Single Integrated Approach to Municipal Revenue Management 19/20 November 2018

Contents Problem Statement Background Root causes Consequence Single Integrated Approach Conceptual Framework Strategy Governance Structure SRP

Problem Statement Local government is in crisis. A group of municipalities has been identified as not fulfilling their Constitutional mandates and are failing at effectively delivering services, billing for services and collecting the revenue due. Consequently, outstanding debtors are increasing and they are not able to maintain positive cash flows to honour their commitments. Unless efforts to assist this group are not better coordinated and collaboration between different stakeholders in national and provincial government is not improved, we will not achieve the desired impact on service delivery.

Background Municipalities are failing to generate and collect sufficient revenue to sustain operations and generate surpluses This is despite the municipal support programmes, capacity building, advisory services and similar local government interventions The unintended consequence is that municipal officials have become reliant on the LGES to for their salaries so the urgency to collect revenue to sustain services is not the primary focus There seems to be no incentive to collect what is due to the municipality Single integrated approach was presented to BC, BCL and BF

Root causes of poor revenue management The operating environment Lack of functional integration Weak municipal leadership with limited accountability Capacity constraints Inadequate asset management (maintenance of income generating infrastructure) Weaknesses in the implementation of the indigent policy framework Weaknesses in the implementation of the MPRA Legislative overlaps Data integrity

Consequence of poor fiscal effort Among the consequences are: Increasing bad debt; Defaulting on payments to creditors (bulk creditors included); Failure to maintain income generating infrastructure; Operational deficits; Increasing dependency on equitable share and grant funding; and Service delivery failures

Single integrated approach An integrated approach to municipal revenue management is required to address the root cause identified Collaboration needed between stakeholders Principles proposed to establish the foundation of the collaborative approach The spirit of co-operative government is recognised and upheld by all; The legal framework underpins each stakeholder’s contribution; and The primary responsibility for resolution of financial problems rests with the municipality.

Conceptual Framework of the Single Integrated Approach Revenue management is extremely complex There is an urgent need to unpack the revenue value chain at the municipal level The focus is on stabilising the current revenue management operations To facilitate cooperation across all functional areas Interdepartmental dependencies are addressed for seamless transaction processing Common purpose and stakeholders work from the same point of departure The following are some key pillars required for the integrated approach: Refunds Clearances Collections and payment receipting Town Planning Deeds Registry Legal Services Valuations DATA INTEGRITY POLICIES BY-LAWS GIS Indigent Management Credit control Billing Customer Care Infrastructure Surveyor General Human Settlements

Strategy for the Single Integrated Approach (1) Single approach for revenue management support Collaboration between DCoG and NT as the policy departments, involve PCoGTAs and PTs Other stakeholders such SALGA and sector departments It will require the two stakeholders to align current approaches / initiatives There will be a need to target catalytic areas that derives largest financial benefit Each province is different, challenges are diverse, approach will be to adapt the support to address major areas of concern The focus will be on strengthening capacity per province for both PTs and PCoGTAs Capacity at different provinces vary – need to be cognisant of this when developing support structure The single approach will be adapted to suite the PT

Strategy for the Single Integrated Approach (2) Strengthening municipal governance Of paramount importance is the revenue champion to drive revenue initiatives Identify and prioritise municipalities for support A manageable group of municipalities must be targeted for greater impact and focused attention Resourcing the Revenue strategy Realigning current available resources Need to align and coordinate MSIG and MFIP III resources of DCoG and NT respectively Lastly, the approach will be to improve sustainability ultimately, cannot be devolved of addressing expenditure cost containment Establishment of a Steercom and revenue working group to influence the design of the single approach including developing a coherent framework

NT, DCoG, SALGA, PT, P-CoGTA, MUNI Governance Structure Steering Committee NT, DCoG, SALGA, PT, P-CoGTA, MUNI Reference/ Working group PTs, P-CoGTAs, P-SALGAs IMTT (Electricity and Water) IMTT Service Delivery Loss Management Debtor Management Tariffs Structures SRP SOPs Policy Guidance Indigent Management CIGFARO MPRA IIPSA Government Debt Capacity Options MSIG-7 SP/42 munis, MFIP, DBSA, etc Funding Options National Grants, DBSA, IIPSA

Conclusion For too long efforts around revenue management have been fragmented and not impactful Collaboration is key to the success Resources must be aligned for better impact Functional integration Therefore, single integrated approach in essential What is it that this Master Class/Prov requires help with from national

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