 

The Audit and Risk Committee consists of the 

members listed below and meets at least four 

times per annum as per its approved terms of reference. 

During the year under review eight meetings 

were held. 

NAME OF MEMBER 

Mr Seth M Radebe: 

NUMBER OF 

MEETINGS 

ATTENDED PERCENTAGE 

Committee Chairperson 8 100% 

Khosi Tshililo J Ramovha 2 25% 

Mr Ashraf M Adam 6 75% 

Ms Sumaya GS Castle 7 88% 

Ms Wendy L Ovens 7 88% 

Mr Lebina D Tsotetsi 7 88% 

2. AUDIT AND RISK COMMITTEE RESPONSIBILITY 

The Audit and Risk Committee reports that it has 

complied with its responsibilities arising from section 

38(1)(a) of the PFMA and Treasury Regulation 3.1 

The Audit and Risk Committee also reports that is 

has adopted appropriate formal terms of reference 

as its audit committee charter, has regulated its affairs 

in compliance with this charter and has discharged 

all its responsibilities as contained therein. 

3. THE EFFECTIVENESS OF INTERNAL CONTROLS 

The system of internal control applied by the entity 

over financial risk and risk management is effective, 

efficient and transparent. 

In line with the PFMA and the King III Report on 

Corporate Governance requirements, Internal 

Audit provides the Audit and Risk Committee 

and management with assurance that the internal 

controls are appropriate and effective. This is 

achieved by means of the risk management proc 


ess, as well as the identification of corrective actions 

and suggested enhancements to the controls 

and processes. From the various reports of the 

Internal Auditors, the Audit Report on the Annual 

Financial Statements and the management report 

of the Auditor-General, it was noted that matters 

were not reported indicating any material deficiencies 

in the system of internal control or any deviations 

there from. Accordingly, we can report that 

the system of internal control for the period under 

review was efficient and effective. 

4. EVALUATION OF THE FINANCIAL STATEMENTS 

The Audit and Risk Committee has: 

• Reviewed and discussed the audited annual 

financial statements to be included in the annual 

report, with the Auditor-General and the 

Accounting Officer; 

• Reviewed the Auditor-General’s management 

report and management’s response thereto; 

• Reviewed the changes in accounting policies 

and practices; 

• Reviewed the entity’s compliance with legal 

and regulatory provisions. 

The Audit and Risk Committee concurs and accepts 

the Auditor-General’s conclusions on the 

annual financial statements, and is of the opinion 

that the audited annual financial statements be 

accepted and read together with the report of the 

Auditor-General. 

5. RISK MANAGEMENT 

The Board has assigned oversight of the entity’s 

risk management function to the Audit and Risk 

Committee. The Committee fulfils an oversight 

role regarding financial reporting risks, internal 

financial controls, fraud risk as it relates to the financial 

reporting and information technology risks 

as it relates to financial reporting. The committee 

is satisfied with the effectiveness of the entity’s risk 

management processes. 

6. INTERNAL AUDIT 


The Audit and Risk Committee is satisfied that the 

internal audit function is operating effectively and 

that it has addressed the risks pertinent to the entity 

in its audit. 

7. AUDITOR-GENERAL OF SOUTH AFRICA 

The Audit Committee has met with the Auditor- 

General South Africa to ensure that there are no 

unresolved issues. 

Mr Seth M Radebe CA (SA) 

Chairperson: Audit And Risk Committee 

31 May 2012

Chapter 5 

ANNUAL FINANCIAL 

STATEMENTS 

Report of the Auditor-General .................................................................... 45 

Statement of Financial Performance .......................................................... 47 

Statement of Financial Position .................................................................. 48 

Statement of Changes in Net Assets .......................................................... 49 

Cash Flow Statement ................................................................................. 50 

Accounting Policies .................................................................................... 51 

Notes to the Annual Financial Statements ................................................. 61 


REPORT OF THE 

AUDITOR-GENERAL 

REPORT OF THE AUDITOR-GENERAL TO PARLIAMENT ON THE MUNICIPAL DEMARCATION BOARD 

REPORT ON THE FINANCIAL STATEMENTS 

Introduction 

1. I have audited the financial statements of the 

Municipal Demarcation Board, which comprise 

the statement of financial position as at 

31 March 2012, the statement of financial performance, 

statement of changes in net assets 

and the cash flow statement for the year then 

ended, and a summary of significant accounting 

policies and other explanatory information 

as set out on pages 47 to 71. 

Accounting authority’s responsibility for the 

financial statements 

2. The accounting officer is responsible for the 

preparation and fair presentation of these financial 

statements in accordance with South 

African Standards of Generally Accepted Accounting 

Practice (SA Standards of GRAP) 

and the requirements of the Public Finance 

Management Act of South Africa, 1999 (Act 

No. 1 of 1999) (PFMA), and for such internal 

control as management determines is necessary 

to enable the preparation of financial 

statements that are free from material misstatement, 

whether due to fraud or error. 

Auditor-General’s responsibility 

3. My responsibility is to express an opinion on 

these financial statements based on my audit. 

I conducted my audit in accordance with the 

Public Audit Act of South Africa, 2004 (Act No. 

25 of 2004) (PAA), the General Notice issued 

in terms thereof and International Standards 

on Auditing. Those standards require that I 

comply with ethical requirements and plan and 

perform the audit to obtain reasonable assurance 

about whether the financial statements 

are free from material misstatement. 

4. An audit involves performing procedures to 

obtain audit evidence about the amounts and 

disclosures in the financial statements. The 

procedures selected depend on the auditor’s 

judgement, including the assessment of the 

risks of material misstatement of the financial 

statements, whether due to fraud or error. In 

making those risk assessments, the auditor 

considers internal control relevant to the entity’s 

preparation and fair presentation of the 

financial statements in order to design audit 


procedures that are appropriate in the circumstances, 

but not for the purpose of expressing 

an opinion on the effectiveness of the entity’s 

internal control. An audit also includes evaluating 

the appropriateness of accounting policies 

used and the reasonableness of accounting 

estimates made by management, as well 

as evaluating the overall presentation of the 

financial statements. 

5. I believe that the audit evidence I have obtained 

is sufficient and appropriate to provide 

a basis for my audit opinion. 

Opinion 

6. In my opinion, the financial statements present 

fairly, in all material respects, the financial position 

of the Municipal Demarcation Board as 

at 31 March 2012, and its financial performance 

and cash flows for the year then ended in 

accordance with SA Standards of GRAP and 

the requirements of the PFMA. 

Emphasis of matters 

7. I draw attention to the matters below. My opinion 

is not modified in respect of these matters. 

Material under-spending of the budget 

8. The Municipal Demarcation Board has materially 

under spent its budget. At the date of this 

report, under spending amounted to R3 304 

000, which relates to capacity assessments 

not performed. This results in the institution 

having a significantly large cash reserve. 

REPORT ON OTHER LEGAL AND REGULATO- 

RY REQUIREMENTS 

9. In accordance with the PAA and the General 

Notice issued in terms thereof, I report the following 

findings relevant to performance against 

predetermined objectives, compliance with 

laws and regulations and internal control, but 

not for the purpose of expressing an opinion. 

Predetermined objectives 

10. I performed procedures to obtain evidence 

about the usefulness and reliability of the information 

in the annual performance report as 

set out on pages 26 to 30 of the annual report. 

11. The reported performance against predeter-

mined objectives was evaluated against the 

overall criteria of usefulness and reliability. The 

usefulness of information in the annual performance 

report relates to whether it is presented in 

accordance with the National Treasury annual 

reporting principles and whether the reported 

performance is consistent with the planned 

objectives. The usefulness of information further 

relates to whether indicators and targets 

are measurable and relevant as required by 

the National Treasury Framework for managing 

programme performance information. The 

reliability of the information in respect of the selected 

programmes is assessed to determine 

whether it adequately reflects the facts. 

12. The reliability of the information in respect of 

the selected objectives is assessed to determine 

whether it adequately reflects the facts 

(i.e. whether it is valid, accurate and complete). 

13. There were no material findings on the annual 

performance report concerning the usefulness 

and reliability of the information. 

Compliance with laws and regulations 

14. I performed procedures to obtain evidence 

that the entity has complied with applicable 

laws and regulations regarding financial matters, 

financial management and other related 

matters: 

Annual financial statements, performance and 

annual report 

15. The financial statements submitted for auditing 

were not prepared in accordance with the 

prescribed financial reporting framework and 

not supported by full and proper records as 

required by section 40(1)(b) of the Public Finance 

Management Act. Material misstatements 

of disclosure items identified by the 

auditors in the submitted financial statement 

were subsequently corrected, resulting in the 

financial statements receiving an unqualified 

audit opinion. 

Expenditure management 

16. The accounting officer did not take effective 

steps to prevent irregular expenditure, as per 

the requirements of section 38(1)(c)(ii) of the 

PFMA and Treasury Regulation 9.1.1. 

Procurement management 

17. Goods and services with a transaction value 

below R500 000 were procured without ob- 

taining the required price quotations, as required 

by Treasury Regulation 16A6.1. 

18. Quotations were awarded to suppliers whose 

tax matters had not been declared by the South 

African Revenue Services to be in order as required 

by Treasury Regulations 16A9.1(d) and 

the Preferential Procurement Regulations. 

19. Quotations were awarded to bidders who did 

not submit a declaration on whether they are 

employed by the state or connected to any 

person employed by the state, which is prescribed 

in order to comply with Treasury regulation 

16A8.3. 

Internal control 

20. I considered internal control relevant to my 

audit of the financial statements, performance 

report and compliance with laws and regulations. 

The matters reported below under the 

fundamentals of internal control are limited to 

the significant deficiencies that resulted in the 

findings on compliance with laws and regulations 

included in this report. 

Leadership 

21. The accounting officer did not exercise adequate 

oversight responsibility regarding financial 

and performance reporting and compliance 

with laws and regulations and related 

internal controls. 

Financial and performance management 

22. Management did not prepare regular, accurate 

and complete financial and performance 

reports that are supported and evidenced by 

reliable information. 

23. Management did not review and monitor compliance 

with laws and regulations. 

Pretoria 

31 July 2012 


STATEMENT OF FINANCIAL PERFORMANCE 


Revenue 

NOTES 


2012 

R’000 

2011 

R’000 

Revenue from exchange transactions 2 18 41 

Revenue from non-exchange transactions 3 38,482 37,187 

Investment income 4 623 651 

Total Revenue 39,123 37,879 

Expense 

Administrative expenses 6 10,175 13,840 

Employee cost 7 12,061 11,322 

Audit fees 8 797 923 

Project expenses 9 4,943 3,580 

Other operating expenses 10 6,833 5,525 

Depreciation 11 890 716 

Amortisation 12 119 86 

Total Expense 35,818 35,992 

(Loss)/Gain on disposal of assets 5 (1) 15 

Surplus for the year 3,304 1,902

STATEMENT OF FINANCIAL POSITION 

AS AT 31 MARCH 2012 

NOTES 

2012 

R’000 

2011 

R’000 

ASSETS 

Current assets 19,964 17,120 

Inventories 13 287 283 

Trade and other receivables – exchange transactions 14 418 405 

Trade and other receivables – non exchange transactions 0 44 

Cash and cash equivalents 15 19,259 16,388 

Non-current assets 3,705 2,802 

Property, plant and equipment 16 3,174 2,468 

Intangible assets 17 531 334 

Total Assets 23,669 19,922 

LIABILITIES 

Current liabilities 3,424 2,981 

Trade and other payables from exchange transactions 18 2,758 2,353 

Operating lease liability 19 666 628 

Total Liabilities 3,424 2,981 

NET ASSETS 

Accumulated surplus 20,245 16,941 

Total net assets and liabilities 23,669 19,922 


STATEMENT OF CHANGES IN NET ASSETS 



NOTES R’000 

Balance at 31 March 2010 15,039 

Surplus for the year ended 31 March 2011 1,902 

Balance at 31 March 2011 16,941 

Surplus for the year ended 31 March 2012 3,304 

Balance at 31 March 2012 20,245

CASH FLOW STATEMENT 


NOTES 

2012 

R’000 

2011 

R’000 

CASH FLOW FROM OPERATING ACTIVITIES 

Receipts 39,154 38,051 

Revenue from exchange transactions 49 213 

Revenue from non-exchange transactions 3 38,482 37,187 


Payments (34,370) (37,519) 

Employee costs (12,000) (11,310) 

Suppliers (22,370) (26,209) 

Net cash generated from operating activities 20 4,784 532 

CASH FLOW FROM INVESTING ACTIVITIES 

Proceeds from insured assets 4 54 

Purchase of property, plant and equipment (1,601) (945) 

Purchase of intangible assets (316) (131) 

Net cash flows from investing activities (1,913) (1,022) 

Net increase in cash and cash equivalents 2,871 (490) 

Cash and cash equivalents at the beginning of the year 15 16,388 16,878 

Cash and cash equivalents at the end of the year 19,259 16,388 


ACCOUNTING POLICIES 

The annual financial statements have been prepared 

on the accrual basis of accounting and are in 

accordance with historical cost convention unless 

specified otherwise. They are presented in South 

African Rand. Amounts in the financial statements 

are rounded to the nearest R’000. 

