Municipal Infrastructure Grant

1 Department of Provincial and Local Government June 2006 Page i MMuunniicciippaall IInnffrraassttrruuccttuurree GGrraanntt NNAATTIIOONNAALL MMIIGG MMAANNAAGGEEMMEENNTT UUNNIITT PPRROOGGRRAAMMMMEE MMAANNAAGGEEMMEENNTT PPRROOCCEESSSSEESS AANNDD PPRROOCCEEDDUURREESS Note: The Management processes and procedures document is a working document to be revised as and when required. Department of Provincial and Local Government June 2006 Page ii CONTENTS 1. 1 2. PRINCIPLES AND OBJECTIVES OF THE Municipal Infrastructure Grant .. 1 KEY PRINCIPLES .. 1 MIG PROGRAMME 3 3. INSTITUTIONAL ARRANGEMENTS .. 3 AT Municipal SPHERE THE DEVOLUTION OF RESPONSIBILITY TO THE LOWEST LEVEL .. 3 AT PROVINCIAL 4 RESPONSIBILITY 4 4. CONDITIONS APPLIED TO THE MIG.

2 14 PRINCIPLES RELATING TO THE SETTING OF CONDITIONS .. 14 Division of Revenue Act (DORA) .. 14 Cross-cutting 14 Sector specific conditions .. 16 5. COMMUNICATION FLOW AND CONTROL PROCEDURES .. 17 INTERACTION .. 17 Interaction between the National MIG Management Unit, Provincial MIG Management Unit, PMUs and municipalities .. 17 Interaction between PMU, municipality and project 17 MEETINGS .. 18 Provincial progress 18 National quarterly 19 Ad-hoc meetings .. 19 6. Municipal Infrastructure Grant (MIG) LIFE CYCLE .. 20 PROJECT IDENTIFICATION .. 20 PROJECT PRIORITISATION AND SELECTION .. 21 PROJECT REGISTRATION .. 25 PRE-IMPLEMENTATION PHASE .. 25 25 Tender document and 26 IMPLEMENTATION 27 27 OPERATION AND MAINTENANCE .. 28 7. GENERIC REPORTING MECHANISMS, FORMATS AND 28 DIVISION OF REVENUE ACT MONTHLY 28 Recipient Municipalities.

3 29 Department of Provincial and Local Government June 2006 Page iii PMUs .. 29 Provincial Programme Management Unit (PPMU) .. 29 National MIG Management 30 dplg Chief Financial 30 QUARTERLY KPI REPORT .. 30 ANNUAL REPORT .. 32 8. MIG NATIONAL FUND ADMINISTRATION SYSTEM .. 33 Municipal Infrastructure Grant (MIG).. 34 Recipient Municipalities .. 34 PMUs .. 34 Provincial MIG Management Unit (PPMU) .. 35 National MIG 35 Under spending at Municipal level .. 36 Control measures for 36 Assist 36 Amendment of payment schedule .. 36 Procedure and process of amending payment schedules.. 37 Withholding of 38 Process and procedure of withholding of payments .. 39 Stopping of payments .. 39 Process of Stopping an 39 Non-compliance.

4 40 RE-ALLOCATION OF MIG 40 9. MIG MANAGEMENT INFORMATION SYSTEM (MIS) .. 40 PRELIMINARY PHASE .. 40 Project Registration Form .. 41 PRE-IMPLEMENTATION PHASE (DESIGN & TENDER).. 42 Register consultant .. 42 Request for payment from municipality (Design phase) .. 42 IMPLEMENTATION PHASE (CONSTRUCTION) .. 42 Register 42 Request for Payment (Construction phase).. 42 Physical Completion 43 Request for Payment (Retention) .. 43 10. GENERAL FILING AND BACKUP PROCEDURES .. 43 43 PROJECT FILES .. 43 43 REPORTS .. 44 FINANCIAL ADMINISTRATION 44 Submission of Draw 44 Department of Provincial and Local Government June 2006 Page iv Proof of Expenditure (1084 s) .. 44 SERVICE LEVEL 44 Department of Provincial and Local Government June 2006 Page v ABBREVIATIONS The following abbreviations are used throughout this document.

