Department of Cooperative Governance on State of Local Government Report – Local government support and interventions package; with Minister

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Cooperative Governance and Traditional Affairs

24 August 2021
Chairperson: Ms F Muthambi (ANC)
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Meeting Summary

The Portfolio Committee met with the Department of Cooperative Governance and National Treasury in an engagement that was a continuation of its meeting with the Department on 3 August to discuss the implementation of Cabinet resolutions relating to the findings in the state of local government report.
The identified candidates for intervention included those municipalities that the Department needed to take over in terms of Section 139(7) of the Constitution. In the previous meeting, a list of 64 municipalities had been presented as dysfunctional, but the focus was mainly on those in the North West Province. Today’s presentation indicated that 26 of these municipalities were already under constitutional intervention, which left a question mark regarding the action plan in respect of the outstanding 38 municipalities.

The Committee questioned the ability and effectiveness of the interventions that had been proposed to address the ongoing challenges experienced by municipalities, especially since there was a trend for municipalities to ignore the implementation of the interventions or to implement them incorrectly. The Department was advised to strengthen its monitoring systems to ensure that interventions were implemented so that they benefited communities. The Committee requested the close-out reports from previous Section 139(1)(b) interventions to understand exactly what the administrators had been doing, particularly when some municipalities remained dysfunctional even after previous constitutional interventions.

The issue of withholding the equitable share was a matter of concern for the Committee, especially if it resulted in communities not receiving services because of the incompetence of the municipalities. National Treasury was asked to consider alternative methods of consequence management in dealing with municipalities that operated with unfunded budgets. This raised questions of clarity on the relevant legislation that would prevent stakeholders from approaching the courts for solutions to the situation which could lead to the dissolution of a municipality. The Committee decided that it would engage with all of the 108 local municipalities that had passed unfunded budgets.

Meeting report

Chairperson's opening comments

The Chairperson officially opened the meeting and said that the meeting was a continuation of the session that was held on 3 August, where the implementation of government resolutions relating to the findings of the state of local government report was discussed. Following the tabling of the report, the Committee was informed in the meeting that the Department of Cooperative Governance (DCoG) and National Treasury had been directed to leave the process of developing municipal support plans in collaboration with the provinces. Cabinet had also resolved that DCoG and National Treasury would lead the initiative of identifying municipalities under intervention and advising on the mode of intervention that would be applied, while the municipalities that needed to be taken over would also be identified under Section 139(7) of the Constitution.

On 3 August, a list with 64 municipalities had been presented to the Committee, which labeled them as dysfunctional, with a focus drawn on those in the North West province. The Committee had then resolved that a country-wide analysis should be done on all of the 64 municipalities. The Chairperson noted that the presentation from the DCoG states that 26 of the 64 municipalities were already under constitutional intervention, which raised the question on the status of the outstanding 38 municipalities. The Committee was also informed that National Treasury, the provincial COGTA departments and various provincial Treasury departments were implementing a package of interventions to assist these municipalities.

A detailed report was then requested on all of the municipalities nationally, not just the North West province. Timeframes were also presented on the development of the municipal support and intervention packages. The process was due for completion in September, but some of the deadlines had passed, which was why the Department must inform and advise the Committee whether the relevant milestones had been achieved. The Committee had been requesting close-out reports from the Section 139(1)(b) interventions so that the work of the administrators could be understood.

Dr Nkosazana Dlamini-Zuma, Minister of Cooperative Governance and Traditional Affairs, was welcomed to make introductory remarks and introduce the team of the Department.

The Minister said that the close-out reports could not be provided by either the DCoG or National Treasury, because Section 139 was conducted by the provinces unless they were received from the provinces.

DCoG on state of local government

Ms Avril Williamson, Director-General, DCoG, said that the Department consulted and communicated with the relevant stakeholders before decisions were taken.

Ms Mohanuoa Mabidilala, Chief Director: Performance Monitoring and Evaluation, COGTA, said that the purpose of the presentation was to provide a progress report to the Committee, as well as the background of the state of local government report.

On the state of local government indicators, she highlighted that five indicators were used -- political, governance, administration, financial management and service delivery. The barometer identified the various states of municipalities in each province, whether they were dysfunctional, medium risk, low risk or stable. The legislative framework for support and interventions was outlined, as well as the action plans that would support local government and the intervention plans. National and provincial engagements included multiple meetings with the Provinces, Cabinet and National Treasury.

