State of Mpumalanga Municipalities: Department and SALGA briefings

Meeting report

LOCAL GOVERNMENT AND ADMINISTRATION SELECT COMMITTEE
8 September 2005
STATE OF MPUMALANGA MUNICIPALITIES: DEPARTMENT AND SALGA BRIEFINGS

Chairperson: Mr S Shiceka (ANC)

Documents handed out:
Mpumalanga Department of Local Government and Housing briefing
SA Local Government Association Mpumalanga briefing

SUMMARY
The Department briefed the Committee on the state of municipalities in Mpumalanga, highlighting the situations in four of the 19 municipalities. The main areas of concern were problems of financial impropriety by a number of municipal managers and financial officers. A restructuring process had been implemented. Revenue generation and collection was a challenge and a pilot billing and revenue collection programme had been introduced along with a debt management programme. Co-operative governance through intergovernmental structures had been extremely positive. Project Consolidate had aimed to generate a culture of quick service delivery and had been very successful. Funding for tenure upgrading of all R293 areas would help economic development in poorer areas.

The Committee raised questions around Free Basic Services (FBS), corrective measures and credit control to prevent mismanagement of municipalities, the Local Economic Development (LED) programmes, auditing of financial reports, ward committee functioning and sanitation issues.

MINUTES
The Chairperson noted that since the Committee had begun its third term, they had been involved in 'crisis management and intervention’ rather than establishing the Committee’s own programme. This series of provincial briefings on the state of municipalities was the beginning of understanding the problems such as community protests, financial problems and service backlogs. The Committee would be able to be proactive rather than reactive, working with provincial departments and South African Local Government Association (SALGA) in developing a programme of action.

Mpumalanga Department briefing
Ms G Sibeko (Mpumalanga Department Head of Local Government and Housing) apologised for the Mpumalanga Member of the Executive Committee (MEC) for Local Government and Housing being unable to attend as the typhoid outbreak in Delmas had required emergency intervention. The Department along with the municipality, the Department of Water Affairs and Forestry (DWAF) and parastatals were conducting an investigation into possible water contamination. This illustrated Inter Governmental Relations (IGR) in action.

Ms Sibeko explained that Part One of the Report provided a detailed account of all municipalities in Mpumalanga of which the following four would be highlighted: Ehlanzeni District Municipality, Thaba Chwe Local Municipality, Nkomazi Local Municipality and Dr J S Moroka Local Municipality.

The Department had intervened in Ehlanzeni around staffing problems. This had enabled the District to make a dramatic turn around and move out of their financially weak position. The municipal manager and other staff members had resigned following an investigation. The municipality currently had an acting manager and financial officer. The Department remained concerned about the restructuring process and the pattern of spending in Ehlanzeni and had since sent a team to finalise the operation. Personnel costs had been above average and needed to be addressed. The issues of governance needed to be resolved at a political level between the MEC and the District, with regular status reports being made to the Premier.

Section 139 had had to be invoked in Thaba Chwe late in 2004 as the District had manifested unmanageable problems. An administrator system had been put in place, which had managed to stabilise the municipality successfully. Financial statements from 2000 until 2004 had been finalised and were awaiting the opinion of the Auditor-General. The Chief Financial Officer (CFO) from the Gert Sibande District Municipality had been seconded to assist and had succeeded in turning around financial governance in the area. The municipal manager was currently under review. A task team was to submit recommendations to the MEC by mid September to determine the manager’s future.

The Department had begun an investigation in the Nkomazi Local Municipality to deal with administrative improprieties. The biggest challenge had been stabilising the administration. The municipal manager had been suspended and then re-instated which was of concern. The Department and Province were conducting a Section 106 assessment of the problems with a view to formulating a way forward.

Dr J S Moroka Local Municipality had presented a serious problem with revenue generation. Revenue collection between municipalities had varied greatly, with Dr Moroka the lowest at 11% and Steve Tshwete the highest at 100%. The Municipality had faired quite well administratively, but faced the challenge of being partly rural in make-up. It formed part of the Department’s revenue and billing system pilot programme and would provide lessons on how to raise revenues in municipalities located in areas of poverty. The support of all tiers of government was needed.

The Report detailed various challenges facing other municipalities in Mpumalanga. The Department had begun to work with the rest of the municipalities and raise their levels of performance. The districts, municipalities and province had adopted a strategy to develop municipalities with the assistance of IRG partners, rather than only addressing problem areas.

Part Two of the Report addressed questions raised by the Select Committee, outlined projects and discussed the way forward. The Province had 20 municipalities classified as having low, medium or high capacity levels. Most were low or medium performing and only two were high performing municipalities. SALGA had worked closely with the Department and the Provincial Treasury in providing municipalities with support in the implementation and interpretation of the Municipal Finance Management Act (MFMA).

Mpumalanga had developed a unique brand of co-operative government through its intergovernmental structures. MUNIMAN consisted of the Head of Department and all Municipal Managers and met bimonthly with a 98% attendance, to discuss governance issue, finances and service delivery. MUNIMEC provided a forum for the MEC for Local Government to meet with all mayors and portfolio councillors and municipal managers to deal with policy issues, regulatory matters, and governance issues as well as service delivery.

A debt management system had been introduced to monitor municipalities and ensure compliance at a municipal level. The human resources situation was critical in municipalities and some had no permanently appointed managers. The Department had advised municipalities to ensure all posts were filled within 2005.

