COGTA 2018/2019 Annual performance Plan; with Deputy Ministers

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Meeting Summary

The meeting was attended by both Deputy Ministers in the Department of Cooperative Governance and Traditional Affairs, Mr Andries Nel who is responsible for provincial and local government and Mr Obed Bapela who is responsible for traditional affairs. The Committee was briefed on the 2018/19 Annual Performance Plan and Budget Allocations of the Department of Cooperative Governance and Traditional Affairs; and on the strategic goals and budget of the Municipal Infrastructure Support Agent (MISA).

The main issues discussed were the indebtedness of municipalities, the disagreement between Eskom and municipalities regarding legislation governing the distribution of electricity, human resource recruitment in the municipalities, the reversal of apartheid spatial patterns, conflict between traditional leaders and municipalities particularly over land, corruption in the municipalities, interventions by national and provincial governments in dysfunctional municipalities and the effectiveness of the Back to Basics Programme in addressing problems in local governments.

Members of the Committee questioned the efficacy of the Back to Basics Programme and asked what could be done to help the municipalities become financially viable. Members called on the inclusion of traditional leaders in municipal council meetings to avoid conflict between councillors and traditional leaders, especially over land.

Deputy Minister Nel disclosed that municipalities owed R32 billion to bulk service providers and out of that Eskom was owed R16 billion. However, he dispelled the belief that municipalities were in crisis noting that out of 257 municipalities in the country only 10 municipalities owed Eskom the bulk of the debt. When he was challenged that the Back to Basics Programme, which was designed to create stability and make municipalities viable and effective was not working, he asserted that many municipalities had been turned around and achieved stability.

Members asked why poor and non-viable municipalities were amalgamated and he replied that lessons had been learnt and that the Department was working with the Demarcation Board on new boundaries. Deputy Minister Nel emphasised the importance of having functional municipalities if the country was to attract investment as firms expect to have reliable electricity and water services.

The Committee ran out of time and Members were urged to forward written questions to the Department.

Meeting report

Mr S Mthimunye (ANC; Mpumalanga) introduced himself and informed the meeting that he was chairing the meeting in the absence of the Committee Chairperson, Mr M Mohapi (ANC), who was reported to be sick. The purpose of the meeting was to receive a briefing on the Annual Performance Plan (APP) and the budget by the Department of Cooperative and Traditional Affairs (COGTA). He suggested allocating an hour and a half for the presentation to give Members sufficient time to respond. He invited Members of the Committee to introduce themselves. He then requested the two Deputy Ministers present, Mr Andries Nel and Mr Obed Bapela, to take over.

Deputy Minister for COGTA responsible for Provincial and Local Government, Mr Andries Nel, suggested that the members of his delegation also introduce themselves. He introduced himself as did Mr Obed Bapela, the COGTA Deputy Minister responsible for Traditional Affairs.

Mr Bapela thanked the Committee for the messages of condolences he received after the deaths of his wife and mother.

Mr Nel conveyed the apologies from the COGTA Minister, Mr Mkhize, who was attending to other pressing matters and the Director General of COGTA who was unwell and was being represented by Mr Tozi Faba the Deputy Director General for Corporate Services.

Opening Statement by Deputy Minister Andries Nel

The Deputy Minister thanked the Committee for the opportunity to interact and said it was always special to engage with the NCOP because it was a department of cooperative governance and traditional affairs and the whole question of inter-governmental relations were central to the mandate of the Department. The mandate of the Department accorded well with the mandate of the NCOP which was also concerned with inter-governmental relations which was giving voice to the provincial sphere in the legislative process.

He congratulated the NCOP on the successful Local Government Week that was recently held. The Local Government Week touched on the crucial area of social transformation and support to municipalities and both of those areas were top of COGTA’s agenda. President Cyril Ramaphosa in his State of the Nation Address (SONA) indicated that he would be visiting government departments and having one-on-one with those departments. When the President visited COGTA he used some powerful language in which he referred to COGTA as the engine of government and as the glue between the people and government. He highlighted three areas, namely, the need to vigorously support municipalities, the need to reverse apartheid spatial patterns and to manage urbanisation in a way that would contribute to the growing of the economy and creation of jobs. It was important to ensure that there was a harmonious relationship between municipalities and traditional leaders. He specifically referred to the growing of the agrarian revolution. It was in this context that the Department had come to brief the Committee on the APP and financials for the 2018/19 financial year.

COGTA continues to carry out the mandate that is set out in the Constitution to turn local government into a sector that responds to the needs of the people through the implementation of a vigorous Back to Basics programme. The Medium Term Expenditure Cycle coincides with the end of the electoral mandate term which stretches from 2014 to 2019. In the past financial year, the performance of cooperative governance was at 71% of the planned targets. The 2018/19 APP will ensure that there is an alignment of the goals and objectives of the Department with the Medium Term Strategic Framework (MTSF) outcome 9.

