Election of Chairperson; Mantsopa Petition: hearing

Meeting report

Opening remarks

Mr Nkanyiso Mkhize, Committee Secretary, welcomed all present in the meeting. He said that there were two items on the agenda which was the election of the Chairperson of the Committee and the continuation on the Mantsopa Petition. The election of the Chairperson of the Committee would be facilitated by himself (Committee Secretary), and the continuation of the Mantsopa Petition would be facilitated by the newly appointed Chairperson of the Committee.

Election of the Chairperson

Mr Mkhize asked Members to make their nominations for the election of the Chairperson of the Committee.

Mr J Mthethwa (KwaZulu-Natal, ANC) nominated Mr Dumisani Ximbi as Chairperson of the Committee.

Ms G Oliphant (Northern Cape, ANC) seconded the nomination of Mr Ximbi.

The Committee elected Mr Ximbi as the Chairperson of the Committee without any objections.

Mr D Ximbi (Western Cape, ANC) thanked Members for nominating him as the Chairperson of the Select Committee on Petitions and appreciated the position he was deployed to by the ANC. He said that they needed to work together as Members of the Committee to move South Africa forward. As a Chairperson, his job was to conduct the direction of the Committee, but Members needed to make their inputs and take decisions for the Committee. They also worked together with the support staff as before.

Continuation of the hearing on the Mantsopa Petition Report

The Chairperson said that the petition was on the alleged failure of the Mantsopa Municipality to provide basic services. He said that the Committee was in the Free State for this petition and they did not finish the hearing of the petition. Therefore, they needed to finalize the hearing of the petition and the Committee would make its resolutions later.

Submission by the Provincial Treasury: Report on Financial Status of Mantsopa Municipality

Dr R Chetty, Acting Chief Director: Municipal Finance, said that the report presented a brief summative of the following areas:

• Progress on 2017 /18 Budget;
• Status of In Year Report; Status of Audit; and
• Progress on Mantsopa petition.

He said that in terms of the progress on the 2017/18 budget, there was underfunding, and it was based on a collection rate of 95 percent. He said that the operating revenue was R232 million with the main revenue streams being property rates and service charges at R131 million. The grants and subsidies contributed R72 million. The operating expenditure budget totaled R223 million. Employee related costs contributed R87 million. Debt impairment was R5 million and bulk purchases contributed to R45 million and other operating expenditure to R85 million.

Dr Chetty said that in terms of capital budget, capital funding of 96 percent was from grant contribution (R45 million) and 4 percent was generated internally (R1 million). He said that a substantial contribution of the capital budget was earmarked for infrastructure on the trading services (Energy source R12 million; Water R16 million and Roads R18 million). The cash flow had a closing balance of R3.760 million and was attributed to negative balances as follows:

• cash from/(used) operating activities;
• net cash from/(used) in vesting activities; and
• net cash from/(used) financing activity

Dr Chetty said in terms of the Status of the In-Year Report, the collection rate stood at R29 786 million. He said that aggregate collection rate was at 33.38 percent which would have an impact on the future unassailability of the municipality. A total debt of R299 906 million was outstanding of which R12 239 million was over 90 days.

Households were a major contributor of the outstanding debt. A total of debt of R103 432 million was outstanding for creditors. The major creditor was Eskom at R93 336 million.

Dr Chetty said that the status of the Annual Financial Statements (AFS) was submitted on 31 August 2017. The main qualification areas indicated by Auditor General South Africa (AGSA) included:

• Revenue and Receivables: 10 issues raised, four resolved and six partially resolved;
• Budget: two issues raised, and both partially resolved:
• Traffic: License issue raised and was resolved;
• Supply Chain Management: 22 issues raised, 21 resolved and one partially resolved:
• Expenditure: four issues raised, two resolved and two partially resolved:
• Assets: 17 issues raised and all partially resolved;
• Human Resource Management: 11 issues raised, seven resolved and four partially resolved:
• Internal Audit: one issue raised and was resolved; and
• Risks Management: one issue raised and was resolved.

Dr Chetty said that Provincial Treasury assessed the readiness for submission of the AFS of Mantsopa Municipality.

He said that in terms of the progress on the Mantsopa Petition, the salient areas that needed to be addressed were Roads (Manvatseng & Ladybrand) and the quality on the construction of the road network. He said that a total of R16.6 million would be set aside over the Medium-Term Revenue and Expenditure Framework (MTREF) for the upgrading of 3.1 km roads and storm water in Masakeng and Metampelong. All business plans were submitted in September 2017 and registration of the project would be concluded in November 2017, which was a requirement of Municipal Infrastructure Grant. The project would be implemented in the 2018/2019 financial year.

Dr Chetty said that a long-term plan was to improve the network and as a result, a business plan was submitted to the Department of Water and Sanitation for consideration. The payment of the service provider (Lihlomo) could not materialize as there was no contractual obligation to the municipality and the appointment was not in line with supply chain management processes but rather through Mbonelaphanda and Associates. Mbonelaphanda and Associates were contracted by the Mantsopa Municipality for construction. This company appointed 400 learners. In addition, Mbonelaphanda and Associates arranged with the company Lihlomo to provide stationary and accommodation for the 400 learners. Learners were forwarded to the Premier’s Office. The approval of these learnerships was secured in August 2017 due to the effort and support of the Office of Premier. A significant portion of the operating budget was for compensation of employees and might not be sustainable in the future. Therefore, appointments to permanent posts would impact on the viability of the municipality.