A summary of the significant accounting policies, 

which have been consistently applied, are disclosed 

below: 

A. BASIS OF PREPARATION 

The annual financial statements have been prepared 

in accordance with Generally Recognised 

Accounting Practice (GRAP), issued by the Accounting 

Standards Board in accordance with 

Section 40(1)(b) of the Public Finance Management 

Act (PFMA Act no 1 of 1999 as amended). 

Accounting policies for material transactions, 

events or conditions not covered by the GRAP 

reporting framework have been developed in accordance 

with paragraphs 7, 11 and 12 of GRAP 

3 and the hierarchy approved in Directive 5 issued 

by the Accounting Standards Board. 

Assets, liabilities, revenues and expenses have 

not been offset except when offsetting is required 

or permitted by a standard of GRAP. 

The financial statements incorporate the principle 

accounting policies set out below, which are 

consistent with those adopted in the previous year. 

The details of any changes in accounting policies 

are explained in the relevant policy. 


B. STANDARDS AND INTERPRETATIONS ISSUED, 

BUT NOT YET EFFECTIVE 

The MDB has not applied the following standards 

and interpretations, which have been published 

and are mandatory for the Board’s accounting periods 

beginning on or after 1 April 2012. 

Standards of GRAP effective for financial period 

commencing on or after 1 April 2012 

GRAP 21 - Impairment of Non-cash-generating 

Assets 

ASB Issue date: March 2009 

Effective date: For years beginning on or after 

1 April 2012 

The entity expects to adopt the standard for the 

first time in the 2012 annual financial statements. 

New standard of GRAP: Prescribes the procedures 

that an entity applies to determine whether 

a non-cash-generating asset is impaired and to 

ensure that impairment losses are recognised. 

The standard also specifies when an entity would 

reverse an impairment loss and prescribes disclosures. 

The impact of implementing this standard 

is expected to be immaterial in the context of this 

entity’s operations. 

GRAP 23 - Revenue from Non-exchange Transactions 

(Taxes and Transfers) 

ASB Issue date: February 2008 


1 April 2012 



New standard of GRAP: Prescribes requirements 

for the financial reporting of revenue arising 

from non-exchange transactions, other than 

non-exchange transactions that give rise to an 

entity combination. The standard deals with issues 

that need to be considered in recognising 

and measuring revenue from non-exchange 

transactions, including the identification of contributions 

from owners. The impact of implementing 

this standard is expected to be immaterial in 

the context of this entity’s operations.

GRAP 24 - Presentation of Budget Information in 

Financial Statements 

ASB Issue date: November 2007 


1 April 2012 



New standard of GRAP dealing with the presentation 

and disclosure of budget information as 

required by GRAP 1. The impact of implementing 

this standard is expected to be immaterial in 

the context of this entity’s operations 

GRAP 26 - Impairment of Cash-generating Assets 

ASB Issue date: March 2009 


1 April 2012 



New standard of GRAP: Prescribes the procedures 

that an entity applies to determine whether 

a cash-generating asset is impaired and to ensure 

that impairment losses are recognised. The 

standard also specifies when an entity would reverse 

an impairment loss and prescribes disclosures. 

The impact of implementing this standard 

is expected to be immaterial in the context of this 

entity’s operations 

GRAP 103 – Heritage Assets 

ASB Issue date: July 2008 

Effective date: 1 April 2012 

The board expects to adopt the standard for the 

first time in the 2012 Annual Financial Statements. 

New standard of GRAP dealing with the treatment 

of heritage assets which have cultural, environmental, 

historical, scientific, technological 

or artistic significance and are held indefinitely 

for the benefit of present and future generations. 

The impact of implementing this standard is expected 

to be immaterial in the context of this entity’s 

operations. 

Standards of GRAP approved but not yet effective 

for entities on the accrual basis of accounting 

GRAP 18 – Segment Reporting 

ASB issue date: March 2005 

Effective date: Not yet determined by the Minister 

of Finance 


first time when it becomes effective. 

New standard of GRAP: Prescribes the way an 

entity will present segment information. 

GRAP 20 – Related Party Disclosure 

ASB issued date: June 2011 

Effective date: Not yet determined. 

The objective of this standard is to ensure that 

an entity’s financial statements contains the disclosures 

necessary to draw attention to the possibility 

that it’s financial position and surplus or 

deficit may have been affected by the existence 

of related parties and by transactions and outstanding 

balances with such parties. 

GRAP 25 - Employee Benefits 

ASB Issue date: November 2009 

Effective date: To be determined by Minister 

The Board expects to adopt the standard for the 

first time when it becomes effective. 

New standard of GRAP dealing with the requirements 

around accounting and disclosure of employee 

benefits including short term, long term 

and post retirement employee benefits. The impact 

of implementing this standard is expected 

to be immaterial in the context of this entity’s operations 

GRAP 104 - Financial Instruments 

ASB Issue date: October 2009 

Effective date: 1 April 2012 

New standard of GRAP dealing with the recognition, 

measurement, presentation and disclosure 

of financial instruments. The impact of implementing 

this standard is expected to be immaterial 

in the context of this entity’s operations 


C. ACCRUAL BASIS 

The financial statements have been prepared on 

the accrual basis. 

D. CRITICAL ACCOUNTING ESTIMATES AND 

JUDGMENTS IN APPLYING ACCOUNTING 

POLICIES 

The Board makes estimates and assumptions that 

affect the reported amounts of assets and liabilities 

within the current and subsequent financial 

years. Estimates and judgments are continually 

evaluated and are based on historical experience 

and other factors, including expectations of future 

events that are believed to be reasonable under 

the circumstances. There does, however, not appear 

to be a significant risk that these assumptions 

will cause significant adjustments to the carrying 

amount of assets and liabilities within the subsequent 

financial years. 

(i) Fair value estimation 

The carrying value of trade receivables and 

payables are assumed to approximate their 

fair values. 

(ii) Impairment testing 

The recoverable amounts of cash-generating 

units and individual assets have been determined 

based on the higher of value-in-use 

calculations and fair values less costs to sell. 

These calculations require the use of estimates 

and assumptions. The entity reviews and tests 

the carrying value of assets when events or 

changes in circumstances suggest that the carrying 

amount may not be recoverable. 

(iii) Useful lives of property, plant and equipment 

and intangible assets 

The Board re-assesses the useful lives and 

residual lives of property, plant and equipment 

and intangible assets on an annual basis. In reassessing 

the useful lives and residual values 

of property, plant and equipment management 

considers the condition and use of the individual 

assets, to determine the remaining period 

over which the asset can and will be used. 


E. REVENUE FROM EXCHANGE TRANSACTIONS 

Exchange transactions are transactions in which 

one entity receives assets or services, or has liabilities 

extinguished, and directly gives approximately 

equal value to another entity in exchange. 

Measurement 

Revenue is measured at fair value of the consideration 

received or receivable on an accrual basis. 

Sales of goods 

Revenue from the sale of goods is recognised when: 

• significant risks and rewards of ownership of 

the goods have been transferred to the buyer; 

• the amount can be measured reliably; and it 

is probable that future economic benefits or 

service potential will flow to the Board. 

Interest income 

Revenue arising from the use of others of entity 

assets yielding interest is recognised when: 

• it is probable that future economic benefits or 

service potential will flow to the Board; and 

• the amount can be measured reliably. 

Interest is recognised using the effective interest 

rate method. 

F. REVENUE FROM NON-EXCHANGE 

TRANSACTIONS 

Non-exchange transactions are transactions that 

are not exchange transactions. In a non-exchange 

transaction, an entity either receives value from 

another entity without directly giving approximately 

equal value in exchange, or gives value to another 

entity without directly receiving approximately 

equal value in exchange. 

Recognition 

An inflow of resources from a non-exchange transaction 

recognised as an asset is recognised as 

revenue, except to the extent that a liability is also 

recognised for the same inflow.

Measurement 

Revenue from a non-exchange transaction is 

measured at the amount of the increase in net assets 

recognised by the entity. 

Conditional grants 

Revenue received from grants are recognised as 

income when the entity complies with the conditions 

of the grant. 

The revenue is deferred and recognised as a liability 

to the extent that the conditions of the grant 

have not been met. 

G. PROPERTY, PLANT AND EQUIPMENT 

Property, plant and equipment are tangible noncurrent 

assets that are held for use in the production 

or supply of goods or services, rental to others, 

or for administrative purposes, and are expected 

to be used during more than one period. 

The cost of an item of property, plant and equipment 

is the purchase price and other costs attributable 

to bring the asset to the location and condition 

necessary for it to be capable of operating in 

the manner intended by management. Trade discounts 

and rebates are deducted in arriving at the 

cost. The cost, if any, also includes the necessary 

costs of dismantling and removing the assets and 

restoring the site on which it is located. 

Initial Recognition 

The cost of an item of property, plant and equipment 

is recognised as an asset when: 

(i) It is probable that the future economic benefits 

or service potential associated with the item 

will flow to the entity; and 

(ii) The cost of the item can be measured reliably. 

Subsequent Measurement 

Property, plant and equipment are initially recognised 

as assets on acquisition date and are initially 

recorded at cost. Where an asset is acquired at no 

cost, or for a nominal cost, its cost is measured at 

its fair value as at the date of acquisition. Property, 

plant and equipment are subsequently measured 

at historical cost less accumulated depreciation 

and accumulated impairment losses. 

Subsequent costs are included in the asset’s carrying 

amount or recognised as a separate asset, 

as appropriate, only when it is probable that future 

economic benefits or service potential associated 

with the item will flow to the Board and the cost of 

the item can be measured reliably. All other repairs 

and maintenance are charged to the statement 

of financial performance during the financial 

period in which they are incurred. 

Depreciation 

Subsequent to initial measurement property, plant 

and equipment are depreciated on a straight line 

basis over their estimated useful lives to their estimated 

residual values. The useful lives of property 

plant and equipment are as follows: 

Office equipment 5 - 12 years 

Motor vehicles 5 - 8 years 

Computer equipment 3 - 9 years 

Furniture and fittings 10 -15 years 

Leasehold improvement 5 years 

When there is no reasonable certainty that the lessee 

will obtain ownership by the end of the lease 

term, the asset is fully depreciated over the shorter 

of the lease term and its useful life. 

At each reporting date, the residual values and 

useful lives of all property, plant and equipment 

are reviewed and adjusted if necessary. 

Each part of an item of property, plant and equipment 

with a cost that is significant in relation to the 

total cost of the item is depreciated separately. 

The depreciation charge for each period is recognised 

in surplus or deficit. 

De-recognition 

An asset’s carrying amount is written down immediately 

to its recoverable amount if the asset’s carrying 

amount is greater than its estimated recoverable 

amount. 


An item of property, plant and equipment is derecognised 

when the asset is disposed or when there 

are no economic benefits or service potential from 

the use of the asset. 

