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SALGA

ANNUAL REPORT 2014/15

The SALGA logo above is the organisation’s highest visual symbol. It differentiates SALGA from other local

government associations around the world. The three golden spheres on the logo represent the three

spheres of government, namely: national government, provincial government and local government.

SALGA logo comprises four different colours.

Green - Fertility and growth

Gold - Wisdom

Burgundy - Success

Cream - Peaceful thoughts

Published by SALGA

PO Box 2094

Pretoria

0001

South Africa

Tel: +27 12 369 8000

Fax: +27 12 369 8001

www.salga.org.za

RP: 165/2015

ISBN: 978-0-621-43672-3

Title of Publication: SALGA Annual Report 2014/15

Part A: General information 3

1. List of abbreviations/acronyms 4

2. Foreword by the Chairperson 6

3. Chief Executive Officer’s overview 8

4. Strategic overview 10

4.1. SALGA’s strategic plan 2012-2017 10

4.2. Key policy and strategic frameworks impacting

on local government

11

4.2.1. The Medium-Term Strategic Framework (MTSF) 11

4.2.2. The local government turnaround strategy

(LGTAS)

11

4.2.3. The millennium development goals (MDGs) 12

4.2.4. The new growth path 12

4.2.5. The national development plan 12

4.2.6. Emerging issues and strategic realignment 13

4.3. SALGA membership and stakeholders 13

4.3.1. SALGA members 13

4.3.2. Key stakeholders 13

4.4. Vision 15

4.5. Mission 15

4.6. Values 15

5. Legislative and other mandates 15

5.1. Legislative mandate 15

5.2. SALGA mandate 17

6. Organisational structure 18

Part B: Governance 21

1. Introduction 22

2. SALGA governance framework 22

2.1 SALGA national executive committee (NEC) 23

2.2 SALGA provincial executive leadership 25

2.3 Relationship between national and provincial

bodies

29

2.4 SALGA internal oversight structures 36

2.5 SALGA management 39

5. Social responsibility 40

Part C: Performance information 43

1. Introduction 44

2. Predetermined objectives 44

2.1. Highlights of performance per SALGA mandate 45

2.1.1. Lobby, advocate and represent role 45

2.1.2. Employer role 46

2.1.3. Capacity buidling role 46

2.1.4. Support and advisory role 47

2.1.5. Strategic profiling role 50

2.1.5. Knowledge and informanation-sharing role 50

2.2. Highlights of performance per SALGA strategic

goal

52

2.2.1. Goal 1: Local government delivering equitable

and sustainable services

52

2.2.2. Goal 2: Safe and healthy environment and

communities

59

2.2.3. Goal 3: Planning and economic development

at a local level

63

2.2.4. Goal 4: Effective, responsive and accountable

local government for communities

68

2.2.5. Goal 5: Human capital development in local

government

80

2.2.6. Goal 6: Financially and organisationally

capacitated municipalities

89

2.2.7 Goal 7: Effective and efficient administration 93

Part D: Human resource management 105

1. Introduction 106

1.1. Talent acquisition 106

1.2. Individual performance management 107

1.3. Labour relations compliance 108

1.4. Employee relations 109

1.5. Skills development 110

1.6 Employee wellness programme 113

1.7 Employee recognition awards 113

1.8 Occupational health and safety 114

Part E: Annual financial statements 115

1. Chief Financial Officer’s review 117

2. Report of the Accounting Authority 129

3. Report of the audit and risk committee 141

4. report of the performance management and

remuneration committee

147

5. Report of the auditor-general to Parliament on

SALGA

158

6. Accounting Authority’s responsibilities and

approval

161

7. Annual financial statements 163

CONTENTS

3

PART A: GENERAL INFORMATION

AC Audit Committee

APP Annual Performance Plan

Ald Alderman

AGSA Auditor-General of South Africa

ASGISA Accelerated and Shared Growth Initiative of South Africa

AU African Union

BAAM Business-Adopt-A-Municipality

BCEA Basic Conditions of Employment Act

CD Community Development

CDP Councillor Development Programme

CEO Chief Executive Officer

CFO Chief Finance Officer

CIP Councillor Induction Programme

CLGF Commonwealth Local Government Conference

CLLR Councillor

CMRA Centre for Municipal Research and Advice

CoGTA Department of Cooperative Governance and Traditional Affairs

COO Chief Operations Officer

CRDP Comprehensive Rural Development Programme

CSIR Council for Scientific and Industrial Research

DACF District Assemblies Common Fund

CSR Corporate Strategy and Research

DAFF Department of Agriculture, Forestry and Fisheries

DBSA Development Bank of Southern Africa

DCoG Department of Cooperative Governance

DEA Department of Environmental Affairs

DHS District Health System

DM District Municipality

DoE Department of Energy

DoJ Department of Justice

DPME Department of Planning, Monitoring and Evaluation

DPSA Disabled People South Africa

DRDLR Department of Rural Development and Land Reform

DRM Disaster Risk Management

DSD Department of Social Development

DST Department of Science and Technology

EC Eastern Cape

ECD Early Childhood Development

ED Executive Director

EDI Electricity Distribution Industry

EDP Economic Development Planning

EESDCF Employment Equity Skills Development Consultative Forum

EIUG Intensive User Group of Southern Africa

EMS Emergency Medical Services

EPWP Expanded Public Works Programme

ER Employee Recognition

ESTA Extension of Security of Land Tenure Act

EWP Employee Wellness Programme

FBS Free Basic Service

FFC Financial and Fiscal Commission

FS Free State

GIS Geographic Information System

GIZ Gesellschaft für Internationale Zusammenarbeit

GP Gauteng

GRAP Generally Recognised Accounting Practice

HDA Housing Development Agency

HDF Human Development Framework

HOD Head of Department

HR Human Resources

HRDCSA Human Resource Development Council of South Africa

HRM&D Human Resources Management and Development

ICAS Independent Counselling and Advisory Service

ICT Information and Communication Technology

ICLEI International Council for Local Environmental Initiatives

IDP Integrated Development Plan

IGR Intergovernmental Relations

IMATU Independent Municipal and Allied Trade Union

IMFO Institute of Municipal Finance Officers

IOM International Organization for Migration

IGR Intergovernmental Relations

ILO International Labour Organisation

IPAP Industrial Policy Action Plan

IRM Integrated Risk Management

ISDF Integrated Service Delivery Framework

IUDG Integrated Urban Development Grant

KPI Key Performance Indicator

KZN KwaZulu-Natal

LAN Local Area Network

LED Local Economic Development

LG Local Government

LGA Local Government Association of England and Wales

LGCCC Local Government Climate Change Champions

LGES Local Government Equitable Share

LGFF Local Government Fiscal Framework

LGHR Local Government Human Resources

LGICT Local Government Information Communication Technology

LGS Local Government Support

LGSETA Local Government Sector Education Authority

1. LIST OF ABBREVIATIONS/ACRONYMS

LGSTT Local Government Support Task Team

LGTAS Local Government Turnaround Strategy

LODLOG Local Democracy and Local Governance

LP Limpopo

LR Labour Relations

LRA Labour Relations Act

MASP Municipal Audit Support Programme

MBI Municipal Benchmarking Initiative

M&E Monitoring and Evaluation

MDB Municipal Demarcation Board

MDG Millennium Development Goals

MFMA Municipal Finance Management Act

MHS Municipal Health Services

MHSCG Municipal Human Settlements Capacity Grant

MID Municipal Institutional Development

MINMEC Ministers and Members of Executive Council Meeting

MIS Municipal Infrastructure Services

MMC Member of the Mayoral Committee

MoU Memorandum of Understanding

MP Mpumalanga

MPAC Municipal Public Accounts Committee

MSA Municipal Systems Act

MTEF Medium-Term Expenditure Framework

MTSF Medium-Term Strategic Framework

MYPD Multi-year Price Determination

NC Northern Cape

NCOP National Council of Provinces

NDA National Development Agency

NDP National Development Plan

NEC National Executive Committee

NEDLAC National Economic Development and Labour Council

NEPAD New Partnership for Africa’s Development

NERSA National Energy Regulator of South Africa

NGP National Growth Plan

NHI National Health Insurance

NMA National Members Assembly

NOB National Office Bearers

NSDP National Spatial Development Perspective

NW North West

NWG North West Government

NWG National Working Group

OHS Occupational Health and Safety

OLG Organised Local Government

PA Personal Assistant

PDP Professional Development Programme

PEC Provincial Executive Committee

PEO Provincial Executive Officer

PFMA Public Finance Management Act

PHDA Priority Housing Development Areas

PMA Provincial Members Assembly

PMS Performance Management System

PRZ Provisional Restructuring Zones

RM Risk Management

PHC Primary Healthcare

SADC Southern African Development Community

SALGA South African Local Government Association

SALGBC South African Local Government Bargaining Council

SAMHS South African Military Health Service

SANBS South African National Blood Service

SANEDI South African National Energy Development Institute

SANRAL South African National Roads Agency Limited

SASCOC South African Sports Confederation and Olympic Committee

SCLG SALGA Centre for Leadership and Governance

SCM Supply Chain Management

SCOA Standard Charts of Accounts

SDA Service Delivery Agreement

SDF Spatial Development Framework

SERI Social Economic Rights Institute of South Africa

SIP Strategic Infrastructure Project

SMME Small, Medium, Micro-sized Enterprise

SPLUMA Spatial Planning and Land Use Management Act

SWC SALGA Women Commission

SWPN Strategic Water Partnership Network

ToR Terms of Reference

UCLG United Cities and Local Government

UCLGA United Cities and Local Governments of Africa

UK United Kingdom

UNEP United Nations Environment Programme

UNISA University of South Africa

USDG Urban Settlement Development Grant

VVSG The Association of Flemish Cities and Municipalities

WC Western Cape

WC/WDM Water Conservation / Water Demand Management

WG Working Group

WILGS Women in Local Government Summit

WIPLGS Women in Provincial Local Government Summit

WSA Water Services Authority

WSP Water Services Provider

6

2. FOREWORD BY THE CHAIRPERSON

It is with a great sense of honour and privilege that I present SALGA’s 2014/2015

annual report. The report provides an opportunity for reflection on the organisation’s

contribution to the performance of the local government sector. SALGA endeavours

at all times to create an enabling and conducive environment for municipalities to

execute their developmental mandate to the communities that they serve. This

annual report also provides a synopsis of activities performed by the organisation

between April 2014 and March 2015 whilst providing context to the governance of

SALGA in relation to its role and mandate.

The period under review cuts across two prominent milestones in the era of our

democracy with the country having celebrated twenty years of democracy in 2014

and 2015 marking fifteen years of developmental and democratic local government.

These significant milestones compel us as organised local government to critically

reflect on the strides made by the sector in its efforts to deliver equitable and sustainable services to citizens while acknowledging

the challenges that undermine the integrity of local government.

To this end, one of the key priorities for SALGA in the period 2014/15 was to influence the legislative and policy review process for

local government by lobbying against policies and legislation that have an undesirable impact on local government. We made

several legislative and policy proposals this year which will contribute to a functional local government. Some of the submissions

relate to the upper limits of salaries for senior managers, the devolution strategy for local government, the amendment of the

Public Office Bearers Act, the draft monitoring, support and interventions framework, property rates bill and legislation relating to

cable theft, to mention just a few.

I am pleased to say that the deployment of part-time representatives to the National Council of Provinces (NCOP) contributed

immensely in improving SALGA’s visibility in the NCOP, it also provided the necessary impetus in providing consistency in relation

to advocating and lobbying for the interests of local government.

Accountability within local government is a key success driver in the adherence to the principles of good governance. SALGA has

invested substantial effort in elevating the discourse around corruption in local government. In our view these investments are

starting to yield positive dividends. As a key outcome of the Anti-Corruption Summit the organisation developed a consequences

and accountability framework for the sector, while municipalities were also assisted and encouraged to implement their own

tailored anti-corruption policies. These efforts were jointly addressed with key stakeholders in the sector namely Ethics SA, the

Department of Cooperative Governance and Traditional Affairs, Gauteng Provincial Government, National Prosecuting Authority,

Public Service Commission, Public Protector and GIZ.

SALGA has always been at the fore front of building a functional local government that is responsive to the growing needs of its

communities. This cannot be achieved without growing the leadership quotient in municipalities particularly with those who

need to play their oversight role in councils. The establishment of the SALGA Centre for Leadership and Governance (SCLG) is a

ground-breaking initiative which we believe provide a platform for futuristic thinking through thought leadership development

engagements. The establishment of the SCLG unequivocally demonstrates SALGA’s commitment to promote effective leadership

as the driving force in achieving the goals of a transformed and developmental local government.

The leadership of SALGA has never been comfortable with the notion of poor financial management in local government. We

have monitored the Auditor General’s MFMA outcomes report with keen interest with the objective of improving the narrative

around accountability in the sector. We took a bold step in June 2014 to launch the Municipal Audit Support Programme (MASP) to

provide hands-on support to municipalities who received adverse or disclaimed audit opinions. The MASP Programme is executed

through a delivery model based on benchmarking and peer review.

Cllr. Thabo Manyoni Chairperson of the NEC

7

Many of our municipalities face the growing risk of financial and organisational viability and this informs SALGA’s persistence in

advocating for a fundamental overhaul in relation to the fiscal framework for local government. Financially sustainable municipalities

are the cornerstone of a functional local government system. One of the key highlights that deserves particular mention is SALGA’s

successful lobbying for a transitional grant at the 2014 Budget Forum. This grant is to subsidize additional and administrative costs

that emerge as a result of boundary changes following an election, and will immediately assist those municipalities undergoing

restructuring in 2016. SALGA also took part in a process of reviewing ways of maximising the resources through reforms to capital

grants to municipalities.

SALGA has done well in building recognition and brand equity for the local government sector in South Africa through its work

in the international arena, which has seen SALGA’s commitments across borders grow in leaps and bounds. SALGA has continued

to provide sister associations within the region and the continent direct support and advice in areas relating to governance and

effective lobbying and advocacy strategies. We have also played an active leadership role in the structures of world bodies such as

the UCLG and the CLGF, as well as the UCLGA within the continent. The City of Joburg (COJ) will host the next Africities Summit in

November 2015 and SALGA has played a central role in supporting COJ to secure the bid to host this prestigious summit which

was launched in October 2014.

The Local Government Association of England and Wales requested SALGA to participate in a peer review of local government in

England which we deemed a significant opportunity. Participating in a peer review with a respected international organisation

was indeed gratifying and an indication that SALGA is a strong force in the international arena of organised local government.

In conclusion, it is important for me to mention that SALGA has once again received a clean audit from the Auditor General of South

Africa, the third one consecutively. This achievement demonstrates SALGA’s commitment to lead from the front in promoting the

practices of accountability and a local government which is responsive. I wish to convey to the CEO and the Executive Management

Team of SALGA my heartfelt thanks for the energy they put into running a clean administration which is exemplary to its members.

It is our firm belief that the sum total of these investments will over time contribute to a high performing local government sector

that we can all be proud of.

Cllr Thabo Manyoni

SALGA Chairperson

31 July 2015

8

SALGA has achieved notable successes in 2014/15. The organisation made good

progress in implementing its strategy, thereby laying a strong foundation in delivering

on the strategic goals of the organisation for 2017. Building a resilient and sustainable

organisation is a key factor in ensuring that we deliver on the mandate given to us by our

members. Good governance has therefore been a business imperative to our continued

success as an organisation. SALGA has once again received a clean bill of health from the

Auditor-General for the period under review, the third one in a row. This demonstrates our

commitment to accountability.

SALGA has achieved 98 percent against its APP in 2014/15 – an outstanding achievement.

The organisation maintains a relatively high profile position locally with our members and

with stakeholders in provincial and national government, as well as with international

bodies and other influential bodies with relevance to local government.

The organisation has achieved improved financial sustainability, an important feat in building a resilient body that is responsive

to the needs of its member municipalities. The organisation increased its revenue by 20.3 percent to R502.7 million. In addition, it

recorded over 36.2 percent increase in cash and cash equivalents, and 210 percentage increase in its total assets. Payment levels or

collections rate were maintained at over 85 percent.

During the past year, we also cemented our objective of building the organisation internally by actively promoting values of being

a caring organisation. In consolidating the successes and sustaining the change agenda, the financial and reputational gains made

have enabled SALGA to offer best-practice service benefits to its employees by means of employer contributions to the medical

aid and pension fund, a group risk scheme and adequate funeral cover.

As a result of the implemented service benefits and improved employee engagement, the staff turnover was reduced from 11,

7 percent in 2012/13 to 5,5 percent in 2014/15. Establishing a strong employer value proposition is making SALGA increasingly

attractive as an employer of choice to those with a passion for making a difference in the local government sector. We have also done

well at recognising the good work of employees through an annual employee recognition awards event, and offering employees

educational assistance and capacity building programmes as well as emotional and physical wellness support programmes.

We will look at back at 2014/15 as a year in which we nailed our colours to the mast in implementing programmes that will bring

about tangible results for the sector in the long-term by launching the municipal audit support programme for municipalities who

consistently achieve unqualified audits and through the small town regeneration programme. These programmes were rolled out

in line with the priorities of the organisation outlined in the 2012-2017 strategy. We also accelerated the implementation of key

capacity building programmes through the councillor induction programme and the senior management induction programme.

The national development plan explicitly outlines the importance of building a capable state and it is in that light that we at SALGA

will continue to do all we can to capacitate our members through strategic programmes.

The various successes outlined above serve to highlight the importance of SALGA as a whole and also to raise the bar for all

municipalities in terms of what we should achieve in the forthcoming year. Only through close collaboration and a constant

striving to achieve more will we be able to ensure that the service delivery landscape of the country at large is enriched and we are

able to build a better future for all.

Finally, I would like to extend my heartfelt thanks to the National Executive Committee of SALGA. The support of the NEC has

continuously been strong and it is always motivating to feel its strength and energy. I would also like to acknowledge the executive

management team, which jointly worked hard to implement the goals and strategy of the organisation.

3. CHIEF EXECUTIVE OFFICER’S OVERVIEW

9

Xolile George

Chief Executive Officer

Date: 31 July 2015

I wish to also thank all SALGA’s stakeholders - both in national and provincial government - for their support in realising programmes

for our municipalities, thereby enabling us to better discharge our developmental mandate. I am also grateful to all our partners

in the national and provincial spheres of government, the ministry and the Department of CoGTA in particular, Cities Network,

Municipal Demarcation Board, Local Government SETA and the National Treasury.

We are grateful for the guidance of the National Legislature (Parliament) in the form of the NCOP and its committees, as well as the

National Assembly Committees, in particular the portfolio committee on local government and traditional affairs who have been

unflinching in their support of our organisation. Thank you for embracing the concept that local government is also your business.

10

4. STRATEGIC OVERVIEW

4.1 SALGA’s Strategic Plan 2012-2017

The five-year (2012 to 2017 period) strategic plan was developed against the backdrop of South Africa’s third successful democratic

local government elections. The high voter turnout (which increased from 49% in 2000 to 57% in 2011) is testament to the

importance of local government to South Africans. But while significant gains have already been made in building a democratic

local government, consolidation is still required.

In 2009, government adopted the Local Government Turnaround Strategy (LGTAS). Cabinet also adopted a Medium Term Strategic

Framework (MTSF) with twelve outcomes, one of which focuses specifically on ensuring a responsive, accountable, effective and

efficient local government. Furthermore, government assessed the state of local government in the period preceding the elections

in 2011. This resulted in several challenges being identified, including:

Leadership and governance challenges relating to responsiveness and accountability;

Financial and fiscal management including the inter-governmental fiscal regime;

Cooperative governance especially intergovernmental relations;

Varied performance across municipalities in delivering basic services;

Varied performance across municipalities in growing local economies;

The continuation of apartheid spatial development patterns and inequity;

A lack of human resource capital to ensure professional administrations and positive relations between labour, management

and councils; and

The absence of a differentiated approach to support and govern municipalities that recognises the differences in the

nature and character of municipalities and how this is critical in the challenges that municipalities face.

Given the expectations around the 2011 local elections, SALGA reviewed, from a strategic perspective, what it could do to build on

this. This review gave the association the impetus to achieve the following:

Build on what has already been developed in terms of the LGTAS;

Identify key challenges that continue to impact on local government;

Assert the importance of this sphere of government and intensify the need to clarify and strengthen the powers and

functions of the sphere;

Emphasise the need for local government to fulfil its developmental mandate as articulated in the Constitution of the

Republic of South Africa and the White Paper on Local Government;

Sharpen the focus and priorities of local government as a basis for harnessing and coordinating efforts aimed at

strengthening the sector;

Engage with its members to develop a programme of action that is responsive and relevant to the differentiated needs of

its members; and

Strengthen the position of SALGA as a unitary structure that is aligned in terms of its strategy and structure and is capacitated

as a structure of organised local government that is geared to deliver on its mandate.

The strategic plan asserts the notion that local government must be empowered, resourced and capacitated to assume its role of

service delivery and development to the people of South Africa. It also commits SALGA to adopting a member-centric approach.

The plan is built on the underlying assumption that the association will work closely with its partners and stakeholders to develop

the local government sector.

11

4.2 Key policy and strategic frameworks impacting on local government

The strategic plan of SALGA is aligned to legislation and policy mandates. In this context it commits the organisation to be

member-centric, engage in meaningful partnerships, position the organisation for high performance and ultimately demonstrate

seriousness and commitment to growing and developing the sector.

The strategy of SALGA is also informed by national policy and strategic frameworks:

4.2.1 The Medium-Term Strategic Framework (MTSF)

On 22 December 2009, Cabinet approved the local government turnaround strategy of the Department of Cooperative

Governance and Traditional Affairs (CoGTA). This resulted in Cabinet prioritising 12 outcomes for the remaining years of the MTSF:

MT

SF

OUTCOMES

1 Quality basic education

2 A long and healthy life for all South Africans

3 All people in South Africa are and feel safe

4 Decent employment through inclusive economic growth

5 A skilled and capable workforce to support an inclusive growth path

6 An efficient, competitive and responsive economic infrastructure network

7 Vibrant, equitable and sustainable rural communities contributing towards food security for all

8 Sustainable human settlements and improved quality of life for all households

9 Responsive, accountable, effective and efficient local government

10 Protect and enhance the environmental assets and natural resources of the country

11 Create a better South Africa, a better Africa and a better world

12 An efficient, effective and development-oriented public service and an empowered, fair and inclusive citizenship

While local government has to contribute towards the achievement of all outcomes (especially outcomes 4, 6, 7, 8 and 10),

outcome 9 is especially pertinent to SALGA.

4.2.2 The local government turnaround strategy (LGTAS)

Outcome 9 specifically addresses local government. It is underpinned by the ‘Ten point plan for local government’. This seeks to

reinforce and support the implementation of the LGTAS. It comprises ten local government outcomes and 44 corresponding

performance indicators:

Co

GTA

10

-PO

INT

PL

AN

/ L

GTA

S

OUTCOMES

1Improve the quantity and quality of municipal basic services to people. This is specifically related to the areas of

access to water, sanitation, electricity, waste management, roads and disaster management

2Enhance the municipal contribution to job creation and sustainable livelihoods through local economic

development (LED)

3 Ensure the development and adoption of reliable and credible integrated development plans (IDPs)

4 Deepen democracy through a refined ward committee model

5 Build and strengthen the administrative, institutional and financial capabilities of municipalities

6 Create a single window of coordination for support, monitoring and intervention in municipalities

7 Uproot fraud, corruption, nepotism and all forms of maladministration affecting local government

8 Develop a coherent and cohesive system of governance and a more equitable intergovernmental fiscal system

9 Develop and strengthen a politically and administratively stable system of municipalities

10 Restore the institutional integrity of municipalities

12

4.2.3 The millennium development goals (MDGs)

MD

Gs

GOALS

1 Eradicate extreme poverty and hunger 5 Improve maternal health

2 Achieve universal primary education 6 Combat HIV/Aids, malaria and other diseases

3 Promote gender equality and empower women 7 Ensure environmental sustainability

4 Reduce child mortality 8 Develop a global partnership for development

4.2.4 The new growth path

The new growth path is a broad framework that sets out a vision and identifies key areas where jobs can be created. It is intended

to address unemployment, inequality and poverty in a strategy of creating a significant increase in new jobs in the economy,

mainly in the private sector.

It sets a target of creating five million new jobs in the next 10 years. This target is projected to reduce unemployment from 25% to

15%. To accomplish this, the plan identifies specific ‘job drivers’. These drivers include:

Investing in infrastructure for employment and development: Substantial investment in infrastructure, both to create

employment directly through construction, operation, maintenance and the production of inputs, as well as indirectly, by

improving efficiency across the economy;

Identifying and supporting key economic sectors: Targeting more labour-absorbing activities across the main economic

sectors and the agricultural and mining value chains, manufacturing and related services;

Seizing the potential of new economies: Taking advantage of new opportunities in the knowledge and green

economies;

Investing in social capital and public services: Leveraging social capital in the social economy and the public sectors;

Facilitating effective spatial development: Fostering rural development and regional integration.

The new growth path stresses the need to align macro-economic measures, micro-economic interventions and social partner

commitments. This is done to achieve the shared goals that the framework aims to achieve. It concludes with setting out the

priorities, sequencing and implementation plans.

4.2.5 The national development plan

The national planning commission produced a national development

plan (Vision 2030) (NDP) outlining a long-term vision and strategy for

South Africa. Cabinet has endorsed the NDP, a blueprint for eliminating

poverty and reducing inequality in the country by 2030. This is the

strategic framework for detailed government planning going forward.

The commission believes that the problem of uneven capacity and

varied performance is particularly acute at the local government level.

The current local government system has only been in place for just

over a decade. This means that there are significant challenges that

still need to be addressed. However, despite major obstacles relating

to finance, human resources and a limited autonomy, municipalities

are making progress.

There are many positive stories in the local government sector. These

range from municipalities that generally perform well to those that

just manage to fulfil their responsibilities in specific areas, such as basic

service delivery, poverty alleviation and infrastructure development.

13

It is clear from the various municipal performance reviews that greater attention needs to be given to the obstacles that prevent

the worst performing local and district municipalities from fulfilling their core functions. In particular, the following elements are

suggested:

Closer consideration of the varied capacity of municipalities and the need to achieve a better fit between the capacities

and responsibilities of municipalities;

Addressing the issue of mandates that have no funding;

Addressing the issue of the adequacy of the powers and functions of municipalities, particularly where a lack of these

powers and functions hampers development. The focus is on the transfering of functions such as housing, public transport

and land use management to local government; and

Addressing the inefficient two-tier system of local government.

4.2.6 Emerging issues and strategic realignment

The SALGA strategic plan does not exist in isolation. As such, it is inevitable that it will be impacted by events that have occurred

after its development. These include State of the Nation addresses, Cabinet makgotla, national and provincial elections and the

SALGA leadership makgotla. Given the significance of these events, SALGA has to create flexibility at a strategic level, to ensure that

it is aligned to local government and intergovernmental matters. To do this, SALGA undertakes the following:

Reviews key performance indicators (KPIs) and priority programmes as a basis of assessing how issues may be included;

and

Incorporates the information into the annual performance plans of SALGA.

This approach ensures that SALGA will manage unforeseen issues in its strategy on an ad-hoc basis. This will have implications in

terms of regulatory compliance, resource utilisation and budgetary allocations.

4.3 SALGA membership and stakeholders

4.3.1 SALGA members

Since its establishment in 1996, SALGA has focused on fulfilling its mandate of supporting local government transformation. This

has taken place in a complex environment, characterised by the highly diverse and diffuse membership base of the country’s

278 municipalities, which collectively constitute an independent, interdependent and inter-related sphere of government. These

members range from deep rural municipalities, which struggle with severe service delivery backlogs and institutional challenges,

to sophisticated cities that have significant institutional capacity. Municipalities are therefore classified in accordance with the

criteria in the Local Government: Municipal Structures Act, 1998 (Act No. 117 of 1998):

Metropolitan (Category A);

Local (Category B); and

District municipalities (Category C).

The SALGA strategic plan must therefore respond to the differentiated needs of the various municipalities. In addition, the SALGA

Constitution makes provision for associate member organisations that are strongly concerned with or involved in local government

matters, and which comply with criteria determined by SALGA’s national executive committee (NEC).

4.3.2 Key stakeholders

The efficient management of stakeholders has become a core element of business strategies in many successful organisations.

In line with SALGA’s mandate to represent, promote and protect the interest of local government, the association recognises the

14

important role that stakeholders play within the local government sphere. Stakeholders are integral in shaping and supporting

the implementation of the SALGA mandate and programme of action. The diagram below outlines the manner in which SALGA

engages with stakeholders as part of a broader process of representing, supporting and servicing its members.

Other international

partners

GovernmentMunicipalities

SALGA

Research

institution

Donor agencies

Private sector

Associate members

International

municipal

Professional bodies

State owned

entities

Civil society

Stakeholders also play a vital role in bolstering the resource capacity of SALGA. The three categories of SALGA stakeholders are

briefly discussed below.

4.3.2.1 Government

SALGA has to maintain and develop multi-level relationships with different government spheres. It also has to develop and maintain

these relationships to ensure that it effectively fulfils its mandate. Of particular importance, are the relationships with CoGTA and

national and provincial departments, that impact on service delivery, municipal functioning and the institutions within which

SALGA represents local government. These institutions include the Financial and Fiscal Commission; National Council of Provinces

and Ministers and Members of Executive Council Meetings (MINMECs) (including their political and administrative officials and

staff).

4.3.2.2 Non-governmental entities

SALGA interacts with a range of entities that have a role in the local government sector. These non-governmental entities include

the private sector, research and training institutions, professional bodies, international donors and development partners.

4.3.2.3 Internal

As a national organisation, SALGA must have functional and political integration between its constituent members and the

municipalities they represent. This is necessary if it is to be effective in any appreciable manner. It is required that integration be

actively fostered and developed. These relationships should be multi-level networks of relationships between the SALGA national

office, the SALGA provincial structures and individual municipalities (local, district and metropolitans).

15

4.4 Vision

“To be an association of municipalities that is at the cutting-

edge of quality and sustainable services.”

4.5 Mission

“To be consultative, informed, mandated, credible and

accountable to our membership and to provide value for

money.”

VisionTo be an association of municipalities

that is at the cutting-edge of quality and

sustainable services.

MissionTo be consultative, informed, mandated,

credible and accountable to our membership

and to provide value for money

ValuesResponsive, Innovative, Dynamic and

Excellence.

4.6 Values

Our values are:

Responsiveness

Innovation

Dynamism

Excellence

5. LEGISLATIVE AND OTHER MANDATES

SALGA is managed by various key legislative, policy and regulatory frameworks. These are:

5.1 Legislative mandate

5.1.1 The Constitution of the Republic of South Africa, 1996 (Act No. 108 of 1996)

Section 163 of the Constitution envisages an important role for organised local government. An Act of Parliament must cater for

the recognition of national and provincial organisations representing municipalities. This Act must determine the procedures by

which local government may consult the national and provincial government, designate representatives to participate in the

National Council of Provinces (NCOP) and nominate persons to the Financial and Fiscal Commission (FFC).

5.1.2 The Organised Local Government Act, 1997 (Act No. 52 of 1997)

The Organised Local Government Act recognises SALGA as a representative of organised local government. This allows local

government to designate up to ten part-time representatives to the NCOP in Parliament. It also allows it to nominate two additional

people to the FFC that advises the finance ministry on budget issues. Furthermore, SALGA participates in intergovernmental

structures at provincial and district levels. It is able to influence national and provincial legislation and to gauge the impact of such

legislation on local government.

5.1.3 The White Paper on Local Government (1998)

The White Paper on Local Government (1998) refers to how the constitution allows for municipalities to organise forms of municipal

association. As such, the White Paper identifies the key role of SALGA as being the effective representation of local government

in the legislative processes of all spheres of government. In its intergovernmental executive processes, SALGA affects the status,

institutions, powers and functions of municipalities. In order to do this effectively, the association must develop its own policy and

advocacy capacity. It also has to develop a strong internal mandate and undergo extensive consulting processes. According to the

16

White Paper, organised local government (OLG) is an employer organisation and therefore constitutes the employer component

of the South African Local Government Bargaining Council (SALGBC). This means that SALGA has a key role to play, not only as an

employer in the SALGBC, but also in building capacity in labour relations among its membership. It also has to maintain open and

constructive relationships with organised labour. The successful transformation of local government requires that the relations

between employer bodies and municipal trade unions are reconstructed around a common commitment to a developmental

role for local government.

The negotiation of this partnership requires vision and leadership. It also requires expertise in labour relations, bargaining, conflict

resolution and human resource management and development. As such, SALGA has the potential to make a strong contribution

to the development of municipalities throughout the country. This can be done by:

The provision of specialised services to supplement and strengthen the capacity of municipalities;

Research and information dissemination;

Facilitating shared learning between municipalities;

Human resource development; and

Councillor training. SALGA has a significant role to play in this training. The training is also required to coincide with the

election of new municipal councillors.

5.1.4 The Municipal Systems Act, 2003 (Act No. 32 of 2000)

The Municipal Systems Act provides that all municipalities must comply with any collective agreements concluded by organised

local government within its mandate. This is done on behalf of local government in the bargaining council established by

municipalities. This Act suggests that all municipalities are bound by the terms of agreements negotiated by OLG through SALGA

with the respective trade unions.

5.1.5 The Municipal Finance Management Act, 2003 (Act No. 56 of 2003)

The Municipal Finance Management Act was established to secure sound and sustainable management of the financial affairs of

municipalities and other institutions in the local sphere of government. The Act seeks to establish treasury norms and standards for

local government and to provide for all related matters.

5.1.6 The Intergovernmental Relations Framework Act, 2005 (Act No. 13 of 2005)

The Intergovernmental Relations Framework Act establishes a framework for local government and other spheres of government

to promote and facilitate intergovernmental relations. It also provides for mechanisms and procedures to facilitate the settlement

of intergovernmental disputes and all associated matters.

5.1.7 SALGA Constitution

The constitution of SALGA has undergone three phases of development. It was adopted in May 2000 followed by two further

reviews in 2004 and 2007:

Phase 1: 1996 – 2000 (adopted May 2000);

Phase 2: 2000 – 2004 (adopted 24 September 2004); and

Phase 3: 2004 – 2007 (adopted 25 April 2007).

17

5.2 SALGA mandate

A developmental local government is an essential part of the public sector. National growth and development imperatives are

dependent on the ability of local government to deliver on its mandate. SALGA has to utilise the resources and partnerships at its

disposal to build a local government sector that has the required capacity to facilitate poverty alleviation, economic development

and creation of jobs, and harness the socio-economic opportunities that the state has geared itself to provide for its people. SALGA

serves as the representative voice of all 278 municipalities. Since its establishment, the association has endeavoured to bring focus

to its mandate of supporting local government transformation in a complex environment. This has been characterised by a highly

diverse membership base of municipalities. Its mandate rests on six pillars:

SALGA MANDATE

Transform local government to enable it to fulfil its developmental mandate

The Voice of Local Government

Lobby, Advocate

and RepresentEmployer Body

Capacity

Building

Support and

Advice

Strategic

Profiling

Knowledge and

Information

Sharing

Lobby, advocate,

protect and

represent the

interest of local

government at

relevant structures

and platforms.

Acts as an employer

body representing

all municipal

members and,

by agreement,

associate members.

Build the capacity of

the municipality as

an institution as well

as leadership and

technical capacity of

both Counillors and

Officials.

Support and advise

our members on

a range of issues

to assist effective

execution of their

mandate.

Build the profile

and image of local

government within

South Africa as

well as outside the

country.

Serve as the

main hub of local

government

knowledge and

intelligence and

to facilitate peer

learning within the

sector.

SALGA has six main functions as indicated in the diagram above:

Lobby, advocacy and represent: This refers to representing the interests of members in legislatures and other policy-

making and oversight structures. It also refers to engaging with various stakeholders in public debates and other platforms

in the interest of local government.

Employer body: This refers to being an effective employer that represents its members. This representation is carried out in

collective bargaining as stipulated in the Labour Relations Act. However, it also includes various other structures including

but not limited to those established in the SALGBC.

Capacity building: This refers to facilitating capacity building initiatives through representing member interests in the

Local Government Sector Education Authority (LGSETA).

Support and advise: SALGA needs to provide the tools and services that enable municipalities to understand and interpret

trends, policies and legislation affecting local government and to implement them.

Strategic profiling: Elements here refer to enhancing the profile and image of local government as an important and

credible agent for the delivery of services. Profiling needs to take place on a national level as well as in Africa and the rest

of the world.

Knowledge and information sharing: This refers to building and sharing a comprehensive hub of local governmental

knowledge and intelligence. This will enable the informed delivery of the other mandates of SALGA. The knowledge hub is

also a useful reference point for all who seek local government information.

18

6. ORGANISATIONAL STRUCTURE

As with all public sector institutions, the political governance structures are supported by an administration. In the case of SALGA,

there are both the established national administration as well as nine provincial administrations. Support is not only provided on

logistics and the convening of meetings, but also at a technical level. Support is provided to the governance structures to ensure

that information and data is collected and consolidated and that proper reports are tabled for consideration at meetings. Technical

support is provided to add value to the quality of reports tabled for consideration, by ensuring that the information and data

generated by the various governance structures is properly packaged and analysed. In addition, the administration is there to

ensure that reports and recommendations are appropriately placed in context by considering all legal, financial, human resources

and other implications. Recommendations are required to be clearly outlined for informed decision-making. The administration is

also a generator of reports and recommendations for consideration by SALGA’s governance structures. Therefore, it must facilitate

the processing of reports through all SALGA structures, to ensure full and broad participation by the organisation in the decision-

making process. In this regard, the national executive committee (NEC), at its Lekgotla in August 2007, considered a detailed

presentation on the development of policy positions by the organisation and similarly to establish a mandate to inform a SALGA

position on any matter.

19

Eastern

Cape

Free State

Gauteng

KwaZulu-

Natal

Limpopo

Mpumalanga

Northern

Cape

Noth West

Western Cape

International

relations and

protocol

Inter-

governmental

relations

Advocacy and

lobbying

Governance

support

Parliamentary

affairs and research

5-Year Local

Government

Strategic Agenda

coordination

Collective

bargaining and

labour relations

Municipal

human resources

support

Skills

development

and capacity-

building

Single public

service

Local

government

transformation

Solid waste

management

Water and

sanitation

Electricity and

energy

Transportation

and roads

Climate

change and

environmental

management

support

Sustainable

human

settlement

Human

development

Safety and

security

Health

Social cohesion

and city

diplomacy

Disaster

management

Special

programmes

mainstreaming

(youth, gender,

HIV, etc.)

Development

management

planning

Economic

development

(ICT, ASGISA,

IDPs, PGDS, NSPS,

EPWP)

Local

government

finance

Municipal entity

oversight

P3 country

project

management

Research

Policy

development and

analysis

Strategy and

business planning

Organisational

performance

management

Knowledge

management

Monitoring and

evaluation

Stakeholder

relations

Finance control

Asset

management

Supply chain

management

Human resources

Administration

Information and

communication

technology

Financial reporting

and systems

Provincial

Offices

Governance,

IGR and

International

Relations

Municipal

Institutional

Development

Municipal

Infrastructure

and Services

Community

Development

Economic

Development

and

Management

Planning

Corporate

Strategy and

Research

Finance and

Corporate

Services

Chief of

Operations

Legal Compliance

and Risk

Corporate Secretariat,

Governance and

Strategic Programmes

Performance

Management Unit

Communications and

Marketing

Internal Audit

Chief Executive

Officer

21

PART B: GOVERNANCE

22

1. INTRODUCTION

Corporate governance essentially involves balancing the interests of many stakeholders within SALGA. These include its members,

stakeholders, leadership and management, government and the community. Since corporate governance also provides the

framework for attaining the organisational goals and objectives, it encompasses practically every sphere of management, from

action plans and internal controls to performance measurement and public accountability.

Over the past decade, it has become increasingly apparent that the sustainability of economies, societies and organisations are

integral. Organisational activities impact the health of the societies and economies of which they are part. In turn, the sustainability

of these organisations is dependent on the health of the societies and economies to which they contribute. These are complex

systems, shaped by the inherently interdependent relationships between stakeholders at all levels — individuals, organisations,

communities, governments and regulators. In today’s highly connected world, all boundaries are permeable. In such a world,

SALGA has graduated to the next level. We do not only pursue organisation-centric sustainability, but the sustainability of the

larger system. When SALGA resolved to be sustainable, the organisation committed to more than a series of internal initiatives.

It is committed to a different way of operating that takes into account the health of the larger system of which it is part and

upon which it depends. Sustainability represents a fundamental shift; where multiple outcomes drive decisions, long-term future

outcomes are balanced against today’s demands and a broader set of stakeholder purposes have to be considered.

Local governments across the world are increasingly being given responsibility to address most of their service delivery functions.

Municipalities are therefore expected to manage their localities to ensure environmental, economic and social sustainability. It

is against this background that SALGA, as the voice of organised local government in South Africa, is committed to the creation

of flexible network approaches with key stakeholders. This is in order to carry out joint programmes of research and learning,

information and technology sharing, management development and coordinated action on common problems, as a direct

response to these global challenges facing municipalities.

2. SALGA GOVERNANCE FRAMEWORK

SALGA is a Schedule 3A Public Entity, recognised in terms of the Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA)

and audited as one entity. As such, it reports to the Minister of Cooperative Governance. SALGA is funded through a combination of

sources including a national government grant, membership fees from municipalities and donations from the donor community

for specific projects.

SALGA is bound by one constitution. SALGA governance structures consist of the national conference, provincial conferences,

national members assembly, provincial members assemblies, national executive committee, provincial executive committees,

national working groups as well as provincial working groups. Its point of departure is to strengthen the local sphere of government

in delivering a developmental agenda that is aligned to national strategic priorities and which reinforces the work of the national

and provincial spheres of government. The eradication of poverty and unemployment, alongside the stimulation of growth, lies

at the heart of local government’s mandate and has found expression in the government-wide programme. As the front-line of

service delivery, local government also plays a pivotal role in consolidating and deepening democracy at the grassroots level.

The SALGA Constitution outlines and defines the roles and responsibilities of its political governing bodies. In an effort to improve

the coordination and alignment of the SALGA governance structures at a provincial and national level, the SALGA National Members

Assembly (NMA) of March 2008 adopted the SALGA governance framework. This framework allows for the effective consultation,

mandating and reporting between structures and further allows for effective decision-making by SALGA. The schedule of meetings

allows for the national executive committee (NEC) to convene every three months and for provincial executive committees (PECs)

and national and provincial working groups to convene in between meetings of the NEC.

23

2.1 SALGA national executive committee (NEC)

The NEC consists of:

The Chairperson of SALGA;

Three Deputy Chairpersons;

Six additional members who are elected separately by the National Conference;

Nine Provincial Chairpersons of SALGA who are ex-officio members of the NEC;

The head of the administration; and

The NEC may co-opt no more than three additional members.

The duties of the NEC are to:

Meet at least once every three months and when the need arises;

Exercise day to day executive authority;

Act in accordance with the directions of the SALGA National Conference or SALGA Members Assembly;

Submit a report of its activities during the previous financial year to the National Conference or National Members Assembly,

whichever occurs first; and

Develop, review and adopt the SALGA administration policies.

Cllr Thabo Manyoni Chairperson

Cllr Nombulelo Hermans Deputy Chairperson

Cllr Chris Neethling NEC Member

Cllr David Magabe Chairperson Limpopo

Cllr Subesh Pillay NEC Member

Cllr Sebenzille Ngangelizwe Chairperson Free State

Cllr Grace Mthimunye NEC Member

Cllr Kaone Lobelo Chairperson North West

Cllr Flora Maboa Boltman Deputy Chairperson

Cllr Boltumelo Moloi NEC Member

Cllr Welcome Mdabe Chairperson Kwa-Zulu Natal

Cllr Abe Bekeer Nec Member

Cllr Nomakhosazana Meth Chairperson: Eastern Cape

Cllr Dudu Mazibuko NEC Member

Cllr Willie Johnson Chairperson Northern Cape

Cllr Mpho NawaDeputy Chairperson

Cllr Zukiswa Ncitha NEC Member

Cllr Mafika NkosiChairperson Mpumalanga

Cllr Zibonele DumzeleNEC Member

Cllr Parks Tau Chairperson Gauteng

Cllr Baldwin Mathibe NEC Member

Cllr Demetri Qually Chairperson Western Cape

24

The SALGA NEC members for 2014/15 and the dates of meetings attended were:

NEC Member DATE DATE DATE # Attended

03 July 2014 30 October 2014 13 February 2015

Cllr T Manyoni Yes No Yes 2/3

Cllr N Hermans Yes Yes Yes 3/3

Cllr M Nawa Yes Yes Yes 3/3

Cllr F Maboa-Boltman Yes Yes Yes 3/3

Cllr DCP Mazibuko No No Yes 1/3

Cllr S Mashilo Yes N/A N/A 1/1

Cllr G Mthimunye N/A N/A Yes 1/1

Cllr C Neethling Yes No Yes 2/3

Cllr J Matlou Yes N/A N/A 1/1

Cllr T Matibe N/A N/A Yes 1/1

Cllr B E Moloi Yes Yes Yes 3/3

Cllr Z Ncitha Yes No Yes 2/3

Cllr W Johnson Yes Yes Yes 3/3

Cllr N Meth Yes No Yes 3/3

Cllr D Magabe Yes Yes Yes 3/3

Cllr G Lobelo Yes Yes Yes 3/3

Cllr B Mzangwa Yes N/A N/A 1/1

Cllr Ngangelizwe N/A Yes Yes 2/2

Cllr M Nkosi Yes Yes Yes 3/3

Ald D Qually Yes Yes Yes 3/3

Cllr P Tau Yes No Yes 2/3

Cllr S Mdabe Yes No Yes 2/3

Cllr A Bekeer Yes Yes Yes 3/3

Cllr Z Dumzela Yes Yes Yes 3/3

Cllr S Pillay Yes No Yes 2/3

Cllr F Ratlhaga N/A N/A No 0/1

Quorum Yes Yes Yes meetings

25

2.2 SALGA provincial executive leadership

The provincial executive committee (PEC) consists of:

The Chairperson;

Three Deputy Chairpersons;

Six additional members who are elected separately by the Provincial Conference; and

The PEC may co-opt no more than three additional members.

The PEC’s duties are to:

Meet at least once every three months and when the need arises;

Exercise day to day executive authority in the province;

Act in accordance with the directions of the Provincial Conference or Provincial Members Assembly;

Submit a report of its activities during the previous financial year to the Provincial Conference or Provincial Members

Assembly, whichever occurs first;

Develop, review and adopt SALGA’s administrative policies; and

Generate reports of activities in the province to be tabled at least quarterly at the NEC.

The SALGA PEC members for 2014/15 were:

2.2.1 SALGA Eastern Cape

Name Designation Municipality

Cllr Nomakhosazana Meth Chairperson OR Tambo District

Cllr Deon De Vos Deputy Chairperson Cacadu District

Cllr Mxolisi Koyo Deputy-Chairperson Chris Hani District

Cllr Luleka Simon Co-opted member Buffalo City Metro Cacadu

Cllr Nozibele. Makanda Co-opted member Chris Hani District

Cllr Themba Tinta Co-opted member Buffalo City Metro

Cllr Thando Ngcolomba Co-opted member Nelson Mandela Bay Metro

Cllr Maria Hermans Additional member Nelson Mandela Bay Metro

Cllr Nomfundo Mabunu Additional member Gariep

Cllr Makhaya Twabu Additional member Alfred Nzo District

Cllr Nomasikizi Konza Additional member Amatole District

Cllr Vukile Balura Additional member Cacadu District

Cllr Thandekile Sabisa Additional member OR Tambo District

26

2.2.2 SALGA Free State


Cllr Sebenzile Ngangelizwe Chairperson Matjhabeng

Cllr Bhekumzi Charles Stofile Deputy Chairperson Matjhabeng

Cllr Nthabiseng Mokotjo Deputy Chairperson Mangaung Metro

Cllr Disebo Nakedi Deputy Chairperson Moqhaka

Cllr Mongi Geolion Ntwanambi Additional member Xhariep District

Cllr Thandiwe Ivy Reachable Additional member Letsemeng

Cllr Nesta Rabela Additional member Mangaung Metro

Cllr Lindiwe Ursula Makhalema Additional member Dihlabeng

Cllr Victoria de Beer Co-opted member Ngwathe

Cllr Tshidi Koloi Co-opted member Moqhaka

Cllr Vuyizile Mona Co-opted member Letsemeng

Cllr Lenox Rubulana Co-opted member Matjhabeng

Cllr Phindi Maleka Co-opted member Lejweleputswa District

2.2.3 SALGA Gauteng


Cllr P Tau Chairperson City of Joburg

Cllr P Mkonza Deputy Chairperson Ekurhuleni

Cllr G Hlongwane Deputy Chairperson Emfuleni

Cllr C Seerane Deputy Chairperson West Rand District

Cllr B Modisakeng PEC member Sedibeng District

Cllr F Bhayat PEC member Mogale City

Cllr T Ernest PEC member City of Tshwane

Cllr M Mathikge PEC member Merafong City

Cllr M Mfikoe PEC member City of Joburg

Cllr P Tsotetsi PEC member Sedibeng District

Cllr R Mashego PEC member Ekurhuleni

Cllr B Baloyi PEC member Midvaal

Cllr K Ramokokgopa PEC member City of Tshwane

27

2.2.4 SALGA KwaZulu-Natal


Cllr SW Mdabe Chairperson iLembe District

Cllr J Nxumalo Deputy Chairperson eThekwini Metro

Cllr J Khumalo Deputy Chairperson Amajuba District

Cllr TVB Mchunu Deputy Chairperson uThungulu District

Cllr N Gumede Additional member eThekwini Metro

Cllr M E Ndobe Additional member Harry Gwala District

Cllr C Ndlela Additional member Msunduzi

Cllr NH Gumede Additional member uGu District

Cllr Y Bhamjee Additional member uMgungundlovu District

Cllr N Vilane Additional member UMkhanyakude District

Cllr EN Molefe Additional member Nquthu

Cllr P Khaba Additional member Abaqulusi

2.2.5 SALGA Limpopo


Cllr D M Magabe Chairperson Sekhukhune District

Cllr S Lamola Deputy Chairperson Waterberg District

Cllr D Mmetle Deputy Chairperson Tzaneen

Cllr L Mapoulo Deputy Chairperson Capricorn District

Cllr K Lekalakala PEC member Modimolle

Cllr N Sibanda PEC member Lepelle Nkumpi

Cllr G Kganyago PEC member Capricorn District

Cllr O Mafefe PEC member Sekhukhune District

Cllr L Nhlapo PEC member Bela-Bela

Cllr S Ramaremela PEC member Mopani District

Cllr T Nkadimeng Co-opted member Polokwane

Kgoshi S Dikgale Co-opted member House of Traditional Leaders

Cllr T B Matibe NEC member Vhembe District

28

2.2.6 SALGA Mpumalanga


Cllr Mafika Nkosi Chairperson Chief Albert Luthuli

Cllr Mavis Charles Deputy-Chairperson Mbombela

Cllr Salome Sithole Deputy-Chairperson Emalahleni

Cllr Reinas Khumalo Deputy-Chairperson Bushbuckridge

Cllr Lesetja Dikgale Member Nkangala District

Cllr Terror Shabangu Member Ehlanzeni District

Cllr Tunu Mnisi Member GertSibande District

Cllr VelaphiMagagula Member ThabaChweu

Cllr Lindi Masina Member Govan Mbeki

Cllr Mandla Mhlanga Member Nkomazi

Cllr Sylvia Nxumalo Member Bushbuckridge

Cllr Lindiwe Ntshalintshali Member Emalahleni

Cllr Mandla Khayiyana Member Govan Mbeki

2.2.7 SALGA Northern Cape


Cllr Willie Johnson Provincial Chairperson Frances Baard

Cllr Winnie Ngobeza Deputy Chairperson Sol Plaatje

Cllr Nokhaya Mjila Deputy Chairperson ZF Mgcawu

Cllr Sipho S’thonga Deputy Chairperson Emthanjeni

Cllr Dineo Moyo Additional member Gamagara

Cllr Victor Makoke Additional member John Taolo Gaetsewe

Cllr Jan Tonyane Additional member Tsantsabane

Cllr Lorenzo Faber Additional member Nama Khoi

Cllr Eileen Drage- Maritz Additional member Namakwa

Cllr Brenda Mpamba Co-opted member Thembelihle

Cllr Moses Nhlapho Co-opted member Sol Plaatje

Cllr Lulamile Nkumbi Co-opted member Emthanjeni

Cllr Katerina Dodds Co-opted member Mier

29

2.2.8 SALGA North West


Cllr Kaone Lobelo Chairperson Greater Taung LM

Cllr Lenah Miga Deputy Chairperson Mahikeng LM

Cllr Mbulelo Zephe Deputy Chairperson Dr Kenneth Kaunda DM

Cllr Sheila Mabale-Huma Deputy Chairperson Rustenburg LM

Cllr Afrika Thale Additional member Ramotshere Moiloa LM

Cllr Sarah Nkatlo Additional member Dr Kenneth Kaunda DM

Cllr Suzan Montshioagae Additional member Dr Ruth Segomotsi Mompati DM

Cllr Ezra Mdangai Additional member Bojanala Platinum DM

Cllr Francis Ratlhaga Co-opted member Bojanala Platinum DM

Cllr Doctor Kgosi Mohadi Co-opted member Maquassi Hills LM

2.2.9 SALGA Western Cape


Ald Demetri Qually Chairperson City of Cape Town

Cllr Georlene Wolmarans Deputy Chairperson Knysna

Cllr Grant Twigg Deputy Chairperson City of Cape Town

Cllr Edward Njadu Deputy Chairperson Central Karoo District

Cllr Francois Schippers Additional member Saldanha bay

Cllr Ian Iversen Additional member City of Cape Town

Cllr Steven Vuba Additional member City of Cape Town

Cllr Clera Meyer Additional member Cape Winelands District

Ald Anton Coetsee Additional member Overstrand

Cllr Johan Rademeyer Additional member Drakenstein Municipality

Ald Belinda Walker Co-opted member City of Cape Town

Cllr Sumeia Ndayi Co-opted member Bitou

Cllr Belinda Landingwe Co-opted member City of Cape Town

2.3 Relationship between national and provincial bodies

The SALGA Constitution regulates the relationship between SALGA and its provincial members. All provincial members are to

constitute themselves in terms of the constitution of SALGA and be affiliated to SALGA. In addition, provincial executive committees

(PECs) must generate reports of activities in the province to be tabled at least quarterly at the national executive committee (NEC).

