Section 139 intervention: Free State COGTA on intervention in Municipalities

Meeting report

Chairperson’s remarks

The Chairperson reminded the Committee about the focus of this meeting, which was going to be on four municipalities in the Free State, which had been in distress in the past. The MEC and officials in the province were called to account with respect to the work that they continue to do in the four municipalities.

The Chairperson pointed out that this meeting was supposed to take place last week and was rescheduled because the presentation was sent late to the Committee. This was not acceptable. Members had to receive the presentation early so that they could read and familiarise themselves with the issues so that they were better prepared for the engagement and could make a contribution. The Chairperson was hopeful that it was going to be a fruitful meeting.

The Committee noted that no apologies were received.

MEC’s remarks

Mr Ketso Makume, MEC: CoGTA and Human Settlements, Free State, apologised to the Committee for the presentation not being sent on time last week, resulting in the Select Committee postponing the meeting to today. He indicated that the Free State legislature is sitting to approve the budget and requested that he be allowed to leave immediately after his opening remarks to attend the legislature sitting.

He confirmed that there were four municipalities under Section 139 intervention: Mafube, Tokologo, Mangaung, and Kopanong local municipalities. He assured the Committee that there had been some improvements in three of them in terms of financial controls and systems. Mafube and Mangaung had already appointed accounting officers, with Mangaung having completed all the section 56 employees together with the Municipal Manager that had been filled.

This does not mean that there are no challenges and that the province is happy with the situation, the province still wants to see the municipalities moving forward in the expected manner that some of them were supposed to have finished in terms of the intervention programme. However, the report that is about to be submitted, will reflect on the challenges faced by these four municipalities.

Presentation by Free State CoGTA and Human Settlements

Mr Tshepiso Ramakarane, Head of Department (HOD), FS CoGTA and Human Settlements, provided a progress update on the intervention in each municipality.

Mafube Local Municipality

• The municipality was for some time under section 139, due to its failure to settle its financial commitments. This came to an end in June 2021 due to satisfactory progress and the stability in the municipality. However, the challenge remains the financial viability of the municipality as a going concern.
• On 28 April 2022, Mafube Business Forum obtained a court judgement against the municipality, due to its failure to carry out its service delivery mandates, in particular sewer spillage. The judgement instructed the Premier to invoke section 139.
• Section 139 (5) (a) and (c) meant that the municipality must implement a mandatory Financial Recovery Plan (FRP). The EXCO representatives were appointed, and their mandate was to ensure the implementation of FRP by the municipality.
• There was a delay from National Treasury in finalizing the FRP. The FRP was only finalized and submitted to the Council in September 2023.

Tokologo Local Municipality

• EXCO, with the recommendation of the Minister of Finance, invoked section 139 (5)(a) and (c) with effect from June 2022, due to the municipality’s failure in settling its financial obligation when they are due.
• The effectiveness of the implementation of section 139(5)(a) and (c) cannot be determined at this stage as the FRP is only being implemented from October 2023.
• However, the challenge remains the financial viability of the municipality as a going concern.

Mangaung Metro

• The Provincial Executive Council resolved on 19 December 2019 to place Mangaung Metropolitan Municipality under intervention in terms of section 139 (5)(a) and (c) of the Constitution of the Republic of South Africa, 1996 (As amended).
• The Provincial intervention was brought to an abrupt end in April 2022 as the Cabinet placed the municipality under mandatory intervention in terms of section 139(7) of the Constitution (supra) due to political instability in the metro.
• National government took over intervention at MMM on the 6th of March 2022 by imposing a financial recovery plan and assuming responsibility for the implementation of such FRP.
• The invocation was executed jointly between NT & DCOG resulting in the former Minister for COGTA requesting sector Departments to second officials from the national government as Interim Executive Management due to the contracts of senior managers coming to an end and the City Manager resigning in 2021.
• The main challenge that hinders progress with the implementation of the intervention is the political environment.

Kopanong Local Municipality

• The Free State Provincial Executive Council has invoked section 139 (1) (b) of the Constitution, 1996 read with section 63 of the Water Services Act, 1997 at Kopanong Local Municipality.
• The introduction of the intervention was primarily necessitated by the breach of Sections 152 and 153 of the Constitution, 1996 dealing with the provision of services to communities in a sustainable manner and giving priority to the basic needs of communities.
• The Member of the Executive Council (MEC) responsible for local government in the province has on 15 September 2023 put a notice in the Provincial Government Gazette regarding the intervention in Kopanong Local Municipality.
• The adverse conditions which triggered the intervention was the inability of the Municipality, as water services authority, to carry out the water services mandate as contemplated in terms of the Water Services Act, 1997.
• The failure to deliver water services was exacerbated by the fact that the Kopanong Local Municipality owes the Vaal Central Water Board the amount of R690 million, and the latter has since implemented the 30% water restriction.
• Additionally, the intervention was prompted by the severe financial distress of the Municipality which was occasioned by the inadequate/non-existent revenue collection which further resulted in the Municipality’s inability to meet its financial obligations which included delayed payment of salaries to employees.
• The Administrator/EXCO Representative will submit monthly reports on the progress of the intervention to the MEC: Cooperative Governance & Traditional Affairs.

