Uthukela District Municipality: state of municipalities

Meeting report

Opening remarks by the Chairperson
The Chairperson welcomed the Committee and the delegations from the Uthukela District Municipality along with its local municipalities. Also present were the South African Local Government Association (SALGA), Provincial Treasury, national Department of Cooperative Governance and Traditional Affairs (CoGTA) and the provincial Department of Cooperative Governance (DCoG) to the meeting. She also acknowledged an apology from the Office of the Auditor-General, who could not attend the meeting.

She said that on Tuesday, the Committee stayed up until the early hours of the morning, as they were engaging with the Lejweleputsa District Municipality and all its local municipalities. She said that the Committee did not take a day off because it did not derive much joy from the state of most of the municipalities it has been engaging with. In Uthukela District Municipality, the Committee is encountering an example of good financial administration for the first time as Okhahlamba Local Municipality managed to get consecutive good audit reports. The Committee welcomes the culture of diligence seen in this municipality, as it is also encouraging to see a good political leadership that was able to manage successfully the violent public protests experienced at Okhahlamba and Alfred Duma in 2020.

In Alfred Duma, the Committee also saw a rare example of a municipality that pays its invoices on time and does not have Eskom arrears. It is easy to see why the two municipalities have also performed well in terms of the back-to-basics assessment over the last two years. Unfortunately, the Inkosi Langalibalele Local Municipality and the Uthukela District remain a cause for concern to the Committee, which is why both municipalities are currently under constitutional intervention in terms of Section 139. Inkosi Langalibalele Municipality received an adverse opinion on its 2018/19 financial statements. The municipality also failed to submit financial statements by the cut-off date of 31 January 2020. The positive development so far is the reduction of the Eskom debt from R138 million in 2018 to R7.2 million in January 2021. The Committee welcome this news, but the municipality is still showing symptoms of problems arising from all the ill-advised amalgamation instituted in 2016. During a previous Portfolio Committee meeting on municipal amalgamation, the Committee saw that a merger of a financially healthy municipality with a financially irresponsible municipality would tend to regress the audit outcomes of the new entity.

Inkosi Langalibalele Municipality has received consecutive disclaimers and adverse audit opinions due to the prior year’s findings from the former Umtshezi Local Municipality, which has since been merged with Imbabazane Local Municipality to form a new municipality. According to a previous report from the province, the intervention in Inkosi Langalibalele municipality will be terminated on 31 March 2021. After that period, the Committee will be in a better position to assess the effectiveness of the intervention. Uthukela District, on the other hand, has had severe challenges relating to water provision, including delays on water and sanitation projects and high non-revenue water losses. The Committee is mindful of the fact that the district is a water service authority and yet the water services function is not profitable. The municipality also does not inspire confidence in terms of the District Development Model (DDM), as there are still fundamental unresolved developmental challenges, such as the low levels of access to Internet. These are the issues in which the Committee should hold to account the financial experts, Ministerial representatives and Municipal Infrastructure Support Agent (MISA) technical specialists deployed to assist the municipality.

The Chairperson asked the SALGA representatives why they failed to arrive in the meeting on time.

Mr Sabelo Gwala, Director of Operations, SALGA, apologised to the Committee and said that he had a Human Resource engagement in the morning and has just left that engagement to join the meeting.

The Chairperson said that she did not receive communication of his apology and asked where the SALGA political principles were.

Mr Gwala said that the Provincial Executive Council (PEC) members were at another engagement and apologized on their behalf.

The Chairperson asked what the engagement was about.

Mr Gwala apologised for the inconvenience caused to the Committee and explained that after the passing of their chairperson, they had not been able to replace him. There was another PEC member who resigned as a Councillor, which disturbed them. He said that they were in a meeting on Tuesday to try and fill these vacancies and spread around the workload but they were unsuccessful.

The Chairperson asked if they do not have a PEC member who is a head of governance.

Mr Gwala said that it is the person who resigned, which meant that her deputy would take the work that she was supposed to do, which was why the deputy was not at the meeting as a PEC member.

The Chairperson said that she does not expect the Committee to have to do an oversight on SALGA, as communication of the meeting was given two weeks ago. She asked Mr Gwala to call his delegation to the meeting and allowed Provincial CoGTA to proceed with its presentation to the Committee.

