ATC140915: Report of the Select Committee on Co-Operative Governance and Traditional Affairs on Consideration of the notice of Intervention issued in terms of Section 139(1)(C) of the Constitution In Ngaka Modiri Molema District Municipality, North West Province – dated 15 September 2014

REPORT OF THE SELECT COMMITTEE ON CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON CONSIDERATION OF THE NOTICE OF INTERVENTION ISSUED IN TERMS OF SECTION 139(1)(c) OF THE CONSTITUTION IN NGAKA MODIRI MOLEMA DISTRICT MUNICIPALITY, NORTH WEST PROVINCE – DATED 15 SEPTEMBER 2014

The Select Committee on Co-operative Governance and Traditional Affairs, having considered the directive of the National Council of Provinces (NCOP), to consider and report on the notice of intervention issued in terms of section 139(1)(c) of the Constitution in Ngaka Modiri Molema District Municipality in the North West Province, reports as follows:

1. Introduction and Background

1.1 On the 3 ^rd September 2014, the MEC of the Department of Local Government and Human Settlements tabled to the NCOP, a notice of intervention issued in terms of section 139(1)(c) of the Constitution in Ngaka Modiri Molema District Municipality.

1.2 On the 4 ^th September, the Chairperson of the NCOP referred in terms of Rule 101 of the Council, the notice of intervention to the Select Committee on Cooperative Governance and Traditional Affairs for consideration and reporting.

1.3 The Select Committee on Cooperative Governance and Traditional Affairs took a decision during its Committee proceedings of the 5 ^th September 2014, to call the MEC for the Department of Local Government and Human Settlements to appear before it on the 15 ^th September 2014. The purpose of the meeting was to brief Members on the procedural, substantive and constitutional nature of the notice of intervention in the District Municipality.

1.4 On the 15 ^th September 2014, the MEC appeared before the Committee and briefed its Members on the intervention in the District Municipality.

2. Briefing on the Notice of Intervention in Ngaka Modiri Molema District Municipality

2.1 During the briefing, the MEC’s presentation focused on the purpose and background on Ngaka Modiri Molema District Municipality; basis for invoking section 139(1)(c) in the District Municipality; process followed by the Provincial Government; status quo on the intervention and the process plan for the intervention.

3. Background

3.1 The District Municipality was one of the four category C municipalities (according to the Municipal Structures Act) in the North West Province. The District was made up of five local municipalities: Mahikeng , Ditsobotla , Tswaing , Ramotshere Moiloa and Ratlou Local Municipalities. The District Municipality was an executive type with forty-five councilors comprising of an Executive Mayor, Mayoral Committee, Speaker and Council Committees. This was according to section 84 of the Structures Act, which deals with the division of functions and powers between district and local municipalities. Further, the District Municipality is a Water Services Authority in the district and was also responsible for disaster management and construction of municipal roads and storm water.

4. Governance

4.1 The District Municipality has been experiencing governance and administrative challenges, since the beginning of the current term of local government. This has adversely affected the delivery of services through its constituent local municipalities

4.2 The Ngaka Modiri Molema District IGR Forum was dysfunctional, and this has led to a myriad of complaints from the local municipalities about the poor relations between themselves and the District . The non-functionality of the District IGR Forum has weakened its regional planning capabilities, and the coordination of the provision of water services in particular. There have been no ser vice level agreements between the District as water services authority and local municipalities and/or Botshelo Water as water services provider (in terms of bulk water; distribution; operations and maintenance; provision of free basic services).

4.3 The poor relations also relate to the perceived lack of involvement and consultation with local municipalities on prioritisation, identification, and implementation of projects. Due to the non-functionality of the IGR Forum, there was generally no coordination and collaboration between the District and its family of locals to improve service delivery. Efforts were made on numerous occasions by the Department to resuscitate the IGR Forum, but attendance by the District’s administrative leadership and local municipalities was poor.

5. Administration

5.1 The District council appointed a Municipal Manager and senior managers who did not met the competency requirements in terms of local government regulations (despite being advised by the Department not to proceed with the appointments). The Municipal Manager, at the time of his appointment, had no experience in local government, save for the period he acted in the position when seconded by the Provincial Government.

5.2 Equally, the Chief Financial Officer who was appointed, also did not have the relevant experience in the local sphere of government as a financial management practitioner.

This contributed negatively had an effect on clean administration, as the Municipality was being led by inexperienced senior officials who also did not have the relevant skills to occupy the positions.

5.3 The 2010/11, 2011/12 and 2012/13 audit outcomes of the Auditor-General revealed a chronic failure on the part of the District Municipality to address issues raised in the management letter, that contributed to three consecutive years of disclaimers. There were poor internal controls which compromises supply chain management processes. The District Municipality has obtained disclaimer audit opinions for the past three financial years. The Auditor-General has reported the irregular expenditure of R339 ,864,539.00 in the 2011/2012 and 2013 financial years. The irregular expenditure related to the expenditure that has been incurred without following proper procedures, and not adhering to regulations.

