Viability of Limpopo amalgamated municipalities; Mokgalakwena Municipality Citizens Petition

Meeting report

Amalgamation of municipalities

Vhembe District Municipality

Ms Sylvia Ndou, Municipal Manager: Vhembe District Municipality, briefed the Committee on the amalgamation of local municipalities in the Vhembe district.

The Vhembe district had facilitated the disestablishment and establishment of municipalities in terms of Provincial Gazette No 2608 of 2 October 2015.  The district had to disestablish Mutale and established a new entity -- the Collins Chabane Municipality. An all-inclusive committee comprised of affected municipalities was established administratively and politically.

The district facilitated the transfer of staff from the disestablished Mutale municipality to the existing Musina, and/or Collins Chabane Municipality. Vhembe had also developed draft organograms for Collins Chabane, Musina and Thulamela.

The Committee was also informed that the budgets for all the municipalities had been integrated and adopted by the existing receiving municipalities, and the acquisition and disposal of assets of the affected municipalities had been concluded. Vhembe had also ensured that the receiving and releasing municipalities signed the memorandum of agreement for an effective transition.

The district, together with the Limpopo provincial Department of Cooperative Governance, Human Settlements and Traditional Affairs (COGHSTA), had coordinated the first council sitting for Collins Chabane on 17 August 2016 at the Malamulele Boxing Gym.

To date, there had been no disputes in the district that affected the transfer of personnel during the process, and no municipality had refused transferred personnel. The district had worked in collaboration with COGHSTA to facilitate the transfer.

Challenges with ageing water services infrastructure and existing available water versus current population demand, as well dry boreholes, had been mentioned as some of the water challenges experienced by the amalgamated municipalities.

Fetakgomo-Thubatse Local Municipality

Mr Ntshwane Walter Phala, Municipal Manager: Fetakgomo-Thubatse Local Municipality, briefed the Committee on Fetakgomo-Thubatse's progress since amalgamation.

On Fetakgomo's key performance areas, he reported that before amalgamation, it had achieved 94% performance, but after amalgamation had achieved only 38 %. It had also lost about R230 million through investments at the VBS Mutual Bank, which had had serious implications for service delivery.   There had been poor revenue collection from a low revenue base, and Fetakgomo had also experienced instability at the chief financial officer (CFO) level. It had also received consistent negative audit outcomes.

On governance challenges, Thubatse community members had gone to radio stations to complain about having been assigned former Fetakgomo employees. This had resulted in the former Fetakgomo employees indicating that they wanted to go back to their former municipality. This had led to a high vacancy rate.  Amalgamation had disrupted service delivery in general to communities, and had exacerbated the challenges that had been highlighted.

Fetakgomo had been of the view that the amalgamation transition had not been properly managed due to the impact it had on service delivery and staff morale. On the other hand, amalgamation was a good decision, since the financial stability of the amalgamated municipality had improved the revenue base.

Musina Local Municipality

Mr Nathi Tshiwanammbi, Municipal Manager: Musina Local Municipality, briefed the Committee on how amalgamation had panned out for the Musina Local Municipality. The Committee was informed that the disestablishment of Mutale Local Municipality during 2016 and the part-incorporation of portions of former Mutale Local Municipality into Musina Local Municipality was now comprised of 12 wards and 24 councillors.

The municipality had a total population of 132 009, with a land area of 129 740 hectares (11 297 square kilometres) and a total of 68 934 households.

The redetermination of boundaries had led to transitional outstanding issues. Litigation had been instituted against the Thengwe Traditional Council and the Musina Local Municipality by residents. The litigation related to the implementation of a community project that had stalled due to traditional authority land boundary disputes.

The applicants alleged that they had not been duly consulted by Mutale Municipality on the inclusion of the Mukovhawabale Sporting facility in the Integrated Development Plan (IDP), nor had they given consent to the development. The project had been planned for implementation in an area where two traditional authorities laid claim to ownership and jurisdiction over the land.

