ATC110330: Report: Northern Cape Province from 27 – 30 March 2011, dated 24 April 2012

Cooperative Governance and Traditional Affairs

Report of the Portfolio Committee on Cooperative Governance and Traditional Affairs to Northern Cape Province from 27 – 30 March 2011, dated 24 April 2012

Report of the Portfolio Committee on Cooperative Governance and Traditional Affairs to Northern Cape Province from 27 – 30 March 2011, dated 24 April 2012

 

 

1. Introduction

 

The Portfolio Committee on Cooperative Governance and Traditional Affairs undertook an oversight visit to Northern Cape Province from 27 – 30 March 2011. The visit also aimed to contribute to the Committee’s mandate of ensuring that Provincial and Local interests are taken into account in the National Sphere of Government.

 

2. Delegation

 

The committee consisted of a Multi-Party delegation led by Hon. S L Tsenoli (Chairperson, ANC,), Hon. D G Nhlengethwa (ANC), Hon. W J Nelson (ANC) Hon. J M Matshoba (ANC), Hon. F D Boshigo (ANC), Hon. M J Segale-Diswai (ANC), Hon Nkosi Z M D Mandela (ANC), Hon. M Wenger (DA), Hon. T Botha (COPE), Hon . I C Ditsethelo (UCDP)

The following officials accompanied the delegation:

Ms. S Cassiem , Committee Secretary, Mr. S Ngxiza , Committee Researcher and Ms. C Sheldon, Committee Assistant.

 

3. Background

 

The Committee on Cooperative Governance and Traditional Affairs conducted oversight in two Northern Cape municipalities viz Frances Baard District Municipality , Dikgatlong Local Municipality and Sol Plaatjie Local Municipality . Of necessity, the Committee had engagements with its counterparts ie members of the PC on Cooperative Governance, Human Settlements and Traditional Affairs (COGHSTA) and the purpose of this interaction was to get insight into the challenges facing the municipalities in the province. Further, the Committee had briefings from representatives of the National and Provincial Departments of Cooperative Governance and Traditional Affairs as well as the South African Local Government Association (SALGA). The Committee also utilised the opportunity of its oversight to interact with the National Department of Traditional Affairs regarding its strategic plan and the National House of Traditional Leaders also had an opportunity to brief the Committee on its work as well as the work of the Provincial House of Traditional Leaders in the Northern Cape.

 

The main objective of the oversight visit was to determine the extent of the damage of the disasters that affected the province and in this regard the Committee wanted to understand the nature of the assistance provided to municipalities by provincial and national departments. Importantly, the Committee wanted to ascertain the levels of preparedness for future disasters in order to prevent and mitigate the extent of the damage. The Committee noted the non-compliance with the Disaster Management Act of 2002 regarding building of Disaster Management Centres in Frances Baard District Municipality .

 

The purpose of this analytical report is to provide a comprehensive reflection of issues emanating from engagements with various stakeholders as well as observations from oversight visits. The intention is to capture such issues in order to underlie certain trends, successes and challenges in a wide range of areas for the committee to make considered interventions through the Department or to hold the Department to account for the complex but critical issues confronting these municipalities.

 

The Committee also considered progress made in reducing the backlogs and up-scaling of infrastructure in order to intensify the provision of basic services and thus realise the Millennium Development Goals by 2014. The three municipalities visited made presentations concerning a wide range of issues including governance, capacity, service delivery and infrastructure challenges.

 

4. Overview of the state of Municipalities in Northern Cape: The view of Provincial COGHSTA, Portfolio Committee on COGHSTA and SALGA

 

The Northern Cape Provincial Legislature through its Portfolio Committee on COGHSTA conducts oversight over the relevant departments as well as municipalities in the province. It was therefore important, in the spirit of cooperative governance, that the Committee members held briefings with their counterparts from the provincial legislature. The Committee, as a matter of course, regularly interacts with SALGA as a voice of Organised Local Government. SALGA as a statutory body is charged with responsibility to represent the interests of municipalities and it is therefore expected of them to render assistance to municipalities. Therefore, from a governance point of view, this report combines the inputs from the Northern Cape Provincial Department of Cooperative Governance, the Portfolio Committee of COGHSTA and SALGA.

