Mbombela Local Municipality & Thaba Chweu Interventions: Mpumalanga MEC’s briefing & Beaufort-West and Central Karoo District Mu

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Meeting Summary

The MEC for Local Government and Housing submitted a progress report on interventions in Mbombela Municipality. Having received numerous adverse reports on Mbombela Municipality, the MEC had on 26 February 2007 instituted an investigation in accordance with Section 106 of the Municipal Systems Act. The report on the investigations had been submitted to the Provincial Executive Council, which resolved that there would be intervention and support to the Municipality. However, the municipality, despite receiving the recovery plan in October 2007, failed, by December 2007, to table this formally in Council. The Provincial Executive Council decided to invoke an intervention in terms of section 139(1)(b) of the Constitution. The municipality council responded by 15 January 2008 by supporting the intervention by the Provincial Executive Council. The Department of Local Government and Housing would on 30 January 2008 submit to the Provincial Executive Council a progress report in which it would recommend that the Executive Council approve the assumption of responsibility in terms of section 139 (1)(b) of the Constitution with immediate effect. The Committee was quite satisfied with the report on the Mbombela intervention but expressed the need to act urgently. It would visit Mbombela from 17 to 20 March 2008 and would engage on the matter.

The Committee received a report on progress on the Thaba Chweu intervention and expressed appreciation for the report and the intervention, which had resulted in such improved management of Thaba Chweu municipality that the Mpumalanga Department of Local Government and Housing now recommended that the Provincial Executive withdraw the intervention.

The Western Cape MEC for Local Government and Housing briefed the Committee on his Department’s interventions in the Beaufort West and Central Karoo District Municipalities. He outlined the basis for his interventions and the outcome of the legal process initiated. He described the latest developments in the affected regions. Members raised questions about Project Consolidate and the capacity of councillors. In addition, the Committee briefly debated the debated the merits or otherwise of coalition governments. Issues relating to possible interference with the judiciary and municipal budgets were also scrutinised by the Committee.

The Committee deferred adoption of its Annual Report for 2007 to a subsequent meeting, and held an informal discussion on its Oversight Programme for 2008.

Meeting report

Mbombela Local Municipality: Report on intervention
The Chairperson announced that the Mpumalanga MEC for Local Government and Housing, Ms Candith Mashego-Dlamini, had tendered her apologies and requested that a delegation be permitted to brief the Committee on her behalf on the interventions in Mbombela, the capital city of Mpumalanga.

The Chairperson highlighted that the Committee had a major role to play in ensuring that municipalities functioned well, and that MECs fulfilled their responsibilities. In this regard it would cooperate actively with the Select Committee on Finance. It would also examine public service at all levels. He noted that by the end of 2008 there was to be a new structure of provincial and local government at all levels, and the powers of the respective spheres of provincial and local government were to be clearly defined, so that the 2009 elections could take place under a new dispensation.

The state of the municipalities was a major challenge and the Committee would ask the Minister for a report on this, and the Committee should establish a database of such issues. It was unfortunate that so many interventions were needed, as they should be a last resort.
Mr C Dlamini, Acting Head of Department, Department of Local Government and Housing, Mpumulanga, noted that the purpose of the report was to update the National Council of Provinces (NCOP) on the progress of the intervention into Mbombela municipality. He said that the Office of the MEC for Local Government and Housing had received numerous adverse reports, included allegations of mismanagement and procurement irregularities, and infighting that adversely affected the administration, against the municipality. Therefore, on 26 February 2007 the MEC for Local Government, in consultation with the MEC for Finance, established a team to institute an investigation in accordance with section 106 of the Municipal Systems Act 32 of 2000.

The report on the 106 investigations, as detailed in Annexure A of the Report, was submitted to the Provincial Executive Council (PEC). The PEC resolved that the Provincial Treasury was required to support the municipality with financial management. The team dealing with the contract register was required to collaborate with the Executive Mayor and the Members of the Mayoral Committee (MOCs). Those implicated by the complaints were required to account for their abdication of responsibility or violation of Council resolutions. The Province specifically emphasised that it had decided to provide additional support to the municipality. Any intervention was to be swift, and there should be care to avoid attracting unnecessary media attention. A report to the NCOP was to be drafted in line with these resolutions.

The municipality had then been informed of the outcome of the investigation for adoption and implementation by the council. The two MECs had met with the Mayor, Deputy Mayor and Mayoral Committee Members on 15 October 2007, and had formally submitted the recovery plan to the municipality. The Department of Local Government and Housing however later established that neither of these reports had been formally tabled to the council and that other action points in the recovery plan had not been implemented.