The Department continues to work with provinces to support the municipalities through the Back to Basics programme. There is a belief that COGTA should be turning more of its attention to the provinces and that was an area where the Department needed to work with the NCOP. Recent events that have been witnessed in the North West underscored the importance of national government focusing more on the functionality of provinces. One of the key challenges facing the Back to Basics programme was uneven capacity in provincial COGTA departments which affected the provinces’ ability to support and monitor local government.

In order to ensure that cities and towns are more inclusive, resource efficient and good places to live as envisaged in the National Development Plan (NDP), the Department is focusing on the restructuring of the municipal space economy through the implementation of the Integrated Urban Development Framework (IUDF). Apartheid spatial patterns needed to be reversed so as to ensure that people did not live far from work and social governmental services. As part of improving the financial health of municipalities, a national framework on regional economic development and planning has been developed.

The question of debt, both monies owed to and by municipalities, has reached a national crisis point. A figure of R32 billion is owed by municipalities to bulk service providers; R16 billion to Eskom for electricity and the remainder to water boards. It demands both the enhancing the revenue generation, capacity of municipalities, the improvement of billing systems, the ability to collect revenue and encouraging a culture of payment among consumers of municipal services. The municipalities are being assisted to develop specific municipal revenue plans and ensure that they comply with Municipal Property Rates Act. There is an inter-ministerial task team that is dealing with the Eskom and water boards debts.

 It is important to establish ward committees to ensure that there is a good interface between the citizens and government, especially in those municipalities where there are hung or coalition governments resulting in instability and a failure to create the wards.

Corruption has been a source of concern and impacted negatively on service delivery; therefore, the Department has developed and is implementing an anti-corruption strategy. Partnerships with law enforcement agencies have been enhanced to ensure that the hundreds of corruption cases are expedited. Nationally centralised forensic investigations have been conducted in municipalities and the reports are being studied and forwarded to the Hawks, Asset Forfeiture Unit (AFU) and Special Investigations Unit (SIU). Regulations have been put in place to ensure that staff recruited in the municipalities complied with the law regarding qualifications and experience and that the processes of appointment are sound. Data bases have been established containing the names of personnel who have been found guilty of misconduct which results in their being effectively barred from being employed anywhere in local government.

Through the municipal infrastructure grant (MIG), municipalities are being monitored for compliance to ensure that grants are used for the intended purposes. National Treasury has recently reported on some quite significant under-expenditure regarding infrastructure grants. Over the MTF period, there has been an increase in the local government equitable share and it is hoped that this will go some way to turning around the state of affairs in municipalities.

Unemployment is a burning national issue. The three things that concern South Africans the most are crime, unemployment and corruption. As part of COGTA’s intervention in the quest to reduce unemployment, the Community Work Programme (CWP) is being implemented and the programme has already exceeded its target for the year by creating 259 000 work opportunities. Regrettably, budgetary allocations are constraining the Department from achieving the one million target.

The National Disaster Management Centre has done well both in coordinating government initiatives and dealing with the issue of drought. A national state of disaster has been declared with over R3 billion being allocated to manage the effects. There is a strong link between the work of the National Disaster Management Centre and the IUDF to develop cities and towns and to help informal settlements to be more disaster resilient. There have been some terrible incidents in the recent while.

On supporting distressed and dysfunctional municipalities, attention has been focused on this particularly during the Local Government Week. There is a need for a general approach to be supporting municipalities through section 154 of the Constitution through the Back to Basics programme before the Department jumps in to intervene using section 139 of the Constitution and the Department would want to engage the Committee further on that. There is certainly a place for section 139 intervention, but that should ideally come once there has been an engagement in consistent support.

There are plans to support 81 municipalities in the 2018/19 financial year and that support would include developing infrastructure and town and regional planning, regional sector plans, water conservation and demand management, feasibility studies for the alignment of reticulation and bulk infrastructure water services and the setting up of a framework contract for water and waste water management.

Work was also being done to recruit young graduates, having mentorships and internship programmes. The aim is to develop the youth of the country and solve the problem of unemployment and at the same time support the municipalities.

Minister Mkhize in his budget address also spoke extensively about the formation of the district support teams that would be deployed to the various districts to support those local municipalities that have capacity challenges amongst others.

There was a strong inter-connection between the Back to Basics Programme of getting municipalities to be functional and the IUDF to manage to manage urbanisation and to reverse apartheid spatial patterns. He thanked the NCOP for focusing on both those areas during the Local Government Week.

Statement by Deputy Minister Obed Bapela

The Deputy Minister said he wanted to allude to the issues of the 2018/19 APP as already presented to Parliament, including the 2015-2020 Revised Strategic Plan which was also presented to Parliament. The work of the Department of Traditional Affairs is guided by 5 pillars:

1. Restoration, stabilisation and strengthening of traditional leadership institutions – this includes the strengthening of the traditional councils and to ensure that they are active in governance issues.