5.4 There were reports that the supply chain management processes have been flouted by the Municipal Manager and senior managers on key services, such as the provision of water tankering services to water distressed communities within the District. It was alleged that the contract was given to one supplier, and that some senior officials in the District are connected to the supplier. Communities receiving this service have complained about the inconsistent supply of the water as well as the poor quality of the water. The Provincial Government intends to probe into this matter and take appropriate action where necessary, because the council was not taking action on the alleged financial misconduct and irregular, wasteful and fruitless expenditure as raised by the Auditor-General.

6. Service Delivery

6.1 The District Municipality was one of the two water stressed districts in the Province. Much as there are water sources challenges in the District, the poor management of water provision programmes by the District Municipality aggravates the situation.

6.2 Firstly, the District has failed to develop and maintain a good relationship with the local municipalities as water services providers. There have been no service level agreements to inform the roles and responsibilities of both parties in as far as water provision was concerned. Local municipalities in the District have been complaining about the District’s lack of consultation and involvement when water and sanitation projects are initiated, planned and implemented.

6.3 Secondly, the local municipalities have been providing the water service without any agreement with the District and were not being reimbursed for costs incurred. This has contributed to the financial constraints of the local municipalities as they are unable to service their bulk water accounts with the Water Board (Botshelo Water).

6.4 The total estimated arrear balance of the municipalities within the district is in excess of R200 million. The locals cannot afford to pay this amount and the District refuses to pay, citing that the locals are the ones generating revenue from the sale of water, which the local municipalities disputed. The Auditor-General has also raised this matter consistently that the District, as the water services authority, must make provision for the arrears because there were no agreements.

6.5 This poor relationship has resulted in the delivery of water services in the District being highly compromised. Some communities in Dinokana , Madibogo and Setlagole villages have not had water for years, while the District received equitable share allocations and grants for water and sanitation.

6.6 The Ngaka Modiri Molema is one of the districts that has experienced numerous service delivery protests as a result of poor or non-delivery of water. Communities of Ratlou ( Madibogo , Setlagole ), Ramotshere Moilwa ( Dinokana , Khunotshwana ) and Ditsobotla ( Itsoseng , Bodibe ) have protested against the lack of water provision on their areas for years. These communities have, on many occasions raised this with the relevant authorities but no long lasting solutions have been made.

6.7 Recently, the former Premier and some Members of EXCO had to address the community of Itsoseng , following the violent protests against poor delivery of services and in particular, the lack of water. The District, as the water service authority, has done very little to intervene on this matter and the local municipalities are the ones that have been negatively affected by this.

6.8 Thirdly, the District has not been spending the grants allocated to them for water and sanitation projects. For instance, The Department has through the Provincial Treasury received an allocation of R 60 000 000.00 to assist in eradicating water and sanitation backlogs and further to that, revitalize the capital city of the Province ( Mahikeng ). The District Municipality was allocated R47 000 000 in total from the Grant. The District has not performed well in the spending of the grant, and has so far spent only about R4 000 000. A total of R27 000 000 has been transferred to the Municipality and the outstanding balance was R20 000 000.

6.9 The Department of Water Affairs has indicated that the business practices are in a critical state, and urgent municipal and provincial local government intervention was required. It was noted that the interventions that have occurred in the past has not shown to have had impact on the wastewater service delivery. The poor score was understated by a severe lack of information, data and management systems that would constitute a fair service performance. According to the Department of Water Affairs, the District has not complied with the submission of a corrective action within the 30 days period as stipulated.

7. Basis for Invoking the Intervention in Terms of Section 139(1)(c) of the Constitution

7.1 Failure by the District Municipality to provide quality services to the residents of the Ngaka Modiri Molema District (in line with powers and functions). Failure to implement programmes and projects relating to infrastructure programmes for water and sanitation services.

7.2 Poor administration of service delivery related programmes (poor infrastructure spending, poor monitoring of projects and programmes). Poor integration and coordination of infrastructure and other programmes with the local municipalities as the water services authority (in terms of the Intergovernmental Relations Framework Act).

7.3 Failure by the council to act on the alleged maladministration, fraud and corruption. The District Municipality also failed to provide support to the local municipalities in terms of section 88 of the Municipal Structures Act

7.4 The District Municipality failed to comply with applicable legislation and regulations governing the local sphere of government (Municipal Systems Act, Municipal Systems Amendment Act of 2011, Municipal Structures Act, Municipal Finance Management Act).