On the timeframes of the Municipal Support Intervention Packages (MSIP), she explained that meetings had been held with the Provinces, and there were indications that more time was required because the processes needed further engagements with the municipal councils and provincial executive committees (ExCos) so that all processes were concluded and intervention plans were adopted. She provided details on the interventions' collaboration model and the framework for the development and implementation of the intervention plans. The short-term interventions that were adopted by Cabinet and the medium-term interventions were provided. The roles and responsibilities showed the participation processes and ownership from all relevant stakeholders to ensure the successful implementation of the interventions. She also presented the timeframes of the intervention plans and the monitoring and evaluation reporting timelines. Recommendations were proposed to the Committee.   

National Treasury on financial state of local government

Mr Jan Hattingh, Chief Director: Local Government Budget AnalysisNational Treasury, said that Treasury's focus was different from the Department's, but it was complementary. On the provincial road shows, a study had been conducted in 2017, and the results had been forwarded to the budget council and the budget forum, where Treasury was requested to develop a plan of action. The road shows were an action plan, and had been effective.

Treasury was currently focusing on the 43 municipalities out of the 64, and was also focusing on the unfunded budget. Every year, National Treasury produced the state of local governance and financial management report which tracked the performance of all the municipalities nation-wide, and a set of indicators were provided. The outcome was to indicate whether the municipalities were in financial distress before an actual crisis, and to alert municipalities to do something before falling into the crisis. The outcome report was on the National Treasury website. These 43 municipalities were beyond the Section 154 stage, so the mode of intervention had to be properly implemented.

National Treasury had agreed, with support from COGTA, to get the provinces to apply the correct measure of intervention in the 43 municipalities, with similar timeframes as the Department (August). The technical work had already been done with the provincial treasuries, and there was consensus on the mode of intervention. The next step was for the Minister of Finance to write to the various provincial premiers to issue a directive on the mode of intervention if the criteria were passed for financial crisis, as per Section 138 and Section 140 of the Municipal Finance Management Act (MFMA). It was important for National Treasury to ensure that if a municipality met the legislative requirements, it should be escalated to the next mode of intervention. Provinces had to take the first step, as outlined in the Constitution, but if they failed then national government could step in.

He said that in terms of Section 18 of the MFMA, the council of a municipality was not allowed to table unfunded budgets. The process had been used to develop a methodology, and a budgeting and reporting regulation had been issued with the support of Parliament in 2009. The regulation had been implemented by training all municipalities and all provincial Treasuries so that a uniform application was used when assessing municipalities. The budget council and the budget forum's political decision was that unfunded budgets would not be tabled in future.

On the 180 targeted municipalities, he said that National Treasury was working towards the second installment of the equitable share which was due to be released on 7 December, and there was support from stakeholders. There were hopes that municipalities with unfunded budgets could be supported and that the modes of intervention would be concluded by August. He said that if a municipality and the council adopted unfunded budgets, it meant that there was a possibility of a liquidity crisis, so a systematic process had been implemented to reduce the number of unfunded budgets, but there were hopes that the number would be brought down to zero, where unfunded budgets would not be allowed. If municipalities refused to do the right thing, then National Treasury would be forced to invoke Section 216(2), which withholds the equitable share or grant funding to those municipalities. He said that the relationship between National Treasury and the Department was improving.


Mr K Ceza (EFF) commented on the division of revenue from National Treasury to municipalities, and said that the method assumed that rural municipalities would be able to generate revenue in their areas and state of development without attracting the skills that would help them to generate revenue and counter the high unemployment rate. There was no industrialisation to improve the situation. He asked about the criteria that would be used to improve the situation in rural municipalities. Issues that had resulted in failures within municipalities included projects, political influences and audit teams being attacked. He asked how the interventions collaboration model would ensure that life threatening situations within municipalities were improved, because in some municipalities the Municipal Systems Improvement Plan (MSIP) had not been successful and the morale of the municipal staff was low. The political and administration’s non-responsiveness also added to the challenges that affect communities. In Steve Tshwete Local Municipality, the municipal manager had taken out a loan to fill the fiscal gap. He asked how the interventions would ensure that this culture was eradicated, where councillors were threatening administrators to fulfill personal interests.

