REPRESENTATION TEAM

1
ANNUAL REPORT 2010/2011MUNICIPAL DEMARCATION
BOARDPRESENTATION TO THE PORTFOLIO COMMITTEE ON
COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS
18 October 2011

• REPRESENTATION TEAM
• Mr LJ Mahlangu
• Chairperson Municipal Demarcation Board
• Ms N Gwayi
• Deputy Chairperson Municipal Demarcation Board
• Mr SM Radebe
• Chairperson Audit Risk Committee
• Mr RH Monare
• CEO Municipal Demarcation Board
• Ms MI Mathatho
• Chief Financial Officer
• Ms MP Leburu
• Senior Finance Officer

2
OUTLINE

• Last Briefing 24 May 2011
• Outputs and Developments 2010/11
• Strategic Direction
• Progress to date on current strategy
• Financial Results 2010/11
• Receipts for the year ending 31 March 2011
• Expenditure for the year ending 31 March 2011
• Report of the Auditor General
• Medium term expenditure framework (MTEF 2011
  2014)
• Conclusion
• Additional Slides
• Research Study on Criteria for Determining
  Municipal Boundaries and Categorisation of
  Metropolitan Boundaries
• Research Study on Sizes of Municipalities in
  South Africa

3
LAST BRIEFING 24 MAY 2011

• Briefed the Portfolio Committee on
• MDB Performance in 2010/11 (Unaudited at the
  time)
• Strategic Plan 2011/12 2014/15
• Proposed Developments going forward
• Financial Results 2010/11 (Unaudited at the
  time)
• Medium Term Expenditure Framework 2011/12
  2013/14
• We advised the Portfolio Committee that
• The ward delimitation process was successfully
  completed for the 18 May 2011 local elections,
  despite having started well after schedule by
  four months.
• The Board was now set to commence with a process
  of reconfiguring and aligning outer municipal
  boundaries.
• Bids had been called for a service provider to
  develop a new model on the assessment of the
  capacity of Municipalities.

4
LAST BRIEFING 24 MAY 2011

• The Board adopted to a new way of carrying out
  its mandate, in a number of core areas of the
  Boards work.
• Research has been done on key subjects
• Review of the Capacity Assessment Model
• Sizes of Municipalities
• Criteria for Demarcation of Municipal Boundaries.
• Current system and processes for ward
  delimitation is time consuming and costly, and
  needs to be reviewed.

5
OUTPUTS AND DEVELOPMENTS 2010/11

• During the period under review, a number of key
  outputs and developments were realised
• Facilitate accountable local government and
  contribute to free and fair local elections and
  promote democracy
• During this period focus was on the delimitation
  of electoral wards within local and metropolitan
  municipalities, in preparation for the 2011 local
  government elections
• The process on 15 July 2009 when the National
  Minister of CoGTA published the formula for the
  number of councillors, based on the 2009 national
  common voters roll as divided into municipal
  segments.
• To improve on past ward delimitation processes,
  especially with respect to consultation with
  stakeholders
• Time was set aside to allow municipalities to
  consult widely with communities in their areas
• A very localised process called for by the Board

6
OUTPUTS AND DEVELOPMENTS 2010/11

• The primary aim of allowing time for wide
  consultation, was to facilitate a process whereby
  the final wards would be a product of community
  consensus.
• Provision was also made for cases where consensus
  could not be reached in a municipality, during
  the consultation process
• Provincial Departments of Local Government, as
  well as SALGA and CDWs, were requested to assist
  communities in their preparation of submissions
  to the Board
• The Board also made its own human resources
  available to all communities for assistance
• Some 50 of municipalities were able to reach
  consensus with communities and other
  stakeholders, while others could not reach
  consensus, or submitted alternative ward
  configurations which did not comply with
  legislative provisions

7
OUTPUTS AND DEVELOPMENTS 2010/11

• Ward delimitation process was finalised in August
  2010, and the final wards were officially handed
  over to the IEC on 1 September 2011.
• Preparations for the next round of municipal
  boundary redeterminations began soon after the
  handover.
• The Board faced a number of court challenges
  during the period under review.