8. Process Followed by the Provincial Government

8.1 The Department has had numerous engagements with the District since 2012 to date, at both administrative and political levels. The engagements were aimed at both identifying the challenges faced by the District and providing solutions and support towards addressing them. The previous MECs for Local government have also engaged the council of the District, highlighting the areas that required attention, including the water challenges and the support to the local municipalities.

8.2 Both administrations of the Department of Local government and the Provincial Treasury, have continuous meetings and workshops with the District Municipality, where the officials have raised certain concerns with recommendations to the District. The District has absented themselves from most meetings called by the Department, and in cases they do attend, management tended to send junior officials.

8.3 The Provincial EXCO then, after receiving reports on the poor state of affairs in the District, resolved on the 2 ^nd July 2014 to invoke section 139(1 )( b) intervention in the Municipality. The District subsequently objected to the manner in which the process was followed by the Provincial EXCO. In the spirit of cooperative governance, the Provincial EXCO then resolved to withdraw the intervention on that basis.

8.4 The Department then afforded the District an opportunity to respond to the issues that are of concern to the Provincial Government (the District declined to meet with the MEC, citing short notice). A session with the District was then eventually held on the 21 ^st August 2014, where the District presented a lengthy report denying and disputing all concerns raised, even by the Auditor-General and the Department of Water Affairs, in a very defensive manner. The responses of the District were also reactive in nature.

8.5 The Provincial Government therefore, resolved to dissolve the District Council on the basis that there was no political will and ownership of the myriad of problems in the District and the fact that the communities of the entire District continued to suffer from poor and lack of service delivery. The Provincial EXCO resolved on the 3 ^rd September 2014, to dissolve the District Council in terms of section 139(1)(c) of the Constitution.

9. Status Quo for Intervention

9.1 The District received the notice of the Provincial EXCO resolution to dissolve the council on the 3 ^rd September 2014. The District has responded to the letter by the MEC, citing dissatisfaction about the decision of the Provincial EXCO to dissolve the council. The letter also demanded that the Provincial EXCO decision be reversed by the 10 ^th September 2014 or face legal action.

10. Process Plan for the Intervention

10.1 The Provincial Government has resolved to put in place an intervention plan that will resolve the service delivery crisis in the District in the short, medium to long-term. The plan seeks to establish a Rapid Response Team which will promptly respond to the critical service delivery problems, with special focus on water and sanitation services.

10.2 The Team will also proactively attend to potential service delivery hotspots and crises, by engaging with the communities and all key role-players. A Joint Operation Centre was being established to attend to the water and sanitation crisis in the District, but will also service all other municipalities in the Province.

10.3 The Provincial Government was gravely concerned over the municipal council’s inability as well as neglect/refusal or failure to demonstrate how they have intervened in the administrative failures and/or shortcomings of the administrative arm of the District Municipality, this in the form of the exercise of its oversight responsibility/ ies .

10.4 The Provincial Government was committed to resolving the service delivery crisis in the Ngaka Modiri Molema, in an effective and sustainable manner. The support of the NCOP was requested to empower and enable the Provincial Government to address the long standing problems of poor governance and administration within the Ngaka Modiri Molema District.

11. Committee Observations

11.1 Dissolution is the final step in a process of intervention consisting of more than one attempt to resolve the problem that may exist in a municipality. It should be remembered that in this District there was an intervention invoked in 2009 in terms of section 139(1 )( b), and was subsequently extended. Dissolution is clearly designed as a corrective measure to ensure that appropriate steps are taken that would resolve the problems that may be experienced in a particular municipality. The existence of special circumstances is a prerequisite to the exercise of the power to dissolve a municipal council.

11.2 In its recommendation decision to the NCOP on Ngaka Modiri Molema District Municipality, the Committee took into account all relevant factors, including those challenges that were prevalent during the first intervention and decided that the seriousness, extent and cause of the Municipality’s failure to fulfil the obligation, taken together, constitute exceptional circumstances warranting dissolution of the Municipal Council and the appointment of an administrator to ensure fulfilment of the obligation.

12. Committee Recommendations

12.1 The Select Committee on Co-operative Governance and Traditional Affairs recommends as follows:

12.1.1 The NCOP approves the intervention in Ngaka Modiri Molema District Municipality, as issued by the North West Provincial Executive Council in terms of section 139(1)(c) of the Constitution.

12.1.2 Before the newly elected Municipal Council is declared elected, the Administrator should identify the capacity and skills of the Municipality in relation to the executive obligation the Municipality failed to fulfil, and assist the Municipality in acquiring the necessary capacity and skills.

12.1.3 The North West MEC for Local Government and Human Settlements, should table progress reports to the NCOP and the relevant Provincial Legislature on the status of by-elections to be held at Ngaka Modiri Molema District Municipality, as well as progress reports on the work of the Administrator.

Report to be considered.