The District Development Models (DDMs) also needed to be improved, because there would always be a problem with a campaign that was one-sided for those who could pay. Rural areas also needed to be industrialised to improve the lives of people. Regarding the challenges that had been highlighted in slide 5, he said that violent protests were usually a result of the non-responsiveness of the municipal political leadership and administration to the delivery of services such as water, sewerage and electricity tariffs, and he asked how the MSIP would address the issue of leaders’ unresponsiveness to the delivery of services. Police and the media's monopoly could not be unleashed on angry community members who were not receiving services. He said that models that were failing and were not scientifically proving how challenges would be resolved, must not be presented.

He said that the Minister needed to look into the issue of vandalism thoroughly, because outsourced companies would claim money from insurance companies when property went missing, but there was no evidence where the money went to, so the fight against vandalism still remained. Security company contracts were terminated, but the companies still operated. He asked about the budget for these companies to operate, and whether local small, medium and micro enterprises (SMMEs) had been given opportunities. The matter needed to be investigated, because people could not continue to be oppressed. New programmes could not be initiated when there was no budget -- there needed to be consolidation.

Ms P Xaba-Ntshaba (ANC) observed that of the 64 municipalities, 24 were already under constitutional investigation, and the remaining 38 would be earmarked for investigation. She asked about the intended mode of investigation. In a previous presentation, the Department had indicated that the action plan for local government support and the investigation package would require R3 billion from the municipal budgets, the municipal infrastructure grant (MIG), the water service infrastructure grant (WSIG) and the regional bulk infrastructure grant (RBIG). She asked about the progress to mobilise the funds, because the presentation had not mentioned anything on the matter. 

Mr I Groenewald (FF+) referred to the inter-governmental relations (IGR) structures that were currently in place in municipalities, and said that the structures were problematic because of the non-participation of municipalities and district municipalities in meetings. He asked how the Department would ensure the participation of municipalities. He asked where in the MFMA it is stated that municipalities could adopt an unfunded budget.

Mr C Brink (DA) said that the Intergovernmental Support, Monitoring and Intervention Bill was awaited. To the team that was involved in the process of the Bill, he asked whether national government had considered the effect that local government legislation had had on municipalities to deliver sustainable services, especially those municipalities with challenges. The Preferential Procurement Policy Framework Act placed obligations on municipalities to procure from certain suppliers and to achieve certain socio-economic objectives in the way money was spent, but struggling municipalities would be unable to provide services to communities. He said that if struggling municipalities were excluded from the Act, it would probably have positive outcomes such as municipalities being financially sustainable and for infrastructure investment to continue. He asked for comments on the recommendation.

Ms E Spies (DA) raised a concern that dysfunctional municipalities had resulted in the suffering of people, instead of the lives of people improving. The comment made by Mr Hattingh that when there was non-compliance, the equitable shares of municipalities would be taken away was also concerning. There was an understanding that measures needed to be put in place, but most of the municipalities would not adhere and the people who would suffer were the communities. Less harsh resolutions needed to be developed so that communities were not affected. Another concern was that although the intervention plans were detailed and positive, the state of most provinces was known. Premiers and MECs in provinces were resigning, and there was no accountability. There was also an issue with capacity, because there was a small pool of skills to choose from.

Ms H Mkhaliphi (EFF) was concerned about the matters that had been raised, and said that it was difficult to play politics when it came to local government. If the political matters were not addressed, no amount of implementation of the law would make a difference to the governance of the municipalities. Political faction issues had been the Committee’s biggest concern, even during the oversight visits. On the state of the local government barometer, she highlighted that only 16 municipalities had been identified as stable, and asked what the solution would be to improve the current situation. The interventions that were proposed and recommended by the Department had all been tried and had not make a difference, because 163 municipalities were in financial distress. She asked where the finances were going, because municipalities did collect revenue, so there must be political interference and corruption.

