Increasing the Implementation of Climate Change Projects

Increasing the Implementation of Climate Change Projects

Exploring Perceived and Real Barriers in the PFMA / MFMA

PROVIDING THE CONTEXT: WHO, WHAT, HOW AND WHEN?

Structure of the Project

Rob

ust

Att

racti

ve

Pra

gmati

c

Aspi

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n

“MFMA/ PFMA” “Finance Framework” “Practice Notes”

Offi

cial

s us

e to

bui

ld b

usin

ess

case

s

Understand perceived and real barriers

Identify best practice finance

models and funding

Six Ball Model Gap Analysis Matrix

Sharing guidelines to help officials

access funding

Opportunity Assessment

Stakeholders’ Relationships

TAU

Misuka WCG:EADP

Subject Experts

Province

Municipalities

Communities / Business

Timelines and Deliverables

In-depth Interviews: March 2013Domestic & International Case Study Review : April 2013

In-depth Interviews: March 2013Domestic & International Case Study Review : April 2013

MFMA / PFMA ReportMarch 2013

MFMA / PFMA ReportMarch 2013

Practice NotesMay 2013

Practice NotesMay 2013

Data Collection

Knowledge Creation

Insight

Financing Framework Report April 2013

Financing Framework Report April 2013

UNPACKING THE METHODOLOGY: RESEARCH DESIGN AND TOOLS

Structured Selection of Case Studies

Metro

District

Non- Metro

Small Scale

Medium Scale

Large Scale

Solar

Wate

r Heate

rs

Energy

Efficie

ncy

Was

te- E

nergy

En

ergy M

anag

ement

Wate

r

Renew

ables

A Systems Perspective

Technology Technology

Suppliers & Contracts

Suppliers & Contracts

InfrastructureInfrastructure

Regulation Regulation

Ecology Ecology

Politics Politics

Commerce Commerce

Local Government

CommunitiesCommunities

Culture Culture

Process Process

StructuresStructures FinanceFinance

GovernanceGovernance

The Six Ball Model Policy: Design principles informing the nature and functions of an entity

Policy Strategy

Legislation

Culture

Culture: Accepted values, norms, and beliefs guiding behaviour

Process

Process : Institutionalised procedures guiding the allocation, disbursement & application of resources

Human Capital

Networks & Organisation (Intangible

Capital)

Infrastructure (Tangible Capital)

Infrastructure: Physical assets controlled by a municipality ranging from IT systems to smart meters

Networks: Structure of an entity and the patterns of interaction between departments with an entity and third parties

Human Capital :Quality of skills and HR interventions that promote the development and retention of skills

Foundation Assets Tactical Assets Strategic Asset

SHARING INITIAL FINDINGS: IMPORTANCE OF INSTITUTIONAL BARRIERS

Policy

Culture

Infrastructure Organisation HumanResources

Limited skills to• manage the fiscus strategically• create a financial strategy •Take calculated risks •Prioritise expenditure decisions using multi-criteria weighting models.

• 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

• 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.

• 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

• 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 large-

scale 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

Process

Summary of Findings

Policy Strategy Legislation

Culture Process

Human Capital

Networks & Organisation (Intangible

Capital)

Infrastructure (Tangible Capital)

Severely limits projects Problematic Difficulties , but not insurmountable

Emerging Lessons: Interpretation

• Officials adopt the most conservative interpretation of regulation and legislation

• Need to develop a culture of taking calculated risks, which is supported by processes

• Reduce tension between being compliant and being innovative

• Combine a ‘compliance mindset’ with a ‘business-opportunity mindset’

Return

Rf

Risk

Emerging lessons: Valuation

Revenue Traditional accounting cash flow calculation

Totalvalue

Flexibility Creating options that allows the municipality to respond better to shocks

Savings Income generated by reducing an expense that would have been incurred

Emerging lesson: Integration

Delivery & Communities

Delivery & Communities

Intergovernmental Relations

Intergovernmental Relations

Culture , Rewards &Value

Culture , Rewards &Value

Cash flow, Revenue & Expenditure

Cash flow, Revenue & Expenditure

Relationship business & Funders

Relationship business & Funders

Legislation, Strategy &

Policy

Legislation, Strategy &

Policy

SCM, PPP, IDP & SDBIPS

SCM, PPP, IDP & SDBIPS

Technologies Technologies

Green Projects

Green Projects