5 BAS : Basic Accounting System CETA : Construction for Education Authority DME : Department of Minerals and Energy DoH : Department of Housing DORA : Division of Revenue Act DoT : Department of Transport DPLG : Department of Provincial and Local Government DPW : Department of Public Works DWAF : Department of Water Affairs and Forestry EMM : Executive Manager MIG EPWP : Expanded Public Works Programme GIS : Geographical Information System IDP : Integrated Development Plan IIF : Infrastructure Investment Framework IT : Information Technology KPIs : Key Performance Indicators LGCB : Local Government Capacity Building Grant LIC : Labour Intensive Construction MIIF : Municipal Infrastructure Investment Framework MIS : Management Information System MITT : Municipal Infrastructure Task Team NQF : National Qualification Framework (SETA Sector for Education Training Authority) O&M : Operation and Maintenance PMITT : Provincial Municipal Infrastructure Task Team PMM : Provincial Manager MIG PPMU : Provincial Programme Management Unit PMU : Project Management Unit SMF : Senior Manager Finance SMIF : Special Municipal Infrastructure Fund SMM : Senior Manager MIG SMME : Small, Medium and Micro Enterprises Department of Provincial and Local Government June 2006 Page 1 1.

6 INTRODUCTION The purpose of this guideline document is to create conformity and to regulate the MIG programme management processes and procedures. The national MIG management unit s main responsibility is the administration of MIG funds and therefore will have to implement the following management processes and procedures across all spheres of government: Communication, documentation and information flows generic to all sectors and departmental policies Generic reporting mechanism, formats and procedures MIG national fund administration system MIG management information system (MIS). The planning process for Municipal Infrastructure Investment framework (MIIF) is not covered in this document. This document is work in progress and will be updated as and when the environment or/ conditions change.

7 2. PRINCIPLES AND OBJECTIVES OF THE Municipal Infrastructure Grant KEY PRINCIPLES The Municipal Infrastructure Grant complements the equitable share Grant for local government, however, it is provided conditionally to municipalities. The key principles underpinning the design of the MIG are outlined below: a) Focus on Infrastructure required for a basic level of service: The MIG programme is aimed at providing only basic Infrastructure . b) Targeting the poor: The programme is aimed at providing services to the poor and funds will therefore be targeted to reach them. c) Maximising economic benefits: The programme will be managed to ensure that the local economic spin-offs through providing Infrastructure are maximised. This includes employment creation and the development of enterprises.

8 Department of Provincial and Local Government June 2006 Page 2 d) Equity in the allocation and use of funds: The mechanism for distributing funds must provide for equitable access to such funds by the poor in order to make uniform progress in closing the Infrastructure gap. e) Decentralisation of spending authority within national standards: Decisions relating to the prioritisation of Municipal Infrastructure spending, such as the identification, selection and approval of projects, are best undertaken at Municipal level, with the following provisions: the operating finance and management arrangements must be in place; a degree of national and provincial influence over capital spending, expressed through clear norms, standards and spending conditions must be retained; and unintended consequences should be limited: the Grant must promote sound management practices, not the reverse.

9 F) Efficient use of funds: Funding must be used to provide the greatest possible improvement in access to basic services at the lowest possible cost. This implies the following: There should be an appropriate selection of service levels. Incentives and conditions must ensure that other funds are mixed with Grant funds to minimise leakage to non-eligible households and service levels. The mechanism to disburse funds should be simple and easy to monitor, and the outcomes of Municipal spending should be easy to evaluate. g) Reinforcing local, provincial and national development objectives: This implies the following: The funding mechanism must be consistent with the planning processes of local, provincial and national government. Nodal municipalities associated with the Urban Renewal Strategy and the Integrated Sustainable Rural Development Programme must receive proportionally greater allocations of funding.

10 Spatial integration must be promoted. The emphasis placed on the selection of appropriate service levels. The formula should promote appropriate Municipal performance relative to policy objectives. h) Predictability and transparency: Funds should be provided to individual municipalities on a three-year basis, consistent with medium term budgeting practice, with minimal in-year changes and with year to year changes based only on clearly defined conditions. It is also essential for municipalities and other stakeholders to easily understand how the funds are distributed. Department of Provincial and Local Government June 2006 Page 3 MIG PROGRAMME OBJECTIVES National government provides Infrastructure subsidies to ensure that all households have access to a basic level of Infrastructure services.