2. Development of policies, legislation and regulation towards transformation of the sector

3. Establishment of partnerships for revival and activation of economic activities and participation towards sustainable livelihoods in traditional communities, working in collaboration with other sector departments and private sector – This includes the agrarian revolution

4. Promotion of cultural and customary way of life which conforms to the Bill of Rights, constitutional and democratic principles – Some of the customs and traditions are dated and they need to be transformed so that they can be in line with the Bill of Rights. Those from the rural areas would know about traditions such as ukuthwala which can no longer be allowed in a democratic society because people have rights and people can no longer hide behind culture to perpetuate injustice. Traditional issues property inheritance also need transformation. Culture is never static as it is in constant evolution

5. Coordination of interfaith to promote social cohesion and nation building

There was a national traditional indaba that was held last year in March and a number of landmark decisions were taken which are now beginning to find expression in the annual plans. A number of worthy resolutions have been included in the plans and among them is the recognition of the Khoisan indigenous group among the ethnic groups in South Africa. The second is the promotion of social economic development in the traditional communities. Another matter was the concern about land ownership in the communal lands. Who owns the land in the communal lands? Tenure of security was another major concern. There was a need for certainty regarding those matters. The policy would also be looking at the NCOP as it processes three key bills: The Customary Initiation Bill, the Traditional Leadership and Governance Framework Amendment Bill and the Traditional and Khoisan Leadership Bill. Limpopo, KwaZulu-Natal, Free State and North West are still to comment and bring their submissions. He hoped that the matter could be fast-tracked because a commitment had been made through the President that the Khoisan would be recognised by the time of the elections in 2019.  The Department of Human Settlements (DHS) and municipalities should work and plan together in the rural areas with the traditional leadership when allocating land for human settlements in order to avoid tensions. Without cooperative governance among all stakeholders, service delivery becomes affected. Land is needed to create human settlements, build clinics, schools and hospitals. Therefore, cooperation among the municipalities, departments and traditional leadership was crucial and that was why the spatial planning instruments were so important. The South African Local Government Association (SALGA) will be identifying certain laws to initiate certain legislation amendments. These include the Municipal Finance Management Act sections 71 and 72 regarding the expansion of the municipality mandate. SALGA and traditional leaders will also be engaging with the Disaster Management Centre on early warning systems. The agrarian reforms or revolution plan is aimed at the maximum utilisation of land in the traditional communities because there is plenty of land that is lying fallow. Some of the land was at one time developed with infrastructure like irrigation systems and even railway lines. The agrarian revolution aims at providing food security and overcoming hunger.

Department of Cooperative Governance Presentation

Mr Tozi Faba, Deputy Director-General, DCOG,  made the presentation on behalf of DCOG.

Mission Statement

The Mission of the Department of Cooperative Governance (DCOG) was based on 5 pillars

-Putting people and their concerns first

-Supporting the delivery of municipal services to the right quality and standard

-Promoting good governance, transparency and accountability

-Ensuring sound financial management and accounting

-Building institutional resilience and administrative capability

Alignment of APP to the 2014-2019 MTSF

DCOG is responsible for outcome 9 of the MTSF. Under sub-outcome 1, it is expected that members of society will have sustainable and reliable access to basic services. Strategic objective 7.1 which is aligned to sub-outcome 1 aims at coordinating and facilitating sector collaboration for infrastructure development at municipal level to extend services to unserved communities by March 2020.

Under sub-outcome 2, DCOG aims to strengthen intergovernmental arrangements for a functional system of cooperative governance for local government. The objective is to deepen the relationship between citizens and local government through improved citizen engagement mechanisms by March 2020

Under sub-outcome 3, the idea is to develop democratic, well governed and effective municipal institutions capable of carrying out their developmental mandate according to the Constitution. This will result in the strengthening of the functionality of municipalities through the implementation of administrative and institutional systems by March 2020.

Sub-outcome 4 deals with sound financial management with the objective of implementing initiatives to improve financial sustainability and revenue management in local government by March 2020.

Sub-outcome 5 expects local public employment programmes to be expanded through the Community Work Programme (CWP). The target is to provide one million work opportunities through effective and efficient programme management and strategic partnerships by March 2020.

Alignment to other Outcomes

There is alignment to outcome 7 of the MTSF which aims at creating vibrant, equitable, sustainable rural communities contributing towards food security for all, as well as improving land administration and spatial planning for integrated development in rural areas. The objective is to facilitate the restructuring of municipal space economy through integrated development planning and spatial targeting by March 2020

2018/19 Medium Term Expenditure Framework (MTEF) Budget Allocations

The department has six programmes which received the following allocations:

Administration                                                                           R258 556 000

Regional and Urban Development and Legislative Support          R103 475 000

Institutional Development                                                           R63 111 536 000

National Disaster Management Centre                                        R592 245 000

Local Government Support and Intervention Management            R15 716 173 000

Community Work Programme                                                    R3 869 903 000

Total                                                                                         R83 651 888 000

The Regional and Urban Development and Legislative Support programme budgetary allocation had dwindled by -22.4 % due to the phasing out of the Demarcation Transitional Grant from the 2018/19 financial year. Total budget for all programmes increased by 9%.