SALGA’s national office and the nine provincial offices each have a distinct and complementary role to play in the execution of the

SALGA mandate.

30

2.3.1 SALGA working groups

The SALGA National Conference held from 30 August to 1 September 2011 elected a new NEC, in line with the provisions of the

SALGA Constitution, as amended. The NEC is empowered to establish working groups and appoint the chairpersons of such

working groups. SALGA working groups are structures of the NEC that deal with political detail on behalf of the NEC and their main

purpose is to encourage, ensure and promote local government matters which, inter alia, will include:

Cooperative governance;

Consultation and coordination; and

Participative decision-making.

The working groups, operating within their derived mandate, must develop policies, strategies and programmes to address critical

local government issues and must serve as a forum through which organised local government can consult on a political level, in

order to contribute towards the creation of democratic and economically viable local government.

2.3.2 National working groups

The SALGA national and provincial working groups form a critical component of the SALGA governance structures. The working

groups (national and provincial) are established by national and provincial executive committees respectively, with the chairperson

of the working groups appointed from the additional and co-opted members. The number of working groups is determined by

the NEC based on, inter alia, the key functional areas of local government. Having considered the key functional areas of local

government and to facilitate strategic alignment with the SALGA functional areas, the NEC resolved that the following national

working groups be established and replicated in provinces:

a. Economic development and planning;

b. Climate change, environmental affairs and sustainability;

c. Municipal finance;

d. Community development;

e. Municipal trading services;

f. Municipal infrastructure planning;

g. Human resource development and collective bargaining;

h. Governance and intergovernmental relations; and

i. Councillor welfare and support (only at national level).

31

SALGA’s national governance structures convened as follows during 2014/15:

National governance structures Date of meeting

National executive committee 03 July 2014 30 October 2014 13 February 2015

National office bearers 02 July 2014 30 October 2014 13 February 2015

Community development working group 12 June 2014 11 September 2014 11 January 2015

Municipal trading services working group 20 June 2014 11 September 2014 23 January 2014

Governance, IR and IGR working group 12 June 2014 19 September 2014 22 January 2014

Human resource management working group 12 June 2014 11 September 2014 22 January 2014

Municipal finance working group 10 June 2014 21 September 2014 12 March 2014

Economic development and planning working

group

13 June 2014 10 September 2014 21 January 2014

Municipal infrastructure planning working

group


Climate change, environmental affairs and

sustainability working group


2.3.3 SALGA provincial governance structures

SALGA Eastern Cape

Provincial governance

structures

Date of meeting

Provincial executive meeting 23-24 June 2014 15-16 September 2014 04-05 December 2014 03-04 March 2015

Community development

working group

09 June 2014 03 September 2014 04 November 2014 02 March 2015

Municipal trading services

working group

27 May 2014 20 August 2014 20 November 2014 13 February 2015

Governance, IR and IGR working

group

17 June 2014 25 September 2014 21 November 2014 27 February 2015

Human resource management

working group


Municipal finance working

group


Economic development and

planning working group


Municipal infrastructure



Climate change, environmental

affairs and sustainability

working group

02 May 2014 03 September 2014 14 November 2014 23 February 2015

32

SALGA Free State

Provincial governance structures Date of meeting

Provincial executive meeting 18 July 2014 Special Meetings

20 August 2014

21 October 2014

30 October 2014

02 December 2015 18 March 2015

Community development working

group


Municipal trading services working

group



group

27 May 2014 14 August 2014 19 November 2014 04 March 2015


working group


Municipal finance working group 06 June 2014 08 August 2014 05 November 2014 11 February 2015




Municipal infrastructure planning

working group



affairs and sustainability working

group


SALGA Gauteng


Provincial executive meeting 04 June 2014 19 September 2014 13 November 2014 23 March 2015


working group

05 June 2014 29 August 2014 13 November 2014 06 February 2015


working group

05 June 2014 22 August 2014 31 October 2014 13 February 2015


gGroup



working group


Municipal finance working group 05 June 2014 05 September 2014 07 November 2014 06 March 2015





working group




group

05 June 2014 29 August 2014 28 November 2014 27 March 2015

33

SALGA KwaZulu-Natal




working group



working group


Provincial executive meeting 05 June 2014 22 August 2014 31 October 2014 13 February 2015


group



working group


Municipal finance working group 05 June 2014 05 September 2014 07 November 2014 06 March 2015





working group




group

05 June 2014 29 August 2014 28 November 2014 27 March 2015

SALGA Limpopo


Provincial Executive Meeting 29 May 2014 22 September 2014 02 December 2014 13 March2015


group



group



working group


Municipal finance working group 16 May 2014 18 August 2014 06 November 2014 11 February 2015





working group


34

SALGA Mpumalanga


Provincial executive meeting 05 June 2014 26 August 2014 26 November 2014 19 March 2015


group



group



working group

- 05 August 2014 04 November 2014 10 February 2015






working group




group



group


SALGA Northern Cape


Provincial executive meeting 20 June 2014 08 August 2014

20 August 2014

24 October 2014 20 March 2015


group



group



working group






Municipal infrastructure and

services


35

SALGA North West




working group



working group

14 May 2014 06 August 2014 05 November 2014 11 February2 015


group



working group







working group




group


SALGA Western Cape


Provincial executive meeting 3 April 2014 11 July 2014 05 December 2014 23 January 2015

12 March 2015


group



group



group



working group







working group




group


36

2.4 SALGA internal oversight structures

2.4.1 Audit committee

The SALGA audit committee was established in terms of the PFMA and the Treasury regulations. The responsibilities of the audit

committee have been determined by the national executive committee (NEC). Its modus operandi is outlined in the audit

committee charter that is reviewed annually to ensure its relevance. In accordance with the Treasury Regulations 27.1.3 and 27.1.4,

the audit committee has been constituted to ensure its independence. All members and the chairperson are outside the public

services arena. The composition of the audit committee members is such that all Treasury regulations and audit committee charter

requirements are met in terms of the financial and legal literacy and the independence of the committee.

The chairperson of the audit committee reports on its activities to the national executive committee on a regular basis. All members

give a declaration at each audit committee meeting of any personal or financial interests that may conflict with their duties in this

regard.

The audit committee convenes regularly and is attended by external auditors, the Chief Executive Officer, Chief Financial Officer,

the Head of Internal Audit and relevant corporate officials. For the period under review, the audit committee has fulfilled all the

requirements in terms of its responsibilities and functions, as per the audit committee charter, the PFMA and Treasury regulations.

Five meetings were held during 2014/15 as per the following dates:

Member Record of attendance

22 May 2014 29 July 2014 19 September 2014 30 January 2015 20 March 2015

Mr T Zakuza - chairperson

Ms OM Matloa - member

Ms P Ndumo - member

Mr N Mhlongo - member

Adv J Ralefatane - member

2.4.2 Performance management and remuneration panel

A performance management and remuneration panel is an advisory body established by the NEC in December 2007 to have an

oversight over the implementation of performance management system, policy and procedures, as well as the remuneration

policies and practices of SALGA, including the following:

Review and ensure the proper application of organisational performance management policy and procedures,

remuneration philosophies, strategies and other policies aligned to the approved organisational strategy and objectives

of SALGA;

The panel is empowered to consider and make recommendations to the NEC on all matters relating to the performance

management and remuneration of SALGA; and

Policy frameworks and policy decisions taken by the panel are binding to all administrative structures of SALGA.

The panel comprises members who are external professionals from the private sector and members of the NEC of SALGA. It

functions independently of the management structures within SALGA and endeavours to remain and preserve its objectivity at

all times.

37

Composition of the committee

The committee is comprised of nine members, including four NEC members elected by the NEC and six independent members

from the private sector. The Chief Executive Officer of SALGA sits on the panel in an ex officio capacity to present recommendations

to the panel. The committee is comprised of the following members:

Committee member Background Meeting dates: 2014/15

05 June 2014 14 March 2015

Cllr Thabo Manyoni SALGA National Chairperson

Cllr Nombulelo Hermans SALGA Deputy Chairperson (NEC member)

Cllr Nomakhosazana Meth SALGA Eastern Cape Provincial Chairperson (NEC

member)

Cllr Speedy Mashilo Chairperson of the HR development and

collective bargaining working group (NEC

member)

Mr Chose Choeu Committee chairperson

Ms Elizabeth Dhlamini-Kumalo Committee member

Dr Fazel Randera Committee member

Ms Laura Machaba-Abiodun Committee member

Mr William Huma Committee member

Evolving process and role of the panel

The work of the panel is governed by the terms of reference that outline its duties and authority. The panel makes input towards

the SALGA priorities, assisting the organisation in improving corporate excellence and the achievement of effective and efficient

administration.

The role of the panel includes, amongst others, contribution and making direct input in the following:

Overall review of policies

Regarding policy review processes, the panel is empowered to:

Conduct regular reviews, of the performance management policy and procedure and application framework at SALGA, to

ensure its relevance and proper application;

Conduct regular reviews, as necessary, of the SALGA remuneration philosophy, policy and detailed structure, in the context

of salary reviews and structures. This includes checking on the consistency of job evaluation and the relationship between

role size and actual pay levels; and

Regular reviews of the SALGA strategy (as updated from time to time) and related annual performance plan, including the

impact on other related government strategies, so as to ensure congruence with the organisational performance plans.

Performance

The panel has reviewed and signed off the performance scorecards of the CEO and senior executive levels and subsequently

submitted these for approval by the NEC. The panel oversees the performance assessment process of the CEO and monitors its

execution in a process that ensures coaching and aligning of his performance with the organisational strategy.

38

The committee directs the performance assessment of the CEO by reviewing reports and evidence relating to all of the CEO’s key

performance areas and related KPIs, through direct engagements of coaching and reviews in intensive sessions, which are held

quarterly. In all cases, the panel assesses any requests for deviation and makes its recommendations regarding these to the NEC.

Remuneration

The panel conducts an annual review of all salary adjustments and the overall increase to budget and makes recommendations

to the NEC regarding the final outcomes thereof. In so doing, the panel considers the integrity of the remuneration policy and

framework, and monitors the application thereof. The Panel reviews all annual performance bonus recommendations and

calculations, as well as salary levels for all roles, and submits its final recommendations for consideration by the NEC. In assessing all

remuneration cases, the panel considers related factors including the following:

Organisational affordability;

Overall organisational performance;

Managing of anomalies and requests for interim increases; and

Consistency of adherence to approved policy and objective job evaluation.

Employee benefits

The panel assisted in the shaping of the employee benefits offering that was implemented in SALGA in April 2014. The panel

members shared various best practice ideas to help guide the final proposal and guided the benchmark that was executed to

ensure SALGA’s bouquet of benefits compare well with other leading organisations. Benefits that were introduced include:

A pension fund with monthly employer contributions;

A medical aid benefit with benchmarked employer contribution;

An attractive group risk cover benefit; and

Funeral cover.

Panel oversight, process, and progress

The panel has made an enormous contribution towards the thorough inculcation of the institutionalisation of the individual

performance management in an effort to advance effective and efficient administration towards the consolidation of SALGA as

a centre of corporate excellence. Excellent progress has been achieved both on performance management and remuneration

matters within the organisation.

The panel has conducted a range of oversight activities and has made various decisions during the period under review. Several

factors relating to organisational development must be recognised including, amongst others, the following:

The panel has successfully contributed to the internalisation of performance management in the organisation;

SALGA has maintained high performance outcomes in 2012/13 and 2013/14, thereby resulting in the organisation

achieving a clean audit outcome from the Auditor-General and performance rewards being awarded to eligible employees,

in recognition of the enhanced organisational performance improvement;

The panel has contributed significantly towards the approval of an employee service benefits offering implemented in

April 2014;

Good progress has been made in revising SALGA’s remuneration policy and ensuring that employees are remunerated

fairly in accordance with an established benchmarked salary framework for SALGA; and

Ongoing support and coaching by the panel is appreciated to ensure the firm establishment of SALGA as a centre of

excellence.

39

2.5 SALGA management

As with all public sector institutions, the political governance structures are supported by an administration. In the case of SALGA,

there are both the established national administration as well as nine provincial administrations. Support is not only provided on

logistics and the convening of meetings, but also at a technical level. Support is provided to the governance structures to ensure

that information and data is collected and consolidated and that proper reports are tabled for consideration at meetings. Technical

support is provided to add value to the quality of reports tabled for consideration, by ensuring that the information and data

generated by the various governance structures is properly packaged and analysed. In addition, the administration is to ensure

that reports and recommendations are appropriately placed in context by considering all legal, financial, human resources and

other implications. Recommendations are required to be clearly outlined for informed decision-making. The administration is also

a generator of reports and recommendations for consideration by SALGA’s governance structures. Therefore, it must facilitate the

processing of reports through all SALGA structures, to ensure full and broad participation by the organisation in the decision-

making process.

Below is SALGA management both at national and provincial level:

Management team at SALGA national:

Name Designation Directorate

Xolile George Chief Executive Officer Office of the CEO

Seana Nkhahle Executive Manager Office of the CEO

Nceba Mqoqi Chief Financial Officer Finance and Coporate Services

Lorette Tredoux Executive Director Governance, IGR and International Relations

Rio Nolutshungu Executive Director Municipal Institutional Development

Jean De La Harpe Executive Director Municipal Infrastructure Services

Antonette Richardson Acting Executive Director Corporate Strategy and Research

Phila Xusa (resigned) Executive Director Economic Development and Management Planning

Marx Mapuriwa Acting Executive Director Economic Development and Management Planning

Mandu Mallane Acting Executive Director Community Development

Simphiwe Dzengwa Executive Director Municipal Finance

Management team for SALGA provincial offices:

Name Designation Province

Gcinikhaya Mpumza Provincial Executive Officer SALGA Eastern Cape

Zwe Ndala (until Feb 2015) Acting Provincial Executive Officer SALGA Free State

Zanoxolo Futwa Provincial Executive Officer SALGA Free State

Lucky Leseane Provincial Executive Officer SALGA Gauteng

Sabelo Gwala Provincial Executive Officer SALGA KwaZulu Natal

Thapelo Matlala Provincial Executive Officer SALGA Limpopo

Gugu Langa Provincial Executive Officer SALGA Mpumalanga

Modibedi Mongwe Provincial Executive Officer SALGA Northern Cape

Nancy Ngwenya (until Feb 2015) Provincial Executive Officer SALGA North West

Sam Makhubu Provincial Executive Officer SALGA North West

Khalil Mullagie Provincial Executive Officer SALGA Western Cape

40

5. SOCIAL RESPONSIBILITY

Social responsibility is an ethical framework which suggests that an entity, be it an organisation or individual, has an obligation

to act for the benefit of society at large. Social responsibility is a duty every individual has to perform so as to maintain a balance

between the economy and its eco-systems. Organisational sustainability addresses the dynamic interactions among the economic,

environmental and social impacts and interactions in the short, medium and long-term. SALGA strives to achieve this through the

incorporation of ethical, transparent, responsible and accountable business practices into its operations, the institutional framework

and strategies, decision-making, voluntary practices and organisation culture.

The legacy of apartheid education policies has seriously fragmented education systems in poorer communities. Since 1994,

education has been at the forefront of government’s priorities. Research has demonstrated that children who participate in early

childhood development (ECD) programmes are better equipped socially, emotionally and intellectually. Yet only 43% of children

under the age of five are exposed to an ECD programme. As a result, the NDA has identified ECD centres in various municipalities

across the country that need support.

Mindful of SALGA’s 2010 National Member’s Assembly resolution to support Mandela Day programmes in local government,

SALGA entered into a partnership with the National Development Agency (NDA) of the National Department of Social

Development in a campaign aimed at improving ECD centres.

In signing the memorandum of understanding with the NDA, SALGA was mindful of the fact that South Africa’s achievement of

the millennium development goals (MDGs), in as far as maternal and infant mortality is concerned, depended considerably on:

Mothers and children accessing a healthcare programme pre- and post-natal;

Children having assess to educational toys; and

Children in ECD centres having access to clean water and a safe environment.

As part of the Mandela Day celebrations on 18 July 2010, a significant step was made towards entrenching Mandela Day as a

feature of local government when municipalities made a SALGA National Members Assembly (SALGA NMA: 2010) resolution to

support Mandela Day. The aim of the day is for everyone to make a difference by dedicating their time to doing something positive,

wherever they live.

As an association mandated by the constitution to represent municipalities, SALGA’s role is not only to ensure that it participates

in Mandela Day but also encourages and assists all municipalities to have holistic and integrated Mandela Day programmes as

part of their existing community development and engagement programme. Therefore Mandela Day responses cannot be

viewed in isolation of legislation governing social development and municipalities. Thus far; SALGA ensures the following:

Guidelines to assist municipalities: In partnership with the Nelson Mandela Foundation and 46664, SALGA annually

disseminates SALGA guidelines for local government participation in the Nelson Mandela Day. In addition, national and

provincial circulars are sent to municipalities;

Mandela Day activities: Annually, in partnership with municipalities, national and provincial offices embark on Mandela

Day activities. These activities have largely focused on the elderly and children; and

In 2014/15 SALGA, in partnership with the National Development Agency (NDA) of the National Department of Social

Development, agreed on a campaign entitled SALGA-NDA Adopt-an-ECD-centre. The campaign aimed at improving

ECD centres and it was rolled out in all provinces.

41

Below is a list of all the centres that SALGA adopted in all the nine provinces in each province:

SALGA OFFICE EARLY CHILDHOOD CENTRE

National Ebenhezer Early Childhood Development Centre

Eastern Cape Zwelodumo Early Childhood Development Centre

Free State TJ Teleka Early Childhood Development Centre

Gauteng Ithemba Labantwana Early Childhood Development Centre

KwaZulu-Natal Letty Mkhize Crèche

Limpopo Ditlokwe Early Childhood Development

Mpumalanga Siyacathula Early Childhood Development Centre

Northern Cape Kagisho Early Childhood Development Centre

North West Itukise Early Childhood Development Centre

Western Cape 1. Khanyolwethu Educare

2. Umzomhle Educare

3. Bongani Educare

4. Masizahe Educare

43

PART C: PERFORMANCE INFORMATION

44

1. INTRODUCTION

SALGA’s strategic goals are the focus around which the organisation delivers long-term results. They are the focal point around

which resources and efforts of the organisation are harnessed and galvanised towards a common purpose. SALGA recognises that

it cannot achieve these goals on its own, and that delivery of its mandate depends on effective intergovernmental relations and

dynamic partnerships and stakeholder engagement. Through these relationships and its strategic goals, SALGA will drive service

delivery, transformation, growth and development in the sector as a whole.

SALGA has identified seven strategic goals:

Accessible, equitable and sustainable municipal services delivered by local government;

Safe and healthy environment and communities;

Planning and economic development at local level;

Effective, responsible and accountable local government for communities;

Human capital development in local government;

Financially and organisationally capacitated municipalities; and

Effective and efficient administration.

In order to achieve these goals in the long-term, SALGA has identified a number of key performance indicators (KPIs) that will allow

the organisation to measure its progress towards fulfilling its mandate. SALGA made excellent progress in meeting its KPIs during

the year under review, achieving a 98% success rate through attaining 84 of its 86 KPIs. This means that only two KPIs were not

achieved – one in the first strategic goal and one in the third strategic goal.

2. PREDETERMINED OBJECTIVES

The Auditor-General of South Africa currently performs the necessary audit procedures on the performance information to

provide reasonable assurance in the form of an audit conclusion. The audit conclusion on the performance against predetermined

objectives is included in the report to management, with material findings being reported under the ‘predetermined objectives’ heading in the ‘Report on other legal and regulatory requirements’ section of the auditor’s report.

Refer to page 158 of the report of the Auditor-General, Part E: Annual Financial information.

The SALGA annual report was audited by the Auditor-General. The audit process entailed sampling of performance targets for

audit. The sampling varies from one year to another. For 2014/15, the Auditor-General selected goals 1, 2, 4 and 7 as the sample for

the performance audit. These goals represent the following portfolios respectively:

Municipal infrastructure services;

Community development;

Governance and intergovernmental relations; and

Corporate governance and finance and corporate services.

The four selected goals were audited in-depth inclusive of all the KPIs and targets that comprise these goals.

The performance information 2014/15 reflects on SALGA’s performance and achievements in relation to the seven organisational

goals, 69 targets and 86 key performance indicators (KPIs) and associated performance targets, as per the approved SALGA Annual

Performance Plan 2014/15.

45

This past year brought a significant number of challenges and achievements. The organisation entered the year with a defined

vision to promote the interest of member municipalities, focusing primarily on three apex priority areas:

To review the legislative and policy framework within which municipalities operate;

To review the fiscal and financial management framework of municipalities; and

To build municipal capacity.

Much progress has been made in the delivery of the SALGA’s mandate and goals.

2.1 Highlights of Performance per SALGA Mandate

2.1.1 Lobby, advocate and represent municipalities

SALGA’s members appreciated the increased effectiveness and efficiency of SALGA’s support and representation of municipalities

in intergovernmental structures, including the NCOP. The designation of the part-time representatives to the NCOP improved the

visibility of SALGA in the NCOP and provided consistency in terms of representation, advocating and lobbying for the interests of

local government. At the strategic planning session of the NCOP and the session of committees held in August and September

2014, the part-time representatives were a constant voice, advocating for a review of legislation impacting negatively on local

government. NCOP has since agreed to address this matter and has called on SALGA to provide detailed information on legislation

that impacts negatively on local government. As the NCOP was newly constituted in 2014, this represents significant progress in

building relationships with this key institution to address the constraints hampering local government’s performance

SALGA lobbied at the 2014 budget forum for R139 000 000 towards a municipal demarcation transition grant. The grant is to

subsidise additional institutional and administrative costs arising from boundary changes to take effect subsequent to the elections

of 2016. Subsequent to the budget forum, CoGTA has put forward further demarcation proposals to the Municipal Demarcation

Board (MDB) that will address the socalled non-financially viable municipalities. More work has to be undertaken to lobby for

further financial and technical support for these ‘new’ municipalities.

The infrastructure grant review continues to review ways to maximise existing resources via reforms to capital grants to

municipalities, rather than seeking solutions that require additional funds or significant reforms to operating or capacity building

grants. This collaborative effort between the National Treasury, the Department of Cooperative Governance (DCoG), the Financial

and Fiscal Commission (FFC), the Department of Planning Monitoring and Evaluation (DPME) and SALGA engaged all relevant

stakeholders at national (primarily sector departments) and local government levels to ensure full consultation.

Through participation in the infrastructure grant review process, SALGA ensured that the issue of renewal (refurbishment,

rehabilitation and overall asset management) was included in the scope of the review. The review recognised that:

The current grant system’s emphasis on new infrastructure has been at the expense of the sustainable investment in

existing infrastructure;

An unintended impact of the emphasis on expanding infrastructure networks has been the failure to sufficiently maintain

and renew existing municipal infrastructure. Increasingly this has resulted in service failure; and

Asset management practices over the life cycle of grant funded assets need to be incentivised and enforced so that citizens

can rely on functional municipal infrastructure without electricity blackouts, potholes or taps running dry.

The review recommended that the conditions of the grant system be amended so that renewal can be funded from grants. This

will of course have a positive financial impact on the sustainability of municipal infrastructure.

46

2.1.2 Employer role

SALGA continues to build on its strengths as an effective employer organisation and in the day to day provision of advisory services

to municipalities. In the recent past there has been increased visibility in the role played by SALGA in representing municipalities in

dispute resolution and misconduct cases. A number of cases were recorded during the year under review, including conciliation,

litigation and arbitration. Effective legal representation by SALGA resulted in the long standing wage curve dispute being finalised

by the Labour Appeal Court in favour of affected municipalities. The same can be said of advice provided to municipalities on a

range of labour relations and human resource matters.

Below is a table on representation on different matters:

Province Number of

municipalities

represented

Disciplinary

hearings and

grievances

Conciliations Arbitrations

Eastern Cape 32 25 190 118

Free State 8 18 10 26

Gauteng SALGA Gauteng due to available capacity doesn’t represent municipalities in Conciliations and Arbitrations

KZN 52 33 63 78

Limpopo 13 52 54 46

Mpumalanga 18 26 17 11

Northern Cape 32 17 8 17

North West 23 81 74 56

Western Cape 30 180 118 40

Total 208 432 534 392

The impact of this favorable ruling is that municipalities will be saved from retrospective wage curve back payment on the one

hand and, on the other, municipalities will be enabled to focus their efforts on concluding outstanding job evaluation and wage

curve implementation.

Two hundred and seventy four municipal employees across provinces were trained on TASK job evaluation (JE). The trained

employees will serve in the various JE unit structures that will finalise JE in all municipalities.

2.1.3 Building leadership and technical capacity of the sector

SALGA has worked with the Department of Science and Technology (DST) and the Council for Scientific and Industrial Research

(CSIR) in building technical skills in the waste management sector through the development of formal qualifications on waste

management. The sector did not have a dedicated qualification and as a result, two postgraduate degrees on waste management

were developed: the BSc Hons (Waste Management) through the University of North West and MSc (Waste Management) through

the University of Natal. The first intake of students was in 2015 for the BSc Hons and the MSc will commence with the enrolment

in 2016 at the University of Natal.

The knowledge sharing and advocacy in renewable energy and energy efficient innovations activities have been undertaken

mainly in the form of workshops. Most of these knowledge sharing workshops were structured according to the priorities identified

in the SALGA renewable energy and energy efficient (RE EE) strategy for local government, and in particular on:

Institutionalisation of the energy mandate (energy strategies);

Municipal own energy efficiency; and

Energy access for all.

47

Around 120 municipalities participated in different energy efficiency and knowledge sharing innovations on energy efficiency and

renewable energy.

The roll out of the small towns regeneration training programme achieved the following:

Created an awareness among municipal officials on why and how small town regeneration should be prioritised as vital

spaces for regional and local economic development;

Provided a platform for economic development practitioners to share international and national good practice on

implementing sustainable and meaningful small town regeneration approaches;

Contextualised small town regeneration as a systematic and holistic approach covering areas such as governance,

infrastructure provision and maintenance and financial management, which must find expression in the overall integrated

development plan of municipalities; and

Equipped participants with a practical approach of identifying stakeholders, defining their roles and meaningful

participation.

In March 2015, 51 local leaders from across the country were given sponsored entry to Development & Management of Local

Government, an NQF level 6 programme executed by WITS.

The launch and establishment of the SALGA Centre for Leadership and Governance (SCLG) is another milestone for SALGA. The

SCLG will develop municipal leaders who will drive a development agenda through active reflection and thought leadership in the

sector. The medium- to long-term implementation of coherent learning and knowledge programmes through the SCLG should

result in:

Improved audit reports from the Auditor-General;

Improved strategic and policy choices or trade-offs on developmental objectives and service provision;

Enhanced sustainability and evidence based decision-making at a local level; and

Improved decision-making at all spheres of government as local leaders take up national and provincial leadership positions.

The SCLG has secured over R14million in funding from the LGSETA to develop leadership capacity in the areas of governance,

media and stakeholder engagement and ethics.

The Centre is in the process of concluding peer learning agreements with its counterparts in Malawi and Namibia toward building

the capacity of local government associations in the SADC Region.

SCLG strategic interventions have seen strategic inputs made to the LGSETA Strategic Planning, the Buffalo City Metropolitan

Municipality Mayoral Lekogtla and Nelson Mandela Bay Metropolitan Municipality Mayoral Induction.

SALGA also facilitated training (portfolio based) and leadership development programmes for councillors and senior municipal

officials, benefiting 1 149 officials in the following:

Portfolio based councillor development programme;

Senior manager induction programme; and

Leadership development workshops.

48

Below is a breakdown of all senior management induction and councillor induction programmes conducted:

Province

Councillor induction programme

Councillor development programme

Senior management

induction programme

Leadership development

workshop

2011 2013 2015 2014/15 2014 /15 2014/15

Eastern Cape 1017 41 15 461 28 24

Free State 761 96 - 300 34 -

KwaZulu-Natal 1670 131 - 524 62 96

Gauteng 1265 - - 178 74 -

Limpopo 1318 97 - 349 36 -

Mpumalanga 736 20 - 236 33 -

Northern Cape 431 - - 135 14 -

North West 615 13 - 246 25 132

Western Cape 585 12 - 54 20 -

Total Trained 8398 410 15 2483 326 252

Other capacity building programmes conducted:

Province

Local democracy and local democracy

and governance learning programme

(LODLOG)

Executive municipal leadership

development programme (EMLDP)

Eastern Cape 3 82

Free State - 63

Kwa-Zulu-Natal 2 124

Gauteng 2 123

Limpopo 5 102

Mpumalanga 2 71

Northern Cape 6 148

North West - 119

Western Cape - -

Total trained 20 832

2.1.4 Support and advisory role

SALGA developed and launched the multidisciplinary municipal audit support programme (MASP) which is based on four pillars:

leadership, governance, financial management and institutional capacity. SALGA launched MASP to assist all municipalities to

maintain good audit outcomes (unqualified with no findings or with findings) and to improve poor audit outcomes (disclaimer,

adverse, qualified and audits not finalised) by focusing on the four pillars. The MASP is placing particular emphasis on those

municipalities with adverse/disclaimer opinions as well as those municipalities whose audits were not finalised by the legislated

deadline – these are called “red zone” municipalities. For the year under review, 22 municipalities in the red zone were assisted of

which nine have improved and migrated from the red zone.

Transversal support in the form of workshops for councillor capacity building, revenue management/enhancement, internal audit

support and audit action plan guidance was provided.

49

In addition, two transversal audit issues were addressed in Limpopo through SALGA’s efforts and impacted positively on audit

outcomes of all municipalities in the province:

SALGA wage curve agreement (the national office facilitated the resolution of this matter); and

Provincial roads matter (Limpopo provincial office facilitated the resolution of this matter).

SALGA also finalised an agreement with research institute PARI to perform research into the red zone municipalities. The number

of red zone municipalities has reduced from 79 in 2012/13 to 60 in 2013/14.

Water services master classes were conducted during the year. These dynamic, practical and interactive sessions, which included

municipal and sector leaders, demonstrated the value of improved sharing of municipal data and aligned benchmarks and targets

across the range of MBI water services performance improvement efforts.

As part of a wider package of interventions, SALGA is undertaking to support municipalities with mining activities. As a result,

guidelines were developed to assist municipalities to improve their relationship with mining houses in the delivery of social/

rental housing. The guidelines, which plainly set out the legislation and related responsibilities of the mining companies towards

the municipality and community, will serve to strengthen the position of municipalities so that they engage more firmly with

mining companies and leverage private sector resources for the achievement of development priorities as set out in the integrated

development plan (IDP).

As part of the BZK programme to improve the capacity of municipalities to deliver social and rental housing, SALGA undertook

a number of projects in 2014/15, targeting the 13 municipalities which have been selected for the delivery of social housing. A

benchmark exercise was undertaken, which assisted those municipalities to assess their readiness for implementation, as well as

the strengths and weaknesses. The workshops facilitated real information sharing and peer learning for social housing officials.

For three metro municipalities, the support was taken one step further by providing hands-on assistance. The technical assistance

to eThekwini, Nelson Mandela and Mangaung metros differed in that support to one was related to policy, another to strategy,

and a third to project implementation. The interventions in Nelson Mandela Bay and Mangaung have provided the necessary

technical assistance and momentum to get the municipal rental housing strategy and policy off the ground. In eThekwini, SALGA

convened a team of experts (from NASHO, HDA and independent social housing experts) to visit a particular site for a planned

social housing project in Warwick Junction in the city centre. The interaction enabled metro rental housing officials to gain better

insight into some of the practical implementation issues related to the project: building design, target beneficiaries, placement of

building on site, integration into surrounding community, and property management. The overall impact of these activities is that

these municipalities are strengthened to deliver social housing, specifically as a result of technical assistance and advice provided

by SALGA and peer learning forums orchestrated by SALGA.

On electricity matters, SALGA engaged with Eskom concerning a framework agreement which would cover all municipalities

in whose area Eskom reticulates electricity, and serve as a measure towards preparing for service delivery agreements. However,

instead of a framework, SALGA and Eskom agreed to enter into a memorandum of understanding (MoU) to address the various

industry and operational challenges within the sector. An MoU was signed on 30 October 2014 with the purpose of engaging

in a process of active partnering to establish a cooperative and collaborative working relationship between Eskom, SALGA (and

ultimately, municipalities) to work towards the long-term sustainability of electricity reticulation. The MoU highlights electricity

distribution industry issues in general, and specific operational challenges impacting delivery of electricity to end users.

Performance Management Support was also provided to municipalities. The overall objective of the Municipal PMS Support

Programme is to provide hands-on support & assistance to capacitate municipalities and enable them to develop and implement

Performance Management Systems (PMS).

Various support initiatives have been implemented through:

Assessment of PMS functionality in municipalities to measure the level of compliance with PMS legislation & regulations;

PMS support plans based on the AG’s Findings, PMS Assessments, Human Capital Profiling & MASP;

50

Workshops held to create awareness, deepen knowledge and understanding for effective implementation of PMS;

Review of SDBIPs and ensure that performance agreements/plans of the municipal manager and senior managers are

aligned to measurable objectives as approved in the SDBIPs and the Budgets;

Support municipalities to develop and implement employee performance monitoring and review systems;

Development and review of PMS policies/frameworks;

Development and recommendation of processes & tools of cascading PMS to employees below senior managers;

Training of municipal PMS role players (cllrs and officials) to capacitate them with PMS capabilities.

Table below shows the number of municipalities supported:

Province Total number of municipalities Number of municipalities supported

Eastern Cape 45 24

Free State 24 15

Gauteng 12 7

KwaZulu-Natal 61 18

Limpopo 30 19

Mpumalanga 21 13

Northern Cape 23 10

North West 32 9

Western Cape 30 7

Total 278 122

Some municiplities have been supported more than once on different initiatives

2.1.5 Strategic profiling

SALGA’s enhanced profiling of local government in continental and global forums and platforms, as well as strengthening local

governance and decentralisation globally, has gained increasing traction during the period under review. SALGA also played

a critical role in re-unifying the United Cities and Local Governments of Africa (UCLGA) and is currently leading the Southern

African chapter of the organisation, particularly to strengthen local democracy in our neighbouring countries and support the

establishment of local government associations in our region.

Our role in the UCLG and Commonwealth Local Government Forum (CLGF), among others, has also been entrenched. The pursuit

of democratic local government in our neighbouring countries and abroad is a key mandate of the 2011 National Conference.

2.1.6 Knowledge and information sharing

To continue serving as the main hub of local government knowledge and intelligence, SALGA developed a knowledge hub

which aims to provide users with current and local government knowledge. The municipal barometer is also up and running. The

barometer was uploaded with time series data on demographic trends, economic growth, service delivery and municipal finance

data.

In the sphere of knowledge exchange and learning events, SALGA facilitated 20 learning events during the financial year.

51

The table and chart below provide a broad overview of the audited organisational performance over the 12-month

period from 1 April 2014 to 31 March 2015.

Table 1: 2014/15 annual performance in terms of the six SALGA mandates

Mandate Total Achieved Percent

(%)

Not

achieved

Percent

(%)

Lobby, advocate and represent 11 11 100 - -

Employer body 7 7 100 - -

Capacity building 10 10 100 - -

Support and advice 26 26 100 - -

Strategic profiling 1 1 100 - -

Knowledge and information sharing 13 11 85 2 15

Other (internally focused) 18 18 100 - -

Total 86 84 98 2 2

Table 2: 2014/15 annual performance in terms of the three APEX priorities

APEX priority Total Achieved Percent

(%)

Not

achieved

Percent

(%)

AP1 - Review of the legislative and policy framework 4 4 100 - -

AP 2 - Review of the fiscal and financial management framework 2 2 100 - -

AP 3 - Improved municipal capacity 36 34 94 2 6

Total APEX priorities 42 40 95 2 5

Other 44 44 100 - -

Total 86 84 98 2 2

Table 3: 2014/15 Annual performance in terms of the seven strategic goals

Strategic goal

KPIs Achieved Percent

(%)

Not

achieved

Percent

(%)

1. Local government delivering equitable and sustainable services 9 8 89 1 11

2. Safe and healthy environment and communities 7 7 100 - -

3. Planning and socio-economic development at local government

level17 16 94 1 6

4. Effective, responsive and accountable local governance to

communities11 11 100 - -

5. Human capital development in local government 16 16 100 - -

6. Financially and organisationally capacitated municipalities 7 7 100 - -

Externally focused goals 67 65 97 2 3

7. Effective and efficient administration 19 19 100 - -

Total KPIs iro 2014/15 SALGA annual performance plan 86 84 98 2 2

52

2.2 Highlights of performance per SALGA strategic goals

2.2.1 Goal 1: Local government delivering equitable and sustainable services

The infrastructure grant review continues to review ways to maximise existing resources via reforms to capital grants to municipalities,

rather than seeking solutions that require additional funds or significant reforms to operating or capacity building grants. This is a

collaborative effort between the National Treasury, the Department of Cooperative Governance (DCoG), the Financial and Fiscal

Commission (FFC), the Department of Planning Monitoring and Evaluation (DPME) and relevant stakeholders at national (primarily

sector departments) and local government levels.

A decision was made to introduce variety in the type of grants going to different municipalities. This will impact on the long-

term evolution of the grant system by institutionalising a differentiated approach between metropolitan or non-metropolitan

municipalities, as well as the different circumstances or performance of rural and urban municipalities and various categories in

between. Over time, even greater discretion will be given to high-performing municipalities, and reforms should move towards a

single, loosely conditioned grant for urban cities.

The review has defined numerous guiding principles as well as identified a number of reforms for immediate implementation in

the 2015 MTEF. These include:

Establishing a greater variety in the type of grants going to different municipalities;

The merging of a single public transport grant for cities; and

The merging of the municipal water infrastructure grant, water services operating subsidy, and rural households

infrastructure grant.

Recommendations for reforms

Merge the urban settlements development grant for metros, the municipal infrastructure grant for secondary cities and the

integrated national electrification programme for both into a consolidated integrated urban development grant (IUDG) for

urban municipalities. This will allow cities greater flexibility to meet challenges that require integrated responses;

Base the public transport infrastructure grant on formulae and integrating it with the operational subsidy grant for greater

flexibility in public transport grants; and

Consolidate various overlapping water and sanitation grants into one grant. This will reduce administrative overlap at

national and municipal levels.

Through participation in the infrastructure grant review process, SALGA ensured that the issue of renewal (refurbishment,

rehabilitation and overall asset management) was included in the scope of the review. There are more than 100 municipalities in

the towns and small local municipalities category (mostly in the Free State, Northern Cape and Western Cape) that do not feature in

SIPs or other priority programmes and receive low infrastructure grant allocations dues to relatively low backlogs. Sustainable asset

management, particular of older infrastructure in established settlements, is a major challenge for such areas as well as financing

large ‘lumpy’ infrastructure investments. Conditions for grants to these will be adapted so that grant funds can be used for the

renewal of existing assets, rather than limited to the creation of new infrastructure, as is currently the case. Renewal funding will be

conditional on credible asset management maintenance plans and proof of proper maintenance.

Achievements

Water, electricity and waste management services

Water services master classes were conducted that demonstrated the value of sharing of municipal data. The master

classes also aligned benchmarks and targets across the range of municipal benchmarking initiative (MBI) water services

performance improving efforts;

53

Best practices in the delivery of water and sanitation was shared with KZN water services authorities;

An action plan on the local government contribution towards the implementation of the national water resources strategy

was developed;

Funding for the development of a framework to define the role of local government in the catchment management

agencies was secured from the Kingfisher programme (a joint South African-Dutch strategic initiative in water management);

An action plan to mitigate water interruptions was developed with Rand Water and Gauteng municipalities;

Support was provided to Mopani to develop an action plan to address various delivery mechanisms, understand cost

structures and separate bulk and reticulation infrastructure;

The transfer of technical skills from Umgeni to Ugu was facilitated;

A memorandum of agreement between SALGA and Rand Water was signed, in terms of which a water conservation/water

demand management (WC/WDM) fund was established;

A contract for water conservation and demand management performance was developed and launched. This was a

partnership with the Strategic Water Partnership Network (SWPN) and GIZ;

Comprehensive comments on their bulk water tariffs was developed and submitted to all water boards; and

The municipal water services benchmarking report and the water services league was launched.

Human settlements

Guidelines were developed to help municipalities improve their relations with mining houses in the delivery of social/rental

housing;

A benchmark exercise for the delivery of social and rental housing was undertaken with 13 municipalities, as part of the

BZK programme;

As part of the benchmark exercise, hands-on assistance was provided to eThekwini, Nelson Mandela and Mangaung

metros on policy, strategy and project implementation;

SALGA’s national draft policy on backyard rental was supported by the Human Settlements Technical Ministers and

Members of Executive Councils Meeting (MINMEC);

SALGA lobbied the National Department of Human Settlements to allow USDG funds to be used to provide bulk and

connector services for informal settlement upgrading projects and backyard rental upgrading schemes;

SALGA conducted research on the Northern Cape’s district accreditation model. The finding is that the model ensures

better service for communities in rural areas in low-capacity local municipalities;

SALGA’s advocacy and lobbying on behalf of metros with regard to the municipal human settlements capacity grant

(MHSCG) resulted in this grant not being entirely lost to the metros, although it was significantly delayed and amended.

Continued SALGA pressure also resulted in the grant being disbursed before the end of the financial year;

Three knowledge-sharing workshops on the difficult and complicated issues of evictions and illegal occupation of land

and buildings were held in KZN, Western Cape and Eastern Cape. Fifty five municipalities participated in the workshops,

which were held in collaboration with the Socio-Economic Rights Institute of South Africa (SERI); and

SALGA engaged with the National Department of Human Settlements (NHNR) on its plan to place a moratorium on the

use of municipal waiting lists for the allocation of completed houses, and to phase out the municipal housing waiting lists.

This would have had a detrimental effect on local service delivery. As a result of SALGA’s representations, it was decided that

further consultation was needed to address the issues involved.

54

Roads and transport

Municipalities were engaged on their role in promoting transport, including roads;

A position paper regarding the transfer of freight from road to rail was discussed with stakeholders in the transport sector,

including municipalities, and tabled at SALGA national executive committee (NEC);

SALGA shaped the direction of the review of the Gauteng e-toll system;

Together with other stakeholders, SALGA developed the latest national road traffic law enforcement code; and

In partnership with the Department of Transport, SALGA recruited, placed and trained transport planning interns with

selected municipalities.

Waste management

Knowledge-sharing sessions were held in all provinces to assist municipalities to learn from each other on various initiatives

for attaining a cleaner environment in their areas;

SALGA assisted Johannesburg and Tshwane with a programme to minimise food waste. The project was done in

collaboration with the Department of Trade and Industry (the dti) and the United Nations Environment Programme (UNEP);

A web-based tool to guide municipalities in choosing the relevant alternative technology for turning waste into energy was

developed by SALGA in collaboration with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), GreenCape,

the Department of Environmental Affairs (DEA) and the South African National Energy Development Institute (SANEDI).

Together with the Department of Science and Technology (DST) and the Council for Scientific and Industrial Research

(CSIR), SALGA has achieved the introduction of two postgraduate degrees specifically on waste management through

the Universities of North West and Natal. The first intake of BSc Hons students was in 2015, while an MSc will commence

in 2016;

A peer sharing session was conducted for municipalities based on the differentiated approach for waste management

support. Support was also provided by the DEA;

The municipalities of Gamagara (Northern Cape), Ratlou (North West) and Ndwedwe (KZN) were assisted with the

development of integrated waste management plans; and

A rigorous integrated operational and partial capital costing model was developed for municipal services, including storm

water, roads and municipal health services. The costing will be used to engage with National Treasury, among others, to

lobby for funding instruments.

Electricity

An MoU was signed with Eskom. Its purpose is to establish a cooperative and collaborative working relationship between

Eskom, SALGA (ultimately municipalities) to achieve the long-term sustainability of electricity reticulation. The partnership

will address operational challenges impacting delivery of electricity to end users and distribution issues in general;

A strategic relationship between SALGA and the Intensive User Group of Southern Africa (EIUG) has resulted in access to

various research projects in the electricity and energy sector;

SALGA represented municipalities and advocated municipal issues regarding cable theft at the 2nd annual cable theft

summit; and

Provinces were supported in the implementation of the differentiated approach through the credit control and debt

collection policy and electricity local regulation guidelines.

55

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revi

ew

pro

cess

Eng

age

sta

keh

old

ers

on

th

e O

LG o

pti

on

s

for

infr

astr

uct

ure

ren

ew

al fu

nd

ing

(re

furb

ish

me

nt

and

rep

lace

me

nt)

Re

leva

nt

stak

eh

old

ers

en

gag

ed

on

th

e

fun

din

g o

pti

on

s

for

infr

astr

uct

ure

ren

ew

al b

y

31

Mar

ch 2

01

5

Re

leva

nt

stak

eh

old

ers

(mu

nic

ipal

itie

s, N

atio

nal

Tre

asu

ry,

Co

GTA

an

d F

FC) w

ere

en

gag

ed

thro

ug

h g

ran

t re

vie

w p

roce

ss

on

th

e fu

nd

ing

op

tio

ns

for

infr

astr

uct

ure

re

ne

wal

by

31

Mar

ch

20

15

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

58

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(bo

th o

ve

r

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

18

8M

un

icip

alit

ies

sup

po

rte

d in

th

eir

auth

ori

ty fu

nct

ion

for

mu

nic

ipal

se

rvic

es

(incl

. ho

usi

ng

accr

ed

itat

ion

an

d

tran

spo

rt)

Sup

po

rt t

o re

gu

lato

ry

(au

tho

rity

) fu

nct

ion

for

mu

nic

ipal

an

d

infr

astr

uct

ure

serv

ice

s (in

cl. h

ou

sin

g

and

tra

nsp

ort

)

Sup

po

rt fa

cilit

ate

d o

n

reg

ula

tory

(au

tho

rity

)

role

for

mu

nic

ipal

infr

astr

uct

ure

se

rvic

es

incl

ud

ing

ho

usi

ng

(acc

red

itat

ion

) an

d

tran

spo

rt b

y

31

Mar

ch 2

01

5

Sup

po

rt w

as fa

cilit

ate

d o

n

reg

ula

tory

(au

tho

rity

) ro

le fo

r

mu

nic

ipal

infr

astr

uct

ure

se

rvic

es

incl

ud

ing

ho

usi

ng

(acc

red

itat

ion

)

and

tra

nsp

ort

by

31

Mar

ch 2

01

5.

Ro

ad

s a

nd

tra

nsp

ort

Co

nsu

ltat

ion

s w

ith

mu

nic

ipal

itie

s

we

re c

on

du

cte

d in

ord

er

to e

ng

age

on

th

e r

ole

of

mu

nic

ipal

itie

s in

pro

mo

tin

g

tran

spo

rt in

clu

din

g r

oad

s in

th

eir

org

anis

atio

nal

str

uct

ure

s.

Hu

ma

n s

ett

lem

en

ts

Co

nd

uct

ed

re

sear

ch o

n

the

No

rth

ern

Cap

e d

istr

ict

accr

ed

itat

ion

mo

de

l to

un

de

rsta

nd

ho

w w

ell

the

dis

tric

t m

od

el o

f

accr

ed

itat

ion

wo

rke

d, a

nd

to

mak

e

reco

mm

en

dat

ion

s o

n w

he

the

r

the

sam

e m

od

el s

ho

uld

be

ro

lled

ou

t in

oth

er

pro

vin

ces.

Wo

rksh

op

s

we

re h

eld

in K

ZN

, Eas

tern

Cap

e,

Gau

ten

g a

nd

No

rth

ern

Cap

e t

o

shar

e t

he

fin

din

gs

and

dis

cuss

its

app

licat

ion

in t

ho

se p

rovi

nce

s.

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

18

9O

LG p

osi

tio

n p

ape

r

de

velo

pe

d t

o

pri

ori

tise

use

of r

ail

for

fre

igh

t in

ste

ad o

f

road

s

OLG

po

siti

on

pap

er

de

velo

pe

d t

o

pri

ori

tise

use

of r

ail

for

fre

igh

t in

ste

ad o

f

road

s

OLG

po

siti

on

pap

er

de

velo

pe

d t

o

pri

ori

tise

use

of r

ail

for

fre

igh

t in

ste

ad o

f

road

s b

y 3

1 M

arch

20

15

An

org

anis

ed

loca

l go

vern

me

nt

po

siti

on

pap

er

to p

rio

riti

se u

se

of r

ail f

or

fre

igh

t in

ste

ad o

f ro

ads

was

de

velo

pe

d a

nd

ap

pro

ved

by

the

nat

ion

al e

xecu

tive

co

mm

itte

e

of S

ALG

A b

y 3

1 M

arch

20

15

aft

er

con

sult

atio

n w

ith

all

stak

eh

old

ers

incl

ud

ing

mu

nic

ipal

itie

s in

th

e

tran

spo

rt s

ect

or

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

59

2.2.2 Goal 2: Safe and healthy environment and communities

A key priority for South Africa is the development of sustainable human settlements where social, health, economic and

environmental factors are addressed in an integrated manner. Local government has a crucial role to play in this regard. Hence,

there is need to focus on safe and healthy environments and communities. This goal encapsulates the various interventions that are

implemented to build safe, healthy and environmentally-aware communities. It also incorporates a specific focus on eradicating

poverty, inequality, marginalisation and xenophobia at a municipal level.

Achievements

Climate change

SALGA partnered with the Department of Environmental Affairs (DEA) to develop and implement the local government

support (LGS) strategy, aimed at establishing the status of performance of environmental management in local

government, as well as articulating the barriers and challenges that impede good performance of environmental functions

in municipalities.

Fifteen municipalities were selected for immediate support and intervention. The choice was based on their location in

ecologically sensitive areas and their limited capacity to deal with current environmental issues and threats;

A local government support task team (LGSTT) was formed.

In October 2014, the first local government support municipal workshop was convened in Ekhurhuleni. It was attended

by the 15 municipalities and initiated a detailed profiling to establish the nature and range of challenges and develop

intervention plans; and

Key strategic outputs of the LGS strategy are:

– a legal protocol to define the range and scope of functions to be performed by municipalities;

– a costing framework to attempt to define the costs of performing such functions and provide indicative funding

requirements; and

– a set of performance indicators to assist municipalities and other authorities to measure the progress of municipality

in addressing environmental sustainability.

A framework for specific climate change support to municipalities was developed by SALGA and distributed to

provinces; and

Climate change workshops were held with targeted municipalities in six provinces (Free State, Mpumalanga, Limpopo,

North West and KwaZulu-Natal).

Energy efficiency/renewable energy

About 120 municipalities took part in knowledge-sharing activities on energy efficiency and renewable energy;

A web platform (http://www.cityenergy.org.za) was developed between SALGA and Sustainable Energy Africa (SEA) to

disseminate information to municipalities on energy efficiency and renewable energy innovations;

A common position on small scale embedded generation was approved by SALGA national executive committee.

