MPUMALANGA PROVINCIAL GOVERNMENT
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Building No 6 Extension
2 No Nelspruit Republic of South Africa |
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Private Bag
X11304 Nelspruit 1200 |
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Department of
Local Government and Housing
OFFICE OF THE HEAD OF DEPARTMENT |
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Litiko
LaHulumende We Ndzawo Netindlu |
Department van
Plaaslike
Regering en Behuising
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Umnyango
Wombuso
we ze Khaya
neZindlu |
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STATUS QUO REPORT ON
The Department
visited
The following
specific areas were investigated:
Availability of cash and investments
to fund activities
Commitments towards statutory and
contractual obligations and capital projects.
Status of creditors
External loans (DBSA)
Status of consumer and staff debtors
Credit control policy
Capacity of financial staff
·
Internal Control
1.
Availability of
cash and investments to fund activities
Council operated
with not less than nine different bank accounts. These accounts were reduced to
three accounts, primary bank account, MIG Grant account and an account for
Traffic revenue.
Previously
reported overdraft accounts were done away with and the Primary bank account
balance reflects a positive of R16 mil. Due to the lack of an up to date bank
reconciliation the amount regarding outstanding cheques could not been
provided. The actual bank balance could not been establish.
All revenue is
deposited in the primary account, which is an improvement from the previous
situation where each business unit had its own revenue account.
All creditors
are paid in time and internal control to prevent double payments was
implemented. Council previously made payment of creditors when funds were
available.
Investments to
the amount of R758 673.00 could be verified, but the financial statements of
2006 indicated investments to the amount of R5mil.
The municipality
approved the budget in time.
2.
Commitments
towards statutory and contractual obligations.
All statutory obligations are
honoured on an ongoing basis.
3.
Status of
creditors
All creditors are paid up
to date.
4.
External loans
(DBSA)
All payment towards
external loans is honoured on time. The total outstanding loan in respect of
INCA is R11 696 804.00 and the outstanding balance for DBSA is R6 636 658.37.
The repayment is provided for in the current budget.
5.
Status of
consumer and staff debtors
5.1 Consumer debtors
The Council did consolidate
the two financial systems into one integrated system. Council is still
experience problems with the new financial system. The financial system does
reflect the roll-out of free basic services. The following billing and payments
were recorded for 2 months:
Billed Cash
Received %
Payment
R17 902 491,00 R15 515 136.00 86.66 %
All government institutions
accounts are paid up to date except for Dept of Education who is in arrears to
the amount of more than R1 mil. in consumer accounts.
According to Appendix A of
the budget, Council has an accumulated provision for bad debt to the amount of
R37 mil. The accumulating debtors is currently standing at R67 415 581.62.
5.2 Staff Advances
No new staff advances were
approved since July 2004. The old staff loans to the amount of R125 456.44 were
currently deducted from staff salaries. The deductions were verified and proof
was obtained.
5.3
Councillors
debtors (Cell phone)
The outstanding balances on
Councillors cell phones were reduced from R332 834.28 to an amount of R44
631.04 as on July 2007.
Arrangements were made by
certain Councillors to deduct the arrears on the cell phone accounts from their
allowances.
5.4 Councillors debtors (consumer accounts)
With the information provided it appears that the councillors and
management is up to date with regards to payment of consumer accounts.
6.
Credit control
policy
It was found that a uniform credit control policy
was adopted. Revenue enhancement was outsourced and electricity is cut on a
regular basis. The vacancies of meter readers and shortage of other revenue
staff is currently supported and the functions performed by a service provider.
7.
Capacity of
financial staff
All section 57 managers
posts are filled and performance agreement signed.
The appointment of a
qualified CFO is bearing fruits although training still needs to be provided on
the financial system. More staff still needs to be appointed and trained in the
financial department to ensure that all financial functions are performed by
council.
The current outsourcing of
revenue enhancement to a service provider contributed mainly to the improvement
in the financial department. This is however not a good practice due to the
fact that functions are performed by staff of the service provider and no
skills are transferred. This is not only happening in the finance unit, but
also in the electrical department as well as with the meter readers.