8
OUTPUTS AND DEVELOPMENTS 2010/11

• Assessment of Municipal Capacity
• Assessment of Municipal Capacity did not take
  place in 2010/11 (as well as in 2009/10).
• The existing model of capacity assessment that
  had been used since 2001 was still being
  reviewed.
• The Board resolved to devote time and resources
  to the ward delimitation process.
• Ensuring that the Board is supported by an
  effective and efficient organisational structure
• Building and enhancing capacity of the Boards
  internal machinery was a major priority during
  the period under review.
• The Board appointed an Organisational Design (OD)
  specialist to carry out an investigation into the
  Boards organisational structure, as well as
  significant restructuring of the organisations
  establishment.

9
OUTPUTS AND DEVELOPMENTS 2010/11

• Ensuring that the Board is supported by an
  effective and efficient organisational structure
  (Cont.)
• The service providers brief was to investigate
  and to write a report with recommendations, on
  ways of improving the effectiveness of the
  Municipal Demarcation Board and its members,
  particularly staff members, by means of
  systematically planned interventions.
• The service provider has since delivered on the
  brief, and the Board has resolved to bring about
  far-reaching changes in levels of some positions
  in the Boards organisational structure.
• Also to significantly restructure of the
  organisations establishment this in order to
  have things done differently, in a number of core
  areas of the Boards work.

10
OUTPUTS AND DEVELOPMENTS 2010

• Ensuring Good Governance
• Continued to endeavour to ensure that good
  governance arrangements are in place throughout
  the organization.
• The Audit and Risk Committee was fully operation
  during the period under review, to oversee and
  ensure the effectiveness of the systems of
  controls.
• There was also an effective internal audit
  function in place. The function is outsourced.
• At the end of the period under review, the Board
  was monitoring action by management to attend to
  issues of concern raised in the IT Governance
  Audit, including a complete revamp of the Boards
  website.
• Ensuring Sound Financial Management
• During the period under review we were able to
  maintain
• Effective management of working capital
• Preparation of short and long term budgets
• Effective internal audits
• Consistent cost control.

11
OUTPUTS AND DEVELOPMENTS 2010

• Improving and Enhancing Stakeholder Relations
• As a constitutional institution, it is important
  for the Board to reinforce the need to engage
  with all stakeholders in a structured manner, to
  realise specific organisational goals as well as
  to meet broader social, environmental and
  economic challenges.
• The need for engaging stakeholders in a
  structured manner, also reinforced by the fact
  that stakeholder relations is one of the core
  functions of all Board, in terms of the corporate
  governance principles as outlined in the King III
  report, to which the Municipal Demarcation Board
  subscribes.
• At the end of the period under review, the
  process to develop a Stakeholder Management and
  Governance Framework, Stakeholder Engagement
  Plan, as well as the Stakeholder Communication
  Strategy was underway.

12
STRATEGIC DIRECTION

• The Municipal Demarcation Board has for the
  current Strategic Plan identified strategic
  themes to focus and guide the organisation over
  the next few financial years (2011/2012,
  2012/2013, 2013/14 and 2014/15)

Theme 1 Determination and re-determination of municipal boundaries and categorisation and re-categorisation of municipalities
Theme 2 Assessment of the capacity of metropolitan, district and local municipalities
Theme 3 Ensuring that the Board is supported by effective and efficient organisational processes, systems and practices
Theme 4 Ensuring good governance
Theme 5 Ensuring sound financial management
Theme 6 Improving and enhancing stakeholder relations
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STRATEGIC DIRECTION
Strategic Objective Strategic Objective 2010/2011 2011/2012 2012/2013 2013/2014
Theme 1 Boundary determinations 6,787,118 6,566,881 6,967,250 6,738,727
Theme 2 Capacity assessments 5,000,000 5,180,000 5,569,000 5,566,000
Theme 3 Organisation and Administration 17,440,766 19,175,483 20,536,690 22,306,858
Theme 4 Good Corporate governance 3,035,556 4,242,420 3,345,693 3,646,420
Theme 5 Financial management 2,696,474 2,974,216 3,116,367 3,413,195
Theme 6 Stakeholder management 2,652,086 1,200,000 1,320,000 1,386,800
TOTAL TOTAL 37,612,000 39,339,000 40,855,000 43,058,000
14
PROGRESS TO DATE ON CURRENT STRATEGY

• Determination and re-determination of municipal
  boundaries and categorisation and
  re-categorisation of municipalities
• Circular 1 of 2011 was issued to all
  municipalities and other key stakeholders, to
  communicate the programme for the
  re-determination of municipal boundaries, and to
  also to provide especially new municipal
  councillors with some background information on
  the MDB and its mandate.
• Launch and Media announcement
• Consultations meetings have been held with the
  following key stakeholders
• All MECs for local government
• All municipalities in every District Municipality
  in the country
• MinMEC
• The Chairperson of the NHTL
• National and Provincial structures of SALGA and
  the IEC
• Political and Civic Structures across the
  country.