Allocations Per Economic Classification

Compensation of Employees                                                     R339 475 000

Goods and Services                                                                  R3 192 878 000

Transfers and Subsidies                                                                        R80 111 778 000

Payment for Capital Assets                                                       R7 502 000

Grand Total                                                                               R83 651 888 000

MTEF Allocations: Division of Funds

Transfers Earmarked and Special Allocations

Municipal Infrastructure Grant                                                     R15 287 685 000

Municipal Systems Improvement Grant                                            R115 116 000

Municipal Disaster Relief Grant                                                        R349 280 000

Provincial Disaster Relief Grant                                                        R123 592 000

Municipal Disaster Recovery Grant                                              R62 731 845 000

Community Work Programme (Transfers)                                      R1 000 799 000

Community Work Programme (Goods and Services)                     R2 824 752 000

NDMC (Disaster Evaluations)                                                              R42 334 000

Municipal Infrastructure Support Agency                                           R342 456 000

South African Local Government Association                                      R33 100 000

Municipal Demarcation Board                                                              R53 568 000

South African Cities Network                                                                 R7 353 000

United Cities and Local Government of Africa                                       R6 782 000

Department of Traditional Affairs                                                        R153 306 000

Total                                                                                                R83 093 284 000

 

The total operational budget for the programmes was R558 million. Transfers accounted for 94% of the budget; DTA received 0.2% and the DCOG received 0.7% of the total budget. The CWP accounted for 4.6% % of the allocation and MISA received 0.4%.

Discussion

Mr G Michalakis (DA; Free State) said he was addressing his question to the Deputy Minister regarding his province, the Free State. He was getting increasingly worried about the ability of municipalities to deal with their financial problems as it has an effect on the basic service delivery. Two years ago, he wrote a letter to the Minister and Deputy Minister requesting that they look into the water crisis that was in Brandfort which had been going on for a decade. It had now become so problematic that if a basic thing breaks there is no money to fix it and there is no money to do any infrastructure maintenance. As a consequence, the municipality tells the community that a part needs to be imported from Denmark. In the meantime, it can be bought 40 kilometres away in Bloemfontein, but it is just a way to buy time that two weeks is needed to import the part. Then they try to find money from somewhere. That indicates that the municipality is for all intents and purposes bankrupt.

Then there are municipalities like Matjhabeng that owe billions to Eskom and the water boards. He had suggestions as to how some of these problems could be solved but he wanted to hear how the National Department planned to stop the situation from getting worse and placing the municipalities on a path to recovery. To a large extent the qualifications of the financial and accounting officers were to blame for some of the general management failures. The province was not in a position to bail out these municipalities. The ordinary people have even accepted having no water as a given and that is a point the country should never reach again.

Ms G Oliphant (ANC) addressed her question to both Deputy Ministers regarding the Expanded Public Works Programme (EPWP) which she understood was a public function. She asked how the EPWP works with the municipalities. She once had a public meeting about the EPWP and she disclosed that there were those who appreciated the work it was doing but she wanted to know whether it was also in the pipeline for the minimum wage. Regarding infrastructure and housing, she asked whether the Department was coping with the demand and whether it was possible to add more houses to the annual allocations that are already budgeted for. Whenever illegal settlements are demolished, they move to new places.

On land, there was a need to involve traditional leaders in the council meetings to avoid tensions between municipalities and the traditional leaders. Every council meeting must have a traditional leader because the traditional leaders do not know anything about the decisions being made by the municipalities. That is why the traditional leaders think the councillors are undermining them. The problems between Eskom and the municipalities need to be resolved as people are now buying electricity directly from Eskom. She urged the municipalities to improve their debt collection and to close shops that are failing to pay. She asked the Deputy Ministers what they were doing about the situation and whether National Treasury was helping.

A delegate from the Eastern Cape said there was a need for another platform to address some of the issues concerning regulation particularly the appointment of sections 56 and 57 managers and it was a crisis in the Eastern Cape Province as contracts were sometimes renewed without being advertised. On forensic investigations, most municipalities have been through that process, but the implementation proved challenging. Local government is highly regulated, so most decisions must be subjected to council approval and sometimes the findings are not taken seriously in the council meetings. He suggested centralising the matter of forensic investigations in municipalities to circumvent those challenges.

Regarding the implementation of the Spatial Planning and Land Use Management Act (SPLUMA), the province also needs assistance to address disagreements between municipalities and traditional leaders especially over land. The traditional leaders are claiming that it is their land and have stated that they will not agree to the proposals of government. It would be extremely difficult to progress the concept of the agrarian revolution with such challenges where traditional leaders are rejecting the implementation of SPLUMA. Food security would not be achieved with such challenges that are preventing the use of land which is lying fallow.