Project Consolidate had been 98% successful due to the structures and systems in place. All municipalities in Mpumalanga were now under Project Consolidate. Municipalities required close monitoring and interaction. The Project had aimed to achieve a culture of performance by implementing the first phase, the Early Deliverables scheme, by June 2005. The second phase would focus on project sustainability for the following 18 months.

Service delivery in Free Basic Services (FBS) averaged at 60.3%, with some municipalities operating way below that figure. The MUNIMAN meetings had helped enormously in receiving feed back.

No municipalities had yet been accredited to deliver housing, due to their lack of capacity and limited resources. Certain municipalities had shown potential to be able to do so and two had applied for accreditation.

Discussion
The Chairperson suggested the discussion follow a logical sequence under the categories of uprisings, finances, service delivery and public participation.

Mr D Worth (DA) asked for clarification on whether 18 out of 20 municipalities and cross border areas were under direct intervention. Ms Sibeko responded that all municipalities, as well as cross border municipalities, who were being encouraged to join Mpumalanga, were under Project Consolidate in order to develop a culture of accelerated service delivery. It would be incorrect to assume that the Department had intervened in all municipalities due to problems. Some municipalities had been drawn into the Project to fast-track delivery, and not because they had problems. Mr T Matseke (SALGA Chairperson, Mpumalanga) added that MUNIMEC had taken a conscious decision for all municipalities to formally become part of Project Consolidate.

Ms Sibeko noted that the regular Project Management Meetings (PMUs) included all relevant bodies and enabled efficient decision making on early deliverables possible. Project Consolidate had become an effective management tool.

Mr A Manyosi (ANC) asked what corrective measures had been taken to resolve the issue around excessive personnel costs. Ms Sibeko replied that Government Restructuring Guidelines were available and the process outlined in them would be followed. The problems were labour related and would need to be conducted carefully and transparently with the assistance of SALGA. The MEC was managing and monitoring the issue of councillor discipline through a programme.

Mr K Mokoena (ANC) enquired what measures had been taken to ensure credit control in those municipalities such as Thaba Chwe. Ms Sibeko replied that Thaba Chwe had been in a very bad state and had required a Section 139 intervention and decisions had been taken to charge those responsible. The secondment of the highly experienced CFO from the Gert Sibande District had helped ‘plug’ the problem areas of revenue collection and install a proper billing system with improved results after only two months. The orientation of a new CFO was taking place.

Ms Sibeko noted that the credit control issue was aligned to the billing system and levels of service in municipalities. In some areas such as Mbombela, dual levels of service existed. In certain parts of the municipality, water borne systems with taps and meters existed, and 18 kilometres out of the city centre in the old ‘homeland’ area, a flat rate system was in place. The municipality needed to manage credit control for two different systems. Meter systems need to be in place and required a political decision on infrastructure development. Education for residents would help in explaining the situation to them.

Mr Mokoena asked what tax base was needed to receive an equitable share from the Department. Some municipalities did not even have a tax base and were being drained by the Development Levy. The Province had a mixed situation, where some people were not paying property tax. Revenue was collected in the established white areas, and in some ‘ex-homeland’ areas, no revenue was collected at all. Municipalities needed to conduct audits to find out who owned land. The Department of Provincial and Local Government (DPLG) guidelines needed to be followed to assist the Province in rolling out the Property Rates Tax System. Once that process was started, the Department would be able to assess the situation and make recommendations regarding changes in the tax base.

Ms Sibeko felt strongly that tenure security in the R293 areas needed to be resolved. Tenure upgrading had been done in some areas causing a positive economic spin-off. Tenure security created economic growth. Funding for tenure upgrading of all R293 areas would not only redress land issues, but would create economic growth.

Mr Mokoena asked whether those responsible had repaid the large amount of money looted in Thaba Chwe as had been promised to the Committee during their visit. Ms Sibeko noted that the Counsellors responsible had signed acknowledgements of debt and were repaying the money.

Mr Mokoena felt it was a very dangerous situation to have only acting CFOs in some municipalities. Technological advances were making potential corruption easier and an early warning system was needed. Ms Sibeko responded that the Minister had ordered all posts to be filled within three months. Research was being conducted to ensure the problems did not reoccur with the new cadre of leadership and an orientation programme was being developed to follow the elections.

Mr Z Ntuli (ANC) asked whether provincial or local government determined the accreditation status of municipalities. Ms Sibeko responded that once all requirements had been met, the Minister was responsible for giving consent.

Mr Ntuli asked if Local Economic Development (LED) had improved in Mpumalanga since the Committee’s visit in 2004 and had unemployment been reduced through the Extended Public Works Programme (EPWP). Ms Sibeko outlined an Investment Planning Conference that had taken place with 35 investors. Municipalities had been showcased in an effort to bring investment into the province and municipalities. The Department was dealing with LED programmes at a local level in a creative an innovative way. All programmes had to follow the EPWP with new business programmes looking specifically at how to increase the number of jobs and surpass the current benchmark in Mpumalanga.

The Chairperson asked what would replace the Regional Service Council (RSC) levies when they were abolished. Ms Sibeko responded that the issue was serious and all three districts recognised the gap the abolishment of RSC Levies would leave behind. The issue had been placed on the Provincial Consultative Forum (PCF) programme and a strategy would be developed and communicated to the community. Mr Matseke added that SALGA would be discussing the crucial issue at their Budget Forum in October and developing papers for discussion. Service delivery would seriously be affected by the loss of RCS levies and a new system would need to be introduced.

Mr L Ncoko (SALGA official) noted that the National Treasury had proposed a tax be introduced that