Ngaka-Modiri Molema & Matlosana Municipalities: North West

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Cooperative Governance and Traditional Affairs

25 November 2020
Chairperson: Ms F Muthambi (ANC)
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Meeting Summary

The Committee convened on a virtual platform to receive progress reports on Ngaka-Modiri Molema District Municipality and City of Matlosana Local Municipality in the North West which had been beset by challenges and had had section 139 interventions in the past.

Auditor-General South Africa (AGSA) reported on their 2018/19 audit outcomes: Ngaka-Modiri Molema  had an adverse audit opinion and Matlosana regressed to a qualified audit opinion.

Ngaka-Modiri was one of nine municipalities chosen for the implementation of the material irregularity process in the Public Audit Amendment Act. Three material irregularities were identified which was the highest amongst the nine selected municipalities. These were the result of unfair procurement that resulted in overpricing. It failed to submit its annual financial statement on time and spent R25.6 million on consultants, exceeding the finance unit salary allocation by 124%, yet produced an adverse audit opinion. Despite being under s139 intervention five times in the past, the District Municipality was still failing to set a clean administration example to its five local municipalities.

Matlosana Local Municipality had slightly better audit findings than Ngaka-Modiri Molema despite having regressed. However, it is one of the top municipality for irregular and fruitless and wasteful expenditure. There is a destabilising political environment which has affected its ability to deliver services. Both municipalities are similar as billing revenue is not received. This means using the conditional grants to fund operations which is unsustainable.

Both municipalities gave a briefing and spoke to their state of finances, audit outcomes, unauthorised, irregular and fruitless and wasteful expenditure (UIFW); consequence management; institutional capacity; and internal audit and audit committee.

Input was also provided by the South African Local Government Association (SALGA) on the challenges faced by the municipalities.

The North West Department of Cooperative Governance and Traditional Affairs (COGTA) also briefed the Committee, highlighting problems such as failure and collapse of governance and administrative systems in municipalities, non-compliance with MFMA and other legislative conditions that led to loss and or withholding of Equitable Share and Conditional Grants such as MIG and an inability to provide sustainable, uninterrupted, and quality services

National COGTA made the following recommendations: Matlosana needed a political intervention to urgently stabilise the political infighting; Ngaka-Modiri Molema need to strengthen intergovernmental relations (IGR) with its local municipalities and an organisational development specialist should be seconded to assist with re-engineering the bloated organisational structure. 

Member were concerned about the lack of consequence management at both municipalities. They asked about capacity in their finance units and the huge spend on consultants which provided no value for money. Members discussed the political instability, infrastructure maintenance, exorbitant cost of boreholes and asked for a report on this. They commented that both municipalities seemed to downplay the seriousness of the challenges.

Meeting report

The Chairperson said both municipalities face similar challenges and that is why the Committee has asked for this engagement. Ngaka-Modiri Molema District Municipality (NMM) was one of nine municipalities chosen for the implementation of the material irregularity process in the Public Audit Amendment Act. Three material irregularities were identified which was the highest amongst the selected municipalities. These were the result of unfair procurement that resulted in overpricing. These were not complex accounting matters but issues the municipality could have simply avoided by following basic internal controls. All five local municipalities under the jurisdiction of NMM received poor audit outcomes with findings.

NMM has failed to submit annual financial reports and received an adverse audit opinion despite hiring consultants to the value of R25.6 million which exceeded its finance unit salary allocation by 124%. Despite being under constitutional intervention five times, NMM is still failing to set an clean administration example to its local municipalities.

Matlosana Local Municipality has slightly better findings than NMM despite having regressed in recent years. However, the municipality is one of the top municipality for irregular and fruitless and wasteful expenditure. There is also a destabilising political environment at Matlosana which has affected its ability to deliver services. These are serious matters and require the attention of all actors involved. It is the Committee’s duty to perform oversight and ensure municipalities perform their constitutional duties.

Auditor-General South Africa (AGSA) briefing
Mr Success Marota,  Business Executive: AGSA, said there has been a systematic breakdown in financial management across the North West municipalities. There is a stagnation in all municipalities in the province.

He emphasised that financial  records management at NMM was inadequate and some records were not provided. Payments are a serious problem as it takes 400 days to pay its service providers and this should be done within 30 days. NMM did not incur a deficit in its budget and NMM is purely dependent on grant funding. There are positions that are outside of the staff establishment and since 2013 it has paid R500 million for these extra positions. NMM has also suffered major distribution losses amounting to 82% of revenue.  NMM only spent 1.2% of its infrastructure budget.

