State of Eastern Cape Municipalities: Department and SALGA briefings
NCOP Cooperative Governance & Public Administration
13 September 2005
Meeting Summary
A summary of this committee meeting is not yet available.
Meeting report
LOCAL GOVERNMENT AND ADMINISTRATION SELECT COMMITTEE
13 September 2005
STATE OF EASTERN CAPE MUNICIPALITIES: DEPARTMENT AND SALGA BRIEFINGS
Chairperson:
Documents handed out:
Briefing on state of municipalities in the Eastern Cape
SUMMARY
The Department briefed the Committee on the state of municipalities in Eastern Cape. Revenue generation and collection was a challenge. The presentation also focused on the readiness of municipalities to implement the Municipal Finance Management Act, levels of service delivery for basic services and municipalities accredited with housing responsibilities. The financial situation in local government was skewed as a large part of the budget went to two municipalities out of the 45 municipalities. It appeared as if the province had not looked at proper strategies to increase the revenue raising capacity. The question was asked whether the province had the capacity to identify sources of revenue.
The following questions were asked by Members:
- How District Councils would survive if the regional services levies were phased out.
- How migration from the province was affecting planning.
- What the Department was doing to ensure that officials did their jobs.
MINUTES
Eastern Cape Department briefing
Mr S Kwelita (MEC: Housing, Local Government and Traditional Affairs) welcomed the opportunity to brief the Committee on the state of municipalities in the Eastern Cape province. He said that the areas on which his Department had been requested to focus where very important. Sometimes there was a tendency to be critical about local government’s ability to deliver without looking at factors underlying lack of delivery. The financial situation in local government was skewed as a large part of the budget went to two municipalities out of the 45 municipalities. The majority of the population resided in municipalities that had limited resources and were not based in the two municipalities that received a large part of the total budget.
The ability of local government to raise own revenue remained a serious challenge. Some municipalities would have been dysfunctional if it were not for the equitable share and some grants. Much work still had to be done in order to increase the capacity of local government to raise own revenue. It appeared as if the province had not looked at proper strategies to increase the revenue raising capacity. A question could be asked whether the province had the capacity to identify sources of revenue. Some form of intervention would be required especially if one looked at the existing backlogs.
He said that human resource capacity was also central to service delivery. The issue was not about looking at the number of filled posts against vacancies. The issue was what kind of capacity existed in the filled posts. Did the people occupying the posts have the required skills?
Another issue was the powers and functions at the provincial level. The ability to exercise powers and functions formed the basis of the existence of local government. The weakness was that the Constitution expected that there was capacity to exercise powers and perform functions at local government level whereas this was not the case. The Constitution did not provide that local government had the option to exercise their powers or perform certain functions. The Constitution also provided for certain concurrent competencies between the different spheres of government. For instance, municipalities and the other two spheres of government were expected to play a role in the delivery of health services. The problem was that the roles of the different spheres of government were not clearly defined. There was a need to look at the functions and identify what municipalities could do.
Mr Madyaka (Senior Manager -Municipal Development Finance) focused on the following issues:
– an overview of the financial state of all municipalities in the Eastern Cape province
– readiness of municipalities to implement the Municipal Finance Management Act
– municipalities under Project Consolidate
– levels of service delivery on basic services and
– municipalities that had been accredited with housing responsibilities.
Overview of the financial state of all municipalities in the Eastern Cape province
Mr Madyaka said that the total budget for the year 2004/05 was R10 billion. The document handed out (see attached document) to the Committee referred to R9.5 billion because figures for three municipalities were not included. The province believed that the municipal allocations were problematic. The budget of the Nelson Mandela Metropole and Buffalo City constituted approximately 57% of the total budget of all municipalities in the province leaving 43 other municipalities sharing the remaining 43%. This situation needed serious attention from the government if the financial viability of most municipalities was to be improved. The financial viability of municipalities under the Alfred Nzo and the OR Tambo District Municipalities was of concern given that only 11% and 19% of their respective total budget constitute own revenues. The percentage amounts were not actual collections but amounts budgeted to be collected. The amounts demonstrated dependency on the Equitable Share. The total budget for the OR Tambo District Municipality constituted 9% of the total budget of Eastern Cape municipalities despite the fact that the District Municipality was the biggest in the province.