Of further concern was the fact that the Mbombela municipality had in 2004/05 and 2005/06 received qualified audit reports from the Auditor-General. It was expected that it would receive a disclaimer on the financial statements for the 2006/07 financial year.

In addition, the Mpumalanga provincial government had seconded an official to Mbombela municipality to assist with the 2010 project, but that official was not allowed by the municipality to take up his position.

During December 2007, the PEC therefore decided to serve notice on the council to invoke an intervention in terms of section 139(1)(b) of the Constitution. The municipality was required to respond by 15 January 2008. Finally, In a special council meeting held on 14 January 2008 the Municipal council supported the intervention, and an official response was submitted to the Department of Local Government and Housing on 15 January 2008.

The Department of Local Government and Housing would on 30 January 2008 submit a progress report to the PEC. The Department would recommend that assumption of responsibility by the Mpumalanga Department of Local Government and Housing, in terms of section 139 (1)(b) of the Constitution, be approved with immediate effect.

The Department also recommended that the NCOP note the progress accomplished on the Mbombela municipality intervention.

The Chairperson observed that Mpumalanga was the most accountable provincial government. He referred to Section 106 of the Local Government Amendment Act with regard to the regulations.

Ms N Nyanda (ANC / Mpumulanga) said that her home was in the Mbombela municipality; however, she did not have a ward councillor.  She urged the Committee to visit Mbombela, noting that there were critical deficiencies in provision of services such as water supply and education. She attributed the problems partly to preoccupation with the stadium project.

Mr J Le Roux (DA / Eastern Cape) said that it was whilst he was on holiday that he had received a telephone call from the DA Member for Mpumalanga, advising him of newspaper reports about the Mbombela municipality. Mr Le Roux said that communication was a problem. He disagreed with the comment in the Report that it was necessary for the intervention to be swift and that care to be taken to avoid actions that would attract unnecessary media attention. He believed rather that it was important to be open and transparent in handling the intervention. Perhaps if there had been more media attention, more would have been accomplished.

Mr Le Roux said further that he was worried about the recovery plan that had not been tabled, for the whole process had been derailed on that account.

Mr Le Roux also asked about the role of the municipal manager, asked whether he was responsible for many of the problems, and, if so, if he had he been given a performance bonus.

Mr V Windvoël (ANC / Mpumalanga) asked about the role of the National Assembly’s Portfolio Committee on Provincial and Local Government in the intervention. He also asked about the role of the municipal manager.

Mr N Mack (ANC / Western Cape) also asked about the role of the municipality and was concerned at apparent poor communication.

Mr Z Ntuli said that it was necessary for the Committee to act as quickly as possible.

The Chairperson said that it was necessary to examine the capacity of the South African Local Government Association (SALGA), of which the Mbombela municipality was a member. SALGA should do more to ensure that its members were capacitated. He asked for opinions about the role of provincial government, noting that he himself had formerly served as an MEC.

Mr Sam Ngubane, Chief Director, Local Government and Traditional Affairs, Department of Local Government and Housing, said that there had been infighting in the municipality. He referred to SALGA’s limitations, saying that it lacked sufficient capacity and was, at this stage of its development, still an immature organisation. Service delivery facilitators to the municipality were from the private sector. Other weaknesses in the municipality, as noted in the report, included performance management.

Mr I Strauss, Director of Municipal Finance, Mpumalanga Department of Local Government and Housing, noted that interaction with the municipality had been very difficult. Advice had been given with regard to the Municipal Finance Management Act, and the National Treasury had co-operated, but the municipality had not acted on that advice. The municipality could really do much better. There were various options for increasing revenue, which the municipality had not taken. It was desirable for this city, especially since it was the capital of the province and a host to 2010 events, to take the initiative to improve its performance, rather than wait passively to be rescued.

The Chairperson observed that the Committee would visit Mbombela from 17 to 20 March 2008. The issues facing city dwellers were quite critical, and the Committee was especially aware of the critical situation of Mbombela as the capital city of Mpumalanga. He reiterated that the Committee wished to ensure that cities were administered properly. The Committee was quite satisfied with the delegation’s presentation.

Thaba Chweu intervention: Mpumalanga MEC’s delegation briefing
Mr Dlamini gave a briefing on the Thaba Chweu intervention, in which the Department had conducted an assessment on 31 December 2007, to assess the readiness of that municipality to perform functions by itself, outside of the Section 139 intervention.