The lack of internal controls still remains the main cause of irregular and wasteful expenditure. There is also unresolved past year irregular expenditure amounting to R2.7 billion and this is not the true extent of the irregular expenditure. The use of consultants is ineffective and there is no value for money when hiring consultants.  There is also no consequence management and this issue has persisted over the years.  The combined assurance model for NMM is not working effectively and this is because senior management is not providing assurance. There is some assurance at internal audit and audit committee, but management has been non-responsive on what the committee recommends. AGSA identified three material irregularities and the accounting officer was tasked to recover the lost money.

Matlosana regressed from an unqualified to a qualified audit. This is because of its receivables. Irregularities were noted with the fresh produce market and this was added to the findings. Its financial statements are similar to NMM as although most revenue is through billing for services that billing is never collected and converted into cash. This means Matlosana uses large amounts of its conditional grants to funds its operations which is unsustainable. Irregular and wasteful expenditure has increased. It suffered a deficit of R300 million due to the billing that it does not collect.  Matlosana also owes Eskom  R1.3 billion which puts its budget at risk. The financial records provided were inadequate, but this is the result of consultants.

South African Local Government Association (SALGA) briefing
Mr William Moraka, SALGA North West Acting Provincial Director of Operations, said the 2018/19 audit outcomes for both municipalities are not encouraging. NMM had a history of disclaimer and adverse audit opinions and Matlosana had regressed. Both municipalities have had section 139 interventions. The two municipalities  face the same challenges and SALGA has categorised the problems into four key areas:

Capabilities, Governance and Leadership
Weakening municipal governance and leadership characterised by poor oversight, limited consequence management, instability at senior management levels, and a lack of skills undermine service delivery and transformation at the local sphere.

Fiscal Policy & Financial Management
Increase of municipalities in financial distress due to many factors: increase in cost of services (tariffs), decrease in revenue collection, supply chain management (SCM) inefficiencies, irregular, fruitless and wasteful expenditure, low revenue base, high levels of unemployment and poverty.

Service Delivery & Infrastructure
Increase in coverage of basic services but under pressure from widening funding gap for infrastructure, poor life cycle asset management, maintenance, and effective project implementation, as well as lack of technical capabilities.

Spatial Transformation & Inclusion
Spatial transformation and inclusive communities undermined by depressed economic conditions, increasing impact of climate change, regressing social cohesion, poor coordination in planning, access to land, bulk services, limited decentralisation in housing delivery, transport challenges and safety and security.

North West State of Municipalities: North West COGTA briefing
Mr Ephraim Motoko, North West COGTA Head of Department, said most municipalities in the province are in a state of paralysis characterised by:
• Failure and collapse of governance and administrative systems in municipalities
• Non-compliance with MFMA and other legislation that led to loss/withholding of equitable share and conditional grants such as Municipal Infrastructure Grant (MIG)
• Inability to provide sustainable, uninterrupted and quality services.

The areas of concern led to the regression in audit outcomes:
• Lack of financial records as a result of inadequate record management
• Non-compliance with SCM legislation
• Non review of AFS before submission
• Non implementation of consequence management
• Increase of UIFW not investigated as required by Section 32 of MFMA.

Governance and Administration
In 2018/19 there were 143 approved senior manager posts for all North West municipalities of which 46 (33%) were vacant and 97 (67%) posts were filled. Currently, the situation has improved with 144 approved posts with 38 (26%) vacant and 105 (74%) filled.

Service Delivery and Infrastructure Development
North West municipalities have been experiencing challenges in providing uninterrupted and sustainable services to communities. Performance analysis shows that as a province we are still faced with challenges such as:
• Provision of uninterrupted, quality, and sustainable water services
• Poor functionality of water and wastewater treatment plants
• Spillages of sewers affecting the health of households and business
• Poor roads and storm water drainage system
• Old infrastructure and poor maintenance.

Financial Management
Ineffective revenue management remains a challenge in the North West. The inability of several municipalities to collect revenue from the provision of basic services results in a low revenue collection rate and ultimately the inability to meet financial obligations. Continuous failure to collect revenue has a negative impact on the maintenance of revenue-generating assets and ultimate loss of revenue. There is notable liquidity risks at municipalities that are highly indebted to Eskom, Water Boards, Auditor General and other key creditors. Despite the hands-on-support by the Provincial Government on revenue management and implementation of credit control policies, municipalities remain stagnant.