National Treasury’s attitude of not bailing out municipalities was worrying. Newly established municipalities in the province were all collapsing. As members of the portfolio committee in that province they were very angry because they sent a delegation to the National Assembly to say that you cannot amalgamate two municipalities that are both poor and expect good results. An example is Lukhanji municipality, Queen’s Town, which before amalgamation had R90 million in reserves but that has all been wiped out. The amalgamated municipality now owes millions to Eskom. The idea which came from the Minister by then could never have helped the province. It did not help for National Treasury to refuse to bail out the new municipalities because the communities were now suffering. Eskom is now threatening to switch off those municipalities. The issue of electricity tariffs also needs addressing because the municipalities will continue to remain indebted to Eskom for the rest of their existence if the tariffs are not revised. He requested the Deputy Ministers to elaborate on the role of districts in supporting municipalities as he did not see that happening.

Deputy Minister Nel spoke about section 154 of the Constitution which addresses the matter of the support that must be given to a municipality before progressing to section 139. He wondered how municipalities could be assisted when they had no capacity. A harmonious relationship between traditional leadership and government was required because even those traditional leaders that were sitting on councils were not very cooperative. The space of traditional leaders was not democratic. He also questioned the phasing out of the Demarcation Transitional Grant leading to a reduction in revenue of -22% and he wondered what impact this would have. He wondered what would happen to the areas that were being serviced by the grant.

Ms B Engelbrecht (DA; Gauteng) appreciated the presentation and what was important was that it outlined the mandate of local government to respond to the needs of the communities. Looking at the municipalities that were in financial distress, it would appear that the Back to Basics programme is not working. There was something preventing its effective implementation. Deputy Minister Nel mentioned the outstanding money owed by municipalities to Eskom and water boards and that there was a task team established to address that. She asked what could be done and what could be changed to assist municipalities to govern themselves better. A number of workshops had been held to address the matter, but the challenge seemed to persist.

On the Municipal Systems Act which, as far as she could remember, prescribes that Ward Committees have to be elected within three months of new government. She was concerned that if they waited until 2019 to ensure that Ward Committees are elected they risked being in contravention of the Act. She sought clarity on the matter. Deputy Minister Nel also spoke about the under-expenditure of grants which was a concern because the municipalities had money and yet were not spending it. She asked Deputy Minister Nel what could be done about the under-expenditure.

Mr M Chetty (DA; KZN) said he was happy that Deputy Minister Bapela had made reference to the Traditional Leadership and the Governance Framework Amendment Bill which was on the agenda of the Committee. For the information of the Deputy Minister, he said there was much confusion between the Khoisan Leadership Bill, and the Traditional Leadership and Governance Framework Amendment Bill. The provinces were having challenges with that and it was important for him to take note.

Addressing Mr Nel, he said the Deputy Minister had spoken about the outstanding investigations and the involvement of the Hawks. There were decisions that were yet to be made as to whether some municipalities should be placed under administration. There are no reports regarding these matters and some in the communities believe something is being swept under the carpet. The Deputy Minister spoke about a database where the names of senior officials who had been implicated in corruption were stored. He begged to differ with the Deputy Minister. He gave the name of a senior manager in Erkurhuleni municipality, Slindokuhle Hadebe, who had now been appointed a senior manager in Msunduzi municipality. All that the man did was to change his name to Sizwe Hadebe. He wondered how good the systems were if this could happen.

He disclosed that there is a company that had put in a billing system that is not functioning well and for the last 13 months a city has not been billed because of the dysfunctional billing system. Many rural municipalities were failing because of a lack of support from district municipalities. Mr Pravin Gordhan brought in the Back to Basics in 2014, but if you keep doing the same thing over and over again you cannot expect new results. Mr Gordhan had then said that one third of the municipalities were functioning, one third was at risk and one third was dysfunctional. In 2017, a fourth category was created: 7% of the municipalities were functioning well; 31% were reasonable; 31% were almost dysfunctional; and the last 31% were dysfunctional or distressed. The Back to basics programme was not working if the functional municipalities had decreased from 31% to 7 %.

On interventions, he agreed that section 139 must be the last resort, but, unfortunately, there are so many municipalities that are in distress that there was no time to start looking at section 154. The amount of damage done so far and giving them another three months will lead to total collapse and there would be more anarchy than what is happening in KZN and the North West. Too much time had been wasted from the fear of factionalism.

The Acting Chairperson interjected saying that could only be speculation

Mr Chetty said Msunduzi municipality was awarded the prize of best performing municipality in KZN two years ago. The mayor was removed and middle managers were removed. The MEC forwarded the name of the manager he had mentioned earlier who was under investigation for corruption to Msunduzi and this was part of the problem. This also explains why there is resistance by the MEC to place the municipality under administration. The municipality is running on a deficit budget; it has abused its funding and yet it is not among the five municipalities in KZN that have been placed under administration. Had the MEC accessed to the call to place Msunduzi under administration, the life of a former councillor could have been saved who was killed a week earlier. The issue is no longer just about poor service delivery, but there is now loss of life. Out of 257 municipalities, only 55 have qualified engineers. He asked whether the 27 municipalities identified by the Deputy Minister were included in the 35 municipalities where municipal-specific revenue plans were being implemented as indicated under the 2018/19 targets for strategic objective 3.1 in the APP. Similarly, of the 110 that were being assessed in terms of compliance with the ratings aspects of the MPRA, he wondered whether they included the 87 that had been identified by the Deputy Minister.