Furthermore, the Department of Human Settlement allocated 306 RDP Housing Allocations for Excelsior in the current financial year. The housing and land parcel identification would be included in the integrated development plan for priority.

Discussion

Ms Oliphant said that there was a problem with this document from the Provincial Treasury as it was not signed and if it was not signed it was not binding and therefore illegal.

Mr Godfrey Mahlatsi, Head of Department: Free State Provincial Treasury, said that the issue of the document not being signed was Ms Oliphant should recall in the first meeting, the document was part of the tripartite management that it should collectively deal with this petition. Treasury was dealing with it in its own part; the municipality was doing the same as well as the Department of Cooperative Governance and Traditional Affairs (COGTA). Treasury was doing oversight over the municipality in terms of expenditure. So what Dr Chetty was indicating was that in certain areas, contract employees had to be absorbed by the municipality. In terms of their own oversight role, they realized that there were problems with the budget.

Currently, the Head of the Department of Provincial Treasury was outside the country and therefore could not sign the document. But through the permission of the MEC, he could sign the document as an Accounting Officer, and he could confirm that the document was authentic, and its contents were correct.

Mr M Monakedi (Limpopo, ANC) said that Members should allow the document to be submitted to the Committee.

Ms T Wana (Eastern Cape, ANC) said that the input from this report did not take the Committee on the issue raised by the Petitioner and the Petitioner was not there to counteract this report. Furthermore, COGTA, Provincial Treasury, and the Mantsopa Municipality had to design a framework which would focus on the delivery of basic services for the community. She asked what the situation was in terms of delivering storm water drainage in that area where sanitation was deposited to. She asked whether the 3km road was completed and how far they went as a municipality in the upgrading of that road. She insisted that the Committee should get a detailed procedural framework from all the stakeholders because this document did not address the issues raised by the Petitioner for the Committee to come to the finalization of this petition.

Mr S Mthimunye (Mpumalanga, ANC) said that Provincial Treasury must present some kind of evidence in terms of the consultations it conducted on this petition because this report was quiet in that regard. He asked whether there was a database on housing at the municipality because this issue of housing was a national demand. What were the criteria for people to qualify for RDP houses? Was there a system where people could check for themselves whether they qualified for an RDP house?

Mr Monakedi asked whether the 306 housing allocation came about because of the concern from the petition or was it part of the housing allocation policy of the municipality. Also, the municipality was going to spend R3 million on sewer pipes, was this because of the petition or was this part of the normal programmes of the municipality?

Mr M Mohapi (Free State, ANC) said that this was not the first time that the municipality has had this type of engagement and they should stick to what was resolved by the Committee in the previous meeting and focus on the progress report and not start another hearing. Secondly, from the onset, there was a call of concern on their side as a Committee as there was no visibility from the Office of the Speaker. The Office of the Speaker together with the municipality should plan mechanisms and processes of ensuring that they engaged with communities, and it was very clear that most of the issues that were raised in the petition were a clear case of proliferation of misinformation in most instances.

Mr Mohapi said that as a Committee they should devise a plan in terms of how the Committee could oversee the whole of municipalities together with COGTA. Again, as much as the Committee listened to inputs from Treasury, COGTA and the Municipality, they had an obligation as a Committee in terms of the issues that were raised in the petition to ensure that there was monitoring and support. He said that the issues that were raised in the petition were issues that should have been proactively attended to, but because of time to react to the situation, they were sitting with those problems. Perhaps the Committee should emphasize the role of the province in terms of oversight which was expected to submit section 47l reports to the Committee. Without that, as a Committee, they were unable to detect constraints or deficiencies. Therefore, the emphasis was that provincial treasury should utilize the section 47 reports because those were the tools that could assist them to detect problems.

Mr Mohapi said that the presence of the MEC for Treasury was highly appreciated. It was therefore, important to have all the principals of the departments before the Committee so that they could take full responsibility in answering the questions raised by the Committee.

Lastly, as pointed out the Committee should not reopen another public hearing because Members still had another oversight after the Committee concluded all its business. Therefore, they should not reiterate what was said instead if they felt that there was anything outstanding, then Members should pursue it, but for him this matter was exhausted and the only thing that was outstanding was for the Committee to decide based on all the submissions made.

Mr Mahlatsi said that he would like to submit that as an Accounting Officer, there was no way that he would advise the municipality to shift payments because the problem was that Mvelaphanda started the work without a Service Level Agreement. After the work the Services SETA was started it was realized through their manager that these people were not accredited to provide that kind of training, and even if they issued certificates to learners, it would not be compliant.

Mr Mahlatsi said that Mr Mohapi was correct and generic by-laws was issued and gazette for all their municipalities and each municipality had to customize itself with those by-laws in line with their own conditions. On the issue of the enforcement of the by-laws, it was a great challenge. They must try to build capacity around this and develop a strategy on this issue.

Ms Wana said that what she was highlighting was that the Committee should have a clear understanding of what was going on in that municipality so that they could arrive at a decision that would be satisfactory to everyone.

The Chairperson thanked the officials from Free State for coming and submitting to the Committee. He said that it was the duty of the Committee to take this matter forward and respond to the petitioner. As Mr Mohapi already indicated, the Committee would sit and look at all the submissions made to the Committee and make a final determination on this matter.

The meeting was adjourned.