Governance and Administration: North West COGTA interventions
All 22 municipalities were supported to finalise their Municipal Recovery/ Back to Basics Action Plans and adopt plan in municipal council.

Capacity building sessions were held to support 12 priority municipalities to improve functionality of their wards by developing ward committee operational plans, drafting of community concerns registers; ward level improvement plans; functionality of ward committee assessment tool; policy on establishment of local ward committee forums; ward operational plans, training on taking of minutes and report writing.

Support provided to all four Districts to establish Covid-19 governance structures in line with the guidelines. District Command Centres and Councils are fully functional. The department has deployed senior managers to District Command centres to strengthen municipal capacity and has procured de-contamination equipment for the four districts. It has facilitated the transfer of R11.59 million Disaster Relief Fund from Treasury to all municipalities for decontamination, PPE and sanitation.

Service Delivery: North West COGTA interventions
NMM and all its local municipalities have signed service level agreement (SLA) ending in June 2020. The district is currently preparing the new SLA.

Regular support is provided in the monitoring of projects on a regular basis. Progress meetings have been held in districts for MIG implementation.

Financial Management: North West COGTA interventions
Municipalities were capacitated through revenue enhancement training on cost reflective tariff structuring, revenue enhancement and Municipal Property Rates Act (MPRA) compliance to ensure property rates are recoverable.

Five municipalities were assisted with the development and implementation of simplified revenue enhancement plan. Service providers were allocated to municipalities by National COGTA to enhance municipal revenue management and debt collection.

Provincial Treasury issued circulars to guide municipalities to improve audit outcomes. Provincial Treasury reviewed action plans of all municipalities and provided feedback.

Support provided to promote and coordinate honouring of payment agreements to settle Eskom debt and Water Board debt of the 12 municipalities. Total outstanding debt for the nine municipalities supplying electricity was R1.7 billion on 29 September 2020. City of Matlosana is owing a huge balance of R578 million.

Municipalities were advised to establish  disciplinary boards. Part of the work of disciplinary boards is to investigate irregular and wasteful expenditure and report to council for implementation.

The Chairperson asked Mr Motoko to focus only on the two municipalities.

Mr Motoko replied that the brief he had was to present on support given to all North West municipalities so the presentation is structured in that way. North West COGTA has provided NMM with a financial administrator which will provide capacity and help with internal controls and financial management. NMM does not have adequate skills in its finance unit as some of the accountants only have a matric certificate as a qualification. There was been a serious deterioration in financial management at Matlosana municipality.

State of Municipalities by the National Department of Cooperative Governance
Mr Loyiso Ncoko, COGTA Director:  Local Government Improvement Unit, said the situation at both municipalities is a serious concern. He said at Matlosana there is a need for political intervention to urgently stabilise the political infighting at the municipality. He said at NMM Molema, there is a need to strengthen the municipalities intergovernmental relations system to improve relations with its local municipalities and an organisational development specialist should be seconded to the district to assist with the re-engineering of the bloated organisational structure.  He further outlined the problems for each municipality.

Matlosana Local Municipality
• There is instability caused by infighting amongst councillors and poor  public participation
• Allegations of rented mobs to disrupt operations and block service delivery projects
• Decline in mining activities, the main economic driver, has led to socio-economic challenges
• High levels of poverty and unemployment, low education, and skills levels.

Governance and Administration
• Meetings of Committees of Council not convened or poorly attended or disrupted
• The municipal manager is on suspension and is facing criminal charges.
• All senior managers positions have been filled. Recruitment underway for other vacancies
• It has various litigation cases costing about R10 million in 2018/19.

Financial Management
• In past six financial years it received 1 disclaimer and 4 qualified audit opinions. It regressed from 2017/18 unqualified to qualified audit opinion in 2018/19
• The approved budget is not cash-backed so is not viable and it fails to pay creditors in 30 days
• It unable to implement credit control measures to recover outstanding debt from consumers for its largest creditors, Eskom and Water Board.

Service Delivery
• It has ageing infrastructure with a frequency of sewage spillages
• Poor contract management resulting in several blocked projects denying communities of expected services and no action is taken against those responsible
• Blocked sports facilities projects at Jouberton and Khuma remain a challenge.