The gain or loss arising from derecognition of an 

item of property, plant and equipment is included 

in surplus or deficit when the item is derecognised. 

The gain or loss arising from the derecognition of an 

items of property, plant and equipment is determined 

as the difference between the net disposal proceeds, 

if any, and the carrying amount of the item. 

H. PRIOR YEAR ERRORS 

The Board shall correct material prior year errors 

retrospectively in the first set of financial statements 

authorised for issue after their discovery by: 

i) Restating the comparative amounts for the 

prior year(s) presented in which the error occurred; 

or 

ii) If the error occurred before the earliest prior 

year presented, restating the opening balances 

of assets, liabilities and accumulated 

surplus for the prior year presented. 

I. INVENTORIES 

Inventories are assets held in the form of materials 

or supplies to be consumed in the production process 

or in the rendering of services. Inventories are 

recognised as an asset when it is probable that 

future economic benefits or service potential associated 

with the item will flow to the Board, and 

when the cost of the inventories can be measured 

reliably. Where inventory is acquired at no cost, or 

for nominal consideration, their cost shall be their 

fair value as at the date of acquisition. 

The cost of inventories shall comprise all costs of 

purchase, costs of conversion and other costs incurred 

in bringing the inventories to their present 

location and condition. Inventories are valued at 

the lower of cost and current replacement cost 

where it is held for distribution at no charge or 

nominal charge, or consumption in the production 


process of goods to be distributed at no charge 

or for a nominal charge. The cost of inventories 

shall be assigned by using weighted average cost 

formula. 

J. INTANGIBLE ASSETS 

An asset is identified as an intangible asset when it: 

(i) is capable of being separated or divided from 

an entity and sold, transferred, licensed, rented 

or exchanged, either individually or together 

with a related contract, assets or liability; or 

(ii) arises from contractual rights or other legal 

rights, regardless whether those rights are 

transferable or separate from the Institution or 

from other rights and obligation. 

Initial Recognition 

Intangible assets are recognised when it is probable 

that expected future economic benefits or 

service potential attributable to the asset will flow 

to the Board and when the cost or fair value of the 

asset can be measured reliably. 

Subsequent Measurement 

Intangible assets are initially recognised as assets 

on acquisition date and are initially recorded at 

cost. Where an asset is acquired at no cost, or for 

a nominal cost, its cost is measured at it fair value 

as at the date of acquisition. 

Amortisation 

Intangible assets are amortised on a straight-line 

basis over their useful lives. After initial recognition, 

intangible assets are carried at cost less 

accumulated amortisation and accumulated impairment 

losses. The amortisation period, amortisation 

method and residual value is reviewed at 

each financial year end. The residual value of intangible 

assets is assumed to be zero. 

Computer software is stated at amortised cost and 

is amortised on a straight-line method over the estimated 

useful life of three (3) years.

De-recognition 

An item of intangible assets is derecognised when 

the asset is disposed or when there are no economic 

benefits or service potential from the use of 

the asset. 

K. LEASES 

A lease is classified as a finance lease whenever 

the terms of the lease transfer substantially all the 

risks and rewards of ownership to the lessee. All 

other leases are classified as operating leases. 

The Board as a lessee 

Assets held under finance leases are recognised as 

assets of the Board at their fair value at the inception 

of the lease or, if lower, at the present value 

of the minimum lease payments. The corresponding 

liability to the lessor is included in the statement 

of financial position as a finance lease obligation. 

Lease payments are apportioned between finance 

charges and reduction of the lease obligation so as 

to achieve a constant rate of interest on the remaining 

balance of the liability. Finance charges are 

charged to surplus or deficit for the period. 

Capitalised lease assets are depreciated in accordance 

with the accounting policy applicable to 

property, plant and equipment. 

Operating leases 

A lease is classified as an operating lease if it does 

not transfer substantially all the risks and rewards 

incidental to ownership. 

In event that lease incentives are received to enter 

into operating lease, such incentives are recognised 

as liability. The aggregate benefit of incentives 

is recognised as reduction of rental expense 

on a straight line basis, except where another 

systematic basis is more representative of the 

time pattern in which economic benefits from the 

leased asset are consumed. 

Rentals payable under operating leases are 

charged to the statement of financial performance 

on a straight-line basis over the term of the lease. 

L. IRREGULAR EXPENDITURE 

Irregular expenditure comprises expenditure, 

other than unauthorised expenditure, incurred in 

contravention of or that is not in accordance with 

a requirement of any applicable legislature, including: 

the Public Finance Management Act 1 of 1999 

(as amended by Act 29 of 1999); the State Tender 

Board Act, 1968 (Act No. 86 of 1968 or any regulation 

made in terms of that Act. 

Irregular expenditure is raised as receivables in 

the statement of financial position until it has been 

confirmed that the amounts are irrecoverable. 

Once confirmed, as irrecoverable it is charged to 

the statement of financial performance in the period 

in which they were incurred. 

M. FRUITLESS AND WASTEFUL EXPENDITURE 

Fruitless and wasteful expenditure means expenditure 

that was made in vain and would have been 

avoided had reasonable care been exercised. 

Fruitless and wasteful expenditure is raised as 

receivables in the statement of financial position 

until it has been confirmed that the amounts are irrecoverable. 

Once confirmed, as irrecoverable it is 

charged to the statement of financial performance 

in the period in which they were incurred. 

N. FINANCIAL INSTRUMENTS 

Recognition 

Financial assets and financial liabilities are recognised 

on the Board’s statement of financial position 

when the Board becomes a party to the contractual 

provisions of the instrument. 

The entity recognises financial assets using trade 

date accounting. 

The categories of financial assets for the entity are 

as follows: 

Available for sale investments are financial assets 

that are designated as available for sale or are not 

classified as: 


• Financial assets at fair value through the statement 

of comprehensive income 

• Held-to maturity investment 

• Loans and receivables 

• Available for sale. 

The categories of financial liabilities for the entity 

are as follows: 

• Financial liabilities at amortised cost or 

• at fair value through profit or loss. 

Initial measurement 

Financial instruments are initially measured at fair 

value, which includes transaction costs. 

Subsequent measurement 

Subsequent to initial recognition these instruments 

are measured as set out below. 

Impairment 

Impairment losses on financial assets are recognised 

in surplus or deficit when there is objective 

evidence that it is impaired. The impairment is 

measured as the difference between the financial 

asset’s carrying amount and the present value of 

estimated future cash flows discounted at the effective 

interest rate at initial recognition. 

If there is objective evidence that an impairment 

loss on financial assets measured at amortised 

cost has been incurred, the amount of the loss is 

measured as the difference between the asset’s 

carrying amount and the present value of estimated 

future cash flows discounted at the financial asset’s 

original effective interest rate. The carrying 

amount of the asset is reduced through the use of 

an allowance account. The amount of the loss is 

recognised in surplus or deficit. 

Financial assets 

The Board’s principle financial assets are trade receivables 

and cash and cash equivalents both fall 

into the loans and receivables category and are 

subsequently recognised at amortised cost. The 

financial assets are subject to review for impairment 

at each reporting date. 


Held-to maturity investment 

Held-to-maturity investments are financial assets 

with fixed or determinable payments and fixed maturity 

where the entity has the positive intent and 

ability to hold the investment to maturity. 

Loans and receivables 

Loans and trade receivables are measured at initial 

recognition at fair value, and are subsequently 

measured at amortised cost using the effective interest 

rate method. 

Loans and Receivables are non-derivative financial 

assets with fixed or determinable payments 

that are not quoted in an active market. They are 

included in current assets, except for maturities 

greater than 12 months, which are classified as 

non-current assets. 

Cash and cash equivalents 

The carrying amount of cash and cash equivalents 

approximates fair value due to the relatively shortterm 

maturity of these financial assets and financial 

liabilities. 

Cash includes cash on hand (including petty cash) 

and cash with banks (including call deposits). 

Cash equivalents are short-term highly liquid investments, 

readily convertible into known amounts 

of cash that are held with registered banking institutions 

with maturities of three months or less 

and are subject to an insignificant risk of change 

in value. For the purposes of the cash flow statement, 

cash and cash equivalents comprise cash 

on hand, deposits held on call with banks, net of 

bank overdrafts. The entity categorises cash and 

cash equivalents as financial assets: available for 

sale. 

Financial liabilities 

The Board’s principle financial liabilities are trade 

payables and an operating lease. They are categorised 

as financial liabilities held at amortised cost, 

are initially recognised at fair value and subsequently 

measured or amortised cost which is the initial 

carrying amount less repayments plus interest.

Trade payables 

Trade payables are recognised initially at fair value 

and subsequently measured at amortised cost 

using the effective interest rate method. 

De-recognition of financial assets 

The entity de-recognises financial assets using 

trade date accounting. 

The entity de-recognises a financial asset only 

when: 

i. The contractual rights to the cash flows from 

the financial asset expire, are settled or 

waived; 

ii. The entity transfers to another party substantially 

all of the risks and rewards of ownership 

of the financial assets; or 

iii. The entity, despite having retained some significant 

risks and rewards of ownership of the 

financial asset, has transferred control of the 

asset to another party and the other party has 

the practical ability to sell the asset in its entirety 

to an unrelated third party and is able 

to exercise that ability unilaterally and without 

needing to impose additional restrictions on 

the transfer. 

De-recognition of financial liabilities 

The entity de-recognises Financial Liabilities 

when, and only when, the entity’s obligations are 

discharged, cancelled or they expire. 

Risk Management of Financial Assets and Liabilities 

It is the policy of the entity to disclose information 

that enables the user of its financial statements to 

evaluate the nature and extent of risks arising from 

financial instruments to which the entity is exposed 

on the reporting date. 

Risks and exposure are disclosed as follows: 

Credit Risk 

Each class of financial instrument is disclosed 

separately. Maximum exposure to credit risk not 

covered by collateral is specified. Financial instruments 

covered by collateral are specified. 

Liquidity Risk 

Liquidity risk is the risk that the entity will encounter 

difficulty in meeting the obligations associated with 

its financial liabilities that are settled by delivering 

cash or another financial asset. Sufficient cash is 

maintained to manage the MDB’s liquidity risk. 

Interest Risk 

Interest rate risk originates from the uncertainty 

about the fair value or future cash flows of a financial 

instrument which fluctuate because of 

changes in market interest rates. Management 

has assessed the impact of interest rate risk on 

the operations of the entity and considers the risk 

to be negligible. 

Market Risk 

Market risk is the risk that changes in market prices, 

such as foreign exchange rates, interest rate and 

equity prices will affect the entities income or the 

value of its holdings of financial instruments. The 

objective of market risk management is to manage 

and control market risk exposures within acceptable 

parameters, while optimizing the return. 

O. IMPAIRMENT OF FINANCIAL ASSETS 

At each reporting date, the Board reviews the carrying 

amounts of its tangible and intangible assets 

to determine whether there is any indication that 

those assets have suffered an impairment loss. If 

any such indication exists, the recoverable amount 

of the asset is estimated in order to determine the 

extent of the impairment loss (if any). Recoverable 

amount is the higher of fair value less costs to sell 

and value in use. In assessing value in use, the 

estimated future cash flows are discounted to their 

present value using a pre-tax discount rate that reflects 

current market assessments of the time value 

of money and the risks specific to the asset. 

If the recoverable amount of an asset is estimated 

to be less than its carrying amount, the carrying 

amount of the asset is reduced to its recoverable 


amount. An impairment loss is recognised as an 

expense immediately. 

Where an impairment loss subsequently reverses, 

the carrying amount of an asset is increased to the 

revised estimate of its recoverable amount, but so 

that the increased carrying amount does not exceed 

the carrying amount that would have been determined 

had no impairment loss been recognised 

for the asset in prior years. A reversal of an impairment 

loss is recognized as income immediately. 

P. COMPARATIVE FIGURES 

When the presentation or classification of items 

in the Annual Financial Statements is amended, 

prior period comparative amounts are reclassified. 

The nature and reasons for the reclassification are 

disclosed. 

