MUNICIPAL TURNAROUND STRATEGY
“Bringing ADM Back to its Former Glory”
Problem Statement
• ADM dire State of Affairs in the following:
– Governance
– Poor relations with other organs of state, local municipalities and other stakeholders
– Leadership
– Poor state of Finance
– Service Delivery
– Poor Planning
– Ancient infrastructure and Lack of Maintenance
– Unaffordable Organisational Structure and
– Drought
– Poverty and Underdevelopment
MUNICIPAL TURNAROUND STRATEGY MODEL
ADM TURNAROUND STRATEGY
• In order ADM to be where it should, it is important to build a “Culture of Excellence” and a value based organisation through:
– Brand Repositioning - Building confidence of the ADM important Stakeholders, including local municipalities.
– Organisation Development and Design - Coupled with this culture, there is a need to revise the current organizational structure to respond to ADM’s core business.
– Financial Sustainability - There is a need to build a sound financial base to realize the service delivery goal of ADM.
– Building Public Confidence- For the community to trust and have confidence in ADM in rendering the services in an efficient and effective manner
EIGHT DEVELOPMENT PILLARS AS ENABLERS TO MOVE THE INSTITUTION FORWARD:
MTAS: LEADERSHIP DEVELOPMENT
INTERVENTIONS UNDERWAY:
• Training of MPAC members on roles and responsibilities including technical competencies
• Training relevant officials on provision of technical support to MPAC
• Educate and Empower administration and Council on the role and mandate of MPAC and Oversight Committees
• Strengthening of Oversight Committees
• Consequence Management and establishment of Disciplinary Committees
MTAS: INSTITUTIONAL DEVELOPMENT
• This Pillar seeks to focus on the development and building of a skilled and professional workforce of ADM in order for the institution to exercise its powers and perform its functions assigned to it in terms of the Constitution and other legislation in an efficient, effective and sustainable manner.
• During the commencement of the 5th Term of Council, ADM is faced with the challenge of high employee costs because of the Recategorisation of the municipality from level 6 to level 7 in 2013 and the standardisation process that was undertaken in February 2014.
• In addition, employee allowances such as, but not limited to, the Essential User Car Scheme, Overtime and Rental continue to contribute to the rising employee costs.
Interventions Underway:
• Supported through the RMSC (MISA)
• ADM Establishment Plan has been endorsed by Council
• Currently in the process of:
• Developing and Reviewal of Job Descriptions
• Conduct Job Evaluation of all developed and reviewed Job Description
• Conducting of Skills Audit and verification of qualifications
• Development of a Migration Plan and Implementation thereof.
• Human Capital and Investment
• A moratorium on filling of vacancies has been put in place
• Staff allowance policies have been reviewed with the intention of reducing the employee costs.
• Support elements of the organisational design that will strengthen the organisational capacity for service delivery
• Partnership with SALGA on the ITSM Capability Maturity Model and its implementation
• Capacity Development on general ICT skills for Municipal Officials and Infrastructure Review
• Records Management
MTAS: QUALITY SERVICE DELIVERY
• This pillar seeks to focus on the improvement of the institutional operational performance towards service delivery.
ADM’s provision of its water and sanitation function is below standard characterised by the following:
• Some services are not functional, have collapsed or are unreliable due to neglect of maintenance and/or poor operational management.
• In some areas, infrastructure is proving to have low levels of sustainability with rapid decline in condition and failure well before the design life of the infrastructure is reached;
• ADM’s provision of its water and sanitation function is below standard characterised by the following:
• The capacity of existing infrastructure is insufficient and requires extension and /or ageing infrastructure requires replacement, and this has not been sufficiently prioritised for capital investment;
• The difficulties and cost of investing in infrastructure in rural areas;
• Insufficient funding to meet all the needs;
• The cost of producing per kilolitre of water is far above the price of selling per kilolitre of water thus causing the municipality to trade at a loss.
• Interventions Underway:
• ADM secured funding from MISA to ensure Sustainable Municipal Performance in:
• Reliability of Infrastructure
• Water Security and Water Governance
• Targeting 90% Reliable Water Services by 2019
• Turnaround Action Plan and Strategy focus areas:
• Water and Sanitation Services
• Financial Management and Supply Chain
• Institutional Development and Human Resources Management
MTAS: SOUND FINANCIAL MANAGEMENT AND VIABLITY
• The pillar seeks to focus on financial management reforms, strengthening of planning and budgeting, strengthening oversight through improved transparency, institutional strengthening and capacity building and analysis of financial conditions.
• As stated before, ADM Council inherited a municipality that is technically bankrupt due to poor financial management with a total budget deficit rising from R10m in 2016/17 to R268m in 2018/19.
• As a result, the municipality is unable to honour its payments to creditors within 30 days which is thus in contravention of the MFMA
• In addition to the high salary bill at R852m budgeted for the financial year, ADM has undertaken a Mutual Separation Package (VSP) initiative to be implemented in the 2019/20 financial year as an effort to reduce the salary bill going forward.
• The cost of this initiative tallies at R150m inclusive of all the penalties that the institution will have to absorb.
