INDUCTION PACK 1 NDPG Administration & Reporting

1. INDUCTION PACK 1 NDPG Administration & Reporting

2. Understanding why & how NDPG is different to other grants • Concepts & terms → what do they mean? • Funding Envelope • Multi-year budgeting • Schedule 6 & Schedule 7 of NDPG • Funding components & importance of planning activities for MPS • Approval points • Funding flows • Financial operational management → the 5 rules • Sequencing • Municipal responsibilities

3. Budget Concepts: Funding Envelope Project Funding Envelopes CD & PDs NDPG Reference Group Project 1  Project 2  Project 3  Project 4  Project 5  Project 6  Project 7  Project 8  Project …  + + + + + + + + = Approved Portfolio Funding Envelope  Approved Portfolio Funding Envelope  Approved Portfolio Funding Envelope  DDG + + Approved NDPG Funding Envelope  = DG Excludes leverage of other funding 100 projects @ R10 bn in 10 years

4. Funding Envelope Budget Concepts: Multi-Year Budget • Funding Envelope ≠ annual gazette amounts! • MTEF total forecasts vs. one-year detailed budgets • Alignment of financial years → Treasury: 1 April & Municipality: 1 July Yr 1 Yr 2 Yr 3 Yr ++ Sch 7 Sch 7 Sch 7 Sch 6 Sch 6 Sch 6 Sch 6

5. Schedule 6 Direct Transfer to Municipality Schedule 7 In-kind to Consultant Schedules 6 & 7 Status Quo, TRS & Concept Business Plan 1 Programme Management & Coordination Programme plans → MPS 2 Strategic Planning (SQ TRS, concept, etc.) 3 Detailed Design 4 Construction/Implementation Management 5 Construction/Implementation 6 Operating

6. Approval Points • Status Quo, TRS & Project Concept • Project concept in respect of TRS • In alignment with NDPG • Interactive process with NDP • Authority to proceed • Business Plan • Plan on how to implement • Plan on how to utilise capital grant as catalyst for TRS • Capital spending priorities identified • Rationale for choices made • NDP to approve • Then only can release capital

7. Schedules 6 & 7

8. Operational Financial Matters • NDPG → Hybrid grant • Definitions of Schedule 6 & 7 • Importance of MPSs

9. Funding Flows Contractor Capital works contract (Sch 6) Payment claims (Sch 6) Payments (Sch 6) Municipality Service Provider Contract & appointment letter (Sch 7) Invoices for Sch 7 amounts to municipality Sch 6 tranches Funding agreement Sch 7 Payments Sch 7 Invoices from municipality Sch 7 Approved invoices from municipality NDP Unit PDF (PPP Unit) Service Level Agreement

10. Financial Management Rules(1) Allocating & reallocating budgets for municipality • DoRA → Section 10 • Allocations of Budgets • MTEF (3-yr) Forecast & Yr 1 in detail • Workings in September/October • Due for April of next year • Published in DoRBill in December/January of the next year → MTEF → NB for muni as these are the numbers for municipal overall budget prep • Also published in Government Gazette (DoRA) in April of next year • Reallocation of Budget • Adjusts only current year of expenditure → in-year adjustment • Workings in September • Due for October • Published in Government Gazette (DoRA Adjusment Gazette) in December • Government Gazette each time • Importance of programme plan & MPS → No info → we guess! • To assist in multi-year projects & provide certainty of cash-flow

11. Financial Management Rules(2) Stopping – (3) Withholding (2) Stopping • Process to take allocation back to Treasury if not used • DoRA → Section 26 • Once a year → in March for NT financial year ending at end March • Funding Envelope generally not affected but can be if warranted • Material & persistent non-compliance with DoRA • Non-spending • If not in alignment with NDPG framework (3) Withholding • Suspension of portion of funds if funds are not spent for 3 months in accordance with MPS • DoRA → Section 25 • Progress reviewed monthly but withholding generally done once a quarter • Funding Envelope generally not affected → cash-flow management by Treasury • Gazetted allocation not affected but Adjustment Gazette process takes lack of progress on board & downwards adjustments are possible & likely

12. Financial Management Rules(4) Roll-Overs – (5) Reporting (4) Roll-overs • Generally not supported • However, any Schedule 6 transfers made in March are accounted for in current financial year of Treasury but can still be spent by municipality in April-May-June (i.e. before end financial year of municipality) (5) Reporting • Monthly reporting requirements in legislation • MFMA → Section 71 & 72 • DoRA → Section 10 • NDPG grant framework • Submissions by muni • Progress reports on internet per award • One –pager • One per award • Pre-populated with data by NDP • 10 minutes to do • Completion dates → 1st to 10th every month • Non-submission → Treasury can hold back payment requests of Schedule 6 & 7 amounts

13. Municipal Responsibility • Committing to a longer-term township regeneration programme • Implementing the NDPG catalytic component • Management & coordination of entire development process • Striving to improve Quality of Life • Leveraging in public & private sector funds • Managing processes • Procurement of consultants & their management • MFMA, SCM, etc. applies • Ensure Value-For-Money • Get quality outputs • PSP Panel role • Obtaining Council approvals • Ensuring capacity is in place • Budgeting & cash flow management & reporting

14. Next Step • Brief your management structures • Get your foundations in place • Sign Funding Agreement & Schedules • If no Council resolution, get one! • Sort out your delegations • Sort out capacity – even if short-term • Set up initial development coordination structure • Political • Administrative • Getting ready for 3 year funding commitments for forward predictability • Resources in your pack • Financial Policy & Procedures • Benchmark Costings (draft) • Schedule 3 of Funding Agreement: MPS • Guidance Note: VAT