Q. RELATED PARTIES 

Parties are considered to be related if one party has 

the ability to control the other party or exercise significant 

influence over the other party in making financial 

and operating decisions or if the related party entity 

and another party are subject to common control. 

Related parties include individuals who have significant 

influence over the Board, such as members of 

the Board and key management personnel. Only 

transactions between the Board and related parties 

during the reporting period not at arm’s length or not 

in the ordinary course of business as well as comparative 

information are disclosed in the notes to the 

annual financial statements. 

R. SHORT-TERM EMPLOYEE BENEFITS 

The cost of short-term employee benefits (those 

payable within 12 months after service is rendered) 

such as, salaries, wages, social security 

contributions, leave pay and bonuses are recognised 

in the period in which the service is rendered 

and is not discounted. The expected cost of shortterm 

accumulating compensated absences is recognised 

as an expense as the employees render 

services that increases their entitlement or, in the 


case of non-accumulating absences, when the absences 

occur. 

The expected cost of performance bonus payments 

is recognised as an expense when there 

is a legal or constructive obligation to make such 

payments as a result of past performance. 

Accruals for leave pay and performance bonuses 

are recognised as a liability in the financial statements, 

after deducting any amount already paid. 

S. CONTINGENCIES AND PROVISIONS 

Contingent liabilities are disclosed when the Board 

has a possible obligation that arose from past 

events whose existence will be confirmed only by 

the occurrence or non-occurrence of one or more 

uncertain future events not wholly within the control 

of the Board. 

Contingent assets and contingent liabilities are not 

recognised. Contingencies are disclosed in the 

note. The note should be either an assets or liability, 

depending on the situation. 

Provisions are recognised when the Board has a 

present obligation as a result of a past event; it 

is probable that an outflow of resources embodying 

economic benefits or service potential will be 

required to settle the obligation; and a reliable estimate 

can be made of the obligation. 

Provisions are reviewed at each reporting date 

and adjusted to reflect the current best estimate. 

Provisions are reversed if it is no longer probable 

that an outflow of resources embodying economic 

benefits or service potential will be required, to settle 

the obligation. 

T. NON-CURRENT ASSETS HELD FOR SALE AND 

DISPOSAL GROUPS 

Non-current assets and disposal groups are classified 

as held for sale if their carrying amount will 

be recovered principally through a sale transaction 

rather than through continuing use. This condition

is regarded as met only when the sale is highly 

probable and the asset (or disposal group) is 

available for immediate sale in its present condition. 

Management must be committed to the sale, 

which should be expected to qualify for recognition 

as a completed sale within one year from the date 

of classification. 

Non-current assets held for sale (or disposal 

group) are measured at the lower of its carrying 

amount and fair value less costs to sell. 

A non-current asset is not depreciated (or amortised) 

while it is classified as held for sale, or while it is part 

of a disposal group classified as held for sale. 

Interest and other expenses attributable to the liabilities 

of a disposal group classified as held for 

sale are recognised in surplus or deficit. 

U. GOING CONCERN 

These financial statements have been prepared 

on the basis of accounting policies applicable to 

a going concern. The basis presumes that funds 

will be available to finance future operations and 

that the realisation of the assets and settlement of 

liabilities, contingent obligations and commitments 

will occur in the ordinary course of business. 

The ability of the Board to continue as a going 

concern is dependent upon further funding from 

Parliament. 

V. BUDGET INFORMATION 

The entity discloses a comparison of the budget 

amounts for which it is held publicly accountable 

and actual amounts as a note to the financial 

statements. The comparison of budget and actual 

amounts shall present separately for each level of 

legislative oversight: 

(i) The approved and final budget amounts; 

(ii) The actual amounts on a comparable basis. 


NOTES TO THE ANNUAL FINANCIAL STATMENTS 

FOR THE YEAR ENDED 31 ST MARCH 2012 

2. REVENUE FROM EXCHANGE TRANSACTIONS NOTES 


2012 

R’000 

2011 

R’000 

Sale of goods 18 41 

Total 18 41 

The revenue is generated from maps that are sold by the 


3. REVENUE FROM NON-EXCHANGE TRANSACTIONS 

Transfers from National Department of Cooperative Governance 

and Traditional Affairs (CoGTA) 38,482 37,187 

Total 38,482 37,187 

4. INVESTMENT INCOME 

Interest received 623 651 

Total 623 651 

This is interest received on funds invested with ABSA bank. 

5. (LOSS)/GAIN ON DISPOSAL OF ASSETS 

Loss on disposal of property, plant and office equipment during 

the year (5) (39) 

Proceeds from insurance claims 4 54 

(Loss)/Gain on assets disposal of PPE (1) 15 

6. ADMINISTRATIVE EXPENSES 

General and administrative expenses 2,870 2,362 

Advertisement 446 96 

Publications, notices and gazettes 2,002 5,984 

Telephone 239 243 

Insurance 203 203 

Members allowances 24 2,202 1,692 

Internal audit fees 700 634 

Legal fees 315 719 

Printing and photocopies 429 437 

Stationery 152 114 

Venue and facilities 342 1,229 

Minor assets 11 10 

Bank charges 23 20 

Training and staff development 241 97 

Total 10,175 13,840

7. EMPLOYEE COSTS NOTES 

2012 

R’000 

2011 

R’000 

Salaries and Wages 11,184 10,862 

Basic salaries 6,026 5,688 

Other non-pensionable allowances 2,892 2,798 

Temporary staff wages 158 323 

Leave payments 295 104 

Overtime payments 237 274 

Performance awards 586 732 

Full time member’s emoluments 24 990 943 

Social contributions (Employer’s contributions) 877 460 

UIF 36 40 

SDL 117 0 

Insurance cover 203 195 

Subsistence and travel allowance 222 199 

Leave expenses 98 (80) 

Other salary related costs 201 66 

Total 12,061 11,322 

8. AUDIT FEES 

Statutory audit 797 923 

Total 797 923 

9. PROJECT EXPENSES 

Capacity assessment 3,145 792 

Consulting fees 1,798 2,788 

Total 4,943 3,580 

10. OTHER OPERATING EXPENSES 

License renewal 787 301 

Travel and subsistence 2,691 2,161 

Courier and delivery charges 129 42 

Maintenance, repairs and running costs 

- Machinery and equipment 25 27 

Data acquisitions 469 144 

Consumables 182 376 

Inventory written down 31 0 

Rentals in respect of operating leases 

- Buildings 21 2,311 2,311 

- Plant, machinery and equipment 208 163 

Total 6,833 5,525 


11. DEPRECIATION NOTES 


2012 

R’000 

2011 

R’000 

- Office equipment 16 188 109 

- Motor vehicles 39 6 

- Computer equipment 425 399 

- Furniture and fittings 120 110 

- Leasehold improvements 118 92 

Total 890 716 

12. AMORTISATION 

- Software 17 119 86 

Total 119 86 

13. INVENTORIES 

Opening balance 283 169 

Additions for the year 306 258 

Utilised for the year (302) (144) 

Balance at end of the year 287 283 

Consumables 155 75 

Stationery 132 208 

287 283 

14. TRADE AND OTHER RECEIVABLES - EXCHANGE 

TRANSACTIONS 

Advance 0 44 

Prepaid Expense 3 0 

Deposits – operating lease 343 343 

Interest income accrued 72 62 

Balance at end of the year 418 449 

15. CASH AND CASH EQUIVALENTS 

Call deposits 19,117 16,289 

Cash at hand 142 99 

19,259 16,388 

Cash and cash equivalents at the beginning of the year 16,388 16,878 

There are no restrictions on cash held with banks.

16. PROPERTY, PLANT AND EQUIPMENT 

2012 

COMPUTER 

EQUIPMENT 

MOTOR 

VEHICLES 

OFFICE 

EQUIPMENT 

FURNITURE 

& FITTINGS 

LEASEHOLD 

IMPROVEMENTS TOTAL PPE 

Opening net carrying amount 634 72 415 898 449 2,469 

Cost 1,318 151 818 1,229 589 4,105 

Accumulated Depreciation (684) (79) (403) (331) (140) (1,636) 

Additions 475 411 607 108 0 1,601 

Disposals (4) 0 (2) 0 0 (6) 

Cost (137) 0 (6) 0 0 (143) 

Accumulated Depreciation 133 0 4 0 0 137 

Depreciation (425) (39) (188) (120) (118) (890) 

Closing net carrying amount 680 444 833 886 331 3,174 

Cost 1,656 562 1,419 1,338 589 5,563 


2011 

Opening net carrying amount 523 78 481 941 254 2,278 

Cost 807 151 777 1,162 302 3,199 

Accumulated Depreciation (284) (73) (294) (221) (48) (920) 

Additions 548 0 43 67 287 945 

Disposals (37) 0 (2) 0 0 (39) 

Depreciation (399) (6) (109) (110) (92) (716) 

Closing net carrying amount 634 72 415 898 449 2,469 

Cost 1,318 151 818 1,229 589 4,105 


• The lessee shall not make any alteration, additions or improvement to the premises without the 

Lessor’s prior written consent. 

• Any improvements made to the premises shall belong to the lessor, and may not be removed from 

the premises. 


17. INTANGIBLE ASSETS - SOFTWARE NOTES 


2012 

R’000 

2011 

R’000 

Opening net carrying amount 334 289 

Cost 627 496 

Accumulated amortisation (293) (207) 

Additions 316 131 

Amortisation (119) (86) 

Closing net carrying amount 531 334 

Cost 943 627 

Accumulated amortisation (412) (293) 

18. TRADE AND OTHER PAYABLES FROM EXCHANGE 

TRANSACTIONS 

Trade payables 1,227 857 

Accrued leave pay 18.1 834 735 

Other Provision 26 26 

Performance bonuses 671 735 

Balance at end of year 2,758 2,353 

18.1 Accrued leave pay 


Leave paid (295) 0 

Utilisation of leave during the year (476) (1,048) 

Accruals made during the year 870 966 

Total 834 735 

19. OPERATING LEASE LIABILITY 


Provision for the year 38 245 

Total 666 628

20. RECONCILIATION OF SURPLUS FOR THE YEAR TO NET CASH 

FLOWS FROM OPERATING ACTIVITIES 

2012 

R’000 

2011 

R’000 

Surplus for the year 

Adjusted for: 

3,304 1,902 

- Depreciation on property, plant and equipment 890 716 

- Amortisation of intangible assets 119 86 

- Loss/ (Gain) on sale of property, plant and equipment 1 -15 

- Movement in operating lease 38 245 

Operating cash flows before working capital changes 4,352 2,934 

Working capital changes 432 (2,402) 

- Increase in inventory (4) (114) 

- Decrease in receivables 31 172 

- Decrease in payables 405 (2,460) 

Cash generated from operations 4,784 532 

21. OPERATING LEASE COMMITMENTS 

The Board as lessee 

At the reporting date the Board had outstanding commitments under non-cancelable operating leases, 

which fall due as follows 

Up to 1 year 2,500 2,273 

1 to 5 years 2,980 5,480 

More than 5 years 0 0 

5,480 7,753 

Operating lease arrangements 

• The MDB leases the building from Wagbro Properties CC for a period of 5 years, effective from 01 

May 2009. The lease payment is R190, 832.61 per month with an annual escalation of 10%. No 

contingent rent is payable. The lease agreement is renewable for 5 years. The request thereof has 

to be submitted within six months of the expiry date of the lease. 

• The lease allows for purchase of premises after the second lease agreement. 

• When the operating lease is terminated before the lease period has expired, any payment required 

to be made to the lessor by way of penalty is recognised as an expense in the period in which 

termination takes place. 


2012 2011 

22. CHANGE IN ESTIMATE: USEFUL LIFE OF ASSETS REVIEWED R’000 R’000 

Changes in the estimated useful lives of some items of property, plant and equipment has resulted in 

the following change in depreciation for the year: 

Depreciation: PPE 

- According to initial estimated useful life (57,523) (37,305) 

- According to re-estimated useful life 27,755 12,550 

Reduced depreciation provided (29,768) (24,755) 

The computer equipment, office equipment, furniture and fittings and motor vehicles were affected by 

this change in the estimated useful life. 

