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The Executive Mayor of Capricorn District Municipality Cllr John Mpe delivered the Budget Speech 2020/2021 during a virtual council meeting held on 22 June 2020, at CDM Council Chamber at 12h00.
BUDGET SPEECH 2020/21 BY EXECUTIVE MAYOR OF CAPRICORN DISTRICT MUNICIPALITY CLLR JOHN MPE AT VIRTUAL COUNCIL MEETING.
22 June 2020
Honourable Speaker Cllr Monica Mohale;
Mayors of our municipalities;
Our Chief-whip Cllr Calvin Masoga
Members of the Mayoral Committee
Chairpersons of Section 79 and
Section 80 Committees Chairperson and
Whips from EFF, Cllr Motolla and from DA Cllr Botha
Leadership of the District House of Traditional Leaders; Kgoshi Maleboho
Our esteemed traditional leaders
Leadership of the ANC, EFF and DA present here
Our Municipal Manager and Management team
CDM supporting staff
Members of Media and community at large;
Thobela
It is my honour to present to this virtual Council meeting of Capricorn District Municipality, the Integrated Development Plan, the Medium-term Expenditure Framework and the budget for the 2020/21 financial year and related policies.
Let me start by conveying my heartfelt deepest condolences to the families, relatives and the entire world who have lost their loved ones because of the COVID-19 pandemic that has seen many people losing their lives and more testing positive. It is also sad that as a district, we currently have 101 coronavirus cases, we have lost three lives (as at the point of compiling this speech) under this pandemic. May their souls rest in peace. This is another sad reminder that we all need to take heed of the government’s call for social distancing, hygiene practices, sanitising, wearing of masks and continue staying safe,
We send our sincere condolences to the family of the former Executive Mayor of Polokwane, who was also the former chairperson of the ANC in Peter Mokaba Region, comrade Thabo Lucas Makunyane who passed on two weeks ago. May his soul rest in peace.
Allow me to also send my message of gratitude to the struggle Icon Ntate Andrew Mokete Mlangeni who just turned 95 years of age. Belated Happy birthday comrade Mlangeni. We also take this opportunity to wish the former state President, President Thabo Mbeki a belated happy 78th Birthday.
In the same breath, it is significant that we also honour the former President of the ANCYL, President Peter Ramoshwana Mokaba. This is the month Peter Mokaba died, it was on the 9th of June 2002, we are speaking here of a valiant and gallant contributor to the national liberation struggle against apartheid. His braveness must continue to inspire us and keep us soldiering on in making our district a district of excellence.
HONOURABLE COUNCILLORS
This is the first time in the history of local government that we deliver the budget speech in a manner that is novel because of the unprecedented circumstances; that are occasioned by the Covid-19 regulations which do not permit gatherings of bigger numbers.
This epidemic has compelled us to derogate from customary practice of gathering at central venue to report to you on the annual performance targets, achievements and challenges, as well as programme of action. It has also forced us to venture into the unknown terrain of approving the IDP and Budget through unconventional means of this virtual nature.
It has also changed the way we plan for the next financial year. However, Covid-19 has not stopped us from delivering on the mandate of a better life for all, a mandate to change your lives for better, a mandate to put you, the people at the centre of development. It is for this reason that we have pulled out all stops to ensure that we comply with treasury regulations to adopt the IDP and Budget and deliver this speech for 2020/21, which is the last full financial year of this council term.
HONOURABLE SPEAKER
In 2016 our people presented us with a mandate to lead and provide sustainable basic services, infrastructure development, grow the local economy, fight inequality and poverty, improve spatial development and environmental management and enhance financial liability. After almost five years at the forefront of this battle, it is quite humbling to account to the citizens of Capricorn District Municipality on how we have responded to this clarion call. We table this report conscious of the unfavorable socio-economic conditions in the District.
In the main, we are aware of the demand for clean accessible water to the remaining 11% of the population, we are also aware of the current remaining 35% of households without adequate sanitation, and the rural road network backlog on district roads. However, as we close this council mandate term, we are also mindful of the good work carried by this ANC-led District despite the discouraging current economic situation in the region, Province and that of our country at large.
