Section 139 municipal interventions in KwaZulu-Natal

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Meeting Summary

Audio: Section 139 intervention: KZN COGTA MEC 

The Select Committee met with the KwaZulu-Natal Department of Cooperative Governance and Traditional Affairs (COGTA) which included the MEC, Mayors and Municipal Administrators. They outlined the municipalities that are under administration as per Section 139(1)(b) of the Constitution and the challenges they face.
 
The KZN Department noted that of the eight municipalities under Section 139(1)(b) intervention, three achieved unqualified audit opinions for the 2018/19 financial year and six of the eight municipalities are operating with a funded budget for the 2019/20. The reduction of debt to Eskom in certain municipalities was also highlighted. 

Members expressed concerns about municipalities that continue to face challenges despite the interventions by the Department; the delayed filling of the vacant municipal manager positions in some municipalities and poorly performing administrators. Members requested the finalised section 106 investigation reports into non-performance and maladministration, fraud, corruption and other serious malpractice for these municipalities and spoke about ensuring consequence management against officials found guilty.

Meeting report

Opening Remarks
The Chairperson welcomed the Kwa-Zulu Natal COGTA MEC and mentioned that the arising matters are important and need to be addressed. A series of meetings have been scheduled to address provinces that have implemented section 139 of the Constitution which places a municipality under administration and allows for the dissolution of non-functional municipalities. The KZN COGTA department would outline how the section 139(1)(b) interventions are being handled in the province and the mayors and administrators of these municipalities are also present.

Presentation
Section 139 municipal interventions in
KwaZulu-Natal
Mr Sipho Hlomuka, MEC: Cooperative Governance and Traditional Affairs in Kwa-Zulu Natal, mentioned that eight municipalities under section 139(1)(b) would be presented and that one municipality has since been removed in November 2019. A report for the extension of addressing municipal issues has been submitted to the Cabinet.

Mr Scelo Duma, Acting Chief Director: Municipal Governance and Administration in the KZN Department of Cooperative Governance and Traditional Affairs, said that a total of eight municipalities are under intervention under section 139 (1)(b) in five districts. He provided background on the reasons for the interventions in the municipalities. He outlined the status of the municipalities as per the key indicators and provided detailed indicators for each municipality. The KZN COGTA Department has deployed finance, technical and governance expertise in the municipalities.

He spoke about the amount owing by the municipalities to Eskom with Mpofana being the most concerning. He provided figures on the Unauthorized, Irregular Fruitless and Wasteful Expenditure (UIFW) in these municipalities. On the Back2Basics report, he outlined the overall scores for each municipality and the status of water supply in targeted schools in the province.

Mr Duma stated that municipalities were encouraged to prepare post-lockdown plans which have been received and are currently under consideration. He said that all municipalities have to be supported especially during the COVID-19 lockdown.

The Chairperson thanked the Department for the presentation which was informative and clear. He invited the municipal administrators to provide feedback on the presentation.

Richmond Local Municipality
Mr Siminenkosi Ndlovu, Municipal Speaker: Richmond Municipality, welcomed the presentation by the Department and confirmed that the expected report is underway. He said that the municipality is stable both politically and in its administration.

Msunduzi Local Municipality
Mr Mzimkhulu Thebolla, Mayor: Msunduzi Local Municipality, welcomed the presentation and said that the municipality was working on short- term and long-term plans especially in revenue enhancement which is a challenge for the municipality during COVID-19. The interventions were implemented because of council’s inability to implement structures which are being addressed and results are satisfactory. He said that the audit committee of the municipality was an area of concern which has been addressed. He said that more can be done on the debtors’ books of the municipality.

uMzinyathi Local Municipality
The municipal representative welcomed the presentation.

AbaQulusi Local Municipality
Mr Sibusiso Mkhize, Administrator: AbaQulusi Municipality, welcomed the presentation and expressed gratitude for the Department’s deployment strategy in municipal management.