There was hope that the Cabinet's decisions and plans to address the issues in municipalities would be fruitful. The Committee should be given the opportunity to meet with the road show initiators, because in the North West there were issues with the appointment of the Premier. The North West COGTA MEC had committed to the Committee that he was active and was trying to improve the situation in the province, but news had been received that the same MEC had resigned. If the real issues were not addressed, they would continue. The situation that had happened in Tshwane with the Independent Electoral Commission (IEC) was also an example of political interference. All political parties must be involved in the process of improving the situation.

The need for provincial governments was questionable. Departments could not provide solutions to political problems because they were responsible for legal frameworks to address the issues. If there were no proper plans in place, the war to win the battle in local governments would be lost. The eThekwini metro was the only stable metro out of the eight, but recently it had failed twice to elect a deputy speaker, and no report had been submitted to state the reasons why the former speaker had resigned. The metro had also recently joined those experiencing service delivery delay. No reports had been submitted on why many municipalities had aging infrastructure and why the issue was not being addressed, because it affected the delivery of services to communities.

She said that the presentation from the Department had helped the Committee get an idea of the state of local government so that solutions could be developed. The matter of the municipal manager in the Steve Tshwete Local Municipality was unacceptable, because it showed that administration was not the problem, but internal politics.    

Departments' responses

National Treasury

Mr Hattingh said that there was no provision in legislation that allowed a municipality to table an unfunded budget, because Section 18 of the MFMA states that a municipality must table a funded budget. The Procurement Bill would be in the Parliamentary process soon, once Cabinet had given the green light to proceed, and that the legislation was based on the Constitutional requirements, so exempting certain municipalities in the procurement process would be problematic. The Committee could assist in ensuring that the bill worked for everyone and that it would ensure proper service delivery.

On the concerns of the equitable share not being released, he said that if a municipality misused taxpayers’ money, the National Treasury had a Constitutional mandate to implement measures that would uphold the legislation. An example was when the equitable share was stopped in April 2015 because municipalities did not pay Eskom, when the outstanding debt at the time was R2.8 billion. National Treasury had been crucified for the measures that were proposed, and the debt currently sits at R37 billion, so if Treasury had been allowed to implement the legislative framework, there had to be consequences. When a case was presented to Cabinet to dissolve a council, it was clear that there was decisive political leadership during the process.

He supported the point that had been made that the departments could handle only the administration of the municipalities, because administrative solutions could not be used to resolve political issues. There were two main challenges that had been identified, including political leadership issues and managerial failure. He said that Section 153 was the support provided by national and provincial governments to municipalities, and suggested that Section 154 was not referred to as an intervention but as support. However, Section 139 provided the hierarchy of interventions. Intervention should be implemented only as a last resort.

Department of Cooperative Governance

Ms Pati Kgomo, Deputy Director-General: Infrastructure Delivery Management Support, Municipal Infrastructure Support Agent (MISA), referred to the service delivery plan of action and the R3 billion costs, and said that in the North West interventions MISA had identified the project costs which were estimated to be R3 billion, and that additional funding was not expected from either the provincial or national fiscus. The existing grants had to be used and repurposed to fund the service delivery plan of action. MISA and the North West Department of COGTA were assisting municipalities to repurpose the MIG to focus on water and sanitation projects, given the existing water challenges in the province, and to deal with the issues of aging infrastructure. The MIG had been reviewed to allow municipalities to use 5% for infrastructure asset management training.

Municipalities were also being assisted in putting together business plans on asset management, and 10% of the MIG could be used for repairs and maintenance of infrastructure. Some municipalities in the North West were already using their budgets to implement projects such as fixing potholes and streetlights, and there was progress, while there were ongoing engagements with stakeholders to access additional funding to address challenges such as the bulk infrastructure.

On the impact of the MSIP and what could be done differently, Ms Mabidilala said that there had been a mobilisation of sector departments and collaborations with national and provincial sector departments in the context of the district development model to ensure that the stakeholders were part of the support plans to assist in unlocking some of the challenges that had been identified, especially since the DDM aimed to stabilise local government. With the collaborative intervention framework, municipalities would be placed under the correct mode of intervention because the lessons learnt from research showed that if the incorrect mode of intervention was applied, then results would not be accurate.

