SA Coat of Arms 4.jpg The Presidency, Pretoria Annual Address by President Jacob Zuma to the National Council of Provinces, Parliament, 26 November 2015 The Chairperson of the National Council of Provinces, Deputy Chairperson of the NCOP, Premiers, Executive Mayors Honourable Members of the NCOP, Esteemed guests, Thank you for the opportunity to deliver this annual address to the National Council of Provinces. Yesterday we officially launched the 16 Days of Activism for No Violence Against Women and Children Campaign. Violence against women and children are serious crimes and must not be tolerated or excused in any way. Eliminating this scourge is not the responsibility of government or the criminal justice system alone. It is very much a societal responsibility. All elected representatives of our people need to play a leading role in taking this campaign forward, not only for 16 days but the whole year. Chairperson and Honourable Members, In my address to both Houses of Parliament in February this year, I laid out our vision as government for the year ahead. We have had to navigate a difficult global environment. The release of the GDP figures showed the challenges faced by slowing global demand on the mining sector as well as the effects of the drought on agricultural output. The manufacturing sector grew robustly, and together with growth in other sectors, helped to ensure GDP quarterly growth of zero point seven per cent. The economy had contracted by 1,3% in the second quarter of this year. We have therefore avoided a recession in the economy though we still need to boost the rate of growth. One billion rands of infrastructure investment per working day Infrastructure development is critical for both industrialisation and to boost employment in construction and other sectors especially during such a difficult time. We are now investing roughly one billion rands per working day in new infrastructure, with a focus on the areas I outlined in the nine-point plan in February. The past three months has seen stability in the supply of electricity to consumers. I opened the first unit of the Medupi power station to come onto the grid, in August this year. The Presidential Infrastructure Coordinating Commission has tracked the supply of renewable energy. About two thousand megawatts of energy is now available for consumption, all of which has assisted in avoiding load-shedding. However, we still need to speed up existing build-programmes to develop the reserves of energy needed to ensure that maintenance and outage challenges in our power plants do not negatively affect the economy and our people. Chairperson, Exactly a year ago, I convened a meeting of the Presidential Infrastructure Coordinating Commission to discuss with Premiers and Metro Mayors the growing problem of cable and metal theft from the infrastructure programme. We finalized the Criminal Matters Amendment Bill, which was then submitted to Parliament and which served in this House earlier this morning. I wish to recognise and appreciate the expeditious manner in which Parliament has considered the Bill. The Bill creates a new category of crimes for theft of cable and metal from public infrastructure and toughens both bail for accused and sentencing of guilty parties. This is meant to send a clear message of our resolve to stop cable theft which is a serious economic crime. Compatriots, Local Government We are coming close to the end of the current term of local government, the sphere that is closest to the people. While the lives of millions have improved meaningfully, there are many others who are still waiting, who still need to see their lives changing for the better. They want water, electricity, housing, roads and decent schools near their homes. They want municipalities that function better and which are caring and responsive. I would like to share with you today, the progress we have made in implementing the Back to Basics programme of revitalizing local government. It is a fact that the services rendered by many municipalities have reduced poverty. We need to acknowledge those achievements. We should also at the same time, identify and rectify the weaknesses and challenges that still remain on the path of improving the quality of life of all. That is the purpose of the Back to Basics Programme which was launched during the Second Presidential Local Government Summit on 18 September 2014. Back to Basics is now well known and accepted, and it was formally launched in all nine provinces. It has been institutionalised. It is a standing agenda item in the President's Coordinating Council meetings and MinMecs. Premiers and MECs report regularly on progress in their respective provinces. The Inter-Ministerial Task Team on Basic Services was established and it is functioning well. Provincial Back to Basics task teams were established and are conducting hands-on monitoring. The teams have developed municipal support plans, and these have been formally adopted by municipalities. Support and intervention packages were prepared and implemented for identified "hot-spot" municipalities. The programme is indeed becoming an integral part of local government governance and renewal. We have learned some key lessons during the initial phases of Back to Basics programme which are helpful in the implementation of the renewal programme. I will mention just a few. We have confirmed that political instability and weaknesses in governance are two of the primary causes of poor service delivery at municipal level. We have learned that direct hands-on support yields improved performance. We have also learned some positive lessons from the various section 154 support packages and the section 139 interventions. Citizen engagements are generally weak in those municipalities that are categorized as dysfunctional and at risk. In addition, municipalities with weaknesses in governance and corporate management functions such as financial management, Human