ATC181115: Report of the Select Committee on Co-Operative and Traditional Affairs inspection in Loco on notice of Intervention Issued in terms of Section 139(1)(B) of the Constitution (1996), in Uthukela District Municipality, dated 15 November 2018

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

REPORT OF THE SELECT COMMITTEE ON CO-OPERATIVE AND TRADITIONAL AFFAIRS INSPECTION IN LOCO ON NOTICE OF INTERVENTION ISSUED IN TERMS OF SECTION 139(1)(b) OF THE CONSTITUTION (1996), IN UTHUKELA DISTRICT MUNICIPALITY, DATED 15 NOVEMBER 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 in Uthukela District Municipality in terms of section 139(1)(b) 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 KwaZulu-Natal MEC for Co-operative Governance and Traditional Affairs (CoGTA), to the Select Committee for consideration and reporting. On 13 November 2018, the Multi-Party Delegation of the Select Committee conducted an inspection in loco at Uthukela District Municipality.

 

2.         Objective of the Loco Inspection in Uthukela District 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 invocation of section 139(1)(b) of the Constitution.

 

3.         Composition of the Delegation

 

3.1        The Select Committee delegation was composed of the following Members of Parliament and officials: Hon J Mthethwa (ANC) KwaZulu-Natal; Hon G Oliphant (ANC) Northern Cape; Hon D Ximbi (ANC) Western Cape; Hon E Mateme (ANC) Limpopo; Hon T Wana (ANC) Eastern Cape; Hon M Chetty (DA) KwaZulu-Natal; Mr TM Manele (Committee Secretary: Committee Section); Mr N Mfuku (Content Adviser: Committee Section); Mr B Mahlangeni (Researcher: Research Unit); Ms T Matthews (Researcher: Research Unit); Mr M Mbebe (Procedural Officer: NCOP) and Mr TM Maunye (Intern: Committee Section).

 

4.         General Overview of the Loco Inspection at Uthukela District Municipality

 

4.1        On 13 November 2018, the delegation of the Select Committee interacted with senior officials of the Department of CoGTA, representatives of the African National Congress (ANC), Democratic Alliance (DA), Economic Freedom Fighters (EFF); Inkatha Freedom Party (IFP); representatives of the South African Municipal Workers Union (SAMWU); Traditional Leader; representatives of women and business forum.

 

4.2        The departmental official made a presentation on the constitutional, procedural and substantive reasons for the intervention. The representatives of the political parties and Organised Labour, shared their opinions with regard to the intervention as tabled by the MEC for CoGTA.

 

5.         Presentation by Department of CoGTA

 

5.1        The Department of Cooperative Governance and Traditional Affairs briefed the delegation of the select committee on the constitutional, procedural and substantive matters related to the intervention.

 

5.2        The presentation focused generally on the background; procedural matters, substantive reasons for intervention, resolutions of the provincial executive council including terms of reference, emerging maters, support measures implemented to date and remaining challenges within the municipality

 

6.         Constitutional, and Procedural Matters Related to the Intervention

 

6.1        The Minister was notified of the intervention on 31 August 2018 and the Minister approved the intervention within 28 days, as prescribed by the Constitution.  The Chairperson of the NCOP was notified of the intervention on 31 August 2018. The Municipality was also notified on 31 August 2018, and the decision was communicated on 5 September 2018 to the full Council of the District Municipality.

7.         Substantive Reasons for the Intervention

 

7.1       Part of the substantive reasons for intervening in the Municipality included the absence of financial management controls and processes which have led to non–compliance. The was absence of municipal leadership for both oversight and administrative responsibilities.      There was increase in water distribution losses based on ageing infrastructure and theft. Further, there was an alarming increase in irregular, fruitless and wasteful expenditure and the absence of plans to mitigate against such risk. In addition, frequent disruption on service delivery through labour and community protests and the absence of plan to manage or avoid disruption.

 

8.         Terms of Reference of the Administrator

 

8.1        An Administrator has been appointed, to assume the following responsibilities, amongst others:

• Preparation and implementation of financial recovery plan approved by the Council.
• Implementation of financial systems, policies and procedures, including preparation and implementation of cost cutting measures.