Ngaka Modiri Molema District Municipality
• It was placed under intervention five times.
• It had vacancies at senior manager level for a period of four to five years
• It has a bloated organisation structure due to extra 600 employees appointed
• It has a huge list of litigation by creditors.

Governance and Administration
• Personnel budget uses over 47% of total expenditure which is not sustainable considering 98% of total revenue is grant funded.
• There was an investigation by Public Protector on 600 extra employees.

Financial Management
• Approved 2019/20 budget is unfunded. Non-compliance with Municipal Budgeting and Reporting Regulations (MBRR), coupled with overriding of the budget due to lack of capacity in finance unit.
• Internal controls: there is no virement policy, segregation of duties, lack of business processes
• It developed standard operating procedures (SOP) to improve internal controls and is currently transacting in the MSCOA chart and is able to produce reports on the same system but not all modules are active such as contract management.

• Lack of business processes to deal with lack of payments and cash management, including lack of operational procurement plan and sound cash flow projections due to lack of internal controls

Service Delivery
• Lack of water due to drought; lack of adequate water infrastructure to address water shortages.
• There is an unfunded abandoned water and sanitation project which affects service delivery
• A general lack of water conservation leads to water and revenue loss. Illegal unmetered yard connections in various areas. Roll-out of drought relief programme by Department of Water and Sanitation augmented through internal funding to drill new boreholes in next financial year.

The Chairperson asked NMM not to repeat what was already noted and the Committee has already read its document. NMM should state what they have done to remedy the situation.

Ngaka-Modiri Molema District Municipality briefing 
Mr Tshepo Makolomakwa, Executive Mayor, said a lot of work has been done by provincial and national COGTA to support the municipality. The municipality is in the process of advertising senior management posts and this should add capacity. It also working with the provincial treasury to solve some of the budget and financial management challenges. Most of the problems at the municipality are a result of previous years.

When the section 139 intervention happened in 2014, councillors were against the intervention and took the provincial government to the Constitutional Court. This further entrenched mismanagement at the municipality and resulted in the loss of important documents. When the new NMM leadership stepped into office, there was consequence management and most senior managers resigned. There is also a process in place to ensure there are actions against councillors who do not attend council meetings.

Sedibeng Water Board has left the municipality with a lot of unfinished projects which hinders its ability to provide water in some areas. It has reached out to Sedibeng but has not received any response on these projects. NMM is trying its level best to regularise the 600 employees that were hired outside of the organisational structure. Before an invoice is paid by the municipality it goes through Provincial COGTA since there has been a lack of accountability within the municipality. The bid committee composition has also been changed and is in line with the law.

As a district municipality, NMM is a water authority and largely dependent on revenue received from water sales. There were some distribution losses, but this can be attributed to illegal water connections and ageing infrastructure. Vandalism and theft of infrastructure is another major challenge that adds to this problem. It was disappointing receiving an adverse audit opinion, but NMM is working very hard to ensure it receives better audit outcomes.

City of Matlosana Local Municipality briefing
Mr Theetsi Nkhumise, Matlosana Municipal Manager, said Provincial COGTA is currently intervening to solve all challenges faced by the municipality. There are forensic investigations underway to investigate irregular and wasteful expenditure, a disciplinary board has been started and once all investigations have been completed, the board will initiate legal action against perpetrators.

The municipality has been without a mayor for more than a month and this has brought serious instability to the administration as important reports such as budget adjustments, are not timeously processed by council, which led to serious non-compliance that may result in National Treasury invoking section 216(2) and withhold government grants. The instability in council places a limitation on service delivery acceleration as administration remains helpless on matters that require council attention. This has caused low morale in the administration and ultimately leads to lack of service delivery. The municipality has a serious staff shortage due to retirements.

The municipality has not implemented cost reflective tariffs since its inception leading to under recovery for services as a result costs exceed revenue. It also makes yearly losses through electricity costs. Eskom charges time-of-use tariffs leading to double the summer charge in winter whereas the municipality charges a flat tariff throughout the year. Electricity losses amount to 29% and water losses are 35% as a result of illegal consumption and old infrastructure. One of the reasons the municipality was unable to submit its AFS and documents was due to a SAMWU unprotected two-week strike. Its AFS will be submitted by the end of November 2020.

