REPORT ON URBAN SETTLEMENTS DEVELOPMENT GRANT Select Committee On Appropriations: 30 May 2017

ALLOCATIONS AND EXPENDITURE TOTAL ALLOCATIONS AND EXPENDITURE FOR ALL METROS FROM 2011/12 - 16/17 FINANCIAL YEARS   Municipality ALLOCATIONS AND EXPENDITURE Voted Funds Roll-over Total Available Funds Spent % Spent Unspent Funds R'000 2011/12 6 266 998 - 5 659 630 90.3 607 368 2012/13 7 392 206 7 999 574 7 526 160 94.1 473 414 2013/14 9 076 906 442 110 9 519 016 8 933 672 93.9 585 344 2014/15 10 284 684 584 692 10 869 376 10 104 970 93.0 764 406 2015/16 10 554 345 806 809 11 361 154 10 769 553 94.8 591 601 AS AT 31 MARCH 2017 10 839 468 298 947 11 138 415 5 965 197 53.6 5 173 218 CONSOLIDATION SINCE INCEPTION FOR ALL METROS   AMOUNT   TOTAL VOTED FUNDS 54 414 607 TOTA EXPENDITURES 48 959 182 TOTAL UNSPENT FUNDS 5 455 425

ALLOCATIONS AND EXPENDITURE FOR 2011/12   Municipality 2011/12 Voted Funds Spent % Spent Unspent Funds R'000 Buffalo City 423 446 156 132 36.9 267 314 Nelson Mandela Bay 502 626 100 - Mangaung 411 995 283 417 68.8 128 578 Ekurhuleni 1 094 276 1 068 595 97.7 25 681 City of Johannesburg 1 027 970 951 531 92.6 76 439 City of Tshwane 891 081 880 963 98.9 10 118 eThekwini 1 091 574 1 063 205 97.4 28 369 City of Cape Town 824 030 753 161 91.4 70 869 Total 6 266 998 5 659 630 90.3 607 368

ALLOCATIONS AND EXPENDITURE FOR 2012/13   Municipality 2012/13 Voted Funds Roll-over Total Available Funds Spent % Spent Unspent Funds R'000 Buffalo City 499 474 267 314 766 788 558 609 72.9 208 179 Nelson Mandela Bay 592 870 - 100 Mangaung 485 967 128 578 614 545 485 095 78.9 129 450 Ekurhuleni 1 212 537 25 681 1 238 218 1 168 709 94.4 69 509 City of Johannesburg 1 290 748 76 439 1 367 187 City of Tshwane 1 051 070 10 118 1 061 188 eThekwini 1 287 560 28 369 1 315 929 City of Cape Town 971 980 70 869 1 042 849 976 573 93.6 66 276 Total 7 392 206 607 368 7 999 574 7 526 160 94.1 473 414

ALLOCATIONS AND EXPENDITURE FOR 2013/14   Municipality 2013/14 Voted Funds Roll-over Total Available Funds Spent % Spent Unspent Funds R'000 Buffalo City 613 305 176 875 790 180 789528. 99.9 652 Nelson Mandela Bay 727 986 - 100 Mangaung 596 719 129 450 726 169 653 452 90.0 72 717 Ekurhuleni 1 584 912 69 509 1 654 421 1 473 823 89.1 180 598 City of Johannesburg 1 488 877 City of Tshwane 1 290 611 1 245 781 96.5 44 830 eThekwini 1 580 999 City of Cape Town 1 193 497 66 276 1 259 773 973 226 77.3 286 547 Total 9 076 906 442 110 9 519 016 8 933 672 93.9 585 344

ALLOCATIONS AND EXPENDITURE FOR 2014/15   Municipality 2014/15 Voted Funds Roll-over Total Available Funds Spent % Spent Unspent Funds R'000 Buffalo City 673 289 - 100 Nelson Mandela Bay 828 863 Mangaung 654 406 72 717 727 123 649 587 89.3 77 536 Ekurhuleni 1 804 532 180 598 1 985 130 1 498 623 75.5 486 507 City of Johannesburg 1 695 189 City of Tshwane 1 469 450 44 830 1 514 280 1 477 412 97.6 36 868 eThekwini 1 800 076 City of Cape Town 1 358 879 286 547 1 645 426 1 481 931 90.1 163 495 Total 10 284 684 584 692 10 869 376 10 104 970 93.0 764 406

ALLOCATIONS AND EXPENDITURE FOR 2015/16   Municipality 2015/16 Voted Funds Roll-over Total Available Funds Spent % Spent Unspent Funds R'000 Buffalo City 713 132 42 403 755 535 755 420 100 115 Nelson Mandela Bay 846 480 - Mangaung 693 847 77 536 771 383 711 405 92.2 59 978 Ekurhuleni 1 842 887 486 507 2 329 394 2 038 189 87.5 291 205 City of Johannesburg 1 731 220 1 636 236 94.5 94 984 City of Tshwane 1 500 683 36 868 1 537 551 eThekwini 1 838 336 City of Cape Town 1 387 760 163 495 1 551 255 1 405 936 90.6 145 319 Total 10 554 345 806 809 11 361 154 10 769 553 94.8 591 601

ALLOCATIONS AND EXPENDITURE AS AT 31 MARCH 2017 :2016/17 FINANCIAL YEAR   Municipality AS AT 31 MARCH 2017 Voted Funds Roll-over Total Available Funds Spent % Spent Unspent Funds R'000 Buffalo City 731 499 - 70 510 132 Nelson Mandela Bay 868 282 51 439 164 Mangaung 725 003 58 644 783 647 75 544 689 Ekurhuleni 1 890 352 43 815 522 City of Johannesburg 1 775 809 94 984 1 870 793 57 1 017 418 City of Tshwane 1 539 334 65 993 847 eThekwini 1 885 685 45 856 694 City of Cape Town 1 423 504 145 319 1 568 823 55 787 731 Total 10 839 468 298 947 11 138 415 55.0 5 965 197