Mr D Ximbi (ANC; Western Cape) said as a resident of Cape Town, he knew that it was divided in two between the rich and the poor. There is a lot of corruption within the city and as a result one of the experienced city managers resigned and now there is an acting city manager and there is also in-fighting in the governing party where the party wants to remove the mayor. When the elephants fight it is the grass that suffers. The poor are suffering because of the in-fighting. He asked whether the national government cannot intervene, although the ruling national party is not in charge of the city.

Response from Deputy Minister Nel

The Deputy Minister said the approach that was adopted in 2014 regarding the Back to Basics programme was not something that was plucked out of the air. It was informed by a number of interventions that had been made since the establishment of democratic local government in 1996. The current system of local government is approximately 15 or 16 years old. It is younger than the country’s democracy. Over 1 200 local government entities had to be consolidated which had operated under apartheid: homeland systems, black local authorities and white local authorities into a coherent local government system that exists now. Institutions take time to develop. That was not negating the urgency of the challenges facing the local governments system currently. Back to Basics was formulated on the back of local government turnaround strategies; operation clean audit and operation consolidate. It was not just changing programmes as fashions are changed. There is continuity in the programmes.

In order to evaluate municipalities, about fifty different criteria were used such customer satisfaction, service delivery, political stability, technical capacity, and so on. Those criteria are the ones that led to the 3 categories of municipalities. Minister Mkhize was not differing with that when he included a fourth category. The introduction of the category of the distressed is referring specifically to the financial status of the municipality. The three broad categories still stand and there has been no regression from 30 % well-functioning to 7%. The category was just subdivided by Minister Mkhize. What has happened since 2014 is that there have been a number of very successful interventions. There were some absolute disasters that were turned around through the intervention of the provincial and national governments. The situation in Nelson Mandela Bay stabilised and turned around through joint interventions. A municipality like Mogalakwena which at one stage was dominating the headlines had stabilised and was turning around through a joint effort. The case of Msunduzi also shows a municipality that was turned around and even won best municipality of the year, and now it has regressed. The examples show that the Back to Basics programme does work. Some of the turnarounds are quite sustainable. There will always be advances and retreats in any process and the Back to Basics approach is a sound one.

As Minister Mkhize said in his budget, there are lessons that have been learnt from experience and how to implement Back to Basics more effectively. At a political level, what is happening is that the Department is moving into provinces with the highest and most acute incidents of dysfunctional municipalities. Minister Mkhize kicked off in the Eastern Cape and the approach follows a comprehensive one: Ministers, Deputy Ministers together with a very senior team from the Department going into a province, working with SALGA and actually going on the ground and visiting those dysfunctional municipalities, meeting with the communities, residents, academics, and traditional leaders. This approach underscores the point that local government is everyone’s business. The next province to be visited on the schedule is the North West, followed by the Free State. A province like Mpumalanga has a different set of circumstances but there are also acute problems when it comes to municipal debt. All provinces will be visited in that manner.

What have been put in place to underpin those interventions are 55 district teams that would be providing the necessary technical backup to emphasise those interventions. It was also important to avoid being mechanical in the interventions. He said he did not want to get into the political debate of his party. It would be remembered that the big and intense debate was around the two-stage theory as to whether intervention must begin with section 154 and then proceed to section 139 of the Constitution. The Constitution was clear that section 139 kicks in when a municipality is unable to execute its executive obligations according to the constitutional and legislation. In order to make the interventions sustainable, the approach outlined in the national development plan must be followed. It requires spending more time and working with the municipalities over a period of time so that when intervention is affected, the intervention is more effective and sustainable. The Free State municipalities have big economic players like Nestle that have approached the government and expressed their intention to stay and create jobs but if they can’t get guarantees that they are going to get water and electricity then they will have to move and go elsewhere. It is, therefore, important to stabilise those municipalities for the good of the economy, especially job creation. One of the best local government economic strategies you can implement is Back to Basics. Do the basics right and you are already creating fertile ground for local economic development.

Regarding municipal debts, it was important not to deal with the question in generality. It is not municipalities in general that owe Eskom. The reality is that 70% of that R16 billion that is owed by municipalities is owed by 10 municipalities out of 257 municipalities. It is not a general local government disaster. If you further scrutinise those 10 municipalities, a municipality like Maluti owes a lion’s share within that. The question should then be why that municipality? Why has Msunduzi regressed? Objectively speaking, there is no reason why those municipalities should be in the state that they are in. There are other municipalities that you can mount a cogent argument that they are not viable and will be grant dependent for the foreseeable future as they do not have a tax base. The questions is what do you do? One option is to try and reconfigure the municipality and that comes with its own share of complications. In some cases it makes sense and I other cases lessons have been learnt the hard way. A number of engagements have been held with the Demarcations Board around the broad approach to those matters of reconfiguration. It also raises the longer term systemic issues concerning the local government fiscal model. It is important to evaluate how municipalities are financed and this is being done together with National Treasury and SALGA.