The total budget of the Nelson Mandela municipality constituted 40% of the total budget of municipalities in the provinces. 80% of the municipality’s budget came from its own revenue and demonstrated the financial viability of the municipality. Various government departments owed municipalities approximately R79 million. The province was still collecting more information regarding the debts. It was difficult to get the cooperation of municipalities on this matter.
Mr Kwelita said that there should be verification and collection of the money.
Mr Madyaka said that he was unable to reflect on revenue collected by municipalities. Lack of data compromised the ability to collect revenue. Data collection was difficult without computer systems. Consumers had often contested bills sent to them by municipalities. The Department had injected R40 million towards the building of Information and Communication Technology capacity in more than 40 municipalities since 2001/02. It is hoped that this would improve revenue collection in the future.
He said that 23 municipalities had submitted annual financial statements to the Auditor General (AG). Seventeen municipalities had submitted their statements late and 22 municipalities did not submit their statements. The AG audited 36 municipalities even though only 23 had submitted their statements and out of this number only two municipalities received unqualified audit reports. In total, 24 municipalities had received disclaimer audit opinions. The Department had visited 35 municipalities to assess and evaluate replies on matters raised in the audit reports. Almost all visited municipalities had not addressed the matters raised in the reports. Non-submission of financial statements could be attributed to backlogs in some municipalities and in some cases the non-availability of the necessary documentation. There was a lack of good financial
management in some municipalities.
Readiness of municipalities to implement the Municipal Finance Management Act (MFMA)
Mr Madyaka said that all municipalities would be ready to implement the MFMA by 1 July 2006. The Department had been involved in capacity building in municipalities.
Levels of service delivery on basic services
Mr Madyaka said that the number of households that received free basic services was not as reflected in the document. This was due to non-submission of progress reports by municipalities. For instance, the document reflected that R521 131 000 was spent on free basic water which was delivered to 57 254 households. Taking into consideration the unit cost per household and the funds spent, the ideal situation should have been 115 807 households served. Electricity statistics were still with the Department of Minerals and Energy. The programme would be part of the Department of Provincial and Local Government mandate in 2006/07. The provincial Department did not have a proper backlog management system in place. Lack of data in municipalities made it difficult to get reliable data. Municipalities did not know who was indigent. 42 municipalities provided free basic water but mostly if the former urban areas. 17 municipalities provided sanitation. The cost for providing free basic services was very high given that the provinces still had to deal with backlogs. Alfred Nzo would require R14 million to deal with backlogs on free basic services and OR Tambo required R160 million. Chris Hani municipality had indicated that it would require over R600 million. The biggest problem was in Nelson Mandela municipality which required R1.5 billion. The total for backlogs was R3 billion.
Municipalities that had been accredited with housing responsibilities
Mr Madyaka said that no municipality had been accredited with housing responsibilities to date because they were still awaiting the approval of the framework for accreditation from the national Department of Housing. The envisaged municipalities to be accredited were Nelson Mandela Metropole and Buffalo City Municipality.
Ms R Z Capa (SALGA Chairperson: Eastern Cape) said that the presenter had left out issue of Integrated Sustainable Rural Development Strategy nodes identified by the President. The Eastern Cape province had four nodes: Chris Hani, uKhahlamba, OR Tambo and Alfred Nzo. These areas were supposed to run programmes that had Integrated Sustainable Development Plan. All three spheres of government had not taken this seriously at all. There were confusions around the money that was supposed to be given to them in 2001 for capacity building. Some municipalities did not receive the money. The lack of funds and failure to develop revenue bases could be attributed to the fact some of the areas were vast and rural. They could not attract the required skills. Lack of led to the poaching of personnel from poor municipalities by richer municipalities. The categorisation of municipalities was a key source of some of the problems. For instance the category of OR Tambo was low as compared to that of King Sabata Dalindyebo (KSD) local municipality. This was the reason why a local municipality could pay their manager better than a manager of a district municipality. This was not understandable because a District manager dealt with the whole district whereas the local municipality manager only dealt with one particular municipality.