Musina also faced waste management challenges, with a backlog of 15 328 households that had not received a waste collection service. The municipality had an insufficient fleet, lacked transfer stations and had inadequate human resources to collect and operate the waste fleet.

Musina also recorded a lack of bulk capacity that supplied engineering services, such as water and sanitation and electricity. 2 432 households still had no access to electricity.

The municipality had also not billed villages on property rates, as the land belonged to trusts. The current liquidity ratio of the municipality was unfavourable, as it owed Eskom and Vhembe District Municipality substantial amounts of money. The municipality had also been unable to carry out proper maintenance of assets due to its financial constraints.

Thulamela Local Municipality

Mr Hlengani Emmanuel Maluleke, Municipal Manager: Thulamela Local Municipality, informed the meeting that Thulamela's residents had decreased from 618 462 residents to 497 293 residents after amalgamation.

Various infrastructure development projects had taken place after amalgamation, which had benefited all Thulamela residents, even those from the former Mutale Municipality. From 2016 to 2020, Thulamela had spent 100% of its allotted Municipal Infrastructure Grant (MIG). For this performance, it had received an award from the South African Local Government Association (SALGA). In 2017/18, Thulamela had received an additional allocation of R20 million.

On the transfer of staff from the former Mutale Municipality, all 100 employees had been placed by the placement committee, of whom 20 had refused placement and instituted arbitration procedures.
Thulamela had experienced serious challenges with residents of Mutale who had refused to pay for municipal services. Mutale's contribution to Thulamela's revenue base amounted to 6%.

The transfer of the Mutale municipal building to Thulamela by the Vhembe District Municipality had also hit a snag, as the building had to be transferred to Thulamela's asset register first. At the moment, Thulamela would not be able to maintain the building.

Discussion

The Chairperson recalled that during the meeting of 13 September, the Committee had received presentations from various Limpopo municipalities and the provincial treasury on the amalgamation of these municipalities. The Executive Mayor of Musina Local Municipality had attended the meeting, but had then absconded. Subsequently, no presentation from Musina had been received. A councillor was later sent by the Mayor to represent Musina, but this councillor had been ill-prepared for the meeting.

She said that today's meeting had been called to follow-up where the last meeting had ended. It had been important to invite the Vhembe District Municipality, given the latter's involvement in the facilitation of the amalgamation process. The report received from Vhembe indicated that there had been no disputes about deployed staff, yet that had turned out not to be the case, as both Collins Chabane and other affected municipalities had rejected certain deployed staff. She requested Vhembe and the provincial government to provide clarity on these matters.

The Chairperson lamented the labour relations issues, as staff placements had not been concluded, even though amalgamation had occurred five years ago. This was unacceptable, as the councils' terms ended next year.

She asked Vhembe to explain to how the district had managed a seemingly flawless amalgamation process.

She also touched on the closure of municipal offices as a consequence of amalgamation, especially in the former Mutale Municipality. She said that community members had to travel long distances to access municipal services. Service level agreements had been signed with Vhembe as the district municipality that would have seen old office space of the former municipality being used.

The Chairperson added that the municipal manager of Thulamela was on record that the reason why the old municipal building had not yet been transferred had been because it had not signed the service level agreement with Vhembe District Municipality yet.

She had been surprised to learn that the Fetakgomo-Thubatse Local Municipality had indicated that they had experienced no financial and governance challenges with the amalgamation process, except the few recorded staff placement issues.

She reminded the meeting that the Committee had conducted an oversight visit to the area, and had learned that serious challenges were involved. The Municipality had also received six unqualified audit reports.

She wanted to know what the Municipality had done right that had avoided the financial and governance challenges that had plagued other municipalities.

Limpopo MEC

Mr Basikopo Makamu, Member of the Executive Council (MEC): Cooperative Governance, Human Settlements and Traditional Affairs, Limpopo, said he appreciated the hard work that had been conducted by the four districts that comprised the Limpopo province. Most of the issues were still outstanding, and maybe it was high time to reconsider the way the amalgamation process had been conducted. He questioned the five years in which an amalgamation had to be completed. He reminded Members that the local government elections were due to take place in 2021, yet the amalgamation process had still not been completed in the mentioned municipalities.