POLICY DIRECTIVE
In terms of section 16(1) of Local Government: Municipal Finance Management Act, No. 56 of 2003 (MFMA), the council of a municipality must for each financial year approve an annual budget for the municipality before the start of that financial year. Section 16(2) of the MFMA states that, in order for a municipality to comply with this subsection 1, the mayor of the municipality must table the annual budget at a council meeting at least 90 days before the start of the budget year. The Draft Budget 2020/21 MTREF was duly tabled virtually on the 22 May 2020 and thereafter in radio stations within the District where after it was subjected to public and stakeholder consultation to comment on which they did.
Section 24 of the MFMA obligates municipal councils to approve their annual budgets before the start of a financial year, together with the adoption of resolutions as may be necessary.
Section 34 of the Local Government: Municipal Systems Act, No 32 of 2000 (MSA), provides that a municipal council must review its integrated development plan annually in accordance with the assessment of its performance in terms of Section 41, and to the extent that changing circumstances so demand, and may amend its integrated development plan in accordance with a prescribed process.
I am presenting the 2020/2021 IDP; Draft 2020/2021 MTREF Budget; and Budget Related Policies in accordance with the dictates of Section 34 of the MSA as indicated. The following milestones and activities were subsequently achieved in compliance with the approved Budget/IDP Process Plan:
· The 1st IDP Representative Forum took place on the 19th July 2019;
· Special IDP Representative Forum to present the District Development model that took place on the 20th January 2020;
· Departmental Strategic Planning Sessions took place between the 21 – 31 January 2020;
· Management Strategic Planning Session took place on the 27 – 28 February 2020 (Management , Local Municipalities and Stakeholders);
· Draft IDP/Budget engagement session with Councillors was held on 11th March 2020;
· The 2nd IDP Representative Forum took place on the 19th March 2020;
· Draft IDP/Budget approved on the 22th May 2020;
· Public/Stakeholder consultations through radio slots took place from 23 – 24 May on community radio stations and 09 June 2020 on Thobela fm
· Virtual Consultation meetings were held on 10 June with the Business Sector, 11 June with Sector Departments and Academic Institutions and on 12 June with the Traditional Leaders
CONSULTATIVE PERIOD
Honourable Speaker, let me remind this virtual council engagement that this budget speech is a culmination of consultative period with all partners in service delivery and also it is based on the mandate they gave to us, the inputs from communities, and stakeholders in the Integrated Development Plan and budget.
We want to thank all stakeholders and residents who participated in the processes, including representatives of non-profit organisations, business, the youth, women, people living with disability and the faith-based sectors. We also want to extent our gratitude to the masses that participated in the launch of District Development Model which was a success. We acknowledge all the inputs that also came through our WhatsApp messages and comments that were aired on radios in the district that augmented the work of our management.
FINANCIAL VIABILITY AND AUDIT PERFORMANCE
After five consecutive years of receiving unqualified audit, we have finally managed to achieve clean audit opinion for the 2018/19 financial year. This is historic and the only one in the Province and this means CDM has successfully managed to perfect its financial management systems and governance; and thus cleared all material findings from the previous financial years.
It is a culmination of many years of hard-work. Let’s recall that the financial year before this one of the clean audit outcome, we were just one material finding away from clean audit and had it not been that finding, this could have been the second clean audit. Most importantly, this clean audit confirms CDM as model provincial entity for benchmarking by other district and local municipalities.
The work continues between us and the Office of the Auditor General to retain this audit outcome and we wish not to regress to any lower bar. We pride ourselves with the support of our Municipal Public Accounts Committee (MPAC), the Audit Committee and management.
We have also thrown spanner in the works to ensure that all conditional grants are spent in order to circumvent returning any unspent portion to National Treasury. In the last financial year, we were able to spend 100% of the Municipal Infrastructure Grant (MIG) by March and subsequently received an additional R70m – which comprises of R30m in MIG and R40m in Water Services Infrastructure Grant. We intend to continue on the same trajectory and spend 100% of all conditional grants.
Honourable Speaker, I don’t intend to spend too much time in this budget speech to give elaborate details and long explanations about the plans and programmes. The purpose and business here today is to actualise the Vision we presented on last year and make allocations to all plans and ensure that we implement programmes contained in the IDP. However allow me just to give key highlights and comparison of the 2019/20 and the proposed budget of 2020/21:
WATER SUPPLY
We know the greatest plight of our people is about inadequate water supply, gravel roads, provision of sanitation etc. it is for that reason that we are making significant strides to roll out bulk infrastructure projects and ensure equitable, sustainable water supply and redress past water supply imbalances and re-affirm water as catalyst for economic development and critical to the sustenance of human life.