The mayor has not been removed but has not showed up for work for over a month. The last time she was present in council was on 14 September 2020. There is a resignation letter but council has not processed the matter. Council decided not to process the matter. He said the mayor is still receiving her salary due to council not processing the resignation letter. She has also not returned the mayoral car. The Office of the Municipal Manager has written to her to return it. This is a result of political instability within the council. Councillors have also been the cause of most of the municipality’s problems as they send community members to protest and stop council projects.

Discussion
Mr C Brink ( DA) said it is very disturbing that councillors are involved in destabilising both municipalities. He said there was a reference of a project being stopped by councillors which is in breach of their code of conduct and illegal in terms of the law. This is an offence according to the Municipal Systems Act that deals with interference. He asked the Municipal Manager to furnish the Committee with a copy of the complaint he made about this to the Speaker or the North West COGTA MEC. He said it is important for the Committee to see the written complaint and to understand why proper disciplinary action is not being taken.

Ms P Xaba-Ntshaba ( ANC) asked NMM why its audit opinion regressed? Was it because of weak institutions or a lack of capacity? She asked the municipality to indicate what solution it has to stop the municipality's finances from further deterioration. In the 39 wards of Matlosana municipality none of the wards have functioning roads. She asked why no maintenance being done on municipal infrastructure and the amount allocated for this in the previous and current financial year. She also asked why the municipality has not being able to provide electricity to all its communities. There is an outstanding debt of R4.7bn and the debt continues to grow by R8m a month. How does it plan to remedy this? She asked what the role of SALGA is in helping these municipalities.

Ms M Tlou (ANC) asked why Matlosana has the highest bill for consultants at R14m but it is still unable to present adequate annual financial statements (AFS). Why does it hire consultants when it has a CFO? She asked if the municipality hired trained professionals to do maintenance work.

Ms D Direko ( ANC) said both municipalities gave confusing presentations and it makes the Committee wonder if the communities will ever receive service delivery since both municipalities are in a state of paralysis and have been for some time. She asked how many consultants does NMM use and what are they appointed for. There is a NMM report that states some consultants have not delivered the work they were contracted for. She asked NMM to supply the consultant names and provide reasons the consultants have not done the work they have been paid for.

She asked why consequence management in both municipalities has not been implemented and if senior managers signed performance agreements. If they did, why have both municipalities not taken action against these managers? She asked NMM to clarify why 600 people were hired outside the organisational structure and the outcome of the Public Protector investigation into this. Matlosana had R68m fruitless and wasteful expenditure which increased from R52m from the previous year. She asked if Matlosana has an audit action plan and what mechanism this plan proposes to stop wasteful expenditure. She asked why the Matlosana council has not resolved the issue of the mayor and who was performing oversight in the absence of the mayor.

She asked if the Municipal Public Accounts Committee (MPAC) is functional in both municipalities and if MPAC has submitted its report to council and what council has done to implement these recommendations. What is the mandate of the disciplinary board and what has it done so far?

Mr K Ceza ( EFF) said the biggest problem with NMM is the ageing infrastructure and depletion of underground water. He asked for an update on underground water. What plans are in place to ensure communities receive clean water? He asked how the R57m was spent by the municipality which it received from the Department of Water and Sanitation. He asked how the municipality ended up paying R750 per litre for sanitiser. The Auditor General indicated that both municipalities had poor financial records management, lacked finanical competence, failed to investigate findings, made the audit environment difficult and were hostile to audit findings. He asked SALGA about the situation of unqualified people holding positions in finance units at municipalities.

Mr Ceza asked for an update on investigations into the R50m spend at NMM. Erecting one borehole had cost between R750 000 and R950 000 which is a concern because drilling boreholes is not this expensive. He asked what monitoring processes were in place for this project. He asked about the 10 000 buckets procured and not used. The sad part is that the communities are the ones that suffer while councillors and officials continue to mismanage these municipalities.

Mr B Hadebe ( ANC) asked for an explanation about the Act that compels municipalities to pay subsidies to farmers. This is an apartheid regime arrangement and asked what benefits municipalities derive from this arrangement. Does the Act apply to all municipalities where there are farms?

Mr Hadebe said the legislation is very clear that if a councillor misses three consecutive council meetings or committee meetings, the councillor can be removed from office. He asked how many meetings the mayor has missed. Since the mayor has not been at work, who presented the adjustment budget to council? In terms of the Municipal Systems Act only the mayor can present the budget to council. There are processes that can be followed to remove the mayor – why has that not happened? Were attempts made to reach the mayor and what was her response? The Speaker of Matlosana Council should lay criminal charges against councillors disrupting projects and compromising the municipality.