This provides a framework to ensure the safe and sustainable development of roof top panels and other embedded

technologies;

SALGA is providing comments on the National Energy Regulator of South Africa’s (Nersa) consultation process to develop

a set of rules on small scale embedded generation;

SALGA moderated a session during the National Biogas Conference 2015 on energy generation from biogas in municipal

waste water treatments plants and landfill with the objective of getting projects off the ground; and

With support from GIZ, a biogas potential assessment tool has been developed and is being used by municipalities and

60

DoE to identity feasible projects in municipal waste water treatment plants. These projects will reduce the electricity

consumption in the water works, resulting in more sustainable municipalities. With the aid of this tool, several municipalities

have already assessed the biogas potential in their waste water treatment plants and identified feasible projects.

Disaster management, migration and municipal health services

SALGA partnered with the National Disaster Management Centre to build capacity among municipalities in disaster risk

reduction. This included legislative requirements, how to declare disasters and how to access municipal disaster grants;

SALGA signed a memorandum of understanding (MoU) with the International Organisation on Migration (IOM) to build

capacity among municipalities in migration. The interventions will help municipalities in planning and managing migration;

and

The draft generic by-laws for municipal health services (MHS) were developed and circulated to provincial offices. Case

studies on four MHS projects were documented for publication.

Sports, libraries and cemeteries

A libraries project was piloted with the National Library Services to provide computers to municipal libraries;

A memorandum of understanding (MoU) with the South African Sport and Olympic Committee (SASCOC) was signed to

provide support in the development of sport and recreation in municipalities; and

SALGA facilitated workshops on integrating poverty eradication in municipal programmes.

Transversal issues

The outcomes report of the SALGA women’s commission (SWC) national lekgotla was adopted and a working session for

a draft programme of action was convened;

A workshop for the development of guidelines on youth development for local government was convened with

municipalities. The guidelines will provide clear actions and approaches to youth development for local government;

SALGA convened the municipal dialogue on HIV and AIDS. Its purpose was:

to present and reflect on SALGA’s initiatives on mainstreaming HIV and AIDS in local government;

to share experiences and understanding on the functioning of AIDS councils as a way of coordinating the fight against

HIV and AIDS; and

To present and discuss SALGA’s proposal for strengthening local government response to HIV and AIDS.

SALGA hosted the disability reference group round table meeting, attended by the Departments of Social Development

(DSD) and Cooperative Governance and Traditional Affairs (CoGTA). As a result of the attendance of the national DSD,

SALGA is now part of the reference group for the disability policy;

Save the Children hosted an end-of-project workshop on mainstreaming the rights of children and development of action

plans, which was attended by SALGA and pilot municipalities; and

A national seminar was held to present the concept paper to define local government approach to providing services to

older persons.

61

Be

low

are

de

tail

ed

pe

rfo

rma

nce

re

sult

s a

s p

er

the

ke

y p

erf

orm

an

ce in

dic

ato

rs in

th

e 2

01

4/1

5 a

nn

ua

l pe

rfo

rma

nce

pla

n:

Go

al

Targ

et

nu

mb

er

KP

I

Nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(bo

th o

ve

r

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

29

10

Re

ne

wab

le e

ne

rgy

and

en

erg

y e

ffici

en

cy

inn

ova

tio

n a

nd

be

ne

fits

th

ere

of

shar

ed

an

d p

rom

ote

d

Faci

litat

e s

har

ing

and

pro

mo

tio

n

of i

nn

ova

tio

n in

ren

ew

able

en

erg

y

and

en

erg

y e

ffici

en

cy

Mu

nic

ipal

sh

arin

g

and

ad

voca

cy in

ren

ew

able

en

erg

y

and

en

erg

y e

ffici

en

t

inn

ova

tio

ns

by

31

Mar

ch 2

01

5

Mu

nic

ipal

kn

ow

led

ge

sh

arin

g a

nd

advo

cacy

in r

en

ew

able

en

erg

y

and

en

erg

y e

ffici

en

t in

no

vati

on

s

acti

viti

es

hav

e b

ee

n u

nd

ert

ake

n

mai

nly

in t

he

form

of w

ork

sho

ps

by

31

Mar

ch 2

01

5

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

29

11

Envi

ron

me

nta

l

man

age

me

nt

and

clim

ate

ch

ang

e

stra

teg

ies

advo

cate

d

and

mu

nic

ipal

itie

s

sup

po

rte

d

Targ

ete

d

mu

nic

ipal

itie

s

sup

po

rte

d t

o

par

tici

pat

e in

str

ate

gic

en

viro

nm

en

tal

man

age

me

nt

and

clim

ate

ch

ang

e

init

iati

ves

Targ

ete

d

mu

nic

ipal

itie

s

sup

po

rte

d t

o

par

tici

pat

e in

str

ate

gic

en

viro

nm

en

t an

d

clim

ate

ch

ang

e

init

iati

ves

by

31

Mar

ch 2

01

5

Targ

ete

d m

un

icip

alit

ies

we

re

sup

po

rte

d t

o p

arti

cip

ate

in s

trat

eg

ic

en

viro

nm

en

t an

d c

limat

e c

han

ge

init

iati

ves

by

31

Mar

ch 2

01

5.

A fr

ame

wo

rk fo

r cl

imat

e c

han

ge

sup

po

rt t

o m

un

icip

alit

ies

was

de

velo

pe

d w

ith

th

e in

ten

tio

n

of e

stab

lish

ing

cri

teri

a fo

r

sele

ctin

g m

un

icip

alit

ies

to b

e

sup

po

rte

d o

n c

limat

e c

han

ge

inte

rve

nti

on

s th

rou

gh

th

e r

oll

ou

t

of t

he

lets

re

spo

nd

IDP

to

olk

it a

nd

kno

wle

dg

e/

awar

en

ess

rai

sin

g

wo

rksh

op

s

.No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

21

11

2Im

pro

ved

loca

l

go

vern

me

nt

cap

acit

y

on

dis

aste

r ri

sk

red

uct

ion

Imp

rove

d

pro

gra

mm

ing

on

dis

aste

r m

anag

em

en

t

and

ris

k re

du

ctio

n

Sce

nar

io-b

ase

d

cap

acit

y b

uild

ing

pro

gra

mm

e

de

velo

pe

d fo

r

imp

rove

d m

un

icip

al

pla

nn

ing

for

dis

aste

rs

by

31

Mar

ch 2

01

5

Sce

nar

io-b

ase

d c

apac

ity

bu

ildin

g

pro

gra

mm

e fo

r d

isas

ter

risk

man

age

me

nt

was

de

velo

pe

d.

Trai

nin

g w

ork

sho

ps

we

re

con

du

cte

d in

all

the

pro

vin

ces

by

31

Mar

ch 2

01

5

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

62

Go

al

Targ

et

nu

mb

er

KP

I

Nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(bo

th o

ve

r

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

21

21

3Im

pro

ved

mu

nic

ipal

pla

nn

ing

on

dis

aste

r

risk

re

du

ctio

n

Stak

eh

old

er

con

sen

sus

on

mo

nit

ori

ng

of d

isas

ter

man

age

me

nt

and

ris

k

red

uct

ion

pra

ctic

es

Stak

eh

old

ers

lob

bie

d

on

imp

lem

en

tati

on

of

the

M&

E fr

ame

wo

rk

for

mu

nic

ipal

com

plia

nce

to

DR

M

req

uire

me

nts

by

31

Mar

ch 2

01

5

Stak

eh

old

ers

we

re lo

bb

ied

on

th

e

imp

lem

en

tati

on

of t

he

mo

nit

ori

ng

and

eva

luat

ion

fram

ew

ork

for

mu

nic

ipal

co

mp

lian

ce t

o d

isas

ter

risk

man

age

me

nt

by

31

Mar

ch 2

01

5

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

21

31

4Im

pro

ved

cap

acit

y

of l

oca

l go

vern

me

nt

in d

eal

ing

wit

h

mig

rati

on

issu

es

Enh

ance

d c

apac

ity

of

loca

l go

vern

me

nt

to

de

al w

ith

po

pu

lati

on

mig

rati

on

Cap

acit

y b

uild

ing

inte

rve

nti

on

s

faci

litat

ed

in a

ll

pro

vin

ces

by

31

Mar

ch 2

01

5

Cap

acit

y b

uild

ing

inte

rve

nti

on

s

we

re fa

cilit

ate

d in

all

pro

vin

ces

by

31

Mar

ch 2

01

5 t

hro

ug

h a

me

mo

ran

du

m o

f un

de

rsta

nd

ing

wit

h t

he

Inte

rnat

ion

al O

rgan

isat

ion

on

Mig

rati

on

(IO

M) .

Trai

nin

g w

ork

sho

ps

we

re

con

du

cte

d in

all

the

nin

e p

rovi

nce

s.

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

21

41

5C

lear

po

siti

on

of

loca

l go

vern

me

nt

on

fun

din

g o

f he

alth

serv

ice

s

Loca

l go

vern

me

nt

po

siti

on

an

d fu

nd

ing

mo

de

l on

mu

nic

ipal

he

alth

tab

led

wit

h

stak

eh

old

ers

Loca

l go

vern

me

nt

po

siti

on

an

d fu

nd

ing

mo

de

l fo

r m

un

icip

al

he

alth

se

rvic

es

tab

led

to

re

leva

nt

stak

eh

old

ers

by

31

Mar

ch 2

01

5

Loca

l go

vern

me

nt’s

po

siti

on

on

mu

nic

ipal

he

alth

wit

h in

pu

ts o

n

the

mu

nic

ipal

fun

din

g m

od

el

for

mu

nic

ipal

he

alth

se

rvic

es

was

de

velo

pe

d a

nd

tab

led

at

the

Nat

ion

al M

un

icip

al H

eal

th

Man

age

r’s F

oru

m a

nd

mu

nic

ipal

he

alth

su

mm

it h

eld

on

25

-26

Ju

ne

20

14

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

21

51

6M

od

el f

or

imp

rove

d

com

mu

nit

y fa

cilit

ies

for

loca

l go

vern

me

nt

pilo

ted

Mo

de

l fo

r im

pro

ved

com

mu

nit

y fa

cilit

ies

for

loca

l go

vern

me

nt

ado

pte

d a

nd

imp

lem

en

ted

Mo

de

l fo

r im

pro

ved

com

mu

nit

y fa

cilit

ies

pilo

ted

in a

ll p

rovi

nce

s

by

31

Mar

ch 2

01

5

Mo

de

l fo

r im

pro

ved

co

mm

un

ity

faci

litie

s w

as p

ilote

d in

all

pro

vin

ces

by

31

Mar

ch 2

01

5.

SALG

A d

eve

lop

ed

fram

ew

ork

for

cem

ete

rie

s, s

po

rt a

nd

re

cre

atio

n

and

we

ll as

co

mm

un

ity

libra

rie

s.

The

se fr

ame

wo

rks

we

re p

ilote

d in

pro

vin

ces.

An

Mo

U w

ith

SA

SCO

C

was

sig

ne

d in

ord

er

to p

ilot

the

spo

rt a

nd

re

cre

atio

n fr

ame

wo

rk

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

63

2.2.3 Goal 3: Planning and economic development at a local level

Poorly developed municipalities continue to suffer from a lack of integrated planning and delivery by the different spheres and

agencies of government, as well as the absence of focused programmes targeting economic development and job creation. There

is therefore an urgency to address planning and economic development at a local level, as it will serve as a critical foundation for

the development and viability of municipalities.

This goal encapsulates the various planning and economic development initiatives that are implemented to build safer, healthier,

and environmentally aware and active communities. It also incorporates a specific focus on eradicating poverty and inequality at

a municipal level.

SALGA’s initiatives were mainly centred on three programme areas aimed at stimulating economic development and creating

conditions conducive for investment attraction, job creation and strengthening the capacity of municipalities to execute their

developmental mandate. EDP identified the regeneration of small towns, strengthening the capacity of economic development

practitioners and capacitating municipal officials to implement the recently promulgated Spatial Planning and Land Use

Management Act, 2013 (Act No. 16 of 2013) (SPLUMA) as the main areas of focus during the year.

Achievements

Small towns regeneration programme

The SALGA training programme aims to influence municipalities to target small towns as entry points to bring about spatial

transformation, stimulate economic growth, create employment and make optimum use of available services, which in most cases

are underutilised. The emphasis was on creating a space for sharing issues and common concerns and creating opportunities for

linkages in local government.

The format of the training was reduced from five to two days to avoid municipal officials being away from their duties for

too long; and

181 local economic development practitioners from 54 municipalities in all provinces were trained.

Professional development programme (PDP)

The PDP’s objective is to develop focused, creative and motivated economic development practitioners. It addresses the challenges

associated with governance and institutional arrangements, and promotes professional credibility and shared approaches by

economic development practitioners.

The course consists of six sessions delivered over eight days and spread over six months; and

PDP training sessions were rolled out to 76 economic development planning practitioners from Eastern Cape, North West,

Western Cape, and KwaZulu-Natal.

Implications of the SPLUMA

EDP conducted municipal capacity-building initiatives that included four sessions in the Eastern Cape, two joint sessions

with municipalities and the South African cities network and influenced the content of the SPLUMA regulations that were

gazetted in March 2013;

SALGA also undertook a SPLUMA implementation readiness assessment and used the outcome of the assessment to lobby

the Department of Rural Development and Land Reform to defer the implementation of the SPLUMA to a date not earlier

than 1 July 2015, to enable municipalities to adequately prepare and factor the SPLUMA implications into their IDPs; and

Municipalities were kept abreast of developments through two circulars that highlighted key actions with implications for

municipalities.

64

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un

icip

al

stat

e o

f re

adin

ess

on

th

e S

PLU

MA

imp

lem

en

tati

on

by

30

Ju

ne

20

14

An

ass

ess

me

nt

and

an

alys

is r

ep

ort

on

mu

nic

ipal

sta

te o

f re

adin

ess

on

SPLU

MA

was

de

velo

pe

d b

y 3

0 J

un

e

20

14

.

A c

ircu

lar

(no

. 26

/20

14

) hig

hlig

hti

ng

key

mu

nic

ipal

act

ion

s re

qu

ired

in p

rep

arat

ion

for

SPLU

MA

imp

lem

en

tati

on

was

de

velo

pe

d

and

dis

sem

inat

ed

to

mu

nic

ipal

itie

s.

Cap

acit

y b

uild

ing

su

pp

ort

on

SPLU

MA

was

pro

vid

ed

to

Eas

tern

Cap

e b

y 3

1 M

arch

20

15

.

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

32

13

1P

rod

uce

an

nu

al

pla

nn

ing

leg

isla

tio

n

and

cas

e la

w

bar

om

ete

r

trai

nin

g p

rog

ram

me

for

mu

nic

ipal

itie

s

on

th

e S

PLU

MA

and

its

reg

ula

tio

ns

imp

lem

en

ted

Stre

amlin

e

de

velo

pm

en

t

pla

nn

ing

su

pp

ort

ed

Spat

ial r

est

ruct

uri

ng

gu

ide

line

s

de

velo

pe

d b

y

30

Se

pte

mb

er

20

14

Spat

ial r

est

ruct

uri

ng

gu

ide

line

s

we

re d

eve

lop

ed

in c

olla

bo

rati

on

wit

h D

RD

LR b

y 3

0 S

ep

tem

be

r 2

01

4.

A fu

rth

er

do

cum

en

t o

utl

inin

g

po

ssib

le t

oo

ls t

o e

ffe

ct s

pat

ial

rest

ruct

uri

ng

was

als

o d

eve

lop

ed

by

30

Se

pte

mb

er

20

15

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

32

43

2Im

ple

me

nta

tio

n o

f

a p

rog

ram

me

for

mu

nic

ipal

su

pp

ort

on

rura

l de

velo

pm

en

t

and

ag

ricu

ltu

re

De

velo

p a

pro

gra

mm

e

to u

nlo

ck r

ura

l

eco

no

mie

s

Smal

l to

wn

reg

en

era

tio

n

pro

gra

mm

e

de

velo

pe

d b

y

30

Ju

ne

20

14

The

sm

all t

ow

n r

eg

en

era

tio

n

pro

gra

mm

e w

as d

eve

lop

ed

by

30

Jun

e 2

01

4 a

nd

ro

lled

ou

t in

No

rth

We

st in

par

tne

rsh

ip w

ith

CLG

F b

y

31

Mar

ch 2

01

5

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

32

43

3Im

ple

me

nta

tio

n o

f

a p

rog

ram

me

for

mu

nic

ipal

su

pp

ort

on

rura

l de

velo

pm

en

t

and

ag

ricu

ltu

re

De

velo

p a

pro

gra

mm

e

to u

nlo

ck r

ura

l

eco

no

mie

s

Trai

nin

g p

rog

ram

me

for

imp

lem

en

tati

on

of s

mal

l to

wn

reg

en

era

tio

n

de

velo

pe

d b

y

30

Ju

ne

20

14

A t

rain

ing

pro

gra

mm

e fo

r th

e

imp

lem

en

tati

on

of t

he

sm

all t

ow

n

reg

en

era

tio

n p

rog

ram

me

was

de

velo

pe

d b

y 3

0 J

un

e 2

01

4 a

nd

rolle

d o

ut

in E

aste

rn C

ape

, Fre

e

Stat

e a

nd

Kw

aZu

lu-N

atal

by

31

Mar

ch 2

01

5

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

68

2.2.4 Goal 4: Effective, responsive and accountable local government for communities

South Africa has a critical need to address issues of local governance and cement the power and status of this sphere within a

broader democratic governance framework. This goal encapsulates the various governance and intergovernmental issues - from

legislation and policy, to funding and institutional arrangements. It covers issues across all spheres of government and specific issues

in relation to the local sphere of government. From a governance perspective, the goal includes a particular focus on corruption at

a local government level. Given the related importance of South Africa’s engagement with the continent and the world as whole

from a governance perspective, the goal also incorporates a focus on international relations from a local government perspective.

Achievements

Framework for municipal support and intervention

The practical model for municipal support and intervention was developed;

SALGA also developed a process flow chart on the support and monitoring application of section 139 interventions.

Ultimately, the practical model intends to address prevention of interventions in municipalities.

Participation in national and provincial legislatures

The designation of the part-time representatives to the NCOP improved SALGA’s visibility in the NCOP and provided

consistency in terms of representation, advocating and lobbying for the interests of local government. SALGA was part

of the historic occasion where the NCOP participated for the first time in the debate on the State of the Nation Address in

June 2014.

Councillor support and welfare

Across the country SALGA provided on-going support and advice to individual municipalities on the implementation of

the upper limits notice on salaries, allowances and benefits of different members of municipal councils;

Support was also provided for other councillor welfare and support issues as and when requested, such as:

Councillor cellphone allowances;

Space for ward councillors;

Full time councillors - Section 12 notice;

Travel allowance;

Grading of municipalities;

Payments to councillors outside the upper limits notices;

Tools of trade; and

SASRIA implementation.

Accountability and oversight

SALGA developed a consequences and accountability framework;

Nine municipal public accounts committees (MPAC) visits were conducted and eight MPAC good practice case analysis

were held across all provinces;

Municipalities were supported in the implementation of the differentiated model for the separation of functions;

On completion of the overall process, SALGA will be able to develop an MPAC good practice case document, which will be

the organised local government (OLG) official publication on good practices on oversight;

69

SALGA participated in a number of anti-corruption events organised by and with various stakeholders (Ethics SA, CoGTA;

Gauteng Provincial Government, IMATU, GIZ, National Prosecuting Authority, the Hawks, Office of the Public Service

Commission, Office of the Public Protector, Office of the Premier, University of Pretoria);

An inception report was prepared for the national anti-corruption survey which is an annual assessment of the state of anti-

fraud and anti-corruption measures in municipalities in South Africa to be completed in 2015/16;

Municipalities were supported to implement the anti-corruption summit resolutions as well as with their anti-corruption

policies as and when requested; and

SALGA participated in a radio station panel discussion with panellist from the Competition Commission and Corruption

Watch on the topic “Corruption is now a South African way of life - If we can’t accept that, how can we change it?”

Boundaries re-determination and ward delimitation

The MDB participated in PWG meetings, PEC meetings, governance and IGR Practitioners Forums and PMAs, and at the

NMA which recommended that the process be re-opened after the 2016 local government elections. This financial year, six

MDB circulars were disseminated to municipalities to keep them abreast with ongoing developments in the demarcation

processes; and

In all the affected provinces, SALGA participated in the MBD information sessions/consultation processes with municipalities.

Issues discussed included: public participation and consultation, ward delimitation process, cross-boundary issues and

poorly configured wards, alignment to services boundaries of other sector departments, post-delimitation engagements

and feedback and continuous and identifiable wards.

Policy and legislative review

Legislative and policy proposals submitted by SALGA this year included:

the Development Bank of Southern Africa Amendment Bill;

Extension of Security of Land Tenure Act, 1997 (ESTA);

Amendment of the Remuneration of Public Office Bearers Act;

SPLUMA;

Draft monitoring, support and intervention framework;

Upper limits for the salaries of senior managers;

Draft framework agreement for a sustainable mining industry entered into by organised labour, organised business

and government;

Terms of reference for SALGA position paper on mining and local government - an assessment of legislation and

national framework;

Terms of reference for the devolution strategy for local government;

Proposals on the review of the OLG Bill, OLG Act 1997;

LG: General Laws Amendment Bill; and

Impact of the Public Administration Management Bill and the Property Rates Amendment Bill on municipalities.

Legislation negatively impacting on local government were presented and discussed at the Parliamentary strategic session,

at the national municipal managers forum, at the Mpumalanga governance indaba; as well as to the Free State summit.

Proposals on legislative amendments were adopted by all PMAs under Apex 1.

70

Be

low

are

de

tail

ed

pe

rfo

rma

nce

re

sult

s a

s p

er

the

ke

y p

erf

orm

an

ce in

dic

ato

rs in

th

e 2

01

4/1

5 a

nn

ua

l pe

rfo

rma

nce

pla

n:

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(b

oth

ov

er

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

42

53

4R

efi

ne

d m

od

el f

or

coh

ere

nt

sup

po

rt

de

velo

pe

d

Stru

ctu

red

en

gag

em

en

t

be

twe

en

loca

l

go

vern

me

nt

and

exe

cuti

ve a

t

pro

vin

cial

an

d

nat

ion

al le

vel

to im

pro

ve t

he

go

vern

ance

en

viro

nm

en

t fo

r

mu

nic

ipal

itie

s

Faci

litat

e t

he

de

velo

pm

en

t

of a

mo

de

l of

mu

nic

ipal

su

pp

ort

and

inte

rve

nti

on

wh

ich

is t

ran

spar

en

t,

con

sult

ativ

e w

ith

cle

ar

pro

toco

ls, s

tan

dar

ds

and

inst

itu

tio

nal

arra

ng

em

en

ts b

y

31

Mar

ch 2

01

5

Imp

lem

en

ted

stru

ctu

red

en

gag

em

en

t w

ith

nat

ion

al d

ep

artm

en

ts

as id

en

tifi

ed

in

the

SA

LGA

IGR

imp

lem

en

tati

on

pla

n

by

31

Mar

ch 2

01

5

The

mo

de

l fo

r m

un

icip

al s

up

po

rt

and

inte

rve

nti

on

was

de

velo

pe

d a

nd

circ

ula

ted

to

pro

vin

ces

for

com

me

nts

fro

m m

un

icip

alit

ies

by

31

Mar

ch 2

01

5.

SALG

A im

ple

me

nte

d t

he

IR

imp

lem

en

tati

on

pla

n t

hro

ug

h

par

tici

pat

ing

in a

nu

mb

er

of I

GR

(te

chn

ical

) fo

ra a

nd

de

velo

pe

d b

rie

fin

g

no

tes,

sp

ee

che

s an

d p

rese

nta

tio

ns

for

cou

nci

llors

re

pre

sen

tin

g S

ALG

A in

IGR

fora

(MIN

MEC

s, M

UN

IMEC

s, P

C C

oG

TA,

PC

fin

ance

, PC

C, p

rem

ier’s

co

ord

inat

ing

foru

m, e

tc) b

y 3

1 M

arch

20

15

.

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

71

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(b

oth

ov

er

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

42

63

5Su

stai

nab

le a

nd

self-

suffi

cie

nt

mu

nic

ipal

itie

s, a

ble

to d

eliv

er

eff

ect

ive

and

acc

ou

nta

ble

go

vern

ance

Mu

nic

ipal

itie

s

sup

po

rte

d

to d

eliv

er

acco

un

tab

le

and

eff

ect

ive

go

vern

ance

Co

ord

inat

ed

go

vern

ance

han

ds-

on

sup

po

rt p

rovi

de

d

to m

un

icip

alit

ies

on

crit

ical

go

vern

ance

chal

len

ge

s b

y

31

Mar

ch 2

01

5

Co

ord

inat

ed

go

vern

ance

han

ds-

on

sup

po

rt w

as p

rovi

de

d t

o m

un

icip

alit

ies

on

cri

tica

l go

vern

ance

ch

alle

ng

es

thro

ug

h o

pin

ion

s, a

dvi

ce a

nd

gu

ide

line

s

to m

un

icip

alit

ies

acro

ss t

he

co

un

try

on

a

nu

mb

er

of g

ove

rnan

ce is

sue

s .

Thre

e c

ircu

lars

we

re d

isse

min

ate

d t

o a

ll

mu

nic

ipal

itie

s d

uri

ng

th

e p

eri

od

un

de

r

revi

ew

:

1)

Circ

ula

r 0

7/2

01

5 w

hic

h g

ave

an

up

dat

e o

n t

he

sta

tus

of t

he

up

pe

r

limit

s n

oti

ce (5

Fe

bru

ary

20

15

);

2)

Circ

ula

r 1

0/2

01

5 o

n t

he

20

14

/15

up

pe

r lim

its

no

tice

(24

Fe

bru

ary

20

15

); an

d

3)

Circ

ula

r 1

4/2

01

5 o

n t

he

gaz

ett

ed

20

15

up

pe

r lim

its

no

tice

(27

Mar

ch 2

01

5)

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

42

63

6C

apac

itat

e

and

su

pp

ort

mu

nic

ipal

itie

s

to d

eve

lop

an

d

imp

lem

en

t

pe

rfo

rman

ce

man

age

me

nt

syst

em

(PM

S)

Cap

acit

ate

and

su

pp

ort

mu

nic

ipal

itie

s

to d

eve

lop

an

d

imp

lem

en

t

pe

rfo

rman

ce

man

age

me

nt

syst

em

(PM

S)

Imp

lem

en

tati

on

of a

mu

nic

ipal

pe

rfo

rman

ce

man

age

me

nt

(PM

S)

sup

po

rt p

rog

ram

me

in t

arg

ete

d d

istr

ict

and

loca

l mu

nic

ipal

itie

s

pe

r p

rovi

nce

by

31

Mar

ch 2

01

5.

Mu

nic

ipal

pe

rfo

rman

ce m

anag

em

en

t

(PM

S) s

up

po

rt p

rog

ram

me

was

imp

lem

en

ted

in t

arg

ete

d (1

27

) dis

tric

t

and

loca

l mu

nic

ipal

itie

s p

er

pro

vin

ce b

y

31

Mar

ch 2

01

5

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

72

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(b

oth

ov

er

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

42

73

7O

rgan

ise

d lo

cal

go

vern

me

nt

infl

ue

nce

s p

olic

y

and

leg

isla

tive

ou

tco

me

s to

be

mo

re r

esp

on

sive

to

loca

l go

vern

me

nt

Stru

ctu

red

en

gag

em

en

t

wit

h n

atio

nal

and

pro

vin

cial

leg

isla

ture

s in

resp

ect

of p

olic

y

and

leg

isla

tio

n

imp

acti

ng

on

loca

l

go

vern

me

nt

Effe

ctiv

e p

arti

cip

atio

n

and

en

gag

em

en

t o

f

OLG

wit

h le

gis

lati

ve

pro

cess

es

by

31

Mar

ch 2

01

5

SALG

A e

ffe

ctiv

ely

par

tici

pat

ed

an

d

en

gag

ed

on

OLG

wit

h le

gis

lati

ve

pro

cess

es

by

31

Mar

ch 2

01

5

SALG

A a

tte

nd

ed

join

t si

ttin

g o

f th

e

Nat

ion

al A

sse

mb

ly a

nd

th

e N

CO

P a

nd

con

trib

ute

d t

o t

he

de

bat

es

on

th

e

Stat

e o

f th

e N

atio

n A

dd

ress

. SA

LGA

hig

hlig

hte

d t

he

sig

nifi

can

t ro

le p

laye

d

by

loca

l go

vern

me

nt

as w

ell

as t

he

chal

len

ge

s th

at c

on

tin

ue

to

co

nfr

on

t th

e

sect

or

and

ho

w t

he

se c

ou

ld b

e r

eso

lve

d

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

73

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(b

oth

ov

er

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

42

83

8P

latf

orm

cre

ate

d t

o

faci

litat

e m

un

icip

al

inte

rnat

ion

al

coo

pe

rati

on

Imp

lem

en

tati

on

of

the

fra

me

wo

rk t

o

gu

ide

inte

rnat

ion

al

coo

pe

rati

on

/s

Pla

tfo

rm c

reat

ed

to

faci

litat

e m

un

icip

al

inte

rnat

ion

al

coo

pe

rati

on

by

31

Mar

ch 2

01

5

SALG

A c

on

tin

ue

d t

o c

reat

e p

latf

orm

s

for

mu

nic

ipal

inte

rnat

ion

al c

oo

pe

rati

on

thro

ug

h t

he

follo

win

g: -

A

fric

itie

s o

ffici

al la

un

ch;

Sm

art

loca

l go

vern

ance

, Bilb

ao, S

pai

n;

1

3th

inte

rnat

ion

al c

on

gre

ss o

f

ed

uca

tin

g c

itie

s;

In

tern

atio

nal

co

nfe

ren

ce o

f lo

cal

auth

ori

tie

s in

so

lidar

ity

wit

h t

he

Pale

stin

e p

eo

ple

;

U

CLG

wo

rld

co

ng

ress

;

B

ALA

co

nfe

ren

ce;

P

ee

r re

vie

w o

f lo

cal g

ove

rnm

en

t in

Eng

lan

d;

Sm

art

Loca

l Go

vern

ance

, Bilb

ao, S

pai

n;

and

U

CLG

cu

ltu

re s

um

mit

.

SALG

A a

lso

en

gag

ed

th

e G

IZ a

nd

loca

l

go

vern

me

nt

in Z

imb

abw

e o

n a

nu

mb

er

of i

ssu

es

that

aff

ect

mu

nic

ipal

itie

s.

Furt

he

r p

latf

orm

s w

ere

cre

ate

d

thro

ug

h M

oU

s t

hat

we

re s

ign

ed

wit

h

the

Pal

est

ine

loca

l go

vern

me

nt

and

the

Ass

oci

atio

n o

f Fle

mis

h C

itie

s an

d

Mu

nic

ipal

itie

s (V

VSG

) .

Inte

rnat

ion

al C

oo

pe

rati

on

’s

en

gag

em

en

ts w

ith

mu

nic

ipal

itie

s w

ere

he

ld in

pro

vin

ces.

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

74

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(b

oth

ov

er

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

42

93

9Eff

ect

ive

acco

un

tab

ility

and

ove

rsig

ht

in

mu

nic

ipal

itie

s

faci

litat

ed

Imp

rove

th

e

eff

ect

ive

ne

ss o

f

ove

rsig

ht

and

acco

un

tab

ility

me

chan

ism

s an

d

stru

ctu

res

Imp

rove

lead

ers

hip

cap

abili

ty o

n o

vers

igh

t

and

acc

ou

nta

bili

ty b

y

31

Mar

ch 2

01

5

Sup

po

rt t

he

imp

lem

en

tati

on

of

the

diff

ere

nti

ate

d

sep

arat

ion

of

fun

ctio

ns

mo

de

ls in

mu

nic

ipal

itie

s b

y

31

Mar

ch 2

01

5

Pro

mo

te g

oo

d

pra

ctic

es

and

kno

wle

dg

e s

har

ing

amo

ng

mu

nic

ipal

itie

s

by

31

Mar

ch 2

01

5

Lead

ers

hip

cap

abili

ty o

n o

vers

igh

t an

d

acco

un

tab

ility

was

imp

rove

d. S

ALG

A

pre

sen

ted

th

e c

on

seq

ue

nce

s an

d

acco

un

tab

ility

fram

ew

ork

to

nin

e P

MA

s

he

ld in

Au

gu

st a

nd

Se

pte

mb

er

20

14

an

d

NM

A h

eld

on

24

-26

Mar

ch 2

01

5.

SALG

A h

eld

MPA

CS

go

od

pra

ctic

e

case

an

alys

is p

rovi

nci

al w

ork

sho

ps

(to

sh

are

be

st p

ract

ice

s an

d id

en

tify

key

chal

len

ge

s e

xpe

rie

nce

d b

y

mu

nic

ipal

itie

s) in

No

rth

ern

Cap

e,

We

ste

rn C

ape

, Kw

aZu

lu-N

atal

, No

rth

We

st, F

ree

Sta

te, G

aute

ng

, Fre

e S

tate

, an

d

Lim

po

po

be

twe

en

Fe

bru

ary

and

Mar

ch

20

15

.

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

43

04

0Lo

bb

ied

for

imp

rove

d

cou

nci

llor

pay

me

nt

dis

pe

nsa

tio

n

and

cap

acit

ate

d

cou

nci

llors

Lob

bie

d fo

r

imp

rove

d

cou

nci

llor p

aym

en

t

dis

pe

nsa

tio

n

and

cap

acit

ate

d

cou

nci

llors

Co

GTA

an

d

ind

ep

en

de

nt

com

mis

sio

n lo

bb

ied

;

Qu

arte

rly

rep

ort

ing

on

co

nti

nu

ou

s

advi

ce, t

rain

ing

and

wo

rksh

op

s

con

du

cte

d/p

rovi

de

d

on

co

un

cillo

rs’

be

ne

fits

by

31

Mar

ch

20

15

SALG

A lo

bb

ied

Co

GTA

an

d in

de

pe

nd

en

t

com

mis

sio

n o

n c

ou

nci

llors

’ be

ne

fits

on

11

Au

gu

st 2

01

4. A

pro

po

sal f

or

the

20

14

/15

no

tice

for

the

up

pe

r lim

its

of

cou

nci

llor’’

s sa

lari

es

and

allo

wan

ces

we

re

app

rove

d b

y th

e N

EC o

f 3 J

uly

20

14

and

forw

ard

ed

to

th

e r

em

un

era

tio

n

com

mis

sio

n o

n 1

1 A

ug

ust

.

Qu

arte

rly

rep

ort

s w

ere

pre

sen

ted

at

the

cou

nci

llor

sup

po

rt w

ork

ing

gro

up

s b

y

31

Mar

ch 2

01

5

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

75

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(b

oth

ov

er

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

43

14

1Im

pro

ved

an

d

en

han

ced

pu

blic

par

tici

pat

ion

in

mu

nic

ipal

itie

s

faci

litat

ed

Stre

ng

the

ne

d

pu

blic

par

tici

pat

ion

app

roac

he

s an

d

pro

cess

es

in

mu

nic

ipal

itie

s

Pro

mo

te p

artn

ers

hip

s

wit

h id

en

tifi

ed

civ

il

soci

ety

org

anis

atio

ns

and

oth

er

stak

eh

old

ers

by

31

Mar

ch 2

01

5.

Pro

mo

te g

oo

d

pra

ctic

es

and

kno

wle

dg

e s

har

ing

amo

ng

mu

nic

ipal

itie

s

on

inn

ova

tive

pu

blic

par

tici

pat

ion

app

roac

he

s b

y

31

Mar

ch 2

01

5

Part

ne

rsh

ips

wit

h id

en

tifi

ed

civ

il so

cie

ty

org

anis

atio

ns

and

oth

er

stak

eh

old

ers

we

re p

rom

ote

d b

y 3

1 M

arch

20

15

.

Go

od

pra

ctic

es

and

kn

ow

led

ge

sh

arin

g

amo

ng

mu

nic

ipal

itie

s o

n in

no

vati

ve

pu

blic

par

tici

pat

ion

ap

pro

ach

es

was

pro

mo

ted

th

rou

gh

SA

LGA

’s

de

velo

pm

en

t o

f a d

raft

co

nce

pt

no

te fo

r

pro

vin

cial

ro

un

d t

able

on

co

mm

un

ity

invo

lve

me

nt

and

pu

blic

par

tici

pat

ion

in

loca

l go

vern

me

nt

and

pro

vin

cial

ro

un

d

tab

le d

iscu

ssio

ns

he

ld w

ith

civ

il so

cie

ty

org

anis

atio

ns

on

pu

blic

par

tici

pat

ion

in

No

rth

ern

Cap

e, E

aste

rn C

ape

, Gau

ten

g

and

Fre

e S

tate

by

31

Mar

ch 2

01

5.

SALG

A a

lso

par

tici

pat

ed

in a

nu

mb

er

of

pu

blic

par

tici

pat

ion

init

iati

ves

du

rin

g t

he

year

:

org

anis

ed

by

the

Isan

dla

Inst

itu

te;

WG

me

eti

ng

wit

h G

IZ;

Dit

sob

otl

a;;

Leg

isla

ture

of S

A)

pu

blic

par

tici

pat

ion

,

pe

titi

on

s an

d c

om

mu

nic

atio

n fo

rum

me

eti

ng

;

mu

nic

ipal

ity

to fo

rmal

ise

a G

SP a

nd

civi

l so

cie

ty p

artn

ers

hip

on

inte

gra

tin

g

the

ass

ets

-bas

ed

co

mm

un

ity-

dri

ven

de

velo

pm

en

t ap

pro

ach

; an

d

East

ern

Cap

e p

rovi

nci

al C

oG

TA

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

76

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(b

oth

ov

er

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

43

24

2Fa

cilit

ate

mu

nic

ipal

itie

s’

par

tici

pat

ion

in w

ard

de

limit

atio

n p

roce

ss

The

vie

ws

of

mu

nic

ipal

itie

s o

n

war

d d

elim

itat

ion

are

inco

rpo

rate

d

in t

he

war

d

de

limit

atio

n

pro

cess

by

the

MD

B

Faci

litat

e t

he

par

tici

pat

ion

of

the

MB

D in

SA

LGA

go

vern

ance

str

uct

ure

s

by

31

Mar

ch 2

01

5.

Faci

litat

e t

he

par

tici

pat

ion

of

mu

nic

ipal

itie

s in

MD

B p

roce

sse

s an

d

en

gag

em

en

ts o

n

war

d d

elim

itat

ion

by

31

Mar

ch 2

01

5

Faci

litat

ed

th

e p

arti

cip

atio

n o

f th

e M

BD

in S

ALG

A g

ove

rnan

ce s

tru

ctu

res

as

we

ll as

mu

nic

ipal

par

tici

pat

ion

in M

DB

pro

cess

es

by

31

Mar

ch 2

01

5.

A r

ep

ort

on

re

op

en

ing

of b

ou

nd

ary

red

ete

rmin

atio

n p

roce

ss b

y th

e M

DB

was

tab

led

at

GIG

R o

n 2

2 J

anu

ary

20

15

NW

G a

nd

NEC

on

12

Fe

bru

ary

20

15

.

Bo

un

dar

y re

-de

term

inat

ion

an

d w

ard

de

limit

atio

n w

ere

als

o d

iscu

sse

d a

t

the

NM

A o

n 2

4-

26

Mar

ch 2

01

5, w

hic

h

reco

mm

en

de

d t

hat

th

e p

roce

ss b

e r

e-

op

en

ed

aft

er

the

20

16

loca

l go

vern

me

nt

ele

ctio

ns

–

The

follo

win

g M

DB

circ

ula

rs w

ere

dis

sem

inat

ed

to

mu

nic

ipal

itie

s vi

a

pro

vin

cial

offi

ces

by

31

Mar

ch 2

01

5.

to k

ee

p t

he

m a

bre

ast

wit

h o

n-g

oin

g

de

velo

pm

en

ts in

th

e d

em

arca

tio

n

pro

cess

es:

;

–

Circ

ula

r 4

/20

14

: De

limit

atio

n o

f war

ds

du

rin

g 2

01

4/1

5 fo

r th

e 2

01

6 lo

cal

ele

ctio

ns;

–

Circ

ula

r 1

/20

15

: Re

de

term

inat

ion

of

bo

un

dar

ies;

–

Circ

ula

r 2

/20

15

: Re

de

term

inat

ion

of

bo

un

dar

ies

in E

aste

rn C

ape

, Kw

aZu

lu-

Nat

al, L

imp

op

o a

nd

No

rth

We

st;

–

Circ

ula

r 3

/20

15

- R

ed

ete

rmin

atio

n o

f

bo

un

dar

ies

in M

pu

mal

ang

a, N

ort

h

We

st a

nd

No

rth

ern

Cap

e;

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

77

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(b

oth

ov

er

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

–

Circ

ula

r 4

/20

15

- R

ed

ete

rmin

atio

n o

f

bo

un

dar

ies

in F

ree

Sta

te;

and

–

Circ

ula

r 5

/20

15

: Re

de

term

inat

ion

of

bo

un

dar

ies.

.

The

MD

B p

arti

cip

ate

d in

th

e N

MA

20

15

he

ld o

n 2

4 M

arch

20

15

, th

e

PW

G m

ee

tin

gs

thro

ug

ho

ut

the

ye

ar,

PEC

me

eti

ng

s, g

ove

rnan

ce a

nd

IGR

pra

ctit

ion

er’s

foru

ms

and

PM

As

in A

ug

ust

and

Se

pte

mb

er

20

15

; as

we

ll at

SA

LGA

LP F

inan

ce W

ee

k.

SALG

A a

tte

nd

ed

an

d p

arti

cip

ate

d

in M

DB

nat

ion

al la

un

ch o

f war

d

de

limit

atio

n p

roce

ss b

y 3

1 M

arch

20

15

.

78

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(b

oth

ov

er

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

43

34

3Su

pp

ort

mu

nic

ipal

itie

s in

th

e

imp

lem

en

tati

on

of a

nti

-co

rru

pti

on

stra

teg

ies

/

corr

up

tio

n fr

ee

mu

nic

ipal

itie

s/

Inte

rve

nti

on

s

Mu

nic

ipal

itie

s

sup

po

rte

d t

o

com

bat

co

rru

pti

on

and

mal

-

adm

inis

trat

ion

Sup

po

rt p

rovi

nce

s

in g

uid

ing

mu

nic

ipal

itie

s o

n t

he

imp

lem

en

tati

on

of t

he

ou

tco

me

s o

f th

e a

nti

-

corr

up

tio

n s

um

mit

by

31

Mar

ch 2

01

5.

Pro

vin

ces

we

re a

ssis

ted

to

su

pp

ort

mu

nic

ipal

itie

s o

n t

he

imp

lem

en

tati

on

of t

he

ou

tco

me

s o

f th

e a

nti

-co

rru

pti

on

sum

mit

by

31

Mar

ch 2

01

5.

The

re

solu

tio

ns

of t

he

an

ti-c

orr

up

tio

n

sum

mit

we

re d

isse

min

ate

d t

o a

ll

mu

nic

ipal

itie

s vi

a p

rovi

nci

al o

ffice

s b

y

31

Mar

ch 2

01

5.

Um

voti

, Man

de

ni a

nd

Mta

mb

anan

a

mu

nic

ipal

itie

s w

ere

ass

iste

d w

ith

th

e

de

velo

pm

en

t an

d a

do

pti

on

of t

he

ir a

nti

-

corr

up

tio

n p

olic

ies.

Ge

rt S

iban

de

, Ch

ief A

lbe

rt L

uth

uli,

Pri

nce

Alb

ert

, Kan

nal

and

an

d B

eau

fort

We

st w

ere

su

pp

ort

ed

on

th

e r

evi

val o

f

the

an

ti-c

orr

up

tio

n s

trat

eg

y th

rou

gh

a

wo

rkin

g s

ess

ion

.

Thro

ug

h t

he

Lim

po

po

sp

eak

ers

foru

m,

go

od

an

ti-c

orr

up

tio

n p

ract

ice

s w

ere

pro

file

d.

SALG

A fa

cilit

ate

d a

n a

nti

-co

rru

pti

on

pe

er-

lear

nin

g in

itia

tive

be

twe

en

Be

aufo

rt

We

st a

nd

Kn

ysn

a m

un

icip

alit

ies

in

No

vem

be

r 2

01

4 a

nd

he

ld a

follo

w u

p

en

gag

em

en

t in

Fe

bru

ary

20

15

wh

ere

Be

aufo

rt W

est

Mu

nic

ipal

ity

pre

sen

ted

its

dra

ft a

nti

-co

rru

pti

on

str

ate

gy.

SALG

A d

eve

lop

ed

an

ass

ess

me

nt

on

th

e

stat

e o

f an

ti-c

o-f

rau

d a

nd

an

ti-c

orr

up

tio

n

me

asu

res

in m

un

icip

alit

ies.

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

79

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(b

oth

ov

er

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

43

44

4Im

pro

ved

po

licy

and

leg

isla

tive

fram

ew

ork

for

de

velo

pm

en

tal

loca

l go

vern

me

nt

faci

litat

ed

Stak

eh

old

ers

lob

bie

d o

n t

he

SALG

A p

osi

tio

n

reg

ard

ing

th

e

com

pre

he

nsi

ve

revi

ew

of

leg

isla

tio

n a

nd

po

licy

fram

ew

ork

imp

acti

ng

on

mu

nic

ipal

itie

s

Co

nd

uct

re

vie

w o

f

leg

isla

tio

n im

pe

din

g

serv

ice

de

live

ry b

y

31

Mar

ch 2

01

5.

Un

de

rtak

e a

com

pre

he

nsi

ve

revi

ew

of O

rgan

ise

d

Loca

l Go

vern

me

nt

by

31

Mar

ch 2

01

5.

De

velo

p p

olic

y

pro

po

sals

on

ke

y

are

as a

ffe

ctin

g lo

cal

go

vern

me

nt

by

31

Mar

ch 2

01

5.

SALG

A c

on

du

cte

d t

he

re

vie

w o

f

leg

isla

tio

n im

pe

din

g s

erv

ice

de

live

ry b

y

31

Mar

ch 2

01

5.

SALG

A e

ng

age

d w

ith

Co

GTA

on

pro

po

sals

on

th

e r

evi

ew

of t

he

OLG

Bill

, OLG

Act

19

97

; an

d L

G: G

en

era

l

Law

s A

me

nd

me

nt

Bill

. A p

rese

nta

tio

n

was

als

o m

ade

in P

arlia

me

nt

and

nat

ion

al m

un

icip

al m

anag

er’s

foru

m o

n

leg

isla

tio

n t

hat

ne

gat

ive

ly im

pac

t Lo

cal

Go

vern

me

nt.

The

NM

A c

om

mis

sio

n

8: “

Stre

ng

the

nin

g o

rgan

ise

d lo

cal

go

vern

me

nt”

ide

nti

fie

d p

rop

osa

ls

to s

tre

ng

the

n O

LGs

eff

ect

ive

ne

ss,

acco

un

tab

ility

, go

vern

ance

fram

ew

ork

and

fun

din

g m

od

el f

or

sust

ain

able

lon

g-

term

re

leva

nce

an

d im

pac

t.

No

t ap

plic

able

No

t ap

plic

able

A

chie

ved

80

2.2.5 Goal 5: Human capital development in local government

Addressing the human resources management and development (HRM&D) and labour relations challenges in local government is

therefore critical in building stability in the sector and ensuring that the sector is appropriately resourced and capacitated to fulfil its

mandate. This goal encapsulates the various policy, strategy and support initiatives that are required to establish a comprehensive

HRM&D dispensation for local government. It also focuses on labour relations as a key factor of productivity and service delivery.

The goal places particular emphasis on achieving HRM&D stability and growth in the sector and supporting skills development

and optimal human resourcing for local government.

Achievements

One hundred and twenty seven municipalities were supported, assisted and guided in developing and implementing a

performance management system (PMS),. The support provided includes training workshops to deepen the knowledge

and understanding of PMS as well as ensure compliance with relevant legislative requirements;

Two hundred and seventy four municipal employees across provinces were trained on TASK job evaluation (JE). The trained

employees will serve in the various JE unit structures that will finalise JE in all municipalities;

Roll out of the professionalisation framework implementation plan using four pillars: service orientation, leadership and

management professionalism, technical professionalism, and institutional professionalism;

As part of the roll out of the human resource management and development strategy for local government, 114

municipalities across provinces were profiled using the municipal developmental human capital management profiling

tool;

Launching and establishment of the SALGA Centre for Leadership and Governance (SCLG); and

SALGA facilitated portfolio based training and leadership development programmes for councillors and senior municipal

officials; 1 149 councillors and senior municipal officials benefited from:

Portfolio-based councillor development programme (787);

Senior manager induction programme (252); and

Leadership development workshops (110).

81

Be

low

are

de

tail

ed

pe

rfo

rma

nce

re

sult

s a

s p

er

the

ke

y p

erf

orm

an

ce in

dic

ato

rs in

th

e 2

01

4/1

5 a

nn

ua

l pe

rfo

rma

nce

pla

n:

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(bo

th o

ve

r

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

53

64

6Im

ple

me

nta

tio

n

of t

he

re

vise

d

SALG

BC

rem

od

elli

ng

mo

nit

ore

d

A m

utu

al g

ain

s

app

roac

h

to c

olle

ctiv

e

bar

gai

nin

g

faci

litat

ed

Re

vie

w, m

on

ito

r an

d

rep

ort

on

op

era

tio

ns

and

eff

ect

ive

ne

ss o

f

the

SA

LGB

C b

y

31

Mar

ch 2

01

5

A r

evi

ew

re

po

rt o

n o

pe

rati

on

s an

d

eff

ect

ive

ne

ss o

f th

e S

ALG

BC

was

de

velo

pe

d. S

ALG

A c

on

tin

ue

d t

o

mo

nit

or

and

re

po

rt o

n o

pe

rati

on

s

of t

he

SA

LGB

C b

y 3

1 M

arch

20

15

.

The

fun

ctio

nin

g o

f th

e S

ALG

BC

was

mo

nit

ore

d a

nd

re

po

rte

d a

t SA

LGA

go

vern

ance

str

uct

ure

s th

rou

gh

ou

t

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

53

74

7R

ep

rese

nt

mu

nic

ipal

itie

s

in c

on

cilia

tio

ns,

arb

itra

tio

ns

and

litig

atio

n

A m

utu

al g

ain

s

app

roac

h

to c

olle

ctiv

e

bar

gai

nin

g

faci

litat

ed

Qu

arte

rly

rep

ort

s o

n

the

re

pre

sen

tati

on

mad

e in

DC

pro

cess

es,

con

cilia

tio

ns

arb

itra

tio

ns

and

litig

atio

n d

eve

lop

ed

by

31

Mar

ch 2

01

5

Qu

arte

rly

rep

ort

s w

ere

pre

sen

ted

to S

ALG

A g

ove

rnan

ce s

tru

ctu

res

on

SALG

A’s

rep

rese

nta

tio

n t

o m

em

be

r

mu

nic

ipal

itie

s ac

ross

pro

vin

ces

in D

C

pro

cess

es,

co

nci

liati

on

s, a

rbit

rati

on

s an

d

litig

atio

ns

by

31

Mar

ch 2

01

5

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

53

84

8N

eg

oti

ate

colle

ctiv

e

agre

em

en

t o

n

serv

ice

ch

arte

r

Loca

l go

vern

me

nt

serv

ice

ch

arte

r fo

r

ne

go

tiat

ion

s w

ith

un

ion

s d

eve

lop

ed

Ne

go

tiat

e c

olle

ctiv

e

agre

em

en

t o

n s

erv

ice

char

ter

by

31

Mar

ch 2

01

5

A lo

cal g

ove

rnm

en

t se

rvic

e c

har

ter

was

de

velo

pe

d a

nd

pre

sen

ted

at

the

SALG

BC

Exc

o fo

r n

eg

oti

atio

ns

by

31

Mar

ch 2

01

5

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

53

84

9A

sse

ssm

en

t re

po

rt

on

co

mp

lian

ce

wit

h c

olle

ctiv

e

agre

em

en

ts

de

velo

pe

d

Re

vie

w o

f

exi

stin

g c

olle

ctiv

e

agre

em

en

ts

fram

ew

ork

Mu

nic

ipal

itie

s

sup

po

rte

d a

nd

ad

vise

d

on

th

e im

ple

me

nta

tio

n

of t

he

co

llect

ive

agre

em

en

t b

y

31

Mar

ch 2

01

5

Ass

ess

me

nt

rep

ort

on

co

mp

lian

ce w

ith

colle

ctiv

e a

gre

em

en

ts

de

velo

pe

d b

y

31

Mar

ch 2

01

5

Mu

nic

ipal

itie

s w

ere

su

pp

ort

ed

an

d

advi

sed

in t

he

imp

lem

en

tati

on

of t

he

colle

ctiv

e a

gre

em

en

t p

ert

ain

ing

to

job

eva

luat

ion

(JE

) tra

inin

g, p

en

sio

n

fun

d, m

ed

ical

aid

an

d h

om

e o

wn

ers

’

allo

wan

ce b

y 3

1 M

arch

20

15

.