23. COMMITMENTS 

- Unrecognised capital commitments 931 1,839 

- Unrecognised contractual commitments 3,657 3,924 

Total future commitments 4,588 5,763 

24. MEMBERS’ EMOLUMENTS 

Fulltime Chairperson 

MR LJ MAHLANGU 990 943 

- Salary (as determined by the Minister: CoGTA) 990 943 

CEO: MDB 

MR RH MONARE 1,014 946 

- Salary (as determined by the Board) 942 889 

- Performance bonus (as determined by the Board) 72 57 

CFO: MDB 

MR DKN LIGEGE (resigned September 2010) 0 480 


- Performance bonus (as determined by the Board) 0 56 

ACTING CFO: MDB 

MS MP LEBURU ( 01 April 2011 – 02 September 2011) 222 0 


CFO: MDB 

MS MI MATHATHO (appointed 05 September 2011) 466 0 


ACTING CFO: MDB 

MS MS MAHLANGU ( 01 February 2012 – 31 March 2012) 82 0 


Sub-total 2,774 2,369 


24. MEMBERS’ EMOLUMENTS (CONT.) 

2012 

R’000 

2011 

R’000 

Part-time Board and Committee members 

MS N GWAYI 397 302 

- Allowances (as determined by the Minister: CoGTA) 397 302 

MS WL OVENS 192 63 


MS LK JOHN 200 89 


MR LD TSOTETSI 221 185 


MS SGS CASTLE 221 201 


DR V MLOKOTI 0 48 

- Allowances (as determined by the Minister: CoGTA) 

(resigned November 2010) 0 48 

MR AM ADAM 160 69 


PROF NC STEYLER 62 38 


KHOSI TJ RAMOVHA 180 191 


MR SM RADEBE (Chairperson of the Audit and Risk Committee) 569 506 

- Allowances (as determined by the Board) 337 255 

- Other additional duties performed for the Board 232 251 

Sub-total 2,202 1,692 

Grand total 4,976 4,061 


25. STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNT 


APPROVED 

BUDGET ACTUAL AMOUNTS DIFFERENCES 

Revenue 

Revenue from non-exchange transactions 38 482 38 482 - 

Revenue from exchange transactions - 18 (18) 


Total revenue 39 339 39 123 216 

Expenses 

Administrative expenses 11 121 10 175 946 

Employee benefits 12 549 12 061 488 

Audit fees 950 797 153 

Project expenses 6 221 4 943 1 278 

Depreciation/Amortisation 991 1 009 (18) 

Other operating expenses 7 507 6 833 674 

Total expenses 39 339 35 818 3 521 

Asset disposals - (1) (1) 

Surplus for the year - 3 304 3 304 

*The budget is prepared on accrual basis. 

26. FINANCIAL RISK MANAGEMENT 

The Board’s activities expose it to some form of risk. Although the exposure to financial risk is minimal, 

the following are risk categories and factors considered by management in preparation of the financial 

statements. 

a. Credit risk 

Credit risk is the risk that a party to a financial instrument will cause a financial loss for the other party 

by failing to discharge an obligation. Credit risks consist mainly of cash deposits, cash equivalents and 

trade receivables. The MDB only deposits cash with major banks with high quality credit standing and 

limits exposure to any counter-party. 

The trading activities of the Board, sale of maps, result in very limited trade receivables. 

b. Interest rate risk 

Interest rate risk relates to fluctuation of fair value or future cash flows of financial instruments as a 

result of changes in market rates. The Board has not entered into any contractual agreement which 

expose it to interest risk. 


26. FINANCIAL RISK MANAGEMENT (CONT.) 

c. Liquidity risk 

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with 

financial liabilities. Management regularly reviews the Board’s going concern. This includes reviewing 

the effectiveness of working capital management and budgetary control. 

The following table indicates the maturity analysis for financial liabilities showing the remaining earliest 

contractual maturities. 

CARRYING 

AMOUNT 

DUE WITHIN 

1 YEAR 

DUE BETWEEN 1 

AND 5 YEARS 

2011/12 

Trade payables 2,758 2,758 0 

2010/11 

Trade payables 2,353 2,353 0 

There were no defaults during the current and previous financial year. 

d. Financial instruments 

FINANCIAL INSTRUMENT CLASSIFICATION 

CARRYING 

AMOUNT 2011/12 

(R’000) 

CARRYING AMOUNT 

2010/11 

(R’000) 

Cash and cash equivalents Cash and cash equivalents 19,259 16,388 

Trade receivables Loans and receivables 418 449 

Trade payables Financial liabilities at amortised cost 2,758 2,353 

27. IRREGULAR EXPENDITURE 

Non-compliance with Supply chain management practices 

The Board instigated a special audit investigation with regard to the awarding of the Capacity Assessment 

contract at the Board for the period 1999 to 2009. Due to the sensitivity of the investigation the 

Board did not follow the normal procurement processes. Although this was in contravention of the 

PFMA and Treasury Regulations relating to supply chain management, the Board did not suffer any 

financial loss in this regard. 

The irregular expenditure has been reported to National Treasury and the Board requested National 

Treasury to condone the expenditure. National Treasury has since declined to condone the expenditure 

that was incurred in 2010/11. No debt was raised in this regard as no person is liable in law for 

such expenditure. 

In 2011/12, the Board incurred irregular expenditure amounting to R627 675.00 as a result of noncompliance 

with PPPFA and related prescripts. 


2012 2011 

27. IRREGULAR EXPENDITURE 

R’000 R’000 


Irregular expenditure 628 726 

Irregular expenditure condoned (1,149) (73) 

Closing balance 205 726 

28. CONTINGENT ASSETS 

MATTER 

FURTHER FINANCIAL 

EXPOSURE 

R’000 DETAILS 

EN Shabalala / MDB 5 • approximate further costs of Johannesburg 

correspondent, sheriff and MacRoberts for 

warrant of execution in respect of awarded 

costs issued by the court in Johannesburg 

and served by the sheriff on the applicant; attendances 

to obtain payment of taxed costs 

from applicant 

M Adoons & others / MDB & 

others 

Matjhabeng Local Municipality 

/ MDB & others 


1 • final invoice of MacRobert Incorporated dated 

22 March 2012 

30 • approximate Bloemfontein correspondent's final 

invoice for period 14.04.2011 to date 

29. SURPLUS FUNDS 

In terms of PFMA, all surplus funds at the reporting date need to be surrendered to National Treasury. 

Approval has been obtained from National Treasury to retain the prior year surplus funds. The current 

total accumulated funds as at 31 March 2012 is R20 245 000. 

30. EVENTS AFTER REPORTING DATE 

The Board is not aware of any matters that arose after the reporting date that requires adjustment to 

the financial statement or additional disclosure. 

31. INCOME TAX EXEMPTION 

The Board is currently exempt from tax in terms of section 10(1) (CA) (i) of the Income Tax Act No 58 

of 1962.

Chapter 6 

HUMAN RESOURCES 

OVERSIGHT STATISTICS 

FOR THE PERIOD 01 APRIL 2011 TO 31 MARCH 2012 

The tables in this chapter provide important information on key human resource issues. The information 

aims to empower our key stakeholders and all who are interested in the Board and its work, to monitor 

whether the Board as an institution is, in addition to fulfilling its constitutional and other mandates, also 

achieving national transformation priorities. 

1. EXPENDITURE 

The following table summarises expenditures by Cluster (Table 1.1). The table provides an indication of 

the amount spent on personnel costs in terms of the Clusters within the Board. 

Table 1.1 – Personnel costs by Cluster, 2011/12 

CLUSTER 

TOTAL 

PERSONNEL 

COSTS 

R 

EXPENDITURE 

ON 

REMUNERATION 

R 

EXPENDITURE 

ON TRAINING 

AND OTHER 

R 

CLUSTER 

PERSONNEL COST 

AS A PERCENTAGE 

OF TOTAL 

PERSONNEL COSTS 

AVERAGE CLUSTER 

PERSONNEL COST 

R 

Cluster 1 

Administration and HR 2,148,317 1,459,838 26,009 16 306,902 

Cluster 2 

Finance and Procurement 1,829,284 1,367,507 54,592 14 261,326 

Cluster 3 

GIS and IT 3,606,636 2,474,171 215,745 27 400,737 

Cluster 4 

Research and Implementation 1,932,468 1,271,809 92,229 15 644,156 

Manager and Board members 3,686,795 3,112,495 574,300 28 368,679 


2. EMPLOYMENT AND VACANCIES 

The following table summarises the number of posts on the establishment, the number of employees, 

the vacancy rate, and whether there are any staff that are additional to the establishment. 

Table 2.1 – Employment and vacancies by Cluster, 31 March 2012 

CLUSTER NUMBER OF POSTS 

NUMBER OF POSTS 

FILLED VACANCY RATE 


NUMBER OF POSTS 

FILLED ADDITIONAL TO 

THE ESTABLISHMENT 

Manager 1 0 1 0 

Administrative Assistant 1 1 0 0 

Cluster 1 

Administration and HR 6 4 2 2 

Cluster 2 

Finance and Procurement 5 4 1 2 

Cluster 3 

GIS and IT 7 7 0 2 

Cluster 4 

Research and Implementation 4 3 1 0 

3. EMPLOYMENT CHANGES 

This section provides information on changes in employment over the financial year. Turnover rates 

provide an indication of trends in the employment profile of the Board. The following table provides a 

summary of turnover rates by Cluster (Table 3.1). 

Table 3.1 – Annual turnover rates by Cluster - 1 April 2011 to 31 March 2012 

CLUSTER 

NUMBER OF EMPLOYEES 

PER CLUSTER AS ON 1 

APRIL 2010 APPOINTMENTS TERMINATIONS 

TURNOVER RATE 

% 

Manager 2 0 1 50 

Administrative Assistant 

Cluster 1 

Administration and HR 6 0 2 33 

Cluster 2 

Finance and Procurement 5 2 2 40 

Cluster 3 

GIS and IT 7 0 0 0 

Cluster 4 

Research and Implementation 4 0 0 0

Table 3.2 identifies the major reasons why staff left the Board. 

Table 3.2 – Reasons why staff are leaving the Board 

TERMINATION TYPE NUMBER % OF TOTAL 

Death Nil - 

Resignation 3 10 

Expiry of contract 1 3.33 

Dismissal –operational changes Nil - 

Dismissal – misconduct Nil - 

Dismissal – inefficiency Nil - 

Discharged due to ill-health Nil - 

Retirement Nil - 

Other Nil - 

Total 13.33 

Total number of employees who left as a % of the total employed 13.33 

4. FOREIGN WORKERS 

No foreign nationals are employed at the Board. 

5. LEAVE UTILISATION FOR THE PERIOD 1 APRIL 2011 TO 31 MARCH 2012 

The need to carefully monitor sick leave by Board employees has become a necessity. The following 

table provides an indication of the use of sick leave by Cluster (Table 5.1). The estimated cost of the 

leave is also provided. 

Table 5.1 – Sick Leave by Cluster, 1 April 2010 to 31 March 2011 

CLUSTER 

Cluster 1 

TOTAL 

DAYS 

DAYS WITH 

MEDICAL 

CERTIFICATION 

NUMBER OF 

EMPLOYEES 

USING SICK 

LEAVE 

% OF TOTAL 

EMPLOYEES 

AVERAGE 

DAYS PER 

EMPLOYEE 

ESTIMATED 

COST 

R 

Administration and HR 17.5 3 5 16.7 3.5 24,499 

Cluster 2 

Finance and Procurement Control 13 8 2 6.66 3.25 22,209 

Cluster 3 

GIS and IT 71 24 7 23 14.2 110,677 

Cluster 4 

Research and Implementation 20 3.5 3 10 6.66 37,221 

Chairperson, Manager and Administrative 

Assistant 13 13 1 3.33 4.3 12,912 


Table 5.2 summarises the utilisation of annual leave. There is a need to monitor the annual leave to 

prevent as far as is possible, excessively high levels of accrued leave being paid at the time of termination 

of service. 