He noted that the following specific areas were investigated: availability of cash and investments to fund activities; commitments towards statutory and contractual obligations and capital projects; the status of creditors; external loans (Development Bank of South Africa); the status of consumer and staff debtors; credit control policy; capacity of financial staff; and internal control.

The Department found that many Improvements had been achieved. These included the prompt payment of all creditors and internal controls to prevent double payments. The municipality had approved its budget punctually. All statutory obligations were now honoured on an ongoing basis.

All creditors were paid up to date. All payments towards external loans were honoured punctually. All government institution accounts were now paid up to date, except that of the Department of Education, which was in arrears to the extent of more than R1 million in consumer accounts.

No new staff advances had been approved since July 2004. Old staff loans to the amount of R125 456.44 were currently deducted from staff salaries. Such deductions were verified and proof obtained. Debts incurred by councillors on their cell phones had been reduced from R332 834.28 to R44 631.04 by July 2007.

Electricity was managed on a regular basis to promote revenue enhancement, which had been outsourced to a service provider; however, outsourcing had the disadvantage that no skills were thereby transferred to municipality staff. 

Bank reconciliations were up to date and financial statements submitted on time. However, the ledger account still needed to be reconciled and investments verified.

All section 57 managers’ positions were filled and performance agreements signed. The municipality did appoint a qualified town engineer in May 2005. For the first time the council was able to allocate out of its own revenue R32 million for capital projects. Also the council spent all of its 2006/2007 financial year’s Municipal Infrastructure Grant (MIG) allocation and had already spent 66% of its 2007/2008 financial year’s allocation. The water services development plan had been finalised, approved and adopted by the council. The municipality had an operating and maintenance programme for the electricity supply that was addressing and solving previous problems.

The Department found that the management of Thaba Chweu municipality had improved to such an extent that the Department now recommended that the Provincial Executive withdraw the section 139 intervention.

Members expressed the view that there was n
o need to continue the intervention if the municipality was doing as well as indicated in the report.

Mr Strauss said that the report spoke for itself. The reason for the intervention had been purely administrative, and the Department had received the full co-operation of the municipality and council. The contract with the service providers had been extended until the end of March 2008. The Department was assisting the municipality on an ongoing basis, notwithstanding the proposed withdrawal from the section 139 intervention, and would continue to assist in such matters as capacity building so that the municipality could stand on its own. The Department was concerned to assist municipalities generally to improve the quality and correctness of their financial statements, since it was an embarrassment to receive so many qualified reports from the Auditor-General.

Mr Ngubane indicated that a report was also attached from the municipality.

Ms Nyanda thanked the Department for its brief and constructive report.

Interventions in Beaufort West and Central Karoo District: Update by Western Cape MEC for Local Government and Housing
The Chairperson explained that the Western Cape MEC for Local Government and Housing would update the Committee on his recent interventions in the Beaufort-West and Central Karoo District Municipalities, and was also asked to enlighten the Committee on the challenges of municipalities in general. He mentioned that the Committee was unhappy with certain aspects of the Local Government Affairs Amendment Act and intended to amend that piece of legislation.

Mr Richard Dyantyi (Western Cape MEC for Local Government and Housing) described the Western Cape as a “challenging environment” as a result of the 2006 local government elections, which gave rise to numerous coalition governments. Given that only four municipalities were won outright, parties were required to form either alliances or partnerships to establish Councils in the remaining municipalities.

Mr Dyantyi revealed that the coalition government arrangement usually resulted in the “fluid” turnover of mayors and councillors. He indicated that in many regions, mayors were often changed every three to six months. This lack of continuity created instability and had an adverse effect on the delivery of services to communities. For this reason, the Department of Local Government and Housing (the Department) continued to insist that municipalities comply with legislation and implement their mandate in terms of service delivery. He emphasised that the department had responsibilities to monitor, support and intervene in affairs of local government.

In line with this commitment, the MEC specified that he invoked had invoked section 139 of the Constitution, providing for the provincial supervision of local government, to intervene in the Beaufort-West and Central Karoo District Municipalities, by reason of these Councils’ failure to convene meetings, and numerous legal battles. The Western Cape Provincial Cabinet granted approval for the issuing of a directive in terms of section 139(1)(a) of the Constitution to both local governments to reconstitute and elect representatives to their respective district municipalities within a specified period.

