Deputy Minister Dickson Masemola: Finance Audit and Risk Officers 2024 conference

Deputy Minister of Cooperative Governance and Traditional Affairs (COGTA), Dr Namane Dickson Masemola will deliver a keynote address at the Chartered Institute of Government Finance Audit and Risk Officers (CIGFARO) 2024 conference under the topic ‘Accelerating Public Finance Excellence’

Programme Director: Cheryl Reddy
The President of CIGFARO : Dr Emmanuel Ngcobo
Members of the Board and Office Bearers: CIGFARO
Deputy  Mayor of Ethekwini Metro :  CLLR Zandile Prudence Myeni
Clllrs responsible for Finance
Municipal Managers and CFO’s
National Treasury  Officials
Officials from Provincial Departments and other organs of State
Finance and Risk Officials
CEO of Munsoft : Nicholas Maweni
Mr Sydwell Mofokeng
Representatives of Countries from the Continent and Abroad.
Colleague from Canada
Lindi Nolte
Zipho Mdluli
Representatives of Banks
Sponsor organisations
Distinguished Guests
Esteemed Delegates
Ladies and Gentlemen
Comrades and Colleagues
Fellow South Africans

Good morning, Goie more, Sanibonane, Molweni,Dumelang

I would like to begin by conveying the apology and well wishes of the Minister , who unfortunately could not join this conference. He is currently leading the Eastern Seaboard Development Political Engagement alongside the Premiers of the Eastern Cape and KwaZulu-Natal, as well as Traditional Leaders, MECs, Mayors, and Councillors from the four districts: Ugu, Harry Gwala, OR Tambo, and Alfred Nzo.

Recognizing the significance of this meeting, the Minister has requested me to represent the Ministry , as we hold this conference  equally in high regard. It is therefore, an honour to address this important  Conference of the Chartered Institute of Government Finance Audit and Risk Officers (CIGFARO) , which brings together the finest minds in public finance to discuss a matter ,that lies at the very heart of governance: the pursuit of public finance excellence. In the context of our constitutional democracy.

It is even more historic given that this year, you are celebrating 95 years of your existence. It’s a heart warming moment for me, on behalf of the National Executive.

I am addressing you on behalf of the department which is part of the Government of National Unity , which arouse as a result of many causal factors. A phenomenon that is occasioned by the voters of this country.

Complex is it might be, we do have the capacity and appropriate wherewithals to manage it on behalf of all South Africans. Let me prelude my presentation by remembering what was once said by Ernesto  Che Guevara:-

One of the greatest theoreticians and tacticians of the struggle for freedom and democracy. At the risk of seeming preposterous, let me say that the true revolutionary is guided by a great feeling of love. It is impossible to think of a genuine revolutionary lacking this quality “.

Secondly, the founding father of our democratic Government, President Nelson Mandela once said :-

The Chief Volunteer of our struggle for freedom and democracy. “A nation should not be judged by how it treats it’s highest citizens, but it’s lowest ones” Based on the above two quotations, it is clear that we cannot lead and manage the affairs of the people without love.

Secondly, that we must do more to ensure social equity, realize higher degree of effectiveness of government systems and defend the resources of the state as patriots. We are called upon to provide leadership, for it’s the only requirement that would move nations forward or bring them down.

Hence we are meeting at this conference based on the theme: – Accelerating Public Finance Excellence “. As President Nelson Mandela said, that we should be characterised or judged by a higher degree of effectiveness of government systems.

The exchange of experiences and lessons, thrifty years into our democracy, should help to mirror ourselves from where we come from, with respect to the theme of this conference. For the supersonic performance of government, we need this high level of commitment to the service of national importance.

We view public finance as not only a matter of fiscal management but also as a tool that ensures, our government can deliver on the promise of a better life for all the people in the Republic. Our Constitution, particularly through its commitment to democratic governance, enshrines the right of every citizen to access essential services such as water, sanitation, safety and security, electricity, housing, and education to mention but a few.

It mandates the State to promote social and economic development and to ensure sustainable service delivery at all levels of government. Central to this mission is our ability to manage public resources effectively and responsibly, which is why today’s theme of “Accelerating Public Finance Excellence” is both timely and significant.

Ladies and gentlemen, I believe we can all agree that public finance excellence is the bedrock of effective service delivery. The careful and transparent management of public funds is what empowers the State to invest in vital infrastructure, enhance service provision, and respond to the growing needs of the communities we serve.

I emphasize the word serve because this is not just a technical duty,  but a moral obligation in the service of the people, for social progress and prosperity. Given that we are expected to serve and lead with integrity and honesty.

When the public funds are mismanaged,  is not only the government that gets weakened with resource capacity, but the people in particular, are the most affected because they are denied access to services and development. The consequences of poor financial management are not abstract – they are felt in the everyday lives of people. By the elderly, women, children, and people living with disabilities.