The matter of infrastructure and housing and the whole issue of human settlement were touched upon by Minister Mkhize in his budget speech when he spoke about the implementation of the IUDF. It will also be necessary to look at the human settlement model currently being used. The current housing plans have to be evaluated to see whether they are sustainable and whether they fit in with the spatial plans of creating compact connected cities and towns. It also links to the question of land, particularly urban land. There is need to take seriously the proposal that instead of just building houses there will also be a provision of serviced land to enable people to build their own houses and in that way to anticipate and manage the high rates of organisation required.

EPWP is a distinct programme that falls under the Department of Public Works. DCOG deals with community programmes. On remunerations concerning the programme it was decided that the issue of minimum wage should not apply because of the nature of the programme.

The matter of the safety of councillors is important to the Department and it has been discussed. A joint team has been established with MECs and SALGA; and Minister Mkhize is pursuing the matter with the Crime Prevention Cluster. The attacks on the councillors are attacks on the State and those councillors being assassinated in cold blood are human beings with families. The killings are not acceptable and it was crucial to understand what was driving those killings. Appropriate measures would be taken to ensure the safety of the councillors.

The developments in Cape Town like in any municipality were a source of concern to the government. To have a major metro having the sort of challenges that Cape Town is having like the drought to have that level of political instability is concerning and the Department was keeping a close eye on the developments. It is hoped that there will be stability soon.

Responding to the questions regarding financially distressed municipalities, Acting DDG, Mr Tebogo Motlashuping, said COGTA had taken an initiative of developing simplified revenue enhancement plans to assist the municipalities generate revenue. There also joint efforts with National Treasury and Provincial Treasury to develop financial recovery plans. The impact would be seen after the implementation of the two plans. The third intervention concerns those municipalities that owe Eskom. National Treasury, Provincial Treasury, SALGA and Eskom engaged the municipalities on drafting sustainable payment plans. So far, 32% of the municipalities are now honouring those repayment plans. COGTA has also established an Inter Ministerial Task Team (IMTT) headed by the Minister which is looking at resolving the Eskom problems. Eskom is not supposed to be distributing electricity in the municipalities, but there are disagreements and different interpretations between Eskom and the municipalities regarding legislation governing distribution. The Minister has appointed a panel of advisors to look at the legislative and systemic challenges affecting Eskom and the municipalities and it has been given a timeframe of four months. The intention is to avoid going to court to get a declaratory order but to use existing mechanisms to resolve the dispute. The IMTT comprises Eskom, Treasury, COGTA, Department of Energy, DPME and SALGA. Municipalities do not just owe Eskom, but water boards as well. The municipalities owing Eskom are the same ones owing the water boards. Some of them are even unable to pay workers’ salaries.

On the appointment of senior managers, the law as it stands provides for the extension of contracts of senior managers only on the condition that in the contract of employment, there is a stipulation that there should be an extension. If there is an extension clause, then municipalities are within their rights to renew these contracts upon expiry. That is the law in the Municipal Systems Act until such a time that it is amended. Municipalities are, therefore, not obliged to advertise those positions. However, municipalities have been advised that the ideal situation is to advertise those positions when they fall vacant and there are proposals to have the clause that allows for extensions to be amended.

The Department is not waiting until 2019 to establish Ward Committees as they have already been constituted but they are not yet functional. They need ward-based plans before they can be functional. There are only a few wards that need to be constituted in the Free State because of a court case that was there.

Responding to the question on EPWP, acting DDG at COGTA, Mr George Seitisho, said EPWP and CWP were sister programmes but the big difference between the two was that CWP was a revolving door programme where those who are participating in the programme are not employed on contract as the participants can come and go as they wish. They only work two days in a week whereas in EPWP the participants might be employed for a period ranging from a year to two years on a project as big as building a road. In contrast, those in the CWP programme do things like mending potholes or cutting grass which might just take two days. Those working under the CWP, therefore, do not qualify for the minimum wage as they are not employees.

The Acting Chairperson requested the Members not to ask questions after the presentations as they were running out of time, but that they were free to forward written questions to the executives and the Members agreed.

Department of Traditional Affairs Presentation

Strategic Outcome oriented Goals

-Functional and accountable institution of traditional leadership

-Community development-oriented and sustainable institution of traditional leadership

-Inclusive, transformed, stable and cohesive traditional and interfaith communities

-Development oriented, effective and efficient department

Strategic Objectives

-To increase the number of functional structures of traditional leadership

-To promote transformation agenda and socio-economic development within traditional leadership structures and communities

-To reduce the number of traditional leadership disputes and claims

-To reduce the number of deaths and injuries resulting from cultural initiation practices

-To improve departmental corporate governance systems

Alignment of DTA Strategic Plan and APP to NDP and MTSF/Government Outcomes

Government outcome 7 aims at vibrant, equitable and sustainable rural communities with food security for all.  The aligned DTA goal is community development-oriented and sustainable institution of traditional leadership and the strategic objective is to promote a transformation agenda and socio-economic development within traditional leadership structures and communities.

