ATC180626: Report of the Select Committee on Co-Operative Governance and Traditional Affairs Inspection in Loco on notice of Intervention, issued in terms of Section 139(1)(B) And (5) of the Constitution (1996), to Walter Sisulu Local Municipality, dated 26 June 2018
REPORT OF THE SELECT COMMITTEE ON CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS INSPECTION IN LOCO ON NOTICE OF INTERVENTION, ISSUED IN TERMS OF SECTION 139(1)(b) AND (5) OF THE CONSTITUTION (1996), TO WALTER SISULU LOCAL MUNICIPALITY, DATED 26 JUNE 2018
1. Background and Overview
1.1 The Select Committee on Co-operative Governance and Traditional Affairs, having considered the request by the National Council of Provinces (NCOP), to consider and report on the intervention notice invoked at Walter Sisulu Local Municipality in terms of section 139(1)(b) and (5) of the Constitution, the Select Committee reports as follows:
1.2 In terms of NCOP Rule 101, the Office of the Chairperson of the NCOP referred the notice of intervention by the Eastern Cape MEC for Cooperative Governance and Traditional Affairs, to the Select Committee for consideration and reporting. On 25 June 2018, the Multi-Party Delegation of the Select Committee conducted a loco inspection at Walter Sisulu Local Municipality.
2. Objective of the Loco Inspection at Walter Sisulu Local Municipality
2.1 The main objective was to interact with the internal and external stakeholders of the Municipality in order to solicit their opinions on the constitutional, procedural and substantive matters related to the invoking of intervention in terms of section 139(1)(b) and (5) of the Constitution.
3. Composition of the Delegation
3.1 The Select Committee delegation composed of the following Members of Parliament and officials: Hon J Mthethwa, KwaZulu-Natal (ANC); Hon D Ximbi, Western Cape (ANC); Hon M Oliphant, Northern Cape (ANC); Hon B Engelbrecht, Gauteng (DA); Mr N Mfuku, Content Adviser (Committee Section); Ms T Matthews, Researcher (Research Unit) and Mr N Mangweni, Committee Assistant (Committee Section).
4. General Overview of the Loco Inspection at Walter Sisulu Local Municipality
4.1 On 25 June 2018, the delegation of the Select Committee interacted with senior officials of the Department of Cooperative Governance and Traditional Affairs, political party representatives in the municipal council (ANC, DA, and Maletswai Civic Association), the South African Local Government Association (SALGA) and external stakeholders of the Municipality.
4.2 The Departmental official made a presentation on the constitutional, procedural and substantive reasons for the intervention. The representatives of the political parties, Organised Labour and external stakeholders, further shared their opinions with regards to the intervention.
5. Presentation by Department of Cooperative Governance and Traditional Affairs
5.1 At the time of its establishment, the Walter Sisulu Local Municipality inherited from the amalgamated Gariep and Maletswai Municipalities, an Eskom debt to the value of R82,1 million. From its establishments, the Municipality had a budget deficit and inherited a dilapidated fleet and plant.
5.2 The Department established multi-disciplinary teams that were to support the Municipality in all the functional areas. The various work streams, developed support packages that outlined what the functionaries in the Municipality should implement.
5.3 It became clear to the Department that the Municipality was dragging its feet in implementing what was contained in the support plans. On numerous occasions, the Department continued to engage the Municipality as a form of support in addressing issues that had a recipe of hindering service delivery, weakening administration and negatively affecting financial management. Over and above the hands on support, financial support was also given to the Municipality in the form of transfers from the Department, to attend to matters that emerged through the amalgamation process. Regardless of the efforts by the Department in supporting Municipality, the Municipal Council failed to implement the support plans, thus leading to the failure in fulfilling its executive obligations.
5.4 In its sitting on 7 February 2018, the Provincial Executive Council (EXCO) resolved to approve the intervention in the affairs of the Municipality, in terms of section 139(1)(b) and (5) of the Constitution. An Administrator was appointed for a period of six months, subject to review with terms of reference, and assumed duties on 22 February 2018.
6. Terms of Reference of the Administrator
6.1 The Administrator was appointed to discharge the following responsibilities:
- Facilitate the appointment of Municipal Manager as an Accounting Officer of the Municipality.
- Facilitate the appointments of the Chief Financial Officer (CFO) and other vacant Section 56 Managers.
- Assist in addressing the challenges currently confronting the Walter Sisulu Local Municipality, in respect to management or administrative challenges; financial management challenges and service delivery challenges.
- Ensure that the oversight structures of the Municipality are strengthened in order to be able to perform their functions effectively and efficiently so.
- Ensure that the supply chain management systems are in place for the smooth running of the procurement management processes.
- Facilitate the review of all financially related policies, especially the credit control and revenue collection policies.
- Attend to all legal matters that are confronting the Municipality, including litigations.
- Institute a forensic investigation on procurement management processes, including the irregular appointments of staff.
7. Opinions of Political Parties and Stakeholders of the Municipality
7.1 The delegation of the Select Committee solicited opinions of the political parties and external stakeholders of the Municipality. Their opinions are summarized as follows:
8. Opinion of the African National Congress (ANC)
8.1 The representative of the ANC tabled an opinion that supported the intervention. However, the debt owed to Eskom was a critical challenge for the Municipality. There are other service delivery challenges, like potholes.