An

ass

ess

me

nt

rep

ort

on

co

mp

lian

ce

wit

h c

olle

ctiv

e a

gre

em

en

ts w

as

de

velo

pe

d b

y 3

1 M

arch

20

15

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

82

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(bo

th o

ve

r

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

53

95

0Fa

cilit

ate

th

e

inte

rpre

tati

on

an

d

imp

lem

en

tati

on

of

the

am

en

dm

en

t

of t

he

Lab

ou

r

Re

lati

on

Act

in t

he

loca

l go

vern

me

nt

sect

or

Co

ord

inat

e

pro

visi

on

of

sup

po

rt t

o

mu

nic

ipal

itie

s

on

th

e L

RA

imp

lem

en

tati

on

me

asu

res

De

velo

p fr

ame

wo

rk/

gu

ide

line

s d

ocu

me

nt

for

mu

nic

ipal

itie

s o

n

the

imp

lem

en

tati

on

me

asu

res

wit

hin

2

mo

nth

s fr

om

th

e

en

actm

en

t o

f th

e A

ct

by

31

Mar

ch 2

01

5

A g

uid

elin

e fr

ame

wo

rk o

n t

he

mu

nic

ipal

imp

lem

en

tati

on

me

asu

res

of t

he

am

en

dm

en

ts o

f th

e L

abo

ur

Re

lati

on

s A

ct w

as d

eve

lop

ed

an

d

shar

ed

wit

h m

un

icip

alit

ies

by

31

Mar

ch

20

15

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

54

05

1R

ep

rese

nta

tio

n

of t

he

inte

rest

of

Loca

l Go

vern

me

nt

at N

EDLA

C a

nd

ILO

asse

sse

d

Re

pre

sen

t th

e

inte

rest

of L

oca

l

Go

vern

me

nt

at

NED

LAC

an

d IL

O

Re

pre

sen

t in

tere

sts

of

Loca

l Go

vern

me

nt

in

bo

th N

EDLA

C a

nd

ILO

by

31

Mar

ch 2

01

5 (a

s

and

wh

en

re

qu

ired

)

Thro

ug

h t

he

au

spic

es

of t

he

SA

LGB

C

stu

dy

tou

r to

Eu

rop

e, S

ALG

A

rep

rese

nte

d t

he

inte

rest

s o

f lo

cal

go

vern

me

nt

in b

oth

NED

LAC

an

d IL

O

by

31

Mar

ch 2

01

5. T

he

e

ng

age

me

nt

wit

h IL

O s

ou

gh

t th

eir

exp

ert

ise

on

issu

es

of d

ow

nw

ard

an

d u

pw

ard

vari

atio

n o

f exi

stin

g c

on

dit

ion

s o

f

serv

ice

, jo

b e

valu

atio

n

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

83

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(bo

th o

ve

r

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

54

15

2C

apac

itat

e

mu

nic

ipal

itie

s

tow

ard

s th

e

imp

lem

en

tati

on

of t

he

pro

fess

ion

alis

atio

n

fram

ew

ork

Fram

ew

ork

for

pro

fess

ion

aliz

atio

n

of L

G h

um

an

reso

urc

es

de

velo

pe

d a

nd

imp

lem

en

ted

Co

ord

inat

e t

he

op

era

tio

nal

isat

ion

(imp

lem

en

tati

on

) o

f

the

Pro

fess

ion

alis

atio

n

fram

ew

ork

for

targ

ete

d

mu

nic

ipal

itie

s b

y

31

Mar

ch 2

01

5

SALG

A c

oo

rdin

ate

d t

he

op

era

tio

nal

isat

ion

(im

ple

me

nta

tio

n)

of t

he

pro

fess

ion

alis

atio

n fr

ame

wo

rk

for

targ

ete

d m

un

icip

alit

ies

by

31

Mar

ch 2

01

5. T

he

pro

fess

ion

alis

atio

n

imp

lem

en

tati

on

pla

n w

as r

olle

d

ou

t to

tar

ge

ted

mu

nic

ipal

itie

s b

y 3

1

Mar

ch 2

01

5 in

th

e fo

llow

ing

pill

ars

of

pro

fess

ion

alis

m:

(a)

Se

rvic

e o

rie

nta

tio

n-

sen

ior

man

age

r’s in

du

ctio

n p

rog

ram

me

(b)

Le

ad

ers

hip

an

d m

an

ag

em

en

t-

SCLG

an

d L

DW

(c) T

ech

nic

al-

SA

LGA

cap

acit

y b

uild

ing

pro

spe

ctu

s.

(d)

Inst

itu

tio

na

l-

De

velo

pm

en

tal m

un

icip

al h

um

an

cap

ital

Pro

filin

g;

TASK

job

eva

luat

ion

imp

lem

en

tati

on

pro

cess

th

at w

ill b

e r

olle

d o

ut

ove

r a

3-y

ear

pe

rio

d;

Mu

nic

ipal

pe

rfo

rman

ce

man

age

me

nt

sup

po

rt p

rog

ram

me

s;

Sup

po

rt fr

ame

wo

rk fo

r th

e

imp

lem

en

tati

on

of t

he

loca

l

go

vern

me

nt:

reg

ula

tio

ns

on

app

oin

tme

nt

and

co

nd

itio

ns

of

em

plo

yme

nt

of s

en

ior

man

age

rs;

and

Hu

man

re

sou

rce

man

age

me

nt

po

licy

revi

ew

an

d d

eve

lop

me

nt.

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

84

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(bo

th o

ve

r

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

54

25

3C

on

tin

uo

us

ind

uct

ion

an

d

trai

nin

g o

f

cou

nci

llors

/ se

nio

r

man

age

me

nt

and

ass

ess

me

nt

of t

he

eff

ect

of t

he

inte

rve

nti

on

wit

h

the

aim

to

faci

litat

e

60

% r

ete

nti

on

in n

ext

ro

un

d o

f

ele

ctio

ns

Syst

em

s, s

tru

ctu

res

and

par

tne

rsh

ips

for

en

han

ced

cap

acit

y b

uild

ing

pro

gra

mm

es

est

ablis

he

d

Ove

rse

e c

oo

rdin

atio

n

of q

uar

terl

y in

du

ctio

n

of s

en

ior

mu

nic

ipal

offi

cial

s b

y

31

Mar

ch 2

01

5.

Ind

uct

ion

of n

ew

ly

ele

cte

d c

ou

nci

llors

eve

ry 6

mo

nth

s b

y

31

Mar

ch 2

01

5

Ind

uct

ion

s o

f mu

nic

ipal

se

nio

r

man

age

rs a

nd

co

un

cillo

rs w

ere

con

du

cte

d in

pro

vin

ces

and

pre

sen

ted

in g

ove

rnan

ce s

tru

ctu

res

by

31

Mar

ch 2

01

5

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

54

45

4A

war

en

ess

bu

ildin

g a

nd

pre

par

atio

n/s

tow

ard

s th

e

imp

lem

en

tati

on

of

Loca

l Go

vern

me

nt

Lead

ers

hip

De

velo

pm

en

t

Aca

de

my

Syst

em

s, s

tru

ctu

res

and

par

tne

rsh

ips

for

en

han

ced

cap

acit

y b

uild

ing

pro

gra

mm

es

est

ablis

he

d

Imp

lem

en

tati

on

of t

he

Ph

ase

1 S

CLG

bu

sin

ess

pla

n b

y 3

1 M

arch

20

15

Ph

ase

1 o

f th

e S

ALG

A C

en

tre

for

Lead

ers

hip

an

d G

ove

rnan

ce (S

CLG

)

was

imp

lem

en

ted

th

rou

gh

th

e la

un

ch

of t

he

ce

ntr

e a

t SA

LGA

Nat

ion

al

Me

mb

ers

Ass

em

bly

on

24

Mar

ch 2

01

5

tog

eth

er

wit

h it

s p

rod

uct

s an

d s

erv

ice

s

cata

log

ue

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

54

55

5C

apac

itat

e

mu

nic

ipal

itie

s

tow

ard

s th

e

imp

lem

en

tati

on

of L

G m

en

tors

hip

pro

gra

mm

e

Syst

em

s, s

tru

ctu

res

and

par

tne

rsh

ips

for

en

han

ced

cap

acit

y b

uild

ing

pro

gra

mm

es

est

ablis

he

d

Imp

lem

en

tati

on

of

exe

cuti

ve c

oac

hin

g

pro

gra

mm

e fo

r

targ

ete

d m

un

icip

alit

ies

as p

art

of s

up

po

rt

pro

gra

mm

e fo

r

imp

rove

d a

ud

its

by

31

Mar

ch 2

01

5

Exe

cuti

ve c

oac

hin

g p

rog

ram

me

was

imp

lem

en

ted

un

de

r th

e t

he

me

of

lead

ers

hip

de

velo

pm

en

t w

ork

sho

ps

(LD

W) a

s p

art

of s

up

po

rt p

rog

ram

me

for

imp

rove

d a

ud

its

by

31

Mar

ch 2

01

5

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

85

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(bo

th o

ve

r

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

54

65

6P

ort

folio

bas

e

cap

acit

y b

uild

ing

con

du

cte

d

Syst

em

s, s

tru

ctu

res

and

par

tne

rsh

ips

for

en

han

ced

cap

acit

y b

uild

ing

pro

gra

mm

es

est

ablis

he

d

Co

ord

inat

e r

oll

ou

t o

f th

e p

ort

folio

bas

ed

co

un

cillo

r

de

velo

pm

en

t

pro

gra

mm

e (C

DP

) b

y

31

Mar

ch 2

01

5

SALG

A c

oo

rdin

ate

d t

he

ro

ll o

ut

of

po

rtfo

lio b

ase

d c

ou

nci

llor

de

velo

pm

en

t

pro

gra

mm

es

in a

ll p

rovi

nce

s b

y

31

Mar

ch 2

01

5.

The

follo

win

g p

rog

ram

me

s w

ere

ro

lled

ou

t:

1)

Cre

dit

co

ntr

ol;

2)

Dis

aste

r ri

sk m

anag

em

en

t;

3)

Mig

rati

on

; an

d

4) P

erf

orm

ance

man

age

me

nt

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

54

75

7K

no

wle

dg

e-

shar

ing

an

d

inte

r-m

un

icip

al

pe

er

lear

nin

g

pro

gra

mm

e

revi

ew

ed

Enh

ance

d p

ee

r

lear

nin

g a

nd

kno

wle

dg

e-

shar

ing

wit

hin

and

be

twe

en

mu

nic

ipal

itie

s

Kn

ow

led

ge

sh

arin

g

and

inte

r-m

un

icip

al

pe

er

lear

nin

g

pro

gra

mm

e

imp

lem

en

ted

by

31

Mar

ch 2

01

5

Kn

ow

led

ge

-sh

arin

g a

nd

inte

r-

mu

nic

ipal

pe

er

lear

nin

g p

rog

ram

me

was

imp

lem

en

ted

by

31

Mar

ch 2

01

5.

20

kn

ow

led

ge

an

d le

arn

ing

eve

nts

we

re fa

cilit

ate

d, h

ost

ed

an

d s

up

po

rte

d

in t

he

form

of S

IKE

(SA

LGA

info

rmat

ion

and

kn

ow

led

ge

exc

han

ge

), m

un

icip

al

man

age

rs fo

rum

an

d o

the

r kn

ow

led

ge

shar

ing

eve

nts

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

86

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(bo

th o

ve

r

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

54

75

8Im

pro

ved

kno

wle

dg

e

and

acc

ess

to

info

rmat

ion

on

tran

sve

rsal

issu

es

LG p

ract

itio

ne

rs a

re

kep

t ab

reas

t o

f ke

y

issu

es

imp

acti

ng

on

mu

nic

ipal

itie

s

thro

ug

h

kno

wle

dg

e-

shar

ing

pro

gra

mm

es

LG d

ata

and

kno

wle

dg

e p

rod

uct

s

sou

rce

d, c

en

tral

ly

sto

red

an

d

dis

sem

inat

ed

in t

he

sect

or

by

31

Mar

ch

20

15

Loca

l go

vern

me

nt

dat

a an

d k

no

wle

dg

e

pro

du

cts

we

re s

ou

rce

d, c

en

tral

ly s

tore

d

and

dis

sem

inat

ed

in t

he

se

cto

r b

y 3

1

Mar

ch 2

01

5

Kn

ow

led

ge

ma

na

ge

me

nt

an

d

mu

nic

ipa

l in

no

va

tio

n

1.

Loca

l Go

vern

me

nt

Kn

ow

led

ge

Hu

b

was

de

velo

pe

d a

nd

co

mp

lete

d in

Mar

ch 2

01

5.

The

hu

b w

ill e

nab

le

eas

y ac

cess

to

th

e s

ect

or’s

dat

a an

d

kno

wle

dg

e r

eso

urc

es.

2.

SALG

A d

eve

lop

ed

an

an

nu

al

kno

wle

dg

e a

nd

info

rmat

ion

pu

blic

atio

n t

hat

aim

s to

info

rm,

shar

e, c

ele

bra

te a

nd

pro

file

mu

nic

ipal

inn

ova

tio

ns,

exc

elle

nce

and

par

tne

rsh

ips.

Th

e p

ub

licat

ion

is

nam

ed

‘in. K

NO

W. v

atio

n’.

Mu

nic

ipa

l ba

rom

ete

r a

nd

qu

ali

ty

ma

na

ge

me

nt

1.

Mu

nic

ipal

bar

om

ete

r w

as u

pd

ate

d

wit

h lo

cal l

eve

l dat

a. T

he

mu

nic

ipal

bar

om

ete

r w

as u

plo

ade

d w

ith

tim

e s

eri

es

dat

a (in

dic

ato

rs a

re

po

pu

late

d w

ith

dat

a b

ase

d o

n

20

11

bo

un

dar

ies)

on

th

e fo

llow

ing

ou

tco

me

ind

icat

ors

:

D

em

og

rap

hic

tre

nd

s -

19

96

, 20

01

,

20

07

an

d 2

01

1

Ec

on

om

ic g

row

th a

nd

de

velo

pm

en

t

- 2

00

1, 2

00

7, a

nd

20

11

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

87

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(bo

th o

ve

r

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

Se

rvic

e d

eliv

ery

- 2

00

1, 2

00

7 a

nd

20

11

M

un

icip

al fi

nan

cial

dat

a fo

r 2

00

5-

20

13

an

d in

dic

ato

rs s

pre

adsh

ee

t

20

05

-20

13

2.

Fou

r lo

cal g

ove

rnm

en

t m

un

icip

al

bri

efs

we

re d

eve

lop

ed

an

d

up

load

ed

.

3.

Mu

nic

ipal

pro

filin

g r

ep

ort

s

pro

vid

ing

an

alys

is o

f th

e s

oci

o-

eco

no

mic

en

viro

nm

en

t o

f dis

tric

ts

and

loca

l mu

nic

ipal

itie

s b

ase

d

on

dat

a se

ts o

f th

e m

un

icip

al

bar

om

ete

r w

ere

als

o d

eve

lop

ed

.

4.

SALG

A c

on

du

cte

d a

nu

mb

er

of

wo

rksh

op

s w

hic

h w

ere

aim

ed

at

cre

atin

g a

war

en

ess

, kn

ow

led

ge

dis

sem

inat

ion

an

d im

par

tin

g o

f

skill

s. T

he

wo

rksh

op

s w

ere

he

ld w

ith

offi

cial

s fr

om

SA

LGA

, mu

nic

ipal

itie

s

and

ext

ern

al s

take

ho

lde

rs.

Re

sea

rch

A 1

5-y

ear

re

vie

w o

f lo

cal g

ove

rnm

en

t

stu

dy

was

co

ncl

ud

ed

54

85

9C

apac

itat

e

mu

nic

ipal

itie

s

tow

ard

s th

e

imp

lem

en

tati

on

of

HR

str

ate

gy

Loca

l go

vern

me

nt

hu

man

re

sou

rce

po

licy

and

stra

teg

y (L

G H

RM

)

de

velo

pe

d a

nd

rolle

d o

ut

LG H

RM

str

ate

gy

fram

ew

ork

ro

lled

ou

t

by

31

Mar

ch 2

01

5

The

loca

l go

vern

me

nt

hu

man

reso

urc

e m

anag

em

en

t st

rate

gy

was

rolle

d o

ut

in 1

14

mu

nic

ipal

itie

s ac

ross

pro

vin

ces

thro

ug

h p

rofi

ling

exe

rcis

e

by

31

Mar

ch 2

01

5.

A r

ep

ort

on

th

e

HR

MIS

de

velo

pm

en

t sp

eci

fica

tio

n w

as

de

velo

pe

d

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

88

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(bo

th o

ve

r

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

54

96

0G

uid

elin

es

de

velo

pe

d o

n t

he

imp

lem

en

tati

on

of a

me

nd

me

nts

and

up

dat

e a

ll

po

licie

s aff

ect

ed

by

ame

nd

me

nts

Loca

l go

vern

me

nt

hu

man

re

sou

rce

po

licy

and

str

ate

gy

de

velo

pe

d a

nd

rolle

d o

ut

De

velo

p g

uid

elin

es

on

the

imp

lem

en

tati

on

of a

me

nd

me

nts

and

up

dat

e a

ll

po

licie

s aff

ect

ed

by

ame

nd

me

nts

by

31

Mar

ch 2

01

5

Gu

ide

line

s o

n t

he

imp

lem

en

tati

on

of a

me

nd

me

nts

was

de

velo

pe

d

by

31

Mar

ch 2

01

5. T

he

18

HR

M

po

licie

s co

nta

ine

d in

th

e h

and

bo

ok

de

velo

pe

d b

y SA

LGA

in 2

00

9

we

re u

pd

ate

d t

o a

lign

all

affe

cte

d

po

licie

s to

th

e E

EA a

me

nd

me

nts

and

to

th

e lo

cal g

ove

rnm

en

t

reg

ula

tio

ns

on

th

e a

pp

oin

tme

nt

and

con

dit

ion

s o

f em

plo

yme

nt

for

sen

ior

man

age

rs r

esu

ltin

g in

an

ad

dit

ion

of

app

roxi

mat

ely

22

ne

w p

olic

ies

by

31

Mar

ch 2

01

5.

Circ

ula

rs w

ere

issu

ed

in

resp

ect

of t

he

EEA

am

en

dm

en

ts a

nd

the

loca

l go

vern

me

nt

reg

ula

tio

ns

on

sen

ior

man

age

rs b

y 3

1 M

arch

20

15

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

89

2.2.6 Goal 6: Financially and organisationally capacitated municipalities

Many municipalities face significant challenges in financial and organisational viability. This problem has persisted since the

establishment of democratic local government and the picture has not changed significantly over the last few years. Hence there

is a need to address some of the fundamental difficulties associated with the fiscal framework for local government. This goal

encapsulates the various policy, strategy and support initiatives that are required to build an enabling fiscal framework (including

sources of revenue generation) and adequate local government capacity (systems, processes and people) to deal with financial

management. The ultimate focus of this goal is to build the long-term financial viability and broader sustainability of municipalities.

Achievements

SALGA lobbied for a municipal demarcation transition grant of R139 000 000 at the 2014 budget forum. The grant is to

subsidise additional institutional and administrative costs arising from boundary changes to take effect in the elections of

2016;

A Municipal Finance Management Act compliance barometer was developed;

A billing and revenue enhancement research project was developed;

SALGA continued to rollout the oversight capacity training tailor-made for councillors in all provinces, and assisted

councillors to understand their role more clearly and how to operate more effectively;

Developed and launched multidisciplinary municipal audit support programme (MASP) which is based on four pillars:

leadership, governance, financial management and institutional capacity. MASP will assist all municipalities to maintain

good audit outcomes (unqualified with no findings or with findings) and to improve poor audit outcomes (disclaimer,

adverse, qualified and audits not finalised. MASP is placing particular emphasis on those municipalities with adverse/

disclaimer opinions as well as those municipalities whose audits were not finalised by the legislated deadline (“red zone”

municipalities). SALGA also finalised an agreement with a research institute PARI to perform research into the red zone

municipalities; and

Developed a discussion paper on standard charts of accounts (SCOA).

90

Be

low

are

de

tail

ed

pe

rfo

rma

nce

re

sult

s a

s p

er

the

ke

y p

erf

orm

an

ce in

dic

ato

rs in

th

e 2

01

4/1

5 a

nn

ua

l pe

rfo

rma

nce

pla

n:

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(bo

th o

ve

r

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

65

06

1Lo

bb

ied

for

the

com

pre

he

nsi

ve

fisc

al r

evi

ew

on

fisc

al a

lloca

tio

ns

to

mu

nic

ipal

itie

s

Lob

bie

d fo

r th

e

revi

ew

of t

he

loca

l

go

vern

me

nt

fisc

al

fram

ew

ork

SALG

A’s

inp

ut

on

the

re

vie

w o

f th

e

loca

l go

vern

me

nt

fisc

al fr

ame

wo

rk

sub

mit

ted

to

th

e

bu

dg

et

foru

m b

y

31

De

cem

be

r 2

01

4

SALG

A’s

inp

uts

on

th

e r

evi

ew

of t

he

loca

l go

vern

me

nt

fisc

al fr

ame

wo

rk

we

re s

ub

mit

ted

to

th

e b

ud

ge

t fo

rum

by

31

De

cem

be

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k m

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by

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ch 2

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par

t o

f ad

dre

ssin

g r

isk

in

mu

nic

ipal

itie

s SA

LGA

de

velo

pe

d

a ri

sk m

anag

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en

t fr

ame

wo

rk fo

r

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nic

ipal

itie

s b

y 3

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arch

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Go

al

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en

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nic

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ort

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e

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ado

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d

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nic

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itie

s

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of t

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d

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nic

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s b

y

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ch 2

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d t

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en

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on

of t

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mu

nic

ipal

sup

po

rt p

rog

ram

me

for

ado

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d

mu

nic

ipal

itie

s b

y 3

1 M

arch

20

15

.

A M

ASP

pro

ject

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lau

nch

ed

to

he

lp

sup

po

rt t

he

60

mu

nic

ipal

itie

s in

th

e

red

zo

ne

dis

clai

me

r, ad

vers

e o

pin

ion

s.

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ese

arch

pro

ject

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en

to d

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se t

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ot

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ses

of

pe

rsis

ten

t g

ove

rnan

ce t

ran

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ssio

ns

by

mu

nic

ipal

itie

s. F

rom

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e r

ese

arch

ou

tco

me

s sp

eci

fic

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rt p

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cts

will

be

de

velo

pe

d

for

the

str

ug

glin

g m

un

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alit

ies.

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mu

nic

ipal

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s w

ere

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pp

ort

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, 9 o

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7Im

ple

me

nta

tio

n o

f

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siti

on

on

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ere

nti

ate

d

app

roac

h

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by

for

fun

din

g

to a

ssis

t st

rug

glin

g

mu

nic

ipal

itie

s

to c

om

ply

wit

h

acco

un

tin

g

stan

dar

ds

and

SC

OA

reg

ula

tio

ns

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velo

p a

po

siti

on

pap

er

on

th

e

fun

din

g n

ee

ds

of

the

mu

nic

ipal

itie

s

wh

o a

re s

tru

gg

ling

to im

ple

me

nt

acco

un

tin

g

stan

dar

ds

and

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OA

by

31

Mar

ch 2

01

5

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eve

lop

ed

a d

iscu

ssio

n

do

cum

en

t ad

dre

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g t

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sp

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fic

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len

ge

s as

ass

oci

ate

d w

ith

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nd

ard

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ts o

f acc

ou

nts

(SC

OA

) wit

h

spe

cifi

c re

com

me

nd

atio

ns

en

do

rse

d

by

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NEC

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Mar

ch 2

01

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ALG

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faci

litat

ed

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s g

rou

ps

to h

elp

low

cap

acit

y an

d r

ura

l mu

nic

ipal

itie

s to

mak

e c

om

me

nts

on

th

e A

cco

un

tin

g

Stan

dar

ds

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ard

exp

osu

re d

raft

s

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t

app

licab

le

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t ap

plic

able

A

chie

ved

93

2.2.7 Goal 7: Effective and efficient administration

Given the significant pressure that will be placed on SALGA to deliver its strategy, it is critical that it has an effective and efficient

administration. This goal encapsulates the various interventions that SALGA will implement to ensure that its administration

functions effectively and efficiently. These interventions will cover areas of governance, products and services, performance

management, people development and marketing and communication. In particular the goal will also focus on consolidating

SALGA as a unitary structure with a national footprint. Part of the process of consolidation will include a bolstering of SALGA’s

financial and organisational viability.

Achievements

Business planning

SALGA has continued to comply with the requirements of the Public Finance Management Act, 1999 (Act No. 1 of 1999)

(PFMA) and in particular the National Treasury Framework for the development of strategic and annual performance plans;

The 2014/15 Annual Performance Plan (APP) of SALGA was fully implemented during the financial year; and

Quarterly reports were submitted to CoGTA and National Treasury. These quarterly reports provide status on the

implementation of the SALGA APP and also provides management with information for corrective measures on those

indicators that are lacking.

Municipal barometer and quality management

SALGA uploaded the municipal barometer with time series data (indicators are populated with data based on 2011

boundaries) on the following outcomes indicators:

Demographic trends - 1996, 2001, 2007 and 2011;

Economic growth and development - 2001, 2007, and 2011;

Service delivery - 2001, 2007 and 2011; and

Municipal financial data for 2005 – 2013.

Four informative municipal briefs monthly electronic updates on district’s socio-economic performance have been

developed and uploaded on the SALGA websites;

District municipal profile reports which provide analysis of the socio-economic environment of districts and local

municipalities based on data sets of the municipal barometer were developed;

Conducted a number of workshops aimed at creating awareness, knowledge dissemination and imparting of skills. The

workshops were held with officials from SALGA, municipalities and external stakeholders;

A partnership with the Department of Monitoring and Evaluation has been finalised; and

Partnerships with the following organisations have been initiated:

Foundation for Professional Development;

Department of Rural Development and Land Administration;

Department of Science and Technology (DST); and

Canadian International Development Agency (CIDA).

Research

A 15-year review of local government study has been concluded.

94

Knowledge management and municipal innovation

SALGA’s development of a local government knowledge hub will build a body of knowledge and institutional memory of

the local government sector;

In the sphere of knowledge exchange and learning events, SALGA facilitated the following:

Co-hosted the 8th national municipal manager’s forum;

Supported the hosting of the 4th South African urban conference; and

Facilitated a knowledge exchange session in the development of small and rural towns and townships.

SALGA developed an annual knowledge and information publication that informs, shares, celebrates and profiles municipal

innovations, excellence and partnerships.

Marketing and communications

Communications

During 2014/15 SALGA dramatically increased communication through electronic, web and social media platforms. During the

year SALGA Facebook followers increased from 400 in April 2014 to 9070 at the end of March 2015 with 178 tweets and retweets

to Twitter and 73 posts to Facebook. Media relations has also made impact through daily media monitoring and reports on media

clippings distributed to SALGA executive management team from across the country.

Ten media briefings were conducted, 29 media statements were issued and 104 media enquiries were received and responded

to by the communication unit.

During the year 2014/15 five editions of the Voice of Local Government magazine and 13 provincial newsletters were developed

and distributed to all our members municipalities and stakeholders.

The internal staff newsletter, Insight, was revitalised and a SIKE in Brief newsletter was introduced to staff of which 13 combined

editions were produced and electronically circulated to all staff. A branded centralised internal notice, E-notice was developed and

weekly multimedia screen updates ensured staff members were informed of strategic projects at SALGA.

Marketing

For the period 2014/15, in line with the organisation’s mandate to profile the sector, SALGA embarked on a process to identify

suitable service providers to assist the organisation with developing an integrated marketing and communication campaign for

the sector. The objective is to roll out campaigns that capture the positive stories within local government relating to service

delivery.

In preparation of the organisation celebrating 20 years’ existence, the organisation would undergo a rebranding to revitalise the

current brand image of SALGA. SALGA also contributed to the 20-year celebrations of the country through a profile in the Sunday

Times magazine. The organisation also contributed towards the awareness campaign for capacity building initiatives championed

by municipal institutional development. The initiatives were for the roll out of the senior managers’ induction programme and the

councillor induction programme. The campaigns were aimed at increasing the awareness on these initiatives by members and for

the CDP to increase the number of councillors who would enrol for the programme. This was done through print media and the

publications were targeted based on readership and circulation. For the first time since it was launched, the municipal manager’s

forum convened in Mpumalanga and the 8th municipal manager’s forum was well publicised. A TNA breakfast briefing aired on

Morning Live on SABC2 for the first time in the history of these forums. This platform gave viewers an opportunity to hear from

municipal managers and their roles within a municipality. The National Members Assembly publicity has also grown in leaps and

bounds with the amount of outside broadcasts with radio stations having increased from two to five including Kaya FM, SAFM,

Ukhozi FM, Lesedi FM and live crossings with Morning Live.

95

Secretariat

In consideration of the institutional arrangements of South Africa’s intergovernmental relations (IGR) landscape; the challenges and

constraints faced with SALGA’s deployment to IGR structures and critically assessed SALGA’s IGR representation and participation,

the SALGA National Members Assembly of March 2008 adopted the SALGA governance framework.

National assessments of internal governance arrangements within SALGA were conducted after each quarter of the financial

year. This is an ongoing mechanism to monitor and evaluate the functionality and effectiveness of SALGA’s internal governance

structures. During 2014/15, all national governance structures held their meetings as per the approved year calendar. Furthermore,

all meetings formed a prescribed quorum and also finished the business of the day as outlined in their agendas.

Legal, risk management, internal audit

Legal

SALGA had developed a legal protocol framework which formed part of a comprehensive approach to effectively coordinate legal

services in the organisation. Key guiding principles that underpin the process when the legal department is engaged have been

implemented. The outcome of the legal framework in the long term is to consolidate, streamline and coordinate processes in the

legal department so as to ensure effective delivery of legal services under a single functionary. This has set in motion all institutional

arrangements aimed at providing quality and efficient legal services. SALGA’s legal department has rolled out online legal content

support on SALGA’s knowledge hub for municipalities.

The online legislative solution covers all national, provincial and local government legislation;

Fully integrated with LexisNexis online products and updated daily, Gazettes Online allows member municipalities to stay

abreast of amendments and proposed amendments to legislation;

Current Awareness Alert is a daily e-mail alert service that provides updates on three major areas: news, legislation and case

law;

LexisNexis legislative solution intends to cover all municipalities that are in good standing; and

This solution takes the time and frustration out of legal research.

SALGA has secured services to roll out the new electronic legal request and response system. This solution will be attached to the

SALGA requisition system as another form of requesting other than the procurement processes. The solution allows for workflows

and tracking of information flow which builds up into an automated legal register in all three categories including a consolidated

one, for audit purposes. A helpdesk solution has been built and configured using a process flow toolset, task centre. Three main

categories of legal proceedings have been identified for inclusion in this helpdesk environment, namely contracts, legal opinion

and litigation. Requests for assistance or inputs for any one of these three categories may vary from one another and thus three

distinct processes have been modelled to cater for the three categories.

Internal audit

Thirteen audits were performed as per the internal audit coverage plan for 2014/15; and

Improved internal controls within SALGA processes were audited. The number of recurring issues previously reported has

reduced and management takes ownership for implementing controls on processes.

Externally focused - internal audit and risk management

Twenty one municipalities were assisted during 2014/15 on areas of internal audit, audit committees and implementation of

action plans to address the findings of the Auditor-General of South Africa (AGSA).

96

Stakeholder management

For the period 2014/15 the stakeholder relations policy was revised to reflect input from provinces and directorates. All staff were

trained on the policy through provincial and directorate workshops. A sign off policy will assist SALGA to manage all external

stakeholders in a structured manner. The policy being institutionalised will also assist in developing a culture of detailed reporting

on engagements with stakeholders as well as identifying the owners within the organisation.

Quarterly stakeholder engagements were convened with external stakeholders in collaboration with directorates. These

stakeholder engagements were convened to form strategic partnerships with organisations to meet organisational objectives as

outlined in the organisation’s five year strategy.

A stakeholder engagement was held in partnership with the Mail and Guardian to launch the water benchmarking initiative.

Various interested parties in the media, public and private sectors were invited. Ahead of the Auditor-General’s announcement

of audit outcomes, SALGA invited metro communicators to engage with the report to enable them to be ready to respond

to the media. In the build up to the launch of the municipal audit support programme for municipalities in the red zone with

audit outcomes, SALGA held a stakeholder engagement for audit firms to solicit their support for the programme. A strategic

partnership was entered into with Proudly South African aimed at assisting municipalities with complying with legislation relating

to procurement practices. An official signing ceremony was convened to seal the partnership. SALGA entered into an MoU with

Eskom aimed at forging relationships to deal proactively with issues relating to electricity distribution, service level agreements

between municipalities and Eskom and compliance with legislation.

SALGA also joined hands with Rand Water to launch the water conservation fund and launched it to stakeholders as a side event

at the National Members Assembly. The National Members Assembly was also used as a platform to sign an MoU with SASCOC as

well as the Association of Flemish Cities and Municipalities (VVSG).

International relations

During 2014/15 SALGA participated in the following international platforms:

Africities official launch: 17 September 2014

The Africities summit was presented to the office bearers meeting held on 17 September 2014. The official launch took place

on 14 October 2014 in Johannesburg. The theme of the Africities summit in December 2015, to be held in Johannesburg, will

be “Shaping the future of Africa with the people: Africa’s local government contribution to the Africa 2063 vision”.

Smart local governance: 6-7 November 2014, Bilbao, Spain

UN-Habitat´s local government and decentralisation unit contributed to the meeting of the UCLG committee of digital and

knowledge-based cities that took place in Bilbao, Spain, on 6-7 November 2014.

13th International congress of educating cities: 13-15 November 2014

The theme for this congress, which took place on 13-15 November 2014, was “The educating city is an inclusive city”. Through

lectures, presentations of experiences, mayors’ and experts’ round tables, and study tours, the congress dealt with the role of

education, in the broadest sense of the term, as an essential instrument for social inclusion, fostering personal and collective

development and the improvement of social coexistence and solidarity.

Local governments and different social agents and entities in cities are facing the major challenge of working towards social

inclusion from a comprehensive perspective in order to confront social and economic inequality and the inequality of

opportunities affecting different sectors of the population. These inequalities run the risk of deepening the rift given the rapid

pace of change that is being lived through if a decisive effort is not made to stop them.

97

International conference of local authorities in solidarity with the Palestine people: 21-23 November 2014

SALGA, informed by the MoU it signed with the Association of Palestinian Local Authorities (APLA), which seeks among others

to facilitate municipality to municipality support, participated in this conference on 21-23 November 2014 in Ramallah. The

conference was organised by the UN International Year of solidarity with the Palestine People (2014). Its intention was:

To develop and deepen ideas that abound in Palestine and around the world on the Palestinian issue; and

To open new avenues of reflection, to explore and to identify new levers of intervention and of development that could be

implemented at the local level of the territory.

The ambition of the conference was to bring together Palestinian (West Bank, Jerusalem and Gaza) and foreign local actors in

order to promote linkages between them, to bring out new ideas and new initiatives, and to act constructively. Among others

the conference introduced and outlined the beginning of answers on these issues, inspiring new ways of thinking and of

acting, and new dynamics of solidarities.

UCLG world congress: 23-29 November 2014

UCLG world congress marked the 10th anniversary of the creation of United Cities and Local Governance (UCLG), which aims to

be the united voice of local and regional governments at the global level. The congress took place on 23-29 November 2014 in

Haikou, China. Focusing on the general theme “city managements and public service innovation”, delegates of member cities

from across the globe brought together smart ideas and valued experiences that have helped shape the growth of their cities.

BALA conference: 20-22 January 2015

The conference was held under the theme “Unlocking investment opportunities”. The current developmental thinking places

local government at the forefront of developmental issues and in ensuring basic service delivery through the promotion of

inclusive development initiatives from all sectors of the economy.

Delegates from the regional countries brought together smart ideas and valuable experiences that have helped shape the

growth of their cities.

Peer review of local government in England: 15-18 February 2015

The Local Government Association of England and Wales (LGA) requested SALGA’s support in an international peer review of

English cities and city regions. Our participation included a comparison between the local government systems in England

and South Africa. The comparisons included among others, the form, structure, powers, functions and systems of the English

and South African local governments. LGA specifically requested SALGA to facilitate the executive mayor of the City of Joburg

to participate in this process.

UCLG culture summit: 18-20 March 2015

SALGA, through its CEO was invited to the UCLG culture summit “Culture and sustainable cities”, which took place in Bilbao

on 18-20 March 2015 and gave a presentation of the “Activities of SALGA on culture and sustainability” in the parallel session:

“Networks and Agenda 21 for culture” that took place on 19 March 2015.

98

Be

low

are

de

tail

ed

pe

rfo

rma

nce

re

sult

s a

s p

er

the

ke

y p

erf

orm

an

ce in

dic

ato

rs in

th

e 2

01

4/1

5 a

nn

ua

l pe

rfo

rma

nce

pla

n:

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(bo

th o

ve

r

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

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nce

sta

tus

75

56

8O

pe

rati

on

al

exc

elle

nce

mo

de

l

(exe

cuti

ve s

up

po

rt)

rolle

d o

ut

Pro

visi

on

of

org

anis

atio

nal

leg

al

serv

ice

s; fa

cilit

atio

n

and

exe

cuti

on

of e

nte

rpri

se r

isk

man

age

me

nt

pro

cess

es;

cre

ate

awar

en

ess

an

d

visi

bili

ty o

f an

ti-f

rau

d

and

pre

ven

tio

n

pro

cess

es;

imp

rove

d

inte

rnal

co

ntr

ols

for

pro

cess

es

aud

ite

d

20

14

/15

.

De

velo

p a

nd

exe

cute

Le

gal

Pro

toco

l Fra

me

wo

rk,

Co

ord

inat

ed

Le

gal

Sup

po

rt p

rovi

de

d t

o

the

org

anis

atio

n b

y

31

Mar

ch 2

01

5

Faci

litat

e a

nd

de

velo

p D

raft

Ris

k

reg

iste

r fo

r 2

01

5/1

6

by

31

Jan

uar

y 2

01

5

Imp

lem

en

tati

on

of

the

Inte

rnal

Au

dit

Pla

n 2

01

4/1

5 b

y

31

Mar

ch 2

01

5

Re

vive

th

e

imp

lem

en

tati

on

of

the

SA

LGA

an

ti-f

rau

d

pre

ven

tio

n P

lan

by

31

Mar

ch 2

01

5

Le

ga

l:

SALG

A d

eve

lop

ed

an

d e

xecu

ted

a le

gal

pro

toco

l fra

me

wo

rk w

hic

h fo

rme

d

par

t o

f a c

om

pre

he

nsi

ve a

pp

roac

h t

o

eff

ect

ive

ly c

o-r

din

ate

leg

al s

erv

ice

s

in t

he

org

anis

atio

n.

Trai

nin

g w

as

con

du

cte

d o

n t

he

fram

ew

ork

as

we

ll

as t

he

Le

xisN

exi

s

Ris

k m

an

ag

em

en

t:

Ris

k re

gis

ter

for

20

15

/16

was

faci

litat

ed

,

de

velo

pe

d a

nd

su

bm

itte

d t

o C

oG

TA

and

Nat

ion

al T

reas

ury

as

par

t o

f th

e

SALG

A A

nn

ual

Pe

rfo

rman

ce P

lan

20

15

/16

.

Inte

rnal

au

dit

:

The

inte

rnal

au

dit

pla

n w

as

imp

lem

en

ted

th

rou

gh

th

e v

ario

us

aud

its

that

we

re c

on

du

cte

d. Q

uar

terl

y

rep

ort

s w

ere

su

bm

itte

d t

o t

he

au

dit

com

mit

tee

.

An

ti-f

rau

d: T

he

an

ti-f

rau

d h

elp

line

was

mo

nit

ore

d, r

evi

ew

ed

an

d r

ep

ort

ed

to

be

op

era

tin

g s

ucc

ess

fully

.

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

75

56

9P

erf

orm

ance

man

age

me

nt

syst

em

su

stai

ne

d

and

co

nti

nu

ou

sly

imp

rove

d t

rou

gh

mo

nit

ori

ng

an

d

eva

luat

ion

Pe

rfo

rman

ce

man

age

me

nt

syst

em

su

stai

ne

d

and

co

nti

nu

ou

sly

imp

rove

d

Mo

nit

ori

ng

and

eva

luat

ion

for

imp

rove

d

pe

rfo

rman

ce

man

age

me

nt

syst

em

by

31

Mar

ch 2

01

5

SALG

A m

on

ito

red

an

d e

valu

ate

d t

he

imp

rove

me

nt

of t

he

pe

rfo

rman

ce

man

age

me

nt

syst

em

an

d d

eve

lop

ed

qu

arte

rly

asse

ssm

en

t re

po

rts

afte

r

con

clu

sio

n o

f qu

arte

rly

qu

alit

y

assu

ran

ce b

y 3

1 M

arch

20

15

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

99

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

tco

me

20

14

/15

20

14

/15

KP

I2

01

4/1

5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(bo

th o

ve

r

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

75

67

0R

esp

on

sive

ICT

en

viro

nm

en

t

mai

nta

ine

d

Re

spo

nsi

ve IC

T

en

viro

nm

en

t

faci

litat

ed

Pro

vid

e a

nd

mai

nta

in a

sta

ble

and

ad

apta

ble

ICT

en

viro

nm

en

t b

y

31

Mar

ch 2

01

5

A s

tab

le a

nd

ad

apta

ble

ICT

en

viro

nm

en

t w

as p

rovi

de

d a

nd

mai

nta

ine

d b

y 3

1 M

arch

20

15

. All

dig

ine

t lin

es

hav

e b

ee

n u

pg

rad

ed

to

4M

B e

nsu

rin

g fa

ste

r re

spo

nse

tim

es

and

imp

rove

me

nt

on

th

e v

ide

o

con

fere

nci

ng

so

luti

on

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

75

77

18

0%

of S

ALG

A o

ffice

acco

mm

od

atio

n

in c

om

plia

nce

faci

litat

ed

80

% o

f SA

LGA

offi

ce

acco

mm

od

atio

n in

com

plia

nce

wit

h

stru

ctu

ral a

spe

cts

in t

erm

s o

f acc

ess

by

pe

rso

ns

in

wh

ee

lch

airs

80

% o

f SA

LGA

offi

ce

acco

mm

od

atio

n

in c

om

plia

nce

faci

litat

ed

by

31

Mar

ch 2

01

5

SALG

A fa

cilit

ate

d t

he

co

mp

lian

ce w

ith

the

OH

S A

ct. 8

0%

of S

ALG

A o

ffice

acco

mm

od

atio

n c

om

plie

d w

ith

th

e

OH

S A

ct b

y 3

1 M

arch

20

15

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

75

87

2R

ep

osi

tory

of

un

clas

sifi

ed

info

rmat

ion

up

dat

ed

Re

po

sito

ry o

f

un

clas

sifi

ed

info

rmat

ion

.

40

00

0 d

ocu

me

nts

(nat

ion

al o

ffice

)

scan

ne

d t

o t

he

rep

osi

tory

b

y

31

Mar

ch 2

01

5

A t

ota

l of 6

9 7

79

do

cum

en

ts fo

r

20

14

/15

we

re s

can

ne

d a

nd

up

load

ed

into

th

e S

ALG

A r

ep

osi

tory

by

31

Mar

ch 2

01

5

Ove

r

ach

ieve

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A s

erv

ice

pro

vid

er

was

ap

po

inte

d

to a

ssis

t w

ith

th

e

up

load

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on

all

do

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en

ts t

hat

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re n

ot

on

th

e

rep

osi

tory

du

e t

o

in-h

ou

se c

apac

ity

con

stra

ints

Ach

ieve

d

75

97

3D

ete

rmin

e

app

rop

riat

e

inte

rve

nti

on

s fo

r

imp

rove

d c

lien

t

sati

sfac

tio

n

Imp

rove

SA

LGA

’s

me

eti

ng

faci

litie

s.

Imp

lem

en

tati

on

of

an o

nlin

e s

yste

m

for

bo

ard

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m

bo

oki

ng

s b

y

31

Mar

ch 2

01

5

An

ele

ctro

nic

on

line

bo

ard

roo

m

bo

oki

ng

sys

tem

was

de

velo

pe

d a

nd

imp

lem

en

ted

by

31

Mar

ch 2

01

5

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

100

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

Ou

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me

20

14

/15

20

14

/15

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5 t

arg

et

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20

14

/15

Va

ria

nce

(bo

th o

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nd

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ach

iev

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)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

76

07

4St

ake

ho

lde

r

man

age

me

nt

stra

teg

y ro

lled

ou

t

Stak

eh

old

er

man

age

me

nt

stra

teg

y ro

ll o

ut

Qu

arte

rly

rep

ort

ing

agai

nst

th

e r

oll

ou

t

of t

he

sta

keh

old

er

man

age

me

nt

stra

teg

y b

y 3

1 M

arch

20

15

Qu

arte

rly

rep

ort

s ag

ain

st t

he

ro

ll o

ut

of

the

sta

keh

old

er

man

age

me

nt

stra

teg

y

we

re d

eve

lop

ed

by

31

Mar

ch 2

01

5

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

76

17

5SA

LGA

go

vern

ance

stru

ctu

re s

up

po

rt

mo

de

l im

ple

me

nte

d

Effe

ctiv

e a

nd

fun

ctio

nin

g

go

vern

ance

stru

ctu

res

NO

B/N

EC r

ece

ive

s

two

re

po

rts

(M&

E) o

n t

he

imp

lem

en

tati

on

of t

he

go

vern

ance

sup

po

rt m

od

el a

s

pe

r th

e S

ALG

A y

ear

-

pla

nn

er

20

14

/15

by

31

Mar

ch 2

01

5

NO

B r

ece

ive

d t

he

ass

ess

me

nt

rep

ort

s

on

th

e im

ple

me

nta

tio

n o

f th

e

go

vern

ance

su

pp

ort

mo

de

l as

pe

r th

e

SALG

A y

ear

-pla

nn

er.

The

re

po

rts

we

re

tab

led

at

NO

B o

n 1

6 M

arch

20

15

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

76

27

6M

arke

tin

g a

nd

com

mu

nic

atio

n

pla

n 2

01

4/1

5

imp

lem

en

ted

Imp

lem

en

tati

on

of m

arke

tin

g a

nd

com

mu

nic

atio

n

pla

ns

Qu

arte

rly

rep

ort

on

imp

lem

en

tati

on

of t

he

20

14

/20

15

nat

ion

al m

arke

tin

g

and

co

mm

un

icat

ion

pla

ns

by

31

Mar

ch

20

15

Qu

arte

rly

rep

ort

s o

n t

he

imp

lem

en

tati

on

of t

he

mar

keti

ng

an

d

com

mu

nic

atio

n p

lan

s w

ere

de

velo

pe

d

de

taili

ng

all

acti

viti

es

un

de

rtak

en

du

rin

g t

he

co

urs

e o

f th

e q

uar

ters

by

31

Mar

ch 2

01

5

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

76

37

7U

nq

ual

ifie

d a

ud

it

op

inio

n fo

r 2

01

4/1

5

ob

tain

ed

Tran

slat

ing

th

e

SALG

A s

trat

eg

ic

pla

n in

to a

qu

alit

y

assu

red

an

nu

al

pe

rfo

rman

ce p

lan

tow

ard

s ac

hie

vin

g

imp

act

in t

he

loca

l

go

vern

me

nt

sect

or

Pla

nn

ing

an

d

rep

ort

ing

ag

ain

st

pre

-de

term

ine

d

targ

ets

co

ord

inat

ed

by

31

Mar

ch 2

01

5

Pla

nn

ing

an

d r

ep

ort

ing

ag

ain

st p

re-

de

term

ine

d t

arg

ets

was

co

ord

inat

ed

on

a q

uar

terl

y b

asis

.

SALG

A c

on

tin

ue

d t

o c

om

ply

wit

h t

he

req

uire

me

nts

of t

he

Nat

ion

al T

reas

ury

fram

ew

ork

for

the

de

velo

pm

en

t o

f

stra

teg

ic a

nd

an

nu

al p

erf

orm

ance

pla

ns.

Qu

arte

rly

rep

ort

s h

ave

be

en

su

bm

itte

d

to C

oG

TA a

nd

Nat

ion

al T

reas

ury

as

pe

r

the

tim

efr

ame

s st

ipu

late

d b

y N

atio

nal

Tre

asu

ry

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

101

Go

al

Targ

et

nu

mb

er

KP

I

nu

mb

er

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me

20

14

/15

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14

/15

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01

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5 t

arg

et

An

nu

al r

esu

lt

20

14

/15

Va

ria

nce

(bo

th o

ve

r

an

d u

nd

er

ach

iev

ed

)

Re

aso

n f

or

va

ria

nce

Pe

rfo

rma

nce

sta

tus

76

37

8U

nq

ual

ifie

d a

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it

op

inio

n fo

r 2

01

4/1

5

ob

tain

ed

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qu

alifi

ed

au

dit

op

inio

n fo

r 2

01

4/1

5

ob

tain

ed

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qu

alifi

ed

au

dit

op

inio

n fo

r 2

01

4/1

5

ob

tain

ed

Un

qu

alifi

ed

au

dit

op

inio

n w

as

ob

tain

ed

for

20

14

/15

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

76

47

92

01

5/1

6 B

ud

ge

t

alig

ne

d t

o

org

anis

atio

nal

stra

teg

ic o

bje

ctiv

es

Bu

dg

et

alig

ne

d

to o

rgan

isat

ion

al

stra

teg

ic o

bje

ctiv

es

Bu

dg

et

alig

ne

d

to o

rgan

isat

ion

al

stra

teg

ic o

bje

ctiv

es

by

31

Jan

uar

y 2

01

5

SALG

A’s

bu

dg

et

was

alig

ne

d t

o

org

anis

atio

nal

str

ate

gic

ob

ject

ive

s b

y

31

Jan

uar

y 2

01

5.

A b

ud

ge

t fo

rum

was

he

ld o

n 1

9

No

vem

be

r 2

01

4 t

o d

iscu

ss t

he

20

15

/16

bu

dg

et

allo

cati

on

an

d t

o e

nsu

re t

hat

the

bu

dg

et

is a

lign

ed

acc

ord

ing

to

SALG

A p

rog

ram

me

s an

d s

trat

eg

ic

go

als.

Th

e b

ud

ge

t h

as b

ee

n p

rep

are

d

wit

h t

ran

spar

en

cy a

nd

in li

ne

wit

h

Nat

ion

al T

reas

ury

te

mp

late

s an

d

gu

ide

line

s.

No

t

app

licab

le

No

t ap

plic

able

A

chie

ved

76

58

0C

apac

itat

ed

bu

sin

ess

un

its

en

sure

d

Fun

de

d v

acan

t p

ost

s

fille

d in

ord

er

to

bu

ild o

rgan

isat

ion

al

cap

acit

y to

imp

rove

sup

po

rt t

o S

ALG

A

me

mb

ers

70

% o

f fu

nd

ed

vaca

nt

po

sts

fille

d b

y

31

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ch 2

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104

Mandela Day

105

PART D: HUMAN RESOURCE MANAGEMENT

106

1. INTRODUCTION

Our employees are SALGA’s key resource. SALGA recognises that the sustainability of the organisation also depends on providing

fair remuneration, benefits, working conditions and development opportunities that will attract and retain the right people with

the right skills in order to execute the developmental mandate of the organisation.

The period under review marks a time where several human resources initiatives were implemented or improved to support

and underpin the organisation’s strategic goals. With the focus being on establishing SALGA as centre of excellence, and on the

attraction and retention of staff, the following marks some highlights during the period under review:

Implementation of service benefits to all staff;

Converting the nature of employment contracts from fixed term to permanent for all employees, excluding senior

management;

Full automation of the individual performance management system;

Entering into an agreement with LGSETA to fund internships; and

Executive skills development interventions.

