The Road Map To Municipal Sustainable & Clean Governance

THE ROAD MAP TO MUNICIPAL SUSTAINABLE AND CLEAN GOVERNANCE

A.         Defining clean governance

B.         Purpose of clean governance

C.         Benefits of clean governance

D.         Fundamentals of clean governance/clean administration

E.         Critical path to sustainable and clean governance

(i)                                            Defining an ideal municipality

(ii)                               Discovering the constitutional mandate

(iii)                              Identifying the laws and regulations governing the municipality

(iv)                               Understanding the importance of how to design, deliver, evaluate, report on and monitor activities when planning service delivery i.e. developing a functional strategy to execute service delivery on time, every time whilst complying with the relevant laws and regulations

(v) Managing risks and monitoring implementation of the functional strategy

(vi)  Reviewing, managing results and measuring progress

(vii)   Recognising, rewarding performance and dealing timeously with poor or non-performance and gaining Consistency

A.         What is clean governance?

(i)        Governance is providing stakeholder assurance that abilities are applied in such a manner that objectives will be achieved effectively and efficiently in an agreed ethical environment.

(ii) Achieving Maximum Output with Minimum Inputs in an agreed Ethical Environment

(iii) Governance consists of processes and systems by which organisations are Directed, Controlled and held to Account for.

(iv) It is further concerned with holding a Balance between Economic and Social goals, and between Individual and Communal goals

B.         What is the purpose of clean governance?

(i)        To improve:

–          General governance

–          Risk Management

–          Internal Controls

–          Internal Audit

–          Resource utilisation and

–          Financial Management

(ii) Contributes to becoming an Auditable organisation

(iii) Improves focused Service delivery in accordance with:

–          The spirit of the Constitution of SA (Transparency, Accountability, Fairness and Responsibility)

–          MFMA and other applicable prescripts

(iv) Forces a balance between Economic and Social goals, and between Individual and Communal goals

C.         Benefits of clean governance

(i)        Good governance influences:

–          Foreign investment decision making

–          The degree of confidence that the general public has in its elected government

–          The amount of grant allocation from the National Fiscus

–          The quality of service the municipality receives from its human capital and service providers

(ii) Good governance ensures appropriate and timeous responses to the critical needs of the communities we are serving

D.         Fundamentals of clean administrations

The office of the Auditor General has identified three (3) fundamentals of internal controls, which I believe, are also three (3) fundamentals of clean administration. When these disciplines are applied effectively and consistently, they enable the municipality to achieve clean audit. Clean audit is not sustainable where there is no sustainable clean administration/governance.

(i)        Effective Strategic Leadership _ focusing on a culture of honesty, ethical business practices and good governance, protecting and enhancing the best interests of the municipality, oversight responsibility, effective HR management, policies and procedures, action plans and IT governance framework

(ii)  Financial and performance management _ focusing on proper record keeping in a timely manner, controls over daily and monthly processing and reconciling of transactions, regular, accurate and complete financial and performance reports, Reviewing and monitoring compliance and formal controls over IT systems

(iii) Governance _ focusing on appropriate risk management activities, adequately resourced and functioning internal audit unit and audit committee promotes accountability and service delivery

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E.         Critical path to sustainable and clean governance

(i)   Defining an ideal municipality

An ideal municipality can be defined as a municipality that is successful in delivering or executing the mandate which it was established for with efficient and effective management of the resources allocated for the mandate. Of importance to note is that, success is not a destination but a journey under construction. Hence, success is a progressive realization of a worthy goal or ideal.

(ii)   Discovering the constitutional mandate

“–        Section 152(1) (a) to (e) of the Constitution of South Africa outlines the objectives of Local Government which includes: a) to provide democratic and accountable government for local communities; b) to ensure the provision of services to communities in a sustainable manner, c) to promote social and economic development, d) to promote a safe and healthy environment; and e) to encourage the involvement of communities and community organisations in the matters of local government.”

–          In terms of section 152 (2) of the constitution of south Africa, A municipality must strive, within its financial and administrative capacity, to achieve the objects set out in subsection (1)

–          In terms of section 153 of the constitution of south Africa, A municipality must:

“a)       structure and manage its administration, and budgeting and planning processes to give priority to the basic needs of the community, and to promote the social and economic development of the community; and”

b)         participate in national and provincial development programmes.

“–        Section 156 of the constitution of South Africa sets out the duties and powers of municipalities which includes, 1. A municipality has executive authority in respect of, and has the right to administer a) the local government matters listed in Part B of Schedule 4 and Part B of Schedule 5; and b) any other matter assigned to it by national or provincial legislation, 2. A municipality may make and administer by-laws for the effective administration of the matters which it has the right to administer,

3. Subject to section 151(4), a by-law that conflicts with national or provincial legislation is invalid. If there is a conflict between a by-law and national or provincial legislation that is inoperative because of a conflict referred to in section 149, the by-law must be regarded as valid for as long as that legislation is inoperative, 4. The national government and provincial governments must assign to a municipality, by agreement and subject to any conditions, the administration of a matter listed in Part A of Schedule 4 or Part A of Schedule 5 which necessarily relates to local government, if a) that matter would most effectively be administered locally; and b) the municipality has the capacity to administer it; and 5.A municipality has the right to exercise any power concerning a matter reasonably necessary for, or incidental to, the effective performance of its functions.”