• ADM acquired an Integrated Financial Management and Information System (SAP) around 2015/16 at a cost of R75m, which has escalated, to an excess of R111m to date. The system is not fully functional and not producing credible and accurate reports as prescribed by National Treasury.
• In addition, this transition to the new system has contributed to the regression of the institution’s Auditor General Opinion.
Interventions underway
– In addressing the challenges faced by the municipality, ADM has approached the Eastern Cape Provincial Treasury to develop a Three Year Financial Recovery Plan that includes amongst other components a Revenue Enhancement Strategy. In addition, Provincial Treasury has been requested as well to assist in the development of a Five Year Financial Plan for the Municipality in order to turn the financial distress around.
– Support through the MISA RMSC Program
– National Treasury has intervene in the move towards ensuring functionality of the Financial Management Systems by the vendor
– EC COGTA appointed Ducharme for the development of Revenue Enhancement Strategy
– GSP II:
• Revenue Management
– Support the review of the credit control policy
– Support Water Meter reading and audit initiative
– Budget Review
– Data cleansing including indigent register
– Tariff setting
– Foster communication between BTO and Engineering Department
• Supply Chain Management
– SCM review and analysis
– Institutional and Capacity Building on SCM for Practioners, non financial managers and Councillors
– Review Contract Management
• Municipal Finance Management
– Capacity Development in Finance for non-finance managers
– Support to Creditors Management
– Support MSCOA training to practioners, non finance staff and Councillors
• Asset Management
– Support the review and updating of the Asset Register and consider GIS
• ICT
– Review of Billing System
– Capacity development support on MSCOA as implemented by SAP
MTAS: GOOD GOVERNANCE
• This pillars seeks to focus on the necessary guidance, support and facilitation in improving planning, monitoring and evaluation of initiatives and accountability of such.
• Since 2016, ADM Council has established section 79 and 80 committees to oversight the municipality in performing its functions.
• In addition, it has made an appointment of a Municipal Manager in June 2017 and four (4) Section 56 Senior Managers reporting directly to the Municipal Manager in November 2017, with the Chief Financial Officer appointed in July 2018.
• The monitoring of the Individual Performance and the alignment with the Departmental Performance in terms of the Performance Management System is being implemented.
• The Audit and Risk Committee is in place and Council has created an enabling environment in order to ensure its effectiveness in the execution of its duties.
• However, since the commencement of the term, the regressing on the Auditor-General findings from Unqualified Audit in 2016/17 to a Qualified Audit opinion in 2017/18 remains a concern.
Interventions underway
– GSP II:
– Institutional Strengthening for Service Delivery
• Design an Integrated Programme planning approach and framework for budgeting, decision making, monitoring and service delivery implementation
• Support the design of planning and budget priotisation processes to ensure resources are maximised and all mandates are addresses
• Support a process to strengthen the use of GIS for planning and decision making
– Strengthen DM support to Planning, Decision Making and Monitoring of service delivery at Local Municipality level
• Design an approach to support LMs in a practical meaningful way
– Active Citizenship
• Analysis of data of customer complaints management systems for areas of improvement
• Improvement of the Civic Education Programs
• Analysis of IDP Representative Forum with regards to civic engagements in Municipal Planning
MTAS: LOCAL ECONOMIC DEVELOPMENT
• This Pillar seeks to focus on creation of wealth in Amathole using its Natural and Artificial resources.
• According to the 2016 Community Survey, ADM is facing high unemployment rate at 37,8% with more than 580 000 people living in poverty. The municipality is further characterised by a large number of indigent persons who depend on the municipality for services.
• Moreover, the municipalities is grant dependent with limited economic opportunities due to its geographical location, rural nature and infrastructure backlogs thus impeding the attraction of investors within the region. Furthermore, the outmigration of skilled persons is affecting the skills profile of the District
• Interventions Underway:
- ADM has undertaken to develop a District Wide Economic Growth Strategy towards 2030 with Tourism, Heritage, Enterprise Development and Agriculture sectors as its contributors to the economic growth of the region.
- In ensuring ownership of all the key stakeholders, a District Wide Economic Growth Strategy consultative Summit is planned for March 2019.
• ADM has submitted a concept and Business proposal to EC Provincial Treasury, Economic Development, Environmental Affairs and Tourism department for funding.
MTAS: HUMAN CAPITAL DEVELOPMENT
• 80% of ADM population
– Extreme Poverty, Near Poverty and Poverty
• Education and Training Profile is a critical driver for change
• Improvement of education and skills provider to drive socio economic growth
• Harnessing and Maximum utilization of the Knowledge Economy
– Partnership with Institutions of Higher Learning
– Establishment of Training and Sports Academies
MTAS: SPATIAL PLANNING
• The Spatial Planning Key Performance area is an addition area that ADM has prioritised as a key instrument in District Wide Integrated Planning
• The focus of this pillar is to give a Spatial Translation to the Development of the Long-Term Vision that will guide and inform land development and management towards alignment to SPLUMA.
• Currently, ADM has an outdated SDF strategy due to the limited resources hence it is not aligned with the revised National and Provincial Spatial Development Framework.
• In order to address this challenge, ADM has taken an initiative of reviewing its District SDF in order to be compliant to legislation and inform the long term planning of the district.