She said that rural municipalities would perish if they did not receive grants. The merging of all projects into the Municipal Infrastructure Grant (MIG) had affected a lot of municipalities. The Department of Water Affairs and Forestry (DWAF) did not meet the deadline of transferring projects with in to MIG. Some programmes had remained without budgets because some municipalities had done multi-year budgeting. The programmes included sanitation. Holes had already been dug in some areas but nothing was done to complete the projects. DWAF had indicated that it would raise the issue with National Treasury. There had not been any solution to the problem. All municipalities that were under Project Consolidate were not there due to their capacity. The criteria that was used was that of sanitation and families that had access to clean drinking water or had access to electricity. Electricity was the responsibility of Eskom and water was the responsibility of DWAF. The question was whether one was consolidating Eskom and DWAF because municipalities were not responsible for providing the services concerned. The criteria was not relevant particularly to rural municipalities. She appreciated the existence of the Project. Ways of dealing and moving away for backlogs in areas that were not the responsibilities of municipalities had since been found. More attention had been given to the weaknesses on municipalities. There were serious backlogs in water. Some areas had old infrastructure and there was no proper town planning during the homelands system. The sources of water needed to be audited. Some areas were being developed without the development of treatment works. KSD local municipality, was a case in point. The level and size of treatment works had remained the same. The water pipes had become too small to serve the area and this would lead to informal connection that would compromise supply to other areas.
She said that ward committees and ward based planning were important for integrated and co-ordinated service delivery. South Africa had seen a number of demonstration or marches in the recent past. The truth was that some of the people did not even know of what was happening in their area. One might find that there was a new road and a new school in their ward. Such people did not know about the infrastructure only because they were not in their area. This could be attributed to the lack of collective planning that would set priorities for the entire ward. The re-determination of wards had helped reduce very big wards to more manageable wards.
Discussion
Mr Shiceka thanked the presenters for a thorough presentation. He said that the government had inherited the apartheid system and had to some extent continued with it without turning the ship. The information presented enable one to see that there were some imbalances. There was a need to look at how municipalities could broaden their tax base. The assumption at national level was that municipalities generated their own revenue and the presentation had changed the assumption. Parliament did not have any data on the prevailing on the ground. Lack of data created monitoring problems because one could not compare the situation under different periods. He said that the Commissioner of Police, Mr J Selebi, could get any information about any police station in the country by just pressing a button. The province was supposed to have the necessary information in its computers.
He said that the issue of Presidential Nodes had been raised before with the Department. The Department and affected municipalities should appear before the Committee to talk about the issue. The grading or catergorisation of municipalities should be looked at. The Committee should engage the Department so that it could have a better understanding of the process.
The Chairperson said that the late transfer of projects by DWAF was a cause for concern. DWAF should be invited to come and brief the Committee on the transfer of projects. Project Consolidate was very popular and symbolised that government was doing something about municipalities. The Committee should find a way of addressing problems relating to the project.
He noted that some of the infrastructure in the province was very old. The City of Tshwane had dealt with a problem better. There was a company based in Cape Town that conducted investigation on infrastructure and also designed systems to manage the infrastructure. The system could tell a person the size of the pipes that would be required in ten years’ time based on the estimated population growth. It could also point the exact area wherein a pipe had burst. It would be helpful for the province to meet with the company.
The Chairperson asked what was the level of debt and what was the income and expenditure of each municipality. He also asked what were the backlogs in water, sanitation and roads in each municipality and how much it would cost of addressing them. The Department should come and address the Committee on these questions at a future date. The Development Bank of South Africa was prepared to help municipalities in the Eastern Cape. A follow up meeting should be held with the Bank in this regard.
Mr D Worth (DA) (Free State) said that a number of municipalities were not financially viable. He asked how many municipalities were doing creative accounting. The regional services for district council levies were to be phased out. He asked how the District Councils would survive if the levies were phased out. He also asked how migration from the province was affecting planning in the province.
The MEC replied that one could not say if migration affected the planning of service delivery. Most of the staff was concentrated at actual service delivery points and there were few people who collected information about people and their movement. The question was how to generate information and there were gaps in this regard.
Mr J Le Roux (DA) (Eastern Cape) agreed that there was a need for a follow up with the Department. Most municipalities had not submitted their financial statements or tabled their audit report before their Councils. He asked what the Department was doing to or with the responsible officials in order to address the issue. It seemed like nothing was being contemplated. Some infrastructure dated back to apartheid years. The job of the manager was to see what was happening in the municipality. There was no point in continuously blaming the homeland and apartheid systems for all problems if managers were not doing their jobs. It was very rich for the government to pay them huge salaries and also train them at the same time. They were the very people who should have been training their staff.