Presentation by KwaZulu-Natal COGTA
Ms Nokuthula Shongwe, Chief Director: Municipal Support, KZN COGTA, presented on the state of the entire Uthukela District Municipality and its local municipalities. She analysed the state of the District Municipality and all its local municipalities according to four categories, such as governance and political stability, sound financial management, basic service delivery and the impact of COVID19.

She noted that there is a serious problem of vandalism and theft afflicted on water and sanitation infrastructure right across the district, which is hampering the provision of water and sanitation services. She commended the good governance structures in Okhahlamba Local Municipality that have led to the municipality receiving consecutive clean audits.

Ms Shongwe then provided a detailed outlook on each of the local municipalities in the district.

Provincial COGTA supported the municipality in terms of the deployment of personnel such as financial experts to support Uthukela District municipality and Inkosi Langalibalele Local Municipality to assist with the improvement of their audit outcomes. The Department also helped with the Economic Recovery Plan as well as with the review of the District Local Economic Development (LED) Plan. Other support projects include the District Economic Cluster, International Labour Organisation Handwash Basin Project Coordination, Small Town Rehabilitation Programme, etc.

The Chairperson asked Ms Shongwe to explain the Small-Town Rehabilitation Programme.

Ms Shongwe said that the Department previously funded three municipalities as identified in the Provincial Spatial Economic Development Strategy (PSEDS) in the District such as Okhahlamba in Winterton and Bergville, Alfred Duma in Ladysmith and Inkosi Langalibalele Local Municipality in Weenen. Currently, there are two on-going projects in Okhahlamba such as the Bergville Fresh Produce Market Purchase of Equipment and Operationalisation amounting to R1.5 million; at Inkosi Langalibalele, there is the installation of Weenen Street Lights amounting to R1.6 million. The Bergville Fresh Produce Market project has been completed. The Weenen Street Lights Installation is ongoing and the municipality is facilitating connection with Eskom to enable energising of the lights.

Presentation by the South African Local Government Association (SALGA)
Mr Gwala highlighted the critical interventions that could be proposed from a governance perspective in the district municipality. He said that the amount of debt that is owed to the municipalities by Government and households is critical in their struggle to collect revenue. These are the signs of a District that struggles with implementing basic measures for good governance, as it struggles to get government and households to pay their debts. Currently, KZN municipalities are struggling to keep up with a total Water Board debt of over R1 billion as at December 2020. This amount includes an amount of R394 944 378.21 that is older than 120 days, and the concern is that any increase, at the peak of the pandemic, would only increase this debt. The idea that a Water Service Authority can switch water off in case of non-repayment of debt is not realistic.

The AG’s basis for a qualified opinion in the district included cash and cash equivalents, receivables from exchange transactions, consumer debtors, payables from exchange transactions, as well as water losses.

In terms of labour relations, Mr Gwala said that the idea that all districts can play a coordinating and capacity building role within the district is not realistic, as interventions such as job evaluation and PMS are often polluted by ad hoc approaches. Cases that go to the bargaining council are dependent on the mandate prosecutors receive. In a climate of intimidation, mandates are weak, and witnesses are reluctant. Cases that go to the bargaining council are dependent on the evidence available. In a climate of poor record keeping, evidence is weak.

Presentation by KwaZulu-Natal DCOG
Ms Nolwazi Njokweni, Director: Corporate Planning, DCOG, said that Okhahlamba and Alfred Duma have been doing very well in the past two financial years and this is due to the fact that the political leadership and senior administration have taken their jobs very seriously. She indicated that some of the challenges right across the District Municipality and its local municipalities included the filling of critical positions, non-functional ward committees, traditional leaders not attending Council meetings at Inkosi Langalibalele municipality, as well as pending investigations. DCOG has provided support to the municipalities regarding the challenges. The challenges that still exist in the district in terms of service delivery include project planning and implementation monitoring, lack of qualified and experienced technicians, inadequate plant/machinery due to high levels of vandalism/theft, inadequate operations and maintenance (O&M) budget allocation, as well as aging infrastructure. DCOG has coordinated Municipal Infrastructure Grant (MIG) appraisal processes and MISA deployed a civil engineer in order to assist the district with some of its challenges.

