Northern Cape Municipalities: Update by MEC Cooperative Governance, Human Settlements & Traditional Affairs

NCOP Finance

12 November 2012
Chairperson: Mr C De Beer ( Northern Cape, ANC)
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Meeting Summary

The Committee had done oversight visits to Northern Cape municipalities in January 2012, following up with a report and recommendations in May 2012, and now wanted to hear the progress on addressing the issues that the Committee had isolated. The Provincial Department of Cooperative Governance, Human Settlements and Traditional Affairs (the Department) touched on five areas. Whilst there had been slight improvement in submission of budgets, some were still submitting them late. The Department had appointed a consultant to assist municipalities, in particular, with financial statements, and eight of the fourteen municipalities submitted their Annual Financial Statements on time, although two submitted late and four were still outstanding. Most of the municipalities still had qualified reports, with problems in supply chain management. Training had been done for the Municipal Public Accounts Committees, but it was too early to assess their functionality. Quarterly meetings were held between provincial and local government. Lack of capacity continued to be a serious problem, from planning through to implementation, with poor service delivery resulting. Specifically in response to the Committee’s recommendation, Provincial Treasury and the provincial Department were trying to assist in several areas. There were problems with contracts both for outside contractors, and internal staff, with high staff turnover, lack of qualified staff, and too little budget to implement interventions.

Members raised several questions on aspects that were not addressed in this report. They asked for comment on the roles of the Mayors, commenting that they should be in office, should be managing properly, and should not be acting as financial officers themselves. Members could not get a sense of the real problems that were causing financial statements to be submitted late, or audits to be qualified, and said that it seemed that money was being poured in, with no results. They were not happy about appointment of consultants. There seemed no reason for not meeting promises around water and sanitation, and there were no visible improvements. Members thought that the time was over to complain about lack of capacity and thought other more creative solutions had to be found, commenting also that even where there were skilled people, they were not employed. They questioned the over-expenditure on conditional grants, and under-expenditure in other areas. They questioned the discrepancy in figures for those receiving Free Basic Water and Free Basic Sanitation. However, the responses were very general and did not address the issues raised. Provincial and National Treasury were asked to give input, and they expressed concerns around sustainability, and agreed that there was a need to be more creative about staff. Cooperation from municipalities was lacking. Finally, a member of the Northern Cape legislature expressed disappointment that the Committee appeared to be negative and urged that the problems had to be fixed.

Meeting report

Northern Cape Municipalities: Update by MEC Cooperative Governance, Human Settlements & Traditional Affairs
The Chairperson asked the MEC for the Northern Cape Provincial Department of Cooperative Governance, Human Settlements and Traditional Affairs (the Department) to present the progress achieved, so far, on matters isolated by the Committee in January, during an oversight visit to Northern Cape.

Mr Kenny Mmoeimang, Member of Executive, Northern Cape Provincial Department of Cooperatives Governance, Human Settlements and Traditional Affairs (MEC) focused on five items in his presentation.

He firstly said, in relation to development and implementation of Municipal budgets, that some municipalities submitted their municipal budgets late. Others submitted on time. He noted, with charts (see attached documents) which had achieved in this regard.

Secondly, he noted that the Department had appointed a consultant to assist municipalities with training on Generally Recognised Accounting Principles (GRAP), to ensure full compliance when they finalised their 2011/12 Annual Financial Statements. In addition, members of the Departmental Municipal Finance unit, together with Provincial Treasury, visited municipalities to assess progress in the implementation of their audit action plans. Due to these provincial government interventions, eight of the fourteen municipalities submitted their 2011/12 Annual Financial Statements timeously, whilst two submitted late and the final four were still outstanding.

The audit reports of most of the municipalities were qualified, in relation to Supply Chain Management processes. The Department and Provincial Treasury were in the process of finalising a Provincial Debt Collection Committee, to assist municipalities to collect debt owed to them by government departments.

The Association of Public Accounts Committees (APAC), together with its strategic partners Auditor General South Africa (AGSA), National Treasury (NT), Department of Cooperative Governance (DCOG) and South African Local Government Association (SALGA), conducted training for all Municipal Public Accounts Committees (MPAC) on 16 to18 April and 24 to 26 April 2012. Since the members of these MPACs had been in place for only a short period, their functionality would only be able to be assessed after the 2011/12 audit outcomes.

