ATC151027: Report of the Select Committee on Cooperative Governance and Traditional Affairs on notice of Termination of Intervention issued in terms of section 139(1)(B) of the Constitution (1996) in Abaqulusi Local Municipality, dated 27 October 2015

NCOP Cooperative Governance & Traditional Affairs, Water and Sanitation and Human Settlements

REPORT OF THE SELECT COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON NOTICE OF TERMINATION OF INTERVENTION ISSUED IN TERMS OF SECTION 139(1)(b) OF THE CONSTITUTION (1996) IN ABAQULUSI LOCAL MUNICIPALITY, DATED 27 OCTOBER 2015 

                                                                                                

1.    Background

 

1.1     On 12 August 2015, 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 termination of intervention in terms of section 139(1)(b) of the Constitution in Abaqulusi Local Municipality. 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.

 

1.2     On 21 October 2015, during the loco inspection on the notice of intervention in terms of section 139(1)(b) of the Constitution in Indaka Local Municipality, the Select Committee also called the Department of Cooperative Governance and Traditional Affairs for a briefing on the termination of intervention in terms of section 139(1)(b) of the Constitution in Abaqulusi Local Municipality.                 

 

1. Objectives of the Briefing Session

 

2.1     The objectives of the briefing session was to accord the Department of Cooperative Governance and Traditional Affairs an opportunity to brief the delegation of the Select Committee on progress made in implementing the constitutional, procedural and substantive matters related to the of intervention in the Municipality in terms of section 139(1)(b) of the Constitution and the Provincial Executive Council’s (PEC) decision to terminate the intervention in Abaqulusi Local Municipality.     

 

1.    Presentation on the Termination of Intervention in Abaqulusi Local Municipality

 

3.1     On 21 October 2015, the Department of Cooperative Governance and Traditional Affairs briefed members of the Select Committee on the termination of intervention issued in terms of section 139(1)(b) of the Constitution in Abaqulusi Local Municipality. The presentation focused on the overview of background and reasons for the intervention; success indicators in the period up to February 2015; extension and emerging challenges; current status and way-forward.            

 

1.     Overview of Background and Reasons for the Intervention 

 

4.1     Abaqulusi Local Municipality is one of five municipalities in the Zululand District family of municipalities. The Municipality has 44 council members of which the ANC has 17, the IFP 16, the NFP 7, the DA 3 and 1 member from the Owethu Residents Organization.

 

4.2     The Municipality has a population of 247,628 (2011), with 91,750 registered voters (2013) and 22 wards. The Municipality is dominated by the urban areas of Vryheid, Bhekuzulu and Emondlo townships. There is a significant number of rural areas. The Municipality has a budget of close to R543 million, of which over R53.5 million was set aside for capital expenditure (2015/16). Grant reliance accounts for only 31% of its revenue basket.

 

4.3     The initial resolution to intervene in the Abaqulusi Local Municipality in terms of section 139(1)(b) of the Constitution was taken on 20 March 2013. The Municipality was failing to fulfil its executive obligations. The failures included, inter alia, the following:

 

• Significant deficiencies in financial management, performance management and compliance with laws and regulations resulting in the Municipality receiving a disclaimer audit opinion for the 2011/12 financial year, and this was a regress from an unqualified audit opinion the Municipality had received in the previous financial year.

 

• The Municipality’s annual report was not compliant with section 121 of the Municipal

Finance Management Act, as it did not include a comparison of performance with set targets. It also did not include performances in the previous year, in terms of section 46(1)(b) of the Municipal Systems Act, as well as measures that were taken to improve performance in terms of section 46(1)(c).

 

• The Municipality was without a Municipal Manager or Acting Municipal Manager from 31 January 2013 to 05 March 2013, and the council had continued to fail in its executive obligation to appoint a Municipal Manager, as per the provisions of section 54A of the Municipal Systems Act.

 

• The council was failing to ensure that the Municipality was organized in a manner that it could fulfil its objectives, by appointing a suitably qualified senior management structure to implement the policy directives of the council.

 

• The state of affairs in the Municipality was impacting on service delivery as the Department of CoGTA in KwaZulu-Natal had received complaints from members of the public regarding applications for development projects which were allegedly not being processed, because there was no official in the municipality to sign off on the development plans.