(iii)    Identifying the laws and regulations governing municipalities

The following are some of the key legislations and regulations that govern municipalities:

–          Constitution of the Republic of South Africa

–          Intergovernmental Relations Framework Act and Related Material

–          Intergovernmental Fiscal Relations Act

–          Local Government: Municipal Property Rates Act

–          Local Government: Municipal Finance Management Act and Regulations

–          Local Government: Municipal Systems Act and Regulations

–          Local Government: Municipal Structures Act

–          Local Government: Municipal Demarcation Act

–          Preferential Procurement Policy Framework Act

–          Water Services Act

–          Local Government: Transition Act

–          Electricity Regulation Act

–          Municipal Fiscal Powers and Functions Act

–          Government immovable Asset Management Act

–          Money Bills Amendment Procedure and Related Matters Act and Regulations

–          The National Treasury has issued over 97 MFMA circulars and over 21 Guidelines

(iv)   Understanding the importance of how to design, deliver, evaluate, report on and monitor activities when planning service delivery i.e. developing a functional strategy to execute service delivery on time, every time whilst complying with the relevant laws and regulations

–          Establish strategy and direction determining Where the municipality is going, what it is going to do, when it is going to do it, why is it going to do it and for How long it is going to do it

–          Strategic planning should be based on rolling process to ensure continuity of service delivery during election period

–          Develop performance indicators that are easily linked to the relevant objectives

–          Defining structures and relationships i.e. determining the required resources in terms of Who is going to do what, how are they going to do it and Who will be informed of What and When

–          Establishing Performance Measures _ regularly assessing whether the municipality is doing what it has planned to do, if the progress is being made according to plan and expectations, and if the risks are properly managed.

–          Defining Compliance and Accountability Framework _ determining Who is Accountable/responsible for What and to Whom and determining if they comply with the prescribed policies and procedure, applicable laws, regulations and instructions.

–          Employ best qualified personnel

–          Inter-link plans for effective implementation and monitoring

–          Develop an effective and integrated control framework

–          Design an Organisational structure linked to plans

–          Establish clear roles and responsibilities

–          Roles and responsibilities must enforce service delivery

–          Perform regular training and refresher courses for all officials

(v)        Managing risks and monitoring implementation of the functional strategy

–          Risk management is one of the critical processes of any organisation.

–          Risks must be identified at strategic level and operational level.

–          The IDP and SDBIP should be the two major documents that must be used to inform the process of identifying risks at strategic level.

–          Standard operating procedures must inform the process of identifying risks at operational level.

–          Once these risks are identified, controls must be identified or put in place to mitigate the risk and/or reduce it to acceptable level

–          Where there are controls in place, internal audit must test the operation effectiveness of the controls and report to the audit committee on the findings.

–          Where there are no controls in place, management should concentrate on designing and implementing controls that will mitigate risks.

–          The risk officer should follow up on the progress made by management in designing and implementing controls and risk response plans.

–          Where management lacks capacity, the consultancy function of internal audit should assist in designing the controls but should not take decisions on behalf of management.

–          Implementation of processes should also be monitored at all levels i.e. at council, EXCO/mayoral committees and all staff levels.

–          In monitoring implementation, the capacity of the municipality should also be measured to establish whether the municipality_s capacity is growing or declining.

–          National and provincial treasury are currently monitoring through in year reporting.

(vi)       Reviewing, managing results and measuring progress

–          One of the mechanisms implemented by government to review results is the annual external audit conducted by the office of the auditor general.

–          Reviewing of results should not only look at whether the processes are implemented or not but also at whether the processes were performed at standard or not and whether they were efficient and effective.

–          Both financial and non-financial performance results should be reviewed on a monthly basis by all relevant structures in order to identify and deal with the issues timeously.

–          Financial ratios should be configured to address the performance of municipalities based on the objectives of the municipalities rather than general private sector financial statement analysis.

–          Managing results deals with addressing the root issues that caused deviations from the expected outcome.

–          It is very important to deal with the root issues when addressing deviation from results because dealing with fruit issues results in running around in circles so to say

–          Therefore, the process that should be followed in dealing with deviations from pre-determined objectives results should be:

(i)        Identifying the deviations from the desired results

(ii)       Quantifying the level/extent of deviations

(iii)      Identifying the root cause of deviations

(iv)       Identifying ways of dealing with the root cause of the deviations

(v)        Setting timelines and identifying people to deal with the root issues

(vi)       Determining monitoring structures to deal with monitoring of ways to deal to with the deviations

(vii)      Implementing the process.

(vii)                  Recognising, rewarding performance and dealing timeously with poor or non-performance and gaining Consistency

–          It is important to recognise and reward performance where necessary to encourage staff to reach for the best.

–          Where there is non-performance, it must be dealt with in the following manner:

(i)        Train the individual

(ii) Correct the individual

(iii) Discipline the individual

(iv) Only after 1 to 3 is performed can an individual can be sent forth or released of their responsibilities.

“–        Power lies in consistency; it is important to apply the process repeatedly until it becomes a culture of the municipality.”

–          This will ensure clean administration which will lead to clean audit