Mr Mpho Mogale, Executive Manager: COGTA, referred to the issue of the Steve Tshwete municipal manager, and said that the matter had been brought to the attention of the Department, and there would be engagements to address it. When the state of local government report was being put together, the political pillar was not considered because in the past, governance was the pillar that was considered. The Minister had insisted that the politics pillar was excluded because that was where most problems came from. He said that political solutions must be implemented where there were political challenges so that there was restoration of stability in a municipality. When the report was submitted to the Cabinet, it had advised the Department to add another pillar for local economic development specifically in rural areas. The "One Plans" from municipalities would include the local economic development pillar, and economies of scale would be ensured. He agreed that the core problem in most municipalities was the political challenges.

On the improvements of the DDM, Ms Williamson said that after the announcement by the President, three pilot sites had to be launched in OR Tambo, eThekwini and Waterberg, as well as hubs to provide stimulus relief packages during COVID, and the political challenges were designated by each of the districts. Profiles in each district were also examined to understand the challenges of the districts and how they could be supported to address the challenges. There were plans to develop templates that would guide the districts in the establishment of the "One Plans," and 40 districts had since submitted the plans. The common thread would be evaluated amongst all the districts, and appropriate action would be taken. She said that private partnerships had also been established where institutions assisted the Department in improving job creation. Sector departments had also been included to determine the action that had been taken in addressing the challenges.  

Follow-up discussion

Mr Groenewald asked the Director-General what happened when a certain political party approached a court and said that all the municipalities’ budgets had not been approved because an unfunded budget could not be approved. Would the 105 municipalities be dissolved?

Ms Williamson said that the process of dissolution was clear, and it would be difficult from an administration perspective to engage in providing support when a municipality was dissolved. There would be a crisis in the country.

Mr G Mpumza (ANC) observed that the local government barometer had indicated that only four provinces had stable municipalities, which was concerning. The MSIPs would be observed to assess whether they could bring effective change and stability to municipalities. He raised concern on the shift of municipalities to a dysfunctional state, because there seemed to be no effective utilisation of the provisions in the Municipal Finance Management Act. The provinces and national government must effectively analyse the Section 71 reports so that Section 154 support could be implemented accordingly before a municipality was placed under section 139. He said the presentation should have focused on the matter of using the section 71 reports to monitor municipalities so that interventions were implemented as early as possible. Once the plans had been developed and presented to the Committee, the monitoring authority and capabilities of the province and national government had to be strengthened to ensure that the plans were effective and made a difference. 

Mr Ceza expressed disappointment that his questions had not been responded to as expected. On the division of revenue and the assumption that municipalities would be able to generate their own revenue, he asked what the solution was. He pointed out that the presentation had not included the Dr Beyers Naudé local municipality as an amalgamated municipality, but as a dysfunctional one, because it had misused R25 million and there was still no answer as to where the money had gone. He asked why the municipality had been presented this way.

Mr Groenewald said that his previous question had not been responded to by the Director-General, repeating that the legislation stated that if a municipality did not draft a budget, it would be dissolved. If something irregular was being done, it meant that everything that followed would be irregular, which would force the municipality not to adopt a budget which would result in dissolution. Property rates that were included in the budget would also be irregular. He highlighted that there were 105 municipalities with unfunded budgets, so if a court was approached on the matter and the court ruled that the budget was irregular and could not be approved, all the municipalities would have to be dissolved. He asked how unfunded budgets were being approved, because it impacted on service delivery. What was being done to rectify the matter?

The Chairperson asked for clarity on whether the Intervention, Monitoring and Support Bill covered all the matters raised in the intervention collaboration model, and why the model was necessary given that the Bill was almost ready for tabling in Parliament. There was a concern that the Department might be focused on developing models instead of addressing the issues. She also asked for details on the criteria that had been developed for each of the seven modes of interventions that were expected in the Constitution and the MFMA.    

Department's response

Ms Williamson said that the national Department did not prove unfunded budgets -- this was done by the provincial Treasuries. On the intervention collaboration model and the progress of the Bill, the Department was mindful not to develop models, but to create impact on the ground by involving practical interventions in the Bill. The challenge experienced was how to implement the involvement of practical interventions, and this could be done through the IGR process, where there were engagements with sector departments and by involving stakeholders. The Department was also driving interventions through MISA, especially infrastructure-related interventions. She said that all consultations on the MSIP bill had been completed, and submissions would be made.