Mr Mncedisi Maphisa, Acting Mayor: AbaQulusi Municipality, said that the municipality is against the extension of the intervention because it does not serve its purpose. The Water Service Authority issue has not been addressed despite the intervention. He argued that the intervention is politically motivated instead of being operational because the municipality does not receive enough financial allocation from the Department. Further, there is poor communication existing between the municipality and the Department.

Mtubatuba Local Municipality
The municipal representative welcomed the presentation and expressed gratitude for the assistance that has been received from the Department. He said that the municipality hopes to achieve a better audit outcome.

Mr Velangenkisi Gumede, Mayor: Mtubatuba Municipality, welcomed the presentation and emphasized the importance of obtaining a clean audit.

Mpofana Local Municipality
Mr Xolani Duma, Mayor: Mpofana Municipality, said that the presentation captured the municipality’s situation accurately. The intervention is providing the relevant support except in financial injection. He said that tampering is still a challenge and a feasibility study was encouraged by the Department. More assistance from the Department is required by the municipality.

Discussion
Mr S Zandamela (EFF, Mpumalanga) asked for clarity from Richmond Municipality on the interview dates for the Municipal Manager post and asked the MEC when the section 106 investigation report was expected to be finalized and tabled. He said that investigations were conducted and completed and that the guilty individuals should be sentenced. To Mtubatuba, he said that the process of finalization for the Municipal Manager post has to be completed especially since 14 days has passed.

Ms S Shaikh (ANC, North West) thanked the Department for the presentation and the municipalities for their input. She said that intervention is still required based on the status of municipalities. To assess the extent of the challenges, the section 106 investigation report with recommendations on fraud, maladministration and corruption and the progress in implementing the recommendations must be submitted. She asked about the frequency of assessments done by the provincial department on the interventions. To Mpofana and Thukela, she said that the interventions have been ongoing since 2017 and 2018 and asked why the interventions had continued until 2020. She asked when the section 106 investigations on AbaQulusi and Msunduzi were expected to be completed.

Ms M Mmola (ANC, Mpumalanga) asked the uMzinyathi Municipality what happened to the previous municipal manager and when the position was expected to be filled. To Msunduzi, she asked how the municipality was operating without funds. To Thukela, she asked how the poor basic service delivery was going to be addressed. To Langalibalele, she asked when the section 106 investigation report on the R100 million debt owed to Eskom was expected to be concluded.

Ms Z Ncitha (ANC, Eastern Cape) asked for clarity on the serious complex challenges of the Msunduzi Municipality, AbaQulusi Municipality, Thukela Municipality and Mpofana Municipality and how the challenges were going to be addressed. She asked Richmond Municipality when the post was expected to be filled and questioned the municipality operations since the administrator is hospitalized and asked when the administrator was expected to return to work. She asked why the UIFW amount of R56.4 million was so high.

Mr S Mfayela (IFP, KZN) asked about the collaboration between KZN COGTA and the Department of Basic Education on the delivery of water especially as some schools did not have water when schools reopened. He asked how KZN COGTA planned to deliver water to the schools. He asked for clarity on the AbaQulusi Acting Mayor's accusation that the intervention is politically driven.

Ms C Visser (DA, North West) asked if administrators are expected to be on site and if they can be both part of the provincial government and the municipality. She requested the comprehensive analysis reports of the municipalities so detailed information is received instead of an overview.

Mr K Motsamai (EFF, Gauteng) expressed concern about the vacant municipal manager post at Richmond Municipality and asked why the municipality has not been dissolved as a municipality cannot operate without a municipal manager for years and years. Richmond Municipality has no running water and does not have efficient service delivery.

Mr G Michalakis (DA, Free State) said that mismanagement is always pointed out but consequence management is never pointed out. He asked for the progress on the investigations of municipal officials who were responsible for the municipalities. Some municipalities debts increased during the intervention which is disappointing and concerning. He asked the MEC to explain if the administration of municipalities is monitored and if not, why not. He asked why there is no consequence management for incompetent municipal officials. He requested an indication of the office locations of the administrators and the selection processes for the administrators in Ulundi, Newcastle and Mpofana.