When there is no water to take medication streetlights are off, and people cannot freely walk their streets for social and economic reasons, as a result of inordinate use of public funds, by those entrusted with the responsibility by the people. We are meeting here today on behalf of sixty-two million South. Africans (62 million) on whose behalf and in their names, are articulating different perspectives with regard to how we are or supposed to be handling their resources.

Local government is the sphere where the interface between the state and the people is most immediate and has the greatest responsibility in this regard. Municipalities are at the forefront of service delivery, and their financial health directly impacts their capacity to deliver basic services, in line with the adopted integrated development plans.

This is where the role of financial officers, accountants, risk officers, and auditors becomes indispensable. Equally, even the banking sector becomes crucial given its finance skills base and capacity, from which municipalities could benefit. I would like to appreciate the presence of the banking sector in this conference.

Their partnerships with the government and the services rendered are highly appreciated. In this regard, we would like to encourage such close relations of exchange and support in sharpening the efficacy of the system. Integration of risk management, seamlessly into the daily business enterprising of government and making it part of municipalities’ high-level strategy and planning process, brings the right shift in orientation and approaches.

As part of striving for public finance excellence, risk management continues to be an integral part of good governance. It strengthens approaches for municipalities to reach effective performance outcomes and conformance to their objectives. By accelerating public finance excellence, we ensure that local governments can meet the constitutional mandate to deliver services that improve the quality of life for all South Africans.

Programme Director, we are living in a time of significant economic challenges. The impact of global events, coupled with domestic pressures, has created a tough fiscal environment. In this regard, there is a global phenomenon of municipalities facing financial challenges, budget deficits, possible bankruptcy, financial debacles, deteriorating and unmaintained infrastructure, declining quality of services, increased urban poverty, mounting social exclusion and spatial governance challenges, low revenue base, declining assets base, and affected growth-enhancing expenditures.

In our country as well, we do have some of the above-mentioned features in our local government system, which are clear indications of the inherent challenges and difficulties, that indubitably would negate the essence of public finance excellence. Municipalities face increasing demands for services, a mandate bestowed upon them by the constitution, while resources are often stretched and limited.

Yet, within these challenges lies an opportunity to build resilient and innovative financial systems that can weather these storms. Hence, we have adopted Integrated Urban Development Framework, as the policy intervention to address related systems, governance, and management challenges. Resilience in public finance is not simply about surviving difficult times. It is about adopting forward-looking strategies that prioritize long-term sustainability over short-term fixes.

This calls for us to strengthen our financial systems, invest in skills development, and embrace technology to improve efficiency. It is our understanding that finance does not need ordinary thinking based on cognisation, because that negates dialectical reasoning, which plays a profound role of vital analytical significance, in ensuring proper finance use and correct decisions.

Our role as the Ministry of Cooperative Governance and Traditional Affairs in accelerating public finance excellence is key to promoting cooperative governance between the three spheres of government: national, provincial, and local. The principles of cooperative governance, as set out in Chapter 3 of the Constitution, call for intergovernmental collaboration and coordination in the management of public finances.

By ensuring alignment in planning and budgeting across all spheres of government, we believe that the country would be in a better position to deliver services more effectively and efficiently. In this regard, the intergovernmental fiscal relations system addresses and influences, the nature,  scope, and depth of policy intervention, with its impact measured through the distribution of nationally collected revenue and expenditure related thereto.

The evidence of expenditure depicts horizontal fiscal imbalance, probably caused by the assumptions made in the 1998 White Paper Policy on Local Government. A matter that has been receiving our attention since the President made a call that, there should be a review of the local government funding model. Working together with the Presidency and National Treasury, we are ceased with this matter.

Ladies and gentlemen, allow me to highlight some of the key initiatives we have undertaken in pursuit of public finance excellence:

Ethical leadership as a catalyst for effective oversight, accountability, and consequence management

Ethical leadership is more than a platitude or parlance.  It is the foundation upon which we build an accountable and transparent local governance ecosystem. In recent times, we have seen concerning patterns within our municipalities: of allegations and reaalities on:- malfeasance and malversation, fraud and corruption, ineffective governance structures, irregular appointments, supply chain challenges, and a pervasive lack of consequences for wrongdoing.

These issues not only hinder service delivery but erode the public’s trust and confidence in local government. The path forward requires more than policies and strategies. It demands a fundamental shift in the culture of governance – a commitment to ethics, integrity, and accountability at all levels, from administrative staff to the highest tiers of Council leadership.

This requires values-based leadership infused into the system and deepened in the political and administrative structures of local government. We must ask ourselves: how do we entrench these values within our institutions? The answers are with those, who are in leadership of the municipal institutions.