The district has set aside R30M for 2020/2021 to continue with forward projects planning. We have so far completed feasibility study for water projects to the value of R2, 5 Billion across our three local municipalities which will benefit 59 052 households. Business plans have been submitted to national department for funding and implementation will start once funding is available.
In Blouberg, for many years the communities have been complaining about inadequate and lack of water supply. CDM listened, heard and is intervening in most areas. Progress in terms of water projects was between 77% and 90% in the last financial year and they are now completed for the benefit of a total of 4,172 households in Blouberg.
For the next financial year, we will spend a total of R39m from WSIG to refurbish water schemes at Ga-Makgodi A and B to benefit 259 households; 2 132 households in Senwabarwana township, 1,000 at Avon and Taaibosch.
The budget for Molemole is R29m to cover Sephala, Mokopu, Thoka and Makwetja in ward 3 and 4. They will receive water from a water project that is now 95% complete. In addition, 2,134 households in Dendron will receive water once refurbishment of their water schemes is completed in the next financial year.
In Lepelle–Nkumpi, the Groothoek water supply project that we started constructing last year is at 39% and will benefit people of Lebowakgomo Zone B. In Lebowakgomo and Makotse, a water scheme will be refurbished for the benefit of 17,046 households. While Mphahlele regional water scheme for Bolatjane, Phalakwane, Makurung and Dithabaneng is at 30%. In the next financial year, we will spend R25m from WSIG, we will refurbish a water scheme in Mafefe Mahlatjane that will benefit 399 households. The Earlydawn refurbishment project will also benefit a 1,000 households; as well as 200 households at Rafiri. In total we are allocating R144 for Lepelle-Nkumpi.
In the new financial year for the entire district, we have set aside a total of R285m for all water projects in the district, R80m from WSIG for refurbishment of existing schemes, R22m for operations and maintenance; and additional R69m for bulk water purchases.
SANITATION
With regard to sanitation, one of our key infrastructure service delivery programmes aimed at restoring dignity to our people is the provision of decent sanitation facilities. To date, 65% of our households has got access to sanitation facilities. However, it will require a huge budget to clear off the 35% backlog.
Despite this, we are pleased to report that in this financial year, we managed to complete more sanitation projects thus providing 1270 households with decent sanitation; 231 households in Molemole, 689 households in Lepelle Nkumpi and 350 in Blouberg.
Going forward, we have budgeted a total budget of R18,9M for household sanitation in the district, which will be used to roll out ventilated-improved and environment friendly toilets for 500 households for Molemole and Blouberg as well as 1000 households for Lepelle Nkumpi only.
OPERATIONS AND MAINTENANCE
A great deal of water shortages in areas where there are existing projects can be ascribed to theft of water pump components, breakdowns from ageing infrastructure; which in turn creates new backlogs and drive us backward as they demand capital for refurbishments. That is why our technicians are always on stand-by to work with Lepelle Northern Water and attend to pipe bursts, leaks and breakdowns particularly in Lebowakgomo on the Specon line. It is our belief therefore that, the R22m budget that we are setting aside for 2020/21 will enable us to maintain our infrastructure while increasing access to water supply
While we wait for some of these mega projects to be completed, we shall continue to intervene in a form of water tankers in areas where shortages are severe. We are grateful to the 192 Jojo tanks and 10 water trucks that we received from the Ministry of Water and Sanitation to augment the capacity of our tanker trucks in the fight against Covid-19.
ELECTRICITY AND ENERGY
The daily life of lighting and heating in our households has been characterized and constrained by the inconvenience of load-shedding in the recent past for various reasons. As we venture into winter, we continue to work with Eskom in order to ease the load of demand on the grid by advising our residents and businesses to use electricity sparingly – with the hope and confidence that a permanent solution is mooted to fix Eskom. Let us therefore help by using our electricity efficiently and also report illegal connections. In further building the capacity of the supply of electricity, Eskom continues to work with our local municipalities to strengthen their network and we are pleased to report that they will be upgrading most of the substations between now and 2025. As a district we remain open to meaningful alternative energy that can complement the current approach.
ROADS AND TRANSPORT
Roads are becoming an everyday major outcry in our communities. Our people need us as government to tar their roads for both economic and transport reasons. While RAL is hard at work, we must accept that more needs to be done as far as roads are concerned. We have engaged the Provincial Government to change legislation to give municipalities powers to go back into tarring D-Roads which are district roads. This will assist government to increase capacity and speed in tarring roads for our communities.