 

It emerged from the interactions with these structures that district municipalities perform better than local municipalities. The PC on COGHSTA conducts oversight through review of municipal annual reports and these are some of the challenges highlighted:

 

· Late submission of annual reports by municipalities

· Municipal reports were not up-to-date

· Lack of community meetings

· Prevalence of vacancies at senior management level

· Employment of incompetent people in the financial sector

· Municipalities struggle to pay Auditor General’s fees\

· Vastness of the province creates problems in terms of efficient delivery of services

 

Other challenges that were highlighted included the difficulty in retaining skilled staff as well as appointment of Section 57 managers due to financial constraints. With respect to vastness of the province, this poses a serious challenge to service delivery particularly sanitation and therefore the cost of service provision is enormous. Another threat to the financial flow is imposed by Magareng Ratepayers Association which is threatening to withhold payment of rates.

 

Having noted the challenges it is likewise important to highlight the interventions to overcome such problems and also it is worth noting the recorded successes. The Frances Baard District Municipality obtained a clean audit and has thus been requested to assist local municipalities under its jurisdiction to manage their finances and comply with legislation. District Management Forum meets on a quarterly basis to address financial management concerns. The province intervened in Dikgatlong Local Municipality and deployed a Chief Finance Officer and a Technician on its own budget. SALGA has issued institutional guidelines to municipalities regarding the Municipal Finance Management Act and councillor induction to ensure smooth transition for new councillors. To overcome the distance challenge the legislature created five (5) regional offices to overcome distance and time constraints. Video conferencing is a practice in order to avoid costly travelling. The province has raised the issue of distance or vastness of the province with the Fiscal and Financial Commission and hopefully this issue will be addressed through the review of the funding formula for municipalities underway within Department of Cooperative Governance (DCOG) and Treasury.

 

With respect to challenges SALGA pointed out that there is inadequate or lack of requisite financial management capacity within the municipal budget and treasury offices and this results in late submission of financial statements as well as dependency on consultants. Further, SALGA emphasised that political oversight over municipal administration (in particular finances) needs to be strengthened. With respect to municipal debt SALGA noted that the biggest debtors that owe municipalities millions are in fact households that owe municipalities a substantial amount of R731 million whilst business owe R131 million. It must be stressed that government debt is also huge amounting to R163 million. Notably, the Provincial Intergovernmntal Relations Forum resolved that government must settle their outstanding debts to municipalities and put in place mechanisms to prevent accumulation of debt. In this regard the PIGRF proposed as follows:

 

• Public Works and Government must ensure that contractual agreements with construction Companies create an account with municipalities prior to site establishment;
• Department of Education must pay the municipalities before making funding transfers to schools;
• Public Works expedite government property vetting process to enable updating of municipal records in relation to property ownership and services payment debtor

 

Further the PIGRF recommended that National and Provincial Treasury should effect all government department and agencies budget allocations after deducting confirmed debts to municipalities.

 

It is important to note some of the gaps pointed out by SALGA around financial and revenue management, in particular, the suggestion that a national intervention for an instrument to write off irrecoverable and untraceable debt( ors) dating more than 90 days is required. In addition, the urgent need to strengthen revenue collection and implementation of credit control systems is also required. All these observations, interventions and suggestions will in varying degrees assist the attainment of Clean Audits by 2014 as well as boosting the Turn Around Strategy.

 

5. Challenges and Progress on Clean Audits and Bulk Infrastructure Analysis

 

The Provincial Department of Cooperative Governance, Human Settlements and Traditional Affairs (COGHSTA) presented a fairly broad overview of the state of progress regarding the Operation Clean Audit, Municipal Turn Around Strategy and Bulk Infrastructure concerns. In terms of overarching challenges COGHSTA reiterated challenges raised by SALGA with respect to the “ consultants dependency syndrome” , lack of political oversight and perhaps more importantly lack of capacity at the provincial level for intervention purposes in terms of the MFMA. This admission is critical because provincial and national government are enjoined by the section 154 of the Constitution as well as section 34 of the MFMA to support municipalities and enhance their capacity to meet their objectives.

