Eastern Cape Munipalities: briefing

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Meeting report

LOCAL GOVERNMENT AND ADMINISTRATION SELECT COMMITTEE

LOCAL GOVERNMENT AND ADMINISTRATION SELECT COMMITTEE
8 August 2005
EASTERN CAPE MUNIPALITIES: BRIEFING


Chairperson: Mr S Shiceka (ANC)

Documents handed out:
None.

SUMMARY
The Eastern Cape Member of the Executive Committee (MEC) for Housing, Local Government and Traditional Affairs and a delegation from the King Sabata Dalindyebo (KSD) Local Municipality briefed the Committee on the state of local government in the Eastern Cape. Key issues discussed included water and sanitation service delivery, the maintenance of existing infrastructure, economic growth strategy plans, internal human resource capacity, assigned powers and functions within the local government regulatory framework and commitments to resolve the crises. Delegates provided anecdotal evidence on the extent of the dilemma and the acrimonious working relationship between the District Municipality and the Local Municipalities. KSD munipality requested that the water and sanitation function be returned to them urgently so that they might address deteriorating health conditions in Umtata and surrounding areas.

The Chairperson expressed the support of the Committee on capacity enhancement of KSD municipality. Members agreed that the water and sanitation functions should to be returned to the local level in the interests of the community. Immediate steps were needed to resolve the impending health hazard followed by an inclusive process to clarify the powers and functions of the district and local levels. They also needed to formulate an effective economic strategy document for KSD.

MINUTES
The Chairperson said the meeting would discuss issues arising from the recent provincial intervention into the King Sabata Dalindyebo Local Municipality and its accompanying progress report. The District Municipality had subsumed the function from KSD in accordance with recent legislation that had caused anomalies in delivery. The line functions of other provincial departments such as Public Works and Roads, also had to be considered to resolve pressing issues of service delivery and infrastructure maintenance.

King Sabata Dalindyebo Local Municipality briefing
Mayor D Mkatshwa stated that water and sanitation remained a sore point in the municipality due to the absorption of the function by the OR Tambo District Municipality in December 2003. No proper hand-over had occurred and this had resulted in operational shortcomings and maintenance deterioration. Water provision had previously earned around R65 million for KSD. A previous feasibility study had concluded that KSD possessed the necessary capacity to adequately provide water and sanitation needs, while OR Tambo lacked such ability. The spreading of limited resources throughout the district had resulted in further inefficiencies and maintenance breakdowns. The President had visited the district on 23 July 2005, and heard various local municipalities raise similar complaints.

Ageing infrastructure and concomitant poor maintenance was creating a municipal ‘timebomb’. KSD had implemented the stipulated reforms required by the provincial intervention, such as the installation of a credit control policy, a new billing system and improved management capacity. Certain planned infrastructure projects had been delayed due to the action by OR Tambo, including upgrades to sewer pipes and treatment plant. The deterioration of the sewerage system could result in serious health hazards. The interconnection of water and sewer pipes within recently completed Reconstruction and Development (RDP) houses at Umkanduli was of grave concern. Proposed new developments within Umtata would increase demand for improved levels of service delivery.

The provincial intervention had stabilised the situation to some extent, but dire conditions remained. The municipality had also completed the required revision of human resources policy, a new financial management system, a corrected budget and a service delivery budget implementation plan. The Audit Committee was functioning properly and a revised credit control policy was now in place. The return of the water and sanitation service would dramatically improve delivery standards and secure much-needed revenue for the municipality.

Mr V Gwadiso (General Manager: Infrastructure) stated that OR Tambo had acquired the municipality's technical staff and deployed them throughout the district, thereby diluting effectiveness and contributing to deterioration within KSD. Members of the community approached KSD to complain rather than direct grievances to the district level. KSD continued to pay debt service charges for assets now absorbed by OR Tambo. Poor maintenance of water treatment plants had resulted in numerous burst pipes in Umtata and consequent flooding of streets and buildings. Continued in-fighting between KSD and OR Tambo had hindered an appropriate response to the litany of problems. The water service provision should be returned to KSD along with suitably qualified personnel to stem the deterioration. KSD had hired private consultants in certain instances to resolve urgent cases as OR Tambo had failed to respond to requests for assistance. The failure of water systems within RDP houses had caused further antagonism as OR Tambo refused to work with KSD appointed consultants. OR Tambo also rejected a business plan compiled by KSD to improve water delivery. The extent of damage to pipes had to be ascertained urgently to determine repair costs. OR Tambo was likely to block any attempt by KSD to access Special Municipal Infrastructure Grants.