15
PROGRESS TO DATE ON CURRENT STRATEGY

• Determination and re-determination of municipal
  boundaries and categorisation and
  re-categorisation of municipalities (Cont)
• Meetings with provincial houses of Traditional
  Leaders are still being arranged in cooperation
  with the Chairperson of NHTL.
• The purpose of the initial consultation meetings
  with was
• To give MECs and other stakeholders an
  opportunity to raise demarcations issues with the
  MDB
• To inform MECs and other stakeholders of
  demarcations cases that are on record for
  consideration by the MDB
• Clarify the process and timeframes for changes to
  municipal boundaries as per Circular 1/2011
• Seek MECs and other stakeholders support for
  the process

16
PROGRESS TO DATE ON CURRENT STRATEGY

• Determination and re-determination of municipal
  boundaries and categorisation and
  re-categorisation of municipalities (Cont)
• Request MECs and other stakeholders to assist in
  communicating contents of Circular 1/2011 to
  provincial stakeholders
• Request MECs and other stakeholders to encourage
  participation
• Request MECs and other stakeholders to assist in
  ensuring that municipalities comply with
  timeframes
• Request MECs that their Departments assist
  stakeholders wanting to make representations for
  changes to municipal boundaries.

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Broad process and timeframes within current
legal framework2011 - 2016
18
Key periods for public participation
MDB provides information
Meetings per district area
Deadline for new requests
Further visits
Section 26 Sub- missions
Public meetings
Section 21 objections
Aug/Sept 2011
15 Dec 2011
Jan-Mar 2012
Apr-May 2012
Sept-Oct 2012
Aug 12-Jan13
Municipalities consult affected communities, and
encourage participation
More information MDB Circular 1/2011
www.demarcation.org.za
19
PROGRESS TO DATE ON CURRENT STRATEGY

• Determination and re-determination of municipal
  boundaries and categorisation and
  re-categorisation of municipalities (Cont)
• A framework has been developed, based on the
  research study on criteria for demarcation of
  municipal boundaries.
• The framework provides information and guidelines
  that will empower stakeholders to submit requests
  to the Municipal Demarcation Board for the
  re-determination of municipal boundaries.
• The framework puts together in one concise
  document, key relevant information and
  guidelines, for stakeholders to motivate a
  boundary change request.

20
PROGRESS TO DATE ON CURRENT STRATEGY

• Assessment of the capacity of metropolitan,
  district and local municipalities
• A service provider was appointed for the
  implementation of the revised capacity assessment
  model, building on the history of capacity
  assessment data obtained in previous years.
• The review of the capacity assessment model has
  elicited a number of weaknesses pertaining to the
  old model.
• Two-tier local government is neither effective
  nor efficient
• Lack of clarity on powers and functions
• MEC adjustments have exacerbated the problem
• Adjustments may undermine service delivery
• Framework for adjustments is insufficient
• Narrow conceptualisation of capacity

21
PROGRESS TO DATE ON CURRENT STRATEGY

• Capacity assessments not useful for boundary
  adjustments
• Need to understand environmental institutional
  capacity
• Capacity assessment model inadequate
• Heavy reliance on subjective indicators of
  capacity
• The review has subsequently come up with some
  recommendations
• Advocacy recommendations
• Single-tier local government
• Legislation to assign powers and functions
• Capacity Assessment Model recommendations
• Suspend recommendations on adjustments
• Position Capacity Assessment as a strategic
  resource

22
PROGRESS TO DATE ON CURRENT STRATEGY

• Revised model
• Financial data is critical
• Include measures of performance
• Identify norms and standards for benchmarking
• Include information on scarce skills
• Introduce qualitative assessment of Powers
  Functions
• Quantitative process has limitations and should
  be used as a trigger for a qualitative review of
  powers and functions within a particular district
  triggered by one of the following
• One or more municipalities performing a function
  less than adequately
• One or more municipalities performing a function
  with less than minimum capacity
• Request by MEC for qualitative review
• Programmatic qualitative investigations of all
  districts over a five year period i.e. 10
  districts qualitatively evaluated a year.