Table 5.2 – Annual Leave by Cluster, 1 April 2011 to 31 March 2012 

CLUSTER TOTAL DAYS TAKEN AVERAGE PER EMPLOYEE 

Cluster 1 

Administration and HR 124 25 

Cluster 2 

Finance and Procurement 50 10 

Cluster 3 

GIS and IT 180 26 

Cluster 4 

Research and Implementation 62 21 

Manager, Chairperson and Administrative Assistant 78.5 26 

6. EMPLOYMENT EQUITY 

Workforce Profile (1st April 2011) 

The detailed workforce profile in terms of gender and race is listed hereunder:- 

MALE FEMALE WHITE MALE FOREIGN NATIONALS 

OCCUPATIONAL CATEGORIES 

A C I A C I W W MALE FEMALE TOTALS 

Chairperson 1 1 

Manager 1 1 

Head: GIS/IT 1 1 

Head: Research & Implementation 1 1 

Chief Financial Officer 1 1 

Head: Admin & HR 1 1 

GIS Analyst 1 1 2 

Senior GIS Officer 1 1 2 

Junior GIS Officer 1 1 

IT Specialist 1 1 

Senior Researcher 1 1 2 

Administrative Assistant 1 1 

Personal Assistant 1 1 

HR Assistant 1 1 

Archivist 1 1 

Receptionist 1 1 

Auxiliary Services Officer 1 1 

Senior Finance Officer 2 2 

Procurement Officer 1 1 

Finance Officer 1 1 

TOTAL PERMANENT 6 0 3 8 0 2 2 3 0 0 24 

Temporary Employees 3 0 0 4 0 0 0 0 0 0 7 


7. LABOUR RELATIONS 

The following table summarises the outcome of disciplinary hearings conducted within the Board for the 

period under review. 

Table 7.1 – Misconduct and disciplinary hearings finalised, 1 April 2011 to 31 March 2012 

OUTCOMES OF DISCIPLINARY HEARINGS NUMBER % OF TOTAL 

Correctional Counselling Nil 0 

Verbal Warning Nil 0 

Written Warning Nil 0 

Final written warning Nil 0 

Suspended without pay Nil 0 

Fine Nil 0 

Demotion Nil 0 

Dismissal Nil 0 

Not Guilty Nil 0 

Case withdrawn Nil 0 

Total 0 

Table 7.2 – Grievances lodged for the period 1 April 2011 to 31 March 2012 

GRIEVANCES NUMBER % OF TOTAL 

Number of Grievances resolved 1 3.33 

Number of Grievances not resolved Nil 0 

Total Number of grievances lodged 1 3.33 

Table 7.3 – Strike Actions for the period 1 April 2011 to 31 March 2012 

There were no strike actions during the period under review. 

Table 7.4 – Precautionary Suspensions for the period 1 April 2011 to 31 March 2012 

Number of people suspended Nil 

Number of people whose suspension exceeded 30 days Nil 

Average number of days suspended Nil 

Cost of suspensions Nil 


Chapter 7 

STRATEGIC 

DIRECTION 

FOR THE FISCAL YEARS 2012 TO 2017 

1. STRATEGIC OUTCOME ORIENTED GOALS OF THE INSTITUTION 

STRATEGIC OBJECTIVE To determine and re-determine boundaries of local, district and metropolitan 


OBJECTIVE STATEMENT Plan and implement a process to finalise 100% of requests received, or initiated, 

in terms of Section 22 of the Demarcation Act, 1998, by 2013. 

The process will comprise of different phases including planning, consultation, 

compliance to legal provisions, and the finalisation of all changes to municipal 

boundaries during 2013. 

Action 100% of process to ensure that municipalities qualifying for metro status 

indeed become metros on the date of the next local government elections. 

Advise service delivery departments of changes to municipal boundaries. 

Declaration and withdrawal of district management areas. 

STRATEGIC OBJECTIVE Delimitation of wards for all local and metropolitan municipalities for the 2016 

local elections. 

OBJECTIVE STATEMENT Plan and implement a process to delimit wards in 100% of local and metropolitan 

municipalities by mid 2015 in terms of Schedule 1 to the Local Government: 

Municipal Structures Act, 1998. 


compliance to legal provisions, and the finalisation of all wards for the 2016 local 

elections. 

STRATEGIC OBJECTIVE Assessment of the capacity of metropolitan, district and local municipalities 

OBJECTIVE STATEMENT Ensures that consultants appointed by the Board delivers 100% of the outcomes 

specified in their contracts with the Board. Provide quality municipal 

capacity assessment reports and recommendations to MECs for local government 

regarding adjustments of powers and functions in compliance with Section 

85 of the Local Government: Municipal Structures Act, 1998. 

STRATEGIC OBJECTIVE Ensuring Good Governance and sound financial management 

OBJECTIVE STATEMENT Manage resources to accomplish strategic goals, effective financial planning, 

ensure adherence to laws, regulations and contractual obligations, ensure effective 

efficient use of resources 

Compliance with legal frameworks. 

Improve efficiency and effectiveness of administrative processes and systems. 


STRATEGIC OBJECTIVE Board supported by effective and efficient organisation, organisational processes, 

systems and practices 

OBJECTIVE STATEMENT Implement the outcomes of the Organisational Development Initiative (OD) 

Monitor individual performance contracts that supports strategic objectives 

Maintain an internship programme to mitigate risks associated with staff turnover 

Maintain acceptable employee satisfaction levels 

Develop and nurture capability at all levels within the Board 

Compliance with employment equity legislation 

STRATEGIC OBJECTIVE Stakeholder Relations 

OBJECTIVE STATEMENT Stakeholder Management function to drive strategies and implement plans 

Participation in joint structures and Initiatives 

2. PROGRAMME PERFORMANCE: PROGRAMME STRUCTURE 

The Municipal Demarcation Board programme structure is as follows: 

PROGRAMME SUB-PROGRAMME 

Operations and Research Determinations and Delimitations 

GIS and Database Management 

Research 

Financial Management and Accounting Financial Accounting and Reporting 

Financial Management 

Corporate Services Information Technology 

Programme 1: Operations and Research 

Supply Chain Management and Risk Management 

Legal and Secretariat 

Human Resources and Administration 

Stakeholder and Media Relations 

Provides management of all processes in pursuit of the legislative mandate of the Municipal Demarcation 

Board, and includes: 

• Determination and re-determination of municipal boundaries, 

• Appropriate categorisation of municipalities, 

• Advisory service on the alignment of service delivery boundaries to municipal boundaries 

• Declaration and withdrawal of declarations of district management areas 

• Delimitation of municipal wards for local government elections 

• Oversee the process to assess the capacity of municipalities to perform their functions, and render 

advice to MECs to adjust powers and functions between district and local municipalities. 


Programme 2: Financial Management and accounting 

Provides policy leadership, advice and core support services, including: 

• Financial management, 

• Financial Reporting, 

• Supply chain management, 

• Risk Management. 

Programme 3: Corporate Services 

• Human resources and administration, 

• Legal and Board secretariat, 

• Information and management services, including IT 

• Communication and stakeholder management, 

• Corporate planning, 

• Project management. 

PROGRAMME 1: OPERATIONS AND RESEARCH 

2.1. STRATEGIC OBJECTIVE 

STRATEGIC OBJECTIVE 1 To determine and re-determine boundaries of local, district and metropolitan 


OBJECTIVE STATEMENT • Plan and implement a process to finalise 100% of requests received, or 

initiated, in terms of Section 22 of the Demarcation Act, 1998, by 2013. 

• The process will comprise of different phases including planning, consultation, 

compliance to legal provisions, and the finalisation of all changes to 

municipal boundaries during 2013. 

• Action 100% of process to ensure that municipalities qualifying for metro 

status indeed become metros on the date on the next local government 

elections. 

• Advise service delivery departments of changes to Municipal Boundaries 

• Declaration and withdrawal of district management areas 

BASELINE 10% of the process namely the planning part has been finalised by July 2011. 

This will be followed by consultation with municipalities, and other stakeholders 

before the end of the 2011/12 financial year. All stakeholders requiring in loco 

consultation during 2012/13 will be visited and after completion will represent a 

40% completion of the process. During the 2012/13 financial year the first part 

of the legal process will be completed which will represent 45% of the process 

and in 2013/14 the final part of the legal process will be completed which will 

represent the last 15% of the process. 


BASELINE (CONT.) Two municipalities namely Mangaung and Buffalo City became metros on 18 

May 2011. By 2013, 100% of the process to further categorise municipalities 

qualifying to be category A municipalities, will be completed. The boundaries 

of new metros will take effect on the date of the 2016 local elections. 

Service delivery departments have opted to align their service boundaries to 

local municipalities and need to be advised on changes. 

The MDB has withdrawn all declarations of DMAs. Though Section 6 of the 

Local Government: Municipal Structures Act, 1998, allows the Board to again 

declare DMA’s it is unlikely that this will happen again. This sub-programme 

should be regarded as dormant, but may be reactivated. 

INDICATOR TITLE • Percentage of process for the re-determination of municipal boundaries 

completed. 

• Categorise 100% of municipalities qualifying to be metropolitan municipalities 

in terms of Section 2 of the Local Government: Municipal Structures 

Act, 1998, before the 2016 local government elections. 

• Conduct quarterly meetings to advise departments of changes or progress 

of alignment of service delivery boundaries. 

• 100% of ad-hoc activities completed within the shortest possible period. 

SHORT DEFINITION • A process will be followed from 2011 to 2013 to review municipal boundaries 

at the request of the Minister or MECs responsible for local government, 

or at the request of the municipalities involved, or changes initiated 

by the MDB. 

• A municipality is categorised as a metropolitan municipality when it complies 

with certain criteria provided for in Section 2 of the Local Government: 


• Over and above clear programmes and sub-programmes, many foreseen 

and unforeseen tasks are performed on an ad-hoc basis. 

PURPOSE/IMPORTANCE • Ongoing review of municipal boundaries to ensure sound spatial municipal 

areas complying with the relevant criteria provided for in the Demarcation 

Act, 1998. 

SOURCE/COLLECTION 

OF DATA 

METHOD OF 

CALCULATION 

• Compliance with Section 2 of the Local Government: Municipal Structures 

Act, 1998. 

• It is important that 100% of these are attended to, in order to ensure that 

stakeholders are satisfied with the Board’s services. 

Municipalities and persons requesting boundary changes will be requested by 

the MDB to provide data. This is provided for in Section 22 of the Demarcation 

Act, 1998. 

N/A 

DATA LIMITATIONS Some data may not be available and will have to be purchased from data vendors, 

or collected. 

TYPE OF INDICATOR Percentage of process completed. 

CALCULATION TYPE N/A 


REPORTING CYCLE The Demarcation Act, 1998 requires that the MDB submits an annual report to 

Parliament and the provincial legislatures. 

NEW INDICATOR N/A 

DESIRED 

Completion of 100% of the process by 2013. 

PERFORMANCE 

INDICATOR 

GIS and Research and Implementation Clusters. 

RESPONSIBILITY 

STRATEGIC OBJECTIVE 2 To delimit wards for all local and metropolitan municipalities for the 2016 local 

elections. 

OBJECTIVE STATEMENT Plan and implement a process to delimit wards in 100% of local and metropolitan 

municipalities by mid 2015 in terms of Schedule 1 to the Local Government: 



compliance to legal provisions, and the finalisation of all wards for the 2016 

local elections. 

BASELINE Local elections were held on 18 May 2011 within the ward boundaries delimited 

by the MDB during 2009/10. The process of delimiting wards for the 2016 

elections will commence in 2014/15. During 2013/14 a new Board will be appointed 

to deal with the ward delimitation process. 

Taking into account the 2009/10 ward delimitation process, this sub-programme 

may unfold as follows: 

2013/14 finalise policy and planning for the ward delimitation process – complete 

20% of process. 

2014/15 ward delimitation process comprising of consultation with stakeholders, 

and compliance with legal requirements – complete 50% of process. 

2015/16 finalise all wards and hand over to the IEC to prepare for the 2016 local 

elections – complete the remaining 50% of the process. 