Councellor N Kuluta (Speaker: KSD Municipality) provided background on the recent political developments within the municipality. KSD had been administered by the United Democratic Movement from 2001 to June 2004, when an ANC-aligned administration had taken over. OR Tambo had refused to meet with KSD to discuss issues and had claimed that the local municipality contained a glaring lack of capacity to provide water and sanitation in an adequate manner. KSD had decided to approach all influential parties to discuss the dilemma. OR Tambo needed to institute capacity-building training within the municipality rather than adopt such an acrimonious position. The KSD municipality was mired in a crisis regarding water and sanitation provision that would result in an inevitable health hazard if not resolved shortly.

Discussion
The Chairperson noted the Committee’s concerns following its recent oversight visit, and the findings of the provincial intervention report. Umtata’s serious decline that was regrettable given its history and past leadership in the region. The provincial government's decision to end the intervention seemed shortsighted as there had been no intense consideration of social and economic consequences, and thus a vacuum in service delivery. A failure of all stakeholders to act decisively would be disastrous for the region. District municipalities had been created to facilitate resource distribution from rich to poor areas, and to build capacity within struggling municipalities. Improved co-ordination was intended but deviations had occurred in practice. Confusion prevailed around aspects of local government legislation, such as the Municipal Systems Act and the designated powers at the district and local levels. The economic development of Umtata had to be pursued and water and sanitation delivery improved. District municipalities would struggle to provide such services due to a shortage of staff and large spatial responsibilities. The crisis should be resolved through dialogue with involved entities. Improved human resources and infrastructure development remained crucial to achieving success.

Mr S Kwelita (Eastern Cape MEC: Housing, Local Government and Traditional Affairs) said a meeting had been arranged to clarify the allocation of powers and functions between the district and local municipal levels. A follow-up meeting would be held to discuss capacity at the different levels and determine needs such as the required numbers of technicians and engineers and ideal placements. Immediate provincial intervention was needed to address urgent crises such as sewerage deficiencies and collapsed infrastructure. The responsibility for water provision would have to be finalised at the scheduled meeting.

The Chairperson supported the two-pronged strategy of immediate intervention and a meeting to address powers and functions. Members would follow events and contribute where possible. The return of the water provision service to KSD would contribute to income generation and would ensure sustainability. The various income streams at the district and local level would have to be considered in a sensitive manner there were various vested interests. The Committee would appeal for urgent action in reaching a resolution to the impasse.

The Mayor noted that the impending introduction of the Regional Electricity Distribution system would further diminish potential income for KSD. The return of the water and sanitation responsibility was imperative for the long-term sustainability of the municipality. Reports on the status of the sewerage system would be provided to Members.

The Chairperson asserted that the financial health of KSD was questionable and the continued servicing of loans for assets acquired by the district was unprecedented. The law dictated that assets and liabilities should not be separated. Members demanded an update on this matter in the near future. Possible reimbursement of KSD for losses could be considered.

Mr Kwelita reiterated that issues pertaining to potential health hazards would be dealt with immediately followed by initiatives to correct the financial anomalies and determine powers. KSD should not continue to service the debt but use the money for maintenance demands. The District Municipality should continue to be informed of development activities within the KSD jurisdiction.

The Chairperson declared that limited resources had to be spent responsibly and in places of urgent need. KSD had complained of lack of accessibility to grants earmarked for the municipality that remained within OR Tambo. He noted that recent legislation such as the Intergovernmental Relations Framework Bill had been devised precisely to mitigate instances of bad blood between different spheres of government. Parties had to co-operate as a matter of responsibility rather than as a favor to others. The legislation created forums where Mayors could meet and discuss challenges and channel resources to the advancement of all.

The Speaker concurred that bad blood characterised the relationship and a solution would not be reached in the short term. OR Tambo refused to consider requests from KSD and provincial intervention was necessary to resolve the dilemma and return the functions to the local level. Conditional grants tended to be channeled to favored local municipalities by the district authorities to the detriment of KSD. District Municipalities should empower and support local municipalities rather than engage in undermining tactics.