23
PROGRESS TO DATE ON CURRENT STRATEGY

• Methodology
• Improve integration with other data collection
  processes
• National Treasury, StatsSa, National Sector
  Departments
• Web-based collection methodology with support
• Simplify and shorten questionnaire
• Include metros
• Outputs
• One strategic and analytical report supported by
• Automated municipal reports
• District report
• Provincially aggregated district report
• Accessible, interactive database with reporting
• This year will pilot this methodology. Nine
  districts (roughly 20 of all municipalities)

24
PROGRESS TO DATE ON CURRENT STRATEGY

• Ensuring that the Board is supported by effective
  and efficient organisational processes, systems
  and practices
• The following reports on the organisation design
  were submitted by the service provider and
  approved by the Board
• The Blueprint Report with findings and
  recommendations, on the restructuring of the
  organisations establishment, as well as
  improvements.
• The Board has also adopted a particular option in
  the report as the best organisation design to
  enable the MDB to meet its mandate more
  effectively.
• The Implementation Report, which provides the MDB
  with an implementation road map.
• Job evaluation, which is the process of
  determining the worth of one job in relation to
  that of other jobs in an organisation so that a
  fair and equitable wage and salary system can be
  established.

25
PROGRESS TO DATE ON CURRENT STRATEGY

• Salary benchmarking, which is a process where an
  organisation tests its own pay practices against
  that of other outside organisations.
• A new Remuneration Policy.
• Migration Policy, to regulate the movement of
  employees from one post or position in the
  current Organization Structure to another in the
  new Organization Design.
• New structure envisaged to be operational at the
  beginning of the 2012/13 financial year.

26
PROGRESS TO DATE ON CURRENT STRATEGY

• Ensuring good governance
• Draft unaudited annual report for the year ended
  31 March 2011 considered by the Audit and Risk
  Committee. Duly submitted to the Auditor-General
  on 31 May 2011.
• The Auditor-General has given an unqualified
  audit opinion, but with emphasis of matter.
• Improving and enhancing stakeholder relations
• Service providers were appointed for a three
  month contract for support on media relations and
  media engagement.
• Other service providers were appointed to prepare
  a stakeholder and communication strategy for the
  Board.
• The stakeholder management function has been
  adequately provided for in the organisational
  design blueprint report that was approved by the
  Board.
• The boundary redetermination process was
  kick-started with an extensive programme of
  initial consultations with key stakeholders
  across the country.

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FINANCIAL RESULTS 2010/11

• SUMMARY OF FINANCIAL RESULTS
• RECEIPTS FOR THE YEAR
• FINANCIAL PERFORMANCE FOR THE YEAR ENDED MARCH
  2011
• BREAKDOWN OF EXPENDITURE

28
SUMMARY OF FINANCIAL RESULTS

• Total income for the period R37.9 million
• Expenditure during the period R36.0 million
• Resulting in a surplus of R1,9 million
• Expenditure Variance of R1,6 million
• Projections Board has spend within budget
• Current ratio 61
• Accumulated Surplus of R16,9 million
• Commitments of R11,0 million

29
RECEIPTS FOR THE YEAR ENDING 31 MARCH 2011
Original MTEF allocation R37,187,000
Other income R746,000
TOTAL INCOME AT OUR DISPOSAL 2010/11 R37,933,000
30
EXPENDITURE FOR THE YEAR ENDING 31 MARCH 2011
Description YTD YTD YTD
Description Actual Budget Variance
Government Grants 37,187 37,187 0
Other Income 746 425 (321)
Total income 37,933 37,612 (321)
Total expenditure 35,992 37,612 1,619
Loss on disposal of Assets 39 - (39)
SURPLUS 1,902 - 1,902
31
BREAKDOWN OF EXPENDITURE FOR THE YEAR ENDING 31
MARCH 2011
Expenditure Item Amount Percentage of Total Income
Administrative expenses 13,840 38
Employee benefits 11,322 31
Audit fees 923 3
Project expenses 3,580 10
Other operating expenses 5,525 15
Depreciation and amortisation 802 2
TOTAL EXPENDITURE 35,992 95
Loss on Sale of Assets 39 0
Surplus for the period 1,902 5
32
REPORT OF THE AUDITOR GENERAL

• Unqualified report with emphasis of matter
• Irregular Expenditure of R726,012
• Contravention of PPPFA
• HDI Points scoring was not documented

33
MEDIUM TERM EXPENDITURE FRAMEWORK (MTEF 2011-2014)

• 2011 MTEF amounts to R121.4 million
• Allocation for 2011/12 increased by R1.3 million
• Representing a 3 increase
• In 2012/13 and 2013/14 grants increased by 5 in
  respective years.