He reiterated his stance that a longer period had to be considered, and that it should also include a review on the revenue base and financial viability of the municipalities earmarked for amalgamation. He recalled that he had been told on numerous occasions by various people they feared being amalgamated into bigger municipalities, as this could signify a drop in service delivery to their areas.

He added that the amalgamated municipalities also faced revenue challenges, as they had been allocated their usual budget allocations. The budget allocations had failed to consider the increase of residents and the impact thereof on municipal budgets. In one instance, an amalgamated municipality had been allocated R21 million for capital projects. This was simply not sustainable. All outstanding matters had to be addressed, he emphasised.

The Collins Chabane Local Municipality had also had challenges with service delivery to residents of Thulamela. He indicated that there should be enough grant allocations based on the current needs of amalgamated municipalities. He proposed that the authorities, including the province, should consider resourcing these municipalities so that they could run on their own.

Collins Chabane Local Municipality

Mr Moses Maluleke, Mayor: Collins Chabane Local Municipality, referred to the staffing matter that had plagued Collins Chabane, and commented that the district should have intervened in the dispute. Politicians should have seen to it that the matter was resolved. He informed the meeting that "we were not going to compare the skills of people that we had with those that were supposed to be absorbed by us." He reminded Members that Collins Chabane had already presented on this matter, and that there never had been a refusal to honour the transfer of employees.

He thought that Collins Chabane had done well on service delivery, given the prevailing circumstances in areas like Vuyani. People who lived in Vuyani now benefited more from services than other communities. He lamented that he had not received adequate support from the various departments as envisaged. He claimed that since amalgamation and the establishment of Collins Chabane Local Municipality, not a single road had been attended to by the South African National Roads Agency Ltd (SANRAL), or the province. He made a blunt assessment that with the looming local government elections, politicians should ready themselves for a backlash from community members.

Mr Risenga Richard Shilenge, acting municipal manager, added that when he had presented on a previous occasion, he had presented on what Collins Chabane had inherited. Decisions had been taken to continue with various projects, such as a R35 million project in Vuyani. Unlike phase 1, the community had not rejected the service, and had accepted phase 2.

He added that for the 2020/2021 financial year, plans had been put in place to erect market stalls. A decision had also been taken to fence the Giyani cemetery, and on 7 December, refurbished municipal facilities would be opened to the public so that services could be accessed. The project had cost about R7 million. He conceded, however, that Vuyani residents had not received any waste removal services after they had chased municipal workers away. He said that various other villages had been electrified.

He acknowledged that problems persisted in Vuyani, but this did not mean that these applied to the whole area.

Vhembe District Municipality

Mr Dowelani Nenguda, Executive Mayor: Vhembe District Municipality, said that he found the acts of vandalism that had been perpetrated by a municipal official reprehensible, and hoped that the official in question would face the full might of the law.

Vhembe had regular meetings with local municipalities in the Vhembe district, as well as with provincial and national departments. These meetings had borne fruit. He asked Members to check Vhembe's successes versus challenges, and claimed that Vhembe had been able to provide adequate support to local municipalities.

He conceded that Vhembe had backlogs that it struggled with, and called for the support of the Committee. He would not be saying much, as the municipal manager had already briefed the Committee.

Portfolio Committee Members

Ms D Direko (ANC) asked what the Fetakgomo-Thubatse Local Municipality had done to engage with the disaffected community members who had not supported the amalgamation process.

She also wanted to ascertain what had been done about assertions that only certain wards received municipal services, and how the municipality's grading had affected operations.

She asked what the financial implications of the amalgamation process had been for the Fetakgomo-Thubatse, and whether these had been addressed.

She recalled that there had been challenges with the amalgamation process, and wanted to ascertain how these challenges had been dealt with.