1.1 Talent acquisition

As at the end of the financial year, SALGA had a staff complement of 428 employees of whom 162 are employed at the national

office in Pretoria, with the rest of the staff spread across the nine provincial offices. Senior SALGA appointees undergo psychometric

assessments to ensure proper skills fit. In realising SALGA’s uniqueness as an organisation, it is important to have a focused job

market and to expand its recruitment efforts to social media. The breakdown of the staff complement of 428 is reflected below:

Workforce profile per business units (excl. temporary staff)

Directorate / province Number of employees

Office of the CEO (including CSR) 38

Finance and Corporate Services 68

Municipal Institutional Development 17

Municipal Infrastructure and Services 11

Municipal Finance 6

Governance and IGR 11

Economic Development and Planning 8

Community Development 9

Eastern Cape 32

Free State 33

Gauteng 29

Mpumalanga 24

North West 26

Northern Cape 27

Limpopo 29

Kwazulu Natal 28

Western Cape 32

Total 428

107

TERMINATION CATEGORIES

All Terminations Resignations Retirement Death End Contract

35

30

25

20

15

10

5

0

32

27

12 2

ETHNIC GROUPS

AFRICANS INDIANS COLOUREDS WHITES

120%

100%

80%

60%

40%

20%

0%

100% 100% 100% 100%

33%

50%

1% 1% 3% 3% 3% 3%

All positions filled

Males

Females

1.2 Individual performance management

The individual performance management system transcended into the use of an automated, user-friendly system during 2014/15.

Various training and informative workshops were held across the organisation to thoroughly inculcate the process. All reviews

and coaching sessions for 2014/15 were successfully completed electronically. This automation enables faster processing of

performance results and ensuring credible performance reports. These efficiencies allow for the expertise in SALGA to have more

time to focus on the execution of day to day responsibilities in responding to the needs of members and the sector generally.

The behaviour’s charter, which enhances individual performance management was implemented for executive management

and will be rolled out to all staff in the next financial year. Several awareness workshops were held throughout the organisation to

ensure that SALGA fosters a workforce with professional, value-driven behaviour amongst employees. A proper link between the

behaviour’s charter and SALGA’s values were drawn.

108

1.3 Labour relations compliance

1.3.1 Employment equity within SALGA

In an effort to comply with the labour relations Act, SALGA has an existing Employment Equity Committee which meets on a

quarterly basis. The purpose of the committee is to discuss matters such as equity in the workplace, discrimination, disability,

promotion, fair remuneration, disability and others as required by legislation. SALGA’s EE forum was amended to incorporate

skills development committee and is now known as the employment equity skills development consultative forum (EESDCF).

The purpose of adding skills development was to ensure compliance with legislation in terms of the Skills Development Act

and Employment Equity Act. It was also important that SALGA as a learning organisation invests in its staff as part of employee

umpliftment.

1.3.2 Employment equity workforce profile

The table below reports the total number of employees (including employees with disabilities) in each of the following occupational

levels:

Occupational levels Male Female Foreign nationals Total

A C I W A C I W Male Female

Top management 10 - 1 - 3 - 2 2 - - 18

Senior management 9 1 1 2 6 - - 2 - - 21

Professionally qualified and

experienced specialists and mid-

management 45 4 2 4 37 1 3 3 - 1 100

Skilled technical and academically

qualified workers, junior

management, supervisors, foremen,

and superintendents 55 6 1 4 72 7 2 4 1 1 153

Semi-skilled and discretionary

decision making 11 - - - 72 4 1 9 - - 97

Unskilled and defined decision

making 9 - - - 17 3 - - - - 29

Total permanent 139 11 5 10 207 15 8 20 1 2 418

Temporary employees 5 - - - 4 - - - - - 9

Grand total 139 11 5 10 207 15 8 20 1 2 437

Note: A=Africans, C=Coloureds, I=Indians and W=Whites

109

The table below reports the total number of employees with disabilities only in each of the following occupational levels:

Occupational levels Male Female Foreign nationals Total

A C I W A C I W Male Female

Top management - - - - 1 - - - - - 1

Senior management - - - - - - - - - - -

Professionally qualified and

experienced specialists and mid-

management - - - - - - - - - - -

Skilled technical and academically

qualified workers, junior

management, supervisors, foremen,

and superintendents - - - - - 1 - - - - 1

Semi-skilled and discretionary

decision making 1 - - - - - - - - - 1

Unskilled and defined decision

making - - - - - - - - - - -

Total permanent 1 - - - 1 1 - - - - 3

Temporary employees - - - - - - - - - - -

Grand total 1 - - - 1 1 - - - - 3

1.4 Employee relations

The employee relations function is designed to ensure that there is a sound relationship between employer and employees. SALGA’s

processes are designed to ensure fairness when it comes to issues of discipline and grievances, in addition it is a mechanism that

makes provision for collective bargaining. Ordinarily it is expected that each employer should provide for an effective employment

relations process. To this effect SALGA has an employment management relations policy which makes provision for the SALGA

code of conduct, grievance procedure, disciplinary procedure, appeals procedure and dispute procedure.

SALGA has established a fraud hotline which is managed by SizweNtsalubaGobodo. Matters referred to the fraud hotline for further

investigation are also dealt with by the employee relations unit. SALGA strives to always comply with the policy and adheres to

the timeframes as stipulated. Below is a graphic representation of cases that SALGA honoured during the current reporting period.

Implementation of employee service benefits

Number of disputes

0 2 4 6 8 10 12 14

Labour Court

Disputes (CCMA)

Appeals

Grievance

Investigation

Formal Disciplinary cases (Final Written Warning,

Demotion and Dismissals)

Progressive Disciplinary cases (Counselling, Verbal

Warning & Written Warnings)

Note: A=Africans, C=Coloureds, I=Indians and W=Whites

110

Effective from 1 April 2014, SALGA implemented service benefits to its employees and converted the nature of employment of

employees at manager levels and below to permanent positions. By offering benchmarked service benefits, SALGA is able to

position itself as a competitive employer of choice. The benefits offering also serves as an attraction and retention measure. The

following benefits were introduced:

Medical aid,;

Pension fund; and

Group risk cover.

1.5 Skills development

SALGA is a learning organisation that believes in investing in the development of its workforce. Employees are continuously

exposed to learning interventions aimed at equipping them with skills, knowledge and abilities required to meet the needs of

SALGA’s main clients, its member municipalities.

As per the relevant legislative requirements of the Skills Development Act, SALGA is required to annually submit a workplace skills

plan (forecast of training interventions to be implemented) as well as annual training report (ATR) to the LGSETA. This report reflects

how the skills budget was utilised for SALGA to be eligible for discretionary grants from the LGSETA to further develop its staff and

interns.

For the current reporting period a total of 27 skills development interventions were implemented and four conferences/workshops

were attended. Fourbhundred and two employees across job levels were trained on the different short course/skills programmes.

During this reporting period, study assistance was awarded to 48 officials who are doing Doctorate, Masters, Degrees, Diplomas,

Certificates and Matric.With the conversion of employment contracts SALGA also amended its study assistance policy to enable

more employees the opportunity to study or further their academic qualifications. It is very encouraging to see the enthusiasm

of SALGA employees in aspiring to improve their existing qualifications. SALGA registered 13 employees with seven professional

bodies. The following statistics depict the training programmes conducted from July 2014, until the end of March 2015.

111

2014/15 Summary of number of employees trained and inducted

National view

450

400

350

300

250

200

150

100

50

0

Number of employees trained

Training programmes delivered

Study assistance

Induction programme

400 31 48 50

Employment equity and gender: annual training report

Number of employees per race and gender

450

400

350

300

250

200

150

100

50

0

Total number trained

Africans

Whites

Coloureds

Indians

Males

Females

402

340

2226

9

151

245

112

2014/15 Types of qualifications being studied

Qualifications

50

45

40

35

30

25

20

15

10

5

0

Qualifications: Study Assistance

Masters

PhD

Degrees

Diploma

Certificates

Matric

48

9

1

21

10

2 1

Training programmes conducted in 2014/15

Training Programmes Number of attendees

Writing Queries 1

Cisco Network 1

Cobit 5. Foundation 1

File Plan and Records Development 13

Fiscal Decentralisation 3

MS Office 16

Project Management 14

Strike Handling 9

Supervisory Training 8

Compliance Course 1

Measuring ROI in Training 1

Minute Taking 42

2nd Annual HR Standards 2

Hazard Identification & Risk Assessment 22

Report Writing 29

Telephone & Reception Training 4

Public Speaking and Presentation Training 88

Planning ( Conference) 3

Coaching and Mentoring 18

Company Secretary course 1

CIPS Assessments Skills 8

Office Management 19

Job Analysis 4

Asset Management 2

EE Training 12

ABET 22

Monitoring and Evaluation 15

113

Training Programmes Number of attendees

Finance for Non-Financial Managers 9

Strategic Management 11

Fire Fighting Training 23

Total 402

1.6 Employee wellness programme

SALGA embarked on an extensive drive to ensure wellness of its employees. SALGA provides the services of Independent

Counselling and Advisory Service (ICAS) to its employees at no cost to the employees. The uptake by staff in the utilisation of ICAS

was above average during the year under review. Counselling, whether telephonic or face-to-face, group counselling sessions

and an array of other methods, form part of the ICAS offering and are aimed at providing professional assistance with matters that

might hinder an employee from performing optimally in the workplace. Other physical wellness and employee bereavement

support services are also offered to staff.

SALGA firmly promotes a healthy work life balance amongst its staff members. In support of this, several other initiatives in addition

to the employee assistance programme were presented.

The following graph illustrates the employee wellness activities for 2014/15:

Table 1.2

EWP activities

Wellness day

Blood drive

Emotional Impact Session

Personal financial

management training

TB Awareness Session

Women’s Month Activities

16 Days of No Violence

Against Women and Children

Sports Day

510

11

1

1

10

10

1.7 Employee recognition awards

The employee recognition awards is SALGA’s way of recognising excellence in employees. Employees who both perform well, and

also go the extra mile while executing the mandate of SALGA, are nominated by their fellow staff members in order to become

eligible for an award. Recognition is an important component in the HR value chain. A formal recognition programme such as

SALGA’s employee recognition awards serves as a catalyst to encourage even more outstanding work amongst employees. SALGA

furthermore promotes the concept of working collaboratively in a team as well as forming multi-disciplinary teams to achieve a

certain strategic objective. A reward category recognising and rewarding the best team was therefore included in the awards

categories.

114

1.8 Occupational health and safety

A formal occupational health and safety (OHS) committee serves within SALGA. Apart from the fact that this is a legislative

requirement, SALGA is committed to the provision of a safe and healthy work environment to its employees. The OHS committee

carries out regular inspections on OHS requirements. Reports on the committee’s findings are presented to the executive members.

All OHS representatives attend regular training interventions such as hazard identification and risk assessment and rire emergency

drill training to ensure that they are prepared to act in an emergency situation.

Through its commitment to human resources processes, SALGA has managed to establish a strong employee value proposition.

When concerted efforts between SALGA, its staff and stakeholders come to fruition, it aids in positioning the organisation as

an employer of choice, a high performance organisation which continuously challenges the status quo. In order to continue

rendering an impeccable service to its members, SALGA ensures that best practice principles are incorporated into all employment

practices within the organisation.

115

PART E: ANNUAL FINANCIAL STATEMENTS

117

w

Nceba Mqoqi

Chief Financial Officer

OVERVIEW OF OPERATING RESULTS

The year under review is characterised by a solid financial performance with a net surplus margin of 4.0 percent (2014: 9.8 percent)

that has led to the organisation’s financial position becoming more stable and secure with an asset coverage rate of 20 times

(2014: 40 times). The operating results for the year ended 31st March 2015 reflect a surplus of R 18.7 million (2014: R 39.0 million)

representing a reduction of 52.1 percent (2014: 12.8 percent).

The major contributing factor to the reduction in surplus is due to an increase in programme costs i.e. costs incurred for service

delivery to SALGA’s membership in pursuance of the organisation’ s mandate, namely: (i) lobbying; advocacy and representation;

(ii) employer role; (iii) capacity building; (iv) providing support and advice; (v) strategic profiling of the local government sector and

(vi) knowledge and information sharing.

Gross programme costs i.e. inclusive of ‘direct programme costs’ such as direct employee costs necessary for service provision to

members and ‘indirect programme costs’ such as costs incurred in the actual service provision to members have increased by

22.8 percent to R 298.9 million (2014: R 243.5 million).

Relative to total operating expenditure gross programme costs comprise 62.3 percent (2014: 62.5 percent).

The 2014/15 financial year is characterised by advances made in the area of improvement in conditions of service for SALGA

employees, in that, in the financial period under review SALGA introduced employee benefits as well as converted fixed term

contracts of employment for employees below the level of director to permanent. The effect of the introduction of employee

benefits has impacted SALGA’s statement of financial performance with an additional expenditure of R 29.6 million.

The employee benefits introduced entail the following:

Pension fund - an employer contribution based on 10.5 percent p.a. of an employee’s basic or pensionable salary towards

pension and/or retirement funds. Employees are required to contribute a corresponding contribution of 6.5% p.a. based

on their basic or pensionable salary.

Medical aid - an employer contribution capped at R 2 028 per month per employee. The contribution amount is reviewed

annually depending on prevailing medical insurance inflation.

Group risk - an employer contribution that covers funeral benefit for the employee at a cost of R20 per employee per

month to the organisation and immediate family members. The risk cover also includes life assurance cover at 2 times an

employee’s annual pensionable salary in case of death. The risk cover is based on 1.45 percent of SALGA’s basic payroll costs.

The above mentioned initiatives are to ensure that SALGA attracts and retains top talent; its remuneration philosophy is aligned

with the organisation’s strategy; and drives sustainable performance in the long-and short-term.

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The solid performance was attributable to revenue (excl. interest) growth of 19.1 percent to R 489.6 million (2014: R 411.1 million).

The growth in revenue has been boosted by a strong growth in membership levies that have grown by 18.5 percent to

R 429.1 million (2014: R 362.2 million) as a result of the review of the membership levy formula and organic growth.

KEY FINANCIAL INDICATORS

REVENUE

Revenue for the year (excl. interest) amounts to R 489.6 million (2014: R 411.1 million).

Operating revenue

The organisation is primarily funded by membership levies that are levied to member municipalities. For the year under review,

membership levy revenue remained the main source of revenue for SALGA with membership levies comprising 88 percent

(2014: 88 percent) of total revenue.

- Membership Levy revenue 429.1 362.2

- Government grant - Executive Authority 26.9 26.0

- Direct programme costs as a percentage of employee related costs 78% 79%

- Administrator employee costs as a percentage of employee 22% 21%

- Indirect programme costs as a percentage of operating expenses 19% 24%

- Gross programme costs as a percentage of operating expenses 63% 65%

- Total employee related costs as a percentage of operating expenses 57% 53%

Profitability - Net surplus margin 4.0% 9.8%

Liquidity ratio - Current ratio 180% 187%

Solvency ratio - Solvency ratio 1.99 2.08- Debt /Equity ratio 5.3% 7.8% - -Asset coverage rate (times) 20 14

Activity ratio - Debtor collection period after impairment (days) 28 26- Debtor collection period before impairment (days) 62 48- Membership levy payment levels rate(%) 87% 92%Exclude depreciation and amortisation

Financial Indicators 2015 2014

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Operating revenue distribution is as follows:

88%

5%3%

0% 1%3%

Operating revenue distribution per category - 2015

Rendering of services - Membership leviesTransfers and subsidies - Executive AuthorityRevenue from non-exchange transactions¹Donor funds recognisedRevenue from capacity building programmesOther revenue

88%

6%0%

2% 1% 3%

Operating revenue distribution per category - 2014

Rendering of services - Membership leviesTransfers and subsidies - Executive AuthorityRevenue from non-exchange transactions¹Donor funds recognisedRevenue from capacity building programmesOther revenue

The applicable membership levy formula for the year under review and ensuing financial years is as follows:

Metropolitan municipalities Flat rate plus CPI and 1 percentage point

Local and district municipalities 1% of annual salary budget with a minimum of R500 000

The operating grant from the Executive Authority (Department of Cooperative Governance and Traditional Affairs) has increased by

3.5 percent to R 26.9 million (2014: R 26.0 million) as part of national government cost-cutting measures.

The strong growth in revenue has also been buoyed by an increase of over 14.6 percent in ‘revenue from non-exchange transactions’

to R 39.2 million (2014: R 34.2 million).

The ‘other revenue’ category also includes recoveries in the form of delegate fees for attendance of SALGA’s governance structures

at R 15.1 million (2014: R 6.0 million).

Operating revenue composition:

Operating revenue

R million 2015 2014 % change

Rendering of services - Membership levies 429.1 362.2 18.5

Transfers and subsidies - Executive Authority 26.9 26.0 3.5

Revenue from non-exchange transactions 12.3 1.4 758.4

Donor funds recognised 1.8 6.2 (70.9)

Revenue from capacity building programmes 2.4 4.1 (41.6)

Other revenue 17.1 11.1 53.4

Total operating revenue 489.6 411.1 19.1

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Membership levy payment level rate

As membership levy revenue comprises the majority of SALGA’s revenue stream, the payment levels rate for membership levies

remains the most important key performance indicator for the organisation as it determines the tempo for programme rollout and

the organisation’ s operational sustainability.

As at 31 March 2015 the payment levels for membership levies stood at 88 percent (2014: 92 percent). The collection rate for the

current year remained within budget at 90 percent (2014: 94 percent).

The provincial split for payment levels rates as at 31 March 2015 and the prior year are tabulated below:

Payment levels rate provincial distribution

2015 2014

Province

Current

year Overall

Current

year Overall

Eastern Cape 88 85 92 88

Free State 83 82 91 92

Gauteng 96 96 97 99

KwaZulu-Natal 90 86 95 90

Limpopo 94 96 95 96

Mpumalanga 91 92 93 95

Northern Cape 74 67 82 77

North West 87 85 92 94

Western Cape 97 96 96 96

Organisational payment levels rate 90 88 94 92

Overall membership levy payment level rate:

20122013

20142015

89%87% 92% 88%

Perc

enta

ge

Year

Membership levy payment levels rate

-4%

Overall membership levy payment levels rate

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The cumulative monthly interval of payment levels for the 2014/2015 as well as 2013/2014 financial years are illustrated below.

The key feature of the payment level curve for the 2014/15 financial year is that a cumulative payment levels rate of 61 percent

was achieved at the constitutional due date of 31 July 2015 i.e. more than half of members had settled their membership levies.

A salient feature of the payment levels curve for 2014/2015 is that a cumulative payment levels rate of 84 percent was achieved at

30 September 2014 versus 67 percent at 30 September 2013.

The reduction in the cumulative payment levels rate at 31 March 2015 from 90 percent to 88 percent for the year is due to the

raising of additional membership levy invoices in March 2015 as a result of the revenue assurance exercise undertaken annually.

In terms of the SALGA’s constitution (2012) membership levies are billed on 1 April and payable on 31 July each year, meaning that

ideally by 31 July the payment levels should be 100 percent. However, as a result of some struggling members that are dependent

on an equitable share for their financial viability this is not always possible.

EXPENDITURE

Total operating expenditure (excl. finance cost) for the year increased by 27.8 percent to R 482.9 million (2014: R 377.8 million).

Total operating expenses

As mentioned above, the growth in operating expenditure is driven by the growth in direct programme costs i.e. programme

related employee costs as part of building adequate internal capacity geared towards servicing SALGA’s membership directly.

Thus in an effort to be a more member-centric organisation, the growth in employee related costs is 38 percent to R 270.1 million

(2014: R 195.8 million).

Employee related costs split between direct programme cost and administrative support costs


Employee related costs 270.1 195.8 38.0

– Direct programme costs 210.6 154.9 36.0

– Administrative support 59.5 40.9 45.5

Included in the employee related cost is direct programme cost that is employee cost geared towards service delivery to members

and direct support to SALGA’s membership of R 210.6 million (2014: R 154.9 million). The portion relating to administration support

to SALGA’s core business is R 59.5 million (2014: R40.9 million).

As indicated above, SALGA also introduced employee benefits during the year and the additional expenditure incurred on

employee benifits amounts to R 29.6 million.

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Employee headcount grew by 13.2 percent to 437 employees as at 31 March 2015 (2014: 386 headcount).

Indirect programme costs which are incurred as part of discharging SALGA’s mandate to its members decreased by 0.4 percent to

R 88.3 million (2014: R 88.7 million).

Operating expenditure distribution is as follows:

12%

62%

11%

2%

13%

Operating expenditure distribution per category -2015

Employee related costs (administrative support)Programme costs (direct and indirect)Administrative overheadsDepreciation and amortisationOther operating expenses

11%

64%

9%

1%15%

Operating expenditure distribution per category -2014

Employee related costs (administrative support)Programme costs (direct and indirect)Administrative overheadsDepreciation and amortisationOther operating expenses

Programme related expenditure comprise the bulk of total expenditure incurred, for the year under review. The ratio of programme

related expenditure is 61.9 percent (2014: 64.5 percent).

Operating expenditure split between programme and other expenditure Distribution %

R million 2015 2014 % change 2015 2014

Gross programme costs (direct and indirect) 298.9 243.5 22.8 61.9 64.5

Other operating expenses 184.0 134.3 37.0 38.1 35.5

Total operating expenditure 482.9 377.8 27.8 100.0 100.0

The growth in membership levies of 18.5 percent, is primarily directed or utilised by activities that are geared towards servicing

SALGA’s membership. This is illustrated by a R 54.4 million growth (representing 22.8 percent) in gross programme expenditure.

Other expenditure growth is R 49.7 million (representing 37 percent).

Operating expenditure composition by category:

Operating expenditure by category


Employee related costs (administrative support) 59.5 40.9 45.5

Programme costs (direct and indirect) 298.9 243.5 22.8

Administrative overheads 54.4 32.8 65.9

Depreciation and amortisation 7.4 5.0 48.0

Other operating expenses¹ 62.6 55.6 12.6

Total operating expenditure 482.9 377.8 27.8

¹ -Operating expenditure excludes finance costs.

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Operating expenditure composition by economic classification:

Operating expenditure by economic classification


Employee related costs 270.1 195.8 38.0

Programme costs (indirect) 88.3 88.7 (0.4)

Administrative overheads 54.4 32.8 65.9

Depreciation and amortisation 7.4 5.0 48.7

Other operating expenses ¹ 62.6 55.6 12.5

Total operating expenditure 482.9 377.8 27.8

NON-OPERATING REVENUE AND EXPENDITURE

The net non-operating revenue grew by over 100 percent to R 12.0 million (2014: R 5.7 million).

Non-operating revenue

Investment revenue increased by 97.1 percent to R 13.1 million (2014: 6.7 million),. The strong growth has been buoyed by

investment revenue earned through investment of positive cash balances due to steady payment levels rate for membership

levies being maintained. Finance costs remained steady at R 1.1 million with a negligible growth of 16 percent.

Non-operating revenue composition:

Net non-operating revenue


Investment revenue 13.1 6.7 95.5

Finance costs (1.1) (1.0) 10.0

Net non-operating income 12.0 5.7 110.5

OPERATING SURPLUS

SALGA’s primary objective is not the pursuit of a surplus. However, as a result of sound financial management practices and a

rigorous procurement system, the organisation has been consistent in extracting value for money whilst delivering services to its

membership.

Operating Surplus

The operating surplus for the year decreased by 52 percent to R 18.7 million (2014: R 39.0 million) mainly due to an increase in

programme costs i.e. costs incurred for service delivery to SALGA’s membership in pursuance of the organisation’s mandate as well

as improving SALGA employees’ conditions of service with the introduction of employee benefits.

¹ - Operating expenditure excludes finance costs.

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20132014

2015

43.6

39.0

18.7

R m

illio

n

Year

Operating surplus

-52%

COMPARISON OF ACTUAL OPERATING RESULTS AGAINST ADJUSTED BUDGET

The SALGA budget is prepared on an accrual basis which is comparable with the financial statements. The original budget for the

2014/2015 financial year was approved by the Accounting Authority on 30 January 2014. The first adjusted budget for the 2014/15

financial year was approved by the Accounting Authority on 9 January 2015 and the final adjustment budget for 2014/15 was

approved with the annual financial statements on 26 May 2015.

The budgets mentioned above cover the periods 1 April 2014 to 31 March 2015.The budget is prepared on the accrual basis using

a classification based on the nature of expenses in the statement of financial performance.

Comparison of actual operating results against adjusted budget

2015

R million Actual Budget Variance Variance %

Revenue 489.6 484.6 5.0 1.0

Expenses (482.9) (483.7) 0.8 0.2

Non-operating revenue 12.0 3.6 8.4 230.1

Operating surplus 18.7 4.5 14.2 313.3

The operating surplus for the year ended 31 March 2015 is R 18.7 million versus the budgeted R 4.5 million resulting in a positive

variance of R 14.2 million.

An explanation of salient line items contributing to variances per major category are explained below:

Revenue

In revenue, the prominent positive variance is attributable to the following:

Other revenue from exchange transactions - the positive variance is due to the over recovery for the convening of SALGA

governance structures with more delegates attending than expected as well as the recovery of costs for the TASK Job

Evaluation that is being rolledout to member municipalities.

Sponsorships and donations - the positive variance is largely due to sponsorship realised for the hosting of SALGA

governance structures exceeding expectations.

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Expenditure

The prominent line item contributing to the positive variance in expenditure is the ‘indirect programme costs that results in several

positive variances and in aggregate contribute to the R 1.2 million positive variance. The positive variance was realised due to

budgetary control together with measures to contain escalating costs further emphasised by the National Treasury Instruction

Note 1 of 2013/14 on cost containment measures.

Non-operating income

Investment income - the positive variance is mainly due to improved cash holding as a result of membership levy collections being

realised early due to the early settlement discount strategy adopted as well as the better rates negotiated with our bankers.

A comparison of actual operating results against adjusted budget is illustrated below:

R 0.0 R 50.0 R 100.0 R 150.0 R 200.0 R 250.0 R 300.0 R 350.0 R 400.0 R 450.0 R 500.0

Revenue

Expenses

Non-operating revenue

R 489.6

R 482.9

R 12.0

R 484.6

R 483.7

R 3.6

R million

Comparison of actual operating results against adjusted budget

Budget Actual

Capital budget

Capital additions for the year ended 31 March 2015 amount to R 7.5 million versus the adjusted budget of the same amount

resulting in nil variance.

Comparison of capital expenditure against adjusted budget


Capital acquisitions¹ 7.5 8.7 (13.8)

¹ - including intangible assets and property, plant and equipment.

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FINANCIAL POSITION

Statement of financial position


Current Assets 192.4 146.7 31.2

Non-Current Assets 32.1 32.0% 0.5

Total Assets 224.6 178.6 25.7

Current Liabilities 107.2 78.7 36.2

Non-Current Liabilities 5.8 7.1 (18.3)

Total Liabilities 113.1 85.8 31.8

Net Assets 111.5 92.8 20.2

Net assets

The financial position of the organisation as at 31 March 2015 reflects positive net assets of R 111.5 million (2014: R 92.8 million). The

growth in ‘net assets’ is due to the strong financial performance in the year under review.

In terms of solvency the organisation is solvent with a Debt/Equity ratio of 5.3 percent (2014: 7.8 percent) indicating an adequate

asset coverage rate of 20 times (2014: 14 times).

Also refer to the Accounting Authority’s going concern considerations or assessment for the organisation included in its the report.



Cash and cash equivalents 154.4 116.5 32.6

Other current assets 38.0 30.2 26.0

Investment property 6.6 5.9 11.9

Property, plant and equipment 23.9 24.4 (2.1)

Other non-current assets 0.6 0.6 (5.8)

Other financial assets 1.0 1.0 -

Total Assets 224.6 178.6 25.7

Other current liabilities 96.3 69.9 37.8

Unspent conditional grants and receipts 1.8 4.8 (62.5)

Provisions 7.1 - -

Deferred revenue 2.1 3.9 (46.6)

Current Liabilities 107.2 78.6 36.4

Non-Current Liabilities 5.8 7.1 (20.5)

Total Net Assets 111.5 92.8 20.2

Current assets

Current assets increased by 31.2 percent to R 192.4 million (2014: R 146.7 million). The growth has been propelled by the growth in

revenue and cash collections improved.

Current assets are comprised primarily by ‘Cash and cash equivalents’ at R 154.4 million (2014: R 116.5 million) and followed by

‘Other current assets’ at R 38.0 million (2014: R 30.2 million).

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‘Cash and cash equivalents’ increased by 32.6 percent mainly due to a steady payment levels rate that increased significantly over the

2nd half of the financial year as a result of vigorous debt procedures.

Included in ‘other current assets’ is ‘Trade and other receivables’ that increased by 25.4 percent to R 33.8 million (2014: R 26.9 million) as

a result of increased membership levy revenue. Outstanding receivables comprise 6.9 percent (2014: 6.6 percent) of total revenue.

In terms of liquidity the current ratio is positive and exceeds current liabilities resulting in a ratio of 180 percent (2014: 187 percent).

Non-current assets

Non-current assets grew by 0.5 percent to R 32.1 million (2014: R 32.0 million) as a result of investment in operating capital.

Capital expenditure


Capital acquisitions¹ 7.5 8.7 (13.8)

¹ - including intangible assets.

Asset additions for the period, inclusive of intangible assets, amounts to R 7.5 million (2014: R 8.7 million) which aligns with the

growth in employee headcount from 386 as at 31 March 2014 to 437 at 31 March 2015.

Current liabilities

Current liabilities are comprised primarily by ‘Trade and other payables’ at R 92.3 million (2014: R 67.1 million). These are trade creditors

and accruals that are payable in the ordinary course of business, usually 30 days from statement date or fulfilment of a particular

deliverable by a supplier.

Included in current liabilities are ‘other current liabilities’ such as ‘Deferred income’ and ‘Unspent conditional grants’ that constitute

R 3.9 million (2014: R 8.6 million) of the total current liabilities. Deferred income and unspent conditional grants do not require

settlement through payment; rather these are extinguished by fulfilment of the conditions of the grants.

Non-current liabilities

Non-current liabilities consist of the long-term portion of the finance lease obligation; operating lease liability; provisions and post-

employment medical benefit. These amount to R 5.8 million as at the end of the reporting period (2014: R 7.1 million).

Outlook for the year ahead

In terms of the allocation letter from National Treasury the operating grant that SALGA receives from the national fiscus shall be

phasedout of the MTEF period. The total Parliamentary allocation for 2015/16 period is R 9.2 million, and R 1.4 million and R nil for

2016/17 and 2017/18 financial periods respectively.

In 2014/15 the Parliamentary funding represented 5 percent of total revenue and 6 percent and 7 percent in 2013/14 and

2012/13 respectively. Therefore, the Parliamentary grant funding has been reducing in real terms over the last financial periods.

Notwithstanding these reductions the organisation has been able to report surpluses as a result of budgetary control and sound

financial management practices.

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The reduction in the operating Parliamentary grant is occurring against the backdrop of the organisation being presented with

measures to alleviate over-reliance on a single source of revenue viz. membership fees. In an effort, to address over reliance on

a single source of revenue the organisation developed a funding model that was adopted by members during the National

Members Assembly (NMA) held on 11-12 May 2010 in Kimberley. The funding model was presented to the Executive Authority

and National Treasury during the intervening years, in an effort to address the structural under unding of the organisation versus its

mandate vis-à-vis legislated and mandatory participation in intergovernmental relations (IGR) structures.

However, despite the non-implementation of the funding model the organisation has seized the occurrence of phasing out the

Parliamentary grant funding as an opportunity rather than a threat. At present measures geared towards strengthening SALGA’s

financial independence have already begun with the research undertaken benchmarking with sister organisations internationally

and the concept of ‘paid services’ being scoped together with other projects underway to position SALGA as a reservoir of

innovation, knowledge and solutions for the local government sector. Despite the efforts, preliminary results indicate that the

funding of SALGA’s participation at legislated and mandatory intergovernmental relations structures still remain a pivotal element

of the funding model that needs to be funded from the national fiscus.

Conclusion

In conclusion, I express my sincere appreciation to the Chief Executive Officer, Xolile George, for his continued support, leadership,

and strategic direction.

I also extend my appreciation to the Finance and Corporate Services team for their immense contribution during the year.

______________________

Nceba Mqoqi

Chief Financial Officer

31 July 2015

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Report of the Accounting Authority

The current NEC was elected at the last National Conference held on 29 August 2011 to 1 September 2011, in terms of clause 11.1

of the SALGA constitution, where the chairperson, three (3) deputy-chairpersons, and six (6) additional members were elected.

The NEC has exercised its powers as conferred by the SALGA constitution in filling any vacancies in between National Conference,

in terms of clause 11.3 of the SALGA constitution. The NEC can co-opt up to four additional members as members of the NEC and

as at 31 March 2015 the NEC had four co-opted members.

The term of the SALGA NEC is five years; the current term is due to end at the conclusion of the current political term of office for

local government.

With the exception of Xolile George who serves as an ex officio member in his capacity as Chief Executive Officer of the organisation,

all other NEC members are councillors and are deemed to be ‘independent non-executive directors’ of SALGA as defined for state-

owned enterprises (SOEs) in the September 2002 Protocol on Corporate Governance in the Public Sector. A non-executive director

is a person who has not been employed by the SOE in any executive capacity for the preceding three financial years; and is (in

relation to the SOE) not a significant supplier or customer, has no significant contractual relationship and is not a professional

advisor, other than in his or her capacity as a director.

1. NATIONAL EXECUTIVE COMMITTEE MEMBERS’ INTEREST IN CONTRACTS

All NEC members are required to complete a register of interests. This register is updated on an annual basis. Refer to note 32 and

33 of the annual financial statements for a full disclosure of related parties.

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2. REMUNERATION OF NATIONAL EXECUTIVE COMMITTEE MEMBERS’ AND NEC SUB-COMMITTEES

2.1 National Executive Committee

Disclosure of remuneration paid to members of the Accounting Authority for 2014/15 per PFMA regulation 28.1.1(a).

2015

NEC member

Name

Sitting

Allowance

**

Reimbursed

Travel

Allowance *

Subsistence

Allowance

(local) *

Subsistence

Allowance

(foreign) *

Expenses

Refund Total

Cllr Thabo Manyoni 11 141 - - 36 667 - 47 808

Cllr Mpho Nawa 12 857 - - 18 423 - 31 280

Cllr Nombulelo Hermans 12 856 28 854 - - - 41 710

Cllr Flora Maboa-Boltman 17 143 9 352 309 20 176 548 47 528

Cllr Dudu Mazibuko 1 714 - - - - 1 714

Cllr Tiny Grace Mthimunye 7 713 - - - - 7 713

Cllr Christiaan Neethling 12 855 24 910 1 454 - 203 39 422

Cllr Pinkie Moloi - - - 9 712 - 9 712

Cllr Willie Johnson 17 998 17 305 1 133 - - 36 436

Cllr Sebenzile Ngangelizwe 8 570 - - - - 8 570

Cllr Demetri Qually 18 869 4 495 412 - 1 270 25 046

Cllr GK Lobelo 12 855 - - - - 12 855

Cllr David Magabe 6 010 - - 4 396 - 10 406

Cllr Sibusiso W Mdabe 10 300 - - - - 10 300

Cllr Nomakhosazana Meth 7 723 - - - - 7 723

Cllr Zibonele Dumzela 7 713 - - - - 7 713

Cllr Abraham Bekeer 10 301 858 206 - - 11 365

Cllr Mafika Nkosi 6 856 66 596 - - - 73 452

Cllr Zukiswa Ncitha 6 007 - - - - 6 007

Total 189 481 152 370 3 514 89 374 2 021 436 760

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Disclosure of remuneration paid to members of the Accounting Authority for 2013/2014 per PFMA regulation 28.1.1(a).

2014

NEC member Name

Sitting

Allowance

**

Reimbursed

Travel

Allowance *

Subsistence

Allowance

(local) *

Subsistence

Allowance

(foreign) *

Expenses

Refund Total


Cllr Mpho Nawa 4 285 - - 73 554 - 77 839

Cllr Flora Maboa-Boltman 5 142 2 749 - - 67 7 958

Cllr Dudu Mazibuko 1 714 - - 12 900 - 14 614

Cllr Speedy Mashilo 4 285 - - 16 048 - 20 333

Cllr Christian Neethling 5 142 45 585 4 019 - 786 55 532

Cllr Joshua Matlou 2 571 - - - - 2 571

Cllr Boitumelo Moloi 2 571 - - 9 933 - 12 504

Cllr Willie Johnson 5 142 49 299 3 926 - 6 188 64 555

Cllr Parks Tau 3 428 - - - - 3 428

Cllr Balekile Mzangwa 2 571 - - 9 933 - 12 504

Cllr Demetri Qually 7 713 2 582 279 - 792 11 366

Cllr Gavin Lobelo 5 142 28 260 651 - - 34 053


Cllr Sibusiso Mdabe 3 428 - - - - 3 428

Cllr Nomakhosazana Meth 857 24 774 1 395 18 034 - 45 060

Cllr Subesh Pillay 3 428 - - - - 3 428

Cllr Zibonele Dumzela 2 571 5 309 186 - - 8 066

Cllr Abraham Bekeer 4 285 4 045 930 - - 9 260

Cllr Mafika Nkosi 3 428 24 332 372 - - 28 132

Cllr Zukiswa Ncitha 857 - - - - 857

Total 76 273 186 935 11 758 222 401 7 833 505 200

** With effect from 1 July 2013 and in terms of Government Notice number R64 - determination of upper limits of salaries,

allowances and benefits of different members of municipal councils, issued in terms of the Remuneration of Public Office

Bearers Act, 1998 (Act No. 20 of 1998), dated 29 January 2014, SALGA is required to pay sitting allowances to councillors

appointed to governance structures of organised local government. The said allowance is limited to R857 per sitting of the

PEC or NEC or any committee of organised local government, regardless of the number of meetings that are attended by such

councillor on a specific day.

On 25 March 2015 the above mentioned government notice was repealed via Government Notice number R243 - Determination

of upper limits of salaries, allowances and benefits of different members of municipal councils. The sitting allowance has since

been increased to R908 per sitting of the Provincial Executive Committee or National Executive Committee or any committee

of organised local government, regardless of the number of meetings that are attended by such councillor on a specific day.

* Reimbursed travel and local subsistence allowances is remitted to NEC members in terms of SALGA policy for participating in

governance structures of organised local government (where applicable). The rates used for local travel and subsistence are

based on SARS rates deemed as expended. International per diem is paid to NEC members who undertake SALGA’s mandate

of strategic profiling. For example, SALGA’s chairperson partakes in governance structures of internal bodies such as the local

government Pan-African body, United Cities and Local Governments of Africa (UCLGA) as vice president; he is also president of

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the UCLGA Southern Africa Regional Office (UCLGA-SARO), SALGA also participates in other world-wide bodies such as United

Cities and Local Government (UCLG), Commonwealth Local Government Forum (CLGF) and Metropolis. In pursuit of SALGA’s

mandate in these bodies, the SALGA NEC mandates NEC members to participate in them from time to time.

2.2 National executive committee oversight sub-committees

The NEC as the Accounting Authority or Board of SALGA subscribes to good governance principles as espoused in the King code

on corporate governance (King III). Accordingly, internal oversight structures have been established and these include the audit

and risk committee and the performance management and remuneration committee.

Members of NEC sub-committees not in the employ of the state such as those serving on the audit committee; and performance

management and remuneration panel are reimbursed on an hourly basis according to professional fee schedules.

These committees are comprised of independent members who are charged with oversight responsibilities on governance

matters.

2.2.1 Audit and Risk Committee

The organisation’ s audit committee is constituted in terms of section 77(a) of the PFMA; as well as per regulation 27.1.1; and 27.1.4

of the PFMA Treasury Regulations (2005).

The audit committee is constituted as follows:

Name of member Role

Mr Temba Zakuza Chairperson

Ms Octavia Matloa Member

Ms Phumelele Ndumo Member

Mr Nala Mhlongo Member

Adv Motlatjo Ralefatane Member

The members of the audit and risk committee have been remunerated for the year under review and prior year as follows:

2015

Name of member Attendance fees * Reimbursed

travel cost **

Total

Mr Temba Zakuza 79 568 6 378 85 946

Ms Octavia Matloa 44 068 293 44 361

Ms Phumelele Ndumo 64 878 - 64 878

Mr Nala Mhlongo 13 465 495 13 960

Adv Motlatjo Ralefatane 24 482 950 25 432

Total 226 461 8 116 234 577

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2014


travel cost **

Total

Mr Temba Zakuza 98 086 9 835 107 921


Ms Phumelele Ndumo 76 605 120 76 725

Mr Nala Mhlongo 91 764 2 865 94 629

Adv Motlatjo Ralefatane 73 107 2 226 75 333

Total 423 048 15 524 438 572

* Members of SALGA’s NEC sub-committees are remunerated for participating in SALGA’s governance structures based on

SALGA’s policy for remuneration of NEC sub-committees. Attendance fees are based on an hourly rate and claimable hours are

capped regardless of the duration on a meeting or preparation time.

** Reimbursed travel allowance is remitted to members based on the applicable SARS rates deemed as expended.

2.2.2 Performance Management and Remuneration Committee

The organisation has a performance management and remuneration committee that supports implementation and

institutionalisation of performance management within the organization. The committee is an advisory body to the NEC authorised

to review, guide and support SALGA in the proper implementation and strategic alignment of the organisational performance

management policy and procedures, remuneration philosophy and strategy.

The performance management and remuneration committee is constituted as follows:

Name of member Role

Mr Chose Choeu Chairperson

Ms Elizabeth Dlamini-Khumalo Member

Dr Faizel Randera Member

Ms Laura Machaba-Abiodun Member

Mr William Huma Member

Cllr Thabo Manyoni Ex officio member

Cllr Nombulelo Hermans Ex officio member

Cllr Nomakhosazana Meth Ex officio member

134


The members of the performance and remuneration committee have been remunerated for the year under review and prior year

as follows:

2015


travel cost **

Total

Mr Chose Choeu 29 379 635 30 014

Ms Elizabeth Dlamini-Khumalo 29 379 570 29 949

Dr Faizel Randera 14 689 382 15 071

Ms Laura Machaba-Abiodun 29 379 635 30 014

Mr William Huma 29 379 91 29 470

Total 132 205 2 313 134 518

2014

Name of member Attendance

fees *

Reimbursed

travel cost **

Total

Mr Chose Choeu 55 970 1 138 57 108

Ms Elizabeth Dlamini-Khumalo 62 966 1 138 64 104

Dr Faizel Randera 58 302 1 327 59 629


Prof Johan Hough 16 325 93 16 418


Mr Michael J Olivier

(by invitation – former chairperson)16 325 506 16 831

Mr Zwelibanzi Mntambo

(by invitation – former member)

16 325 379 16 704

Total 314 832 5 434 320 266



capped regardless of the duration of a meeting or preparation time.


135


3. REMUNERATION OF SENIOR MANAGEMENT

Senior management includes the Chief Executive Officer, Executive Directors and Provincial Executive Officers. The breakdown of

senior management remuneration forms part of the annual financial statements and is reported on note 22 and 33.

3.1 Remuneration of senior management in aggregate

Annual Remuneration 2015 2014

Annual remuneration 15 902 806 21 895 198

Employer contribution to retirement and pension fund 1 560 173 -

Performance related payments 1 914 469 2 220 009

Contribution to medical aid and pension fund - 128 808

Subsistence, cellphone, travel and other allowances 680 139 1 149 249

Employer contribution to group risk 241 592 -

Employer contribution to medical aid 158 184 -

Total 20 457 363 25 393 264

3.2 Remuneration of senior management per person

Disclosure of senior management remuneration per PFMA regulation 28.1.1

2015

Employee name Basic salary

Bonuses and

performance

related

payments

***

Subsistence

and other

allowances *

Employer

contribution

to pension &

retirement

funds **

Employer

contribution

to medical

aid **

Employer

contribution

to group

risk ** Total

Mr Xolile George 3 240 528 600 880 217 330 317 338 22 308 47 914 4 446 298

Mr Nceba Mqoqi 1 523 390 211 824 32 330 149 107 24 336 22 991 1 963 978

Mr Seana Nkhahle 1 246 157 161 757 61 736 121 935 24 336 18 965 1 634 886

Ms Antonette

Richardson 1 243 269 159 446 30 000 121 741 24 336 18 937 1 597 729

Mr Simphiwe Dzengwa 1 380 741 - 45 751 138 265 20 280 21 113 1 606 150

Ms Lorette Tredoux 1 378 636 179 311 30 000 135 000 6 084 20 901 1 749 932

Mr Rio Nolutshungu 1 471 096 180 502 58 224 144 066 - 22 244 1 876 132

Ms Jean De La Harpe 1 291 185 109 795 35 713 126 440 24 336 19 633 1 607 102

Ms Phila Xuza (resigned) 1 317 014 120 668 33 702 129 012 - 20 830 1 621 226

Ms Mandu Mallane

(Acting) 901 005 93 861 110 300 88 209

6 084 13 969

1 213 428

Mr Marx Mupariwa

(Acting) 909 785 96 425 25 053 89 060

6 084 14 095

1 140 502

Total 15 902 806 1 914 469 608 139 1 560 173 158 184 241 592 20 457 363

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In the current year key management personnel have been redefined in line with the accounting policy and limited to only

executive management team (EMT) members who report directly to the Chief Executive Officer. As a result, only portfolio heads in

terms of SALGA’s business units have been disclosed.

** With effect from 1st April 2014 and in an effort to be competitive in regard to the labour market, SALGA introduced employee

benefits to all staff who are all defined contribution short term benefits such as employer contribution to pension, medical aid

and group risk cover for all employees including EMT members.

The EMT is subject to written employment and performance agreements. The employment agreements regulate duties,

remuneration, allowances, restraints, leave and notice periods of these executives. The performance agreements regulate

performance and the merit based performance related rewards. None of these service contracts exceed five years.

* Other allowances comprise travel allowance, cellphone allowance and acting allowance (where applicable). International per

diem is paid to employees who undertake SALGA’s mandate of strategic profiling. SALGA’s chairperson partakes in governance

structures of internal bodies such as the local government Pan-African body, United Cities and Local Governments of

Africa (UCLGA) as vice president; he is also President of the UCLGA Southern Africa Regional Office (UCLGA-SARO); SALGA

also participates in other world-wide bodies such as United Cities and Local Government (UCLG); Commonwealth Local

Government Forum (CLGF) and Metropolis. In pursuit of SALGA’s mandate in these bodies the chairperson is supported by the

CEO.

*** Performance related bonuses are per the SALGA performance management policy that is implemented with an oversight role

of the Performance Management and Remuneration Panel, which is comprised of independent non-executive members. The

applicable performance rewards are based on merit and the applicable reward rates matrix range from 9% (minimum) to 20%

(maximum).

SALGA’s performance management and remuneration committee is charged with the normalising SALGA’s remuneration

framework, particularly in instances where salary bands of some executives are on a “personal to holder basis” till the expiry of

the contract or through natural attrition or earlier. The CEO’s current remuneration has been identified as one of these category

of employees. Notwithstanding the efforts to manage the escalation of remuneration at SALGA, particularly those of executives,

it is important to note that SALGA had to review its remuneration policies as they pertain to its executives and benchmark these

with municipalities; particularly Metros, since metropolitan municipalities pose the greatest direct remuneration competitor

to SALGA (also see report of the chairperson of SALGA’s Performance Management and Remuneration Panel in the annual

report).

137


2014

Employee name Basic salary

Contributions

to medical aid,

pension fund,

and retirement

funds *

Bonuses and

performance

related

payments

Subsistence

and other

allowances Total

Mr Xolile George 3 006 185 - 370 275 185 717 3 562 177

Mr Nceba Mqoqi 1 399 546 14 401 144 910 44 005 1 602 862

Mr Lance Joel (resigned) 1 489 948 - 189 605 110 583 1 790 136

Ms Antonette Richardson 1 157 191 - 126 953 25 190 1 309 334

Mr Jonathan Patrick (Acting) 722 843 31 736 75 176 12 750 842 505

Ms Lorette Tredoux 1 318 577 - 113 786 41 407 1 473 770

Mr Rio Nolutshungu 1 369 222 - 155 889 82 706 1 607 817

Mr Mthobeli Kolisa (resigned) 110 025 - 118 326 3 581 231 932

Mr Seana Nkhahle 1 157 191 - 119 416 55 067 1 331 674

Mr Gcinikhaya Mpumza 867 651 - 70 506 51 809 989 966

Ms Lulama Ceba (resigned) 71 079 5 223 - - 76 302

Mr Lucky Leseane 1 062 570 - 119 840 48 694 1 231 104

Mr Sandile Cele (resigned) 194 920 - - 2 500 197 420

Mr Thapelo Matlala 919 963 - 108 968 80 086 1 109 017

Ms Gugu Langa 981 657 77 448 88 015 49 643 1 196 763

Mr Johannes Ruiters (Acting) 522 119 - 39 951 35 339 597 409

Ms Nancy Ngwenya 965 970 - 94 214 78 223 1 138 407

Mr Khalil Mullagie 1 063 065 - 107 183 62 712 1 232 960

Ms Jean De La Harpe 801 190 - - 37 465 838 655

Mr Zwelandile Ndlala (Acting) 1 025 397 - 108 276 74 279 1 207 952

Mr Sabelo Gwala (Acting) 754 366 - 68 720 47 493 870 579

Ms Phila Xuza 934 523 - - 20 000 954 523

Total 21 895 198 128 808 2 220 009 1 149 249 25 393 264

* Other allowances comprise of travel allowance, cellphone allowance and acting allowance (where applicable).

Prior to the 2014/2015 financial year SALGA’s EMT was remunerated on a total cost to company basis. EMT members were permitted

to structure their package to allow for a thirteenth cheque, medical aid contribution, pension fund contribution or travel allowance.

The EMT is subject to written employment and performance agreements. The employment agreements regulate duties,

remuneration, allowances, restraints, leave and notice periods of these executives. The performance agreements regulate


138


4. GOING CONCERN CONSIDERATIONS

The SALGA NEC reviewed the annual financial statements for 2014/15 and information regarding the forthcoming financial year, to

assess the going concern status of SALGA. Based on this information, the NEC has every reason to believe that SALGA will remain

a going concern.

SALGA will receive Parliamentary grant funding for the next two Medium Term Expenditure Framework (MTEF) periods

per the notification from National Treasury via SALGA’s executive authority viz. Department of Cooperative Governance

and Traditional Affairs (CoGTA). The total Parliamentary allocation for 2015/16 period is R9.2 million; 2016/17 period is

R1.4 million and nil for subsequent periods.

This allocation notification represents a reduction of R18.6 million in 2015/16 or 67 percent and R27.9 million in 2016/17

period or 96 percent when compared with the 2014/2015 MTEF allocation notification. In 2017/18 the reduction is

100 percent.

Notwithstanding the abovementioned reductions in Parliamentary grant funding over the MTEF period the NEC is

satisfied that SALGA’s continued existence is assured since over the last few years the actual Parliamentary funding has

decreased in real terms when compared to total revenue.

In 2014/15 the Parliamentary funding represented 5 percent of total revenue; and 6 percent and 7 percent in 2013/14

and 2012/13 respectively. Despite these reductions the organisation has been able to report surpluses as a result of

budgetary control and sound financial management practices, hence the NEC is assured of SALGA remaining a going-

concern.

The NEC is engaging with the Ministers of CoGTA and Finance in an effort to reinstate SALGA’s funding from the national

fiscus per the organisation’s funding model.

SALGA regards the cutting of its funding from the national fiscus as an opportunity, rather than a threat, and is taking

measures to strengthen its financial independence. These measures involve research into similar interpersonal

organisations and the concept of paid services. Projects are underway to position SALGA as a reservoir of innovation;

knowledge and solutions for the local government sector. However, the measures being undertaken to cement

SALGA’s financial independence do not wholly discard the funding model that was adopted by members at a

National Members Assembly held on 10-11 May 2010 in Kimberley. The funding of SALGA’s participation at mandatory

intergovernmental relations structures still remains a pivotal element of the funding model.

In terms of other funding SALGA has raised R 5.5 million (2014: R 3.8 million) in sponsorship revenue.

The organisation has secured R 2.1 million (2014: R 3.9 million) from donors to pursue its mandate in ensuing years.

In terms of conditional donor and grant funding secured, the organisation has leveraged about R 8.3 million (2014:

R 8.3 million).

At 31 March 2015, the statement of financial position shows that SALGA has already secured R 3.6 million (2014:

R 6.1 million) as ‘payments received in advance’. Included in the amount are membership levies paid in advance by member

municipalities of R 3.0 million (2014: R 5.4 million). The remaining R 0.6 million (2014: R 0.7 million) will be defrayed through

programme implementation.

The statement of financial position reflects total assets of the organisation at 31 March 2015 at R 224.6 million (2014:

R 178.6 million). This represents an increase in assets of R 45.9 million (2014: R57.1 million) representing 25.7 percent (2014:

47 percent).

The organisation is solvent with total assets exceeding total liabilities by R 111.5 million (2014: R 92.8 million).

The solvency rate is 2.00 times (2014: 2.08 times), which means that SALGA had a liability of 100 cents for each 200 cents it

held in total assets.