In terms of the DDM, the champions of the district are Deputy Minister Dr Joe Phaahla (National) and MEC Nomusa Dube-Ncube (District). The model’s inauguration took place on the 22nd of September 2020, and Uthukela Technical DDM has adopted four clusters with Municipal Managers (MM’s) as convenors and Mayors as cluster chairpersons.

Presentation by Provincial Treasury
Mr Farhad Cassimjee, Chief Director, KZN Treasury, provided an in-depth presentation on each of the municipalities individually in terms of the Municipal Finance Management Act (MFMA) compliance and financial viability. On average, Okhahlamba Municipality took 91 days to pay its creditors in 2019/20, which is an increase from the 85 days taken to pay creditors in the prior year. Section 65(2)(e) of the MFMA requires that creditors be paid within 30 days of receiving the relevant invoice or statement.

Inkosi Langalibalele Municipality took, on average, 117 days to pay its creditors in 2019/20, which is a decrease from the 167 days taken to pay creditors in the prior year; Alfred Duma Municipality took, on average, 98 days to pay its creditors in 2019/20, which is an increase from the 81 days taken to pay creditors in the prior year; Uthukela Municipality took on average, 201 days to pay its creditors in 2019/20, which is a decrease from the days taken to pay creditors in the prior year of 227 days.

Discussion
Ms E Spies (DA) said that it is good for a change to get something positive in terms of the municipalities appearing before the Committee, but in the same vein a clean audit finding shows that people are doing their jobs. So, people must not create the narrative that things are fantastic, as people are getting paid for doing their jobs. She wanted to know from the Municipal Manager of Uthukela District Municipality the amount that was spent on water tanks in the past financial year to date and whether there has been an audit of the usage of water tankers, and whether there is some perverse incentive inside the municipality to use water tankers instead of providing permanent access to water. She said that the staff costs are very high at about 40% at Okhahlamba Municipality and that is a huge concern. She wanted to understand the reasons for the situation. What is the municipality doing about the low debt collection rate?

Ms P Xaba-Ntshaba (ANC) said that the majority of R14.9m debt owed by government to Okhahlamba Municipality is not registered against any particular government Department. She wanted to know if this means that the municipality does not know which departments owe them and how the municipality plans to recover the amount in the event that they do not know the government departments indebted to them. She asked the Alfred Duma Municipality to explain why they have not helped the Empunzi Municipality with its water crisis, as water is coming from the ground. She wanted to know why they have not used pumping equipment to use that water to help the community with water supply.

Mr C Brink (DA) wanted the details of the 106 investigation at Alfred Duma Municipality in terms of what led to the initiation of the investigation and whether it has been completed, as well as if there is a report that has been tabled to Council from that investigation. He asked the Municipal Manager of Uthukela District to confirm if anybody has been held responsible for the illegal sale of water to the communities in the municipality. He also wanted the reasons behind the municipality using the water service infrastructure grant on matters unrelated to that and whether that situation has been rectified. He also wanted to know what has been done about the Municipal Director who, in 2017/18 and 2018/19, was a principal shareholder of a service provider that received tender awards in the municipality.

Ms D Direko (ANC) said that the presentation from Alfred Duma Municipality does not say anything about their post-audit plan, financial recovery plan and consequence management. She wanted to know if the municipality does have these plans in place and if it is implementing those plans. She also wanted to know if the municipality has a revenue-collection plan in order to improve their collection rate so that they can be able to pay their creditors within their legislated time. She said that SALGA has a good research unit and their proposals to assist municipalities are very good, but unfortunately the implementation is lacking.

She asked if SALGA has researched the challenges that cause municipalities to fail in implementing their proposals and wanted to know the challenges. Ms Direko wanted to know why Inkosi Langalibalele Municipality adopted an unfunded budget and what Provincial COGTA has done to discourage municipalities from adopting unfunded budgets, as it leads to financial challenges for municipalities.

