REPORT OF THE SELECT COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS, ON THE OVERSIGHT VISIT TO ABAQULUSI LOCAL MUNICIPALITY, DATED 11 NOVEMBER 2014

1.         Background

 

1.1          On the 20th March 2013, the Provincial Executive Council resolved to intervene at Abaqulusi Local Municipality in terms of section 139(1)(b) of the Constitution, and assumed the functions specified in terms of section 51, 54A and 56 of the Local Government: System Act (Act 32 of 2000). On the 04th December 2013, the Provincial Executive Council noted progress in relation to the turn-around strategy, more specifically in respect to local economic development, municipal financial viability, good governance, public participation as well as spatial development planning.

 

1.2          However, there were some challenges which remained unresolved, these included the regression from an unqualified audit opinion to a disclaimer audit opinion for the 2011/12 financial year; governance challenges in relation to compliance with laws and regulations. On that basis, it resolved to extend the intervention until 30 September 2014. The intervention was further extended on 10 September 2014 until 31 March 2015, due to outstanding key intervention priority areas prevalent

 

1.3       On the 9th September 2014, the MEC for Cooperative Governance and Traditional Affairs in KwaZulu-Natal, tabled to the Office of the Chairperson of the National Council of Provinces (NCOP), a Notice of the request for extension of intervention in terms of section 139(1)(b) of the Constitution at Abaqulusi Local Municipality.

 

1.4        Subsequent to the tabling, the Chairperson of the NCOP referred the notice of intervention in terms of Rule 101, to the Select Committee on Cooperative Governance and Traditional Affairs for consideration and report.

 

1.5        On the 21 October 2014, a multi-party delegation of the Committee conducted an oversight visit to the Abaqulusi Local Municipality.         

 

 

 

2.         Objective of the Oversight Visit

 

2.1        The objective of conducting the oversight visit was to consult and interact with the internal and external stakeholders of the Municipality, in order to solicit their opinion with regard to the Notice of the request for the extension of intervention in the Municipality in terms of section 139(1)(b) of the Constitution, and thereby report back to the NCOP in terms of Rule 101.      

 

3.         Overview of the Oversight Visit to Abaqulusi Local Municipality 

 

3.1       On the 21st October 2014, the delegation of the Select Committee on Cooperative Governance and Traditional Affairs had interaction and a consultative meeting with the internal and external stakeholders of the Municipality. The stakeholders the delegation interacted with included the Mayor, Speaker, Chief Whip, senior officials of the Provincial Department of Cooperative Governance and Traditional Affairs, the Ministerial Representative and representatives of the Organised Labour and Ward Committee members and members of municipal political parties.

 

4.                     Presentation on the Justification for Request of Extension of Intervention in Abaqulusi Local Municipality  

 

4.1       The Provincial Department of Cooperative Governance and Traditional Affairs briefed the Members of the Select Committee on the background of the constitutional intervention and the resolution of the KwaZulu-Natal Provincial Executive Council, dated 10 September 2014, to extend the intervention in terms of section 139(1)(b) of the Constitution.

 

4.2       The Departmental presentation focused on the background, reason for the intervention and the terms of reference of the Ministerial Representative in Abaqulisi Local Municipality. 

 

5.        Context           

 

5.1        On the 20th March 2013, the Provincial Executive Council resolved to intervene at Abaqulusi Local Municipality in terms of section 139(1)(b) of the Constitution, and assumed the functions specified in terms of section 51, 54A and 56 of the Local Government: System Act (Act 32 of 2000).

 

5.2        On the 04th December 2013, the Provincial Executive Council noted progress and some challenges which still remained. On that basis, it resolved to extend the intervention until 30 September 2014. The intervention was further extended on 10 September 2014 until 31 March 2015, due to outstanding key intervention priority areas prevalent.      

 

6.        Reasons for the Intervention 

 

6.1        The Municipality had regressed from an unqualified audit opinion to a disclaimer audit opinion for the 2011/12 financial year, highlighting significant deficiencies in financial management, performance management and compliance with laws and regulations which reflected a clear failure to fulfil executive obligations.

 

6.2        The Municipality also failed to raise and account for the interest on arrears as required by section 64(2)(g) of the Municipal Finance Management Act (MFMA), Act 56 of 2003, and the absence of council resolution to grant the exemption from charging interest as required by the Act.  

 

6.3        The annual report was not compliant with section 121 of the MFMA, and there was also substantial disagreement in the council, regarding the filling of the post of the Municipal Manager. The Municipality was without a Municipal Manager or an acting Municipal Manager from 31 January 2013 to 05 March 2013, which is a statutory violation. 

 

6.4       Further, the Municipality refused or neglected to opt for support offered by the Provincial Department of Cooperative Governance and Traditional Affairs, despite having no top management structure in place.       

 

7.       Terms of Reference of the Ministerial Representative at Abaqulusi Local Municipality   

 

7.1        The terms of reference for the Ministerial Representative were as follows:

 

·                To review any decisions of the municipal council, its committees and that of the Municipal Manager or managers directly accountable to the Municipal Manager for the purpose of ensuring legality.