Total currents assets stand at R 192.4 million (2014: R 146.7 million) which is more than the current liabilities of R 107.3 million

(2014: R 78.7 million).

139


The current ratio is then 180 percent (2014: 187 percent) which means that SALGA had R 1,80 (2014: R 1,87) in current assets

to cover every R1 of current liabilities.

The organisation’ s operations resulted in an operating surplus of R 18.7 million (2014: R 39.0 million), and the 2015/16 to

2017/18 MTEF cycle budget projects operating surpluses in terms of the organisational strategy.

The organisation also reviewed its membership levy formula for the 2015/16, resulting in a projected growth for membership

levy revenue of 2.3 percent to R 438.9 million. The projection for the two outer years of the MTEF cycle is R 466.9 million

and R 494.6 million for 2016/17 and 2017/18 respectively. In 2016/17 the organisation will disconnect the determination

of membership levy revenue from the annual municipal salary budgets to a basis that is linked to CPI with 2015/16 being

the base year.

Total revenue is projected at R 456.7 million R 474.5 million and R 500.1 million over the 2015/16 MTEF cycle.

Other aspects considered in assessing the organisation’s going concern are the following:

In section 163, the Constitution of the Republic of South Africa envisages an important role for organised local government

and provides that an Act of Parliament must cater for the recognition of national and provincial organisations representing

municipalities, and determine procedures by which local government may consult the national and provincial government,

designate representatives to participate in the National Council of Provinces (NCOP) and nominate persons to the Financial and

Fiscal Commission (FFC).

Hence the organisation exists as a result of the Organised Local Government Act, 1997 (OLGA) that was enacted by Parliament.

SALGA is recognised as the sole voice of organised local government in South Africa.

There is no indication in the foreseeable future that the recognition granted by the Minister per the Government Gazette, regulation

gazette no. 6087, volume 391 dated 30 January 1998, no. 18645 may be revoked, and the NEC thus concludes that SALGA will be in

existence for the next 12 months.

SALGA is constituted by its member municipalities that are spread throughout South Africa. There is no indication in the near future

that the governance model of the country in terms of which there are three levels of government (local, provincial and national)

will change.

Lastly, as indicated above, the organisation has submitted the outcome of its revenue enhancement model to the Executive

Authority (Department of Co-operative Governance and Traditional Affairs) as part of the MTEF submission for the 2015/16 to

2017/18 planning cycle, and made necessary representations relating to the adequacy of the SALGA funding from the national

fiscus. This submission was preceded by a formal engagement between the SALGA Chairperson and the Minister of Finance on

30 September 2010; and a further engagement between the CEO of SALGA and the Deputy Minister of Finance on 25 January 2011.

However, the funding model is not fully implemented in the current MTEF cycle as the Executive Authority and National Treasury

are considering the model. The NEC will continue to engage the Executive Authority and National Treasury for the implementation

of the funding model. Despite the non-implementation of the funding model the NEC is convinced that SALGA’s continuation as

a going concern is assured.

5. FRUITLESS AND WASTEFUL EXPENDITURE AND IRREGULAR EXPENDITURE

5.1 Fruitless and wasteful expenditure

Fruitless and wasteful expenditure is disclosed in note 39 of the annual financial statements. Fruitless and wasteful expenditure

amounting to R 2 107 was incurred during the financial year. SALGA requested and was granted credit notes for fruitless and

wasteful expenditure incurred in current and prior years amounting to R 2 966. The net effect is that there is an over-recovery of

fruitless and wasteful expenditure in the current year of R 859.

140

Report of the audit and risk committee

5.2 Irregular expenditure

During the year under review, the organisation did not incur any expenditure deemed as irregular expenditure in terms of the

Public Finance Management Act, 1999 PFMA, see note 40 to the annual financial statements.

6. LOSSES, IRREGULARITIES AND OTHER MATTERS

Losses or irregularities are referred to in Section 55(2)(b) of the PFMA. The organisations materiality and significance framework was

developed and agreed to in terms of PFMA Treasury Regulation 28.3.1.

In terms of Section 55, the following are specified as matters that must be reported on in the annual report and financial statements:

(i) any material losses through criminal conduct and any irregular expenditure and fruitless and wasteful;

(ii) expenditure that occurred during the financial year;

(iii) any criminal or disciplinary steps taken as a consequence of such losses or irregular expenditure or fruitless and wasteful

expenditure;

(iv) any losses recovered or written off;

(v) any financial assistance received from the State and commitments made by the State on its behalf; and

(vi) any other matters that may be prescribed.

SALGA’s annual financial statements comply with the requirement as stated above.

7. MATERIALITY AND SIGNIFICANCE FRAMEWORK

The organisation has developed and the NEC approved the materiality and significance framework; developed in terms of the

PFMA Treasury Regulation 28.3.1. The framework defines aspects of significance and materiality in terms of sections 54(2) and 55(2)

(b)(i) of the PFMA.

The framework has been agreed to with the Executive Authority as required by the PFMA Treasury Regulation 28.3.1.

8. LEGAL PROCEEDINGS

The organisation is involved in a civil litigation matter disclosed in note 31 to the annual financial statements.

141


Temba Zakuza

Chairperson: Audit and Risk Committee

The Audit and Risk Committee is pleased to present the report for the financial year ended 31 March 2015.

1. AUDIT AND RISK COMMITTEE

The SALGA Audit and Risk Committee is constituted in terms of section 77(a) of the Public Finance Management Act (PFMA) as well

as Treasury Regulations 27.1.1; 3, and 4 and meets as per its approved terms of reference.

The Audit and Risk committee is a sub-committee of the National Executive Committee (NEC). The objectives of the audit

committee are as follows:

To review the effective, efficient and transparent systems of financial and risk management and internal control

maintained by SALGA, which contribute to the efficient and effective utilisation of resources, safeguarding of assets and

the accomplishment of established strategic objectives for operations or programmes of SALGA;

To promote the efficiency and effectiveness of accounting and management information systems;

To monitor that, in accordance with SALGA’s responsibility to its members, justifiable decisions pertaining to service

rendering are taken as indicated in policy statements, practices and uncovering of malpractice;

To have access to a distinct and clear communications channel between the National Executive Committee, Executive

Management Team, external auditors and internal auditors;

To inform SALGA regarding critical problems which must be addressed concerning the preparation and discussion of the

financial statements;

To monitor the effectiveness of the internal audit function and internal controls;

To monitor management, internal audit and external audit with reference to the drafting and auditing of the financial

statements;

To enhance the objectivity and credibility of reporting to stakeholders; and

In order to achieve its objectives, the audit committee is empowered to request all information necessary to assess and act

on and to convene meetings, including in camera meetings, at any time.

142


2. AUDIT AND RISK COMMITTEE MEMBERS

The Committee comprises members who are external professionals from the private sector. It functions independently of the

management structures within SALGA and endeavours to remain and preserve its objectivity at all times.

The audit and risk committee consists of the following non-executive independent members:

National

Executive

Committee

Mr. Temba

Zakuza

(Chairperson)

Accounting Authority

Audit and Risk Committee

(independant

non-executive members) Ms Octavia

Matshidiso

Matloa

Ms Phumelele

Ndumo

Mr Nala

Mhlongo

Adv Motlatjo

Ralefatane

Name of member and role

Mr Temba Zakuza (Chairperson)

Qualifications and other roles; board membership (past and present)

Qualifications

– Chartered Accountant, South Africa (CA, SA)

– Master’s in Business Administration (MBA); [University of Stellenbosch]

– Certified Internal Auditor (CIA)

– Postgraduate Diploma in Accounting; [University of Cape Town]

– Postgraduate Diploma in Management – Financial Accounting; [University of Cape Town]

– Bachelor of Commerce (Accounting); [University of the North]

Other board membership and professional affiliations

– Board member of Independent Regulatory Board of Auditors (IRBA)

– Chairman of Education Training and Development Committee (IRBA)

– Member of the Education Fund Committee (IRBA)

– Chairman of the Centlec Audit Committee

– Chairman of the Mbizana Local Municipality Audit Committee

– Member of the Eastern Cape Department of Health Audit Committee

– Member of the COEGA Development Corporation Audit Committee

– Member of Council WSU and Chairman of Audit Committee

– Trustee of Thuthuka Education Fund of SAICA

Mr Zakuza has held various other positions as member and chairperson of boards and associations and is actively involved in

community service initiatives.

143



Ms Octavia Matshidiso Matloa (member)


Qualifications


– Bachelor of Commerce, [University of Cape Town]

– Honours Bachelor of Commerce, [University of Pretoria]


– Member of Audit and Risk Committee; Petra Diamonds

– Member of Audit and Risk Committee; National Treasury

– Member of Audit and Risk Committee; Department of Defence and Military Veterans

– Member of Audit and Risk Committee; Village Main Reef

– Member of Investment Committee; Village Main Reef

– Member of Nomination and Governance Committee; Village Main Reef

– Member of Audit and Risk Committee; Great Basin Gold

– Member of Audit Committee; Department of Transport

– Member of Audit Committee; Urban Transport Fund

– Member of Audit Committee; City of Tshwane

– Member of South African Women in Mining Association

Ms Matloa holds various directorships in several companies including Tsidkenu Chartered Accountants Inc. and Trusteeship in non-profit organisations.


Ms Phumelele Ndumo (member)


Qualifications

– Bachelor of Commerce; [University of KwaZulu-Natal]

– Higher Diploma in Computer Auditing; [University of the Witwatersrand]

– Master’s in Business Leadership (MBL); [University of South Africa]

– Executive Women Development Programme; {Gordon Institute of Business Science]


– Non-executive director; Rand Water Board

– Member of the Audit Committee; Department of Trade and Industry

– Chairman of the Risk Committee; Department of Trade and Industry

– Member of the Operations Committee; Government Employees Medical Scheme

– Non-executive director and chairman of the Audit Committee; City of Johannesburg Revenue Management Unit

– Member of Audit Committee; Department of Transport

– Chairman of Audit Committee; Sedibeng Water

– Member of Audit Committee; Magalies Water

Ms Ndumo has held various other positions and is actively involved in community development initiatives.

144

Report of the Audit and Risk Committee


Mr Nala Mhlongo (member)


Qualifications

– Chartered Global Management Accountant (CGMA)

– Chartered Management Accountant (ACMA)


– Bachelor of Commerce; [University of the Western Cape]

– Honours Bachelor of Commerce; [University of the Western Cape]


– Chairman of Audit Committee; KwaZulu-Natal Gambling and Betting Board

– Chairman of Audit and Risk Committee and board member; Cross-Border Road Transport Agency

– Chairman of Audit and Risk Committee; and board member; Water Research Commission

– Chairman of Risk Committee; Companies and Intellectual Properties Commission (CIPC)

– Member of Audit Committee; Companies and Intellectual Properties Commission (CIPC)

– Part-time Commissioner; Department of Trade and Industry Copyright Review Commission

– Member of Audit Committee; KwaZulu-Natal Provincial Government

Mr Mhlongo has held various other positions in boards and board sub-committees and has been a Chief Financial Officer of various private and public sector institutions.


Advocate Motlatjo Ralefatane (member)


Qualifications

– B. Proc; [University of the North]

– Bachelor of Laws (LLB); [University of the North]

– Advocate of the Supreme Court of South Africa

– Certificate in Labour Relations; [University of Pretoria]

– Certificate in Human Rights; [University of Pretoria]

– Certificate in Corporate Governance; [Institute of Directors of South Africa]

– Certificate in Directorship; [University of the Witwatersrand]

– Adv. Ralefatane also holds various other qualifications from several institutions.


– Member of board; South African Medical Research Council (MRC)

– Member of board; Technology Innovation Agency (TIA)

– Non-executive director; Road Accident Fund (RAF)

– Chairman of the Human Capital and Remuneration committee; Road Accident Fund (RAF)

– Acting Judge; Labour Court

– Non-executive director; Gauteng Enterprise Propeller (GEP)

– Chairperson of Audit Committee; Ephraim Mogale Local Municipality

– Member of the Institute of Directors;

– Member of the Institute of Internal Auditors

Adv Ralefatane has held various other non-executive directors positions in boards and board sub-committees and is actively involved in community development initiatives. She also held roles as an Appeals Adjudicator for the Department of Home Affairs.

145


3. AUDIT AND RISK COMMITTEE MEMBERS’ ATTENDANCE

Five meetings were held during 2014/2015 financial year. These meetings were attended by external auditors, the Chief Executive

Officer, Chief Finance Officer, the Head of Internal Audit, and other relevant corporate officials. The Chairperson of the Audit

Committee reports on committee activities to the National Executive Committee on a regular basis. All members give a declaration

at each Audit Committee meeting of any personal or financial interests that may conflict with their duties in this regard.

The table below highlights the Audit Committee members and the record of attendance of Audit Committee meetings.

Member

Record of Attendance

22 May 2014 29 July 2014 19 September 2014 30 January 2015 20 March 2015

Mr Temba Zakuza

Chairperson

Ms Octavia Matshidiso Matloa

Member

Ms Phumelele Ndumo

Member

Mr Nala Mhlongo Member

Advocate Motlatjo Ralefatane

Member

4. AUDIT COMMITTEE RESPONSIBILITY

The Audit Committee reports that it has complied with its responsibilities arising from Section 51(1) (a) (ii) and section 76(4) (d) of

the PFMA as well as Treasury Regulations 27.1. The audit committee adopted appropriate formal Terms of Reference as its audit

committee charter and has regulated its affairs in compliance with these terms of reference and has discharged all its responsibilities

as contained therein.

5. THE EFFECTIVENESS OF INTERNAL CONTROL

The review of the effectiveness of the system of internal control by the audit committee is informed by the reports submitted by

the internal audit function and management who are responsible for the development and maintenance of the internal control

system.

Minor weaknesses have been reported from the reports issued by the Internal Audit Function and Auditor General. These

weaknesses continue to be addressed by management.

6. RISK MANAGEMENT

An organisational risk register that identifies the major risks and potential threats to the strategic and directorate/provincial

objectives of SALGA has been developed. These risks are analysed, evaluated and mitigated by means of suitable measures.

Management has also developed action plans to reduce the severity of each risk exposure to an acceptable level. On a quarterly

basis, the Risk Management Unit reviews management assertions made on the status of implementation of action plans in the risk

register and reports them to the audit and risk committee.

The internal audit function follows a risk-based approach and developed an appropriate Internal audit coverage plan in order to

provide assurance on the effectiveness of risk mitigating measures.

146


7. EVALUATION OF FINANCIAL STATEMENTS

The audit committee has:

Evaluated the annual financial statements and performance information of SALGA for the period ended 31 March 2015.

Reviewed the Auditor-General’s report to management and management response thereto.

The audit committee concurs and accepts the Auditor-General‘s conclusion on the annual financial statements. It is of the opinion

that the audited financial statements be accepted and read in conjunction with the report of the Auditor-General.

___________________________

Temba Zakuza

Chairperson of the audit committee

Pretoria

31 July 2015

147

Chose Choeu

Chairperson: Performance Management and Remuneration Committee

The performance management and remuneration committee is pleased to present its report for the year ended 31 March 2015.

1. PERFORMANCE MANAGEMENT AND REMUNERATION COMMITTEE

The performance management and remuneration committee (REMCO) is a sub-committee of the National Executive Committee

(NEC) and it supports implementation and institutionalisation of performance management within the organisation. The

Committee is an advisory body to the NEC, authorised to review, guide and support SALGA in the proper implementation and

strategic alignment of the organisational performance management policy and procedures, remuneration philosophy and

strategy.

2. RESPONSIBILITIES OF THE COMMITTEE

The National Executive Committee of SALGA established the performance management and remuneration committee as its

advisory body that has an oversight over the implementation of the performance management system policy and procedures, as

well as the remuneration policies and practices of SALGA.

The main purpose of the performance management and remuneration committee is to ensure the adoption of remuneration

policies which:

Aim to attract and retain top talent;

Are aligned with the organisation’s strategy; and

Arive performance in the long-and short-term.

The Performance management and remuneration committee was established to assist SALGA in maintaining the integrity of the

performance management system; exercise oversight over the implementation of the performance management system and

policy, as well as the remuneration policies and practices within SALGA; confirm the appropriateness of the institutional goals of

SALGA in pursuing its strategy; ensuring objective performance reviews; considering and making recommendations on all matters

relating to performance management and remuneration to the National Executive Committee. The committee has oversight over

the following:

Review and ensure the proper application of organisational performance management policy and procedures, remuneration philosophies, strategies and other policies aligned to the approved organisational strategy and objectives of SALGA;

The committee is empowered to consider and make recommendations to the National Executive Committee on all matters relating to the performance management and remuneration of SALGA;

Policy frameworks and policy decisions taken by the REMCO shall be binding to all administrative structures of SALGA;

and

Report of the Performance Management and Remuneration Committee

148

The committee presents reports to and receives feedback from SALGA’s national office bearers and National Executive

Committees on all matters relating to their work.

The Committee’s terms of reference, inter alia, include the following responsibilities:

Promoting the consistent attraction and retention of staff; the improvement and assessment of performance; and the

motivation and reward of SALGA staff;

Approving the remuneration policy to be adopted by the organisation;

Ensuring that the remuneration strategy is market-related and competitive;

Determining specific remuneration packages for executive management team of the organisation;

Ensuring remuneration for executive management team, including their short and long-term incentives, is based on

performance;

Considering the relationship between executive management team’s remuneration and the remuneration of SALGA’s

other employees;

Approving the design of short-term incentive schemes, including determining targets and participation thresholds;

Approving the design of the long-term share incentive schemes, including determining the allocation criteria and

performance conditions;

Reviewing and monitoring progress in people management;

To provide oversight of targets, ensuring that these remain challenging and reflect SALGA’s strategic objectives; and

Shall provide recommendations and suggestions on actions that must be taken to achieve agreed targets or to assist

where deviations from targets are probable.

3. COMPOSITION OF THE COMMITTEE

The committee comprises members who are external professionals from the private sector and members of the National

Executive Committee of SALGA as ex-officio members. It functions independently of the management structures within SALGA

and endeavours to remain and preserve its objectivity at all times.

The performance management and remuneration committee consists of the following non-executive independent members:

National

Executive

Committee

Mr Chose Choeu

(Chairperson)

Accounting Authority

Performance Management

and Remuneration

Committee

(independant

non-executive members)Mrs Elizabeth

Dlamini-

Khumalo

Dr Faizel

Randera

Ms Laura

Machaba-

Abiodun

Mr William

Huma

Cllr. Nombulelo

Hermans

National Executive Committee members, ex-officio members

of REMCO

Cllr Nomakhosazana

Meth


Cllr Thabo

Manyoni

149


Mr Chose Choeu (chairperson)


Qualifications

– Bachelor of Arts (cum laude), [University of the North]

– Honours Bachelor of Arts (cum laude), [University of the North]

– Masters degree in International relations, [University of Denver]

– Company direction diploma, [Graduate Institute of Management and Technology]

– Finance for non-financial managers certificate, [Wits Graduate School of Business Administration]

– Executive Development Program, [University of the Witwatersrand]

– Master of Philosophy, [University of Port Elizabeth]

– Accelerated directorship programme certificate, [Institute of Directors]

Mr Chose Choeu holds several other qualifications that range from Primary Teachers certificate; Parliamentary administration

and procedure; Telecommunications network fundamentals; Telecommunications policy & management; Telecommunications

regulatory master class; Diploma in public relations; Diploma in business management


– Chairperson of the Audit Committee of the South African Parliament

– Board member and Vice President of the South African Chamber of Commerce

– Board member of the American Chamber of Commerce

– Member of the Executive Committee of the American Chamber of Commerce

– Member of the Board of the Free State Development Corporation

– Chairperson of the Audit Committee of the Free State Development Corporation

– Member of the Free State Province Premier’s Economic Advisory Council

– Member of the Black Management Forum

– Member of the Institute of Directors

– Member of Black IT Forum

– Member of the American Academy of Political Science.


150


Mrs Elizabeth Dlamini-Khumalo (member)


Qualifications

– Masters in Management – Human Resources, [Wits Business School]

– Post Graduate Diploma in Management – Human Resources, [Wits Business School]

– Senior Executive Programme, [London Business School]

– Diploma in Personnel Management, [Institute of Personnel Management]

– General Management course, [Industrial Society, United Kingdom]

– Secretarial course, [Anglo American Corporation]

Mrs Elizabeth Dlamini-Khumalo holds various other in-house training courses at supervisory and managerial level.


– Human Resources Director; Sandvik Southern African Companies & Vice President – Africa Region

– Non-executive chairperson; EVA (Economic Value Acceleratotors)

– Human Resources Director; African Continent British Oxygen Company (Afrox in South Africa)

– Human Resources Director; Woolworths (Pty) Ltd

– Human Resources Director; South African National Parks

– Human Resources Director; Fedics Group

– Head of department – Organisational transformation; Nedcor Limited.


Dr Faizel Randera (member)


Qualifications

– Undergarduate Medical degree; [Guy’s Hospital, London]

– Diploma in Obstetrics and Gynaecology; [Royal College of Obstetrics and Gynaecology]

– Postgraduate Vocational Training in General Practice; [ Guy’s Hospital. London]

– Diploma course in Occupational Health; [National Institute for Occupational Health, Wits University]

– Master course in Family Practice; [Wits Medical School]

– Mini MBA; [South African Medical Association and Manchester Business School]


– Health Advisor; Chamber of Mines, South Africa

– Director; NEHAWU Investment Company

– Director and chairperson, Liseko Strategic Investment Company, Johannesburg

– Director and Chairman, Ethics Institute of South Africa

– Trustee, Human Rights Committee of South Africa

– Trustee, Foundation for Tolerance Education

– Director, Board of Health Care Funders

– Director, Netcare

– Director, Private Health Care Forum

Dr Randera holds various other directorships (past and present) such as board member of the World Medical Association; member of the Advisory Committee on Occupational Health and Safety.


151


Ms Laura Machaba-Abiodun (member)


Qualifications

– Postgraduate Diploma in Education, [University of the Witwatersrand] (summa cum laude)

– Bachelor of Commerce (Law); [University of the North]

– Master of Arts in Communication and Training; [Governors State University] (magna cum laude)

– Master of Business Administration (General Management); [Rosary College, USA]

– Organisational Change Leadership Programme, [Harvard University, USA]


– Chairperson – AMC International Group

– Executive Head: Talent & Brand Woolworths (Pty) Ltd

– Executive Consultant to the Superintendent Charlotte Mecklenburg School

– Executive Director: Global Individual & Organisational Effectiveness Brady Corporation (Milwaukee, Wisconsin; USA)

– Regional Manager: Executive & Organisational Development, Solectron Corporation (Charlotte, North Carolina; USA)

Ms Machaba-Abiodun has held various other roles and positions in her career.


Mr William Huma (Member)


Qualifications

– B. Proc, [University of the North]

– Bachelor of Laws (LLB), [University of the North]

– Master of Laws (LLM), [North West University]

– Doctor of Laws (LLD), [University of Pretoria]

– Graduate Diploma in Company Direction, [Henley Management College]

– Finance for non-financial managers certificate, [University of Witwatersrand]

Mr. Huma has various certificates of attendance in Human Capital and Change Management from Accenture Limited (Chicago) and Oxford University (United Kingdom).


– Advocate of the High Court of South Africa (Pretoria)

– Fellow of the Institute of Directors of South Africa

– Chairperson Board of Trustees; BDH Trust

– Chief Executive Officer; BDH Group

– Director: Corporate and Business Services; Group Five Limited

– Chairperson – Performance Audit Committee of the Department of Health

– Chairperson – Audit Committee of Department of Communications

– Member – Audit Committee of Ekurhuleni Metropolitan Municipality

– Member – Audit Committee of the Department of Health

– Member – Audit Committee of the Department of Public Service and Administration.


152

4. RECORD OF ATTENDANCE OF MEETINGS

The committee meets per its approved terms of reference, with the NEC members and Chief Executive Officer attending by

invitation.

The committee Chairperson reports back to the NEC on the activities of the committee.

Name of member

Record of attendance

20 January 2014 5 June 2014 14 March 2015

Mr Chose Choeu

Ms Elizabeth Dlamini-Khumalo

Dr Faizel Randera

Ms Laura Machaba-Abiodun

Mr William Huma

5. REMUNERATION PHILOSOPHY

SALGA’s remuneration philosophy is designed to attract, develop and retain passionate, committed and talented people who are

required to effectively implement the overall SALGA strategy to the benefit of SALGA’s membership.

The remuneration strategy for the executive management team is based on principles of retention of key and critical skills and

to drive performance in alignment with SALGA’s strategy, through guaranteed pay, short and long-term incentives. A significant

portion of the executive management team’s total potential remuneration is performance-related in order to drive the right

behaviour to optimise the organisation’s performance taking into account the prevailing economic environment.

The performance management and remuneration committee and the National Executive Committee approved the SALGA

remuneration and benefits policy that espouses the organisations remuneration philosophy. Among the SALGA remuneration

philosophy or principles is the following:

All positions are evaluated for their relative size, scope and impact using the HAY job evaluation methodology.

5.1 The HAY Method

The Hay guide chart profile method of job evaluation evolved over a 40 year period to its current form. The methodology is a

combination of a point factor approach and the factor comparison method; it thus provides both a rating and a ranking. This is

important, as the ‘ranking’ is sensitive to the value system of the organisation, while ‘rating’ gives a common basis for comparison

across functions and across companies. There are two fundamental decisions to be made in designing a job evaluation system;

‘WHAT’ and ‘HOW’ factors should be measured.


153

6. REMUNERATION AND BENEFITS

The organisation under the direction and advice of the performance management and remuneration panel introduced employee

benefits that were approved by panel on 20 January 2014 and by the NEC on 30 January 2014.

6.1 Harmonisation of conditions of service

The South African Local Government Association (SALGA) was established in 1996 as a voluntary body representing all the

municipalities of the country and its nine Provincial Local Government Associations.

SALGA has demonstrated a political preference for a unitary structure. This has seen it driving one structure that is governed

through a constitution as a central unit.

In 2002, the association merged the administration of the nine provincial associations. The national body entered into Memorandums

of Understanding (MoUs) with the provincial associations which saw the assets, staff and liabilities of the associations transferred to

SALGA with effect from July 2002. It also meant that the annual membership levies of those municipalities who were members of

each of the provincial associations would be levied by SALGA and paid directly to the association. This process was completed and

by 1 July 2006 all of the nine provincial local government associations had transferred their administration to SALGA.

The amalgamation of the nine provincial associations with SALGA national resulted in varying conditions of service with employees

who were part of amalgamation in line with section 197 of the Labour Relations Act.

In the 2014/15 financial year the organisation with the direction of the performance management and remuneration committee

has harmonised the conditions of service across all SALGA employees.

6.2 Executive management team (EMT) remuneration

Executive management team (EMT) total remuneration package consists of the following:

Total guaranteed pay which includes benefits, is subject to an annual review by the performance management and

remuneration committee;

Variable pay short-term incentive scheme is designed to focus the executive management team on the achievement of

the short-term strategic, financial and operational objectives in the annual performance plan (APP). The incentive is payable

on achieving certain pre-defined stretch targets, in line with our strategy. The scheme rewards performance when targets

are met, with higher rewards for exceptional performance; and

Variable long-term incentive are designed to align the objectives of senior management with those of SALGA’ s five-year

strategic plan (2012 to 2017) and therefore ensure sustainable long-term performance.

6.3 Other employees remuneration

Other employee total remuneration package consists of the following:

Total guaranteed pay, which includes benefits, is subject to an annual review by the performance management and

remuneration committee; and

Variable pay short-term incentive scheme is designed to focus employees on the achievement of the short-term strategic,

financial and operational objectives in the annual performance plan (APP). The incentive is payable on achieving certain

pre-defined stretch targets, in line with our strategy. The scheme rewards performance when targets are met, with higher

rewards for exceptional performance.


154

6.4 Retention scheme – variable long-term incentive (LTI) scheme

The performance management and remuneration committee on 14 March 2015 approved a retention scheme in the year under

review for all employees on fixed-term contracts (FTC) that are performance based.

The retention scheme is a performance based long-term incentive (LTI) scheme designed to retain fixed-term contract (FTC)

employees that are talented; perform at an acceptable level and are critical in driving SALGA’s long-term strategy.

The long-term incentive scheme (LTI) grants conditional awards which vest after a three-year performance period, subject to the

extent to which agreed performance conditions have been met. The performance conditions are determined by the performance

management and remuneration committee and are based on an acceptable performance rating per SALGA’s performance rating

matrix applicable for all employees.

6.5 Performance rewards - variable short-term incentive (STI) scheme

The organisation has a short-term incentive (STI) scheme that has been cascaded to all employee levels.

It is a variable pay short-term incentive scheme designed to focus all employees on the achievement of the short-term strategic,

financial and operational objectives in the annual performance plan (APP). The incentive is payable on achieving certain pre-

defined stretch targets, in line with SALGA’s strategy.

6.6 Behaviour Charter – variable short-term incentive (STI) scheme

The organisation has implemented the Behaviours Charter as part of its performance management system for the first time in

2014/2015 financial year. The Behaviours Charter is a framework that reflects key behaviours that will support the values and

culture desired by the organisation.

Its objective is to shape operational excellence, support management and organisational development, develop capacity and core

leadership within the organisation and to identify areas of individual and team development.

The Behaviours Charter component has a total weight of 15 in the performance scorecards of SALGA employees.

The Behaviours Charter is premised on two types of behaviour components:

(1) Enabling behaviour (supported by the organisation); and

(2) Constraining behaviours (discouraged by the organisation).

The organisation’s individual performance management system (iPMS) focuses on enabling behaviour that is supported by the

values espoused by the organisation:


155

All of the above mentioned behaviours have their sub-behavioural statements which will help as measures when deciding on the

rating:

Sub-behavioural statements for enabling behaviours

Acts in accordance with SALGA’s mandate, vision, mission and values

Highest level organisational ethics and adhere to policies and procedures

Displays professionalism

Integrity

Adheres to SALGA’s policies and procedures


Responds proactively, promptly and efficiently to customers

We will be responsive and member centric

Understanding of their customer’s business challenges and expectations

Accountability

Delivers quality service and outputs


Self-development

Strive for and recognise excellence

Recognises good behaviour and good performance

Embraces change

Innovative

Strives for the attainment of the SALGA vision

Encourages an environment of continuous learning


Aligns their individual goals to those of the team

Work collectively in cooperative teams

Considers the views, ideas and interests of all the team members

Assisting colleagues with workload and development

Encourages working together

Developing constructive relationships with external stakeholders

Shows collective ownership of results


Open and transparent in communication

Communicate timeously, accurately and appropriately

Accessible and approachable

Shares and transfers knowledge

Provides ongoing feedback

Communicates proactively


156


Treats everyone in SALGA with equal respect and dignity

Allow free expression of views

We will promote mutual respect

Developing constructive relationships

Creates a conducive environment

Engages with others in an appropriate manner

The performance measurements of the Behaviour’s Charter is conducted through the application of a 360 degree assessment

which include feedback from an employee’s subordinates, peers and supervisor, as well as a self-evaluation.

6.7 Remuneration packages that are on “Personal to Holder” basis

SALGA has as part of its remuneration escalation management efforts, sought to provide very tight salary grading and remuneration

curve for all positions per the Hay grading system. With this remuneration modelling exercise it has identified employees which

are remunerated within the range at the time of adopting the Hay grading system and also identified employees that are outside

the approved grading scales.

The organisation’s remuneration and benefits policy recognises that there are a few instances where individual employees might

be enjoying salary packages which exceed the maximum of the relevant salary band within the organisation’s salary framework.

Examples of such instances include:

Individual salaries inherited during the amalgamation of some of its provincial offices into the organisation;

Where the need for a certain skill requires SALGA’s salary offer to exceed the maximum of the salary band in order to attract

this specific skill (note this will only be in instances where the successful candidate’s existing salary package is equal to or

higher than the maximum of the SALGA salary band within the framework);

Where an employee has, due to higher annual salary increases as a result of continuous excelling performance, moved

outside of the band irrespective of the fact that the bands may have been adjusted with the base cost of living increase on

an annual basis;

Where certain employees’ salary packages exceed the maximum of the respective salary bands within the framework.

These employees who are outside this range, are ring-fenced as employees whose remuneration is being managed on a “personal

to holder basis” until their contract employment term expires.

SALGA employs its executive management team on a fixed term contract. This applies to the incumbent Chief Executive Officer

and his direct reports. The Chief Executive Officer’s current remuneration has been identified to be one of these category of

employees who are on a “personal to holder basis” till the expiry of the contract or through natural attrition or earlier.

This means that when SALGA recruits a replacement candidate, it shall remunerate that new employee on the basis of the

approved remuneration scale that will be substantially less than the current “personal to holder” legacy packages that is disclosed

in the annual report.

Notwithstanding, the efforts to manage the escalation of remuneration at SALGA, particularly those of executives, it is important

to note that SALGA had to review its remuneration policies as it pertains to its executives and benchmark these with municipalities

particularly Metro’s since metropolitan municipalities pose the greatest direct remuneration competitor to SALGA. The review

exercise was necessitated by the recent recruitment and poaching of top SALGA Executives over the past three years by the

Gauteng Metropolitan municipalities that have employed SALGA executives in droves. SALGA is alive to this labour market

competitiveness.


157

SALGA is committed to rectifying and normalizing the remuneration to be in harmony with the sector imperative of managing

down the salary packages payable to executive management. This will also take into the account the upper limit guidelines that

the Minister of Cooperative Governance and Traditional Affairs (CoGTA) set for the sector which compels municipalities to recruit

new Executive Managers at salary packages that will be in line with prescribed salary limits, and SALGA will use this as a basis when

reviewing its salary packages for new recruits .

7. ORGANISATIONAL PERFORMANCE

As the performance management and remuneration committee we monitor and review organisational performance on a

quarterly basis per the committee’s terms of reference.

In view of the organisation having attained 98 percent of its targets against pre-determined objectives and three consecutive

clean audits, our oversight over organisational performance has been consistent and we are accordingly pleased with the

achievement.

8. INDIVIDUAL PERFORMANCE MANAGEMENT

In regard to performance management of executives the committee provides oversight over formulation of targets, and ensures

that these remain challenging and reflect SALGA’s strategic objectives. Through our oversight function we have determined that

the organisations’ performance curve, which is formulated based on individual performance outcomes, is comparable with a

standard performance curve for high performance organisations.

________________________

Chose Choeu

Chairperson: performance management and remuneration committee

Pretoria

31 July 2015


158

Report on the financial statements

Introduction

1. I have audited the financial statements of the South African Local Government Association set out on pages 164 to 234,

which comprise the statement of financial position as at 31 March 2015, the statement of financial performance, statement

of changes in net assets, cash flow statement and the statement of comparison of budget and actual amounts, for the year

then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information.

Accounting authority’s responsibility for the financial statements

2. The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance

with the South African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and the requirements

of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA), and for such internal control as the

accounting authority determines is necessary to enable the preparation of financial statements that are free from material

misstatement, whether due to fraud or error.

Auditor-general’s responsibility

3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance

with International Standards on Auditing. Those standards require that I comply with ethical requirements, and plan and

perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial

statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material

misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers

internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness

of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial

statements.

5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

6. In my opinion, the financial statements present fairly, in all material respects, the financial position of the South African

Local Government Association as at 31 March 2015 and its financial performance and cash flows for the year then ended, in

accordance with SA Standards of GRAP and the requirements of the PFMA.

Emphasis of matters

7. I draw attention to the matters below. My opinion is not modified in respect of these matters.

Report of the auditor-general to Parliament on the South African Local

Government Association

159

Significant uncertainties

8. With reference to note 31 to the financial statement, the entity is defendant in a lawsuit. The outcome of this lawsuit cannot be

determined at present and no provision for any liability that may result has been made in the financial statements.

Restatement of corresponding figures

9. As disclosed in note 34 to the financial statements, the corresponding figures for 31 March 2014 have been restated as a result

of an error discovered during 2014/15 in the financial statements of the South African Local Government at, and for the year

ended, 31 March 2014.

Report on other legal and regulatory requirements

10. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) and the general notice issued in terms

thereof, I have a responsibility to report findings on the reported performance information against predetermined objectives

for selected objectives presented in the annual performance report, non-compliance with legislation and internal control. The

objective of my tests was to identify reportable findings as described under each subheading but not to gather evidence to

express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined objectives

11. I performed procedures to obtain evidence about the usefulness and reliability of the reported performance information

for the following selected objectives presented in the annual performance report of the public entity for the year ended

31 March 2015:

Goal 1: Accessible, equitable and sustainable municipal services delivered by local government on pages 52 to 58;

Goal 2: Safe and healthy environment and communities on pages 59 to 62;

Goal 4: Effective, responsive and accountable local governance for communities on pages 68 to 79; and

Goal 7: Effective and efficient administration on pages 93 to 103.

12. I evaluated the reported performance information against the overall criteria of usefulness and reliability.

13. I evaluated the usefulness of the reported performance information to determine whether it was presented in accordance

with the National Treasury’s annual reporting principles and whether the reported performance was consistent with the

planned objectives. I further performed tests to determine whether indicators and targets were well defined, verifiable,

specific, measurable, time bound and relevant, as required by the National Treasury’s Framework for managing programme

performance information (FMPPI).

14. I assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

15. I did not identify any material findings on the usefulness and reliability of the reported performance information for the

selected objectives.

Additional matter

16. Although I identified no material findings on the usefulness and reliability of the reported performance information for the

selected programmes objectives, I draw attention to the following matter:



160

Achievement of planned targets

17. Refer to the annual performance report on pages 43 to 103 for information on the achievement of planned targets for the year.

Compliance with legislation

18. I performed procedures to obtain evidence that the public entity had complied with applicable legislation regarding financial

matters, financial management and other related matters. I did not identify any instances of material non-compliance with

specific matters in key legislation, as set out in the general notice issued in terms of the PAA.

Internal control

19. I considered internal control relevant to my audit of the financial statements, the annual performance report and compliance

with legislation. I did not identify any significant deficiencies in internal control.

Pretoria

31 July 2015

Pretoria

31 July 2015



Pretoriaetoria

161

The National Executive Committee as Accounting Authority is required by the Public Finance Management Act (Act 1 of 1999),

to maintain adequate accounting records and is responsible for the content and integrity of the annual financial statements and

related financial information included in this report. It is the responsibility of the National Executive Committee to ensure that

the annual financial statements fairly present the state of affairs of SALGA as at the end of the financial year and the results of its

operations and cash flows for the period then ended. The external auditors are engaged to express an independent opinion on the

annual financial statements and was given unrestricted access to all financial records and related data.

The annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice

(GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.

The annual financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable

and prudent judgements and estimates.

The National Executive Committee (NEC) is of the opinion, that the system of internal control provides reasonable assurance that

the financial records may be relied on for the preparation of the annual financial statements.

The annual financial statements set out on pages 164 to 234, which have been prepared on the going concern basis, and the

performance information set out on pages 43 to 103 were approved by the NEC on 26 May 2015 and were signed on the NEC’s

behalf by:

Thabo Manyoni

Salga Chairperson

Xolile George

Chief Executive Officer

Pretoria

31 July 2015

Accounting Authority’s Responsibilities and Approval

Pretoria

31 July 2015

162

1. COMPOSITION OF THE ACCOUNTING AUTHORITY (NATIONAL EXECUTIVE COMMITTEE)

In terms of Section 49 of the PFMA and the SALGA constitution, the governing body of SALGA is the accounting authority also

referred to as the National Executive Committee (“NEC”).

The accounting authority of SALGA is comprised by the following councillors:

Name of member Designation Provincial chairperson

(where applicable)Role or Working Group

Chairperson

Cllr Thabo Manyoni Chairperson Office Bearer

Cllr Mpho Nawa Deputy Chairperson Office Bearer

Cllr Flora. Maboa-Boltman Deputy Chairperson Office Bearer

Cllr Nombulelo Hermans Deputy Chairperson Office Bearer

Cllr Dudu Mazibuko Member of the NEC Economic Development & Planning

Cllr Tiny Grace Mthimunye Member of the NEC HR Development & Collective

Bargaining

Cllr Christiaan. Neethling Member of the NEC Municipal Trading Services

Cllr Baldwin Matibe

Tshitereke

Member of the NEC Governance & Intergovernmental

Relations

Cllr Boitumelo P. Moloi Member of the NEC Municipal Infrastructure

Cllr Nomakhosazana Meth Ex-officio member of the NEC Chairperson:

SALGA Eastern Cape

Cllr Sebenzile Ngangelizwe Ex-officio member of the NEC Chairperson:

SALGA Free State

Cllr Parks Tau Ex-officio member of the NEC Chairperson:

SALGA Gauteng

Cllr Sibusiso W. Mdabe Ex-officio member of the NEC Chairperson:

SALGA KwaZulu-Natal

Cllr David Magabe Ex-officio member of the NEC Chairperson:

SALGA Limpopo

Cllr Mafika Nkosi Ex-officio member of the NEC Chairperson:

SALGA Mpumalanga

Cllr Willie Johnson Ex-officio member of the NEC Chairperson:

SALGA Northern Cape

Cllr Kaone Mmusi G. Lobelo Ex-officio member of the NEC Chairperson:

SALGA North West

Cllr Demetri Qually Ex-officio member of the NEC Chairperson:

SALGA Western Cape

Cllr Zukiswa Ncitha Member of the NEC

(co-opted)

Community Development

Cllr Subesh Pillay Member of the NEC

(co-opted)

Municipal Finance

Cllr Abraham Bekeer Member of the NEC

(co-opted)

Councillor Support & Welfare

Cllr Zibonele Dumzela Member of the NEC

(co-opted)

Environmental Change &

Sustainability

Mr Xolile George Ex-officio member of the NEC Chief Executive Officer

Accounting Authority’s Responsibilities and Approval

163

ANNUAL FINANCIAL STATEMENTS

164164

South African Local Government Association(Schedule 3A public entity ito the Public Finance Management Act, 1999 and recognised ito the Organised Local Government Act, 1997)

Annual financial statements for the year ended 31 March 2015

Figures in Rand Note(s) 2015

2014

Restated

Assets

Current assets

Operating lease asset 6 41 305 32 225

Trade and other receivables from exchange transactions 8 37 949 785 30 127 743

Cash and cash equivalents 9 154 448 536 116 497 546

192 439 626 146 657 514

Non-current assets

Investment property 2 6 600 000 5 900 000

Property, plant and equipment 3 23 902 654 24 412 036

Intangible assets 4 610 698 648 274

Deposits 5 1 028 068 1 028 068

32 141 420 31 988 378

Total assets 224 581 046 178 645 892

Liabilities

Current liabilities

Finance lease obligation 11 1 285 240 1 402 365

Operating lease liability 6 2 746 976 1 554 015

Trade and other payables from exchange transactions 15 92 297 948 67 111 759

Unspent conditional grants and receipts 12 1 790 897 4 778 917

Provisions 13 7 070 821 -

Deferred revenue 14 2 065 059 3 868 244

107 256 941 78 715 300

Non-current liabilities

Finance lease obligation 11 859 128 1 015 356

Operating lease liability 6 2 818 065 5 463 532

Employee benefit obligation 7 637 000 653 000

Provisions 13 1 508 785 -

5 822 978 7 131 888

Total liabilities 113 079 919 85 847 188

Net assets

Revaluation reserve 10 2 259 566 2 259 566

Accumulated surplus 109 241 561 90 539 138

Total net assets 111 501 127 92 798 704

Total net assets and liabilities 224 581 046 178 645 892

Statement of financial position as at 31 March 2015

165165



Statement of financial performance


2014

Restated

Revenue

Revenue from exchange transactions 17 429 100 083 362 244 562

Other revenue from exchange transactions 19 21 281 983 14 737 346

Investment income 23 13 130 438 6 661 582

Conditional sponsorship – LA Health 17 40 000 40 000

Grant recognised – Free State Department of Cooperative Governance and

Traditional Affairs 17 1 120 323 -

Grant recognised - Eastern Cape Department of Local Government and

Traditional Affairs 17 98 987 1 435 274

Grant recognised – LG SETA (CIP) 17 845 509 1 513 377

Grant recognised – LG SETA (Capacity building) 17 1 743 088 1 412 939

Grant recognised – LG SETA (PBCDP) 17 2 589 879 -

Government grants and subsidies - Executive Authority 17 26 904 000 25 999 000

Sponsorships and donations from non-exchange transactions 17 5 509 690 3 767 406

Grant recognised – Commonwealth Local Government Forum 17 41 560 -

Grant recognised – GIZ Governance Support Programme 17 330 811 -

Total revenue 502 736 351 417 811 486

Expenses

Personnel 22 (270 140 551) (195 757 092)

Administrative 20 (54 437 100) (32 779 260)

Depreciation and amortisation expense 3 & 4 (7 429 746) (4 996 936)

Indirect programme costs 20 (88 348 538) (88 702 476)

Other expenses 20 (62 572 575) (55 598 270)

Finance costs 26 (1 105 418) (952 680)

Total expenses (484 033 928) (378 786 714)

Surplus for the year 18 702 423 39 024 772

166166



Figures in Rand

Revaluation

surplus

Accumulated

surplus Total net assets

Opening balance as previously reported 2 259 566 43 802 972 46 062 538

Adjustments

Prior year adjustments - 7 711 394 7 711 394

Balance at 01 April 2013 as restated 2 259 566 51 514 366 53 773 932

Changes in net assets

Surplus for the year - 39 024 772 39 024 772

Total changes - 39 024 772 39 024 772

Balance at 01 April 2014 2 259 566 90 539 138 92 798 704

Changes in net assets

Surplus for the year - 18 702 423 18 702 423

Total changes - 18 702 423 18 702 423

Balance at 31 March 2015 2 259 566 109 241 561 111 501 127

Note(s) 10

Statement of changes in net assets

167167




2014

Restated

Cash flows from operating activities

Cash receipts from customers 481 783 871 416 173 042

Cash paid to suppliers and employees (448 435 389) (351 684 126)

Cash generated from operations 33 348 482 64 488 916

Interest received 13 130 438 6 661 582

Interest paid (1 105 418) (952 680)

Net cash flows from operating activities 29 45 373 502 70 197 818

Cash flows from investing activities

Purchase of property, plant and equipment 3 (7 480 834) (8 547 496)

Proceeds from sale of property, plant and equipment 3 331 574 161 785

Purchase of intangible assets 4 - (115 513)

Movement in financial assets - (214 448)

Net cash flows from investing activities (7 149 260) (8 715 672)

Cash flows from financing activities

Finance lease payments (273 252) (673 277)

Net cash flows from financing activities (273 252) (673 277)

Net increase in cash and cash equivalents 37 950 990 60 808 869

Cash and cash equivalents at the beginning of the period 9 116 497 546 55 688 677

Cash and cash equivalents at the end of the period 9 154 448 536 116 497 546

Cash flow statement

168168



Budget on comparable basis

Figures in Rand Note(s)

Approved

budget Adjustments Final budget

Actual

amounts on

comparable

basis

Difference

between

final budget

and actual

Revenue

Revenue from exchange transactions

Rendering of services – membership

levies 17 397 569 314 34 500 000 432 069 314 429 100 083 (2 969 231)

Other revenue 19 6 794 400 3 615 574 10 409 974 21 281 983 10 872 009

Investment revenue 23 5 151 445 - 5 151 445 13 130 438 7 978 993

Total revenue from exchange

transactions 409 515 159 38 115 574 447 630 733 463 512 504 15 881 771

Revenue from non-exchange transactions

Conditional sponsorship – LA Health 17 40 000 - 40 000 40 000 -

Grant recognised – Free State

Department of Cooperative Governance

and Traditional Affairs 17 - 1 120 323 1 120 323 1 120 323 -

Grant recognised - Eastern Cape

Department of Local Government and

Traditional Affairs 17 - 98 987 98 987 98 987 -

Grant recognised – LG SETA (CIP) 17 - 1 800 000 1 800 000 845 509 (954 491)

Grant recognised – LG SETA (Capacity

building) 17 - 700 000 700 000 1 743 088 1 043 088

Grant recognised – LG SETA (PBCDP) 17 - 6 207 306 6 207 306 2 589 879 (3 617 427)

Government grants and subsidies 17 26 904 000 - 26 904 000 26 904 000 -

Sponsorships and donations 17 1 800 000 2 700 000 4 500 000 5 509 690 1 009 690

Grant recognised – Commonwealth

Local Government Forum 17 - 41 560 41 560 41 560 -

Grant recognised – LG SETA (LDW) - 350 000 350 000 - (350 000)

Grant recognised – GIZ Governance

Support Programme 17 - 330 811 330 811 330 811 -

Total revenue from non-exchange

transactions 28 744 000 13 348 987 42 092 987 39 223 847 (2 869 140)

Total revenue 438 259 159 51 464 561 489 723 720 502 736 351 13 012 631

Expenditure

Personnel 22 (248 913 488) (21 214 841) (270 128 329) (270 140 551) (12 222)

Administrative 20 (43 541 639) (9 094 963) (52 636 602) (54 437 100) (1 800 498)

Depreciation and amortisation expense 3 & 4 (4 217 607) (3 212 484) (7 430 091)(7 429 746)

345

Indirect programme costs 20 (88 384 465) (4 177 422) (92 561 887) (88 348 538) 4 213 349

Other expenses 20 (51 057 984) (9 875 281) (60 933 265) (62 572 575) (1 639 310)

Finance costs 26 (1 877 592) 368 832 (1 508 760) (1 105 418) 403 342

Total expenditure (437 992 775) (47 206 159) (485 198 934) (484 033 928) 1 165 006

Surplus for the year 266 384 4 258 402 4 524 786 18 702 423 14 177 637

Also refer to note 41.

Statement of comparison of budget and actual amounts

169169



1. PRESENTATION OF FINANCIAL STATEMENTS - BASIS OF PREPARATION

Statement of compliance

The annual financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting

Practice (GRAP), issued by the Accounting Standards Board in accordance with Section 91(1) of the Public Finance Management

Act, 1999 (Act No 1 of 1999).

Basis of measurement

These annual financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost

convention as the basis of measurement, unless specified otherwise. They are presented in South African Rand.

In the absence of an issued and effective Standard of GRAP, accounting policies for material transactions, events or conditions were

developed in accordance with paragraphs 8, 10 and 11 of GRAP 3 as read with Directive 5.

A summary of the significant accounting policies, which have been consistently applied in the preparation of these annual financial

statements, are disclosed below.

1.1 Going concern assumption

These annual financial statements have been prepared based on the expectation that SALGA will continue to operate as a going

concern for at least the next 12 months.

1.2 Significant judgements and sources of estimation uncertainty

In preparing the annual financial statements, management is required to make estimates and assumptions that affect the

amounts presented in the annual financial statements and related disclosures. Use of available information and the application of

judgement is inherent in the formation of estimates. Estimates and underlying assumptions are reviewed on an on-going basis.

Revision to accounting estimates are recognised in the period in which the estimates are revised and in any future period affected.

Actual results in the future could differ from these estimates which may be material to the annual financial statements. Significant

judgements include:

Trade receivables and other receivables

SALGA assesses its trade receivables for impairment at the end of each reporting period. In determining whether an impairment

loss should be recorded in surplus or deficit, management makes judgements as to whether there is observable data indicating a

measurable decrease in the estimated future cash flows from a financial asset.

Fair value estimation

The carrying value less impairment losses of trade receivables and the carrying value of trade payables are deemed to approximate

their fair values.

The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the

current market interest rate that is available to SALGA for similar financial instruments.

Accounting policies

170170



Post-retirement medical benefits

The present value of the post-employment medical obligation depends on a number of factors that are determined on an actuarial

basis using a number of assumptions. The assumptions used in determining the net cost include the discount rate. Any changes

in these assumptions will impact on the carrying amount of post-employment medical obligations.

SALGA determines the appropriate discount rate at the end of each year. This is the interest rate that will be used to determine

the present value of estimated future cash outflows expected to be required to settle the medical obligations. In determining the

appropriate discount rate, SALGA considers the medical aid inflation that have terms to maturity approximating the terms of the

related medical liability.

Other key assumptions for medical aid obligations are based on current market conditions. Additional information is disclosed in

note 7.

Effective interest rate

SALGA uses the prime interest rate to discount future cash flows for payables and/or expenditure and the R186 government bond

rate to discount the future cash flows in receivables and/or revenue.

Allowance for doubtful debts

For trade receivables an impairment loss is recognised in surplus and deficit when there is objective evidence that it is impaired.

The impairment is measured as the difference between the trade receivables carrying amount and the present value of estimated

future cash flows discounted at the effective interest rate, computed at initial recognition.