The possibility of dealing with wards on a continuous basis in the run up to the 

2016 local elections may need to be explored. 

INDICATOR TITLE Percentage of process completed. 

SHORT DEFINITION A process will be followed from 2013 to 2015 to delimit all ward boundaries, 

within which elections will be held in 2016. This process entails the division of 

the municipalities into smaller spatial units called wards, so as to ensure that all 

wards in a municipality have more or less an equal number of registered voters 

as provided for in current legislation. 

PURPOSE/IMPORTANCE The purpose is to enhance democracy through regular elections in wards. 

SOURCE/COLLECTION Mainly internal GIS spatial data. 

OF DATA 

METHOD OF 

N/A 

CALCULATION 

DATA LIMITATIONS N/A 


TYPE OF INDICATOR Percentage of process completed. 





DESIRED 

PERFORMANCE 

Completion of 100% of the process by 2015. 

INDICATOR 


GIS and Research and Implementation Clusters. 

INDICATOR TITLE Percentage of process completed. 

STRATEGIC OBJECTIVE 3 To assess the capacity of metropolitan, district and local municipalities in line 

with the revised model. 

OBJECTIVE STATEMENT Ensures that consultants appointed by the Board deliver 100% of the outcomes 

specified in their contracts with the Board. Provide quality municipal capacity 

assessment reports and recommendations to MECs for local government regarding 

adjustments of powers and functions in compliance with Section 85 of 

the Local Government: Municipal Structures Act, 1998. 

BASELINE Since 2008/2009 no capacity assessments have been done. Section 85 provides 

that the Board must do capacity assessments when so requested by 

an MEC responsible for local government, and when re-determining municipal 

boundaries. In the past the Board opted for an annual assessment. The Board 

resolved to do another capacity assessment during the 2011/12 financial year. 

The tender process has been completed, and the process has begun. 

INDICATOR TITLE Consultants deliver 100% assessments in compliance with their contract with 


SHORT DEFINITION While capacity assessments are currently outsourced by the Board the intention 

is to transfer skills to staff in this process, with the aim of increasingly 

undertaking the assessments using internal staff. The intention of such assessments 

is to establish as to whether metropolitan, district and local municipalities 

have the capacity to perform their functions, and to empower the 

MECs responsible for local government to adjust certain powers and functions 

between district and local municipalities, as well as to provide the necessary 

support and advise. 

PURPOSE/IMPORTANCE The purpose of capacity assessments is to ensure that all municipal functions 

are placed at a level (district or local) where they can be best performed, and 

to enhance service delivery. 

SOURCE/COLLECTION Data is collected by consultants directly from municipalities. 

OF DATA 

METHOD OF 

N/A 

CALCULATION 

DATA LIMITATIONS Municipalities may not have all information available, or may provide incorrect 

information. 


TYPE OF INDICATOR Number of reports finalised in line with the revised approach and contractual 

arrangements. 





DESIRED 

PERFORMANCE 

INDICATOR 


2.2. RESOURCE CONSIDERATIONS 

100% capacity assessments done by consultants in compliance with their contract, 

and all reports submitted to the MDB. 

Project Steering Committee 

SUB-PROGRAMME 

Determination and re-determination of municipal boundaries 

Delimitation of electoral wards 

Assessment of the capacity of Metropolitan, District and Local Municipalities 

2.3. RISK MANAGEMENT 

RISK KEY CONTROLS 

Non fulfilment of requests for redetermination of 

municipal boundary leading to non-fulfilment of 

MDB mandate. 

Lack of quality assurance leading to publication of 

incorrect notices 

Inability to respond to requests received from 

Government Departments leading Departments 

not aligning to municipal boundaries 


NO OF KEY STAFF 

MEMBERS PROPOSED 

13 

Ensure there is a policy, procedure and action 

plan that complies with legislation 

Quality Assurance Review to be performed by 

senior staff in cluster 

Adequate capacity in place to respond to requests

PROGRAMME 2: FINANCIAL MANAGEMENT AND ACCOUNTING 

2.1. STRATEGIC OBJECTIVE 

STRATEGIC OBJECTIVE 1 To ensure sound financial management. 

OBJECTIVE STATEMENT Manage resources to accomplish strategic goals, effective financial planning, 

ensure adherence to laws, regulations and contractual obligations, and ensure 

effective efficient use of resources. 

BASELINE Current ratio – 2:1 

Budgeted expenditure to budgeted income - 100% / 1:1 

Internal audit rating – an average rating of 2 

Actual expenditure to revenue received - 100% / 1:1 

INDICATOR TITLE Current ratio 

Budgeted expenditure to budget income 

Internal audit rating 

Actual expenditure to revenue received 

SHORT DEFINITION Current ratio 

To give an idea of the organisation’s ability to pay back its short term liabilities 

(debt and payables) with its short term assets (cash inventory, receivables). A 

ratio under one suggests that the organisation would be unable to pay off its 

obligations if they came due at that point. 


The annual expense plan for the organisation as opposed to its revenue. 


Rating for the purpose of indicating the overall level of performance from Internal 

audit purpose for the function audited. The rating relates to internal operations, 

administrative and financial controls and audited performance relative 

to planned/policy/procedures in each function audited and is based on established 

guidelines. 


The actual expenses in relation to the revenue received. 

PURPOSE/IMPORTANCE Current ratio 

To give a sense of the efficiency of an organisation’s operating cycle by ability 

to meet short term debt obligations. 


To maintain parity between expenditure as planned and budgetary allocations. 


The rating is used to accomplish the following objectives: 

• Provide management with an indication of the relative competence with 

which functions covered by the audit were performed. 

• Measure any change in performance of the functions since the previous 

audit. 

• Provide incentive to area management to improve their operations. 

• Help to determine the frequency and extent of audit coverage which should 

be provided in the future. 


To plan in advance the expenditure against the revenue received. 



OF DATA 

METHOD OF 

Financial systems and established professional guidelines 

CALCULATION N/A 


TYPE OF INDICATOR Output 

CALCULATION TYPE Cumulative – for the year 

REPORTING CYCLE Quarterly 

NEW INDICATOR 

DESIRED 

No 

PERFORMANCE N/A 

INDICATOR 


CFO 

STRATEGIC OBJECTIVE 2 To ensure good corporate governance 

OBJECTIVE STATEMENT Compliance with legal frameworks. 

Improve efficiency and effectiveness of financial processes and systems. 

BASELINE Unqualified audit opinion by the Auditor-General 

Policies and procedures reviewed during a cycle of three years 

INDICATOR TITLE Audit opinion by the Auditor-General 

Frequency of review of policies and procedures 

SHORT DEFINITION Audit opinion by the Auditor-General 

The Auditor-General’s report which contains a clear written expression of 

opinion on the financial statements as a whole, including those matters that 

arise from the audit of financial statements and, in the opinion of the Auditor- 

General, are both important and relevant to those charged with governance in 

overseeing the financial reporting and disclosure process. 


An established mechanism and frequency for reviewing and updating each of 

the policies and procedures. 

PURPOSE/IMPORTANCE Audit opinion by the Auditor-General 

To provide the opinion of the Auditor-General on whether: 

• the financial statements give a true and fair view (or are presented fairly, in 

all material respects) in accordance with the applicable financial reporting 

framework (An unqualified opinion); 

• an unqualified opinion cannot be expressed due to the effect of any disagreement 

with management regarding departures from the applicable financial 

reporting framework/basis of accounting which result in material 

misstatement of the financial statements or due to the limitation on scope 

being not so material and pervasive as to require an adverse opinion or a 

disclaimer of opinion (A qualified opinion); 


PURPOSE/IMPORTANCE • the effect of a disagreement with management regarding departures from 

the financial reporting framework/basis of accounting is so material and 

pervasive to the financial statements that the auditor-general concludes 

that a qualification of the report is not adequate to disclose the misleading 

or incomplete nature of the financial statements.(An adverse opinion); 

• the possible effect of a limitation on scope is so material and pervasive 

that the auditor has not been able to obtain sufficient appropriate audit evidence 

to form an opinion and accordingly is unable to express an opinion 

on the financial statements.( A disclaimer of opinion) 


OF DATA 


Policies and procedures are reviewed with the necessary and stipulated frequency, 

to ensure their accuracy and completeness, and to make sure everyone 

has the same understanding of the policy, process, or situation. 

Established professional guidelines 

METHOD OF 






NEW INDICATOR 

DESIRED 

No 


INDICATOR 


CEO 


SUB-PROGRAMME 

NO OF KEY STAFF 


Ensuring Sound Financial Management 8 




Lack of alignment of budgets to strategic objectives 

leading to non achievement of strategic objectives. 

Lack of adherence to supply chain management 

policies and procedures leading to non compliance. 

Budget is not considered when incurring expenditure 

e.g. consultants leading to overspending 

Asset management processes not adequate leading 

to non compliance, lack of accountability and 

financial loss. 

Ineffective policies and procedures leading to noncompliance 

with the relevant laws and regulations 

e.g. PFMA and Treasury Regulations. 

PROGRAMME 3: CORPORATE SERVICES 

2.1. STRATEGIC DIRECTION 


Budget that is fully aligned to strategic plan. 

SCM and Procurement policies in place and enforced. 

Communication and training will be provided 

to ensure adherence. 

Tender committee considers budget before approval. 

Processes are currently in place. 

Effective policies and procedures in place and 

complied with. 

STRATEGIC OBJECTIVE 1 To ensure that the Board maintains effective and efficient organisational processes, 

systems and practices. 

OBJECTIVE STATEMENT Implement the outcomes of the Organisational Development Initiative (OD) 

Monitor individual performance contracts that supports strategic objectives 

Maintain an Internship programme to mitigate risks associated with staff turnover 

Maintain acceptable employee satisfaction levels 

Develop and nurture capability at all levels within the Board 

Compliance with Employment Equity legislation 

BASELINE 100% of actions to implement the outcomes of the Organisational Development 

Exercise (OD) as maybe adopted by the Board 

100% Submission of Quarterly Employee Performance reports 

Quarterly staff meetings and carry out half yearly employee satisfaction surveys 

1.5% - Percentage of training cost to total employee cost 

Minimum of 45% gender equity - Workforce composition: Gender equity ratio 

and affirmative action. 

INDICATOR TITLE Percentage of actions to implement the outcomes of the Organisational Development 

Exercise (OD) as maybe adopted by the Board. 

Quarterly Employee Performance reports. 

Quarterly staff meetings and carry out half yearly employee satisfaction surveys. 

Percentage of training cost to total employee cost. 

Workforce composition: Gender equity ratio and affirmative action.

SHORT DEFINITION Percentage of actions to implement the outcomes of the Organisational 

Development Exercise (OD) as maybe adopted by the Board. 

Actions and processes to design and facilitate the implementation of organisational 

development interventions to enhance organisational improvement. 

Quarterly Employee Performance reports 

Quarterly reports analysing employees’ work habits, undertaken at a fixed 

point in time to determine the degree to which stated objectives and expectations 

have been reached. 

Quarterly staff meetings and carry out half yearly employee satisfaction 

surveys 

Meetings where co-workers get together to discuss business and operations. 

Also, management communicate higher-level decisions that have been made, 

discuss progress of the team towards organisational goals, and answer any 

staff members’ questions. 

Surveys to collect data from employees of an organization to gauge satisfaction 

levels. 

Workforce composition: Gender equity ratio and affirmative action. 

Gender Equity: A social order in which women and men share the same opportunities 

and the same constraints on full participation in both the economic 

and the domestic realm. 

Affirmative action: A policy or programme designed to counter discrimination 

against historically disadvantaged racial groups and women in key developmental 

areas. 

PURPOSE/IMPORTANCE Percentage of actions to implement the outcomes of the Organisational 

Development Exercise (OD) as may be adopted by the Board. 