 

5.     Success Indicators in the Period up to February 2015

 

5.1     The intervention was extended on several occasions by the Executive Council due to slow progress in the implementation of the recovery plan. The decision of the Provincial Executive to terminate the intervention on 31 March 2015 was influenced by reported progress as at February 2015. The following are some of the indicators of that reported progress:

 

• The Municipality had complied with all the requirements for the submission of section 71 & section 72 reports, the Annual and Oversight reports, the IDP, the budget, the SDBIP and performance contracts for the period ending June 2015.
• Section 56 managers were employed. However the Manager Planning and Economic Development had subsequently resigned, and thus a process plan was in place for the filling the position. To date the position has been filled.
• Human Resources Policies were finalized and adopted by the Council.
• The construction of the Emondlo Thusong Centre commenced and support was received from the Department of Transport to construct roads at Emondlo.
• In the 2014/15 financial year, the Municipality intended to electrify 1236 households, while Eskom was to electrify 2236 households.
•             All the SCM information on the system was updated and validated;
• The LED plan and the feasibility assessment were being drafted.
•             There were critical projects underway which were being run through the ALEDI project process and these were being implemented by Swakoteka.
•             The provincial CoGTA provided the Municipality with standard rules, which have been adapted by management, and the review of the Orders of Delegation was complete.
•             Investigations into the Security Tender variation and the Refuse Removal Tender award were underway.
•             The Municipality’s bank account had a positive balance of R18,5 million, and investments to the value of R79 million.
•             Political stability showed significant improvement in that Portfolio, Executive and Council meetings were sitting as scheduled.
•             In the Recovery Plan, 8 out of 9 targets on Good Governance were achieved, and 14 out of 16 were achieved on Institutional, while basic services, LED and Finance each remained with 1 target that had not been achieved.
• Lastly the municipality had received an unqualified (with other matters) audit opinion from the AG for the 2013/14 financial year which was an improvement from the previous years where the municipality had received a disclaimer for the 2011/12 financial year and a qualified audit for the 2012/13 financial year.

 

6.     Extension of Intervention and Emerging Challenges

 

6.1     Despite all these achievements, the single notable remaining issue was the resolution

          of the litigation on the appointment of the Municipal Manager. The matter has since

          been settled out of court, and the municipality is in the process of advertising the position of Municipal Manager.

 

6.2     Failure by the Municipality to institute and implement stringent expenditure control     

        measures may create cash flow challenges for the municipality going forward.         The municipality still needs to clean its indigent register to include those who received

        electricity directly from Eskom. This will ensure that the correct people benefit from the FBE programme of the Municipality.

 

6.3     Water provision remains a challenge due to the ongoing drought spell, dilapidated and

          poorly maintained infrastructure. Most rural areas are affected by water shortages. The function is however rendered by the Zululand District Municipality.

 

7.      Current Status and Way-Forward

 

7.1     The Municipality is still without a Municipal Manager. However the matter has since been amicably settled between the parties through facilitation by CoGTA. The Municipality is in the process of advertising for the position of Municipal Manager.

 

7.2     Since the termination of the intervention in March 2015, the Municipality was able to

          approve its IDP, Budget and SDBIP without challenges.

 

7.3     The Municipality received an additional allocation R7.2 million from MIG for the 2014/15     

         financial year due to its good spending record. Despite this the Municipality had fully        

         expended the revised allocation of R41.3 million as at end of June 2015.

 

8.       Select Committee Observations

 

8.1   The delegation of the Select Committee has observed and noted based on departmental briefing that it’s been six months since the intervention was lifted, and there have been no out-of-the-ordinary challenges at the Municipality.

 

8.2     Based on the Back to Basics assessment results to date, the Municipality is indeed one of those that will be recommended for graduation from the requiring intervention to either the challenged or functional municipalities under the Back to Basics programme.

 

9.      Recommendation 

 

9.1     Having been briefed on the termination of intervention in terms of section 139(1)(b) of the Constitution, the Select Committee recommends to the NCOP as follows: 

 

          9.1.1       The NCOP approves the termination of the intervention in Abaqulusi Local                                   Municipality in terms of section 139(1)(b) of the Constitution.

 

Report to be considered.