Useful lives and residual values

SALGA re-assesses the useful lives and residual values of property, plant and equipment on a yearly basis. These assessments

require judgements and assumptions to be made by management. The assessments involve the estimation of months or years

based on past experience and historical information to determine the estimated period of time over which an asset is expected to

be used. Other assessments involve the determination of value where a comparison of the resale value of the specific asset taking

into consideration its age and condition. This determination represents the estimated amount that SALGA would currently obtain

from disposal of the asset, after deducting the estimated costs of disposal, if the asset was already of the age and in the condition

expected at the end of its useful life.

Impairment of non-cash generating assets

Criteria developed by SALGA to distinguish non-cash-generating assets from cash-generating assets are as follows: SALGA’s

mandate or intention is not in pursuit of commercial return but service delivery to its members’ assets acquired by SALGA are

therefore solely to facilitate service delivery to its members (i.e. administrative in nature).

There is no uncertainty as to whether SALGA assets are non-cash generating assets, as SALGA does not have an asset or class of

assets that operate or generate cash flows independently from other assets, nor do its assets form part of a group of assets that

generate cash flows independently from other assets.

Accounting policies

171171



1.3 Investment property

Recognition and measurement

Investment property is property (land or a building-or part of a building-or both) held to earn rental income or for capital

appreciation or both, rather than for:

Use in the production or supply of goods or services.

Administrative purposes. or

Sale in the ordinary course of operations.

Investment property is recognised as an asset when it is probable that the future economic benefits or service potential that are

associated with the investment property will flow to SALGA, and the cost or fair value of the investment property can be measured

reliably.

Investment property is initially recognised at cost plus any transaction costs included in initial measurement.

Where investment property is acquired through a non-exchange transaction, its cost is its fair value as at the date of acquisition.

Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a part of a property. If a replacement

part is recognised in the carrying amount of the investment property, the carrying amount of the replaced part is derecognised.

Subsequent measurement

Subsequent to initial measurement, investment property is measured at fair value.

The fair value of investment property reflects market conditions at the reporting date.

A gain or loss arising from a change in fair value is included in net surplus or deficit for the period in which it arises.

SALGA does not amortise the revaluation surplus subsequent to transfer. The revaluation surplus is realised upon disposal or

retirement of the asset. Upon transfer of the owner occupied property to investment property the revaluation surplus is treated in

the following manner:

Any remaining part of the increase is credited directly to net assets in revaluation surplus;

On subsequent disposal of the investment property, the revaluation surplus included in net assets may be transferred to

accumulated surpluses or deficits. The transfer from revaluation surplus to accumulated surpluses or deficits is not made

through surplus or deficit; and

Fair value adjustments are recognised as profit or loss through the statement of financial performance Re-measurements

to fair value are made annually to ensure that the carrying amount does not differ materially from that which would be

determined using fair value at the end of the reporting period.

Accounting policies

172172



1.4 Property, plant and equipment

Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in the

production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used for more

than one period.

Initial recognition and measurement

The cost of an item of property, plant and equipment is recognised as an asset when:

It is probable that future economic benefits or service potential associated with the item will flow to the entity; and

The cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost.

The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the

location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and

rebates are deducted in arriving at the cost.

Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition.

Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary assets, or a

combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired

item’s fair value was not determinable, it’s deemed cost is the carrying amount of the asset(s) given up.

When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as

separate items (major components) of property, plant and equipment.

The cost of an item of property, plant and equipment is recognised as an asset if and only if;

It is probable that the future economic benefits or service potential associated with the item will flow to SALGA and the

cost of fair value of the item can be measured reliably.

Where an asset is acquired at a cost that is less than a thousand Rand, its cost is fully depreciated in the period in which it

is acquired.

Subsequent expenditure

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred

subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of

property, plant and equipment, the carrying amount of the replaced part is derecognised.

Subsequent expenditure of an item of property, plant and equipment is recognised as an asset if and only if;

It is probable that the future economic benefits or service potential associated with the item will flow to SALGA; and

The cost or fair value of the item can be measured reliably.

Costs of the day-to-day servicing are recognised in surplus and deficit as incurred.

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses.

Accounting policies

173173



Following initial recognition at cost, land and buildings classified as property, plant and equipment is carried at revalued amount,

being the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated

impairment losses.

Revaluations are made with sufficient regularity such that the carrying amount does not differ materially from that which would

be determined using fair value at the end of the reporting period.

When an item of property, plant and equipment is revalued, any accumulated depreciation at the date of the revaluation is

restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount of the asset after

revaluation equals its revalued amount.

When an item of property, plant and equipment is revalued, any accumulated depreciation at the date of the revaluation is

eliminated against the gross carrying amount of the asset and the net amount restated to the revalued amount of the asset.

Any increase in an asset’s carrying amount, as a result of a revaluation, is credited directly to a revaluation surplus. The increase

is recognised in surplus or deficit to the extent that it reverses a revaluation decrease of the same asset previously recognised in

surplus or deficit.

Any decrease in an asset’s carrying amount, as a result of a revaluation, is recognised in surplus or deficit in the current period. The

decrease is debited directly to a revaluation surplus to the extent of any credit balance existing in the revaluation surplus in respect

of that asset.

The revaluation surplus in equity related to a specific item of property, plant and equipment is transferred directly to retained

earnings when the asset is derecognised.

The revaluation surplus in equity related to a specific item of property, plant and equipment is transferred directly to retained

earnings as the asset is used. The amount transferred is equal to the difference between depreciation based on the revalued

carrying amount and depreciation based on the original cost of the asset.

Property, plant and equipment are depreciated on the straight line basis over their expected useful lives taking into account their

estimated residual value.

The useful lives of items of property, plant and equipment have been assessed as follows:

Item Average useful life

Land Indefinite, not depreciated

Buildings 20 to 75 years

Furniture and fixtures 3 to 20 years

Motor vehicles 5 years

Office equipment 3 to 20 years

IT equipment 3 to 4 years

Leasehold improvements The shorter of useful life or lease term (36 to 60 months)

Leased assets (Equipment) The shorter of useful life or lease term (24 to 36 months)

Accounting policies

174174



Residual values

The residual value, and the useful life and depreciation method of each asset are reviewed at the end of each reporting date. If the

expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

Reviewing the useful life of an asset on an annual basis does not require the entity to amend the previous estimate unless

expectations differ from the previous estimate.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is

depreciated separately.

The depreciable amount of an asset is determined by deducting the residual value of an asset from its original cost (or revalued

amount, where applicable).

The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another

asset.

No residual value is assessed for assets where the value of the residual is considered immaterial in relation to the cost of the asset.

Management intends using the assets shown in the statement of financial position over their entire economic life.

The residual values of motor vehicles are set as determined by market forces. When setting a residual value for a motor vehicle

consideration is given to the expected useful life and expected proceeds that could be received today if the same vehicle at the

end of its useful life were to be sold.

Derecognition

Items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic

benefits or service potential expected from the use of the asset.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when

the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined

as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

The carrying amount of property, plant and equipment is reviewed for impairment when events or changes in the circumstances

indicate that the carrying amount may not be recoverable.

Specific categories of property, plant and equipment:

Land and buildings

Land and buildings are separable assets and are accounted for separately, even when they are acquired together. Land has an

unlimited useful life and therefore is not depreciated.

Buildings have a limited useful life and therefore are depreciable assets.

The useful lives of the land and buildings are re-assessed annually.

Accounting policies

175175



Furniture and fittings and office equipment

Office equipment and furniture and fittings are not currently componentised as no component accounting is considered necessary

due to the nature of office furniture and fittings and office equipment, namely, that the useful lives of individual components do

not differ from the whole.

Estimated useful lives are based on past experience and historical information.

IT equipment

IT equipment can be separated into the following components:

Computer hardware

Computer software (integral part and embedded into hardware)

IT equipment is not currently componentised as no component accounting is considered necessary due to the nature of the

computer information.

Expenditure relating to ongoing maintenance (which does not meet the recognition criteria), IT support and customisation is

expensed in the statement of financial performance as and when incurred.

Purchased software is recognised at cost, including all direct costs associated with the customisation and installation thereof.

Motor vehicles

Where there is an indicator of impairment, the recoverable amount of the individual asset is estimated. When the residual values

are re-assessed annually, the carrying amount is compared to the resale value of the specific vehicle taking into consideration its

age and condition.

Gains and losses

The gains or losses arising from derecognition or disposal of an item of property, plant and equipment is included in surplus and

deficit when the item is derecognised. The gains and losses arising from derecognition of an item of property, plant and equipment

is determined as the difference between the net disposal proceeds, if any and the carrying amount of the item.

Leased assets

Leased assets can be separated into the following categories:

Leases for office equipment

Leasehold improvements

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no

reasonable certainty that SALGA will obtain ownership by the end of the lease term.

Leasehold improvements arise when SALGA improves the premises occupied under operating leases to suit operational

requirements. Capitalised leasehold improvements are depreciated over the shorter of the estimated useful life of the asset and

the lease term.

Accounting policies

176176



1.5 Intangible assets

An Intangable asset is identifiable if it is either:

Separable, i.e. is capable of being separated or divided from an entity and sold, transferred, licensed, rented or exchanged,

either individually or together with a related contract, identifiable assets or liability, regardless of whether the entity intends

to do so; or

Arises from binding arrangements (including rights from contracts), regardless of whether those rights are transferable or

separable from the entity or from other rights and obligations.

An intangible asset is recognised when:

It is probable that the expected future economic benefits or service potential that are attributable to the asset will flow to

the entity; and

The cost or fair value of the asset can be measured reliably.

The entity assesses the probability of expected future economic benefits or service potential using reasonable and supportable

assumptions that represent management’s best estimate of the set of economic conditions that will exist over the useful life of the

asset.

Intangible assets are initially recognised at cost.

Subsequent to initial recognition intangible assets are carried at cost less any accumulated amortisation and any impairment

losses.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to

the period over which the asset is expected to generate net cash inflows or service potential. Amortisation is not provided for these

intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired.

For all other intangible assets amortisation is provided on a straight line basis over their useful life.

The amortisation period and the amortisation method for intangible assets are reviewed at each reporting date.

Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows:

Item Useful life

Computer software 2 to 5 years and indefinite

Intangible assets are derecognised:

On disposal; or

When no future economic benefits or service potential are expected from its use or disposal.

The gain or loss is the difference between the net disposal proceeds, if any, and the carrying amount. It is recognised in surplus or

deficit when the asset is derecognised.

Accounting policies

177177



1.6 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or a residual interest of

another entity.

Classification

SALGA has the following types of financial assets (classes and category) as reflected on the face of the statement of financial

position or in the notes thereto:

Class Category

Trade and other receivables from exchange transactions Financial asset measured at amortised cost

Cash and cash equivalents Financial asset measured at amortised cost

Other financial assets (rental deposits) – exchange transactions Financial asset measured at amortised cost

Operating lease receivables – exchange transactions Financial asset measured at amortised cost

SALGA has the following types of financial liabilities (classes and category) as reflected on the face of the statement of financial

position or in the notes thereto:

Class Category

Trade and other payables from exchange transactions Financial liability measured at amortised cost

Membership levy received in advance (over-payment) –

exchange transactions

Financial liability measured at amortised cost

Sundry payables – exchange transactions Financial liability measured at amortised cost

Other payables (lodge cards) – exchange transactions Financial liability measured at amortised cost

Initial recognition

SALGA recognises financial assets and liabilities in its statement of financial position when the entity becomes a party to the

contractual provisions of the instrument.

SALGA recognises financial assets and liabilities using trade date accounting.

Initial measurement of financial assets and financial liabilities

When a financial asset or liability is recognised initially, SALGA measures it at its fair value, plus in the case of a financial asset or

financial liability initially not subsequently measured at fair value, transaction costs that are directly attributable to the acquisition

or issue of the financial asset or financial liability.

Subsequent measurement of financial assets and financial liabilities

SALGA measures all financial assets and financial liabilities after initial recognition using the following categories:

Financial instruments at amortised cost.

Accounting policies

178178



All financial assets measured at amortised cost are subject to an impairment review.

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured

at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of

any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an

allowance account) for impairment or uncollectibility.

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group of

financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period. The effective

interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial

instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When

calculating the effective interest rate, the entity estimate cash flows considering all contractual terms of the financial instrument

(for example, prepayment, call and similar options) but does not consider future credit losses. The calculation includes all fees and

points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and

all other premiums or discounts. There is a presumption that the cash flows and the expected life of a group of similar financial

instruments can be estimated reliably. However, in those rare cases when it is not possible to reliably estimate the cash flows or the

expected life of a financial instrument (or group of financial instruments), the entity shall use the contractual cash flows over the

full contractual term of the financial instrument (or group of financial instruments).

Impairment and uncollectibility of financial assets

At the end of each reporting period SALGA assess whether there is any objective evidence (e.g. continuous defaults on settlement)

that a financial asset or group of financial assets is impaired.

Financial assets measured at amortised cost.

If there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred, the

amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future

cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest

rate. The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised

in surplus or deficit.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event

occurring after the impairment was recognised, the previously recognised impairment loss is reversed directly in surplus or deficit.

The reversal does not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had

the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in surplus

or deficit.

Interest, losses or gains

Interest relating to a financial instrument or a component that is a financial liability, is recognised as income or expense in surplus

or deficit.

Losses and gains relating to a financial instrument or a component that is a financial liability is recognised as income or expense

in surplus or deficit.

Accounting policies

179179



1.7 Leases

Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than the form of the

contract. Situations that individually or in combination would normally lead to a lease being classified as a finance lease are:

The lease transfers ownership of the asset to SALGA by the end of the lease term;

SALGA has the option to purchase the asset at a price that is expected to be sufficiently lower than the fair value at the

date the option becomes exercisable for it to be reasonable certain, at the inception of the lease, that the option will be

exercised;

The lease term is for the major part of the economic life of the asset even if title is not transferred;

At the inception of the lease the present value of the minimum lease payments amounts to at least substantially all of the

fair value of the leased asset;

The leased assets are of such a specialised nature that only the lessee can use them without major modifications;

If SALGA can cancel the lease, the lessor’s losses associated with the cancellation are borne by SALGA;

Gains or losses from the fluctuation in the fair value of the residual accrue to SALGA (e.g, in the form of a rent rebate

equalling most of the sales proceeds at the end of the lease);

The lessee has the ability to continue the lease for a secondary period at a rent that is substantially lower than market rent;

and

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership.

An operating lease is a lease other than a finance lease.

Finance leases - where SALGA is the lessee

Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the

leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included

in the statement of financial position as a finance lease obligation.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.

Minimum lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance

charge is allocated to each period during the lease term so as to produce a constant periodic reduction of the remaining balance

of the liability.

Subsequent to initial recognition the asset is accounted for in accordance with the accounting policy applicable to that asset.

Operating leases - where SALGA is the lessor

Operating lease income is recognised as revenue on a straight-line basis over the lease term.

Operating leases - where SALGA is the lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the

amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability.

Any contingent rentals are expensed in the period in which they are incurred.

Accounting policies

180180



Assets under operating leases are not recognised in the statement of financial position.

1.8 Cash and cash equivalents

Cash comprises cash on hand and demand deposits.

Cash and cash equivalents are measured at amortised cost.

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are

subject to an insignificant risk of changes in value.

Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

For an investment to qualify as a cash equivalent it must be readily convertible to a known amount of cash and be subject to an

insignificant risk of changes in value. Therefore, an investment normally qualifies as a cash equivalent only when it has a short

maturity of, say, three months or less from the date of acquisition.

SALGA does not have an overdraft facility and is restricted in terms of section 66(3)(c) of the PFMA to borrow money, subject to the

approval of the Minister (Executive Authority) in concurrence with the Minister of Finance.

1.9 Revaluation reserve

The revaluation reserve results from the revaluation of property, plant and equipment while still owner occupied. It remains after

treating the same assets as investment property since they were vacated by the entity.

Upon transfer of the owner-occupied property to investment property the revaluations surplus is treated in the following manner:

Any remaining part of the increase is credited directly to net assets in revaluation surplus. On subsequent disposal of the

investment property, the revaluation surplus included in net assets may be transferred to accumulated surpluses or deficits.

The transfer from revaluation surplus to accumulated surpluses or deficits is not made through surplus or deficit.

1.10 Impairment of non-cash-generating assets

Non-cash-generating assets are assets other than cash-generating assets.

Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of

the loss of the asset’s future economic benefits or service potential through depreciation (amortisation).

Recoverable service amount is the higher of a non-cash-generating asset’s fair value less costs to sell and its value in use.

Useful life is either:

(a) The period of time over which an asset is expected to be used by SALGA; or

(b) The number of production or similar units expected to be obtained from the asset by SALGA.

Criteria developed by SALGA to distinguish non-cash-generating assets from cash-generating assets are as follows: SALGA’s

mandate or intention is not in pursuit of commercial return but service delivery to its members, therefore assets acquired by SALGA

are solely for service delivery or facilitate service delivery to its members( i.e. administrative in nature).

Accounting policies

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There is no uncertainty as to whether SALGA assets are non-cash generating assets, as SALGA does not have an asset or class of

assets that operate or generate cash flows independently from other assets, nor does its assets form part of a group of assets that

generate cash flows independently from other assets.

Identification

When the carrying amount of a non-cash-generating asset exceeds its recoverable service amount, it is impaired.

SALGA assesses at each reporting date whether there is any indication that a non-cash-generating asset may be impaired. If any

such indication exists, SALGA estimates the recoverable service amount of the asset.

When SALGA is assessing whether there is any indication that an asset may be impaired, at a minimum the following indications

are considered:

External sources of information

(a) Cessation, or near cessation, of the demand or need for services provided by the asset.

(b) Significant long-term changes with an adverse effect on the entity have taken place during the period or will take place in

the near future, in the technological, legal or government policy environment in which the entity operates.

Internal sources of information

(a) Evidence is available of physical damage of an asset.

(b) Significant long-term changes with an adverse effect on the entity have taken place during the period, or are expected to

take place in the near future, in the extent to which, or manner in which, an asset is used or is expected to be used. These

changes include the asset becoming idle, plans to discontinue or restructure the operation to which an asset belongs, or

plans to dispose of an asset before the previously expected date.

(c) Evidence is available from internal reporting that indicates that the service performance of an asset is, or will be, significantly

worse than expected.

Value in use

Value in use of a non-cash-generating asset is the present value of the asset’s remaining service potential.

The present value of the remaining service potential of non-cash-generating assets is determined using the following approach:

Service units approach

The present value of the remaining service potential of the asset is determined by reducing the current cost of the remaining

service potential of the asset before impairment, to conform to the reduced number of service units expected from the asset in its

impaired state. The current cost of replacing the remaining service potential of the asset before impairment is determined as the

depreciated reproduction or replacement cost of the asset before impairment, whichever is lower.


If the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the carrying amount of the asset

is reduced to its recoverable service amount. This reduction is an impairment loss.

An impairment loss is recognised immediately in surplus or deficit.

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Reversal of an impairment loss

SALGA assess at each reporting date whether there is any indication that an impairment loss recognised in prior periods for a non-

cash-generating asset may no longer exist or may have decreased. If any such indication exists, the recoverable service amount of

that asset is estimated.

An impairment loss recognised in prior periods for a non-cash-generating asset is reversed if there has been a change in the

estimates used to determine the asset’s recoverable service amount since the last impairment loss was recognised.

The carrying amount of the asset is increased to its recoverable service amount. The increase is a reversal of an impairment loss.

The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed the carrying amount

that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised for the asset in

prior periods.

A reversal of an impairment loss for a non-cash-generating asset is recognised immediately in surplus or deficit.

Any reversal of an impairment loss of a revalued non-cash-generating asset is treated as a revaluation increase.

After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the non-cash-generating asset is

adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a

systematic basis over its remaining useful life.

1.11 Employee benefits

Short-term employee benefits

The cost of short-term employee benefits, (those payable within 12 months after the end of the reporting period in which the

service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as study leave), are

recognised in the period in which the service is rendered and are not discounted.

The organisation remunerates employees on total cost-to-company basis, this package includes SALGA’s portion of contribution in

respect of retirement benefits. The expected cost of compensated absences is recognised as an expense as the employees render

services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs.

The expected cost of bonus payments is recognised as an expense when there is a legal or constructive obligation to make such

payments as a result of past performance.

Defined contribution plans

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

Payments made to industry-managed retirement benefit schemes are dealt with as defined contribution plans where the SALGA’s

obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit plan.

SALGA’s defined contribution plans are as follows:

Pension fund - an employer contribution based on 10.5% p.a. of an employee’s basic salary towards pension and/or

retirement funds. Employees are required to contribute a corresponding contribution of 6.5% p.a. based on their basic

salary.

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Medical aid - an employer contribution capped at R 2 028 per month per employee. The contribution amount is reviewed

annually depending on prevailing medical insurance inflation.

Group risk - an employer contribution that covers funeral benefit for the employee and immediate family members.

The risk cover also includes life assurance at three times an employee’s annual salary in case of death. The risk cover is based

on 1.45% of SALGA’s basic payroll costs.

Long-term incentive scheme - the employer provides for long-term incentive (LTI) scheme for fixed term contract (FTC)

employees. These employees make-up the top management structure of the organisation and are employed on a five year

fixed term contract. The incentive scheme is based on performance (merit) and the employee remaining in the employ of

the organisation for a period longer than three years.

Defined benefit plans

A defined benefit plan is a post-employment benefit plan where the entity’s obligation is to provide the agreed benefits to current

and former employees; and the actuarial risks fall, in substance, on the entity.

For defined benefit plans, the cost of providing the benefits is determined using the projected credit method.

Re-measurements or actuarial valuations are conducted on an annual basis by independent actuaries separately for each plan.

SALGA recognises the net total of the following amounts in surplus or deficit:

Interest cost; and

Re-measurements or actuarial gains and losses

Gains or losses on the curtailment or settlement of a defined benefit plan is recognised when SALGA is demonstrably committed

to curtailment or settlement.

The amount recognised as an obligation in the statement of financial position represents the present value of the defined benefit

obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service costs, and reduced by the fair

value of plan assets.

SALGA provides post-employment health care benefit upon retirement to some retirees.

The entitlement to post-retirement health care benefits is based on the employee remaining in service up to retirement age and

the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment.

Independent qualified actuaries carry out valuations of these obligations. An annual charge to surplus or loss is made to cover both

these liabilities.

1.12 Provisions and contingencies

Provisions are recognised when:

SALGA has a present obligation as a result of a past event;

It is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the

obligation; and

A reliable estimate can be made of the obligation.

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The amount of a provision is the best estimate of the expenditure expected to settle the present obligation at the reporting date.

Where the effect of time value of money is material, the amount of a provision is the present value of the expenditures expected

to settle the obligation.

The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the

liability.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the

reimbursement is recognised when, and only when, it is virtually certain that reimbursement will be received if SALGA settles

the obligation. The reimbursement is treated as a separate asset. The amount recognised for the reimbursement is limited to the

amount of the provision.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no

longer probable that an outflow of resources embodying economic benefits or service potential will be required to settle the

obligation.

Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase

is recognised as an interest expense.

A provision is used only for expenditures for which the provision was originally recognised.

Provisions are not recognised for future operating surpluses.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 31.

1.13 Conditional grants and receipts

Revenue received from conditional grants, donations and funding are recognised as revenue and a corresponding asset to the

extent that SALGA has complied with any of the criteria, conditions or obligations embodied in the agreement. To the extent that

the criteria, conditions or obligations have not been met a liability is recognised.

1.14 Revenue from exchange transactions

Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an

increase in net assets.

An exchange transaction is one in which SALGA receives assets or services, or has liabilities extinguished, and directly gives

approximately equal value (primarily in the form of goods, services or use of assets) to the other party in exchange.

Measurement

Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates.

Accounting policies

185185



Rendering of services

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the

transaction is recognised by reference to the stage of completion of the transaction at the reporting date. The outcome of a

transaction can be estimated reliably when all the following conditions are satisfied:

The amount of revenue can be measured reliably;

It is probable that the economic benefits or service potential associated with the transaction will flow to SALGA;

The stage of completion of the transaction at the reporting date can be measured reliably; and

The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

When services are performed by an indeterminate number of acts over a specified time-frame, revenue is recognised on a

straight line basis over the specified time-frame unless there is evidence that some other method better represents the stage of

completion. When a specific act is much more significant than any other acts, the recognition of revenue is postponed until the

significant act is executed.

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only

to the extent of the expenses recognised that are recoverable.

Stage of completion for membership levies

The membership levy entitles members to ‘services’ or ‘benefits of association’ for the financial period of SALGA. Although the

formula for fees is based on annual budgeted salary, this is not relevant in terms of revenue recognition. The recognition of revenue

depends, rather, on the timing, nature and value of benefits provided.

On the basis of the accounting standard GRAP 9, the stage of completion needs to be determined at year end, and revenue

recognised in accordance with the stage of completion of the transaction.

The guidance in GRAP 9 par A11 of the Appendix also states that the membership levies should be recognised on the basis which

reflects the timing of benefits provided.

“Revenue recognition depends on the nature of the services provided. If the fee permits only membership, and all other services or

products are paid for separately, or if there is a separate annual subscription, the fee is recognised as revenue when no significant

uncertainty as to its collectability exists. If the fee entitles the member to services or publications to be provided during the

membership period or to purchase goods or services at prices lower than those charged to non-members, it is recognised on a

basis that reflects the timing, nature and value of the benefits provided”.

1.15 Revenue from non-exchange transactions

Non-exchange transactions are defined as transactions where the entity receives value from another entity without directly giving

approximately equal value in exchange.

Transfers are inflows of future economic benefits or service potential from non-exchange transactions, other than taxes.


An inflow of resources from a non-exchange transaction recognised as an asset is recognised as revenue, except to the extent that

a liability is also recognised in respect of the same inflow.

Accounting policies

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As SALGA satisfies a present obligation recognised as a liability in respect of an inflow of resources from a non-exchange transaction

recognised as an asset, it reduces the carrying amount of the liability recognised and recognises an amount of revenue equal to

that reduction.

Where a liability is required to be recognised it will be measured as the best estimate of the amount required to settle the obligation

at the reporting date.

Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates.

Transfers

Apart from services in kind, which are not recognised, SALGA recognises an asset in respect of transfers when the transferred

resources meet the definition of an asset and satisfy the criteria for recognition as an asset.

Transferred assets are measured at their fair value as at the date of acquisition.

Conditional grants and receipts

Revenue received from conditional grants, donations and funding are recognised as revenue and a corresponding asset to the

extent that SALGA has complied with any of the criteria, conditions or obligations embodied in the agreement. To the extent that

the criteria, conditions or obligations have not been met a liability is recognised.

Gifts and donations

Gifts and donations are recognised as assets and revenue when it is probable that the future economic benefits or service potential

will flow to SALGA and the fair value of the assets can be measured reliably.

1.16 Investment income

Investment income is recognised on a time-proportion basis using the effective interest method.

1.17 Budget information

General purpose financial reporting by SALGA shall provide information on whether resources were obtained and used in

accordance with the legally adopted budget.

The annual financial statements and the budget are prepared on a comparable basis of accounting, therefore a comparison with

the budgeted amounts for the reporting period have been included in the notes to the annual financial statements.

1.18 Translation of foreign currencies

Foreign currency transactions

A foreign currency transaction is recorded, on initial recognition in Rands, by applying to the foreign currency amount the spot

exchange rate between the functional currency and the foreign currency at the date of the transaction.

Accounting policies

187187



At each reporting date:

Foreign currency monetary items are translated using the closing rate;

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange

rate at the date of the transaction; and

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the

date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those

at which they were translated on initial recognition during the period or in previous annual financial statements are recognised in

surplus or deficit in the period in which they arise.

When a gain or loss on a non-monetary item is recognised directly in net assets, any exchange component of that gain or loss is

recognised directly in net assets. When a gain or loss on a non-monetary item is recognised in surplus or deficit, any exchange

component of that gain or loss is recognised in surplus or deficit.

Cash flows arising from transactions in a foreign currency are recorded in Rands by applying to the foreign currency amount the

ruling spot exchange rate.

1.19 Comparative figures

Where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year.

1.20 Fruitless and wasteful expenditure

Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been

exercised.

All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance

in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and

where recovered, it is subsequently accounted for as income in the statement of financial performance.

1.21 Irregular expenditure

Irregular expenditure as defined in section 1 of the PFMA is expenditure other than unauthorised expenditure, incurred in

contravention of or that is not in accordance with a requirement of any applicable legislation, including-

(a) the PFMA; or

(b) the State Tender Board Act, 1968 (Act No. 86 of 1968), or any regulations made in terms of the Act; or

(c) any provincial legislation providing for procurement procedures in that provincial government.

National Treasury practice note no. 4 of 2008/2009 which was issued in terms of sections 76(1) to 76(4) of the PFMA requires the

following (effective from 1 April 2008):

Irregular expenditure that was incurred and identified during the current financial year and which was condoned before

year end and/or before finalisation of the annual financial statements must also be recorded appropriately in the irregular

Accounting policies

188188



expenditure register. In such an instance, no further action is required with the exception of updating the note to the

annual financial statements.

Irregular expenditure that was incurred and identified during the current financial year and for which condonement is

being awaited at year end must be recorded in the irregular expenditure register. No further action is required with the

exception of updating the note to the financial statements.

Where irregular expenditure was incurred in the previous financial year and is only condoned in the following financial year,

the register and the disclosure note to the financial statements must be updated with the amount condoned.

Irregular expenditure that was incurred and identified during the current financial year and which was not condoned by

the National Treasury or the relevant authority must be recorded appropriately in the irregular expenditure register. If liability

for the irregular expenditure can be attributed to a person, a debt account must be created if such a person is liable in law.

Immediate steps must thereafter be taken to recover the amount from the person concerned. If recovery is not possible,

the accounting officer or accounting authority may write off the amount as debt impairment and disclose such in the

relevant note to the annual financial statements. The irregular expenditure register must also be updated accordingly. If the

irregular expenditure has not been condoned and no person is liable in law, the expenditure related thereto must remain

against the relevant programme/expenditure item, be disclosed as such in the note to the annual financial statements and

updated accordingly in the irregular expenditure register.

1.22 Related parties

SALGA operates in an economic sector currently dominated by entities directly or indirectly owned by the South African

Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only

entities within the national sphere of government in respect of the Executive Authority (CoGTA) and members of the NEC and their

respective municipalities belonging from the local sphere of government are considered to be related parties.

Management are those persons responsible for planning, directing and controlling the activities of SALGA, including those charged

with the governance of SALGA in accordance with legislation and SALGA Constitution.

Close members of the family of a person are considered to be those family members who may be expected to influence, or be

influenced by, that management in their dealings with the entity.

A related party is considered to be related if one party has the ability to control the other party or jointly control or exercise

significant influence over the other party in making financial and operating decisions or if the related party and the other entity

are subject to common control.

Specific information with regards to related party transactions is included in the disclosure notes.

Identification of Related Parties

Controlling Entities Related Party identification

All municipalities are represented at SALGA through direct membership to SALGA, furthermore representation in SALGA structures

is carried by the elected provincial representative at a Provincial Conference as well at National Conference.

The National Conference elects representatives that comprise the National Executive Committee of SALGA (Accounting Authority).

Each municipality has a single vote that entitles it to vote at SALGA governance structures. A single municipality would not have

control or significant influence over the running the affairs or determining the policies of SALGA. The control and significant influence

over SALGA’s policies and finances is jointly held my all the 278 municipalities. In terms of SALGA’s constitution all the municipalities

Accounting policies

189189



are members and would have equal rights over the residual assets of the organisation upon dissolution. The ten directly elected

members at National Conference and the nine ex-officio members elected by the respective Provincial Conferences are related

parties of SALGA by virtue of being part of the National Executive as well as the Chief Executive who is also an ex-officio member

of the NEC due to his role. The NEC has an option to co-opt up to three members, who once co-opted become related parties by

virtue of being part of the National Executive of SALGA.

SALGA does not have a sister entity that is subjected to common control by the National Conference or jointly by the 278

municipalities in South Africa.

Significant Influence Entities Related Parties identification

Legislatively SALGA reports to the Department of Corporate Governance and Traditional Affairs (CoGTA). SALGA reports on a quarterly

to the Minister of CoGTA in line with Public Finance Management Act (PFMA) and its regulations. CoGTA has significant influence

over SALGA’s activities by virtue of CoGTA’s role as the designated Executive Authority in terms of the PFMA. The department is

tasked with the function of developing national policies and legislation with regard to provinces and local government. CoGTA’s

role has a direct impact or significant influence over the decisions of SALGA’s policies and finance decisions. Although disclosed

as a Related Party transaction, the fees paid by CoGTA to SALGA are part of normal funding that Government grants to its entities.

Senior management of SALGA comprises of the Chief Executive Officer; Chief Financial Officer; Executive Manager in the Office

of the Chief Executive; and other senior managers including their close family members have been identified as Related Parties of

SALGA due to the significant influence that senior / key management exert over SALGA’s operating and finance policies.

The governing body members of SALGA, being the NEC; Audit Committee; and Performance and Remuneration

Committee members and their close families have been identified as Related Parties, due to the significant influence these

structures exert over SALGA’s operating and finance policies.

SALGA does not provide loans whether at market rates/prices or non-market related rates/prices to either Senior Management;

NEC members; Audit Committee; and Performance and Remuneration Committee members.

Only transactions with related parties not at arm’s length or not in the ordinary course of business are disclosed.

Compensation paid to key management personnel including their family members, where relevant is included in the disclosure

notes.

Accounting policies

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1.23 New standards and interpretations

Standards and interpretations issued, but not yet effective

The entity has not adopted the following standards and interpretations, which have been published issued but not yet effective:

Standard/ Interpretation: Effective date:

Years beginning on or

after

Expected impact:

GRAP 18: Segment Reporting 1 April 2015 Additional disclosure in terms of GRAP 18

will be required. A working paper on the said

disclosure has been developed and discussed

with the Audit Committee.

SALGA is ready to implement new disclosure

requirements when effective.

GRAP 105: Transfers of functions between

entities under common control

1 April 2015 No impact since SALGA has no entities under

common control where transfer of functions

is envisaged.

GRAP 106: Transfers of functions between

entities not under common control

1 April 2015 No impact since SALGA has no entities not

under common control where transfer of

functions is envisaged.

GRAP 107: Mergers 1 April 2015 Not expected to impact.

GRAP 20: Related parties No effective date has been

determined by the Minister

of Finance

No impact expected since SALGA is already

implementing IPSAS 20 in line with Directive

5 of the ASB.

GRAP32: Service Concession Arrangements:

Grantor

No effective date has been


of Finance

No impact expected since it is unlikely to be

applicable to SALGA in view of its operations.

GRAP108: Statutory Receivables No effective date has been


of Finance

No impact since SALGA does not have any

statutory receivables.

IGRAP17: Service Concession Arrangements

where a Grantor Controls a Significant

Residual Interest in an Asset

No effective date has been


of Finance

No impact expected since it is unlikely to be

applicable to SALGA in view of its operations.

Accounting policies

191191191



Notes to the annual financial statements

Figures in Rand 2015 2014

2. INVESTMENT PROPERTY

2015 2014

Valuation Carrying value Valuation Carrying value

Investment property 6 600 000 6 600 000 5 900 000 5 900 000

Reconciliation of investment property - 2015

Opening balance

Fair value

adjustment gain /

(loss) Total

Investment property 5 900 000 700 000 6 600 000

Reconciliation of investment property - 2014

Opening balance

Transfer from

property, plant

and equipment

Fair value

adjustment gain /

(loss) Total

Investment property 4 300 000 3 600 000 (2 000 000) 5 900 000

Details of property

(1) Stand 3278, Johannesburg, Gauteng

(2) Stand 750, Kimberley, Northern Cape

(3) Portion 654 of the farm Albinia no. 957, FT KwaZulu-Natal

Details of valuation

The effective date of the revaluations was 31 March 2015. Revaluations were performed by an independent valuer, Mr. William

John Hewitt NDPV, C.I.E.A., F.I.V. (SA), Appraiser of Mills Fitchet (TVL) CC. Mills Fitchet (TVL) CC is not connected to SALGA and has

recent experience in location and category of the investment property being valued.

The valuation was based on open market value for existing use. For the purpose of determining the market value of the investment

properties the capitalisation of the “Net Annual Income”, generally considered to determine the market value of an income

producing property such as shopping centres, offices and industrial or commercial properties where the building has an earning

potential.

Amounts recognised in surplus and deficit for the year.

The only rental income received from letting a portion of the investment property relates to the Hillcrest property in KwaZulu-

Natal, where a portion of the land is let to Mobile Telephone Networks (MTN) for a cellular phone mast erected on the land. Such

leasing of the property is incidental and insignificant relative to the potential of the property. There’s no rental income earned on

other investment property, rather they are held for capital appreciation.

There are no restrictions on the realisation of investment property or the remittance of revenue and proceeds of disposal.

There are also no contractual obligations to purchase, construct or develop investment property or for repairs, maintenance or

enhancements.

None of the investment property has been pledged as security for any loan.

Rental revenue from investment property (73 980) (73 980)

Direct operating expenses from rental generating property 507 807 514 051

Direct operating expenses from non-rental generating property 1 209 945 1 416 225

192192



192


Figures in Rand

3. PROPERTY, PLANT AND EQUIPMENT

2015 2014

Cost

Accumulated

depreciation

and

accumulated

impairment

Carrying

value Cost

Accumulated

depreciation

and

accumulated

impairment

Carrying value

Furniture and fixtures 13 122 687 (4 387 316) 8 735 371 12 028 026 (3 752 161) 8 275 865

Motor vehicles 592 096 (509 663) 82 433 769 176 (430 626) 338 550

Office equipment 5 782 177 (1 987 795) 3 794 382 5 324 829 (1 624 916) 3 699 913

IT equipment 13 444 415 (5 875 647) 7 568 768 10 887 736 (2 996 315) 7 891 421

Leased assets 10 348 839 (6 627 139) 3 721 700 10 008 251 (5 801 964) 4 206 287

Total 43 290 214 (19 387 560) 23 902 654 39 018 018 (14 605 982) 24 412 036

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194194



194



3. PROPERTY, PLANT AND EQUIPMENT (Continued)

Compensation received for losses on property, plant and equipment – included in operating profit.

IT equipment 331 574 161 785

Assets subject to lease (Net carrying amount)

Office equipment 2 054 675 2 282 839

Leasehold improvements 1 667 024 1 923 448

3 721 699 4 206 287

Other information

Property, plant and equipment fully depreciated and still in use (Gross carrying amount)

Furniture and fixtures 15 382 15 392

Office equipment 23 322 24 921

38 704 40 313

195195195





4. INTANGIBLE ASSETS

2015 2014

Cost

Accumulated

depreciation

and

accumulated

impairment Carrying value Cost

Accumulated

depreciation

and

accumulated

impairment Carrying value

Computer software 738 409 (127 711) 610 698 738 409 (90 135) 648 274

Reconciliation of intangible assets - 2015

Opening

balance Amortisation Total

Computer software 648 274 (37 576) 610 698

Reconciliation of intangible assets - 2014

Opening

balance Additions Amortisation

Impairment

reversal Total

Computer software 64 613 115 513 (33 254) 501 402 648 274

Other information

Fully amortised intangible assets still in use (Gross carrying amount) 49 156 49 156

5. DEPOSITS

At amortised cost

Rental deposits held by lessors 1 028 068 1 028 068

Terms and conditions

The deposits are refundable by the lessors only on termination of the lease agreement

Non-current assets

Rental deposits held by lessors 1 028 068 1 028 068

6. OPERATING LEASE ASSET (ACCRUAL)

Current assets 41 305 32 225

Non-current liabilities (2 818 065) (5 463 532)

Current liabilities (2 746 976) (1 554 015)

(5 523 736) (6 985 322)

The operating lease asset arose as a result of straight-lining the operating lease receipts in accordance with GRAP 13.

196196



196



SALGA leases a portion of its property in KwaZulu-Natal to a cellular phone operator for a cellular phone mast. The lease period on

integration of SALGA KwaZulu-Natal into SALGA fold was 96 months. The annual escalation is 8% and the remaining lease period

is 60 months.

The operating lease liability arose due to the straight-lining of operating lease payments in accordance with GRAP 13. Refer to note

30 for details on the non-cancellable operating lease rentals payable in future.

SALGA leases premises with a lease period ranging from 36 to 60 months. The average annual escalation is 9% and the average

remaining lease term is 17 months.

All leases, except for Gauteng have extension options included in the contracts. The average annual escalation is 9% and the

average remaining lease term is 34 months. Four of the lease contracts (National Office; KwaZulu-Natal; Northern Cape and North

West) have extension options that are subject to negotiation between SALGA and the Lessors at the end of the current contracts.

SALGA normally enters into negotiations to extend lease contracts at least six months before the termination of the lease.

The national office lease has an option to purchase. The purchase price shall be based on market value at the time of exercising

the option.

7. EMPLOYEE BENEFIT OBLIGATIONS

Defined benefit plan

The plan is a post-employment medical benefit plan.

Post-employment medical aid plan

When the then Western Cape Local Government Organisation (WECLOGO) was incorporated into SALGA, to form a unitary

organisation WECLOGO had former employees for whom it contributed towards a medical aid post-employment benefit. One of

the conditions of the unitary structure was that conditions of service of any employee in the employ of the provincial associations

would not be affected upon amalgamation in line with section 197 of the Labour Relations Act. The WECLOGO members were

incorporated into SALGA as of 1 February 2005 and SALGA inherited the post-employment medical benefit scheme of the two

remaining pensioners.

SALGA contracted NMD Consultants and Actuaries (Pty) Ltd, an independent firm of actuaries not connected to SALGA to assist

with the determination of the post-employment medical obligation as at 31 March 2015. The report provided by the actuaries

valued the obligation at R 637 000 (2014: R 653 000). The decrease in the post-employment medical obligation is due to a deficit of

R 5 000 as a result of changes in financial assumptions, surplus of R 5 000 due to health care cost inflation compared to expectations

and surplus of R 14 000 due to actual demographic profile of the membership compared to expectations.

The amounts recognised in the statement of financial position are as follows:

Carrying value

Present value of the defined benefit obligation - wholly unfunded (637 000) (653 000)

197197197





Changes in the present value of the defined benefit obligation are as follows:

Opening balance 653 000 662 477

Benefits paid (56 000) (52 477)

Net expenses recognised in the statement of financial performance 40 000 43 000

637 000 653 000

Net expense recognised in the statement of financial performance

Interest cost 54 000 47 000

Re-measurement or actuarial gain or loss (14 000) (4 000)

40 000 43 000

Key assumptions used

Assumptions used at the reporting date:

Discount rates used 7.93% 8.00%

Medical cost trend rates 7.55% 14.96%

Consumer Price Inflation 6.05% 6.65%

Real discount rate 0.35% 0.42%

Expected increase in healthcare costs 7.55% 8.15%

The post-employment health care liabilities have been valued using the projected unit credit discounted cash flow method. This

method was used to determine the past-service liabilities at the valuation date and projected annual expense in the year following

the valuation date.

The discounted mean term of the post-employment medical benefit liability was approximately 8.9 years as at 31 March 2015.

The discount rate and CPI have therefore been based on the 8.9 year yield from the South African zero coupon government bond

yield curve as at 28 March 2014, as published by the Bond Exchange of South Africa. The PA(90) female and male mortality tables

were used.

Other assumptions

Assumed healthcare cost trend rates have a significant effect on the amounts recognised in surplus or deficit. A one percentage

point change in assumed healthcare cost trend rates would have the following effects:

One

percentage

point increase

One

percentage

point decrease

Effect on the aggregate of the service cost and interest cost 43 440 36 960

Effect on defined benefit obligation 689 234 590 499

198198



198



Defined contribution plan

It is the policy of SALGA to provide retirement benefits to all its employees. A defined contribution pension or retirement fund,

subject to the Pensions Fund Act exists for this purpose.

SALGA is under no obligation to cover any unfunded benefits.

The amount recognised as an expense for defined contribution plans is 17 818 297 -

Included in defined contribution plan information above, is the following plan which is accounted for as a defined contribution

plans:

Pension fund - R 17 818 297 (2014: Rnil)

The defined contribution plan commenced on 1 April 2014.

8. TRADE AND OTHER RECEIVABLES FROM EXCHANGE TRANSACTIONS

Trade receivables 33 828 986 26 982 814

Prepayments 2 437 114 1 489 488

Sundry receivables 1 683 685 1 655 441

37 949 785 30 127 743

Credit quality of trade and other receivables

The credit quality of trade and other receivables that are neither past nor due nor impaired can be assessed by reference to historical

information about counterparty default rates. The credit qualities rating of each of these financial instruments are as follows:

Low credit grade - The counter party has evidenced high occurrences of defaults and/or re-negotiations of contractual terms

in prior periods. Furthermore an assessment of the financial position and liquidity position of the party has provided evidence of

financial difficulties that may impede the recoverability of the outstanding amounts. As such the counter parties included in the

low credit grade category pose a high credit risk to the entity.

Medium credit grade - The counter party has evidenced instances of defaults and/or re-negotiations of contractual terms in prior

periods on the repayment of outstanding amounts. An assessment of the financial position and liquidity positions of the party has

provided evidence of financial difficulties that may impede the recoverability of the outstanding amounts. The counter parties

included in this credit grade category are active in an industry that is highly sensitive to market fluctuations and volatility in the

international economies.

High credit grade - The counter party has evidenced no instances of defaults and / or re-negotiations of contractual terms in prior

periods.

Trade receivables

Trade receivables schedule

Trade receivables schedule (gross carrying amount) 76 082 131 49 240 651

Less: Allowance for doubtful debt (42 253 145) (22 257 837)

33 828 986 26 982 814

199199199





Trade and other receivables past due but not impaired

The ageing of amounts past due but not impaired is as follows:

Not more than 30 days 6 694 938 1 242 414

More than 30 days but not more than 60 days 13 702 768 13 380 364

More than 60 days but not more than 90 days - -


More than 120 days 13 431 280 12 360 036

33 828 986 26 982 814

The carrying amount of trade and other receivables that are past due and have re-negotiated settlement terms amount to

R 2 380 142 (2014: R 9 316 453)

Trade and other receivables impaired

As of 31 March 2015, trade and other receivables of R 42 253 145 (2014: R 22 257 837) were impaired and provided for.

The ageing of impaired amounts is as follows:

Not more than 30 days 800 880 -

More than 30 days but not more than 60 days 1 483 627 297 192



More than 120 days 39 968 638 21 960 645

42 253 145 22 257 837

Reconciliation of allowance account for doubtful debt

Opening balance 22 257 837 23 912 965

Increase in allowance for doubtful debt 42 253 145 22 257 837

Decrease in allowance for doubtful debt (22 257 837) (23 912 965)

42 253 145 22 257 837

The creation and release of allowance for impaired receivables have been included in operating expenses in surplus or deficit

(note 21).

The maximum exposure to credit risk at the reporting date is the fair value of each class of loan mentioned above. SALGA does not

hold any collateral as security.

SALGA is exposed to credit risk as a result of transactions entered into with customers on extended payment terms, and cash and

cash equivalents held with commercial banks that may not be able to produce cash on demand.

SALGA manages these risks by independent checks and only using commercial banks approved by National Treasury. No changes

occurred in the management of these risks from the prior year.

200200



200



9. CASH AND CASH EQUIVALENTS

The carrying value of cash and cash equivalents is measured at amortised cost. None of the instruments included in the cash and

cash equivalents were pledged as security for any financial obligation.

Cash on hand 11 788 33 851

Bank balances 154 436 748 116 463 695

154 448 536 116 497 546

10. REVALUATION SURPLUS

The revaluation surplus is non-distributable.

Opening balance 2 259 566 2 259 566

The revaluation reserve results from the revaluation of property, plant and equipment while still owner occupied. It remains after

treating the same assets as investment property since they were vacated by the entity.

Upon transfer of the owner-occupied property to investment property the revaluation surplus is treated in the following manner:

Any remaining part of the increase is credited directly to net assets in revaluation surplus. On subsequent disposal of the

investment property, the revaluation surplus included in net assets may be transferred to accumulated surpluses or deficits.

The transfer from revaluation surplus to accumulated surpluses or deficits is not made through surplus or deficit.

11. FINANCE LEASE OBLIGATION

Minimum lease payments due

- within one year 1 423 843 1 549 101

- in second to fifth year inclusive 924 769 1 070 490

2 348 612 2 619 591

less: future finance charges (204 244) (201 870)

Present value of minimum lease payments 2 144 368 2 417 721

Present value of minimum lease payments due

- within one year 1 285 240 1 402 365

- in second to fifth year inclusive 859 128 1 015 356

2 144 368 2 417 721

Non-current liabilities 859 128 1 015 356

Current liabilities 1 285 240 1 402 365

2 144 368 2 417 721

It is SALGA’s standard operating practice to lease certain office equipment under finance leases. Obligations under finance leases

are secured by the lessor’s title to the leased assets.

201201201





SALGA ordinarily concludes these leasing arrangements for a period that ranges between 24 to 36 months. The average lease

period for the leased assets for office equipment is 25 months. The average remaining lease term is 16 months and the average

effective interest rate implicit in the lease was 9% (2014: 9%).

Interest rates are fixed at the contract date. All leases have fixed repayments and no arrangements have been entered into for

contingent rent. There are purchase options entered into on these leased assets. SALGA does not renew the leases upon expiry as

the useful life approximates the lease term.

SALGA’s obligations under finance leases are secured by the lessor’s claim over the leased assets, in an instant where SALGA defaults

on the contractual lease payments. Refer to note 3.

Leased assets with a carrying amount of R 2 054 676 (2014: R 2 282 839) are subject to the lessors restrictions in terms of movement

(relocation).

12. UNSPENT CONDITIONAL GRANTS AND RECEIPTS

Unspent conditional grants and receipts comprises:

Unspent conditional grants and receipts

Government grant - Free State Department of Cooperative Governance - 1 120 323

Conditional sponsorship: LA Health 39 998 79 999

Government grant - Eastern Cape Department of Local Government and Traditional

Affairs 86 424 485 411

Local Government SETA - councillor induction programme - 622 515

National Treasury - councillor induction programme 429 209 429 209

Deutsche Gesellschaft fur Internationale Zusammernarbeit (GIZ) - LED Network 105 260 41 460

Local Government SETA – leadership development workshops (LDW) 350 000 -

Local Government SETA - capacity building (CB) 256 912 2 000 000

Conditional grant – Commonwealth local government forum (CLGF) 112 973 -

Local Government SETA – portfolio based councillor development programme (PBCDP) 410 121 -

1 790 897 4 778 917

Assets recognised and included in cash and cash equivalents amounting to R 1 790 897 (2014: R 4 778 917) are ring-fenced and can

solely be used in terms of the conditions of the grants.

Movement during the year

Balance at the beginning of the year 4 778 917 6 279 714

Additions during the year 3 523 722 3 583 250

Revenue recognition during the year (6 511 742) (5 084 047)

1 790 897 4 778 917

The nature and extent of conditional government grants recognised in the annual financial statements and an indication of

other forms of assistance from which SALGA has directly benefited are disclosed in note 18; any unfulfilled conditions attaching

to government and other assistance has not been recognised in surplus or deficit and remain reflected as a liability (unspent

conditional grants and receipts).

202202



202



See note 18 for reconciliation of grants from national / provincial government and other Institutions.

13. PROVISIONS

Reconciliation of provisions – 2015

Opening

balance

Additions Total

FTC employee long term incentive - 8 579 605 8 579 605

Non-current liabilities 1 508 785 -

Current liabilities 7 070 821 -

8 579 606 -

The fixed term contract (FTC) employee long-term incentive represents management’s best estimate of SALGA’s liability under one

year incentive granted on FTC employee should the FTC employees performance be acceptable in terms of SALGA’s merit based

rating matrix. Furthermore, should the employee remain in the employ of SALGA for a period exceeding three years, whereupon

the incentive shall vest in the FTC employee. Based on prior experience FTC employees tend to leave SALGA within three years.,

Hence as part of a retention scheme, the incentive scheme was introduced for the first time in 2014/15. The provision is based on

20 percent p.a. of the FTC employee basic package.

14. DEFERRED REVENUE

Deferred revenue arises from donor funded projects, whose funds when received in advance are classified as deferred revenue and

recognised as and when the donor requirements are fulfilled. The organisation has the following donor funded projects:

Masibambane project 2 065 059 3 868 244

Assets recognised and included in cash and cash equivalents amounting to R 2 065 059 (2014: R3 868 244) are ring-fenced and can

solely be used in terms of the Masibambane project business plan.

Movement during the year – Masibambane project

Balance at the beginning of the year 3 868 244 4 817 736

Revenue recognised during the year (1 803 185) (949 492)

2 065 059 3 868 244

Masibambane project is a European Union donor funded programme (funds are channelled through the Department of Water

Affairs) aimed at capacity building, infrastructure development and ensuring viable and sustainable delivery of water and sanitation

services.