9. Opinion of the Democratic Alliance (DA)
9.1 According to the representative of the DA, the amalgamation of Gariep and Maletswai Local Municipalities was a challenge, including the Eskom debt. What was needed is additional funding. Acknowledgement of the financial support from the Department of CoGTA, and the deployment of the Administrator was appreciated. Hence the intervention was supported. The representative of the DA also flagged issues related to employee benefits, specifically on outstanding pension fund amounting R24 million.
10. Opinion of the Maletswai Civic Association (MCA)
10.1 Besides supporting the intervention in the Municipality, the Association was unhappy about the composition of council committees. Reference was made of the provisions of section 160(8) of the Constitution, where it was stressed that members of a Municipal Council are entitled to participate in its proceedings and those of its committees in a manner that allows parties and interests reflected within the Council, to be fairly represented.
11.1 Opinion of Provincial SALGA
11.1 Provincial SALGA has been part of the Interim Task Team on the amalgamation of municipalities in the Province. They were consulted by the MEC before the invocation of section 139 of the Constitution. Further, the intervention was supported since it was an intensification of section 154 of the Constitution, to build the necessary capabilities to assist the Municipality. Lastly, the Association was adamant that Eskom should review the current debt of the Municipality.
12. Opinion of Ward Committees
12.1 The Ward Committees’ representative protested that they were never consulted or informed about the intervention in the Municipality. However, the role and progress made by the Administrator was appreciated.
13. Opinion of Youth in Walter Sisulu Local Municipality
13.1 The representative of the Youth in Walter Sisulu Local Municipality welcomed the intervention, since progress has been observed. However, there should be improved communication between Ward Committees, the youth formation and the Municipality. There is also a need for a youth desk in the Municipality.
14. Select Committee Observations and Opinion
14.1 The notice of intervention in Walter Sisulu Local Municipality submitted by the MEC for Cooperative Governance and Traditional Affairs in Eastern Cape Province, complies with the provisions of section 139(2)(a)(ii) of the Constitution, meaning the NCOP was officially informed within 14 days after the intervention began.
14.2 Concerns were raised on what tangible deliverables were achieved in the past six months by the Administrator, in respect to cost containment measures on the operating expenditure, MIG spending, as well as the R23 million debt owed to employees’ pension funds.
14.3 The Select Committee has noted the need to fill vacant positions of Municipal Manager, Chief Financial Officer (CFO), Director of Corporate Services and Director of Community Services, as these positions are critical for the successful implementation of the recovery plan.
14.4 The current situation in the Municipality indicates that there is limited in house experience for managing infrastructure projects, handling tender documents and meaningfully interacting with contractors. There is also limited scheduled maintenance of infrastructure taking place. These challenges make it difficult for the Municipality to spend the funds they have obtained from national government to assist them with infrastructure development. This was evident when the National Treasury withheld R10 million of the local government equitable share, with a view to substitute unspent grants totalling R10,1 million.
15.1 Having conducted the oversight visit at Walter Sisulu Local Municipality and interacted with internal and external stakeholders, it is recommended that:
15.1.1 The NCOP approves the intervention in Walter Sisulu Local Municipality in terms of section 139(1)(b) and (5) of the Constitution.
15.1.2 The Eastern Cape Provincial Executive should intervene by imposing a recovery plan, aimed at assisting the Walter Sisulu Local Municipality to meet its obligations to provide basic services and its financial commitments.
15.1.3 The leadership in the Walter Sisulu Local Municipality should exercise adequate oversight over performance reporting and compliance with laws and regulations, as well as internal control.
15.1.4 The Administrator should fast-tract the process of appointing and filling of section 57 Managers, and further assist the Municipality to ensure that the Service Delivery and Budget Implementation Plan (SDBIP) and the IDP are aligned with the Municipality budget, and has the support and confidence of the whole community.
15.1.5 The Administrator should table a report to the NCOP on the forensic investigations in procurement management processes, irregular appointment of staff and progress made on the payment of third parties, in particularly the R23 million debt owed to employees’ pension funds. The report should be forwarded to the NCOP within one month, after the adoption of this report.
15.1.6 The Administrator should table an audit action plan to the NCOP, that addresses all the audit findings identified by the Auditor-General of South Africa. The report should be forwarded to the NCOP within one month, after the adoption of this report.
15.1.7 The Select Committee on Cooperative Governance and Traditional Affairs, in collaboration with the relevant Portfolio Committee on Cooperative Governance and Traditional Affairs in the Eastern Cape Provincial Legislature, should conduct a follow-up visit to the Municipality, to determine progress made on the intervention and the implementation of the Back to Basics programme.
15.1.8 The South African Local Government Association (SALGA), in co-operation with Local Government Sector Education and Training Authority, should facilitate training and capacity building for Municipal Councillors at Walter Sisulu, to further deepen their understanding of their oversight role, legal framework and policies that govern the activities of the Municipality.
15.1.9 The Select Committee on Cooperative Governance and Traditional Affairs should systematically monitor and review the implementation of the terms of reference of the Administrator, as well as the implementation of the municipal recovery plan, in accordance with Rule 91(2) of the NCOP Rules.
15.1.10 The Eastern Cape MEC for Cooperative Governance and Traditional Affairs should table quarterly progress report to the NCOP on the performance and implementation of the Back to Basics pillars in the Municipality, including the filling of the senior management vacant positions.
Report to be considered.
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