Ms H Mkhaliphi (EFF) said that the Committee received beautiful presentations from all stakeholders, but the reality does not reflect that. She said that she sent a video to the Committee Secretary to share to the Committee as it shows the situation in Alfred Duma Municipality. She reminded the Committee of a video where there were heavy rains in Emnambithi, where people had to ride on each other’s backs in order to commute to the taxi ranks to go to work and school. This situation points out to the aging infrastructure in the municipality.

She enquired from all the municipalities about their plans to address the water infrastructure problems, as they are evident in all the municipalities in the District. She wanted to know why the municipality continues to pay a Councillor who is facing a court case amid allegations of trying to bribe the police. She also asked DCoG if the Ward Councillors that are non-functional are getting paid.

She wanted clarification on the traditional leaders at Inkosi Langalibalele Municipality who did not attend Council engagements, as the traditional leaders had previously complained to the Committee that they are treated as inferior stakeholders. She also sought further clarification from SALGA on the point made about districts playing a coordinating capacity role not being realistic.

Ms Mkhaliphi then had network connection issues; not all her questions and comments could be captured

Mr K Ceza (EFF) said that in instances where there are service delivery protests, the grievances cited by the people protesting include the lack of water and electricity as well as poor quality of non-municipal services that are the responsibility of the District to provide. He wanted to know if the district has the internal capacity to provide water to the municipalities and was concerned about whether the overreliance on external service providers is bringing the required results in terms of water supply.

He wanted clarification on the matter of the assessment of MISA to be functional at Okhahlamba Municipality. He also asked who is being monitored and who is to be held accountable for not following the proper project cycle, as there should be thorough reporting between the client and the person delegated to the project. This would also speak to the overreliance on external service providers.

He wanted to know the internal capacity and capabilities of the municipalities. He wondered if there is a manufacturing programme in the small towns. Programmes in small towns should not only be based on producing fresh produce, but also manufacturing because this would broaden economic activity and create jobs. He said that he was interested in the lessons that could be learnt from Okhahlamba Municipality in terms of how the municipality managed to get consecutive clean audits and how they could influence the municipalities around them.

He asked for the cause of the increase in irregular expenditure at Inkosi Langalibalele Municipality and the measures in place to mitigate the ongoing escalation. He also wanted to know what could be done to remedy the aging infrastructure in the municipality.

Lastly, he asked what action will be taken by provincial CoGTA and Treasury to ensure that provincial government departments and businesses pay what is due to municipalities.

Responses
Mr Vincent Madlala, Mayor of Alfred Duma Local Municipality, said that the town was built during the time of Apartheid. He said that they have a challenge of water that comes from areas near the Free State and Mpumalanga Provinces, coming under the Drakensberg Mountain. The water flows to Ingula River and Emhlwaneni River. It was found that the town was wrongly built, as the planning system is the problem. This led to the building of a dam in 1998 in the north of the town, which is not a storage dam but a controlling dam. When there is rain, the dam overflows coming downward to the south of the town, and the river is smaller than water. The water used to be in a high level than the roads in the streets in the town and this caused problems. The drainage system in the town works, but it cannot push the water back to the river as the water level is too much and pushes the water back to the roads causing floods. This caused problems for the shops and taxi ranks.

Mr Sizwe Mazibuko, Senior Manager: Planning and Housing, Alfred Duma Municipality, said that Ladysmith is located at a lower-level area and is surrounded by the rivers at a 10-year flood line area. When it was built during apartheid times or pre-1994, there was no Spatial Planning Land Use Management Act (SPLUMA) indication requiring environmental studies to be done and planning for that time only focused on the lower population. Now that the population has grown in the area, it has become a problem. In 2012 there was the storm damage, which was almost similar to this nature, where most of the houses were flooded in so every 10 years the same problem is expected. The municipality is trying to do an urban expansion to the north side of Ladysmith because it is on a higher area. This is so that the floods do not affect investors and businesses, as they would be in the upper side of town.