Mr Mmoeimang moved on to describe the collaboration between Municipalities and National and Provincial Sector Departments. He said that quarterly meetings of the Districts Inter-Governmental Forum, MUM-MEC and Premier’s Inter-Governmental Forum were held. These were chaired, respectively, by the Executive Mayors of District Municipalities, the MEC for Cooperative Governance, Human Settlements and Traditional Affairs, and Premier and MEC for the Department.

He then described the service delivery capacity constraints, saying that lack of capacity in municipalities posed serious challenges in project initiatives, planning and implementation, which ultimately resulted in poor service delivery and protests. In all municipalities, access to basic water, sanitation, electricity, refuse removal free basic water and basic sanitation were poor (see document for further details).

Mr Mmoeimang further summarised the response of the province to the recommendations of the Select Committee on Finance, as contained in its May report. Provincial Treasury had visited the Emthanjeni Local Municipality and held open discussions with the Municipal Manager, Chief Financial Officer and Head of Supply Chain Management. The Department and Provincial Treasury coordinated their assistance to municipalities, and all other provincial sector departments were part of the Local Government Turn-Around Strategy (LGTAS). The contract between the Department of Human Settlements Unit and municipalities was clear and stated that municipalities must review the contracts of contractors and ensure that all houses built conformed to national norms and standards.  However, the problem was that municipalities were not reporting back to the departments, and no action was taken against them for their non-compliance.

He noted that there were some particular challenges facing the Northern Cape municipalities. They were often struggling to recruit senior management personnel to work in some areas, owing to the spatial realities of the Province. Municipalities consistently experienced “brain drain” because they were not able to offer competitive remuneration to skilled personnel. The equitable share allocated to local government was inadequate to deal with the challenges faced by municipalities. The Department ended up deploying its own personnel to fill vacancies, such as those of Municipal Managers, in several municipalities. Finally, the Department had limited budget to sustain interventions implemented in municipalities

Discussion   
The Chairperson asked what the National and Provincial Departments were doing to assist the municipalities in the Northern Cape.

The Chairperson wanted more comment about the role of the Mayor.

The Chairperson questioned why the financial statements were submitted late. He thought that the appointment of consultants may be causing deadlocks and preventing jobs being done. He wanted to know who appointed the consultants and what was the rule around this, commenting that it was necessary for the Committee to get clarity on these issues.

The Chairperson noted that despite the rivers in the province, communities continued to battle to access water. The government had made promises to the people and had to meet them.

Mr M Makhubela (COPE, Limpopo) expressed his concerns that the report did not mention achievements since the Select Committee on Finance had visited the province. There appeared to be no visible improvements, despite the interventions into the municipalities, leading to the supposition that this could have been a waste of money. He questioned why money continued to be spent on systems that were not working and commented that many of the interventions were not sustainable.

Mr Makhubela was also concerned that most of the municipalities did not have Chief Financial Officers. The issue of lack of capacity was raised a long time ago and could no longer be raised as an excuse. He wondered what the municipalities were doing to actually address the problems.

Mr Makhubela suggested that specific people be identified and sent to university to be trained. He commented that he still did not understand why the Northern Cape continued to complain of incapacity. It seemed that even those with training were not employed, and those with competency seemed to leave. He suspected that this might even be done to increase corruption. He found it disappointing that after 11 months, there was still no apparent improvement in the municipalities. People in the Northern Cape people were convinced that there was no money allocated to the province, although there was in fact under-expenditure. He looked forward to receiving some proof on progress. 

Mr T Chaane (ANC, North West) commented that in regard to the conditional grants, there was over expenditure, and asked how the Department would ensure that the grant was used for its intended purpose.

Mr Chaane asked about the impact of the interventions across all fourteen municipalities, and what the plans were for the municipalities showing regression. He wondered how the Department could succeed in improving the situation in the municipalities without qualified Chief Financial Officers.

Mr J Bekker (DA, Western Cape), referred to service delivery and capacity constraints of municipalities and questioned how some people would have access to Free Basic Water, while access to Free Basic sanitation differed. He cited the figures of 2982 people who had access to free water and 900 with access to free basic sanitation. He asked why this difference arose.

Mr B Mnguni (ANC, Free State) mentioned that the report did not clearly indicate which of the municipalities did not receive unqualified reports. He asked a general question whether the MEC or provincial government was aware that there were staff in place who were not qualified, and asked how the municipality managed to deliver services, if this was the case. He questioned whether there was in fact leadership in the municipalities and if the Mayors were doing their jobs properly. In particular, he questioned if, during the auditing process, the Mayor and CFO were available. He also was concerned that some mayors were doing the job of CFOs.