·                To devise a turn-around strategy for the Municipality, including a strategy to promote good governance and ensure implementation of the council resolutions by the administration.

·                To implement a system to control and approve all expenditure.

·                To implement all governance systems and procedures including appropriate council oversight mechanisms.

·                To ensure implementation of financial systems, policies and procedures.

·                To review the organisational structure of the Municipality and undertake all steps of the section 54A and section 56 of the Local Government: Municipal Systems Act.

 

 

8.         Presentation on the Intervention Progress Report                               

 

8.1       The Ministerial Representative briefed the delegation of the Committee on the municipal progress report since the intervention, and the challenges which are the basis for the request of extension of intervention in terms of section 139(1)(b) of the Constitution. The presentation focused on the five key performance areas of the five-year Local Government Strategic Agenda, namely, institutional development and municipal transformation; municipal financial viability and management; good governance and public participation, basic service delivery and local economic development.           

 

 

9.         Institutional Development and Municipal Transformation     

 

9.1        The Municipality developed its process plan for reviewing the IDP for 2015-2016, and adopted by council on the 27th August 2014. The process plan was advertised on the 4th of September 2014, and the IDP Representative Forum was scheduled to take place on the 11th September 2014 and was rescheduled to November 2014. 

 

9.2        The Municipality drafted its Service Delivery Budget and Implementation Plan (SDBIP) for the 2014/15 financial year in a session with the following as attendees: Executive Committee, Speaker, Chairperson MPAC, Chief Whip and MANCOM. The point was to inculcate a culture of common purpose. The SDBIP was approved by the Mayor on the 18th June 2014, and submitted to council on the 26th June 2014. The first quarter departmental performance assessments were conducted from the 13th to the 17th of October 2014.

 

9.3        The review of the Human Resources Policies has been completed but was scheduled for a workshop of all councilors, before final adoption. An assessment was currently conducted for the annual skills development for all the employees and has been finalized. An annual training plan has been finalized and it was due for the Training Committee.

 

9.4        A procedural document in compliant with section 75 of the MFMA, that regulates the information to be published on the municipal website has been drafted, the website was being updated.

 

9.5       The Employment Equity Plan has been drafted and was due for the managers to make comments, and shall be presented to the Union members for consultation processes, before approval and submission to the Department of Labour.

 

10.      Financial Viability and Management

 

10.1      The Municipality’s revenue for the month of August 2014 was 20,5% of budget. Trading services revenue was 15,7% of budget. The revenue collection rate for the month of August was higher due to the 1st tranche of the equitable share having been received during July. Stricter credit control of zero tolerance on agreements and disconnections has been implemented. Plans were underway to solve that and embark in a study for alternative revenue sources.

 

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10.2      Expenditure for the month to August 2014 was 11,6% of budget. This was due to the payment for Eskom being made during the month of August, for the July account, as Eskom was paid in arrears. The prior audit report showed a significant improvement in the SCM and expenditure controls.

 

11.      Good Governance and Public Participation

 

11.1      Council has for the current year adopted an annual program for the sitting of council, EXCO, Portfolio and Municipal Public Accounts Committee. However, during the first quarter of the current financial year, committees did not sit as scheduled due to the instability within the institution, which was created by the dismissal of the MEC’s appeal at the Constitutional Court. The reviews of the Rules of Order, and the Orders of Delegation have been completed and await a workshop and council approval. A workshop of councilors on Roles and Responsibilities including the Code of Conduct has been conducted by the Department of Cooperative Governance and Traditional Affairs.

 

11.2      All Directors concluded performance contracts by end July 2014 and the one of the Chief Financial Officer will be concluded in December 2014, and all copies were submitted to Department of Cooperative Governance and Traditional Affairs in August 2014.

 

11.3      The annual financial statements implementation plan and corrective action has been stringently adhered to. All processes and committees have been put in place to deal with the Auditor-General’s requirements. The fourth quarter dashboard by the Auditor-General has confirmed that the Municipality is in a better stead to achieve a better audit opinion.

 

11.4      The risk management situation in the Municipality has improved drastically in that Provincial Treasury has concluded the risk register which each of the departments, and now it was in the process of departments monitoring and reconciling other risk areas to be addressed. The risk chapter will be included in the monthly reports and departments will report progress on risk. The Audit Committee was fully functioning and has met the seating requirements and will continue to meet going forward by the end of the financial year. Management has advertised the two vacancies in the committee, and the advert was closing on the 28th of September 2014, the process of filling the vacancies will be concluded in October 2014.

 

12.      Local Economic Development  

 

12.1      The Municipality has not yet developed its Local Economic Development Plan, but has committed to complete the Plan in December 2014.

 

13.      Basic Service Delivery

 

13.1      Municipality was in the process of developing draft social assistance policy to be completed by November 2014. It has facilitated a partnership with the Development Bank of South Africa (DBSA) on support, including its comprehensive Infrastructure Plan.