The bank reconciliations
are up to date and the financial statements were submitted on time. The ledger
account still needs to be reconciled and the investments need to be verified.
8.
Infrastructure
and MIG fund
The municipality did
appoint a qualified Town Engineer during May 2005. For the first time council
could make an allocation out of own revenue to the amount of R32 mil for
capital projects. Council did also spend 100% of the 2006/07 financial years
MIG allocation and have already by August 2007 spend 66% of the 2007/08
financial years MIG allocation.
The water services
Development Plan has been finalised approved and adopted by Council. The
municipality does have a operating and maintenance programme for the electricity
supply, which is addressing and solving previous problems.
9. Recommendations
·
The general management of Thaba Chweu municipality
did improve to such an extend that the department recommends the withdrawal of
Section 139 intervention by the Provincial Executive.
That the Department of Local Government and Housing obtain the
Provincial and Executive council approval to terminate the intervention and
inform all relevant stakeholders of such an approval.
THABA CHEU
P O Box 61
Lydenburg
1120
All correspondence to be directed to The Municipal Manager
Municipality
Head
Office Lydenburg
Enquiries: I M Moshoadiba 30 July 2007
Ref No:
The Acting HOD DLG&H
Mr C Dlamini
P O Box 11304
NELSPRUIT
1200
Attention:
Bassie Strauss
Director Municipal Finance
Sir
PROGRESS
REPORT ON SECTION 139(1)(B) OF THE CONSTITUTION OF RSA
REPORT
OF THE MUNICIPAL MANAGER ON THE VISIT BY SCOPA
08 FEBRUARY 2007
1.
Progress since
the commencement of the intervention in 2005
Three of our
Section 56 & 57 Managers (including the Municipal Manager) had the pleasure
and opportunity of working with the Administrators team. A road map was clearly set out and was
followed in this manner.
o To date all five
(5) Section 56 & 57 posts have been filled.
o Municipal
Manager, Mr
o CFO, Mr Paul Mpele was appointed 1 January
2007
o Director Safety
and Community Services, Ms Lindi Dube
was appointed 1 January 2007
o Director
Corporate Services, Mr Noko Seanego
was appointed 10 May 2005
o Director
Technical Services, Mr Nick van Rensburg
was appointed 10- May 2005.
o All Section 56
& 57 Managers have signed Fixed Term Employment Contracts and have signed
three (3) Performance Contracts. Chief
Financial Officer and Director Safety and Community Services Performance
Contracts will be finalized by 31 July 2007.
o A manually
verified debtors book amounted to R48 million including the Pre 1994 debt)
as of September 2005.
o A private
service provider (Revenue Management and Debt Collection Shining Star
Management Consulting) was appointed in October 2005
o To date an
amount of R69 million marks councils electronically verified debtors
book. This increase is due to:
(a)
accumulated interest charged at 18% per annum,
compounded.
(b)
Increasing number of indigents
(c)
A high suspense account due to unidentified
deposits.
o The SEBATA
Financial System is now able to give the accurate figure of the debtors book.
o The Auditor
General has audited Thaba Chweu Municipal for the years 2003, 2004 and
2005. A final report is still awaited
from the Auditor General.
o Annual Financial
Statements for the year ended 30 June 2006 have been compiled and sent to the
Auditor General in January 2007. An
Audit Report is still awaited hereof.
o There is
certainty that the AFS 2006/07 will meet the 31 August 2007 timeline.
o
o
o The
inconsistency/or changing the Chief Finance Officers and Acting Chief
Financial Officers four (4) times in one year contributed adversely in the
migration from the two financial systems (Finstel and Munsoft) to SEBATA. This situation caused the municipality a
crisis with rate payers. A recovery plan
was put into place and it is working satisfactorily.
o However, there
is a significant improvement in the Sebata Financial System regarding data accuracy. There is still room for improvement.
o
o Proper reports
regarding Bank Accounts have already been sent to relevant authorities, i.e.
Provincial and National Treasury.
o All pending
disciplinary cases have been finalized and resolved.
o
o The old By-laws
and Policies are currently undergoing reviewal one by one.
o Since February
2007 the following policies were reviewed and By-Laws passed by Council:
(i)
Delegation of Authority
(ii)
Fleet Management Policy
(iii)
Transfer and Promotion Policy
(iv)
Occupational Health and Safety
(v)
Land Alienation and Integration of Communities
Policy (Policy and Procedures)
(vi)
Developer Bulk Service Contributions Policy.