We are also pleased with the progress RAL is making in upgrading gravel roads and maintaining them, while implementing new ones. Amongst others, just to mention but few:
• Polokwane – Lamburg to Matlala;
• Molemole – Morebeng to Segosese;
• Lepelle Nkumpi – Mamatonya up to Selwane.
• Blouberg – Senwabarwana to Indermark to Vivo; Blouberg Hospital to Buffelshoek Clinic; as well as maintenance of Makgate to DeVrede road.
SPATIAL PLANNING, LAND USE AND ENVIRONMENTAL MANAGEMENT
Capricorn District Municipality launched the District Development Model which seeks to ensure the integration of all government plans and serve communities more effectively, the launch happened in Moletjie under Polokwane Local Municipality. This means that no project by any sphere of government or any organ of state will now take place in the district without the involvement of the District Municipality. For 2020/21, we have set aside R1, 2m for the implementation of spatial development framework (SDF) and SPLUMA.
ECONOMIC DEVELOPMENT AND TRANSPORT PLANNING
Fellow Councillors, as you know, coronavirus has plunged the country into economic turmoil and our local economy was not spared. These turbulent times will continue for months to come before we can see some recovery on the horizon. The devastating effects of this will be mostly felt through job losses as small and medium enterprises struggle to stay open. Our SMMEs in tourism and manufacturing sectors will therefore need our support more than ever before as they gradually resume entrepreneurship activity. We will therefore continue to work with SEDA and NYDA to lend a helping hand and throw our weight behind local businesses. We are pleased that we managed to create 1 830 work opportunities through municipal EPWP and infrastructure projects. In the next financial year, we are setting aside R1,2m for entrepreneurship support through schools program (teacher graduates), SMME support as well as the promotion of SMME products.
EMERGENCY SERVICES AND DISASTER MANAGEMENT
When President Ramaphosa declared the state of disaster on 23 March, our disaster management rose to the occasion and began with preparations at district and local levels. This included the establishment of District Command Council to report on all COVID 19 matters within the district, coordinate the response to the pandemic; identification of quarantine sites and establishment of shelters to combat transmission of the virus. Our district has been hands on in ensuring compliance with COVID 19 regulations as and when they were issued.
This is because our disaster management and municipal health service are essential services that had to hit the ground running to counter the effects of covid-19 and monitor compliance to regulations. We are therefore pleased to report that tracing of contacts and cases continues throughout the district; 821 community awareness campaigns were conducted; 684 food outlets were monitored; 417 informal traders were inspected; 368 funerals were inspected for compliance to the 50-mourners limit, sanitization, and food safety, social distancing and wearing of masks. 26 taxi ranks within the district were also inspected; followed by disinfection, deep cleansing and awareness at pension pay points and clinics. In our continued efforts to increase disaster management capacity of our local municipalities, we are allocating R1,2m and to complete the TT Cholo fire station in the financial year 2020/2021.
SOCIAL TRANSFORMATION
• Madam Speaker, this pandemic has brought out the best in us and revealed how caring and compassionate our region is. CDM put the welfare of indigent households ahead and not let them face the economic effects of the lockdown alone. This we did by joining hands with public-private partners to feed those whose livelihoods were interrupted when everyone was forced to stay at home. We were therefore the first district to launch the District Food Bank which represented a fair transparent centralised distribution of food parcels to the needy whilst ensuring equal distribution throughout all wards in the district. To date in partnership with DSD, the Food Bank has now distributed 20 617 on equal distribution/ward approach as at 17 June 2020. At an estimation of +/- R500/food parcel this can be estimated at the cost of R10 308 500. To this we are grateful to all donors that have shown overwhelming generosity.
Internally, we have engendered special focus programmes aimed at freeing young people from the clutches of social ills, poverty and diseases so they can be nurtured, skilled, trained and prepared to play their role in the economy. We have tailored response programmes for young people to support and protect them from diseases such as HIV/Aids, substance abuse, crime, prostitution, joblessness and teen pregnancy – that holds them back, inhibit their youth development, subject them to abject poverty, putting them at greater risk of death and on the edge of subsistence. We also continued waging war against violence against women and children; forged partnerships with our social partners to protect the elderly from abuse. For the next financial year, we set aside R1,1m to for these social transformation programmes.