Ms Sixolile Ngiba, Municipal Manager, Alfred Duma Local Municipality, said that the R31m irregular expenditure is made up of non-cash items, which are actually the issues of damages or the vandalism that took place in the many substations within the municipality. There was vandalism in the park facilities as well as storm water damages and damages on street infrastructure mostly done by motorists. All these issues were declared and reported to Council as unauthorised expenditure, which also included losses on land and disposal of assets. The municipality is in the process of investigating the amount that is reflected in the 2019/20 financial year. Under irregular expenditure, the municipality reported an amount of about R847 000, which is made up of a set plan account where a service provider is doing the evaluation system. The reason why the municipality maintains the set plan account is that it can only change when the valuation rolls issues are restarted. The municipality contracted Ndlala Mass Valuation Services, who are using a system that ensures that irregular expenditures are always reported to Council and the reports are sent to Municipal Public Accounts Committee (MPAC) and Council on a monthly basis. The investigation has revealed that it was due to the fact that the sourced valuation system is the one that the municipality is paying for. The other irregular expenditure was for R20 000 on the report that was received by the municipality from the Department of Employment and Labour, where the municipality was found to not have complied with occupational health and safety rules.

The municipality had to do an urgent procurement of mobile showers because the infrastructure that was used by the municipality was under renovation. On unauthorised, irregular, fruitless and wasteful expenditure (UIFW) expenditure, one was interest paid to Eskom to the amount of R6 000 and R4 290 was recovered through the consequence management system and disciplinary processes; all the officials who were responsible were instructed to pay back those amounts. The amount of R14 million that was declared to Council for a service provider that was doing the assets, the municipality investigated and the person who was the CFO in the municipality was found to be responsible for the extension of his contract. The person was charged and went through the disciplinary processes and unfortunately, he resigned before the case could be finalised. The matter has been referred for a civil claim through the municipality’s attorneys.

The Chairperson asked for the details on the allegations that led to the initiation of the section 106 investigation by the MEC in the municipality and wanted to know if the MEC released the report and when the report will be tabled to Council.

Ms Ngiba said that she anticipated that provincial CoGTA would respond to those questions, as it is CoGTA who would be presenting it to Council.

The Chairperson said that that does not exonerate the MM from answering the question.

Ms Ngiba said that the section 106 that is done in the municipality was recommended by the former MEC for CoGTA, Ms Nomusa Dube-Ncube, and it was in relation to the issues of the community protests in Ekuvukeni, affecting two municipalities – Alfred Duma municipality and Uthukela District Municipality. The issues that were raised by the community, among others, is that what was affecting Alfred Duma municipality was the issue of the merger between the two municipalities, where they were querying about some of the projects that were supposed to be implemented by the former Indala Municipality but were not implemented when they were merged into one municipality that became Alfred Duma. There was another section 106 investigation in 2020, where there were community protests, with people complaining about the security given to the Mayor and that one is also conducted by CoGTA and council has also not received that report.

Ms Buhle Ally, Municipal Service Delivery Support and Acting Director, KZN CoGTA, indicated that the reports are being finalised, and a date has been set for the municipality to call a special council meeting so that the reports can be tabled and that will be done before the end of April.

The Chairperson wanted to know the turnaround time of the status of these reports, as the law says it should be three months.

Ms Ally said that there is a report that incorporates all the issues that were referred to by the MM. It will be one report that will be presented to the full council but incorporating the issues that were brought up after the first part was completed and then that elongated or increased the time of the completion of the report. During the protest there were allegations, and CoGTA was requested to include those in the investigation. It has been more than three months.

The Chairperson wanted to know why the report is taking time and questioned the manner in which responding to complaints of the public is slow. CoGTA is a Department that must comply with the transcripts of the Constitution and also assist municipalities to comply. She wanted to know why they are not leading by example.

Ms Ally said that the Chairperson was correct in her concern and assured her that she would get the exact dates when the first investigation began and added that the first one was delayed due to the addition. She said that she would get back to the Committee in terms of the timelines in the evening.

