The Committee received briefings from Phokwane and Renosterberg Municipalities on their compliance with the Municipal Finance Management Act (MFMA) and their challenges and successes. Both municipalities experienced challenges related to small rural towns such as inadequate revenue streams and lack of capacity and resources. Both also indicated that their salary costs took up a large slice of the budget, and that problems in staffing led to problems in service delivery.
Members were concerned about the high salary costs, the inability to appoint a Chief Financial Office, the fact that many staff were not qualified and that municipalities were not properly utilising the training that was available for the employees to upgrade their skills. They questioned the existence and functionality of ward committees and communication between Councils and residents, commented that spending was slow and requested clarity on the Municipal Infrastructure Grant spending and what was meant by the “surplus” at Phokwane Municipality, as well as what happened to resources at Renosterberg Municipality. They also asked about debt collection, the existence of prepaid water meters, whether there was proper consultation with stakeholders, and suggested that the South African Local Government Association be called upon to assist these municipalities.
Municipal Finance Management Act compliance, challenges and successes of municipalities
Phokwane Municipality briefing
Mr Moeketsi Dichaba, Municipal Manager, Phokwane Municipality, said that his municipality was affected by the Taung floods, with some roads being badly damaged. Road maintenance was a huge challenge because the municipality was depended on one grader. He said that Phokwane municipality straddled two provinces. There were various challenges in human resources and delivery. The Finance department had a high staff turnover and currently even the position of the Chief Financial officer was vacant. The Human Settlements department was faced with a challenge of housing delivery. Some of the residential areas did not have electricity because Eskom had said that it could not electrify an area that was not fully occupied. Mr Dichaba explained that the Municipality was heavily depended on farming for employment but here too they faced a challenge since some agri-industries were closing down.
Mr Dichaba outlined that Phokwane had some achievements. These included the formalisation of some informal settlements. He said that most of the residential areas had access to water and electricity, except for Pampierstad.
In regard to the budget, he noted that property rental, traffic fines and electricity coupons retail were some revenue sources. Staff salaries represented up to 31% of budget, and the medical costs also accounted for a large slice of the budget.
Mr Dichaba mentioned that the municipality had some problems with a rapidly growing old dumping site which encroached upon residential areas of Jan Kempdorp, posing heath hazards. The Department of Water and Environmental Affairs had allocated money for the removal of the dumping site and the informal settlement that sprung up from the site.
Mr Dichaba then outlined the municipality’s compliance with the Municipal Finance Management Act (MFMA). He said that the
In terms of service delivery, he noted that the municipality had a backlog in electrification of newly built houses. About 2 500 had access to clean water and sanitation in the informal settlements. Refuse removal posed a challenge, due to shortage of trucks as the whole municipality was serviced by only one tractor. He reiterated that the municipality was unable to do road maintenance on roads damaged by the floods because it only had one grader.
Ms Zondiwe Jack, Mayor,
Ms Nozuko Mvandaba, Chief Financial Officer, Renosterberg Municipality, explained that she could not report give a financial report for 2004-05 due to unavailability of archived records.
She noted that Eskom had been supplying prepaid electricity to the informal settlements, and this affected the revenue collection of the municipality, which had supplied electricity in the past. The majority of residents were unemployed. Out of a total of 2 424 people 1 084 persons were indigent, and this posed a great challenge for the municipality because its population were heavily depended on grants.
Ms Mvandaba reported on compliance with the Municipal Finance Management Act. The municipality had approved a Supply Chain Management Policy. The Bid Committee had been appointed, but the adjudication Committee had not yet been appointed. The establishment of internal audits was in progress.
She said that there were capacity challenges in the Finance Department because most of the personnel were not properly qualified. After the amalgamation of two municipalities the salaries had to be adjusted to achieve parity. The percentage of the amount allocated for salaries had increased significantly, up to 43%.
In terms of service delivery, she reported that sewerage ponds were not fenced, and they were running at full capacity. The maintenance of ageing electricity infrastructure was costing the Municipality a great deal.
The Chairperson asked why the
Mr Vuyisile Khen, Mayor,
The Chairperson enquired about the existence and the functionality of ward committees, asking if there were proper communication channels between the Council and the residents.
Mr Khen replied that the ward committees existed in
Mr T Chaane (ANC Northern Cape) enquired about the reasons that a financial report was not submitted by
Mr Chaane asked for clarity on the high amount spent by Renosterberg on salaries, pointing out that wealthier municipalities spent lesser amounts.
Ms Hestele Basson, Acting Chief Financial Officer,
Mr Chaane enquired about the progress in upgrading informal settlements in Phokwane. He complained that
Mr Clement Pitso Technical Manager,
Mr T Harris (DA,
Mr Harris also reiterated the earlier question about the reasons why it had taken so long to appoint the CFO in Phokwane. He also asked the reasons for the resignation of the previous CFO.
Mr Dichaba replied that the previous CFO was awarded a tender to work as financial consultant for three municipalities, and had then resigned, because he found it easier to work as a consultant rather than account to politicians.
Mr Harris criticised the high salary bill for
Mr Harris asked why proper credit controls and debt collection were not enforced at
Mr Dichaba noted that debt collection was depended on the voluntary response of the person who owed money. Some residents, who owed more than R10 000, would decide to pay R100 a month. The MFMA stipulate that a municipality could only demand up to a certain amount. Other ratepayers would threaten to protest rather than pay their debt.
Mr Harris asked whether both Municipalities had been using prepaid water meters.
Mr Dichaba said that
Mr M Makhubela (COPE,
Mr Makhubela asked for clarity on the surplus.
Mr Pitso explained that the surplus in Phokwane referred to money that was not spent and was therefore left over.
Mr Makhubela said that it was not clear what happened to the resources and money of
Mr Makhubela said that
The Chairperson assured the delegations from the two municipalities that the Committee was attempting to assist in solving the problems, rather than criticising.
Mr S Montshitsi (ANC,
Mr Dichaba explained that the
Mr Montshitsi found it surprising that Eskom was not willing to electrify certain areas, as it had agreed to electrify all residential areas when it met with the Committee in the
Mr Khen explained that Eskom said that the Department of Energy stipulated that Eskom should only electrify homes when 80% of these homes were occupied.
The Chairperson said that the South African Local Government Association (SALGA) was available to assist struggling municipalities. Councillors should do oversight work over management. He indicated that he was aware of the problems that affected the two municipalities, particularly that one straddled two provinces. He indicated that in some cases the border line of provinces in fact could cut directly through a person’s home.
The meeting was adjourned
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