She asked the Vhembe District Municipality how the former local government had dealt with the water infrastructure challenges, and whether the provincial and national authorities had provided support on this front.

How had Vhembe had dealt with the employee disputes?

The Chairperson posed her first question to the Musina Local Municipality, and wanted to know what assistance it had received from national COGTA on the traditional land boundary dispute that had stalled a community recreational project.

Why had Musina agreed to the amalgamation process when there had apparently been no such story?

She asked Thulamela Local Municipality what factors had been essential to the apparent success of the amalgamation process in that municipality, and what issues had informed the appeal that had been lodged by 20 of the 100 employees that had been transferred to Thulamela from Mutale.

On Vhembe, she was happy that the municipal manager had corrected the previous assertion that there had been no disputes about the placement of municipal staff at Thulamela. The handover report had omitted the staff placement challenges, and the Committee was also mindful that the executive mayor and the municipal manager had come after the fact. The National Executive Committee (NEC) had attested to this as well.

She said it had already been three years since the amalgamation process, and the amalgamated municipalities under Vhembe still had no adequate resources. She wanted Vhembe to explain what had impeded the allocation of adequate resources, and to elaborate more on its intergovernmental relations.

The Chairperson alluded to Vhembe's water and sanitation challenges, and wanted to ascertain whether it had received adequate support from the national Department of Water and Sanitation (DWS).

She asked Fetakgomo-Thubatse Local Municipality whether the amalgamation process had created a viable municipality.

Municipalities’ replies

Thubatse Local Municipality

Mr Phala said that the former Thubatse Local Municipality had been a small municipality, and due to the nature of land tenure (communal land), it could not charge rates and taxes. This had had serious implications on the financial viability of the municipality. The amalgamation process had altered this scenario, and had created a municipality that would be viable in the long run.

Thulamela Local Municipality

Mr Maluleke amplified the challenges of the Thulamela Local Municipality since amalgamation.

On staffing matters, he said that the managers from Mutale had been appointed as assistant managers in Thulamela's organogram. He referred to one scenario where a former manager of Mutale's municipal asset unit had demanded to be appointed as a manager in Thulamela's asset unit. This request had been denied, as it was impossible to have two managers overseeing the same unit. This had angered the former Mutale staffers, who had stated that they had been managers at Mutale and would not accept a lower job title.

He did not understand the rationale behind these objections, as these officials had received generous benefits and all had received increases. He lamented that people just came to work to collect paychecks, and did not perform any duties. All 20 had refused job placements. He emphasised that Thulamela could not afford to appoint two people into the same position.

On the amalgamation, he was clear -- the process had turned out to be a negative experience for Thulamela, and he could not think of one success story. Before the determination of boundaries, Thulamela had a population of about 618 000, and the current population stood at about 200 000 fewer people. This had serious implications for the revenue base, as the number of people who paid rates and taxes had now been reduced.

The old Mutale municipal building had had to be transferred to Thulamela by the Vhembe District Municipality first. Only then would Thulamela be able to sign a service level agreement with the latter.

He said Thulamela had become accustomed to people paying for municipal services, but that had changed since communities from Mutale had been incorporated. These communities had simply refused to pay for municipal services. This situation was unfair to those communities that paid for municipal services.

Because Mutale communities refused to pay for municipal services, they would not be able to sustain themselves if they had to pay for their own service delivery needs, as opposed to those communities that did pay. He also lamented the 51 % salary threshold that had decimated Thulamela's finances. He concluded that Thulamela had regressed.

Musina Local Municipality

Ms Mihloti Ramoyada, Executive Mayor: Musina, responded to some of the questions that had been posed by Members.

On the litigation, she said that Musina Municpality and traditional leaders had been invited to a meeting that had been convened by the provincial government. The case was currently in the hands of the National Prosecuting Authority (NPA), and a court order had been issued against Musina.

The only way forward would be for the traditional leaders to withdraw the court order. At some stage, the traditional leaders had agreed to withdraw the court however this did not come to fruition.