Grants 2011/12 2012/13 2013/14
Amount 38,482 40,362 42,578
34
MEDIUM TERM EXPENDITURE FRAMEWORK(MTEF 2011-
2014)
2011/2012 2012/2013 2013/2014
Income 39 339 000 40 855 000 43 058 000
Grants 38 482 000 40 362 000 42 578 000
Sundry income - - -
Interest income 857 000 493 000 480 000
Expenses 39 339 000 40 855 000 43 058 000
Capacity Assessment 5 180 000 5 569 000 5 566 000
Publications 0 0  0
Boundary determination 4 804 795 5 078 668 4 587 000
Rental expense 2 310 848 2 310 848 2 310 848
Salaries 13 013 685 14 167 091 15 847 500
Depreciation 710 517 710 517 710 517
Members allowances 1 713 155 1 725 265 2 067 935
Audit expenses 2 056 000 2 210 332 2 431 364
Staff Training 195 205 212 506 237 712
Other expenses 9 354 795 8 870 773 9 299 124

Net surplus 0 0 0


35
MEDIUM TERM EXPENDITURE FRAMEWORK(MTEF 2011-
2014)
Other expenses 2011/2012 2012/2013 2013/2014

Advertising 168 000 170 000 172 000
Bank charges 35 000 37 625 41 388
Legal fees 165 000 181 500 199 650
Printing and publication 361 000 397 000 437 000
Venues and facilities 1 531 632 809 950 890 945
Travel and subsistence 1 104 629 1 187 352 1 406 087
  36 000 102 000 166 000
Entertainment      
Office expenses 119 115 131 026 144 129
Consulting fees other 1 573 800 1 728 680 1 901 548
Computer expenses 270 984 302 082 335 290
Other insurance 332 750 366 025 402 628
Other fleet expenses 29 709 32 679 35 947
Repairs and maintenance 49 500 54 450 59 895
Utilities 159 500 175 450 192 995
Stakeholder management 1 200 000 1 320 000 1 452 000
Other Admin and operations 2 218 177 2 641 919 2 408 485
 Total 9 354 795 8 870 773 9 299 124
36
MEDIUM TERM EXPENDITURE FRAMEWORK(MTEF 2011-
2014)
37
Questions and Comments
38
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

• The brief for the research study on demarcation
  criteria was to
• Expand on and precisely define the criteria
  implied, for an area to be regarded as a Category
  A (metropolitan) area, as outlined in Section 2
  of the Local Government Municipal Structures
  Act, 1998, including developing quantifiable
  indicators, benchmarks and thresholds for each
  criterion
• Expand on and precisely define the criteria
  implied for municipal boundary demarcation and,
  more specifically, the objectives of demarcation
  and factors to be taken into account by the Board
  when it determines a municipal boundary, as
  outlined in Sections 24 and 25 of the Local
  Government Municipal Demarcation Act, 1998.
• The study was to develop quantifiable indicators,
  benchmarks and thresholds for each or clusters of
  factors/criterions as outlined in section 25
  Local Government Municipal Demarcation Act,
  1998.
• Institutionalisation and precise application of
  the section 2 criteria as well as the sections 24
  and 25 demarcation objectives and factors.

39
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

• The study was to develop quantifiable indicators,
  benchmarks and thresholds for each of the cluster
  factors/criteria as outlined in section 25 Local
  Government Municipal Demarcation Act, 1998,
  including recommendations/advice on data
  requirements, skills sets and other resource
  requirements
• Recommendations as to which provisions in Section
  2 of the Structures Act, 1998, and Sections 24
  25 of the Demarcation Act, 1998, would be
  reviewed.
• The methodology for the study involved
• International Survey of municipal boundary reform
• Development of Data Base of Demarcation
  Indicators
• Conducted desktop analysis of relevant South
  African documentation
• Conducted Interviews with relevant experts

40
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

• The study developed a database of indicators, by
• Collating data from Census, Community Census, MDB
  and IEC.
• Used the MIIF Classification as an illustrative
  tool
• A-Metros
• B1-Secondary Cities
• B2 -Large Towns
• B3 -Small Towns
• B4 Rural Areas
• C1 -Districts who are Not Water Service Providers
• C2 -Districts who are Water Service Providers