203203203





Movement during the year - SDC Project

Balance at the beginning of the year (549 269) (1 558 043)

Additions during the year 549 269 3 299 950

Revenue recognised during the year - (2 291 176)

Included in trade and other receivables (sundry receivables) (Note 8) - 549 269

- -

The Swiss Agency for Development and Co-operation (SDC) agreed to support SALGA to build capacity in the monitoring and

implementation of energy efficiency. The project has two components:

SALGA; and

up in 2014 with outstanding receivables settled.

15. TRADE AND OTHER PAYABLES FROM EXCHANGE TRANSACTIONS

Trade payables 14 418 396 7 355 727

Membership levy received in advance 3 604 087 6 135 176

Sundry payables 602 765 323 032

Accrued leave pay 12 686 213 10 954 273

Accrued thirteenth cheque 1 616 781 1 362 458

Accrued expenses 34 930 180 25 664 079

Accrued performance rewards 20 079 455 12 940 436

Other payables (lodge cards) 4 360 071 2 376 578

92 297 948 67 111 759

204204



204



16. FINANCIAL INSTRUMENTS DISCLOSURE

Categories of financial instruments

2015

Financial assets

At amortised

costTotal

Operating lease receivables – exchange transactions 41 305 41 305

Trade and other receivables from exchange transactions 33 828 986 33 828 986

Sundry receivables from exchange transactions 2 437 114 2 437 114

Cash and cash equivalents 154 448 536 154 448 536

190 755 941 190 755 941

Financial liabilities

At amortised

costTotal

Trade and other payables from exchange transactions 49 348 576 49 348 576



Other payables (Lodge cards) 4 360 071 4 360 071

57 915 499 57 915 499

2014

Financial assets

At amortised

costTotal

Operating lease receivables – exchange transactions 32 225 32 225

Trade and other receivables from exchange transactions 26 982 814 26 982 814

Sundry receivables from exchange transactions 1 655 441 1 655 441

Cash and cash equivalents 116 497 546 116 497 546

145 168 026 145 168 026

Financial liabilities

At amortised

costTotal




Other payables (Lodge cards) 2 376 578 2 376 578

41 854 592 41 854 592

205205205





17. REVENUE

Total revenue disclosed in the statement of financial performance is made up as follows:

Revenue from exchange transactions 429 100 083 362 244 562

Revenue from non-exchange transactions 39 223 847 34 167 995

Other revenue (refer note 19) 21 281 983 14 737 347

Investment income (refer note 23) 13 130 438 6 661 582

Total revenue 502 736 351 417 811 486

The amounts included in revenue arising from exchanges of goods or services are as follows:

Rendering of services - membership levies 429 100 083 362 244 562

Other revenue 21 281 983 14 737 347

450 382 066 376 981 909

The amount included in revenue arising from non-exchange transactions is as follows:

Conditional sponsorship – LA Health 40 000 40 000

Grant recognised – Free State Department of CoGTA 1 120 323 -

Grant recognised - Eastern Cape Department of Local Government and Traditional Affairs 98 987 1 435 274

Grant recognised – LG SETA (CIP) 845 509 1 513 377

Grant recognised – LG SETA (Capacity building) 1 743 088 1 412 939

Grant recognised – LG SETA (PBCDP) 2 589 879 -

Transfers – Government grant and subsidies 26 904 000 25 999 000

Sponsorship and donations 5 509 690 3 767 406

Grant recognised – Commonwealth Local Government Forum 41 560 -

Grant recognised – GIZ governance support programme 330 811 -

39 223 847 34 167 996

206206



206



18. GOVERNMENT GRANTS AND SUBSIDIES

Transfers and subsidies - Executive Authority 26 904 000 25 999 000

Conditional grant -Free State Department of Cooperative Governance - grant

Balance unspent at beginning of year 1 120 323 1 120 323

Conditions met - transferred to revenue (refer to note17) (1 120 323) -

- 1 120 323

Conditions still to be met - remaining liability (refer to note 12).

SALGA engages provincial and national departments for assistance in terms of building capacity in the respective provinces and

funding certain programmes. The Free State funding is split between programme support (40%) and building internal capacity in

the province (60%).

Conditional sponsorship: LA Health

Balance unspent at beginning of year 79 999 120 000

Conditions met - transferred to revenue (refer to note17) (40 000) (40 001)

39 999 79 999


A conditional sponsorship was obtained from LA Health to fund SALGA’s website redesign and rejuvenation. The sponsorship has

the condition that SALGA’s webpage must bear LA Health presence (logo on each page in a format to be agreed upon by the

parties for a period of five years). This amount will thus be amortised over this five-year period.

Conditional grant - Eastern Cape Department of Local Government and Traditional Affairs


Current-year receipts / (refunds) (300 000) 1 500 000

Conditions met - transferred to revenue (refer to note17) (98 987) (1 435 273)

86 824 485 411


The grant from the Eastern Cape Department of Local Government and Traditional Affairs is firstly to fund internal capacity within

SALGA for the implementation of collaborative support to municipalities specifically focusing on capacitating municipal oversight

structures, and provide assistance to enhance and promote oversight in the municipalities. Secondly, the grant is to fund SALGA’s

councillor induction programme, ward committees training, and the training of traditional leaders. For the prior year a portion of the

grant that was targeted for support to five municipalities within the Eastern Cape province has been returned to the department

at its request. SALGA and the department could not agree on the terms of the grant.

207207207





Conditional grant - LGSETA - councillor induction programme (CIP) grant

Balance unspent at beginning of year 622 515 2 135 891

Conditions met - transferred to revenue (refer to note17) (845 509) (1 513 376)

Included in trade and other receivables (sundry receivables) 222 994 -

- 622 515

A conditional grant was obtained from LGSETA to assist in SALGA’s programme to induct the new councillors after the 18 May 2011

local government elections into the local government sphere.

Conditional grant -National Treasury - CIP grant



A conditional grant was obtained from National Treasury to assist with SALGA’s programme to train new entrants to the local

government sphere after the 18 May 2011 local government elections, heading up the financial management portfolio in their

respective municipalities.

Conditional grant -Deutsche Gesellschaft fur Internationale Zusammernarbeit (GIZ) - LED network grant)


Current-year receipts 63 800 83 250

Conditions met - transferred to revenue (refer to note17) - (682 458)

105 260 41 460


The grant is funded by Deutsche Gesellschaft fur Internationale Zusammernarbeit (GIZ) to build capacity within SALGA for a local

economic development (“LED”) specialist.

Conditional grant - local government SETA leadership development workshops (LDW)

Current-year receipts 350 000 -

Conditions still to be met - remaining liability (refer note 12).

The grant is from the Local Government Sector Education and Training Authority (LG SETA). Its intention is to provide support

to SALGA’s capacity; building programmes targeted to SALGA members, i.e. municipalities; and its primary aim is to fund the

Leadership Development Workshop (LDW).

208208



208



Conditional grant - local government SETA (capacity building)

Balance unspent at beginning of year 2 000 000 1 412 939

Current-year receipts - 2 000 000

Conditions met - transferred to revenue -(refer to note17) (1 743 088) (1 412 939)

256 912 2 000 000


The grant is for the activation of capacity building through a human resources development indaba that will inform SALGA’s

programme on human resource development for the sector. The grant received from the LG SETA will also fund the following

projects:

Capacity-building,

Conducting a feasibility study for the facilitation of local government leadership academy scoping; and

Development of requirements specification for the HRM&D information systems.

Conditional grant - GIZ governance support programme



The grant is from Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ) and its primary aim is to provide financial support

to SALGA for the following:

Develop, pilot and roll out the research instrument at a sample of red zone municipalities;

Train SALGA staff on research instrument and methodology;

Data analysis and report write up;

LED and LGCICT marketing material for SALGA events;

Technical website development;

Training for SALGA network teams on Drupal content management system and online facilitation techniques;

LED materials (manuals & handbooks) for municipalities; and

Compiling and printing LED newsletter and distributing to Municipalities.

The grant is from the Local Government Sector Education and Training Authority (LG SETA). Its intention is to provide support

to SALGA’s capacity building programmes targeted at SALGA members, i.e. municipalities, and its primary aim is to fund the

Leadership Development Workshop (LDW).

Conditional grant - Commonwealth local government forum (CLGF)



209209209





The grant from the Commonwealth local government forum (CLGF) is to fund SALGA’s partnership with CLGF to support local

government in promoting local economic development. The objectives of the intervention is to address the following key actions

to enable local government to play its full role in LED;

Provide clear national framework for LED;

Create an enabling environment; and

Local strategies to promote LED partnerships with the private sector.

Conditional grant - LGSETA portfolio based councillor development programme (PBCDP)

Current-year receipts 3 000 000 -

Conditions met - transferred to revenue -(refer to note17) (2 589 879) -

410 121 -


The grant is from LGSETA and it is intended to provide financial support to SALGA to enable the roll-out of a portfolio based

councillor development programme (PBCDP) programme. The programme is targeted at reaching at least 5 000 councillors to be

provided with portfolio based training based on their respective roles in municipalities.

19. OTHER REVENUE

Revenue from capacity building programmes 2 423 990 4 147 305

Sundry revenue 1 006 781 1 168 104

Delegate fees - national and provincial members assembly 15 053 400 6 028 000

Management fee – LGSETA (PBCDP) 816 667

Commission revenue 11 337 11 501

Rent revenue 73 980 78 980

Discount received 1 710 90

Donor funds recognised 1 803 186 3 240 668

Debt impairment reversed 6 000 12 000

Gain or (loss) on foreign exchange differences 84 892 50 699

21 281 983 14 737 347

20. EXPENSES

Disclosed expenses comprise the following:

Administrative expenses

Impairment loss 223 822 215 428

Impairment reversal - (597 193)

Lease rentals 34 590 101 32 071 694

Allowance for doubtful debts 19 934 437 (1 651 667)

Repairs and maintenance 346 190 265 895

Loss on disposal of assets 42 550 475 103

Investment property fair value adjustments (700 000) 2 000 000

54 437 100 32 779 260

210210



210



Indirect programme costs

Remuneration of councillors 1 276 399 7 094 721

Professional and advisory services (member support) 29 403 861 24 713 285

Travel expenses 16 254 299 16 875 651

Venue hire and accommodation expenses 28 086 200 29 310 700

Capacity building expenses 4 453 629 4 898 772

Logistical support expenses 8 874 150 5 809 347

88 348 538 88 702 476

Other expenses

Advertising 8 283 824 5 604 896

Auditors remuneration 4 053 408 3 305 323

Bank charges 154 760 148 653

Cleaning 617 444 549 993

IT consumables 370 205 293 477

Professional and advisory services 3 285 831 1 213 717

Donations 69 245 2 154 767

Entertainment 14 045 205 235

Gifts 83 983 94 904

Insurance 309 547 521 543

Community development initiatives 188 373 -

IT support and licence fees 14 830 001 11 154 699

Marketing 4 719 447 3 827 669

Magazines, books and periodicals 63 951 316 001

Motor vehicle expenses 126 955 142 104

Postage and courier 890 766 1 105 575

Printing and stationery 5 923 833 5 973 494

Security costs 1 800 301 1 848 204

Staff welfare 973 590 594 566

Subscriptions and membership fees 765 275 417 674

Telephone and fax 2 546 017 3 174 464

Training 2 621 978 2 446 998

Assets expensed 102 701 250 917

Municipal charges – utilities 4 196 024 4 298 102

Municipal charges - other levies 1 387 026 1 110 939

Uniforms 85 885 95 762

Legal settlements (CCMA) 172 670 -

Other office accommodation costs 267 995 530 282

Recruitment costs 3 302 298 3 476 102

Corporate governance costs 369 097 741 559

General expenses (3 900) 651

62 572 575 55 598 270

211211211





21. SURPLUS

Surplus for the period is stated after accounting for the following amongst others:

Operating lease charges

Premises

Straight-lined amounts 34 222 439 31 867 242

Other lease expenses - 1 760

Equipment

Lease expenses 367 662 204 452

34 590 101 32 073 454

Loss on sale of property, plant and equipment 42 550 475 103

Legal fees 59 124 572 427

Impairment on property, plant and equipment 223 822 215 428

Reversal of impairment on property, plant and equipment - (95 791)

Reversal of impairment on intangible assets - (501 402)

Amortisation of intangible assets 37 576 33 254

Depreciation of property, plant and equipment 7 392 170 4 963 682

Employee costs 270 140 551 195 757 092

Amount expensed in respect of retirement benefit plans 17 858 297 43 000

Defined contribution funds 17 818 297 -

Defined benefit funds 40 000 43 000

Litigation settlement (CCMA) 172 670 -

212212



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22. EMPLOYEE RELATED COSTS


Performance rewards 22 468 502 13 616 301

Employer contribution medical aid 8 713 839 -

UIF 729 700 643 608

SDL 2 152 494 1 780 152

Other payroll levies 5 923 449 5 766 508

Leave pay accrual charge 2 718 186 2 286 730

Cell phone allowance 4 177 139 -

Employer contribution group risk 3 083 568 -

Other short term costs 1 445 009 703 950

Defined contribution plan – Employer contribution pension fund 17 818 297 -

Long-term benefits - incentive scheme 8 579 605 -

270 140 551 195 757 092

Remuneration of senior management


Employer contribution to retirement and pension funds 1 560 173 -

Performance rewards 1 914 469 2 220 009

Contributions to Retirement, medical, and pension funds - 128 808

Subsistence; cell phone; and travel allowances 680 139 1 149 249

Employer contribution to group risk 241 592 -

Employer contribution to medical aid 158 184 -

20 457 363 25 393 264

Also refer to note 32 - Related parties for further details on remuneration of senior management.

In the current year Key Management Personnel has been redefined in line with the Accounting Policy and limited to only EMT

members who report directly to the Chief Executive. Only portfolio heads in terms of SALGA’s business units have therefore, been

disclosed.

23. INVESTMENT INCOME

Interest income

Bank 10 053 876 4 737 443

Trade and other receivables at amortised cost – interest revenue 3 076 562 1 924 139

13 130 438 6 661 582

Total interest revenue, calculated using the effective interest rate, on financial instruments not at fair value through surplus or deficit

amounted to R 13 130 438 (2014: R 6 661 582).

213213213





24. FAIR VALUE ADJUSTMENTS

Investment property (fair value model) (see note 2) 700 000 (2 000 000)

25. IMPAIRMENT OF ASSETS

Impairments

Property, plant and equipment 223 822 215 428

An impairment loss has been recognised on items of property, plant and equipment due

to the said assets having no future service potential. Furniture and fixtures were damaged

by water flooding in the SALGA Free State office resulting in these assets having no service

potential R123 223 (2014: R117 659). Impairment losses were recognised for IT equipment

no longer required for delivery of services to members over the longer planning period due

to technological obsolescence R 86 286 (2014: R 97 769). Office equipment amounting to

R 14 313 (2014: R nil) was impaired due to the equipment having no service potential over

the longer planning period. All these assets are not required for the delivery of services to

members, either currently, or over the longer planning period and some have evidenced

physical damage to the asset.

223 822 215 428

Reversal of impairments

Property, plant and equipment - (95 791)

Property, plant and equipment previously impaired was reinstated as a result of a

significant increase in the need for the services derived from the said asset items. The

significant increase in the need for the assets service potential has indicated evidence

significantly better than expected. The recoverable service amount of the asset was based

on its value in use.

Intangible assets - (501 402)

Impairment previously recognised on intangible assets reversed due to the change in the

intent/commitment to migrate electronic document management to another software

solution (SAP CRM module) and to enhance the functionality of the existing software

solution (paper trail) and thereby significantly increasing the need for the intangible asset

service potential. The recoverable service amount of the asset was based on its value in

use. A decision to use other software solutions previously halted has also significantly

increased the need for the assets service potential. Therefore the service potential has

indicated evidence significantly better than expected. The recoverable service amount of

the asset was based on its value in use.

- (597 193)

Total impairment losses recognised (reversed) 223 822 (381 765)

214214



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The main classes of assets affected by impairment losses are:

Furniture and fixtures - R 123 223 (2014: R 117 659)

IT equipment - R 86 286 (2014: R 97 769)

Office equipment - R 14 313 (2014: R nil)

The main events and circumstances that led to the recognition of these impairment losses are as follows:

Furniture and fixtures - SALGA Free State office was damaged by water flooding resulting in these assets having no service

potential;

IT equipment - these assets are not required for the delivery of services to members, either currently, or over the longer

planning period due to technological obsolescence; and

Office equipment - these assets are not required for the delivery of services to members, either currently, or over the longer

planning period and some have evidenced physical damage to the asset.

Value in use

In determining the recoverable amount of the assets subjected to Impairment reversals SALGA considered the following:

Usefulness of the assets and their current state. SALGA’s IT department/experts are of the opinion that the intangible assets

have an indefinite useful life and will be assessed annually for usefulnes;

The intention of management on the current use of the assets and upgrades effected on specific assets;

The nature/classes of the assets affected, being both intangible and tangible i.e. software, furniture and fittings and office

equipment;

The appropriateness of the carrying value of the assets prior the change in use; and

In the absence an active market for the same assets due to technological advancements and change in design, management

opted for the cost replacement approach to determine value in use, this was done through the application of consumer

price increase (CPI) on the affected assets.

SALGA determined the value in use of the assets affected by impairment reversal as follows:

A depreciated replacement cost approach was used, where the replacement cost of an asset is the cost to replace the asset’s gross

service potential. This cost is depreciated to reflect the asset in its used condition. In the absence of an active market for assets of a

similar condition the depreciated replacement cost is measured as the reproduction or replacement cost of the asset, whichever

is lower, less accumulated depreciation calculated on the basis of such cost, to reflect the already consumed or expired service

potential of the asset.

26. FINANCE COSTS

Trade and other payables (859) (1 203)

Finance leases 184 169 250 070

Trade and other payables at amortised cost – interest expense 922 108 703 813

1 105 418 952 680

Total interest expense, calculated using the effective interest rate, on financial instruments not at fair value through surplus or

deficit amounted to R 1 105 418 (2014: R 952 680).

215215215





27. TAXATION

No provision is made for taxation as SALGA is exempt from income tax in terms of section 10(1) of the Income Tax Act.

No Value Added Tax (VAT) was applicable to SALGA as it is exempt from complying with the Value Added Tax Act.

28. AUDITORS’ REMUNERATION

Audit fees 4 053 408 3 305 323

29. CASH GENERATED FROM OPERATIONS

Surplus 18 702 423 39 024 772

Adjustments for:

Depreciation and amortisation 7 429 746 4 996 936

Loss on sale of assets 42 550 475 103

Loss/(gain) on foreign exchange (84 891) (50 698)

Fair value adjustment to investment property (700 000) 2 000 000

Recognised/(reversed) Impairment loss 223 822 (381 765)

Increase/(decrease) in allowance for doubtful debt ¹ 19 934 437 (1 651 667)

Movements in operating lease assets and accruals (1 461 586) 287 579

Movements in retirement benefit liability (16 000) (9 477)

Movements in provisions 8 579 605 -

Increase in accruals relating to employee costs 7 139 019 3 499 518

Changes in working capital:

Trade and other receivables from exchange transactions (27 756 479) 6 674 805


Unspent conditional grants and receipts (2 988 020) (1 500 797)

Deferred revenue from exchange transactions (1 803 185) (949 492)

45 373 502 70 197 818

¹ The increase in allowance for doubtful debt is primarily due to an increase in customers categorised as low credit grade (high

risk customers) and the number of customers on this credit grade has increased to 22 (2014: 18).

216216



216



30. COMMITMENTS

Authorised capital expenditure

Already contracted for but not provided for

Property, plant and equipment 156 649 -

Total capital commitments

Already contracted for but not provided for 156 649 -

Authorised operational expenditure

Already contracted for but not provided for

Expenditure 14 862 103 13 196 706

Total operational commitments

Already contracted for but not provided for 14 862 103 13 196 706

Total commitments

Authorised and contracted capital expenditure 156 649 -

Authorised and contracted operational expenditure 14 862 103 13 196 706

15 018 752 13 196 706

This committed operational expenditure relates to expenditure where purchase orders were issued and handed-over to suppliers

as at year-end. The committed capital expenditure relates to the purchase of a motor vehicle were the purchase order was issued

to the supplier but not delivered at year-end. All these commitments will be realised in the normal operating cycle of SALGA and

are funded from internal resources.

Operating leases - as lessee (expense)

Minimum leases payments due

- within one year 29 678 849 35 176 738

- in second to fifth year inclusive 25 369 250 54 396 867

55 048 099 89 573 605

SALGA has ten operating leases for office accommodation across all provinces. Operating lease payments represent rentals payable

by SALGA for its administrative office accommodation.

Leases are negotiated for an average term of five years. The average extension period is 1.8 years (2014: 2.8 years). The average

escalation rate is 9%.

All leases, except for Gauteng have extension options included in the contracts. Four of the lease contracts (National Office;

KwaZulu-Natal; Northern Cape and North West) have extension options that are subject to negotiation between SALGA and the

217217217





Lessors at the end of the current contracts. SALGA normally enters into negotiations to extend lease contracts at least six months

before the termination of the lease.

Operating leases - as lessor (income)

Minimum leases payments due

- within one year 70 092 64 900

- in second to fifth year inclusive 341 112 315 745

- later than five years - 95 360

411 204 476 005

SALGA leases a portion of its property in KwaZulu-Natal to a cellular phone operator for a cellular phone mast. The lease period

upon integration of SALGA KwaZulu-Natal into SALGA was 96 months. The annual escalation is 8% and the remaining lease period

is 60 months.

31. CONTINGENT LIABILITIES

(i) SALGA is defending a matter against alleged breach of contract which was instituted by Millionsure Insurance Brokers (Pty)

Limited. The plaintiff claims payment of R8 336 250 interest at a rate of 15.5% from July 2004. SALGA has lodged a counter-

claim of R10 377 104. The expected outcome is unknown and the legal costs incurred thus far in defending the matter

forms part of legal costs as disclosed in note 21.

218218



218




Figures in Rand

32. RELATED PARTIES

Relationships

Members of the National Executive Committee (“NEC”)

Chairperson (office bearer) Cllr T ManyoniExecutive Mayor: Mangaung metropolitan municipality

Deputy Chairperson (office bearer) Cllr M NawaExecutive Mayor: West Rand district municipality

Deputy Chairperson (office bearer) Cllr F Maboa-BoltmanMayor: Gert Sibande district municipality

Deputy Chairperson (office bearer) Cllr N HermansMayor: Umsobomvu Local Municipality

Member of the NEC Cllr. D MazibukoExecutive Mayor - Uthukela district municipality

Member of the NEC Cllr TG MthimunyeMayor – Dr JS Moroka local municipality

Member of the NEC Cllr C NeethlingWard Councillor - George local municipality

Member of the NEC Cllr. TB TshiterekeExecutive Mayor – VhembedDistrict municipality

Member of the NEC Cllr BP MoloiExecutive Mayor - Dr Kenneth Kaunda district municipality

Member of the NEC (co-opted) Cllr. Z NcithaExecutive Mayor - Buffalo City metropolitan municipality

Ex-officio member of the NEC Cllr W JohnsonChief Whip - Frances Baard district municipality

Ex-officio member of the NEC Cllr P TauExecutive Mayor - City of Johannesburg metropolitan municipality

Ex-officio member of the NEC Cllr S NgangelizweMayor – Matjhabeng local municipality

Ex-officio member of the NEC Cllr Demetri QuallyCity of Cape Town metropolitan municipality

Ex-officio member of the NEC Cllr GK LobeloMayor - Greater Taung district municipality

Ex-officio member of the NEC Cllr D MagabeExecutive Mayor - Sekhukhune district municipality

Ex-officio member of the NEC Cllr SW MdabeIlembe district municipality

Ex-officio member of the NEC Cllr N MethExecutive Mayor OR Tambo district municipality

Member of the NEC (co-opted) Cllr S PillayMMC - City of Tshwane metropolitan municipality

Ex-officio member of the NEC Cllr M NkosiExecutive Mayor - Chief Albert Luthuli district municipality

Member of the NEC (co-opted) Cllr A BekeerCouncillor -Drakenstein local municipality

Member of the NEC (co-opted) Cllr Z DumzelaExecutive Mayor -Joe Gqabi local municipality

Ex-officio member of the NEC Mr X GeorgeChief Executive Officer

219219219




Figures in Rand

Executive Authority

Executive Authority National Department of Co-operative Governance and Traditional Affairs (CoGTA)

Members of the Audit and Risk Committee

Chairperson of Audit Committee Mr Temba Zakuza

Member of Audit Committee Ms Octavia Matloa

Member of Audit Committee Ms Phumelele Ndumo

Member of Audit Committee Mr Nala Mhlongo

Member of Audit Committee Adv M Ralefatane

Members of the Performance Management and Remuneration Panel

Chairperson of Performance and Remuneration Panel Mr Chose Choeu

Member of Performance and Remuneration Panel Ms Elizabeth Dlamini-Khumalo

Member of Performance and Remuneration Panel Dr Faizel Randera

Member of Performance and Remuneration Panel Ms Laura Machaba-Abiodun (resigned 14 March 2015)

Member of Performance and Remuneration Panel Mr William Huma

Executive Management Team

Senior Management - Chief Finance Officer Mr Nceba Mqoqi

Senior Management – Executive Manager: Office of the CEO Mr Seana Nkhahle

Senior Management - Executive Director (Corporate Strategy & Research)

Ms Antonette Richardson

Senior Management - Executive Director (Community Development)

Ms Mandu Mallane (Acting)

Senior Management - Executive Director (Municipal Finance) Mr Simphiwe Dzengwa

Senior Management - Executive Director (Governance, Inter-Governmental Relations)

Ms Lorette Tredoux

Senior Management - Executive Directors (Municipal Institutional Development)

Mr Rio Nolutshungu

Senior Management - Executive Director (Municipal Infrastructure and Services)

Ms Jean De La Harpe

Senior Management - Executive Director (Economic Development and Planning)

Ms Phila Xuza (resigned)

Senior Management - Executive Director (Economic Development and Planning)

Mr Marx Mupariwa (Acting)

220220



220



Related party balances

The balances disclosed hereunder are as a result of transactions at arm’s length in terms of SALGA Constitution and on normal

terms that SALGA undertakes with any of its customers.: i.e. there are no special terms and conditions that are no more or less

favourable than it is the norm for SALGA to conduct its business.

Amounts included in Trade receivables (Trade Payables) regarding related parties

Mangaung metropolitan municipality 74 125 6 000

West Rand district municipality (48 703) (68 704)

Nelson Mandela Bay metropolitan municipality - 148 800

Umsobomvu local municipality 10 000 -

Gert Sibande district municipality 40 274 88 692

Uthukela district municipality (30 870) 349 142

Nkangala district municipality (not related party in current year) (21 462) 299 947

Dr. JS Moroka local municipality (current year) 113 689

Mopani district municipality (not related party in current year) - 243 244

Dr Kenneth Kaunda district municipality (95 692) (61 436)

City of Johannesburg metropolitan municipality 80 160 89 541

Thabo Mofutsanyane district municipality (not related party in current year) - 5 000

Frances Baard district municipality 51 000 (17 168)

City of Cape Town metropolitan municipality 74 425 32 800

Greater Taung district municipality 17 755 13 121

Sekhukhune district municipality (23 161) 182 251

Ilembe district municipality 516 083 75 123

OR Tambo district municipality 918 210 64 470

City of Tshwane metropolitan municipality 81 725 16 100

Chief Albert Luthuli district municipality (172 320) 121 441

Drakenstein local municipality 180 208 289 611

Joe Gqabi local municipality 200 715 (35 426)

Buffalo City metropolitan municipality 1 214 125 763 500

Vhembe district municipality (current year) 150 130 -

Matjhabeng local municipality (current year) 306 819 -

George local municipality 42 863 -

Related party transactions

Transfers - government grant and subsidies

Department of Cooperative Governance and Traditional Affairs 26 904 000 25 999 000

Only transactions with related parties not at arm’s length or not in the ordinary course of business are disclosed.

The fees paid by the Department of Cooperative Governance and Traditional Affairs to SALGA are part of normal funding that

Government grants to public entities to further state policies.

221221221




Figures in Rand

Key management information

Class Description Number

Non-executive board sub-committee members Audit and Risk Committee (5); and

Performance Management and Remuneration Panel (5)

10

Non-executive board members Accounting Authority 22

Executive board member Chief Executive Officer 1

Executive management Executive Management Team (Senior Management

excludes the Chief Executive Officer)

9

33. KEY MANAGEMENT PERSONNEL

National executive committee members

With effect from 1 July 2013 and in terms of Government Notice R.64 - determination of upper limits of salaries, allowances and

benefits of different members of municipal councils, issued in terms of the Remuneration of Public Office Bearers Act, 1998 (Act No.

20 of 1998), dated 29 January 2014. SALGA is required to pay sitting allowances to councillors appointed to governance structures

of organised local government. The said allowance is limited to R 908 (2014: R 857) per sitting of the Provincial Executive Committee

or National Executive Committee or any committee of organised local government, regardless of the number of meetings that are

attended by such councillor on a specific day.

No remuneration or compensation was provided to close family members of NEC members. There were no transactions entered

with entities that are owned by NEC members.

Executive management team

No loans were advanced to senior management and no remuneration or compensation was provided to close family members of

senior management. There were no transactions entered with entities that are owned by senior executives of SALGA.

Audit committee members

No loans were advanced to audit committee members and no remuneration or compensation was provided to close family

members of audit committee members. There were no transactions entered with entities that are owned by audit committee

members.

Performance management and remuneration panel members

No loans were advanced to performance management and remuneration panel members and no remuneration or compensation

was provided to close family members of performance management and remuneration panel members. There were no

transactions entered with entities that are owned by the performance management and remuneration panel members.

Entities, department and agencies

The fees paid by the Department of Cooperative Governance and Traditional Affairs to SALGA are part of normal funding that

government grants to public entities to further the policies of government.

222222



222


Figures in Rand

National executive committee (NEC)

2015

Sitting

allowance

**

Reimbursed

travel

allowance *

Subsistence

allowance

(local) *

Subsistence

allowance

(foreign) *

Expense

refund Total


Cllr Mpho Nawa 12 857 - - 18 423 - 31 280

Cllr Nombulelo Hermans 12 856 28 854 - - - 41 710

Cllr Flora Maboa-Boltman 17 143 9 352 309 20 176 548 47 528

Cllr Dudu Mazibuko 1 714 - - - - 1 714

Cllr Tiny G Mthimunye 7 713 - - - - 7 713


Cllr Boitumelo Moloi - - - 9 712 - 9 712

Cllr Willie Johnson 17 998 17 305 1 133 - - 36 436

Cllr Sebenzile Ngagelizwe 8 570 - - - - 8 570

Cllr Demetri Qually 18 869 4 495 412 - 1 270 25 046

Cllr Gavin Lobelo 12 855 - - - - 12 855



Cllr Nomakhosazana Meth 7 723 - - - - 7 723

Cllr Zibonele Dumzela 7 713 - - - - 7 713

Cllr Abraham Bekeer 10 301 858 206 - - 11 365

Cllr Mafika Nkosi 6 856 66 596 - - - 73 452

Cllr Zukiswa Ncitha 6 007 - - - - 6 007

189 481 152 370 3 514 89 374 2 021 436 760

** With effect from 1 July 2013 and in terms of Government Notice R.64 - determination of upper limits of salaries, allowances and

benefits of different members of municipal councils, issued in terms of the Remuneration of Public Office Bearers Act, 1998 (Act No.

20 of 1998), dated 29 January 2014. SALGA is required to pay sitting allowances to councillors appointed to governance structures

of organised local government. The said allowance is limited to R857 per sitting of the Provincial Executive Committee or National

Executive Committee or any committee of organised local government, regardless of the number of meetings that are attended

by such councillor on a specific day. The remuneration paid to councillors who serve on the NEC (Accounting Authority) is limited

to the sitting allowance.

On 25 March 2015 the above mentioned government notice was repealed via Government Notice R 243 - determination of

upper limits of salaries, allowances and benefits of different members of municipal councils. The sitting allowance has since

been increased to R908 per sitting of the Provincial Executive Committee or National Executive Committee or any committee of

organised local government, regardless of the number of meetings that are attended by such councillor on a specific day.


governance structures of organised local government (where applicable). The rates used for local travel and subsistence are based

on SARS rates deemed as expended. International per diem is paid to NEC members who undertake SALGA’s mandate of strategic

profiling. For example SALGA’s Chairperson partakes in governance structures of internal bodies such as the local government

pan-African body, United Cities and Local Governments of Africa (UCLGA) as vice president. He is also President of the UCLGA

Southern Africa Regional Office (UCLGA-SARO), SALGA also participates in other world-wide bodies such as United Cities and Local

Government (UCLG); Commonwealth Local Government Forum (CLGF) and Metropolis. In pursuit of SALGA’s mandate at these

bodies the SALGA NEC mandates NEC members to participate at these bodies from time to time.

223223223




Figures in Rand

2014

Sitting

allowance

**

Reimbursed

travel

allowance *

Subsistence

allowance

(local) *

Subsistence

allowance

(foreign) *

Expense

refundTotal


Cllr Mpho Nawa 4 285 - - 73 554 - 77 839

Cllr Flora Maboa-Boltman 5 142 2 749 - - 67 7 958

Cllr Dudu Mazibuko 1 714 - - 12 900 - 14 614

Cllr Speedy Mashilo 4 285 - - 16 048 - 20 333


Cllr Joshua Matlou 2 571 - - - - 2 571

Cllr Boitumelo Moloi 2 571 - - 9 933 - 12 504

Cllr Willie Johnson 5 142 49 299 3 926 - 6 188 64 555

Cllr Parks Tau 3 428 - - - - 3 428

Cllr Balekile Mzangwa 2 571 - - 9 933 - 12 504

Cllr Demetri Qually 7 713 2 582 279 - 792 11 366

Cllr Gavin Lobelo 5 142 28 260 651 - - 34 053



Cllr Nomakhosazana Meth 857 24 774 1 395 18 034 - 45 060

Cllr Subesh Pillay 3 428 - - - - 3 428

Cllr Zibonele Dumzela 2 571 5 309 186 - - 8 066

Cllr Abraham Bekeer 4 285 4 045 930 - - 9 260

Cllr Mafika Nkosi 3 428 24 332 372 - - 28 132

Cllr Zukiswa Ncitha 857 - - - - 857

76 273 186 935 11 758 222 401 7 833 505 200

** With effect from 1 July 2013 and in terms of Government Notice number R.64 - determination of upper limits of salaries, allowances

and benefits of different members of municipal councils, issued in terms of the Remuneration of Public Office Bearers Act, 1998

(Act No. 20 of 1998), dated 29 January 2014. SALGA is required to pay sitting allowances to councillors appointed to governance

structures of organised local government. The said allowance is limited to R857 per sitting of the Provincial Executive Committee

or National Executive Committee or any committee of organised local government, regardless of the number of meetings that are

attended by such councillor on a specific day. The remuneration paid to councillors who serve on the NEC (Accounting Authority)

is limited to the sitting allowance.


governance structures of organised local government (where applicable). The rates used for local travel and subsistence are based

on SARS rates deemed as expended. International per diem is paid to NEC members who undertake SALGA’s mandate of strategic

profiling. For example SALGA’s chairperson partakes in Governance structures of internal bodies such as the local government

aan-African body, United Cities and Local Governments of Africa (UCLGA) as vice president; he is also President of the UCLGA

Southern Africa Regional Office (UCLGA-SARO); SALGA also participates in other world-wide bodies such as United Cities and Local

Government (UCLG); Commonwealth Local Government Forum (CLGF) and Metropolis. In pursuit of SALGA’s mandate in these

bodies the SALGA NEC mandates NEC members to participate at these bodies from time to time.

224224224

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225225225




Figures in Rand

In the current year key management personnel has been redefined in line with the accounting policy and limited to only executive

management team (EMT) members who report directly to the Chief Executive Officer, therefore only portfolio heads in terms of

SALGA’s business units have been disclosed.

** With effect from 1st April 2014 and in an effort to be competitive in regard to the labour market, SALGA introduced employee

benefits to all staff that are all defined contribution short term benefits such as employer contribution to pension; medical aid

and group risk cover for all employees including EMT members.

The EMT members are subject to written employment and performance agreements. The employment agreements regulate

duties, remuneration, allowances, restraints, leave and notice periods of these executives. The performance agreements regulate


* Other allowances comprise travel allowance. cellphone allowance and acting allowance (where applicable). International per

diem is paid to employees who undertake SALGA’s mandate of strategic profiling. SALGA’s chairperson partakes in governance

structures of internal bodies such as the local government pan-African body, United Cities and Local Governments of

Africa (UCLGA) as vice president. He is also President of the UCLGA Southern Africa Regional Office (UCLGA-SARO). SALGA

also participates in other world-wide bodies such as United Cities and Local Government (UCLG), Commonwealth Local

Government Forum (CLGF) and Metropolis. In pursuit of SALGA’s mandate in these bodies the Chairperson is supported by the

Chief Executive Officer of the organisation.

*** Performance related bonuses are per the SALGA performance management policy that is implemented with an oversight

role of the Performance Management and Remuneration Panel comprised of independent non-executive members. The

applicable performance rewards are based on merit and the applicable reward rates matrix range from 9% (minimum) to 20%

(maximum).

SALGA’s performance management and remuneration Panel is charged with normalising SALGA’s remuneration framework,

particularly in instances where salary bands of some executives are on a “personal to holder basis” until the expiry of the contract

or through natural attrition or earlier. The Chief Executive Officer’s current remuneration has been identified as one of the category

of employees. Notwithstanding the efforts to manage the escalation of remuneration at SALGA, particularly those of executives, it

is important to note that SALGA had to review its remuneration policies as it pertains to its executives and benchmark these with

municipalities particularly Metros since metropolitan municipalities pose the greatest direct remuneration competitor to SALGA

(also see report of the Chairperson of SALGA’s performance management and remuneration committee in the annual report).

226226



226




Figures in Rand

2014

Basic salary

Contributions to medical aid; pension fund;

and retirement fund

Bonuses and performance

related payments

Subsistence and other

allowances * Total

Mr Xolile George 3 006 185 - 370 275 185 717 3 562 177

Mr Nceba Mqoqi 1 399 546 14 401 144 910 44 005 1 602 862

Mr Lance Joel 1 489 948 - 189 605 110 583 1 790 136

Ms Antonette Richardson 1 157 191 - 126 953 25 190 1 309 334

Mr Jonathan Patrick (Acting) 722 843 31 736 75 176 12 750 842 505

Ms Lorette Tredoux 1 318 577 - 113 786 41 407 1 473 770

Mr Rio Nolutshungu 1 369 222 - 155 889 82 706 1 607 817

Mr Mthobeli Kolisa (resigned) 110 025 - 118 326 3 581 231 932

Mr Seana Nkhahle 1 157 191 - 119 416 55 067 1 331 674

Mr Gcinikhaya Mpumza 867 651 - 70 506 51 809 989 966

Ms Lulama Ceba (resigned) 71 079 5 223 - - 76 302

Mr Lucky Leseane 1 062 570 - 119 840 48 694 1 231 104

Mr Sandile Cele (resigned) 194 920 - - 2 500 197 420

Mr Thapelo Matlala 919 963 - 108 968 80 086 1 109 017

Ms Gugu Langa 981 657 77 448 88 015 49 643 1 196 763

Mr Johannes Ruiters (Acting) 522 119 - 39 951 35 339 597 409

Ms Nancy Ngwenya 965 970 - 94 214 78 223 1 138 407

Mr Khalil Mullagie 1 063 065 - 107 183 62 712 1 232 960

Ms Jean De La Harpe 801 190 - - 37 465 838 655

Mr Zwelandile Ndlala (Acting) 1 025 397 - 108 276 74 279 1 207 952

Mr Sabelo Gwala (Acting) 754 366 - 68 720 47 493 870 579

Ms Phila Xuza 934 523 - - 20 000 954 523

21 895 198 128 808 2 220 009 1 149 249 25 393 264

* Other allowances comprise travel allowance, cellphone allowance and acting allowance (where applicable).

Prior to the 2014/15 financial year SALGA’s EMT was remunerated on a total cost to company basis. EMT members were permitted

to structure their package to allow for a thirteenth cheque; medical aid contribution; pension fund contribution or travel allowance.

The EMT members are subject to written employment and performance agreements. The employment agreements regulate

duties, remuneration, allowances, restraints, leave and notice periods of these executives. The performance agreements regulate


SALGA’s performance management and remuneration committee is charged with normalising of SALGA’s remuneration

framework, particularly in instances where salary bands of some executives are on a “personal to holder basis” until the expiry of

the contract or through natural attrition or earlier. The Chief Executive Officer’s current remuneration has been identified to be

one of these category of employees. Notwithstanding the efforts to manage the escalation of remuneration at SALGA, particularly

those of executives, it is important to note that SALGA had to review its remuneration policies as it pertains to its executives and

benchmark these with municipalities particularly Metros, since metropolitan municipalities pose the greatest direct remuneration

competitor to SALGA (also see report of the Chairperson of SALGA’s performance management and remuneration committe in

227227227






Figures in Rand

the annual report).

Audit Committee and Performance and Remuneration Panel members

2015

Attendance

feesReimbursed travel cost Total

Audit and Risk Management Committee

Mr Temba Zakuza (chairperson) 79 568 6 378 85 946


Ms Phumelele Ndumo 64 878 - 64 878

Mr Nala Mhlongo 13 465 495 13 960

Adv Motlatjo Ralefatane 24 482 950 25 432

Performance Management and Remuneration Panel

Mr Chose Choeu (chairperson) 29 379 635 30 014

Ms Elizabeth Dlamini-Khumalo 29 379 570 29 949

Dr Faizel Randera 14 689 382 15 071



358 666 10 429 369 095



capped regardless of the duration on the meeting or preparation time.


2014

Attendance

feesReimbursed travel cost Total

Audit and Risk Management Committee

Mr Temba Zakuza (chairperson) 98 086 9 835 107 921


Ms Phumelele Ndumo 76 605 120 76 725

Mr Nala Mhlongo 91 764 2 865 94 629

Adv Motlatjo Ralefatane 73 107 2 226 75 333

Performance Management and Remuneration Panel

Mr Michael J Olivier (chairperson) 16 325 506 16 831

Ms Elizabeth Dlamini-Khumalo 62 966 1 138 64 104

Dr Faizel Randera 58 302 1 327 59 629

Mr Zwelibanzi Mntambo 16 325 379 16 704


Prof Johan Hough 16 325 93 16 418


Mr Chose Choeu (chairperson) 55 970 1 138 57 108

737 880 20 958 758 838



capped regardless of the duration on the meeting or preparation time.


228228



228


Figures in Rand 2014

34. PRIOR PERIOD ERRORS

In the prior periods SALGA used to recognise the full liability and expense upon issuance of a purchase order (obligating event)

but this was not in accordance to GRAP. In the current year, SALGA adopted the percentage of completion method to achieve fair

presentation. The prior year figures have also been restated in order to achieve comparability in presentation.

The correction of the error(s) results in adjustments as follows:


Decrease in expenditure accrual (current liabilities) (15 479 754)

Increase in accumulated surplus 15 479 754

The effect on periods prior to 2014 is as follows:

Decrease in expenditure accrual (current liabilities) (7 711 394)

Increase in accumulated surplus 7 711 394

The effect on accumulated surplus for periods prior to 2014 is as follows: 7 711 394

Statement of financial performance

Decrease in other expenses 900 401

Decrease in personnel expenses 153 563

Decrease in indirect programme costs 6 714 395

Increase in surplus for the year 7 768 359

The effect on periods prior to 2014 is as follows:

Decrease in other expenses 5 759 602



Statement of financial performance and budget versus actual amounts

Decrease in other expenses 900 401

Decrease in personnel expenses 153 563



35. COMPARATIVE FIGURES

Certain comparative figures have been reclassified in order to achieve comparability.

The effects of the reclassification is as follows:


Decrease in operating lease liability – current 5 606 435

Increase in operating lease liability – non-current (5 606 435)

229229229




Figures in Rand

36. RISK MANAGEMENT

Financial risk management

SALGA’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow

interest rate risk and price risk), credit risk and liquidity risk.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash. SALGA receives cash in the form of membership levies from

its members and grants from government. The entity maintains liquidity by limiting capital and operational expenditure within

the approved budget.

SALGA’s risk to liquidity is as a result of inadequate funds available to cover future commitments. SALGA manages liquidity risk

through an ongoing review of future commitments and credit facilities.

2015

Maturity analysis Trade payables Other payables

Not later than one month 38 403 771 -

later than one month and not later than three months; 21 696 236 -

later than three months and not later than one year; and 9 851 909 13 114 099

later than one year and not later than five years. - 10 075 733

69 951 915 23 189 832

2014

Maturity analysis Trade payables Other payables

Not later than one month 35 405 851 -

later than one month and not later than three months; 14 302 894 -

later than three months and not later than one year; and 13 870 597 11 455 548

later than one year and not later than five years. - 1 668 356

63 579 342 13 123 904

Values presented in the maturity analysis are undiscounted according to the terms of the instrument. These amounts will all be

settled in cash. Trade payables are considered to mature in 30 days after year end as these suppliers require 30 days settlement

terms. No changes between the current and prior year assumptions have been made.

Credit risk

Credit risk consists mainly of cash deposits, cash equivalents, derivative financial instruments and trade receivables. The entity only

deposits cash with major banks with high quality credit standing and limits exposure to any one counter party.

Trade receivables comprise of municipalities which are invoiced once a year based on their budgeted salary cost. There is no

independent rating, therefore management assesses the credit quality of the customer, taking into account its financial position,

past experience and other factors. The entity establishes an impairment that represents its estimate of incurred losses in respect of

trade receivables.

230230



230


Figures in Rand

Market risk

Interest rate risk

SALGA’s interest rate risks arises from market and economic factors, loans and other payables, cash and cash equivalents and loans

and other receivables. The entity’s exposure to interest rate risk is minimal due to the following factors:

No interest is levied on overdue trade receivables;

Interest paid on trade payables is limited as it is the policy of the entity to settle within the credit terms, cash flow permitting

in order to comply with the Public Finance Management Act (PFMA) requirements; and

The PFMA does not allow for the entity to utilise bank overdrafts, without prior approval of the Executive Authority and

Minister of Finance.

Based on the activities of SALGA the only area affected by interest rate risk is finance leases and investment income earned on call

deposits and other bank balances.

At 31 March 2015, if interest rates at that date had been 200 basis points lower with all other variables held constant, surplus for

the year would have been R 250 500 (2014: R 114 178) lower arising mainly as a result of lower interest earned on call deposits and

bank balances.

If interest rates had been 200 basis points higher, with all other variables held constant, surplus would have been R 250 500 (2014:

R 114 178) higher, arising mainly as a result of higher interest expense on variable payable and receivables.

The sensitivity is higher in 2015 than in 2014 because of an increase in cash and cash equivalents held during the year.

Cash flow interest rate risk

SALGA’s exposure to this type of risk arises when the entity has a financial instrument with a floating interest rate. The entity is

seldom exposed to this type of risk. When the need arises management employs conservative approaches with a limited risk

exposure such as call accounts or limit the risk completely by employing fixed deposits. The following credit facilities are available,

which are payable 30 days from statement date:

Lodge cards R 15 000 000

Office equipment rentals R 4 400 000

Fleet cards R 50 000

Fair value interest rate risk

SALGA’s exposure to this type of risk is slightly higher than the cash flow interest rate risk, primarily due to the conservative

investment philosophy. Ordinarily fixed deposits expose the entity to this type of risk. The entity manages this risk by keeping fixed

investments on a shorter-term to mitigate the impact that this type of risk might have on the organisation.

Foreign exchange risk

SALGA does not hedge foreign exchange fluctuations.

SALGA is seldom exposed to this type of risk. Whenever the risk arises it is normally on the incurrence of per diem for international

travel. The organisation’s policy on international travel allows for payment of USD 215 per day. As the allowance is denominated in

foreign currency, SALGA is exposed to currency fluctuations on payment based on the ruling spot rate. Furthermore, an infrequent

231231231





incurrence of a foreign currency denominated expenditure relating to Microsoft product suite licences, the organisation is also

exposed to this risk as it settles these expenditures at the ruling spot rate on payment date.

Due to the infrequent nature and magnitude of the expenditure management does not employ any hedging mechanisms against

this risk.

Price risk

The entity’s exposure to price risk is limited to the effect that inflation has on the market prices for goods and services ordinarily

procured by the organisation. The risk arises when the entity’s revenue does not escalate at a similar or better rate that the prevailing

market conditions. This is rare since the entity’s major source of revenue is its membership levies which, due to the basis of deriving

the levy amount normally escalates at a rate higher or equivalent to the prevailing inflationary trends.

Other than membership levies adjusted annually, there are no special mechanisms employed by management to manage this

kind of risk other than pursuing a fair market value/price through a ‘dip-stick’ in the market viz. sourcing formal price quotations and

open tenders per the organisations supply chain management (SCM) policy.

37. GOING CONCERN

We draw attention to the fact that at 31 March 2015, SALGA had accumulated surpluses of R 109 241 562 and that the entity’s total

assets exceed its liabilities by R 111 501 128 indicating that the organisation is solvent.

The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis

presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities,

contingent obligations and commitments will occur in the ordinary course of business.

The ability of SALGA to continue as a going concern is dependent on a number of factors. The most significant of these is the

recognition of SALGA by the Minister of Co-operative Governance and Traditional Affairs (CoGTA) in terms of the Organised Local

Government Act, 1997 as the sole voice of local government.

38. EVENTS AFTER THE REPORTING DATE

There are no material facts or circumstances that have arisen between the reporting date and the date of approval, which affect

the financial position of SALGA as reflected in these annual financial statements.

39. FRUITLESS AND WASTEFUL EXPENDITURE

Opening balance - -

Fruitless and wasteful expenditure 2 107 1 453

Less: fruitless and wasteful expenditure recouped (2 966) (2 656)

Over-recovery of fruitless and wasteful expenditure 859 1 203

Less: fruitless and wasteful expenditure (condoned) - -

- -

Fruitless and wasteful expenditure amounting to R2 107 (2014: R1 453) was incurred during the financial year. SALGA requested

credit notes and were granted for fruitless and wasteful expenditure incurred in the current and prior years amounting to R 2 966

(2014: R2 656). The net effect is that there is an over-recovery of fruitless and wasteful expenditure in the current year of R 859 (2014:

R1 203).

232232



232



40. IRREGULAR EXPENDITURE

Opening balance - 37 090 372

Less: amounts condoned by National Treasury - (9 352 841)

Less: amounts condoned by Accounting Authority - (27 737 531)

- -

41. STATEMENT OF COMPARATIVE BUDGET AND ACTUAL INFORMATION

The SALGA budget is prepared on an accrual basis which is comparable with the financial statements. The original budget for the

2014/15 was approved by the Accounting Authority on 30 January 2014. The first adjusted budget for 2014/15 was approved by

the Accounting Authority on 9 January 2015 and the final adjustment budget for 2014/15 was approved with the annual financial

statements on 26 May 2015.

The budgets mentioned above cover the periods 1 April 2014 to 31 March 2015. The budget is prepared on the accrual basis using

a classification based on the nature of expenses in the statement of financial performance.

233233233

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234234



234



Explanation of variances between actuals and final approved budget (variances greater or equal to 10 percent)

Other revenue from exchange transactions - the positive variance is attributable to over recovery for the convening of

SALGA governance structures with more delegates attending than expected as well as the recovery of costs for the TASK

job evaluation that is being rolledout to member municipalities;

Investment income - the positive variance is mainly due to improved cash holding as a result of membership levy collections

being realised early due to the early settlement discount strategy adopted as well as the better rates negotiated with our

bankers;

Grants recognised LGSET CIP; CB; PBCDP - the negative variance is attributable to unrecognised grant revenue due to

programme roll-out for the portfolio based capacity building programme (PBCDP) lagging behind initial projections as a

result of the delayed release of the grant funding. Other programmes were also affected by the release of the grant funding;

Sponsorships and donations - the positive variance is largely due to sponsorship realised for the hosting of SALGA

governance structures exceeding expectations; and

Finance costs - the positive variance is due to the finance cost incurred on finance leases being lower than budget due to

assumptions being higher than the average 9 percent implicit rate.

Reconciliation between budget and statement of financial performance

Reconciliation of budget surplus/deficit with the surplus/deficit in the statement of financial performance:

Net surplus per the statement of financial performance 18 702 423 39 024 772

Adjusted for:

Fair value adjustments (700 000) 2 000 000

Less: positive variance in revenue (5 033 636) (9 259 844)

Less: positive variance in expenditure (61 665) (18 852 765)

Less: positive variance in non-operating income or expenditure (8 382 336) (2 944 889)

4 524 786 9 967 274

235235235

Notes

236236236

Notes

237237237

Notes

238238238

Notes

239239239

Notes

240240240

Notes

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