Intermunicipal Co-Operation Conference

On behalf of the Western Cape Government I welcome you to the Inter-Municipal Co-Operation Conference. 

The theme of the IMC Conference is, "The Potential role and involvement of National, Provincial and Local Government in implementing Inter-Municipal Co-Operation". In the Western Cape we have taken the initiative in involving all three sphere’s of Government in piloting and implementing shared services.

Legislation is clear in prescribing and promoting the delivery of services in an integrated and co-operative manner.  Chapter 3 of the Constitution is dedicated to intergovernmental relations and prescribes what the relations between the different spheres of government should be.

 Secondly various provisions in the Municipal Structures Act (Act 117 of 1998) prescribes cooperation.

Thirdly the Intergovernmental Relations Framework Act (Act 13 of 2005) also creates forums for cooperation between district and local municipalities.

Finally the Municipal Systems Act (Act 32 of 2000) promotes developmental local government and an integrated approach to such development requires co-operation.

 Therefore, local government legislation, as well as the processes within local government, is aimed at enhancing good relations between municipalities with shared responsibilities and competencies over the same geographical area.

  Although not specifically legislated, shared services for local government is high on the Agenda of National Government.   Outcome 9 of the National Agenda, requires municipalities to ensure a responsive, accountable, effective and efficient local government system.

The shared services model if correctly applied could be seen as a model that could enhance service delivery and efficiency in local government.

As the debate on the role and mandate of the two tier local government continues, various studies were conducted to resolve this debate.  Some of these studies highlighted initiatives and processes that could not only add value to district municipalities but also to local municipalities, one of the initiatives highlighted is shared service delivery.

Currently there is a growing shortage of critical technical skills, such as finance planning, engineering and legal services. These shortages impact directly and indirectly on service delivery to communities in the Western Cape Province we realised the Strategic Importance of looking at possible solutions and  strategies that can enhance service delivery at a municipal level and hence we engaged with the German Donor Agency (GIZ), to assist with the roll out and implementation of Shared Services.

The technical advice and capacity provided by GIZ has enabled this province to actively support Shared Services in three regions namely Eden District, Central Karoo District and the West Coast District.

What does Shared Services mean and why do we as a Province encourage municipalities to embark on Shared Services?

Shared Services refers to the consolidation and sharing of services by different units within an organisation or group in order to achieve economies of scale, make better use of scarce skills, provide information and services more efficiently and reduce the cost of administration. The concept of Shared Services rests upon the following principles, standardisation, consolidation, re-engineering, access to services that was not possible before.

However, Shared Services are often confused with centralisation and support, It is therefore important to distinguish between shared services, centralisation and support at the outset of establishing shared services.

 It is common for organisations to think that they are pursuing a shared services strategy when in fact they are merely centralising certain functions. Such confusion can lead to disappointing results from the restructuring effort.

The Key drivers forcing municipalities to move towards “Sharing Services” include amongst others compliance with legislative requirements, the cost of service delivery, lack of capacity, unavailability of scarce skills. Municipalities in the Central Karoo is an example of municipalities where shared services is not an option it is a must due to lack of financial resources, capacity and scarce skills.

Shared Services has the potential to deliver significant benefits to municipalities, both in terms of reduced costs and improved performance.  The introduction of shared services can be a catalyst for redesigning work processes, aligning current practices with best practices and increase collaboration amongst municipalities.

In the West Coast District the shared services model developed has portrayed the potential cost savings for municipalities if the Risk Management Function is performed on a shared service basis.

Although you will hear much more in the next two days about the detail of the respective projects many lessons have been learnt, both positive and negative. These should guide our approach and application of this project going forward. I wish to briefly highlight some of the key lessons learnt in the Western Cape Shared Services journey:

• A dedicated team should be appointed to focus on the research of shared services.
• Constant changes in leadership responsible for shared services had an impact on effective implementation.
• The decision to implement shared services should be based on sound business decisions and be born out of necessity.
• Change Management is critical in the implementation of shared services.
• A robust business case needs to be developed.
• Research should be done into cost implications and resourcing models.
• Economies of scale should be exploited and sharing of cost should ultimately ensure economic sustainability.

In reflecting on our journey, I can highlight on the existing programmes as follows;

• In terms of Central Karoo a Service Level Agreement for Legal Services was completed and agreed between Municipal Managers. The Legal Services shared service will form part of the bigger shared services organisation.  In terms of the way forward for Central Karoo a business plan for internal audit and risk management was developed and is already functioning.
• The West Coast District has progressed well and is currently sharing the risk management function.  The Risk Manager is stationed at the District Municipality. The potential cost saving for sharing this function would be approximately R1,2 million per annum.
• In the Eden District the Shared Services initiative is at a critical stage as shared services in the district has lost momentum.  The District as driver of the Shared Services initiative will need to secure buy-inn from Local Municipalities in order to take the Shared Services initiative forward.

I am in deed proud of this positive progress made by the respective participating Councils. It is clear to me that by working together and positive commitment we reached this important point that will guide us going forward.

In closing, I would like to thank GIZ and Department of Cooperative Governance, for enabling us to gather here today to share our experiences on Shared Services, without your commitment to this initiative, none of this would have been possible.

 I would also like to extend a special vote of thanks to my team at the Department of Local Government for their absolute dedication to this programme. The Shared Services initiative is truly a reminder to us all of what is possible when we focus on realising the strengths of partnerships.