Resource management and Supply Chain management also tend to experience difficulties in service delivery. Also evident is that municipalities generally have weak technical capacity in planning, project management, design and procurement of infrastructure. Some urgent delivery areas need attention such as the removal of bottlenecks in the provision of housing, water and sanitation. Corruption and fraud also remain a matter of concern in some municipalities. These lessons are instructive in the implementation of remedial programmes to assist struggling municipalities. Let me emphasise, Chairperson, that we should avoid entrenching the perception that all municipalities perform badly or are struggling. Many are actually doing well and are trying hard to improve systems. Also important to note is that those who are provided with support through the Back to Basics programme have responded positively and corrective action is visible. Having mentioned these challenges, Honourable Chairperson, I would also like to highlight some of the successes that we have experienced thus far as we continued supporting various municipalities. I will mention just a few municipalities given time constraints. These municipalities demonstrate what can be achieved with intensive support. The Eastern Cape provincial Department responsible for local government assisted the Ikwezi municipality through funding to the amount of one-million-and-twelve-rand to improve their service delivery outcomes. It also assisted Inkwanca municipality through payments of their Eskom debt to the amount of two million rand and service delivery creditors to the amount of five million rand. The Makana municipality was also supported to pay their Eskom debt to the amount of eighteen million rand, and service delivery related creditors to the amount of seven million rand. Water supply problems have also been attended to in the municipalities following the upgrading of infrastructure. An intervention was completed at the Great Kei Local Municipality with procurement and installation of new meters and maintenance of faulty meters to 10 households and five businesses that consume large amounts of electricity. While the number of households seems small the main focus was to train the municipal official so that he can continue to perform this work on his own. The expected outcome is accurate metering and billing of consumers, both residential and business. Elundini municipality in the Eastern Cape was unable to provide piped water to households in one hundred and seven villages due to a shortage of funding as well as a lack of technical capacity. The villages in the municipality experienced severe water supply backlogs for many years. With the technical support from the Municipal Infrastructure Support Agent, the municipality conducted a feasibility study for the eradication of its water backlog. The study revealed that the Municipality will need about three hundred million rand to eradicate the water backlog in the 107 villages. The funding was secured from the Municipal Infrastructure Grant and also development support from the Kingdom of the Netherlands. The project entailed the provision of new water infrastructure and ten years of operations and maintenance support. At least two thousand temporary and more than 100 permanent jobs will be created during the implementation phase. Although most of the Eastern Cape municipalities have Municipal Managers, in eight municipalities this position is vacant. Officials have been seconded to fast track the recruitment process of municipal managers in OR Tambo, King Sabata Dalindyebo Municipality, Makana, Port St Johns, Nkonkobe, and Ikwezi. The two outstanding municipalities are Inkwanca and Great Kei which are affected by demarcation. We continue to support Nelson Mandela Bay Metro. Included in the support package has been a commitment of finance and technical support from various government departments and agencies. In the Free State, twelve Municipalities reached the August 2015 Municipal Infrastructure Grant Expenditure target of 12%: These are: Kopanong Naledi; Tokologo; Nala; Setsoto; Nketoana; Maluti-a-Phofung; Phumelela; Mantsopa; Moqhaka; Ngwathe and Metsimaholo. We welcome these positive developments and encourage others to work harder as well. The Gauteng Department of Human Settlements has funded the implementation of numerous infrastructure-related projects in Bekkersdal in the Westonaria local municipality. The increase in the size of the indigent population who cannot pay debts due to retrenchments has put a burden on Westonaria and Randfontein local municipalities. They have to provide free basic services to the ever growing number of people who are without an income. Notwithstanding this, the municipalities have managed to meet their service delivery obligations to communities, including the servicing of their Eskom account that was in arrears. In the original categorisation of KwaZulu-Natal municipalities last year, eight municipalities were categorised as "requiring Intervention". Only Mtubatuba municipality has remained in the category of requiring intervention. Umvoti and Amajuba have progressed to what is defined as the "challenged category". Abaqulusi, Ugu, Umzinyathi, Mpofana and Endumeni moved to the "functional category". With regards to infrastructure, some newly established communities around Umvoti Local Municipality in Greytown were not being provided with piped water due to limited available capacity of the existing water treatment works. Umvoti Local Municipality lacked technical capacity to plan and manage the implementation of this project and requested the Municipal Infrastructure Support Agent to support with project management, including planning, supply chain management, execution and construction management. Phase one of this project has been completed. More than eight thousand households are currently benefitting and are now receiving water. Phase