Overall, Mr Mnguni asked what the province thought the achievement would be in 2012-2013, and whether there were improvements being made that would address the problem.

Mr Mmoiemang noted that in respect of the Acting Financial Manager, a previous CFO had been subjected to disciplinary proceedings, and it had taken three months to end his contract. Most of the contracts expired after 18 May 2012, and had created many areas of complexities. He explained that some of the municipalities allowed their managers an extension of time to act as CFO, to strengthen the administration. When the contract ended, they were supposed to work until the post was filled. This, he admitted, was a mistake and the area should be addressed.

He noted that the Department had agreed to support the outcomes and outputs of the Committee by putting in place a strategy to turn the situation around. There were some municipalities with unqualified reports. The Department was not happy with the audit outcomes, but was putting emphasis on addressing the particular area of concern. There was a need to recruit extra services.

Mr Mmoeimang said that interventions were made, there was some improvement and challenges were being addressed.

Mr Mmoeimang shared the concerns of the Committee on under-expenditure, in light of the challenges faced. This had to be turned around, and reports would be obtained.

Mr Mmoeimang noted the comment on experienced or skilled people who were not hired, or were removed from their jobs, and said that more detail was needed. It was desirable to ensure that those with skills were in place.

Mr Kgotso Moeketi, Acting Chief Director: Local Government, Provincial Department of Cooperative Governance, Human Settlements and Traditional Affairs, said that it was not the responsibility of the MEC to appoint Chief Financial Officers. However, the Department had advertised posts, but not all competency requirements were met, meaning that the post would have to be re-advertised.

He also spoke about under-expenditure, noting that many municipalities spent funds without reporting, and agreed it would be necessary for the Department to call on them to report. The challenge was that the technical department was not functioning and there was nobody to fix the matters.

Most municipalities had asked the Provincial Treasury to come to assist them, and had expectations that money would be paid. This Department constantly interacted on preparation of programmes.

Mr Makhubela emphasised that his concern remained the deployment of staff without achieving anything. The report did not mention what could have done or what was in progress.

The Chairperson asked the MEC to clarify the role of mayors. He made the point that they should be in office, not travelling without any good reason to do so. The Municipal Finance Management Act had to be properly implemented.

Mr Bafedile Lenkoe, Acting Head of Provincial Department of Cooperative Governance, Human Settlements and Traditional Affairs, responded to questions about the appointment of consultants in the Municipalities, and said that the reason for this was that the grant was incorrectly implemented.

He added that, in relation to the budgets, one of the problems lay around cash flow in the municipalities, and there was a need to check if they would be able to implement what was budgeted. Municipalities were not generally managing their budget properly, but this would be picked up, and the monitoring of municipalities should pick up on regressions.  

The Chairperson asked the National Treasury to give their input.

Mr TV Pillay, Chief Director: Municipal Finance Management Act, National Treasury, expressed concerns about sustainability in the Province. He raised the issue of long term sustainability and viability, to address these Municipalities. There was a need to look alternative measures of resolving these problems, such as providing internships to the community and employing local people who would stay in the province than having constant staffing changes. It was clear that the cooperation of the municipalities was needed. Some current officials felt very threatened by young and upcoming interns. He could go into more details during a longer session.

Mr Pillay said that Treasury was looking into how to improve the enforcement of the Municipal Finance Management Act.

Ms Marli Jansen van Rensburg , Director: Local Government Budget Analysis, National Treasury, mentioned that National Treasury did provide support on budgeting, and would try to check whether the budget was used or implemented properly. However, there were challenges in that the unit did not have enough infrastructural backing.

Mr Mzilikazi Manyika, Chief Director: Intergovernmental Fiscal Relations, National Department of Cooperative Governance, said that the National Department had guaranteed R5 million to the municipalities, to address some of the issues.

A member of the Northern Cape Provincial Legislature, who was present at the meeting, was disappointed in some of the comments made by Members, and said that they appeared to be pessimistic. More must be done to change the realities, as the situation needed to be fixed, whatever the current deadlocks. Some issues were created by National Treasury but at the end it came down to Members to address the problems.

The Chairperson commented that other provinces would be called to future meetings.

The meeting was adjourned.

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