• To Review and re-design the current managerial arrangements and come 

up with appropriate managerial structure and levels including qualifications, 

core competencies and key performance areas for each leadership 

positions; 

• To Review and re-design non-managerial jobs in the organisation, to ensure 

that their current size match the standards and levels applied in the 

South African Public Service (National and Provincial Government Departments; 

• To develop and implement an appropriate organisational structure and size 

that is consistent with the constitutional mandate and operational requirements 

of the MDB, 

• To implement key interventions including transitional arrangements and 

change management interventions that will facilitate the smooth implementation 

of this organisational development initiative. 

Quarterly Employee Performance reports 

• To articulate the bottom line requirements of jobs in a manner that instructs, 

empowers, and holds incumbents fully accountable on an ongoing basis 

• To ensure that employees know where they stand and how they are doing 

compared to the employer’s expectations of them. 

• To form an objective and fair basis for rewarding exceptional employee 

performance. 


PURPOSE/IMPORTANCE Quarterly staff meetings and carry out half yearly employee satisfaction 

surveys 

• Provide a general understanding of what is happening in the organization 

as a whole, and how what each employee contributes adds value. 

• Ensure regular and effective communication. 

• Reduce friction by giving staff members an appropriate forum to air their 

differences and seek resolution. 

• Contribute to a sense of oneness among co-workers. 

• Discourage feelings of isolation that can develop when staff members are 

given routine work assignments that allow only minimal interpersonal communication 

during the day. 

• Prepare staff members to step in for colleagues when unforeseen or extended 

absences occur. 

• Stimulate useful ideas about how to deal with problems and how to improve 

the handling of routine situations. 

• Provide opportunity for management to be better informed about all aspects 

of the operations. 


OF DATA 

Percentage of training cost to total employee cost 

To determine and to monitor the interlink between long term HR planning vs. 

organisational strategic choices and directions, taking into account the attrition 

rates trending over the years. 

Workforce composition: Gender equity ratio and affirmative action 

• To ensure that decisions made in the planning process will have a positive 

effect on gender equality in the workplace, 

• To ensure consideration of gender equality issues in the planning process 

and a decision-making process that supports progress towards gender 

equality. 

• To ensure that qualified individuals have equal access to opportunity and 

are given a fair chance to contribute their talents and abilities, for the good 

of the organisation. 

Established professional and SA public service/government guidelines and 

regulations 

METHOD OF 






NEW INDICATOR 

DESIRED 

No 


INDICATOR 


CEO 


STRATEGIC OBJECTIVE 2 To ensure maintenance of proper administrative systems and practice as well 

as the necessary support for governance structures. 

OBJECTIVE STATEMENT Compliance with legal frameworks. 

Improve efficiency and effectiveness of administrative processes and systems. 

BASELINE Policies and procedures reviewed during a cycle of three years. 

In-house information management system developed and incremental implementation 

of content over three year MTEF period as per action plan. 

INDICATOR TITLE Frequency of review of policies and procedures 

Secretariat and stakeholder management units operational 

In-house information management system developed and implemented 

SHORT DEFINITION Frequency of review of policies and procedures 

An established mechanism and frequency for reviewing and updating each of 

the policies and procedures. 


It is the mandate of a Board Secretariat to provide top-level secretariat and 

administrative support to the Board of the organization, and the Board subcommittees, 

and to disseminate decisions of the Board to relevant stakeholders 

and follow up on agreed actions. 

The role of a stakeholder management unit is to support an organization in 

achieving its strategic objectives by interpreting and influencing both the external 

and internal environments and by creating positive relationships with 

stakeholders through the appropriate management of their expectations and 

agreed objectives. 


An information management system is a system that provides information 

needed to manage the organisation’s effectively. 

PURPOSE/IMPORTANCE Frequency of review of policies and procedures 

Policies and procedures are reviewed with the necessary and stipulated frequency, 

to ensure their accuracy and completeness, and to make sure everyone 

has the same understanding of the policy, process, or situation. 


Board Secretariat is necessary to provide top-level secretariat and administrative 

support to the Board of the organisation, and the Board sub-committees, 

and to disseminate decisions of the Board to relevant stakeholders and follow 

up on agreed actions. 

Effective management of stakeholder relationships is key to corporate reputation 

management. There are several key strategic stakeholder groupings that 

play a critical role in influencing an organisation’s reputation & trade-offs are at 

times required. 


For professional application of management techniques to collect information, 

communicate it within and outside the organization, and process it to enable 

managers to make quicker and better decisions. 



OF DATA 

METHOD OF 







NEW INDICATOR 

DESIRED 

No 

PERFORMANCE 

INDICATOR 

N/A 

RESPONSIBILITY CEO 

STRATEGIC OBJECTIVE 3 To enhance and maintain effective stakeholder relations 

OBJECTIVE STATEMENT Stakeholder Management function to drive strategies and implement plans 

Participation in Joint Structures and Initiatives 

BASELINE Stakeholder Management Function fully established by 1 April 2012, following 

budgetary approval by Treasury. 

Stakeholder Relations Strategy - Implementation process started by 1 April 2012 

Stakeholder Engagement Plan - Implementation process started by 1 April 2012 

Stakeholder Communication Strategy - Implementation process started by 1 

April 2012 

100% attendance and participation as and when invited by stakeholders to relevant 

meetings. 

INDICATOR TITLE Establish Stakeholder Management Function 

Implement Stakeholder Relations Strategy 

Implement Stakeholder Engagement Plan 

Implement Stakeholder Communication Strategy 

Number / Percentage of meetings attended 


SHORT DEFINITION Establish Stakeholder Management Function 

Establishing a component in the organisation to execute the management 

functions of planning, organising, motivating, directing and controlling the resources 

used to cope with stakeholders’ strategies. Stakeholder management 

is a continuous management process, adaptable to new stakeholder threats 

and promises, and to change strategic views of existing stakeholders. 

Implement Stakeholder Relations Strategy 

Implementation of a strategy to build and maintain the support and confidence 

of our stakeholders in the way in which we are fulfilling our mission and mandate. 

Also to continuously improve the alignment between the organisation and 

its key stakeholders. Misalignments between stakeholder expectations and the 

organisation’s actions in the social and political environment are identified and 

researched, followed by discussions with internal stakeholders to alert them to 

issues raised and to help develop and coordinate the organisation’s position 

on these. 

Implement Stakeholder Engagement Plan 

Implementation of a process of identifying stakeholders, their issues and how 

the organisation will engage with each stakeholder. 

Implement Stakeholder Communication Strategy 

PURPOSE/IMPORTANCE • To confirm with stakeholders that the organisation is well led and know 

what they want to be famous for. 

• To confirm with stakeholders that the organisation has strong organisational 

vision and direction, and has the confidence to make decisions to 

follow this through. 

• To confirm with stakeholders that the organisation has greatest clarity of 

purpose, to let the stakeholders know what an organisations is doing, and 

that it will add value to them. 


OF DATA 

METHOD OF 







NEW INDICATOR No 


DESIRED 


INDICATOR 

RESPONSIBILITY CEO 


SUB-PROGRAMME NO OF KEY STAFF 


Ensuring Good Governance 4 

Board supported by effective and efficient organisational processes, systems and 

practices 

13 

Administration 

Stakeholder relations 



Inappropriate organisational structure leading to Appropriate structure in place. 

non achievement of organisational objectives. 

Lack of a training/development programme lead- Annual performance development plan for each 

ing to unskilled employees. 

employee. 

Lack of proper Governance (e.g. Committee As- Board and Committee evaluations, valid training. 

sessments, training programme of Board Members 

etc.) leading to non compliance and irregularities. 

Lack of role clarification between Chair, Board Clear and absolute compliance to legislation. 

and its Committees on the one hand and the CEO 

and Staff on the other hand leading to misplaced 

accountability. 

Lack of stakeholder management/public relations Communication strategy and access to public in- 

leading to low profile of MDB. 

formation manual in place or to be approved. 


3. FINANCIAL RESOURCE CAPACITY TO GIVE EFFECT TO THE BOARD’S MANDATE 

The Board receives its money through appropriations by Parliament. 

a) Funding Trends – 2011/2012 to 2014/2015 

The allocation for 2012/2013 have increased by R2.1 million (5%) to R40.6 million. For 2013/14 and 

2014/15, the grants have increased by 5% in the respective years. 

Funding trends 

ITEM 2011/12 2012/13 2013/14 2014/15 

Grants 38 482 000 40 362 000 42 578 000 45 133 000 

46 000 000 

44 000 000 

42 000 000 

40 000 000 

38 000 000 

36 000 000 

34 000 000 

2011/12 2012/13 2013/14 2014/15 

Grants 

Figure 1: Grants 

Allocations per cluster 

CLUSTER 2011/12 2012/13 2013/14 2014/15 

Operations and Research 17 321 000 14 840 000 15 360 000 15 253 000 

Financial Management and Accounting 4 996 000 6 244 000 6 816 000 7 444 000 

Corporate services 17 022 000 19 775 000 20 910 000 22 954 000 

TOTAL 39 339 000 40 859 000 43 086 000 45 651 000 

30 000 000 

25 000 000 

20 000 000 

15 000 000 

10 000 000 

5 000 000 

0 

2011/12 2012/13 2013/14 2014/15 

Operations & Research Financial Management & Accounting Corporate Services 

Figure 2: Allocations per cluster 


MULTI-YEAR PROJECTIONS 


CONSOLIDATED BUDGET - 2011/12 - 2014/15 


2011/12 2012/13 2013/14 2014/15 

Income 39 339 000 40 859 389 43 086 128 45 651 943 

Transfers received 38 482 000 40 362 000 42 578 000 45 133 002 

Map Sales 22 000 25 000 27 000 28 000 

Interest Income 835 000 472 389 481 128 490 941 

Less Current Expenditure 39 339 000 40 859 389 43 086 128 45 651 943 

Administrative and operating expenses* 19 733 008 18 554 870 19 906 562 21 235 583 

Employee Cost 12 384 040 17 198 907 18 872 395 20 713 234 

Audit Fees 1 965 690 1 546 600 1 701 260 1 871 386 

Project Expenses (Capacity Assessment) 4 265 685 2 593 150 1 543 463 663 047 

Depreciation and Amortisation 990 577 965 862 1 062 448 1 168 693 

Surplus/(deficit) for the period 0 0 0 0 

Administrative expenses* 19 733 008 18 554 870 19 906 562 21 235 583 

Advertisements & Promotions 262 107 488 318 517 149 533 007 

Publications notices and gazette 1 980 000 1 595 000 2 105 000 2 645 000 

Staff Training 262 968 289 265 318 191 350 010 

Telephone Expenses - Rental & Other 240 530 372 392 409 631 450 594 

Insurance 428 873 515 760 567 336 624 070 

Members Fees 2 842 232 2 434 101 2 542 619 2 770 467 

Legal fees 492 595 767 625 844 387 928 826 

Conference and Seminars 342 997 853 355 1 008 691 1 175 816 

Minor Assets less R2000 33 565 24 858 27 344 30 078 

Bank Charges 28 001 21 233 23 357 25 692 

Catering Expenses 85 206 90 339 99 372 109 310 

Rent Paid 2 340 734 2 343 723 2 347 010 2 350 626 

Travel and subsistence 3 604 282 3 629 322 3 676 677 3 725 612 

Consulting Fees-Other 3 731 237 2 125 010 2 115 196 1 945 505 

Computer Expenses 1 391 200 1 644 354 1 808 365 1 936 931 

Electricity and Water 195 406 214 947 236 441 248 263 

General and Administrative 1 471 076 1 145 269 1 259 796 1 385 775

NOTES 


NOTES 


NOTES 


NOTES 


ie 

Communications. 

(t) +27 12 349 2811 

(f) +27 12 349 1596 

www.iecomm.co.za

MUNICIPAL DEMARCATION BOARD: 

Demarcation House 

304 Orient Str 

Arcadia 

PRETORIA 

0082 

Private Bag x28 

Hatfield 

0028 

South Africa 

Telephone: +27 12 342 2481 

Facsimile: +27 12 342 2480 

www.demarcation.org.za 

RP258/2012 

ISBN: 978-0-621-41170-6

Mr LJ Mahlangu - Municipal Demarcation Board

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