two of the Project is under construction at 40% progress to date. About three thousand households will be benefitting from the completion of the phase two project. It is anticipated that the project will be completed by July 2016. A total budget of four hundred and ninety million rand has been approved for the project. When phase two project is complete in July 2016, more than eleven thousand households will be benefitting in receiving water. Other municipalities such as Umkhanyakude still experience serious water shortages due to infrastructure backlogs and the drought. The area is the worst affected municipality. The Department has allocated an amount of ninety million rand to assist with drought interventions. Interventions by the Department of Water and Sanitation include amongst others the drilling of boreholes, provision of fifteen water tankers for water distribution, installation of static water tanks as well as rehabilitation of water schemes in the short term. The KZN provincial government must be acknowledged for the firm leadership it has shown in managing the drought situation as all sectors have been severely impacted by the drought namely agriculture, environment, industry and domestic users. In Mpumalanga all local municipalities are currently installing water meters for all water reticulation projects. Thirty one pieces of land were acquired for housing programmes. This was done to address the spreading of informal settlements in the Msukaligwa, Dr Pixley Ka Isaka Seme, Umjindi, Thaba Chweu and Victor Khanye municipalities. In North West, the villages of Choseng, Mathlapaneng and Mase in Dr Ruth Mompati District Municipality in North West were faced with severe reliable water supply problems for many years. There were very old concrete reservoirs which were leaking and therefore available water was being wasted. The old borehole was no longer a reliable source and these communities were always experiencing interrupted water supply problems. Through support, the municipality secured funding through the Municipal Water Infrastructure Grant programme to the value of nine million rand from the Department of Water and Sanitation. Construction began on 18 November 2014 and was completed on 17 April 2015. The new boreholes are now providing reliable water supply to more than one thousand households. On financial management, disclaimer audit opinions have been reduced by six municipalities due to the availability of supporting documents, and effective oversight at municipalities in North West. The situation is indeed gradually improving. To fill critical vacancies, a number of senior managers from various Provincial Departments are deployed to Municipalities. This is also important Chairperson as it demonstrates that the local government sphere is as important as the other spheres if not more, given its closeness to the people. In the Northern Cape, support to Nama Khoi municipality led to the development of a Council approved Recovery Plan. The municipality is implementing its credit policy, and the collection rate has improved to eighty four percent. The Municipality is also paying its Eskom electricity account arrears monthly as per their joint agreement, as well as paying the current account. The appointment of an acting municipal manager and an acting Chief Financial Officer in Renosterberg municipality has facilitated the payment of the outstanding salaries of officials and Councillors, as well as the payment of all outstanding third parties. The outstanding two-hundred-and fifteen-thousand rand free basic energy Eskom account was also paid in full. In the Western Cape, the Provincial Government intervened in Oudsthoorn Municipality in terms of Section 139 (1)(b) of the Constitution, and it will remain in this category post December 2015. The Province deployed Forensic Auditors to the Municipality during August 2015 to conduct a forensic investigation. The Western Cape provincial Treasury also conducted an assessment of the finances of the Municipality to identify, quantify gaps and provide support. All acting arrangements at senior management level (from internal staff) have been terminated, bringing some sense of stability in the administration. Chairperson, I must emphasise that we strongly welcome the report of the Auditor-General which shows improvements but also areas that require serious attention. We also agree with the Auditor-General that there should be consequences for bad management. Ministers as Executive Authorities running the departments have been spoken to in this regard. The matter was discussed extensively in the last Cabinet with a view to finding solutions. They must ensure that officials under their management fulfil all prescripts when utilizing public funds. In most cases it is the failure to follow procedures stated in the Public Finance Management Act that is a problem and not that money has been stolen. Ministers will ensure that their accounting officers, the Directors-General, implement the remedial action stipulated by the Auditor-General. We will discuss the matter with Premiers and the SA Local Government Association as well when we meet next in the President's Coordinating Council. We congratulate all government departments that obtained clean audits for the first time. They have proved that it is possible to improve management systems in government. The intensive Back to Basics programme is clearly making an impact in municipalities in financial management, as visible in the just released municipal audit outcomes for the 2013-2014 financial year. All provinces showed an improvement in their audit outcomes, with the biggest contributors to the total number of clean audits being Gauteng, KwaZulu-Natal and the Western Cape. For municipalities, 96% submitted their financial statements for auditing by 31 August 2014. This is a major improvement from the 78% in 2007-2008. The number of unqualified audit opinions on financial statements improved