INDUCTION PACK 1

NDPG Administration & Reporting

2

Understanding why & how NDPG is different Understanding why & how NDPG is different to other grantsto 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 EnvelopeBudget Concepts: Funding EnvelopeProject 1

Project 2

Project 3

Project 4

Project 5

Project 6

Project 7

Project 8

Project …

+ + + + + + + +

=

Project Funding Envelopes

Approved NDPG Funding

Envelope

Approved Portfolio Funding Envelope

Approved Portfolio Funding Envelope

Approved Portfolio Funding Envelope

+ +

=

100 projects @ R10 bn in 10 years

CD & PDs

DDG

DG

ND

PG

Reference G

roup

Excludes

leverage of

other funding

4

Budget Concepts: Multi-Year BudgetBudget 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 ++Yr 3

Funding Envelope

Sch 7Sch 6

Sch 7Sch 6

Sch 7

Sch 6 Sch 6

5

Schedule 6

Direct Transfer to Municipality

Schedule 7

In-kind to Consultant

1

Concept

2

Pre-feasibility

3

Detailed Investiga-tion

4

Business Case & Business Plan

5

Detailed Project Design & Implemen-tation

6

Exit

7

Review

Schedules 6 & 7Schedules 6 & 7

1 Programme Management & Coordination

2 Strategic Planning (SQ TRS, concept, etc.)

3 Detailed Design

4 Construction/Implementation Management

5 Construction/Implementation

6 Operating

Status Quo, TRS& Concept Business Plan

Pro

gram

me p

lans →

MP

S

6

Approval PointsApproval 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 & 7Schedules 6 & 7

No Broad Category Typical Outputs

1 Programme Management & Coordination

Coordinated & managed programme, could also be dedicated capacity for, and in, municipality (e.g. member of staff dedicated to NDPG with short-term contract for programme & development management), if needed. NDP would seek to limit exposure & council should also contribute.

2 Strategic planning TRS, business case development & high-level business planning, feasibilities, detailed investigations, exit plans & M&E.

3 Detailed design Detailed design work to build capital asset funded by the capital as per Schedule 6 fund.

4 Construction management Outsourced construction/project management for implementation if needed.

5 Construction Capital for construction.

6 Operating funding Kick-start operating funding (BIDs, ops, etc.), if needed.

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

Item Schedule 6 Schedule 7

For Construction Planning mainly

Transfer Direct transfer In-kind transfer

From National Treasury PDF (PPP) via NDP

To Municipality Service Provider

What For work to be done in next quarter

Progress payments

Time +1 week +4 weeks

VAT Excluded Included

9

NDP Unit

Municipality Service Provider

PDF(PPP Unit)

Sch 7 Approved invoices from municipality

Fund

ing

ag

reem

ent

Sch

7

Paym

ents

Sch

7 I

nvoic

es f

rom

m

unic

ipality

Invoices for Sch 7 amounts to

municipality

Service Level Agreement

Sch

6 t

ran

ches

Contractor

Capital works contract (Sch

6)

Payment claims (Sch

6)

Funding FlowsFunding Flows

Payments (Sch 6)

Contract & appointment letter (Sch 7)

10

Financial Management RulesFinancial Management Rules(1) (1) Allocating & reallocating budgets for municipalityAllocating & 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 RulesFinancial Management Rules(2) (2) Stopping – (3) WithholdingStopping – (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 RulesFinancial Management Rules (4) Roll-Overs – (5) Reporting(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 ResponsibilityMunicipal 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 StepNext 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