The Chairperson was unhappy with the response from the Director-General and repeated the questions for clarity.

Mr Hattingh said that it needed to be understood that neither the national government, COGTA or Treasury ran the municipalities, and that the legislative framework -- the Public Finance Management Amendment Act (PFMA) and the MFMA -- was a decentralised financial management regime. The council was responsible for approving the budget, and the role of Treasury was to assess the budget and offer advice, so it played a preventative role in the process of unfunded budgets. The sad reality was that when a budget was presented to the council by a municipality, the advice of Treasury was not considered. If a municipality was unable to table and adopt a budget on time, then section 139 was implemented. This was why consequence management was invoked in the form of the equitable share.

On the Section 71 monitoring system, he said that the provision had been implemented by Treasury. It had started in 2006/07, when only 43 municipalities reported, and currently all 257 now reported to Treasury. The information was published by the provincial Treasuries monthly, as well as conditional grant information. The activation of consequence management and oversight were identified as challenges. A consolidation of municipal budgets was published every year, and the Section 71 results, including conditional grants, were published quarterly. The state of local government report was published annually, as was the Auditor-General’s report. There were enough instruments available to facilitate oversight, and he proposed that if the Committee was not satisfied with the information available then the municipalities could be called to appear before the Committee to account for why unfunded budgets were being adopted.

On the division of revenue issue, every year before the Minister tables the bill in Parliament, Treasury produces the annual Division of Revenue Act (DORA), and it was presented to all the relevant committees. The bill was used an instrument for the fiscal framework to compensate rural municipalities through the metro municipalities. If the information had to be presented, it could be done so that the Committee could understand how the process worked. It would not be appropriate to invest more money into a system that was bound to misuse the funds. R230 billion in municipal revenue had not been collected by municipalities. He said that if the 108 municipalities were taken to court and the ruling was not in their favour, there would be a crisis because 108 municipalities would be dealt with in one process.

The Chairperson agreed that inviting the municipalities was a good proposal.

Mr Groenewald said that it was understandable that there was no specific department that was responsible for the municipalities, and said that there should be a process in place that monitored the implementation of the laws in municipalities. He asked who was responsible for ensuring that the laws were implemented correctly by municipalities.

Mr Hattingh said that Treasury had institutionalised a practice where information was tracked for ten years, and the legislation would assist in enforcing the relevant Acts. A decision had been taken that money should not be forwarded to municipalities with unfunded budgets, no national contribution would be made to municipalities that received disclaimer audit opinions, and municipalities with more than one person occupying the same position would also not receive any funding from national government.

Mr Ceza asked for clarity on the penalties that were imposed on non-complying municipalities, and what happened to communities when these penalties took effect. How was the situation remedied, and what was the expected timeframe for the interventions? Had the consequences of the penalties been considered in light of the effect they would have on service delivery to communities?

Mr Groenewald said that municipalities did not comply with the legislation, and asked Treasury whether there was another resolution to compel municipalities to comply with the law, because its response had been that the only way to compel municipalities to comply was by approaching the courts. If this was the only way, then it should be the only remedy to the issues.

Minister Dlamini-Zuma agreed with the Committee that when funds were withheld from the municipalities, the delivery of services to communities was affected. There were efforts to try and assist the municipalities in implementing interventions, especially when it came to service delivery. National facilities could also be used to assist these municipalities, because where municipalities did not use funds it meant they had more funds available, and those with minimal funds remained with little. There were hopes that agreements would be made to support smaller municipalities that did not have the capability to spend on infrastructure. She said that the Bill was not ready to be tabled in Parliament -- it still had to go to Cabinet first because there needed to be extensive consultations, and there were constantly new developments.

Ms Williamson responded to the Section 139 and collaborative model questions, and said that the collaborative model was aligned with the requirements in the MSIP bill, and could be deployed while the bill was still with Parliament. There had been extensive consultations on the MSIP bill, and there were ongoing processes of presenting the bill to the state law advisors, as well as to the Cabinet.