The MEC stated that he had not dissolved either local government in terms of section 139 of the Constitution, despite their non-adherence to either the deadline or to the election of representatives as stipulated in the directive. It was decided that the municipalities should continue to function over the festive season.

The MEC also summarised the prevailing circumstances and latest developments in the stated municipalities. On December 21 2007, the court dismissed the application of five councillors. In effect, this judgment meant that there were three ward vacancies in the Beaufort-West, for which by-elections should be held, as well as three proportional vacancies for Independent Civic Organisation of South Africa (ICOSA) - two in Beaufort-West and one in central Karoo. The defeated parties appealed this decision and, in terms of the Rules of the Court, the operation of the Order must be suspended until resolution of the appeal. Unknowingly, the Independent Electoral Commission (IEC) had filled the three proportional vacancies, having been at that time unaware of the application for leave to appeal. The legal position confirmed by the IEC was that the three proportional members should retain their positions until the Court indicated otherwise. Consequently, four months after the floor-crossing window, the Beaufort-West Municipal Council had still not elected its representative to the Central Karoo District Municipality. The Department intended to apply its mind the situation and initiate appropriate action after the appeal had been heard.

In conclusion, Mr Dyantyi disclosed that the Department was currently studying the two systems of governance at municipal level, namely the executive mayoral system and the executive committee system, to determine which was the better model and to ascertain whether municipalities were hampered by narrow political interests.

The Chairperson commented that he would be interested in the Department’s findings on the two systems of governance at municipal level. He noted that in the executive committee system the power resided in the collective, whereas in the executive mayoral system the authority vested in the individual. Finally, he voiced his approval that floor-crossing would soon be discarded and this would eliminate some of the instability and challenges faced by municipalities.

Mr Dyantyi confirmed that the Department was in the process of assessing the performance of municipalities under coalitions since 2006. This study would form the basis of the Department’s plan to strengthen certain interventions.

Mr Le Roux disagreed that coalition governments were wholly bad for the country. He reasoned that these taught parties of different political persuasions to work together and understand each other better. Also, he urged all parties to nominate competent and dedicated people to serve as councillors.  As a final point, he stressed that there should be “good and strong” rules and that the provincial Department should enforce them.

The Chairperson echoed the call for parties to examine the calibre of persons before placing their names on a party list.

Mr Dyantyi differed with Mr Le Roux’s position regarding coalition governments and believed that the issue was an ideological one. However, he agreed with Mr Le Roux that the capacity of councillors and administrators was fundamental to the success of a municipality. In response to Mr Le Roux’s last point, the MEC insisted that the department was strict on enforcement and issues of compliance.

Mr Z Ntuli (ANC, Kwa-Zulu Natal) enquired how many municipalities in the Western Cape were under Project Consolidate.

Mr Dyantyi replied that there were ten municipalities under Project Consolidate across all five regions of the province.

Mr Mack thanked the MEC for an informative presentation. He wondered what criteria the department used to approve municipal budgets. Secondly, he stated that the IEC had not been impartial when it allowed for the proportional representation vacancies to be filled despite the appeal, yet did not do the same for the ward vacancy.
Mr Dyantyi responded that the Department looked at factors such as credibility, sustainability and response to the needs of the community before approving the budget of a municipality. He added that the last inquiry should be directed at the IEC because the Department did not have the power to declare who an elected councillor was.

Kgoshi L Mokoena (ANC, Limpopo) recognised the arduous challenges faced by the provincial department. He asked what the best approach would be to ensure that ordinary people did not suffer while others fought for positions. 

Mr Mack expressed concern that the Central Karoo District Municipality had appealed to provincial as well as national government for financial support after exhausting all its funds on litigation with the former municipal manager.

Mr Dyantyi shared this concern and pointed out that it was not a problem uniquely confined to the Central Karoo District Municipality.

The Chairperson asked whether it would be perceived as interference with the judiciary if the legislative and the executive met with judges to recommend that they prioritise cases that involved municipalities. He argued that this would be necessary since delay in the legal process could lead to the dysfunction of Councils.

Mr Mokoena construed that such a measure could not be deemed as interference, provided that it was limited to a mere recommendation to judges that cases involving municipalities should be prioritised.

The Chairperson asked Mr Mokoena to facilitate a meeting with the Judge President of the Cape High Court to discuss this issue.

Committee’s Annual Report for 2007 and Committee’s Oversight Programme for 2008
The Committee deferred adoption of its Annual Report for 2007 to a subsequent meeting, and held an informal discussion on its Oversight Programme for 2008.

The meeting was adjourned.

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