Transcript SSEG 4_TAU_Overview

Increasing the Implementation of Climate
Change Projects
Exploring Perceived and Real Barriers in
the PFMA / MFMA
PROVIDING THE CONTEXT: WHO,
WHAT, HOW AND WHEN?
“MFMA/ PFMA”
“Finance
Framework”
“Practice Notes”
Understand
perceived and
real barriers
Identify best
practice finance
models and
funding
Sharing
guidelines to
help officials
access funding
Six Ball Model
Gap Analysis Matrix
Aspiration
Pragmatic
Attractive
Robust
Opportunity Assessment
Officials use to build business cases
Structure of the Project
Stakeholders’ Relationships
Municipalities
Misuka
TAU
Communities / Business
Subject Experts
Province
WCG:EADP
Timelines and Deliverables
Practice Notes
May 2013
MFMA / PFMA Report
March 2013
Insight
Financing Framework
Report April 2013
In-depth Interviews: March 2013
Domestic & International Case Study Review : April 2013
Knowledge Creation
Data Collection
UNPACKING THE METHODOLOGY:
RESEARCH DESIGN AND TOOLS
Structured Selection of Case Studies
Metro
Non- Metro
Small Scale
District
Medium Scale
Large Scale
A Systems Perspective
Process
Commerce
Ecology
Culture
Technology
Local
Government
Suppliers &
Contracts
Regulation
Communities
Governance
Structures
Infrastructure
Politics
Finance
The Six Ball Model
Policy: Design principles
informing the nature and
functions of an entity
Culture: Accepted values,
norms, and beliefs guiding
behaviour
Infrastructure
(Tangible
Capital)
Infrastructure: Physical assets
controlled by a municipality
ranging from IT systems to
smart meters
Foundation Assets
Policy
Strategy
Legislation
Culture
Process : Institutionalised
procedures guiding the allocation,
disbursement & application of
resources
Process
Networks &
Organisation
(Intangible
Capital)
Networks: Structure of an entity
and the patterns of interaction
between departments with an
entity and third parties
Tactical Assets
Human
Capital
Human Capital :Quality of skills and
HR interventions that promote the
development and retention of skills
Strategic Asset
SHARING INITIAL FINDINGS: IMPORTANCE
OF INSTITUTIONAL BARRIERS
• Onerous
• PPP is expensive and time
consuming
• No lifecycle costing
• Short time horizon of financial
and budgeting processes
• SCM : Selection of established
technologies
• SCM: Difficult to identify
qualified suppliers
• SCM designed to support largescale engineering projects
• No incentive for branches to
create ‘operational savings”
• Performance management
system rewards compliance
• Income and finance model
ignore potential savings.
• Complicated electricity tariff
structures
• Poor communication of
electricity tariffs
• No fiscal strategy
• Poor access to data
• MFMA: Section 78
• MFMA: Section 33
• Weak national electricity and water
regulation increases
• NERSA regulation is ambiguous
• MFMA: Criminalisation of wasteful
and fruitless expenditure.
• MFMA: Easy to appeal the award of
tenders which stalls implementation.
• No green procurement policy at the
national and local government level.
Policy
Process
Infrastructure
Culture
Organisation
• Risk averse
• Regulation interpreted in the
most narrow and strict sense,
especially by Legal, Finance, SCM
• Limited teamwork
• Short-termism and insular
• Myth: reduction in electricity
sales will harm the financial
health of municipalities .
• Myth that expenditure outside
4A/4B is disallowed ( e.g., no
mandate to spend on
environment).
• Leadership prioritised the
delivery of basic services , and
climate change projects seen as
a ‘nice to have’
• Myth that municipality must
purchase cheapest electricity
which thereby excluding RE
Human
Resources
• Capital injection requirement from
potential investors
• Engineers have disproportionate
control
• Complicated intergovernmental
structures / governance
mechanisms.
• CFO, branches and Treasury apply a
different interpretation of
legislation
Limited skills to
• manage the fiscus strategically
• create a financial strategy
• Take calculated risks
• Prioritise expenditure decisions
using multi-criteria weighting
models.
Summary of Findings
Policy Strategy
Legislation
Culture
Infrastructure
(Tangible Capital)
Severely limits projects
Process
Networks &
Organisation
(Intangible
Capital)
Problematic
Human Capital
Difficulties , but not insurmountable
Emerging Lessons: Interpretation
• Officials adopt the most
conservative interpretation of
regulation and legislation
Return
• Need to develop a culture of taking
calculated risks, which is supported
by processes
• Reduce tension between being
Rf
compliant and being innovative
•
Risk
Combine a ‘compliance mindset’
with a ‘business-opportunity
mindset’
Emerging lessons: Valuation
Flexibility
Savings
Total
value
Revenue
Creating options that allows the
municipality to respond better to shocks
Income generated by reducing an expense
that would have been incurred
Traditional accounting cash flow calculation
Emerging lesson: Integration
Technologies
Delivery &
Communities
Intergovernmental
Relations
SCM, PPP, IDP &
SDBIPS
Green
Projects
Culture , Rewards &
Value
Legislation,
Strategy &
Policy
Relationship business
& Funders
Cash flow, Revenue
& Expenditure