 

With respect to Clean Audits 8 out of 32 municipalities obtained unqualified audit opinion which is an improvement from the 6 the previous audit period. Further, 9 municipalities obtained disclaimer of opinion which is an improvement from the 22 of the previous audit period. However, 3 municipalities got a qualified opinion and there were 10 outstanding audit reports. There is an Operation Clean Audit Committee led by the Director General of the province and an implementation plan has been developed. There are five technical task teams comprising of officials from Provincial Treasury, COGHSTA and the Office of the Premier that has been deployed to various municipalities to assess their capacity with respect to financial management.

 

With respect to MTAS the Provincial Department reported that only 3 District Municipalities have established oversight committees ie JT Gaetsewe , Frances Baard and Pixley ka Seme . It is unclear why only 3 of the 32 municipalities have established the oversight committees. The two districts ie Frances Baard and Pixley ka Seme were granted 1 and 2 accreditation by the Department of Human Settlements. With respect to service delivery the report did not provide details around the extent of backlogs. A detailed Municipal Infrastructure Grant analysis reveals certain challenges in particular under-expenditure which could be attributed to lack of long term planning. Only 15 of the 32 municipalities have spent above 50% of their MIG allocations and the remaining 17 municipalities have spent less than 50% the lowest spending being Umsobomvu at 0% whilst Keimisberg only spent 12% of their allocation. Some of the problems as cited by COGHSTA include lack of technical capacity, funding not used for intended purposes.

 

However, there are some contradictions that need to be pointed out in the presentation of COGHSTA inter alia , regarding bulk infrastructure the presentation asserts that all municipalities submitted their Comprehensive Infrastructure Plans ( CIPs ) and yet the reporting on MIG expenditure decries lack of infrastructure plans and implementation thereof. Secondly the presentation states that 31 of 32 IDPs were credible (except for Dikgatlong ) however, the report further states that LED and poverty alleviation strategies are not in place in most municipalities. This is a contradiction because IDPs must include LED strategies as well as Spatial Development Plans.

 

6. Engagements with municipalities and the state of Disaster Management

 

The general thrust of the committee engagements with the three municipalities visited viz Frances Baard District Municipality, Dikgatlong and Sol Plaatjie Local Municipalities (both under Frances Baard DM) focused on inter alia the status of the Municipal Turn Around Strategy (which includes an array of issues from governance to service delivery), Operation Clean Audit and Disaster Management concerns. What follows is the brief reflection on the content and quality of the engagements as well as observations made during the oversight visits.

 

The Frances Baard District Municipality provided a comprehensive overview of the state of municipalities within the district however it is prudent to start with the state of affairs in the District Municipality itself. The District has obtained unqualified audit opinions for several years but with matters of emphasis however in the 2008/09 financial year the municipality obtained an unqualified audit with no matters of emphasis. The municipality was appointed as the Ambassador for the Operation Clean Audit by the Minister in 2009. The municipality also won a Vuna Award however the prize money was never given to the municipality and this reflects as debt owed to the municipality which exceeds 90 days. A Supply Chain Management Unit is established in the municipality. The District allocates over R1 million to support local municipalities obtain Clean Audits. In terms of debt collection the District has established a revenue enhancement to rectify database discrepancies for revenue collection in relation to property rates. The District Municipality had 100% expenditure of its MIG allocation for 2008/08 however backlogs in water (212) , sanitation (157) and electricity (410) provision remain steady.

 

The District has delayed the construction of a Disaster Management Centre as required by the Disaster Management Act of 2002. The reason for delays is funding as cost estimations of R65 million were conducted two years earlier but funding challenges persist. Disaster Management is a function of the District and therefore as the local municipalities were victims of the recent floods the District Municipality was expected to coordinate efforts to mitigate to minimise the damage, rescue victims as well as rehabilitation of infrastructure post facto. In the absence of a functional Disaster Management Centre with adequate resources, clearly the support to disaster struck areas would have been limited.

