A memorandum of understanding (MOU) for partnership was concluded in July 2006 between the DBSA and the North West provincial government (NWPG). In terms of the MOU, the DBSA would provide technical assistance and resources to assist in the reduction of service delivery backlogs in the province. The two parties conceptualised the North West Water and Sanitation Programme (NWWSP), which was championed by the North West Department of Developmental Local Government and Housing (NWDDLG&H).
Between 2006 and 2009, the DBSA provided bridging finance of R100 million for the bucket sanitation eradication programme. Technical capacity support was also provided by the DBSA through a technical expert deployed to the NWDDLG&H in the same period. A technical assistance grant of approximately R5 million was also provided by the DBSA towards the provincial water and sanitation backlog study, which was completed in July 2008.
Based on the findings of the backlog study, the DBSA provided an additional technical assistance grant of R2 million in 2010 as a co-funding contribution with the NWDDLG&H towards the preparation of 60 water and sanitation projects business plans in the North West municipalities. 15 projects business plans were prepared in each of the four district municipalities of the province. The intention was to get the projects to registration stage with the Municipal Infrastructure Grant (MIG) so as to be able to unlock funding from the fiscal allocations.
The NMMDM's water and sanitation programme was initiated after the provincial water and sanitation backlog study was completed. The findings of the backlog study gave a quantification of the water and sanitation reticulation backlogs in the NMMDM, namely 56 387 and 91 102 households respectively at 31 December 2007. The backlog study estimated that about R1.44 billion will be required to address the bulk and reticulation backlogs over the MTEF, of which only R560 million was potentially available through fiscal allocations. This implied a funding gap of an estimated R880 million over the MTEF at that time.
The DBSA and NWPG agreed to a funding mechanism that will bridge the funding gap and front-load fiscal allocations to fast-track project implementation and reduce backlogs. The 15 project business plans completed by the DBSA and the NWDDLG&H in the NMMDM were used as part of the motivation to National Treasury (NT) for the approval of the MIG front-loading arrangement with the NMMDM, whereby the DBSA provided the required funding.
The initial MIG front-loading arrangement was approved in September 2011 in the amount of R219 million. However, due to the delays experienced in rolling out the programme, the amount was reduced to R152.7 million in May 2013. The reduction was to allow for alignment with fiscal allocations in the MTERF cycle. The DBSA supported the NMMDM with project implementation support from July 2013 through the Project Implementation Support Unit (PISU).
The main objectives of the NMMDM Water and Sanitation Programme were to:
• Accelerate the reduction of the water and sanitation backlogs
• Increase household accessibility to basic water and sanitation services
• Create employment opportunities through the projects implementation
• Alleviate poverty in the local communities.
The programme involved the implementation of 19 MIG projects in the five local municipalities of Ditsobotla, Ramotshere Moiloa, Mafikeng, Ratlou and Tswaing. The projects portfolio consistsed of two bulk water schemes, 14 water supply schemes and three bulk sanitation schemes.
The scope of the programme comprised the identification, prioritisation, planning, design and implementation of 19 water and sanitation projects in the five local municipalities within the NMMDM area in the North West Province. The projects were identified by the NMMDM through community participation as part of its integrated development planning (IDP) processes.
The North West Province is a generally dry province and the inadequacy of regional bulk infrastructure means that piped portable water supply from other district municipalities in the Province is currently not an viable option for bulk water supply. Bulk water supply through boreholes to access underground water resources. Projects were implemented in the rural areas of Verdwaal 1 & 2, Kaalpan, Brooksby, Makgori, Bapong, Naaupoort, Nooitgedacht, Lombaardslaagte, Weltevrede, Mooipan and the urban area of ltsoseng.
ACHIEVEMENT OF PROJECT OBJECTIVES
The business case for the NMMDM MIG front-loading was based on the following anticipated benefits:
• Completion of projects that such outputs would occur if the projects were implemented through the normal fiscus funding cycle
• Delivery of services (e.g. water connections) to communities ahead of time
• Reduced cost of projects executed.
The average completion period for the nine projects completed by the NMMDM to date is 20 months (nearly two years) ahead to time. Furthermore, the completed projects resulted in the local communities receiving the projects benefits faster than would have been the case under the normal MIG allocations funding cycle. This means that service delivery backlogs were eradicated much faster under the MIG front-loading arrangement when compared to the normal MIG allocations funding cycle.
At an average price escalation cost of 10% per annum, the total savings in cost for early completion of nine projects by the NMMDM is estimated at R22.15 million. Inevitably, the use of the MIG front-loading has also resulted in cost savings.
A total of 624 temporary job opportunities were created as a result of the implementation of the NMMDM Water and Sanitation Programme. In addition, in excess of 26 000 households are already benefitting from new or improved access to water and sanitation services. A further 12 969 households will benefit from new or improved access to services once projects in planning and construction stages are completed.
The following lessons were learned during the implementation of the NMMDM Water and Sanitation Programme:
• The establishment of the Steering Committee (SC) to serve as a co-ordinating and report back forum contributed to the success of the programme
• The poor state of implementation readiness of some projects contributed to the delays experienced in getting these projects started and to cost escalations
• Key stakeholders such as DWA, CoGTA, and NT were successfully engaged with and were fully involved during programme implementation. These stakeholders were key in resolution of the challenges encountered
• Bulk infrastructure needs to be in place in order for successful water and sanitation reticulation to be achieved. The development of bulk infrastructure as well as the bulk water resources must be given priority before reticulation infrastructure
• The processing of the DBSA claims from the NMMDM was always a challenge as the municipality had challenges in collating the required documentation and proof of CPs
• Inadequate reporting and incomplete data was a major challenge in the programme, which was resolved with DBSA support
• Cooperation and collaboration from local municipalities in which projects are implemented is a key to project success
• Project implementation support to NMMDM was critical to the resolution of many challenges encountered during project implementation as well as to the expedition of the claims process to enable faster disbursements
• The management of non-revenue water losses, which is relatively high in the NMMDM (in access of 40%), is a major challenge which needs to be resolved for sustainability.
The following recommendations are made in relation to ongoing and future MIG front-loading programmes;
• Adequate project planning is required before embarking on project execution in order to minimise delays to project completion, project cost escalations and contractual disputes during construction. The extension of the DBSA’s project planning support to municipalities should be seriously considered in MIG front-loading programmes
• Project implementation support from the DBSA’s M2/M3 sub-division to the DBSA-funded municipalities should be maintained and be provided in a targeted manner as the DBSA does not have the capacity to provide continuous on-site project implementation support
• Most municipalities receiving bridge financing support have high water losses. The DBSA should continue with its efforts to support and assist municipalities with an effective programme to reduce non-revenue water losses. The process for the appointment of the professional service provider for the development of the Water Demand Management Plan is at an advanced stage, with the plan anticipated to be completed soon
• It is considered that municipalities, with the support of the DBSA, will implement future phases of bridge financing more efficiently given the experience gained and lessons learned from the first phase.