Ms Ngiba said that the municipality’s collection rate in December was at 81% and the reason for not reaching a 100% has to do with the debt owed by government departments to the municipality. The municipality is trying to facilitate the debt collection with the assistance from CoGTA, as the government departments owe the municipality an amount close to R162 million. The municipality also faces challenges in collection of the rates as well as waste removal from one of its biggest locations in Ladysmith, which is Ezakheni. Ezakheni is an Eskom-licensed area and collecting rates in this area is a big problem because the municipality is not in charge of electricity in the area. The area alone owes the municipality almost R430 million in rates for people who are staying in the area. The municipality has tried to engage with Eskom how they can assist the municipality in ensuring that the community or the residents of that area pay the rates through using Eskom to actually switch off their electricity. However, it is a bit difficult because the municipality and Eskom are two entities with the intent to make profits. The engagements are still ongoing with Eskom, but one cannot be sure whether it will be possible to get what the municipality wants to achieve. The municipality has appointed people who will go door-to-door in the area to make sure that the municipality does actually collect the rates. Some people do actually pay their rates, but most of them just acknowledge the debts but do not actually pay. There is a revenue collection strategy, and it is the one that the municipality is using. She said that she thought the district would respond to the issue of water in Empunzi, as it is the district that is responsible for water supply in the area.

Follow-up discussion
The Chairperson said that the AG said that Alfred Duma Municipality’s financial statements are not compliant with the requirements of section 122(1) of the MFMA. In particular, the AG raised issues relating to material misstatements of current assets and accumulated surplus. She wanted to know if the statements were done in-house or by consultants and in the case that they were done by consultants, she asked how much the municipality paid for those services and if they think they got value for money.

The other matter that was raised by the AG was related to non-compliance in terms of expenditure management, with the issue being the municipality’s failure to prevent irregular expenditure amounting almost R1 million. The Chairperson wanted an explanation of those amounts and what has been done to rectify the situation. There was also an unauthorised expenditure amounting to R21.12 million, which was incurred in contradiction to section 62(1)(D) of the MFMA, and the AG raised concern that reasonable steps were not taken. The Chairperson wanted an explanation on how things got out of hand and wanted to know the consequence management that will be taken by the municipality.

The other matter of concern from the AG was around the performance of some of the contractors who were not monitored on a monthly basis as required by section 116 (2)(B) of the MFMA, as well as the contract performance management and monitoring measures and methods that have not been sufficient to ensure that there is effective contract management, as required by the same section of the MFMA. The Chairperson asked the MM to respond to those concerns and indicated that the Committee is mindful of the fact that the irregular expenditure of the municipality was reduced from R50 million to R909 000 in 2018, but UIFW expenditure remains a concern to the Committee as it amounted to R21.12 million. She wanted to know how the municipality has resolved the UIFW expenditure.

Ms Mkhaliphi displayed a video for the Committee and explained that what was in the video was an unfinished project of what was supposed to be their Councillor’s office in Emnambithi Ward 21. She wanted an explanation of why the taxpayer’s money is wasted in such a manner. The other video depicted the public toilets in Emnambithi. Ms Mkhaliphi said that even the roads there are in a state of disaster. She wanted a clarification of the remedial action that will be taken in the Municipality on the issue of the 10-year flood line. She said that there are many unfinished projects in Emnambithi, including the Ezakheni Sports Complex that has been in construction for over ten years, as well as housing projects in Ward two and Ward nine.

Mr Brink said that there is a provision in the Systems Act that says if a senior official resigns before the completion of disciplinary proceedings against him or her, that person's name must be noted in a register kit by the National Minister to ensure that if the person seeks employment elsewhere, Council reconsiders such a candidate or informs the Council about the person's disciplinary record or the person’s attempt to evade disciplinary action. There are other provisions that prevent people from taking certain employment in case of financial misconduct and so on for a period of time, exclusion periods so that bad officials do not get recycled. The MEC would be aware of those provisions as well as national officials at the meeting. The Municipal Manager referred to a CFO who was charged for certain misconduct but then resigned. Mr Brink thought it was important that the Municipal Manager gives the name of the CFO to the Committee so that the national Department can enter that person’s name into the register in terms of the Systems Act.

Responses

Alfred Duma Municipality
Ms Ngiba said that what Mr Brink said was true and added that at the beginning of the disciplinary process, the municipality reported to Provincial CoGTA in terms of the charges that were levelled against the CFO and were reporting on a monthly basis with regards to the disciplinary process. After the CFO resigned, the municipality asked for advice from provincial CoGTA and consulted legislation and there is nothing that says that a person can be prevented from resigning, but the name has been submitted to DCoG.