Mr Ceza said that the responses from the Director-General were unyielding. The issue was the punitive measures, because municipalities were already incapacitated, and there was no solution except for Treasury to withhold funds. The situation with the division of revenue did not capacitate municipalities, and communities had to suffer because of the incompetence of municipal staff who could not comply with the law. He suggested that consequence management on the municipal staff should be strengthened, and not that funds should be withheld. The solution may seem effective, but he asked whether the issues of service delivery within municipalities had been considered.

The Chairperson said that the issue of failed interventions had been raised in the North West municipalities, and in previous meetings the issue was blamed on their lack of capacity. She asked why the current route of resolving the matter was being followed, if there was no capacity to assist the municipalities with the implementation of the interventions, because there would be no improvements. Interventions without human capacity would not produce any results.

The Chairperson said that nothing had been mentioned on the implementation packages to assist municipalities, and a performance report should be forwarded to the Committee to monitor. All the relevant MECs would be called to appear before the Committee on the Section 139 interventions and the close-out reports, because in some cases the municipalities were far worse after the interventions had been implemented.

Mr Hattingh said that after the MFMA had been implemented for the past 17 years, there was an expectation, in theory, that local government should be perfect because a there was nothing wrong with the actual legislation and Constitution -- the only issue was implementation. On the punitive measures, the issue was difficult to comment on because it was based on a trade-off, especially since there were so many challenges within councils of municipalities which affected service delivery. On the allocations that were made for infrastructure, specifically the MIG, he said that for the past 25 years of the allocations there should not have been any backlogs because enough provisions had been made, but instead there had been an increase in this backlog. R2.8 billion had been spent on capacity-related programmes, and the effectiveness of the programmes was being researched by Treasury, which begged the question on how long local government would be capacitated. Treasury would continue, administratively, to make improvements.

Ms Mkhaliphi said that strong administration within the provincial COGTA needed to be ensured. The Committee held municipalities accountable, but there was a gap that existed between COGTA and the municipalities. There was clearly no established monitoring system in place to ensure that recommendations made by the Committee were actually implemented. She asked whether the monitoring system in place was effective, since COGTA was supposed to monitor the progress of municipalities in implementing interventions, because there would be less ongoing issues in local government. She questioned the role of provinces.

Ms Williamson said that the capacity challenge was in line with funding, but support was provided where it was required. Response teams had also been put together to provide additional support. Institutionally, the Department was looking for ways to provide additional capacity to increase support.

On the monitoring system, she asked Ms Mabidilala to provide details of the system in place, and said that the processing systems were being reviewed to ensure that they were more effective, especially during oversight. She committed that a follow-up would be done with the eThekwini metro on why there was no response to the issues that had been raised and recommendations that had been made.

Ms Mabidilala said that a process had been started between the Department and National Treasury to develop relevant indicators that would assist in measuring the performance of local government, because currently joint planning, budgeting and reporting reforms had been established to measure the correct items. This system had resulted in the Minister reviewing the planning and performance management regulations of 2001, so indicators were developed for each category of municipality to implement indicators so that they understood what needed to be reported on. The indicators also served as an early warning system. The metros had institutionalised the indicators developed for the districts.

She said it was important to monitor municipalities based on their power and functions, which was what was being done especially for districts that were water service authorities and local municipalities. Secondary cities had also been included to ensure that the Integrated Urban Development Framework (IUDF) was monitored. The reason for this approach was to ensure that the indicators include the global requirements of the Sustainable Development Goals agenda 2063, so that municipalities were not burdened to report. The outcomes that were expected had been identified with mobilised sector departments, and there were pilot projects in the municipalities. The Auditor-General was part of this initiative, as well as SALGA. 

The Department had made sure that all provinces were aware of the indicator implementation, because the provinces were responsible for monitoring the performance and building the capacity of local government according to Section 155(6) of the Constitution. The role of the provinces had been elevated with the consideration that capacity levels varied from province to province, but the Department was supporting as much as possible to ensure that everything was done correctly.

Minister Dlamini-Zuma said that the role of provinces was outlined in the Constitution, especially when it came to municipalities, because they were the first port of call when a municipality was problematic. Provinces were critical when it came to local government.

The Chairperson said that there would be ongoing follow-ups on the state of local government, and there were matters that would be carried forward, such as the municipalities that had been operating with unfunded budgets, and the close-out reports on the interventions. Engagements on these matters would be held on a quarterly basis.

The meeting was adjourned.   

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