On the viability of Musina after amalgamation, she added that she had been concerned about the inclusion of six additional wards. She said that the decision to amalgamate had been taken on the basis that the appropriate due diligence had been conducted by the relevant authorities, yet Musina now faced service delivery challenges.

Vhembe District Municipality

Ms Ndou fielded questions on behalf of Vhembe District Municipality. She said that Vhembe had received adequate support for its water and sanitation needs. The district had on several occasions received visits from the Deputy Minister of Human Settlements, Water and Sanitation, especially on the Nondoni relocation project.

She also reported good working relations with the Limpopo provincial authorities, and said the municipality had regular meetings with other government stakeholders on water and sanitation matters.

She added that assistance from the Government Technical Advisory Centre (G-TAC) had also helped the district, and that officials had been deployed to Vhembe. These officials had assisted on technical and other water management related matters. The Municipal Infrastructure Management Agent (MISA) had also provided assistance, as well as the Limpopo Provincial and National Treasuries. The district had been assisted at all levels.

Limpopo COGHSTA

Ms Ngaka Dumalisile, Head of Department (HOD): COGHSTA, Limpopo, informed the Committee that the two feuding traditional leaders HAD indicated that they would write a letter to the relevant local government which had instructed that the construction of the sports facility could continue. COGHSTA would conduct a follow-up with the two traditional leaders in question.

On salary disparities, she expressed the hope that the matter would be resolved soon. COGHSTA, had conducted an assessment on the challenges, and had presented two scenarios to the relevant local government. These proposals called for either the reversal and recovery of funds that had been incurred as a result of irregular promotions, or the promotions themselves had to be reversed. These promotions had occurred during the amalgamation process.

The local government had indicated that the proposals had to be tabled before Council. Before the Council could take a decision, a legal opinion had to be sought. She had since been made aware that a legal opinion had been provided, and that the Council was busy with internal processes.

Municipal Demarcation Board

Mr Muthotho Sigidi, Chief Executive Officer (CEO), Municipal Demarcation Board (MDB), described how the MDB work had impacted on the amalgamation process. The MDB's key performance areas (KPAs) had the same weight (25%). What it had to consider was whether financial viability and service delivery should be weighted more than the current 25%. These were the policy considerations that had to be entertained. He conceded that some amalgamated municipalities had found themselves in distress due to their lack of financial viability.

On the redetermination of the Collins Chabane Local Municipality, he said that during the process he had been approached by individuals who had asked him whether he hoped to get to two by merging “minus one plus minus one.” The key concern had been the financial viability of Collins Chabane.

He added that other stakeholders had also played a role in the redetermination of municipalities, and in a recent COGTA workshop, he had reminded participants that the Minister of Finance had played a central role in the redetermination process. The Minister had the authority, after fiscal considerations, to determine a new date for redetermination. To date, the Minister had not yet exercised this authority.

He said that he had learned a lot through his attendance of the Committee meeting, and that it would assist the MDB as it grappled with redefining the redetermination process. He reiterated his call that financial viability had to be placed above the other KPAs.

The Chairperson indicated that the Committee would like to meet with the MDB in the New Year.

The Chairperson asked an official from the national COGTA to respond to the issues that had been raised.

National COGTA

Dr Kevin Naidoo, Executive Manager: Municipal Governance, COGTA, said that of the 13 redeterminations that had taken place in 2015, four of them had taken place in Limpopo, and four in the Eastern Cape. These two provinces had accounted for 60 % of all redeterminations for that year. In Limpopo 12 municipalities had been affected by redeterminations.

The Limpopo redetermination processes had proved to be far more complex, as besides the amalgamation of municipalities, different portions of municipalities had also been incorporated to form a new municipality.

He added that COGTA's monitoring system had red-flagged Limpopo and the Eastern Cape. Under this tagging, COGTA had descended on Limpopo in May 2016 to ascertain how best to support the province and the affected municipalities. COGTA had also invited COGHSTA, the Office of the Premier, the affected local and district municipalities, the provincial and national Treasuries, the South African Local Government Association (SALGA), as well as organised labour. During this two-day workshop, a series of resolutions had been agreed to by all the participating stakeholders.