The Chairperson asked for the name of the CFO for record of Parliament.

Ms Ngiba said that the CFO was Mr M Hloba.

With regards to the unauthorised expenditure of R21 million, there were non-cash items that were sent to Council as unauthorised expenditure and the investigation is still ongoing in that regard. She said that the annual financial statement (AFS) of the municipality is done in-house and asked the Acting CFO to respond to the questions regarding non-compliance with the MFMA.

Mr Riaz Jhetam, Acting CFO, Alfred Duma Municipality, said that the AFS is done in-house within the municipality. The submission of the AFS is in line with the accounting policies as per the accounting requirements and the compilation itself is done in compliance with generally recognised accounting practice (GRAP) as well as in line with the pieces of legislation that are available.

On the findings that were raised by the AG, he said that the municipality had looked at two of them in the past: one was in terms of the issue of asset management in the municipality and many years ago this function was done by service providers, but for the last four financial years it is done in-house. In the municipality there are 18 different assets registers; the assets verification, accounting treatment as well as the updating of the assets legislature, for the last for years, have been done in the municipality. The municipality has a revenue enhancement plan that is being implemented and is going as far as the disconnection of the government departments due to non-payment. The municipality also has two different incentives looking concerning the outstanding debt; one is that any late payer that pays the municipality in full by the end of September each year, the municipality gives a 10% reduction in terms of the total rates. The second incentive is the 50/50 drive in the municipality, where if a debtor that owes the municipality pays 50% of the debt, the municipality writes off the other 50% of the debt. The municipality also has an AFS plan in place where it prepares financial statements on a biannual basis and the plan is that for the next financial year, it will look at the preparation of the quarterly AFS.

Some of the R31.6 million in UIFW expenditure that was short for the 2019/20 financial year, there was only R10.6 million that was there as cash items and the other R21 million was for the different non-cash items in the municipality. The municipality is aware that from a municipal budgeting point of view, there can be a budget in place, but it is very difficult to have non-cash items where you can have a budget in place that will talk to the actual expenditure that was incurred by the municipality.

On the impairment loss, he indicated that there was just over R15 million where the different assets in the municipality were either damaged or vandalised. There was just under R6 million write off of assets in the municipality, so the non-cash items were reported to Council, who took a resolution write off this debt. In terms of some of the cash items, the matter is being investigated by the municipality through consequence management processes. For the different categories of the UIFW expenditure in the municipality, there is consequence management that takes place and is reported on a monthly basis to Council; MPAC also assists in that regard.

Mr S Mazibuko (Senior Manager: Planning and Housing, Alfred Duma Municipality) said that the municipality’s spatial development framework (SDF) identified primary nodes within the town of Ladysmith where they will be doing urban expansion towards the southeast of the town, and the municipality is doing that in consultation with the Ladysmith Business Chamber and Emnambithi Business Chamber trying to come up with a solution on how to save the businesses and the economy of the town. The municipality is also in consultation with the 8-ah-side, which is chaired by the office of the Premier on resolving the problem of flooding and moving businesses to the southeast of the town. The plan is to have the area conserved for environmental issues as a park or anything that will not cost anyone’s life. This move is assisted by funding received from CoGTA, on Small-Town Rehabilitation. The plan is to extend or move the town towards the area that is not a flood line.

On the unfinished houses or projects, he first recounted that after 1994 the structures of the houses that were build were very small, so the municipality has been working with the DHS provincially, trying to give the people the dignity that they deserve. The municipality applied for the rectification of those units and the IA’s approved it. They started building houses, but since then the issue of rectification has been a challenge for the municipality because the subsidy quantum for those areas is very low and that ended up causing challenges on making profit. The challenge is that the IA’s are appointed but they get on site; they start working and then they pull out. Another IA is being appointed by the DHS and the municipality, for the duty of fixing the houses that were left by the other IA. At the moment, the municipality and DHS, alongside the IA, are in the process of finalising the assessment of the houses to see how much it will cost to complete the construction of those houses.

