BRIEFING DOCUMENT
ON THE INTERVENTION IN THE GREATER
1. PURPOSE
To
provide a briefing report to the Select Committee on Local Government and Administration
on the intervention by the Executive Council of the Province of KwaZulu-Natal
undertaken in terms of Section 139 of the Constitution at the Greater Kokstad
municipality and the present status quo in the municipality.
2. LEGISLATIVE PROVISIONS
Section
139 (1) of the Constitution, provides as follows;-
“When
a municipality cannot or does not fulfill an executive obligation in terms of
the Constitution or legislation, the relevant provincial executive may intervene by taking the appropriate steps
to ensure fulfillment of that obligation, including-
(a)
issuing a directive to the Municipal Council,
describing the extent of the failure to fulfill its obligations and stating any
steps required to meet its obligations;
(b)
assuming responsibility for the relevant obligation in
that the municipality to the extent necessary
to –
(i)
maintain essential national standards or meet
established minimum standards for the rendering of a service;
(ii)
prevent that Municipal Council from taking unreasonable
action that is prejudicial to the interests of another municipality or to the
province as a whole; or
(iii)
maintain economic unity; or”
3. BACKGROUND
The
background to the intervention in terms of section 139 of the Constitution is
briefly, the following:-
3.1 The municipality received support from the department’s
Municipal Assistance Programme (MAP) for the 2003/4 financial year. Amounts of R1,9 million and R1,5 million were
set aside to address the undermentioned challenges facing the municipality in
the 2003/4 and 2004/5 years, respectively:-
·
poor municipal cash
flow;
·
no comprehensive
financial management plan;
·
an old and outdated
financial management plan;
·
no system to manage
debt collecting; lack of human resource planning;
·
municipal
properties were leased at below market rates;
·
municipal
properties were sold at below market value;
·
a corrupt housing
programme that resulted in a forensic audit;
·
unlawful approval
of increases to Councillors’ allowances;
·
council approving
unlawful loans to councillors and officials;
·
the regrading of
the municipality from a grade 6 to a grade 9 municipality;
·
poor formulation of
the Integrated Development Plan for the municipality;
3.2
In June 2004 Eskom
notified the National Minister of Provincial and Local Government of its
intention to disrupt electricity supply to the municipality due to the
municipality failing to meet its obligations to Eskom over the past 4 months;
3.3
Due to poor
cooperation from the municipality the MAP intervention had not yielded the
envisaged outcomes;
3.4
The budget process
for the 2004/5 financial year had not commenced 4 months into the financial
year;
3.5
It was decided that
the national department of Provincial and Local Government would intervene to
assist, and a comprehensive MAP Recovery Plan would be instituted, and that
this would be jointly championed by the municipality, the district
municipality, the province, the national department and the DBSA.
3.6
An estimated R12
million was invested to undertake a number of projects to improve the financial
position of the municipality and to enhance administration. However a due diligence
exercise has shown that very little value has been received for this
investment.
3.7
Financial
management at the municipality has not improved despite the support, financial
investment, investigations and initiatives undertaken. This is evident from the fact that the
municipality has received a disclaimed audit for the 2005/6 year, indicating
financial problems and poor financial management and decision making.
3.8
The report of the
Auditor General on Performance Management at the municipality for the year
ending June 2005 has indicated that the performance management and supporting
systems at the municipality had not progressed to the point where they could be
audited. The report for the year ending
June 2006 also highlighted that the council had not fulfilled certain executive
obligations including the following:-
·
the Integrated
Development Plan was not reviewed annually;
·
the Performance
Management System had not been adopted;
·
the municipality
had not monitored and compared actual and targeted progress for actual service
delivery;
·
no internal audit
reports were provided;
·
no performance management report
was prepared.
3.9
The municipality
also failed to comply with the requirement to submit an annual report as
contemplated by the Municipal Finance Management Act, 2003
3.10
Arising from the
above, the Provincial Executive Council resolved to intervene as follows:-
the Greater Kokstad Municipality appoints a multi-disciplinary task-team
of specialists with the appropriate expertise and knowledge in the applicable
fields in consultation with, and upon the instruction of the MEC for Local
Government, Housing and Traditional Affairs to review the affairs,
administration and financial management of the municipality in order to refine
a turn-around strategy for the municipality for the effective administration
and financial management of the municipality, in order to provide an economic,
accountable, effective and efficient administration;
it directs the Greater Kokstad Municipality Council to
cooperate with the task-team and to undergo capacity empowerment to improve its
oversight functions and responsibilities;
it directs the Greater Kokstad Municipality Council to
report to the Executive Council on any action taken in terms of their mandate.
It authorises the MEC for Local Government,
Housing and Traditional Affairs to take such steps as are necessary to give
effect to the above resolutions.
4. CURRENT
STATUS
·
The
Provincial Department is providing support in respect of matters arising from
the report of the Auditor-General
these include the fixed asset register,
VAT returns, credit control and debt management and staffing matters.
·
Financial
and technical expertise is being sourced from the DBSA.
·
A
turn – around strategy is being refined for implementation. A copy of the draft strategy is attached
hereto.