The Local Government Anti-Corruption Strategy lays out a clear mandate, that municipal leadership must set the ethical tone and lead by example. Mayors, Speakers, and Municipal Managers carry a critical responsibility to champion this cause.

Their actions—or inaction—set the precedent for the entire municipality. It’s not just about avoiding unethical behavior but actively promoting a culture where ethical leadership is the standard. In recognition of the urgent need to reinforce ethical leadership, the Department, in collaboration with The Ethics Institute (TEI), SALGA, the Moral Regeneration Movement (MRM), and heads of law enforcement agencies, convened the Summit on Ethical Leadership in Local Government on March 1, 2024, under the theme: “Ethical Leadership for Effective Local Government.”

At this summit, we launched the Code for Ethical Leadership in Local Government, as envisaged in the Local Government Anti-Corruption Strategy. This Code is not just symbolic, it serves as a guiding document for municipalities to follow in their governance practices.

As part of institutionalizing the Code, the Minister, alongside the President of SALGA, will be co-signing a Circular addressed to all municipalities across the country, urging them to adopt the Code at the Council level, for institutionalization , compliance, and adherence. We are recommending that municipalities distribute the Code to all their leaders, prominently display it on their websites, and integrate discussions on ethical leadership into Council meetings.

Beyond this, training and awareness initiatives will be essential in ensuring the Code is fully understood and implemented. This Code serves as a roadmap for municipalities seeking to achieve well-governed, efficient, and ethical leadership, thus ensuring public finance excellence.

It is through transparency, integrity, honesty, trustworthiness, reliability, and accountability that we will cultivate good governance. Our commitment to these values and principles should not be imaginary.

In partnership with the National School of Government (NSG), SALGA, the SIU, the Department of Public Service and Administration (DPSA), and other key stakeholders, we are adapting the Ethics in the Public Service Course to suit the local government context.

This course, which is currently tailored for national and provincial officials, will be customized to meet the unique challenges and requirements of local government. Once finalized, this free course will be a critical tool in promoting ethics and integrity at the municipal level.

Collaborating to Fight Corruption: However, instilling ethical values is only part of the equation.

Effective consequence management is one of the critical activities and actions to be implemented. A matter that in many instances the system is found wanting. Therefore, we are calling upon Mayors and Municipal Managers, to make sure that this area of enforcement and accountability is realised.

Because many things could be avoided and the correct culture is deepened where officials look after public finances and other areas of their municipalities with care. The Department will continue to work closely with law enforcement agencies, provincial governments, and other stakeholders to strengthen the fight against corruption in municipalities.

Of course, we appreciate those who uphold the set values and are centers of excellence in public finance.

Continue to do well, in the interests of the working class and the poor, the downtrodden whose future and conditions depend on our collective honesty and efforts.

The President has signed many proclamations in this regard because of challenges and problems that seem to abound. Michael Lewis in the book “The Fifth Risk: Undoing Democracy”  says :

“Many of the appointees are based on loyalty even though unsuitable, and they even actively work against branches they are heading for their pecuniary interests.”

All these actions intentionally or unintentionally impact negatively on any organ of state capable of dispensing power, in a manner that totally destroys and weakens the systems of governance, for vexatious and frivolous actions to triumph, in satisfying the insatiable appetite for currency. We are looking forward to the meeting where the Ministry, will be engaging the heads of the three primary law enforcement agencies, to discuss ways to intensify the fight against corruption, ensuring accountability and that those responsible for wrongdoing face appropriate consequences.

Professionalisation of local government

Section 152(2) of the Constitution mandates municipalities to fulfill their service delivery obligations. Key to this is their institutional and administrative capability, human resource capacity, and financial stability. To build a capable and developmental state, as envisioned in the National Development Plan (NDP) 2030, several measures are being implemented to professionalize local government.

In context once again, the Priorities of the 7th administration include building an ethical, capable, and developmental state. We have introduced multiple frameworks to improve governance in municipalities, such as the Municipal Performance Regulations for Senior Managers (2006), Competency Framework for Senior Managers (2014), Municipal Staff Regulations (2021), and the Municipal Systems Amendment Act (2022).

These policies ensure the recruitment of qualified senior managers, regulate performance evaluations and limit political interference in municipal administration and management. Equally, caution officials and locate them accordingly within the realm of their legislative space. To address the temptations of blurring boundaries and avoid such, given its impact on the quality of decisions and delivery of service.

Because matters of collegiality and relations should be based on principles of political administration, informed by the need for effective local governance. We are focused on capacity-building initiatives, including comprehensive training programs for municipal leaders and HR practitioners to help implement these regulations.

Competency assessments for senior managers have been introduced to ensure, that only suitably qualified individuals fill key positions, with ongoing reviews to adapt assessment tools. The Competency Framework for Mainstream Occupations and Career Streams, published in 2021, sets a foundation for skills audits and upskilling programs to address gaps.