Mr Ronnie Mazibuko, Alfred Duma Municipality, said that the municipality has two sport complexes – one is at Ezakheni and the other one is called Indoor Sports Centre and is located just offside the road as you get into Ladysmith from the Durban side. The Indoor Sports Centre is a project that is currently running; it has five phases. A contractor was appointed, and it is a co-founded between the Council and Department of Sports and Recreation. There is absolutely nothing wrong with the project, as it is going to take five years to finish since it is a five-year-phase project that is currently on year two and is anticipated to be finished next three to four years and will be handed over to the community. The Ezakheni Sports Complex is currently non-functional, as there is no contractor on site and there has been a lot of legal litigation that happened because the consultant and the contractor were liquidated sometime back, hence the project could not be finished. The process of liquidation has just been concluded and the municipality, within the last six months, had to appoint a civil engineering consultant to assess the structures of the actual complex so that the municipality can know exactly what needs to be done to complete it. The municipality has received a report and is in the process of presenting the final report to the Council. Thereafter, it will have to locate some funds to finish the project. The Council offices in Ward 21 were fully completed more than two years ago and were handed over. But unfortunately, they were vandalised a few of months ago and the cause of the vandalism is still being investigated. The process of identifying funds to fix the vandalism is also still ongoing, with the hope that in the next financial year some funds from the Council will be allocated.

Ms Ngiba said that the municipality has reported R914 000 of fruitless and wasteful expenditure of which interest and penalties of late payment into Eskom and Telkom accounts amounted to R6 600 and the municipality recovered R4 200 from the officials responsible for these, through a consequence management in disciplinary cases. Another payment that was done due to cancellation of accommodation for some councillors and one official is being investigated, the municipality has managed to recover R1 654 out of R14 000, and the rest is being investigated. The R892 000 that was paid to WINWATER, which was also appointed for the Ezakheni Sports Complex, was also reported as an amount that is fruitless expenditure. This was reported to Council as well as the South African Police Services (SAPS) and there is a case number; the SAPS is also investigating it alongside the municipality. The municipality found out about this amount only when the company was liquidated and was reported to the police; the investigation is ongoing. The R914 000 comprises of those amounts. The municipality also found out that the company was paid the amount without any work being done on site and the person who was responsible for this passed on in 2019.

The Chairperson said that she had a problem with the turnaround time of the municipality in resolving the matter and asked about what has been done about the other officials who were implicated. She was concerned that the investigations are never-ending and asked the MM to state when she thought the investigations would be completed, as the internal investigations could run concurrently with the police investigations. She wanted to know whether the MM is being proactive in dealing with these investigations.

Ms Ngiba said that she was being proactive in the investigations and committed to submitting a report within a period of three months.  

Ms Mkhaliphi agreed with the Chairperson that the MM needed to have clear timelines since the matter directly affected the communities. She said that the other concern was that people come to the Committee before Parliament and become dishonest, as none of the things that Mr S Mazibuko said in his responses were alluded to in the presentations. No one responded to the questions that she asked regarding the toilets. She said that the delegation from the municipality needed to be reminded that some of the Committee Members were Councillors in their communities and they know exactly what is going on in the communities. She wanted to know the timeframes for the plans that the municipality said that they would implement and whether the municipality informs its people of its plans.

Mr S Mazibuko said, on the urban expansion project, that the municipality is working with the Department of Human Settlement (DHS) provincially and the project will be implemented in phases. The next step is to start putting down the services on the area and an Implementing Agent (IA) has already been appointed to do that work. Phase one of the project will take two and a half years from now to finalise the issue of services in that area; for phase two, the municipality has already applied for the DHS to reserve funds for that phase. During that time, the municipality is in communication with the Business Chambers to try and reach an agreement on which businesses will be moving to that area first, but also depending on their willingness to do so. Public awareness is being done in the municipality about the projects that are underway or forthcoming. The municipalities do this through IDP, Izimbizo and Roadshows.

Ms Ngidi said that it is not that they are hiding some of the things that are taking place in the municipality; the problem is that when they received the invitation, they were guided by the email on what should form part of their presentations. She said that they had to focus on the guidelines that were given to them in terms of the presentations. She said that they responded to the best of their abilities to the questions of the Committee.

The Chairperson announced that the meeting would reconvene at 19:00.

The meeting was adjourned.