GOOD GOVERNANCE
In building clean administration, we continue to take a zero-tolerance approach to ill-discipline, corruption, laziness and tardiness. In fraud prevention, we’ve done everything possible to identify areas where fraudulent activities are suspected and also investigated cases as we become aware of. We are pleased that we were able to help the Court to convict a former employee who tried and failed to outsmart our finance management system to effect a fraudulent transfer of R4,5m into his personal account. This is another proof that our anti-fraud measures are efficient and cannot be outmanoeuvred. We can continue to win this war if you work with us by using our anonymous toll-free number 0800 20 50 53 to report any suspicion of fraud or corruption.
DORA GRANTS ALLOCATION
Fellow councillors, let me also highlight that the Division of revenue Act (DORA) is issued to show the allocations in terms of each grant, either conditional or non-conditional. We are experiencing more strain in this MTREF budget 2020/2021. Most money is channelled towards the water and sanitation and water O&M, as water is generally our core function, hence from the equitable shares portion and WSIG conditional grant, it shows an increase allocated for repairs and maintenance that basically talk to O&M.
The overall budget includes the R 932 627 000 of grants plus the revenue from water sales, the interest on investment and the other income from sale of tenders. Our budget is 91% of grant funded.
OPERATING REVENUE
Apart from revenue from grants, there is an increase of 7% on the interest on investments, totalling to R 29 470 000. Also an increase of about 6% on the water sales, totalling to R 72 109 000
OPERATING EXPENDITURE
The operating expenditure is as follows:
· Salaries increase to R 328 39 000;
· Councillors allowances increased to R 16 206 000;
· General expenses is R 149 640 000;
· Operating projects R 734 835 000;
· The repairs and maintenance R 22 76 000;
· The bulk water purchases is R 69 170 000
· Depreciation is R 79 724 000
CAPITAL BUDGET
Capital Budget is at R 321 377 000 and has projects funded by Equitable Share, Water Services Infrastructure Grant (WSIG) and Municipal Infrastructure Grant (MIG). The Capital budget includes O&M of
R 16 220 000.
BUDGET RELATED POLICIES
The budget related policies form greater part of the budget process as it gives guidance towards the direction on the financial management within an institution.
Credit Control and Debt Collection Policy
If you look at the credit control and debt collection policy that is supposed to document the processes and procedures that must be followed to ensure accounts receivable are collected in a timely, fair and cost effective manner – Section 23 of the policy is amended to indicate the criteria for the reconnection of services
i. Domestic – reconnected after settlement of 100% current debt and 10% of old debt (debt over 30 days and above).
ii. Government – reconnected after settlement of 100% current debt and 50% of old debt (debt over 30 days and above)
iii. Business – reconnected after settlement of 100% current debt and 90% of old debt (debt over 30 days and above)
iv. All outstanding old debt after the application of section 23(i) to 23(iii) after to be settled within 3 months from the date section 23 was applied, failure to do so will result in disconnection that will only be uplifted by 100% settlement of the outstanding debt.
Tariff Structure
The tariff for 2020/21, 2021/22 and 2022/23 were increased by 6% for all three year respectively as per the guidance in the budget circular by issued by Treasury.
Petty Cash Policy
Petty cash float was increased from R10 000 to R20 000. The purpose is to ensure the cost-effective and efficient use of petty cash funds while maintaining the required level of control in the municipality
Asset Management Policy
Section 1.2.13(c) was amended to remove the following clause “’Notwithstanding any provision in this policy, computer tablets and computer notebooks shall become property of a councillor to whom they were allocated as tools of trade when such a councillor ceases to become a member of council: Provided that such a councillor does not cease to be a councillor as a result of misconduct for which he/she has been found guilty’.”
Cash and Investment Policy, No changes were made.
Tariff Policy, No changes were made to the Tariff policy
Virement Policy, No changes were made to the policy
Supply Chain Management Policy, No changes were made to the policy.
Delegations of Financial Powers, No changes were made to the policy.
Indigent Policy, No changes were made to the policy.
Bad Debts provision and Write off Policy, No changes were made
Cost Containment Policy, No changes were made
This was done in line with MFMA and Municipal budget and reporting regulation. The budget was also prepared in compliance to the Municipal standard chart of accounts (MSCOA).
Budget 2020/21
Madame Speaker, it is our firm belief that all these programmes and IDP objectives will be achieved with the proposed budget of R1 053b which comprises of R732m for operating expenditure and R321m for capital budget, which will be used to consolidate priority capital projects for the 2016-2021 council mandate term.
Thank you.