Mr I Sileku (DA, Western Cape) said that municipalities should not use COVID-19 as an excuse for poor performance by administrators. These challenges have been happening before COVID-19 started. He asked how many financially struggling municipalities are in the process of tabling approval for upper limit salary increases for their senior managers. He asked for clarity on the extra capacity that would be provided to municipalities and whether pre-assessments were done to establish the requirements beneficial to each municipality. He said if pre-assessments were done then required expertise could be deployed and municipalities would have different results. He said that there is no consequence management for the political aspect in municipalities. He asked the MEC if the political challenges affecting municipalities are being addressed.

Mr E Mthethwa (ANC, KZN) said that the AbaQulusi Municipality matter should not be discussed as it is in court and there a lot of accusations and allegations of political interference. He noted that a school had received water tanks, but the location of the tanks cannot be accessed by the water delivery trucks. He asked the MEC how many schools had a similar problem and if the matter could be addressed.

The Chairperson said that the report was good and provided a clear overview of the situation in Kwa-Zulu Natal. He said that instead of criticizing the municipalities, it should be noted that some municipalities have performed well and improved. He expressed appreciation for the honesty of the report and asked the MEC why municipalities are grouped as one when they are not. He expressed concerns about the Mpofana and uMzinyathi interventions which have existed for a long time. He stated that the report can serve as an example for future interventions.

Responses
The MEC welcomed the comments and questions raised by Members. He said that the Richmond Municipal Manager and Chief Financial Officer were suspended after consultations by the municipality with the Department and the court. The municipal manager post cannot be filled during the court dispute with the previous municipal manager. The outcome of the court is underway, but the municipality is working on filling the vacancy especially during COVID-19 which has prevented interviews from taking place. A request has been made to start with the recruitment process during Level 3.

The Richmond investigation is underway, but the process cannot be rushed to ensure fairness for all the accused. On consequence management, 14 officials at Mtubatuba have been suspended and consequence management is being implemented in all municipalities.

The MEC replied that six-month extensions for municipalities is the maximum and is based on the report submitted. Endumeni failed to submit its report on time which resulted in the municipality being excluded from the intervention municipalities. Administrators were replaced in Thukela, Langalibalele and Mpofana because some of the administrators were not given enough time to address the challenges at municipalities. The current administrators are producing better results which is why an extension of another six months was approved by the executive council.

The uMzinyathi municipal manager post has been vacant since January. The municipal manager was suspended but there was a settlement agreement where the municipal manager resigned. On the concern about administrators being part of provincial government and the municipality, the MEC explained that Mr Duma was seconded to the Msunduzi Municipality as an administrator. He has been a municipal manager in various municipalities and has the necessary experience to assist municipalities especially in municipal interventions. Mr Duma was asked to assist the Department to present but the report was compiled by the Department.

A report was compiled on the non-functional municipalities which included Newcastle and Ulundi. The MEC said that the hospitalized Richmond Administrator matter will be evaluated because an administrator cannot be replaced based on hospitalization.

On schools not having water, the MEC explained that water is a common challenge and the Department cannot be criticized for not supplying water especially since the Department of Basic Education has a water and sanitation budget. MOUs were signed but water would not be supplied for free to schools because water is a source of revenue for municipalities. Richmond Municipality cannot be dissolved on the basis of lack of service delivery especially since the municipality has improved based on the Auditor-General’s audit report. He acknowledged Richmond Municipality faces challenges in filling the vacant municipal manager post and the finalization of the section 106 investigations.

Poorly performing administrators have been replaced in Langalibalele, Msunduzi and uMzinyathi and some are still going to be replaced. The decision has been made not to approve any applications for increases of upper limit of salaries of municipal managers for section 139(1)(b) municipalities which have not improved according to the audit report. Only improved municipalities will be approved for upper limit increases. This will serve as a motivation tool.