 

The criticism levelled against the Local Municipalities by the FBDM is that no budget is allocated for disaster management events or incidents. This implies that there are no or there is lack of thorough disaster risk assessments to use as the basis for budget planning. This also means no contingency plans were conducted and implemented, as prescribed in the Act, to prevent damages to property, infrastructure and loss of life. Interventions such as relocation of families as well as provision of temporary shelters were provided to the victims of the disastrous floods.

 

The Sol Plaatjie Local Municipality indicated that there had been no support from the Provincial government despite the declaration as a disaster area. The municipality had to rely on its internal resources to deal with the effects of the disaster. The same was reported in Dikgatlong Local Municipality where Blikkiesdorp was most affected. In this area people had to be resettled after their original area was flooded but the resettlement had to within the same ward in order for them to benefit from the housing development project.

 

8. Interventions by Provincial Department of Cooperative Governance, human settlements and traditional affairs

 

· The Committee has noted with appreciation the oversight role played by the Provincial COGHSTA Portfolio Committee.

· The Committee as a matter of course regularly interacts with SALGA as a Voice of Organised Local government State Owned Entity.

· The Frances Baard District Municipality obtained a clean audit – It assist municipalities under its jurisdiction to manage their finances and comply with regulations

· The province intervened in Dikgatlong Local Municipality by deploying a Chief Finance Officer and a technician on its own budget

· To overcome the distance/vastness of province’s challenge, 5 district offices have been created and also video conferencing has been encouraged to avoid costly travelling

• The Committee has noted that there is improvement in respect to clean audit in municipalities because intervention has been made by the province to form Operation Clean Audit Committee led by Director General of the Province
• Five technical task teams comprising of officials from the province, Provincial Treasury, COGHSTA department and Premier’s Offices are deployed to municipalities to assess their capacity with respect to financial management.

 

 

 

 

 

 

 

 

9. Committee Recommendations

 

 

Observations	*Recommendations
1. The Committee noted the non-compliance with Disaster Management Act of 2002 regarding building of Disaster Management Centres in Frances Baard District Municipality	1. For the 2012/2013 financial year there must be budget allocated which will focus specifically on disaster management and a centre must be well equipped and capacitated with staff.
2. The Committee has noted that biggest debtors that owe municipalities millions are house holds owing a substantial amount of R731 million and businesses owing R131 million.	2. There should be credit control systems in place and Province to develop a revenue collection strategy to assist municipalities in revenue collection
3. The Committee also noted that, government departments owe municipalities an amount of R163 million	3. There should be credit control systems in place and Province to develop a revenue collection strategy to assist municipalities in revenue collection Provincial Treasury to effect government departments and agencies budget allocation after deductions and confirm debts to municipalities
4. The Committee has noted that in most municipalities there is “Consultants Dependency Syndrome” which is too costly.	4. District Municipalities and provincial department should assist with shared services in scarce skill.
5. The Committee noted that only three district Municipalities have established oversight committees	5. Provincial department should ensure that all municipalities establish oversight committees
6. The Committee noted that two district municipalities ie . Frances Baard District Municipality and Pixley ka Isako Seme were granted accreditation to build RDP houses by the Department of Human Settlement	6 District municipalities should be supported and monitored to see if they are able to build quality houses as per the requirement of Human Settlement regulations.
7. The committee noted that Local Municipalities were victims of floods. The District was expected to co-ordinate effort to mitigate and minimise the damage, rescue victims and rehabilitate infrastructure, but because of the non existence of District Disaster Centre there were minimum interventions by Province and National government.	7. The 2012/2013 financial year budget allocation for building of District Disaster Centres in Northern Cape should be priority number one, taking into consideration for climate change unforeseen circumstances

 

 

*The Minister on Co-operative Governance and Traditional Affairs should ensure that all the above recommendations are implemented.

 

 

Report to be considered.