The MEC replied that there were municipal managers who were doing exactly what was expected from them. The problem was that some municipalities had backlogs that dated to eight years ago. A person had to deal with issues that arose eight years ago as well as new issues. A lot depended on the kind of support that was offered to municipal managers. The situation was compounded by lack of supporting documentation.
Mr T Manyosi (ANC) (Eastern Cape) said that a lot of work had been done in the province. A big part of the budget went to the payment of salaries. He asked what effect this had on the budget as a whole and service delivery. It seemed that debt collection was a problem. He asked if there was a possibility of deducting the monies owed by various Departments to municipalities from their annual allocations. Rural areas composed a very large part of the Eastern Cape province and those areas had no infrastructure. Free basic service could best be delivered in areas that had infrastructure. He asked how the lack of infrastructure was affecting the delivery of free basic services.
Mr Madyaka replied that all Departments were prepared to settle their debts. At times some Departments had queried certain amounts. There might not be arrears by next year.
Mr L Moseki (ANC) (North West) said that the Department was facing as problem of lack of response to requests for information by municipalities. He asked how the Department was doing to ensure that municipalities responded to its requests. He noted that revenue collection was a problem and asked if the systems were capable of addressing the challenges. Was the province well positioned to deal with challenges? He also asked if the programmes put in place to address capacity problems added any value. He said that he was impressed by the Mpumalanga model of governance. It might be helpful for the Eastern Cape province to look at it. He asked if service providers who were contracted by municipalities ever transferred skills to them.
The MEC agreed that there was a need to do more in terms of revenue collection. There was a difference between projected and collected revenues.
Mr Madyaka agreed that revenue collection was a challenge. Most municipalities did not have computers to assist them in the billing process. A huge amount of money had been injected towards building better capacity. With regard to governance, he said that the Eastern Cape had a forum for District Municipalities where mayors met regularly to discuss governance issues. Municipal managers also formed part of the forum. There was a need for a forum for all managers across the province. There was a structure that had been initiated for mayors across the province
Ms F Nyanda (ANC) (Mpumalanga) noted a number of municipalities had not submitted annual financial statement to the AG. She asked what were the reasons for this. She also asked what were the reasons for the disclaimer audit opinions given to 24 municipalities.
Ms Capa replied that the AG’s office did not have many officials at regional level. The officials were slow to respond to queries from municipalities relating to the audit reports. They would normally say that they were busy doing audits of various Departments and had no capacity to attend to queries from municipalities. In some instances mayors had to give answers relating to issues that had happened when they were not yet in office. For instance, there was a query in OR Tambo relating to a Madondile taxi rank in UMbashe. UMbashe was now under Amathole District municipality. It was discovered that only R5000 had been budgeted for marking marks in the taxi rank. The query from the AG had given an impression that a taxi rank had not been built. Municipalities also needed support when it came to managing financial statements. Most statements lacked supporting documents. The issue of capacity in dealing with financial statements was very important. This had been in Project Consolidate. The Municipal Finance Management Act provided that the Mayor should receive monthly financial statements. This required capacity in the Mayor’s office because a politician would not intelligent enough to deal with financial statements. One had to scrutinize the statements together with the budget implementation plan and Integrated Development Plans. A unit to deal with this was required in the Mayor’s office. Most statements, including bills to residents, had clearly indicated to inability to deal with financial statements.
She said that the Eastern Cape province was in the process of establishing Municipal Support Unit (MSU). It had been discovered that municipalities were entities or institutions in terms of the Constitution. One could not just walk into a municipality. One had to be able to communicate in a manner that he or she would be acceptable in a municipality. The MSU would have all the expertise required in every municipalities. The President had been informed that OR Tambo had one Zambian engineer. One might say that the engineer had remained there because he was not a South African. What made the situation worse that that the engineer was at the present moment on sick leave. Both OR Tambo and Alfred Nzo municipalities had tried to recruit an engineer who would serve both municipalities but could not find one. Even people who were born in the municipalities who rather prefer to go and work elsewhere. Project Consolidate should bring in seven engineers to OR Tambo municipality who would not be allocated to any particular municipality because they might not like the conditions in the municipality and decide to leave. They would be deployed throughout the District municipality when necessary.
Ms Capa said that SALGA was looking at ensuring that bigger municipalities had twining arrangements with rural municipalities. Johannesburg City was already waiting for a name of a municipality in Eastern Cape that would like to twin with them. OR Tambo was already twining with Cape Town City around financial management and disaster management. OR Tambo could not manage disaster because it was a little bit of a disaster itself. The information technology problem was big and most municipalities could not use the systems that were in place.