41
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

• The study has developed indicators for each of
  the criteria in section 24 and 25 of the
  Demarcation Act.
• Also suggests a useful organisation of the
  criteria used for the demarcation of municipal
  boundaries, into a collection of categories
  and/or subcategories.
• This may enable greater flexibility were the
  emphasis with regard to a particular case may be
  geared toward a particular set of criteria.
  However, there are a number of caveats
• Many of the criteria/indicators are
  interdependent (i.e., one criterion may influence
  the another criterion and vice versa)
• Given the interdependence of many of the
  criteria, it is difficult to assert a hierarchy
  to the criteria (i.e., that some criteria are
  more important than others or that some are a
  perquisite for other application of other
  criteria)

42
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

• Criteria should be given varying weight and
  importance depending on the unique circumstances
  of an area.
• The following are suggested as criteria for small
  municipalities
• the need for cohesive, integrated and compact
  areas
• Political boundaries, including areas of
  traditional rural communities, ward committees
  and local communities
• Boundaries that enable the delivery of main
  municipal services, particularly irrigation,
  water works, electricity and sewerage
• The ability to generate a certain amount of
  revenue locally
• topographical, environmental and physical
  characteristics of the area including watersheds
• boundaries sensitive to economic conditions of
  each small municipality

43
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

• The following are suggested as criteria for
  District Municipalities
• within the framework of national redistribution
  there is a need to share and distribute financial
  and administrative resources
• existing land use and transport planning.
• the promotion of integrated social and economic
  development planning
• the need for co-ordinated local, provincial and
  national programmes and services.

44
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

• Four main categories of municipal demarcation
  criteria are put forward in the study
• Planning and Development Criteria Many boundary
  adjustments particularly in the form of municipal
  amalgamations are premised on the need to provide
  better planning and economic development over an
  extended area. This includes the socio-economic
  interdependence of a given city-region. Section
  25 (A, H, and J) Criteria and Indicators
• Municipal Functioning Criteria These include
  the collection of indicators that measure the
  delivery of municipal services and the
  administration of areas of municipal
  responsibility. Section 25 (D, G and I) Criteria
  and Indicators
• Municipal Financial Criteria These include the
  impact of demarcation on a municipalitys revenue
  and expenditures. Section ( 25 D, K) Criteria and
  Indicators
• Municipal Governance Criteria Referring to
  indicators that measure the decision making
  ability of a municipal government as well as
  questions of good governance over the
  city-region. Section (25 B, E, F, and L) Criteria
  and Indicators

45
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

• Public participation, in particular, is raised as
  being an important component of boundary reform.
  International overview has pointed out that South
  Africa excels at good boundary criteria but lags
  behind other nations on the processes of reform.
• It is suggested that the Board should be more
  transparent in releasing the substantial
  deliberations of its decisions. It should provide
  local government stakeholders with a written
  account of how it has applied the Section 24 and
  25 criteria.
• The option to hold public meetings is
  highlighted. Another way to improve public
  participation is by making meetings compulsory
  for all boundary investigations. The study
  suggests that the Board should always hold public
  meetings before it makes boundary decisions.

46
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

• The study also suggests a need for provision to
  be made in legislation, for annexation or
  technical redeterminations/corrections.
• Annexation/technical redetermination often
  involves the incorporation of a small piece of
  territory such as a farm. The Municipal
  Demarcation Act is conspicuously silent on how to
  deal with this issue of annexation.
• The suggestion is that this process must be dealt
  with in legislation along the following lines
• Accommodation of growth by all municipalities
  must be accomplished without encumbering the
  initiating municipality and the responding
  municipalitys ability to achieve rational growth
  directions, cost effective utilisation of
  resources and fiscal accountability
• An annexation must be supported by growth
  projections, availability of lands within current
  boundaries, consideration of reasonable
  development densities, accommodation of a variety
  of land uses and reasonable growth options within
  each municipality (initiating and responding
  municipality)

47
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

• An annexation must achieve a logical extension of
  growth patterns, transportation and
  infrastructure servicing for the affected
  municipalities
• Each annexation must illustrate a cost effective,
  efficient and coordinated approach to the
  administration of services
• Annexations must demonstrate sensitivity and
  respect for key environmental and natural
  features
• Coordination and cost effective use of resources
  will be demonstrated when annexations are aligned
  with and supported by integrated development
  planning, economic development plans,
  transportation and utility servicing plans and
  other related infrastructure plans
• Annexation proposals must fully consider the
  financial impact on the initiating and responding
  municipality
• Inter-agency consultation, coordination and
  cooperation is demonstrated when annexations
  proposals fully consider the impacts on other
  institutions providing services to the area