Municipal public accounts committees (MPACS)

As we all know, MPACs were introduced through the Amendment Act to enhance oversight and accountability in municipal councils. The MPACs’ primary responsibilities include reviewing the Auditor-General and internal audit reports, developing oversight reports on annual reports, investigating issues affecting the municipality, and making recommendations to the council.

The challenge in this regard is that these committees are at different levels of functionality and in most instances, their impact is not felt. This is despite the training that has happened. MPACs are distinct from other committees, such as the Finance and Audit Committees, and mainly focus on investigating concerns related to audits, with a particular emphasis on unauthorized, irregular, fruitless, and wasteful (UIFW) expenditure.

They are required to meet monthly to address UIFW and develop preventative measures. The MFMA through section 62 sets out the general financial management responsibilities of the accounting officer. The accounting officer is required to take all reasonable steps to ensure that the resources of the municipality are effectively, efficiently, and economically utilised and that unauthorised, irregular, fruitless, and wasteful expenditures are prevented.

The Municipal Regulations on Financial Misconduct Procedures and Criminal Proceedings makes provision for the establishment of a Disciplinary Board which will receive and investigate allegations of financial misconduct within municipalities. A necessary instrument to heighten accountability and its importance cannot be ignored and we are looking forward to getting reports on how these committees are functioning.

Equally, we have embarked on an outreach programme and are interacting with municipalities in provinces, to assess their performance in key areas of local government transformation. This is part of our ongoing work, that has become even more serious, given the recent Auditor General’s, Municipal Finance Audit Outcomes, and the State of Local Government Report, which reflects a concerning state of municipalities.

A number of municipalities are in distress, in fact, 35 of them, and  10  are regarded as dysfunctional while a substantial number of them are at risk. This situation has necessitated the President to appoint an Inter-Ministerial Committee to ensure improvement of the reported municipalities’ performance.

This undertaking is meant to strengthen the provision of leadership and deepen accountability. As I conclude, I would like to once again express my sincere gratitude to the organizers of this important conference, for affording us the opportunity to participate in these discussions.

It is through platforms like these that we can collectively engage, share insights, and develop strategies to address the pressing issues facing local governance in our country. Our continued collaboration with CIGFARO is proof of our commitment to developing meaningful partnerships with key stakeholders,  who share our vision for improving the state of local government in South Africa.

Recognizing the critical role that professional bodies play in enhancing the capabilities and governance within municipalities, we have made a strategic decision to align ourselves with partners like CIGFARO, who bring valuable expertise and resources to the table. In line with this commitment, we are proud to highlight that on 30 June 2023, we formalized a Memorandum of Understanding (MoU) with CIGFARO.

This MoU serves as a significant milestone in strengthening our collaboration, particularly in the areas of financial management, governance, and capacity building within municipalities. Through this partnership, we aim to bolster the support we provide to municipalities, by ensuring that, they are equipped to meet their constitutional obligations and deliver services effectively to the communities they serve.

This strengthened collaboration with CIGFARO highlights our dedication to advancing public finance excellence and enhancing the overall performance of local government. We are confident that by leveraging the collective knowledge, skills, and experience of both our department and CIGFARO, we will make significant strides in addressing the challenges faced by municipalities, thus contributing to the broader goal of achieving sustainable, accountable, and effective governance at the local level.

I am certain that we all agree that together, we remain committed to this journey of transformation. Just as called for by the District Development Model, we remain committed to working with our stakeholders to ensure that municipalities across South Africa, are positioned to deliver on their mandates and improve the quality of life for all citizens.

We look forward to the continued partnership with CIGFARO and the positive outcomes that will arise from this collaborative effort. I would like to wish everyone well as you continue with this important conference. The conversations and ideas shared here are key to improving public finance and making the system of local government better.

Your participation shows your commitment to improving public service and making a real difference in our municipalities. As we face the challenges in local government, this conference provides a great opportunity to share knowledge, come up with new ideas, and find solutions. By working together, we can build stronger, more efficient, and accountable municipalities that serve the people of South Africa better.

I hope this conference inspires and motivates you all. I am confident that the ideas and strategies discussed will help improve governance and service delivery in municipalities. I wish you all successful discussions, good networking opportunities, and a rewarding experience. May the outcomes of this conference lead to positive changes and lasting improvements in our local government system.

One vergader hierso vandag ,on die strategie the ontwikkel, om hoe kan one better regeer, en kry die opplossings vir ons problem. As we manage the resources of this country on behalf of the people, let’s always remember that:- 1 Timothy 6:10 says ” Money is simply a tool that can be used for good or I’ll. But the love of money is always destructive and sinful because it replaces our love for God.”

Out of this many things happen that negate the good will of the Lord about his people. I would like to wish you well in your areas of responsibilities, for better finance management and quality delivery of services.

I  thank you.