to fifty eight percent from forty nine percent in the previous year. The Gauteng Provincial Treasury assisted the two municipalities that are at risk, namely the Westonaria and Randfontein local municipalities with preparations for the 2014/15 audit by the Auditor-General. This support resulted in a significant improvement in the financial management of both Westonaria and Randfontein Local Municipalities. In the Free State, through the intensive interventions of the Back to Basics Crack Teams as well as the Premier's Operation Hlasela programme and the Municipal Infrastructure Support Agent, some municipalities improved their Audit Outcomes. These are: . Mangaung Metro from Qualified to Unqualified; . Tokologo LM from Qualified to Unqualified; and . Naledi LM from Disclaimer to Qualified. In Gauteng, both Randfontein and Westonaria further demonstrated improvement in overall capital expenditure and Municipal Infrastructure Grant spending as at the end of June 2015. This shows other municipalities that positive change is possible. Under the leadership of the Department of Cooperative Governance and Traditional Affairs, Government will continue and accelerate the hands-on approach. In the next phase of the Back to Basics approach, Government will work smarter and innovatively to increase impact. We will make better use of available monitoring mechanisms such as unannounced municipal visits, spot checks of supply chain management processes, implementation of forensic reports recommendations and site visits of Municipal Infrastructure Grant funded projects. Corruption will be tackled with vigour and determination, as the uprooting of corruption is a core objective of the Back to Basics programme. Already two hundred and twenty two officials were dismissed for fraud and corruption in the nine months from October 2014 to June 2015. Going forward, anti-corruption measures will include the monitoring of the implementation of the recommendations of all forensic investigations into municipalities. A campaign with organised business will be embarked upon to counter private sector involvement in corruption in municipalities. Debt owed to municipalities by business and residential sectors are constraining municipalities. A specific campaign will be launched to alleviate this obstacle. The improvement of the Billing Systems of selected municipalities will receive dedicated attention. Honourable Chairperson, I want to thank the leadership of all nine provinces and each and every municipality for their active participation in the Back to Basics approach. Chairperson, I would now like to talk about the 2016 Local Government elections preparations. The trend since democracy has been to break down barriers of race and inequality. This has led to the rationalisation of the number of municipalities from one thousand two hundred and sixty two in 1995 gradually to two hundred and seventy eight in 2011. In August 2015, the Municipal Demarcation Board proposed a further reduction of 19 municipalities after the 2016 municipal elections. There will thus be two hundred and fifty nine municipalities across the country (assuming that the Sedibeng District Municipality decision is reversed by the court). Should the court uphold the Municipal Demarcation Board's section 26 Notice confirming the amalgamation of Ikwezi, Camdeboo and Baviaans Local Municipalities - this will result in a further reduction of two municipalities. We believe that the proposed changes will lead to better governance and stronger functioning municipalities. The local government elections must be held within 90 days from May 2016 and preparatory work is being done. The number of councillors for each municipal council was gazetted last year. The Municipal Demarcation Board is presently busy with the delimitation of wards, after which they will hand over the final ward boundaries to the IEC for them to take the preparatory work forward. We will provide support as government as we always do. The IEC has run efficient, free and fair local government elections for years now. We do not anticipate any hassles in the organization of the 2016 elections. Chairperson, Drought is being experienced in some parts of the country and these conditions have been occurring over the past several years. We have established an inter-ministerial committee led by COGTA to respond to the challenge. The Department of Water and Sanitation also allocated an amount of three hundred and fifty two million rand for water projects in the affected municipalities, while other departments nationally, provincially and locally are also allocating funds. Water restrictions are being imposed by municipalities and other Water Services Authorities to control water usage and reduce the pressure on water resources during the period of drought. In addition, all spheres of government are working together to provide support to communities and farmers. It is a difficult situation with serious implications for the economy. It calls for us to work together closely to mitigate the impact. We thank Premiers and Executive Mayors for responding swiftly to assist communities and affected sectors. Important is for all spheres to promote the saving of water and to fight water losses. Our country loses seven billion rand a year to water losses. It is for this reason that we have introduced the Water Leaks project where government is to train fifteen thousand young people as plumbers and artisans to eliminate water leaks in communities. Honourable Members, In the short time of 14 months the government-wide commitment to the Back to Basics approach is evident. If we continue to work in this way, I am convinced that the services that Government provides will be provided in a timely manner, on an affordable basis and close to where our citizens live. When we do this, our citizens' experience of local government will be a happy one. I thank you. 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