(vii)
Property Rates By-Law (passed)
(viii)
Street Trading By-Law (passed)
(ix)
Outdoor Advertisement By-law (passed)
(x)
Electricity By-Law (passed)
(xi)
Storm Water Management By-Law (passed)
o The four (4)
Portfolio Committees established by Council Resolution in April 2006 are fully
functional.
o These Committees
hold monthly meetings and recommend to the Mayoral Committee. The Mayoral
Committee is fully functional and holds its meetings on monthly basis and when
the need arises.
o The Mayoral
Committee which consists of full time councilors has added a lot of value in
the day to day running of the municipality.
o Full Council
holds its quarterly meetings exactly as required by law. Items are no longer deferred without
substantive reasons.
o The land audit
was conducted and it proved that ample land in
o
o The same plan
will be used for Sabie and Graskop areas as of 1 July 2007 (Budget Purposes).
o Quarterly Report
will be sent to SCOPA in this regard.
o The Department
of Local Government and Housing has funded
o The Department Local
Government & Housing is also in the process of funding
·
It is good.
·
Was at its best until the time of the Speakers
untimely death in April 2007.
·
The new Speaker of Council will assume office
during the month of August 2007.
·
Currently
at its best.
·
The first
Municipal Managers Forum Meeting of Ehlanzeni District was held in Thaba Chweu
on 25 January 2007.
·
o The 2006/7
budget was compiled successfully and the same happened
for 2007/2008 budget.
o For the first
time
o
o The Municipal
Systems Improvement Grant 2006/2007 (MSIG
R734 000) has been used for the Municipal
Valuation Roll
o The Finance
Management Grant (FMG R500 000) has been used for the SEBATA Financial
System.
o Monthly Reports
are sent to both Provincial and National Treasury on these grants.
·
Nothing
critical can be reported at this stage.
Only individual councilors interference problems are still experienced
and administration is handling them on an ongoing basis. This is however not so serious.
·
See
attached schedule herewith, marked as Annexure A.
·
It is
remarkable that the outstanding debt of R167 009.99 as of February 2007 has
been reduced to R44 631.04 to date. Only
two (2) Councillors are still owing.
·
The cell
phone allowances are now being paid in line with the existing prescribed
practices and laws,.
·
A
Qualified Town Engineer was appointed in May 2005.
·
A Water
Services Development Plan has been finalized, approved and adopted by council
in July 2006.
·
Lydenburg
still experiences minor power outages due to over stretching of electricity
caused by a busy housing development.
·
The current
billing system does reflect the roll-out of free basic services and consumers
are no longer complaining about this.
It is remarkable
that the outstanding debt of R167 009.99 as of February 2007 has been reduced
to R44 631.04 to date. Only two (2)
Councillors are still owing.
·
The cell
phone allowances are now being paid in line with the existing prescribed
practices and laws.
·
Mashishing
Unit payment rate has improved from 80% to 90%.
·
Sabie Unit
has increased from 60% to 80%.
·
Graskop
Unit has increased from 40% to 70%.
·
·
Currently
an average amount of R8.2 million is consistently received every month from the
total billing since September 2006 to date.
v Eleven (11) of
the twelve (12) Ward Committees have been established and are fully
functional. The one ward is a rural ward
which has transient residents (Zimbabwean, Mozambican, etc. nationals) who live
in compounds and do not seem to have any interest in human settlement issues.
v The municipal
budget is supportive of Ward Committees and Community Development Workers
functionality, i.e. 2% of the operating budget is allocated for the
functionality of Ward Committees.
v The 14 Community
Development Workers are all functional and are fully supported by municipal
administration and politicians. They
report monthly to the province as required.
v Management team
was invited to a meeting of the Mashishing Rate Payers Association to give
administrative clarity on issues. This
meeting was constructive and fruitful (NB. March 2007).
v The Local Labour
Forum has been established and it runs as scheduled. Labour issues of critical importance are
tackled as laid down by the Bargaining Council.
v The Employment
Equity Plan has been jointly compiled, ratified by Council and sent to the
Department of Labour as regulated.
v There is labour
stability in the institution.
v It has certainly
added value in the administration of
Ψ That a credible internal audit be conducted throughout
the municipality to finally clear up all administrative intricacies and
political environment to enable operations from a clean slate.
