Eastern Cape :2016/17 Stopping Considerations Municipality Allocation 2016/17 (R'000) Transferred (R'000) Spent by December 2017 Spent as % of total available Spent as % of total transfers Stopped 2016/17 (R'000) 1. Sundays River V. 24,446 21,711 3,273 13% 15% 2,735 2. Kou-Kamma 14,694 5,320 2,774 19% 52% 3,000 3. Amahlathi 30,147 20,465 5,444 18% 27% 7,000 4. Ngqushwa 21,854 17,889 5,022 23% 28% 2,379 5. Emalahleni 31,758 13,754 4,042 29% 6. Engcobo 50,431 27,229 2,921 6% 11% 4,000 7. Sakhisizwe 17,539 9,993 3,186 32% 3000 8. O.R.Tambo DM 609,099 375,457 132,090 22% 35% 90,000 TOTAL EC STOPPED 799,968 491,818 158,752 20% 119,114

MUNICIPAL INFRASTRUCTURE GRANT PROGRAMME 2016/17 Stopping & Reallocation Considerations: OR Tambo DM June 2017

DUTIES OF RECIEVING OFFICER 12. (1) The receiving officer of a Schedule 5 allocation must ensure compliance with the relevant framework. MIG Framework stipulates the following: To receive the first tranche, municipalities must have followed the process for approval of 2016/17 projects and have confirmed with the Department of Cooperative Governance their programme, project planning and implementation readiness. Municipalities must spend at least 60% of their first transfer and comply with reporting provisions before the second and subsequent transfers are made Municipalities must spend 40% of their total MIG allocation by December 2016 A maximum of five per cent of a municipalities MIG allocations may be used for project management costs related to grant funded projects and only if a business plan for their Project Management Unit is approved Withholding or stopping of transfers and reallocation or conversion of MIG allocations will be instituted where municipalities do not comply with the conditions Division of Revenue Act – Duties of the accounting officers

Stopping & Reallocation 2016/17 MIG Allocations In terms of MIG Framework 2016, Municipalities must by December 2016 spend at least 40% of their total MIG allocation. spend at least 60% of their previous transfer (made in October 2016) and/or comply with reporting provisions before the transfers are made. If not, the Transferring Officer (TO) may evoke stopping and reallocation procedures (in terms of Sec. 19 & 20 of the DoRA 2016)

Provincial Gains

OR TAMBO DISTRICT MUNICIPALITY The Eastern Cape Province is allocated an amount of R2 956 279 billion from the MIG Programme in the 2016/17 financial year In 2016/17, OR Tambo District Municipality has an allocation of 2016/17 financial year of R609 099 million. The municipality is the highest receiving institution throughout the country for the MIG Programme The Municipality is a Water Services Authority (WSA) and as result, their funds are only for the implementation of water and sanitation projects in the five local municipalities. Local Municipalities under the District include: Ngquza Hill Port St Johns Nyandeni Mhlontlo King Sabata Dalindyebo

OR TAMBO DM: 2016/17 MIG PERFORMANCE To receive the first tranche, municipalities must have followed the process for approval of 2016/17 projects and have confirmed with the Department of Cooperative Governance their programme, project planning and implementation readiness. Draft Implementation plan: 20 Jan 2016: DCoG issued letter to municipalities, as a submission reminder of the 29 Jan 2016 implementation plan 30 Jan 2016: OR Tambo submitted an unsigned implementation plan 4 Feb 2016: DCoG issued a non-compliance letter to the Municipality 11 Feb 2016: Municipal response received by DCOG 18 Feb 2016: DCoG issued readiness assessment letter to the municipality Final implementation plan 31May 2016: DCoG issued allocation letter to municipalities, noting final submission of the implementation plan by 7 June 2016 8 June 2016: DCoG issued non- compliance letter to municipality Implementation readiness of the municipality could not be confirmed before the start of the municipal financial year. As such, the DCoG determined the flow of funding, with the 1st transfer being made in July, an amount R189,8 million was transferred. Division of Revenue Act – Duties of the accounting officers

OR TAMBO DM: 2016/17 MIG PERFORMANCE A maximum of five per cent of a municipalities MIG allocations may be used for project management costs related to grant funded projects and only if a business plan for their Project Management Unit (PMU) is approved by DCOG 29 Feb 2016: DCoG issued letter to Eastern Cape municipalities requesting consideration of the 5 % PMU business plan 1 June 2016: DCoG issue a letter of notification of none receipt of the municipal 5% consideration. 6 July 2016: DCoG issued confirmation letter that any expenditure on 5% will not be considered. The PMU expenditure was not considered, due to non-submission of the PMU Business plan Division of Revenue Act – Duties of the accounting officers