Government outcome 9 aims at a responsive, accountable, effective and efficient developmental local government system. The aligned DTA goal is functional and an accountable institution of traditional leadership and the aligned strategic objective is to increase the number of functional structures of traditional leadership.

Goals Statements (Indicators and Outputs)

-75% of sampled houses of traditional leaders. Kings councils, queens’ councils, principal traditional leadership councils and traditional councils comply with legislation and perform all their legislated functions

-75% of sampled traditional councils support municipalities in the identification of community needs and facilitate the involvement of community members in the development and review of the IDP

-100% of projects in the National Traditional Leadership capacity Building and Institutional Development implemented

-5 unqualified audit outcomes for both financial and pre-determined objectives performance from 2014/15 -2019/20

Strategic Objectives and Targets

The National House of traditional Leaders (NHTL) has three projects:

-HIV and AIDS prevention project

-Food Security Project

-Women Empowerment Project

These projects are meant to capacitate structures of traditional leadership to lead the course for HIV and AIDS prevention within their communities in collaboration with SANAC and other partners. It is further aimed at:

-Empowering women within structures of traditional leadership

-Facilitating that traditional leaders promote food security within their communities in collaboration with relevant departments and role players.

One of the resolutions of the traditional leadership indaba was the involvement of the traditional leadership in cultural tourism

The Acting Chairperson asked Deputy Minister Bapela whether DTA was thinking of establishing a unit of conflict resolution because there were many conflicts between municipalities and the traditional leadership. He urged the Department to consider creating a permanent unit to deal with recurring conflicts.

Municipal Infrastructure Support Agent (MISA) Presentation

The presentation was made by Mr Ntandazo Vimba, CEO of MISA.

MISA Mandate

-Supporting municipalities to conduct effective infrastructure planning to achieve sustainable service delivery

-Supporting and assisting municipalities with the implementation of infrastructure projects as determined by the municipal integrated development plans

-Building the capacity of municipalities to undertake effective planning, delivery, operations and management of municipal infrastructure

-Performing any function that may be deemed ancillary to those listed above.

Strategic Goals and Objectives

Goal 1 is to refocus and strengthen the capacity of MISA to deliver on its mandate and the corresponding strategic objectives are:

-Improving the usefulness and reliability of performance information

-Improving the effectiveness of internal controls, risk management and governance structures

-Provide effective and efficient corporate governance, financial and legal support services for MISA to deliver on its mandate

Goal 2 is to ensure significant improvements in the service delivery through sound infrastructure management and the corresponding strategic objectives are:

-Ensuring effective support and interventions with greater impact on citizen’s lives.

-Improving technical skills in municipalities

-Increasing the number of skilled technical professionals and artisans in identified municipalities

-To coordinate and ensure the implementation of a strategic approach to the development of technical capacity in the sector

Programmes

Administration – The strategic objectives are:

-To provide effective and efficient corporate, financial and legal support services for MISA to deliver on its mandate

-To provide effective support and interventions with greater impact on citizens’ lives

Technical Support Services – The strategic objectives are:

-To provide effective support and interventions with greater impact on citizens’ lives

-To improve technical capacity and technical skills in municipalities

-To improve the number of skilled technical professionals and artisans in identified municipalities

-To coordinate and ensure the implementation of a strategic approach to the development of technical capacity in the sector

Infrastructure Delivery Management Support – The strategic objectives are:

-To provide infrastructure planning, procurement and contract management capacity and services to identified municipalities

-To facilitate effective and efficient municipal infrastructure procurement

MTEF Budget Estimates Per Programme for 2018/19

Administration                                                                           67 869 000

Technical Support Services                                                     262 005 000

Infrastructure Delivery Management Support                            12 582 000

Total                                                                                          342 456 000

Concluding Remarks by Deputy Minister

Deputy Minister Bapela said he hoped that the presentations had answered some of the questions that the Members had. He said the relationship between traditional leadership and municipalities was impacted upon by three major things. Firstly, the structural issue, secondly, the respective roles and powers of municipalities and traditional leaders, and, thirdly, personalities. SALGA had come up with a plan to try and smooth this relationship. The majority of the traditional leaders acknowledge the proper role of municipalities and wish to have a harmonious relationship. The Municipal Structures Act also needs to be amended particularly section 81. There was also a need to review chapter 7 of the Local Government and chapter 12 of the Traditional Leaders legislation. The contentious points regarding the SLUMA were resolved at the Indaba. Three or four issues were referred to the inter-ministerial committee to look at whether to proceed with amendments to the legislation or to completely repeal the legislation in order to address the challenges.

The Acting Chairperson urged the Deputy Ministers to encourage the municipalities to share good practices so as to avoid having recurrent section 154 and 139 interventions. He also said it was important for municipalities to support small business as opposed to big ones as that model was working in developing countries. He thanked the Deputy Ministers for their presence and input.

Meeting was adjourned.

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