Ψ That further
financial support be offered to fully stabilize the finance department of
Ψ That
6.
LED
OPPORTUNITIES AND
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ACTIVITY |
TIME FRAME |
ANTICIPATED IMPACT |
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1. The IDP Process Itself |
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2. The Establishment of the Thaba Chweu Economic Development Agency. Council Resolution still awaited in this regard. |
June 2008 and to be Reviewed Annually. Ongoing Development Process
Guided by the Dynamics of the Times. |
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3. Development of the LED Strategy and Tourism Plan |
August 2007. Province has offered Grant Funding of the Strategy to the
tune of R500 000 and the DBSA & Ehlanzeni District Municipality have also
Granted Funding of the Tourism Strategy to the tune of R300 000. |
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4. Development of the Spatial Development Plan (Framework) and Land
Use Management System |
July 2007. The DBSA has issued a Grant Funding of the Lydenburg
SDP/SDF to the Tune of R400 000, as a result of the Sustainable Communities
Project currently underway for the Mashishing Area only. Some more
applications have been made to cover Sabie & Graskop areas of |
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5. Global Forest Products (SABIE) has unlocked over 30 hectares of |
Acceptance of the offer by Global Forest Products in October2006.The
Roll-Out of the Implementation Plan as envisaged in the PPP to commence in
January2007 and Ongoing depending of the availability of funds for Township
Establishment and to Put Services in the
earmarked Land |
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6. Servicing of 400 stands in Mashishing Area and 125 stands in the
Sabie Area for the Middle Income Group of the population of |
Process of services to be completed by June2008. The DLG&H MP has pledged a support grant amount of R5 775 000 for
the current financial year subject to * Middle income
group is targeted* and Township establishment has been done on the earmarked
land. |
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7. Proposals have been called for the development of the Shopping Mall
in the Mashishing Area. |
Completion of the Mall anticipated by December 2009. |
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8. Proposals have been called for the development of the Hotel or
Lodge in the Gustav Klingbiel Game Reserve of Thaba Chweu Municipality following
a research that was conducted in 2002/3, by EDM. |
Completion and commencement to operate anticipated by December2009. |
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9. Council Resolution still awaited for the PPP arrangements with the
Business entities of the |
Completion of process anticipated by July 2009. |
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10. Proposals have already been called for the Re-development of the
Taxi Rank in |
Completion and commencement to operate anticipated by December2008 |
ό To ensure that
proper transport service is delivered. ό To develop the
image of the town. ό To enhance
Business activity. ό To encourage
the idea of PPP. This has enough potential and is not yet fully explored in |
Faithfully,
.. 27
JULY 2007
ISAAC MOSHOADIBA
MUNICIPAL MANGER
Ratified by
CLR. CLARA NDLOVU
EXECUTIVE MAYOR
COUNCILORS CELL PHONE DEDUCTIONS
AS FROM
JULY 2006 JULY 2007
VOTE NAME BALANCE DEBIT CREDITS
BALANCE
001 M
E MASHEGO 0.00 0.00 0.00 0.00
002 B
D DUBE 0.00 0.00 0.00 0.00
003 M
MABELANE 0.00 0.00 0.00 0.00
004 J
MASILELA 0.00 0.00 0.00 0.00
005 B
MOHLALA 20 214.29 20 214.29
-7 800.00 12 414.29
006 C
KHUMALO 0.00 0.00 0.00 0.00
007 C
MOKONE 5 277.09 5 277.09 -5 277.09 0.00
008 L
MANZINI 7 034.49 7 034.49 7 034.00 0.00
009 E
N MASHEGO 52 818.07 52 818.07 -20
601.32 32 216.75
010 B
DU PLESSIS 0.00 0.00 0.00 0.00
85 343.94 85 343.94
26 643.92 44 631.04