48
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

• Annexation proposals that develop reasonable
  solutions to impacts on property owners and
  citizens with certainty and specific time
  horizons will be given careful consideration and
  weight
• Annexation proposals must be based on effective
  public consultation both prior to and during any
  annexation hearing or proceedings.
• Finally, the study identifies implications for
  the Boards skills sets.
• There are two main approaches in this regard.
• Firstly, the Board could use consultants to
  support them on boundary investigations. This is
  largely the existing approach of the MDB and also
  is the approach used by most of the international
  Demarcation Boards sampled in this report.
• The advantage of this approach is that enables
  the Board to draw on specialised expertise and
  independent insight when investigating
  boundaries. It is also a more cost-effective way
  of utilising resources given that consultants are
  only used when needed.
• The disadvantage is that the Board does not
  develop a critical mass of internal capacity.

49
RESEARCH STUDY ON CRITERIA FOR DETERMINING
MUNICIPAL BOUNDARIES AND CATEGORISATION OF
METROPOLITAN BOUNDARIES

• The second approach entails the Board developing
  its own internal expertise. If the MDB supports
  this approach it should employ empirical Social
  Scientists to help disaggregate census data and
  other relevant data bases (presuming that it does
  not have such people in its employ).
• The advantage of this approach is that enables
  the Board to develop its own in-house capacity.
• The disadvantage is that it will have highly paid
  professionals in its employ who may be
  underutilised in quiet periods.
• The MDBs preference is for the second approach.

50
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA

• The brief for the research study on demarcation
  criteria was to explore
• Challenges faced by the new local government
  system in South Africa towards realising the
  vision of developmental local government,
  particularly those challenges that come with
  large, inclusive municipalities
• The relationship between municipal size and the
  efficiency of the delivery of municipal services.
  Is there an optimal size or range of sizes for a
  municipality in the South African context, from
  the standpoint of efficiency and to minimise
  duplication of resources and efforts?
• The methodology for the study involved
• International Survey of Literature on Local
  Government Size
• Development of Data Base of Demarcation
  Indicators
• Conducted desktop analysis of relevant South
  African documentation
• Conducted Interviews with relevant experts

51
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA

• Conducted interviews with relevant stakeholders
• MDB,
• COGTA,
• Treasury,
• Provincial Governments
• SALGA,
• individual municipalities
• Consultants
• Semi-structured interviews.
• The study explored the issue of Economies of
  Scale and Size explored.
• Also looked at arguments from Public Choice
  Theory also looked at.
• Democracy and Municipal Size.
• How size is defined-by population, area, budget,
  employment or range of services?

52
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA

• On Economies of Scale and Size
• It is often argued that enlarging local
  government areas will enhance local government
  efficiency.
• Smaller municipalities lack resources and
  citizens.
• Larger jurisdictions lead to bigger thresholds in
  populations, tax bases and workloads.
• Public Choice Theory
• Citizens have diverse preferences for local
  government
• Fragmented local government will operate more
  efficiently.
• Democracy and Municipal Size
• Literature suggests that local government needs
  to be local enough for citizens to identify with.
• Larger local units risk being remote.

53
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA

• None of the criteria in Section 2 specifically
  require that the metropolitan area be of a
  particular size. The definition does give some
  pointers in this regard
• A conurbation, meaning something large,
• Extensive development, implying that the
  metropolitan area is large,
• The notion of complexity which implies question
  of scale,
• With its strong emphasis on interdependency, a
  wider conceptualisation of metropolitan
  government that would encompass the economically
  interdependent suburbs, black townships, rural
  areas and informal settlements.
• Great Deal of Variation between metros in South
  Africa.
• Three big metros (Johannesburg, Cape Town,
  Ethekwini)
• Two reasonably big metros (Tshwane, Ekurhuleni)

54
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA

• Three small metros (Nelson Mandela Bay, Buffalo
  City, Mangaung). Do not meet OECD definition of
  1,5 million population.
• Limited data but no correlation of size with
  performance
• With respect to District Municipalities little
  guidance in legislation.
• MDB suggested four principles
• Functional linkages showing a coherent social and
  economic base eg spending patterns, sectors of
  economic activity
• Districts should not be too large-radius of
  50-100 km
• While the population of Districts should not be
  too large, for economies of scale it was felt
  districts should have a base population of at
  least 100 000 persons and that
• Wherever possible, there should be some coherence
  to the economic and social base of districts.