OR TAMBO DM: 2016/17 MIG PERFORMANCE Municipalities must spend at least 60% of their first transfer and comply with reporting provisions before the second and subsequent transfers are made Monthly Reporting: 20 Sept 2016: DCoG issued a non-compliance letter for July & August. 17 Oct 2016: DCoG issued a non-compliance letter for September & October 11 Nov 2016: DCoG issued a non-compliance letter for November Withholding of Funds 11 Nov 2016: DCoG issued letter of intention to withhold the second transfer 22 Nov 2016: OR Tambo responded indicating 78% expenditure of the transferred amount of R189,8 million 30 Nov 2016: DCoG responded, citing non-responsiveness of the municipality and that the claimed 78% expenditure is not substantiated with supporting documents. The second transfer which was due in November 2016 was withheld. 5 Dec 2016: a follow-up bilateral meeting with the municipality to support 2016/17 (a) implementation plan (b) project registration and (c) proof of payments An expenditure of 68% of the first transfer was confirmed. As such, the second transfer was effected on 22 December 2016. Division of Revenue Act – Duties of the accounting officers

Not recognized and approved Implementation Plan 2016/17 Project- Not recognized and approved Implementation Plan Amount JULY 2016 Magxamfu water supply phase 2 R 1,241,506.76 PMU R 1,423,975.25 Libode water supply R 4,267,809.49 Flagstaff regional water supply R 4,120,061.49 Total R 11,053,352.99 AUGUST 2016 R1,472,709.24 R1,550,592.73 psj ward 15 R 151,755.36 R 723,704.96 R 3,898,762.29 SEPTEMBER 2016 R1,568,290.19 R 1,913,450.00 Flagstaff regional water supply phase 2 e R1,563,988.41 R2,357,962.88 Upper Mhlahlane R 3,320,539.98 Tsolo grid inlet sewerage R 9,069,660.64 Nyandeni ward 15 R 198,252.56 Flagstaff regional water supply phase 3 R 6,174,507.74 PSJ ward 5b R4,197,403.66 R 30,364,056.06

Not recognized and approved Implementation Plan OCTOBER 2016 2016/17 Project- Not recognized and approved Implementation Plan Amount Magxamfu water supply phase 2 R 564,722.00 PMU R 44,927.00 Libode water supply R 3,026,612.08 Upper Mhlahlane R 1,996,097.28 Tsolo Grid inlet raw sewerage R 5,151,816.00 Flagstaff RWS 3 R 4,042,518.31 PSJ sewer & sewerage treatment R 75,629.43 R 14,902,322.10 Total R 29,804,644.20 NOVEMBER 2016 R 671,555.41 PSJ RWS R 552,707.43 Flagstaff RWS 2e R 6,980,197.93 R 1,791,304.00 R 2,097,367.08 PSJ ward 15 R 342,747.70 Nyandeni ward 9 sanitation R 757,971.52 Tsolo grid inlet raw R 6,187,016.64 R 19,380,867.71 Grand Total R 94 501 683. 25  

OR TAMBO DM: 2016/17 MIG PERFORMANCE Municipalities must spend 40% of their total MIG allocation by December 2016 Stopping of Funds At end of December- DCoG’s reports confirmed the total expenditure of the municipality at 23.11% against total allocation, resulting in the municipality falling below the 40% bracket of stopping 19 Jan 2017: municipality did not have a presentation and MISA was requested to assist the municipality to prepare the progress report for the second day of the 20th Jan 20 Jan 2017: the municipality information was insufficient for the committee to deliberate on the municipal progress A concern of the municipal manager and technical director none- attendance was registered. the presentation of the municipality could not address the MIG conditions. i.e implementation plan, project performance and persistent non- compliance. A recommendation for stopping was registered with National Treasury 22 May (March) 2017: municipality submitted a revised implementation which is being reviewed in light of the 2016/17 rollover, a month before the end of the municipal financial Division of Revenue Act – Duties of the accounting officers

OR TAMBO DM: 2016/17 MIG PERFORMANCE Municipalities must spend 40% of their total MIG allocation by December 2016 Stopping of Funds 22 May 2017: municipality submitted a revised implementation which is being reviewed in light of the 2016/17 rollover, a month before the end of the municipal financial year At end of April 2017, the municipal expenditure is recorded at 59% of the total allocation Division of Revenue Act – Duties of the accounting officers

RECOMENDATIONS Based on the planning, reporting and compliance challenges experienced in the municipality, technical support through MISA will be strengthened to ensure that the readiness in 2017/18 to implement projects is secured. That the municipality ensure that strategic technical positions are filled as a matter of urgency to allow the municipality to discharge their planning, monitoring and reporting responsibilities. That a multi-sectoral team comprising of the District Municipality, National and Provincial Cogta, National, Provincial Treasury and the Department of Water and Sanitation be convened to support and assist the municipality with: An Acceleration plan for improving the performance of the District with regards to the water and sanitation projects, Review the 2017/18 draft Implementation plan received by COGTA to address the readiness gaps and assist with matters related to project registration, alignment of MIG with RBIG, reporting and vacancies within the Project Management Unit.