(Further details can be found in the presentation attached.)

Discussion

Mr C Smit (DA, Limpopo) felt that the day’s connectivity issues were just another reminder that face-to-face meetings should be resumed because the connectivity issues made it difficult to properly engage and get a proper outcome of the meetings. He wanted to know if the personnel and councillors of the Kopanong, Mafube, and Tokologo local municipalities had been paid in the last two months since it had been mentioned that there were delays in salaries. Is it true that the Mafube administrator has been sick for a long time? If so, what is the update? In each one of these municipalities, what is the revenue collection for each? What is the salary component being paid to the staff?

Mr R Badenhorst (DA, Western Cape) asked for an explanation on the year-long delay of National Treasury’s submission of the FRP in the Mafube municipality. With regard to addressing debtors and revenue collection, what causes the tension between the municipality and the Mafube business forum, and how is it being addressed?

Mr K Motsamai (EFF, Gauteng) also wanted to know about the sick administrator of Mafube. Has there been anyone appointed to take over in the meantime?

Ms S Shaikh (ANC, Limpopo) asked what was being done to address the ongoing financial viability situation at the Mafube municipality and why it had to take a court order to implement section 139 (5) (a) and (c) that led to the implementation of the FRP? When was the municipal manager appointment finalised? There are many vacancies in executive management positions, what is being done to address that? Regarding Tokologo local municipality, the presentation indicated that the municipality was not reporting on the FRP monthly as expected, there was no oversight from the municipality and the financial viability was an ongoing concern, Ms Shaik wanted to know what support was required by the Tokologo local municipality and what was the province additionally providing to this municipality.

Regarding Mangaung metro and the mandatory intervention in terms of section 139 (7), Ms Shaikh was concerned about the withdrawal of the National Credit Regulator (NCR) and the supporting recall by the CFO of the National Treasury. Regarding the spending of the grant, she asked the province to indicate how far the spending had been incurred. What is the way forward with the mandatory intervention in terms of support to Mangaung metro?

Chairperson’s remarks

The Chairperson suggested that the Committee develop some guidelines on how provinces should report to the Committee in respect of section 139 interventions as there were no reporting mechanisms in place. This resulted in provinces having incomplete reports. It would be interesting to know when all these interventions were made, whether they were approved by the NCOP, and for how long. An intervention cannot be perpetual.  Like a project, it must have an expiry date and when not complete by the end date, an extension should be requested. This is not the case with the section 139 interventions and that is the limitation.

Secondly, we need to standardise so that we know the names of all the people deployed as administrators in all these municipalities, especially their experience, qualifications, and backgrounds. Because often, the people who underperform in other municipalities are sent as administrators, worsening the situation.

The third limitation of these reports is that interventions are drastic in nature, they must be used purposefully and must yield results. Before you intervene in terms of section 139, what support did you give to these municipalities? The Committee must be satisfied that you did monitor these municipalities over time and realised that the problems had been perpetual and then intervened.

These issues are at the centre of what section 139 must be because provinces need to be proactive and demonstrate to the Committee that there were early signs that were picked up and these were the measures taken.

One of these municipalities reported on, the business forum had to go to court to be granted an order that allows them to intervene in terms of section 139 of the constitution. The question would be if the court orders the provincial government to intervene, did the province not see these issues?

Members visited the Mangaung metro just when the intervention was made. It does not make sense for a big municipality like Mangaung to behave so poorly that an intervention is needed because of the problems manifested in that municipality. The problems included political factions and tensions that led to political parties fighting, the council was paralysed. The speaker, the chief whip, and the mayor were not working as they should. An intervention is granted because it is a crisis, so things cannot be business as usual.

The North West, Free State, Limpopo, and the Eastern Cape provinces are currently the worst performers in terms of local government. The report of the auditor general indicates that the situation in Free State local municipalities is extremely bad, which also applies to the municipalities reported on today.

Responses

The HOD of CoGTA’s connection was so bad that the meeting had to be ended. The Chairperson and the Committee members agreed that the HOD respond to the questions in writing. If needed, the province will be invited to attend a physical meeting in Parliament next year. The Chairperson instructed the HOD to send the responses to the municipalities to comment as he felt they also needed to be present in these meetings.

The meeting was adjourned.