The Chairperson stated that the MEC had to be fair and objective in dealing with the matter but time was of the essence, particularly with regard to health risks. Proposed solutions had to be realistic and capable of implementation.

The Speaker felt that OR Tambo would continue to resist advances as various commitments with private businesses had been set up in the interim by the district authority. Intervention from the relevant authorities was required to instruct OR Tambo to return the water function to KSD. The Mayor added that other municipalities in the district had expressed similar grievances to the President as they were in the same predicament.

The Chairperson stated that future attempts to resolve the crisis would have to consider practical realities such as the shortage of qualified and competent technical staff. Solutions should not create new problems and would have to be sustainable.

Mr Kwelita noted that the increase in capacity of municipalities was a priority to ensure competent performance. This had to accompany any return of function. The Department of Water Affairs would be approached to assist in resolving the present crisis and to improve interactions with all local municipalities in the district. Continuous feedback had to be provided to the Committee on developments.

The Chairperson asked that the meeting agree in principle that the water and sanitation function should reside at the local level. Support could be obtained from the Director-Generals of Provincial and Local Government and Water Affairs, as well as relevant provincial authorities. The Committee's would participate in the process if required. Conditional grants should not be used as instruments of control over local municipalities.

The Mayor mentioned certain debts currently residing with the municipality including R75 million owed to the Public Investment Corporation and R16 million to the Development Bank of South Africa (DBSA). The President had advised KSD to approach the Minister of Finance to discuss possible solutions to the debt issue and a task team had been set up to consider the appropriate course of action. He asked whether the Committee could assist in this regard or discussions should continue with the task team.

The Chairperson confirmed that KSD should continue interaction with the task team. The Chairperson and the MEC would hold talks with National Treasury to discuss alternative solutions in the interim. A forensic audit of the financial situation was urgently required. An audit should have been conducted when the present administration assumed office in 2004 to establish an unambiguous financial account.

Mr Kwelita stated that the Buffalo administration had been approached to assist KSD in conducting a due diligence exercise and to establish the extent of debt and current expenditure. Any attempt to write off debt had to be accompanied by an independent financial audit.

The Chairperson noted that KSD's Integrated Development Plan (IDP) contained no specific development strategies, and this could be construed as a weakness. Internal capacity should be strengthened to improve the municipality's planning component. An economic growth strategy was also required to generate much-needed revenue. Members were adamant that Umtata and other district towns had to be ‘resuscitated’.

The Mayor agreed that human resource and financial components had to be enhanced. The IDP had identified three core areas to be developed: agriculture, forestry and tourism. Inadequate service provision and poor maintenance had impacted negatively on all schemes and increased capacity was needed to ensure implementation. The IDP was in place but needed to be revisited to address specific requirements. Enhanced capacity necessitated additional resources that were difficult to procure but were necessary to achieve results.

The Speaker added that economic development hinged on the upgrade of the Umtata airport to facilitate travel and economic activity. Adequate commuter demand existed in the area.

Mr Gwadiso stated that new economic developments currently underway in Umtata would necessitate improved infrastructure to meet additional demand.

Mr Kwelita reported that meetings would be held at the provincial level with relevant departments such as Agriculture, Tourism and Transport to devise meaningful strategies and to ensure a co-ordinated response.

The Chairperson stated that KSD would rely on the MEC to state the municipality's position at future meetings with the provincial departments. A capacity upgrade of KSD was vital to improve planning and maintenance demands.

The Speaker proposed that road maintenance machinery controlled by OR Tambo should be acquired for use by KSD to address escalating road repair needs. Drivers and mechanics were employed by the district and should be utilised to assist. A provincial intervention was necessary to instruct OR Tambo to release the machinery and personnel.

The Chairperson stated that provincial departments should urgently interact to produce a strategy plan to address the immediate problems that threatened community health. The municipality should produce documents indicating the extent of the crisis and recommendations for the provincial government. An economic development plan should accompany the submission.

He then requested that PMG and representatives of the media depart the meeting so that certain matters could be discussed in private with the delegation. A synopsis of the subsequent discussion would be provided in due course.

The meeting was adjourned.

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