The stakeholders had resolved that the technical change committee was supposed to meet weekly, and the political change management committee had to meet every fortnight. A decision had also been taken that all transitional matters had to be finalised within two weeks. These resolutions had never come to fruition. There had been no follow-through from all levels that would have ensured that the resolutions were implemented.

Dr Naidoo’s third point related to the funding that had been made available to municipalities at that time. During 2016, R94 million had been made available to affected municipalities, and the following year, R32 million. Of the R94 million, affected municipalities had not spent the entire amount, and R19 million had been returned to National Treasury.

He reminded Members that to return unspent funds to the National Treasury was regarded as a cardinal sin. Perhaps, with more concerted efforts by stakeholders, they probably would have reached the outcomes set just before 2016 local government elections.

On the legislative changes to redeterminations proposed by the DMB, and the ten-year cycle for major redeterminations, Dr Naidoo said that the definition of major redeterminations would be redefined to include "if it affects more than one ward."

The draft Bill would also include a provision that redetermination requests should be made three years before a local government election. This was a very important provision, if one assessed what had happened in 2015. At that time, the DMB had confirmed 13 applications, nine months before the 2016 local government elections. This had created challenges of its own.

The next intervention related to the DMB having to provide a rationale for redetermination. It had also had to publish a timeline for forward determinations, similar to that of the Independent Electoral Commission (IEC). This would become mandatory.

He echoed Mr Sigidi's sentiment that COGTA welcomed the matters raised by the Committee, and said that these would certainly be discussed and possibly included in the legislation under review.

He added that COGTA had a scheduled engagement with stakeholders on 9 December 2020, where they would be taken through the draft Bill and would revise it where necessary. The Bill would then go through the mandatory processes, starting in early 2021.

The Chairperson thanked all the participants for their inputs, and excused them from the meeting as Members still had to discuss Committee business.

Committee matters

The Committee would have discussed and adopted the outstanding Committee minutes, but a decision was taken to defer the adoption of the minutes to the new year.

The Chairperson then invited Members to deliver farewell remarks, as Parliament would adjourn for the Christmas holidays.

Mr B Luthuli (IFP) said that he would like to thank the Chairperson for her leadership, as she had taught Members a lot during her stewardship of the Committee. He had never served on the Portfolio Committee on Cooperative Governance and Traditional Affairs before, and had learned a lot during the last year. He lauded the cooperation between Members from diverse political affiliations, and hoped that the cordial nature of the relationship would continue in 2021. The Committee played a very important part in saving disadvantaged South Africans.

Mr K Ceza (EFF) extended his appreciation to all Members across political affiliations, and said that Members had gained a lot in terms of the ''amount of maturity that had been displayed," He also lauded the Chairperson's leadership and how she seamlessly rose above party politics. What mattered had been the municipalities and the people that had been assisted through the intervention of the Committee. This had elevated the desire to push for more.

Mr I Groenewald (FF+) thanked the Chairperson and Members for their professionalism, and expressed his appreciation for the quality of engagements that had emanated from Committee meetings. He also thanked the Committee staff for their hard work, and wished everyone well over the festive season.

Ms P Xaba-Ntshaba (ANC) thanked all Members from across the political spectrum and the Chairperson for her guidance and hard work. She said everyone asked her about the Chairperson's high work ethic. She commented that all political parties had coped with the pace set by the Chairperson, and that Members should not bring their party politics to the Committee.

Mr B Hadebe (ANC) also lauded the Chairperson's leadership, and thanked Members and the Committee staff for their work during the year. He also touched on the need for continued bipartisan action by the Committee.

Ms Direko thanked the Chairperson for her leadership and the fairness with which she conducted Committee meetings. The Chairperson had always been well prepared. She also thanked Members for their commitment and hard work, as well as the Committee staff.

The meeting was adjourned.