ALLOCATIONS AND QUARTERLY EXPENDITURE AS AT 31 MARCH 2017 - 3RD QUARTER MUNICIPAL YEAR YEAR TO DATE (01 JULY 2016- 31 MARCH 2017) Municipality   Voted Funds Roll Over Funds Total Available Funds Transferred Funds Expenditure - 1st Quarter Expenditure -2nd Quarter Expenditure -3rd Quarter Cumulative Expenditure R'000 Buffalo City 731 499 - 87 527 288 272 134 333 510 132 Nelson Mandela Bay 868 282 100 555 176 992 161 617 439 164 Mangaung 725 003 58 644 783 647 74 037 287 931 182 721 544 689 Ekurhuleni 1 890 352 169 713 381 585 264 224 815 522 City of JHB 1 775 809 94 984 1 870 793 282 927 426 559 307 932 1 017 418 City of Tshwane 1 539 334 171 954 596 427 225 466 993 847 eThekwini 1 885 685 225 078 360 932 270 684 856 694 City of Cape Town 1 423 504 145 319 1 568 823 148 787 215 234 423 710 787 731 Total 10 839 468 298 947 11 138 415 1 260 578 2 733 932 1 970 687 5 965 197

Key Recommendations Of DPME Based On The USDG Evaluation The DHS and National Treasury should confirm the USDG status as a Schedule 4B Grant for the 2015 DORA, but increase municipal accountability. The DHS should revise the monitoring framework, inclusive of rationalizing outcome, outputs, and indicators, to focus on changes at beneficiary level. The DHS must clarify the grant intent within identified existing programmes, and the specific outcomes associated with these programmes, and related contributions, in a revised policy framework. The DHS and National Treasury should amend the USDG policy framework to stipulate the portion that may be used to procure technical and project management expertise.

Departmental Response to the USDG Evaluation Confirmation of the status of the USDG as a supplementary grant: The USDG is a Schedule 4b Grant and remains as such at this point in time, however it is also part of the broader local government fiscal review and the outcome of this process will have an impact on the grant; Impact on the broader review by National Treasury of Local Government infrastructure Grants: The department has provided inputs into the local government infrastructure review process through the applicable channels. The review has an impact on the USDG as alignment is required between the USDG, PTIG, INEP and NDPG which form part of a Built Environment Performance Plan (BEPP)

Review by National Treasury on Local Government Infrastructure Grants The finding of the USDG Evaluation that the USDG should remain a schedule 4 grant is aligned with the direction of reform agreed through the Review of Local government Infrastructure Grants; The Review’s recommendations for enhancing the structure of conditional grants emphasizes the importance of two factors: differentiation and grant consolidation. In the context of the USDG, these mean: 1. Differentiation – means that the grant system should be different for urban and rural municipalities. In metros, the grant system should allow for greater flexibility so that cities can combine grant funds with their own revenues to deliver integrated infrastructure programmes that serve mixed-use and mixed-income developments. The cities also have the capacity to be able to manage the increased responsibility that comes with a schedule 4 allocation.

Review by National Treasury on Local Government Infrastructure Grants 2. Consolidation – means reducing the number of grants that each municipality receives. The USDG funds infrastructure across multiple sectors (water, sanitation, roads, public facilities etc) through a single grant, thus it is aligned to this objective.

Other Evaluation Findings Finalise the Policy on USDG Revision of the DORA Grant Framework The review of the formulae for funds allocation Built Environment Performance Plan (BEPP) be used as a planning instrument Amending the BEPP guidelines and commission an Expenditure Review Provinces must have a role as affected sphere The monitoring of individual project selection should not be the main focus of outcome Match funding for every USDG rand by Municipalities

Key USDG Outputs Land & Landed Property Acquisition: Suitable and well-located land acquired for informal settlement upgrading and/or other human settlements development programmes. Bulk & link Infrastructure: The provision of bulk and connector services for informal settlements upgrading projects and backyard rental upgrading schemes. Basic Infrastructure Services: including water, sanitation, solid waste, roads, storm water management systems, electricity, and, refuse removal . Serviced sites: The creation of serviced stands in, “green fields” or “infill developments” for a variety of land uses. Public and Socio Economic Amenities -infrastructure for public spaces 6. A portion of the USDG may be used to procure external capacity to support implementation . 7. A minimum of 50 percent of the USDG allocation must be spent on upgrading of informal settlements.

IMPROVING MONITORING CAPACITY Steps taken by the department to improve monitoring capacity internally, to enable independent verification of Municipal performance reports: The department is currently reviewing the departmental structure to increase the monitoring capacity to enable independent verification of metros’ performance reports. Practice Notes/Guidelines specifying mechanics of how the capital funds for operations will be used and the conditions under which it can be applied have been developed and upon approval with be circulated Regionalisation has been proposed to ensure focussed monitoring. A USDG panel involving key sector Departments is also being activated

Steps Taken To Revise the Monitoring Framework The steps taken or progress made with regard to revising the monitoring framework of the USDG in order to standardise outputs, outcomes and performance indicators to enable comparative quality analysis of the USDG expenditure include: The department has revised the monitoring framework from focusing solely on the USDG alone to monitoring the USDG as part of the entire capital budget of the Metros. There is a comparison of the USDG % expenditure with the overall capital % expenditure in the annual USDG performance report. Outputs, outcomes and performance indicators have been standardised in the Departmental Monitoring and Evaluation Framework, the USDG DORA Framework and the USDG Performance Matrix to enable comparative quality analysis of the USDG expenditure.

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