On consequence management for political officials, the MEC replied that section 54 of the Municipal Systems Act provides guidelines for dealing with councillor misconduct. Municipalities are responsible for reporting any misconduct.

COGTA does not supply schools with water tanks but it has donated before to some schools. Principals determine the location of the tanks, but the matter will be investigated and a detailed report will be provided on the outcomes.

Mr Thulani Mdadane, Acting Deputy Director-General: Local Government at KZN COGTA, replied that there are interventions that have been implemented in the eight municipalities as an early detection programme. The Department developed a Local Government Toolkit as a way of standardizing interventions. Municipalities have been provided with municipal finance experts to focus on the Auditor-General findings and assist municipalities to achieve a clean audit. Experts must assist municipalities with critical audit findings and recovery agreement plans have been signed by administrators. The timelines have been reduced to ensure that goals are achieved. The Department has created a clean audit war room to assist municipalities in meeting every two days to discuss how the audit findings are being addressed, and every week the municipalities are assisted by the Department to provide feedback on progress. Early warning systems will guide the Department in determining whether interventions are successful or not.

Mr Thando Thubane, KZN COGTA Head of Department, replied that the points raised by Members have been taken into account. He agreed that the challenges at Mpofana and uMzinyathi have existed for a while and the Department has engaged with the Municipal Demarcation Board on the challenges. Mpofana Municipality has been labelled financially incapable and has been placed under administration for five years which will require extra assistance from the Department. He requested Committee recommendations on dealing with the challenges.

Mr Duma clarified that Msunduzi’s cash coverage was low which meant that money coming into the municipality is not enough to pay creditors in time. This challenge does exist in other municipalities. He explained that Inkosi Langalibalele Municipality owed Eskom R100 million when the intervention started but currently owes R32 million. Comprehensive reports were submitted by the MEC to the NCOP at the end of April 2020.

The uMzinyathi representative said that through combined efforts of the NCOP and COGTA, the municipality has improved and the vacant post will be filled by the end of October.

Follow up questions
Mr Zandamela expressed uncertainty that political parties that are not involved in decision making at municipalities would be penalized with unapproved upper limits. He said that the Select Committee needs to reconsider its oversight visits as not all the stakeholders are present to be held accountable.

Ms Visser asked for clarity about the administrators that are not on-site.

Mr Sileku asked for clarity on the Richmond municipal manager interviews scheduled for after the lockdown and expressed concern that the municipality will not have a municipal manager for the duration of the lockdown. He asked how the challenge of administrators being threatened by municipal officials will be addressed.

Mr Mthethwa requested a separate report from the AbaQulusi Municipality because there are "political gain" matters which should be clarified.

Responses
The MEC replied that all deployed administrators are given security. On the upper limits, the councillors receive all submissions. They make the decisions about any wrongdoings in municipalities. They provide strategic guidance.

Mr Thubane replied that the Municipal Manager interview concerns have been noted and municipalities will be encouraged to fill vacancies even during the lockdown which is possible.

Concluding remarks
The Chairperson said that it was the first meeting that allowed for engagements with provincial Departments, municipalities and the administrators on section 139 interventions. Many provinces can learn from Kwa-Zulu Natal about resolving challenges. Local government nationally is in a crisis and municipalities are the weakest link in the state transformation process.

The Chairperson said that Msunduzi is the second largest municipality in Kwa-Zulu Natal and that its failure has an impact on many lives and the economy. The section 139 intervention is showing signs of improvement despite doubts by Members of Parliament. The interventions in Kwa-Zulu Natal inspire confidence about addressing challenges in other provinces. A seminar for all municipalities should be held on section 139. A large number of municipalities cannot be placed under administration, there needs to be improvement. The Select Committee will reflect on its recommendations for the municipalities. The Chairperson thanked the MEC, Administrators, Mayors and members for their attendance.

Meeting adjourned.

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