Mr M Hoosen (DA) said the state of both these municipalities is unacceptable and this is because of years of neglect from all levels of government. The first line of oversight the Committee has is with the National Executive and it is a shame that none of the National Executive is present in this meeting. Nothing is going to come out of these engagements with municipalities because the National Executive is getting away with not performing their obligations and roles towards municipalities. There is more than sufficient legislation in place that gives the Minister power to act when municipalities are dysfunctional. The Minister knows exactly what the problems are with these municipalities, yet nothing is happening. The Minister must provide an explanation on what is being done to help these municipalities. These municipalities know the law but still contravene it. The municipal managers of both municipalities should be held responsible for the irregular and wasteful expenditure as they are the accounting officers. There is no sense of urgency from these municipalities to solve their challenges as they know there will be no consequences from all levels of government.

Ms G Opperman (DA) referred to the Matlosana intervention and asked what support it needs from provincial and national executive to turn matters around at the municipality. She asked what plans the municipality has to address the human settlements backlog due to lack of available land. She asked if the closed mines have implemented their social responsibility plans and what sustainable projects they started when they were still operational. She asked Matlosana to explain its high litigation bill and asked who is suing the municipality and for what reason. There have been some violent service delivery protests in October and she asked for details about this.

NMM salaries amounts to 47% of total expenditure and this is not sustainable. She asked how this will be dealt with given that NMM’s current budget is underfunded. She asked what consequence there has been for the irregular appointment of 600 staff.

Mr I Groenewald (FF+) noted three towns in the NMM District went three days without water. One of the reasons was the District Municipality did not give its local municipalities their equitable share of funding for water. There was a forensic report at NMM but only an overview was presented to council. He asked the municipal manager when the full report will be given to council. The report was leaked and fingered several senior managers as being in cahoots with elected officials. The report stated that processes were manipulated for a certain service provider to get tenders. He asked who this service provider was. He asked the municipal manager to explain why he was arrested earlier this year.

Mr Groenewald said a City of Matlosana MPAC report implicated officials mismanaging the municipality’s petrol account. Had there been consequence management for this? There are a lot of senior managers and elected officials at Matlosana that have been implicated in various reports and nothing has happened to these people. He asked about the Mayor's car accident earlier this year and the financial implications. Matlosana is renting 10 waste trucks for R1m per month and he asked why the municipality has not purchased its own waste trucks. He asked what support the municipality is giving to its internal audit function. The municipality’s accounts do not align with legislation and it has already suffered major losses on these accounts. He asked if there are plans to align these accounts with legislation.

The Chairperson noted that Matlosana has R2.9bn of unresolved irregular expenditure. She asked why the municipality appointed a consultant to investigate this ignoring AGSA's recommendations on this matter. The municipality has an MPAC in place that can deal with this matter so there is no need to hire external consultants. She asked why there is  no consequence management at the municipality. It cannot be that every year the same problems persist at these municipalities.

The Chairperson said the same problems are happening at NMM which is a district municipality and it should be the one providing capacity to local municipalities. She is under the impression that things got worse under the current executive mayor and asked the mayor to explain this.  The Chairperson asked for a detailed explanation why the boreholes are so expensive.

Ngaka-Modiri Molema District Municipality response
Mr Makolomakwa replied that the situation at NMM has improved. The North West COGTA report which states there is a regression at NMM is wrong, even the AG’s report said there is improvement at NMM. The municipality had a financial administrator but there were no capacity within the municipality’s finance unit. The financial administrator had to cover a range of matters and had to sit on the bid adjudication committee. This was raised with Provincial Treasury. The irregular appointments have been taken to court and some have been dismissed. There is still a significant number of people employed but they are involved in projects and the municipality did not see fit to let them go without the projects being completed as this would disrupt projects the municipality has already spent money on. These people will be let go once the projects are finished. NMM had employees who were servicing local towns across the district and it had to provide accommodation for these employees.