 

14.     Opinion of the Member of Democratic Alliance (Party Whip)

 

14.1      The member of Democratic Alliance raised concerns with regard to the manner in which the intervention was issued. Some of the major concerns raised related to the non-implementation of projects during the period of the intervention and the municipal requirement for the current councillors to repay monies committed by the previous councillors. 

 

15.     Opinion of the Member Inkatha Freedom Party (Party Whip)

 

15.1      The Inkatha Freedom Party member raised concerns with regard to the justification of the intervention and extension. The major concerns raised related to the manner in which section 56 managers have been recruited and appointed, municipal requirement for current  councillors to repay debts committed by previous councillors and the dismissal of 25 municipal employees.    

 

16.      Opinion of the Member of National Freedom Party (Party Whip)

 

16.1      The Member of the National Freedom Party raised concerns with regard to the intervention. The major concerns raised related to the report of the Ministerial Representative on the projects implemented by the councillors and the implementation of decisions by the Ministerial Representative.

 

17.      Opinion of the Member of African National Congress (Party Whip)    

 

17.1      The African National Congress member expressed support and welcomed the progress made in the Municipality in terms of section 139(1)(b) of the Constitution. The major progress reported included the improvement of political relations among councillors, reconciliation during the strategic planning workshop held in February 2014 and the restoration of political stability and governance.   

 

18.      Opinion of the Representative of Organised Labour     

 

18.1      The senior official of the South African Local Government Association (SALGA) pledged on behalf of the office bearers, support of the request for extension of the intervention in terms of section 139(1)(b) of the Constitution. The Association welcomed the progress made by the Ministerial Representative, more especially with regard to governance, municipal administrative and political stability and the processes around restructuring and municipal amalgamation.  

  

19.      Opinion of Labour Unions    

 

19.1      The representative of the labour Union submitted a joint opinion of the IMATU and SAMWU supporting and welcoming the progress made since the intervention was invoked. Although acknowledging the progress made with regard to the functionality of local labour forum, organised labour raised concerns with regard to unfair dismissal of 25 municipal employees, employers decision to take the matter of dismissed employees to the labour court and legal costs incurred by the Municipality in that regard.            

 

 

 

20.       Committee General Observations and Opinion

 

20.1      The Committee has observed and noted that the Provincial Department of Cooperative Governance and Traditional Affairs has failed to comply with the resolution passed by the NCOP during the Fourth-Parliament, which required the Department to table quarterly progress reports in respect of intervention issued in terms of section 139(1)(b) of the Constitution in Abaqulusi Local Municipality.   

 

20.2      The Committee has also noted that on the 20thMarch 2013, the Executive Council resolved to intervene at Abaqulusi Local Municipality in terms of section 139(1)(b) of the Constitution, and assumed the functions specified in terms of section 51, 54A and 56 of the Local Government: System Act.

 

20.3      On the 04 December 2013, the Provincial Executive Council noted the progress and the challenges which remained in the Municipality. On that basis, it resolved to extend the intervention in terms of section 139(1)(b) of the Constitution, at the Municipality until 30 September 2014. The intervention was further extended on 10 September 2014 until 31 March 2015, due to the outstanding key intervention priority areas.   

 

20.4      The Committee has observed and noted that the intervention priority areas which becomes justification for the request of extension of intervention until March 2015, which related to strategic objectives of local government namely, institutional development and municipal transformation, financial viability, good governance and public participation, local economic development and basic service delivery.

 

20.5      The Committee has noted and welcomed the progress made by the Municipality in developing the 2014/15 SDBIP, conclusion of performance contracts of section 26 managers; completion of the review of the Rules of Orders and delegation and the role of the Provincial Department of Cooperative Governance and Traditional Affairs in conducting workshops for the Councillors.      

         

20.6      Despite the progress made in respect financial viability, good governance and public participation, the Committee was of the opinion that the Ministerial Representative, needs to fast-track the process of developing the municipal Local Economic Development Plan and Social Assistance Framework, in order to deal effectively and efficiently with challenges related to basic service delivery.           

 

20.7      The Committee has further observed and welcomed the proactive role played by SALGA and the part played by the Provincial Monitoring Task Team on the interventions in the KwaZulu-Natal Province.   

 

21.      Committee Recommendations to the NCOP

 

21.1      Having conducted the oversight visit to Abaqulusi Local Municipality in response to the request of extension of intervention terms of section 139(1)(b) of the Constitution, the Select Committee recommends to the Council as follows:       

 

20.1.1   The NCOP approves the request of the extension of intervention in terms of section 139(1)(b) of the Constitution in Abaqulusi Local Municipality, until March 2015.  

 

20.1.2 The Ministerial Representative should fast track the process of developing the municipal Local Economic Development Plan and Social Assistance Framework, for consideration and adoption by the Municipality.    

 

20.1.3 The KwaZulu-Natal Provincial Department of Cooperative Governance and Traditional Affairs should table an exit report on the intervention in Abaqulusi Local Municipality to the NCOP by April 2015.

 

20.1.4 On cross-cutting issues with regards to women and youth that were raised during the oversight visit, to be referred to the Department of Women in The Presidency and the National Youth Development Agency (NYDA). 

 

Report to be considered.