55
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA

• An analysis of District Municipalities indicates
  that no clear relationship between size and
  population, operating and budget budgets,
  functions performed, years experience of managers
  of managers and financial managers and audit
  rating
• With respect to local municipalities, the MDB
  decided on the following principles based on
  Sections 24 and 25 of the Demarcation Act
• Capacity Assessment Objective was to develop a
  critical mass of municipal capacity (staff,
  assets, finances).
• Resource Sharing.
• Manageable Size Indicators of 3500 square
  kilometres and 80 000 people were suggested as
  norm
• Functionality Alignment of transport routes and
  physical features

56
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA

• An analysis of local municipalities indicates
  that
• Density correlates with population size
• Weak link with capital budgets but no link with
  operating accounts
• There is no clear cut pattern when it comes to
  the percentage of functions performed, the size
  of municipalities, the years of experience of
  either municipal managers or financial managers
  and audit relationship
• The 50 000-100 category has performed better than
  the 100 000 to 200 000 category in respect of
  capital and operating expenditure, staff,
  functions performed, the years of experience of
  municipal managers and financial managers and
  COGTAs spatial classification system per
  population range. This may suggest that 50 000 to
  100 000 is an optimal size for smaller
  municipalities but more research is needed to
  verify this.

57
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA

• With respect to Municipal Wards, an analysis
  indicates that
• A number of problems were identified with the
  ward process
• The unclear definition of what a community is
• The provision that the number of registered
  voters in each ward, may not vary by more than
  fifteen per cent from the norm, leads to the
  creation of dysfunctional wards. The strict
  application of this formula prevents the creation
  of wards which promote local democracy and
  service delivery/development
• The use of voting districts as the building
  blocks for wards is problematic.
• The following recommendations are made in
  respective of wards
• Repeal, the provisions providing for the
  determination of a formula for the number of
  councillors by the Minister and the determination
  of the number of councillors by the MEC s
  responsible for local government
• Provide for ward boundaries determined for the
  2011 local government elections to remain in
  place for local elections in the foreseeable
  future

58
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA

• Provide a continuous process to review ward
  boundaries with a view to enhance service
  delivery and development but also to promote
  local democracy. One needs to take into account
  population of ward, consultation with ward
  committees, municipal development and service
  delivery projects, and especially planning over a
  longer than the current 5 year period for the
  municipality as a whole.
• Allow deviations from the 15 norm where it can
  promote service delivery/ development and/or
  promote local democracy.
• To what extent size has been a variable affecting
  performance, post 2000?
• There are a number of problems bedevilling local
  government. Many of these factors are not due to
  issues of size around local government e.g.
  politics/administrative relationships,
  clientelistic practices, local electoral system,
  the executive system.

59
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA

• There is no conclusive evidence linking service
  delivery problems to the size of municipalities.
• The metros widely-drawn boundaries seem to have
  facilitated service delivery.
• There are hints by the government that the large
  size of wards is a factor inhibiting the
  performance of ward committees but no evidence is
  produced to support this.
• There is also no conclusive evidence linking
  performance to the size of integrated development
  plans.
• Likewise the argument that councillors in rural
  communities have large constituencies and this
  makes it difficult to represent communities
  adequately is also untested.
• The international literature on size and
  performance on municipalities did not produce any
  ideal or optimal size for local government.

60
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA

• The available empirical data and government and
  academic literature suggest that there is no
  conclusive evidence to show that the size of a
  municipality has been a major problem impeding
  the performance of local government.
• Changing the size of municipalities should be
  treated with circumspect.
• If socio-economic interdependence, most notably
  commuting, is the primarily basis for determining
  boundaries then the nature of settlement patterns
  rather than population size becomes the major
  determinant of boundaries.
• Problem of Reorganisation Fatigue.
• There may be opportunistic incentives for the
  creation of new councils by local politicians.

61
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN
SOUTH AFRICA

• Future Research
• The Board should investigate the possibility of
  undertaking a more systematic analysis of the
  relationship between size and performance between
  and within municipalities.
• It will entail inter alia looking extensively at
  customer surveys, auditor generals reports and
  other performance evaluation data. In order to be
  scientific such a study will have to identify
  external constraints on councils that could
  explain at least part of any apparent performance
  variation economic and social conditions, the
  needs and demands of local residents, previous
  council policies and the behaviour of other
  organisations.