Three consultants were appointed due to lack of capacity at NMM. These are MMV Consultants which was dealing with the annual financial statements, MMM Consulting and Maine Consulting which was doing the quality review of the AFS and dealing with the irregular expenditure. There is a large number of staff due to transfers that came from the provincial departments and the municipality had to cover the cost. This was raised with Provincial Treasury and there is a study happening now which will inform the new organisational structure. The current problems faced by the municipality are problems which the municipality inherited. The Public Protector's investigation is still underway.

There was a drought relief programme and all boreholes were refurbished in the local municipalities. The cost of boreholes is linked to identifying the borehole, equipment used for pumping and security for the borehole. NMM will provide the Committee with a detailed report on the cost of the boreholes. A frequent problem is vandalism or theft of equipment at boreholes. The refurbishment of the wastewater treatment plant is almost complete and was halted due to COVID-19. Refurbishment has now continued and the plant should be operational soon. For the equitable share, local municipalities must submit business plans before they can receive their equitable share. Only one municipality submitted a business plan and it is waiting on the other municipalities. The NMM District Municipality has allocated R10m per local municipality.

Provision has been made for five traditional leaders in the council but only one has been active in council. The District Municipality does not subside farmers. The municipality used virements to fund its COVID-19 plan. For the questions that are unanswered, NMM will get that information and provide it to the Committee.

City of Matlosana Local Municipality response
On the project disruption by councillors, Mr Nkhumise, Municipal Manager, replied that this was reported to the Speaker and will now be reported to the MEC for local government in the province. The municipality will provide copies of the complaint to the Committee. The municipality appointed service providers to fix all the roads within the municipality but the AG raised a finding about the process and the municipality will have to restart the entire process. As soon as the tender process is concluded successfully, road maintenance will then happen.

The consultants helped the municipality where there was no capacity. The only concern raised by the AG was that no monitoring was done of the consultants' work by the municipality. This happened when the municipality had no CFO, but this issue has been addressed. One of the reasons for the fruitless and wasteful expenditure is the interest charged by Eskom.

The disciplinary board was appointed but then one member resigned which was the chairperson. The municipality decided to restart the hiring process and has asked provincial treasury to give them training. The issue with the mayor is a political issue. She provided her resignation letter to the provincial structure and when she left, she appointed an acting executive which was ratified by council. The municipal manager is currently receiving a legal opinion on what steps to take next.

The interventions were not effective as they were meant to be. The closed mines left the municipality with serious socio-economic problems. The mines had no social responsibility plans and only provided computers for one school. There was no sustainability plan. There are still open mine holes that people often fall into. Most of the protest are initiated by other councillors to stop projects and these protests often turn violent.

The forensic report has been submitted to the Hawks and interviews have been done by the Hawks. Hopefully criminal charges will follow soon. The municipality has started its disciplinary process but the lawyers of the affected individuals have delayed the process. All appointments that happened through section 32 were stopped and are being reviewed. Most of these appointments were made when the municipality had an administrator. The municipality is in the process of developing cost reflective tariffs which will be implemented in the next financial year and the municipality is rolling out the new smart meter programme. This will help with debt collection and reduce the municipality’s debt in 2021/22.

Mr Nkhumise  explained that Eskom charges a rural charge to all rural municipalities. This was an apartheid government law and results in a double charge for the municipality. The municipality has decided to take Eskom to court on this matter as it is unfair. The adjustment budget was presented by the current acting mayor, the acting mayor was appointed by council.

The waste trucks contract is very new and the reason the municipality has not bought new trucks is because there is no cash flow. It would cost R5 million for one truck and it is only costing the municipality R1.2 million for 10 trucks. There is no supply chain management capacity but this challenge was raised with Provincial Treasury and measures are being taken fix this. The municipality’s budget is funded but it is threatened by financial challenges with Eskom which can make it unfunded. The municipality will be migrating to a new accounts system starting next month and will bring the accounts in line with legislation.

Mr Nkhumise replied that the issue around his arrest has been resolved. He appeared in court and the case was withdrawn. The wastewater treatment plant was fixed last year. The mayoral car which was involved in an accident was investigated by SCOPA and the mayor presented herself before Provincial SCOPA. The municipality was informed that the case was resolved, and the insurance paid for the car. Most of the vehicles are old and are costly to maintain. The municipality is in the process of putting these vehicles up for auction and once this is concluded new vehicles will be acquired.

The Chairperson reminded NMM to provide a full report on the boreholes. She thanked all officials. There will be a joint meeting with the Provincial COGTA Committee with the National Executive present. The Committee will recall both municipalities again next week.

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