She said that co-ordination integration of service delivery was key to basic service. For instance, one would find that a municipality had its own data on indigent people. This did not mean that the very same people also appeared on the database of the Departments of Social Development or Education. A person who was receiving free basic water and electricity could still not be receiving a grant from Social Development because Social Development did not know that the person was receiving free services. One would also find that the Department of Education was not exempting those people from paying school fees.
A member said that three municipalities had Plenary Executives and no ward committees. He asked if there were any other mechanisms of interacting with the people in the municipalities. The Nelson Mandela municipality had 54 wards but seemed to have no ward committees. He asked the wards were still in the process of establishing the committees.
Mr Madyaka said he could not say how municipalities communicated with the people in places were there were no wards. The Department did not get proper information regarding the Nelson Mandela municipality.
Mr Kwelita said that some municipalities had formulated forums for communication. The problem was that they were not legislated forums. This was gap a that the province would have to address.
Ms Capa replied that municipalities that did not have Ward Committees were usually small municipalities wherein people knew each other well. Communication was informal because it did not involve the ward councillor.
Kgoshi L Mokoena (ANC) (Limpopo) said that it was rare for municipalities to admit that they were struggling and therefore in need of support. He thanked the MEC for the presentation. He noted that a large part of the budget went to the payment of salaries. A large part of the budget went to two municipalities. He asked how the Department was working towards equalizing the situation. The lack of revenue collection mechanism was a problem because it forced municipalities to resources that were supposed to go towards service delivery for other purposes. He asked who was to blame for the non-submission of financial statements and audit reports. Some municipalities had Chief Financial Officers who were serving in acting capacities. Some of those people did not take their responsibilities serious merely because they were not permanent in the positions. Some provinces had complained about the re-determination of boundaries by the Demarcation Board. He asked if the province also had the same problem.
The MEC replied that there was work that municipalities and the provincial government were not doing. There were no institutions that assessed demarcation and made proposals in between the elections. The tendency was to respond only after the Board had released its proposals. Much focus was devoted to changing statistics without looking at the implications of changing statistics. A lot of work should be done in between elections. In some cases there was a need of the concurrence of the affected municipalities and the MEC of the province. There were problems when it came to demarcation. The Eastern Cape did not have traditional authority boundaries that would help eliminate the need of dividing areas of traditional authorities into various components. The development of such boundaries could help solve some problems. The province could then tell the Board to consider the boundaries when doing its demarcations.
With regard to salaries, Mr Madyaka replied that one had to look at a whole range of factors. Some municipalities had not progressed beyond the establishment point. All staff that formed part of municipalities that were amalgamating were still in the payrolls and this increased the amount spent on salaries in a particular municipality. Poaching of staff was a major problem. Municipalities had to look at ways of retaining their staff and one way of doing this was to offer them high salaries.
The Chairperson said that the Committee, together with the Select Committee on Finance, should make a follow up regarding the capacity of the AG’s office and audit reports. Parastatals should be included in the meetings of intergovernmental relations structures. The issue of IDP review should be dealt with a provincial level. It seemed that municipalities were not playing much role in terms of the demarcation of wards. Some IDPs in the province were not realistic and did not reflect how ideas would take shape on the ground. The MEC would be invited to come and explain the province’s programme on dealing with cross border municipalities.
Kgoshi Mokoena said that Ms Capa should elaborate on what she meant by saying that one could not just go and enter into a municipality.
Mr Kwelita said that municipalities were a sphere of government. One could not just move into a municipality if there was a problem. There was a need to work with them in such a way that they would support the intervention. Municipalities could resist the intervention and it would be difficult to enforce it. This was especially the case in cases where people did not what to be exposed.
Ms Capa agreed that municipalities were a sphere of government. Some local municipalities felt that assistance could only come if they had requested it despite signs that there were problems. Legislation that established local government recognized them as legal entities that had to be respected. In some cases a municipality had to pass a resolution before something could be done. A municipality could decide not to pass the necessary resolution so as to frustrate the whole process.
The meeting was adjourned.
Audio
No related
Documents
No related documents
Present
- We don't have attendance info for this committee meeting
Download as PDF
You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.
See detailed instructions for your browser here.