• To be a compulsory signatory on the Municipality’s primary bank account, and other accounts that the Municipality operate.
• Revitalize and act as a chairperson on the interim finance committee to monitor and manage the cash flow of the Municipality, approve or disapprove purchase requisitions and to ensure that the Municipality’s cash position is not overdrawn.
• Ensure that the interim Finance Committee meets regularly and reports fortnightly to the executive committee of the Council on cash flow payments.
• Implement governance systems and procedures, including oversight over the administration including ratification of decisions taken by the Municipal Council, the executive committee, committees, Municipal Manager and section 56 Managers in terms of delegated or original authority.
• Open and conclude negotiations with creditors of the Municipality including application processes envisaged in section 152 and 153 of the Municipal Finance Management Act (MFMA), Act 56 of 2003.

 

• Ensure implementation of findings arising from any investigation into fraud or maladministration or corruption.
• Ensure implementation of remedial action plans dealing with negative findings from the Auditor-General of South Africa.

 

9.      Support Measures implemented in terms of Financial Reporting, Asset Management, Supply Chain Management, Expenditure Management and Rural Development

 

9.1   The Municipality was able to submit its annual financial statements on 31 August 2018, and monthly and quarterly reports as regulated by the MFMA. Cost containment measures were adopted by the council and development of fiscal austerity measures to control and regulate expenditure. The Administrator facilitated the development of well capacitated supply chain management unit, appointment and training of members of the Bid committee and the adoption of anti-corruption strategy and delegation framework. In addition, assistance was provided in the identification and investigation of unauthorized, irregular, wasteful and fruitless expenditure incurred in 2016/17 and 2017/18 financial years.

 

10.       Opinions of Political Parties and Stakeholders of the Municipality

 

10.1      During loco-inspection, the Select Committee interacted and solicited opinions of the political parties, internal and external stakeholders of the Municipality. Their opinions are tabled below:

 

11.        Opinion of the African National Congress (ANC)

 

11.1      The ANC tabled an opinion that supported and welcomed the intervention issued in terms of section 139(1)(b) of the constitution. However, concerns were raised with regard to non-funding of water and draught crisis. The challenge was revenue collection, which was exacerbated by drought. They further indicated that the Municipality has made progress with regard to reporting and use of financial resources for municipal operations.

 

 

 

12.        Opinion of the Democratic Alliance (DA)

 

12.1      The Whip of the DA tabled an opinion that supported the intervention. However, concerns were raised with regard to the use of allocated budget of the municipality on non-core functions of the Municipality, but on music festivals. It was emphasised that there was too much political interference in the administration.

 

13.       Opinion of Economic Freedom Fighters (EFF)

 

13.1      The EFF tabled an opinion that supported the intervention. Concerns were raised with regard to the time-frame of the intervention, and the lack of understanding of the terms of reference of the appointed Administrator. There was also a lack of common understanding on the vision and mission of the Mayor, in respect to the Thuma-Mina Campaign.

 

14.        Opinion of Inkatha Freedom Party (IFP)

 

14.1   The IFP supported the intervention, and further indicated that the intervention was inexorable and unavoidable. In terms of the SWOT analysis, weaknesses in respect of shortage of skilled staff to perform certain functions skilled personnel; low staff morale and poor infrastructure and maintenance.

 

15.        Opinion of Traditional Leader

 

15.1   The Traditional Leader tabled supported and welcomed the issuing of intervention in terms of section 139(1)(b) of the Constitution. The Traditional Leader raised concern that the Municipality had allow external people to come to the Municipality to solve their problems. He encouraged all political parties to work together irrespective of their political affiliations.

 

 

 

 

 

16.        Opinion of the Municipal Organised Labour

 

16.1      The representative of the South African Municipal Workers Union (SAMWU), supported the intervention, with the provision that it should not compromise the workers’ interests negatively.

 

17.        Business Forum

 

17.1      The Business Forum raised concerns with regard to water supply challenges. Some businesses were closing as a result of water shortages. There was a need for a water plan for the Municipality. Further, there are communication challenges between the Business Forum and the Municipality, although the intervention was supported.

 

18.        Select Committee Observations and Opinion

 

18.1      In terms of the constitutional and procedural matters, the Select Committee has observed that the National Minister for CoGTA has approved the intervention, and the NCOP and the district municipality were notified in accordance with the legislative requirements.

 

18.2      The Minister for CoGTA approved the intervention in Uthukela District Municipality on the 31 of August 2018.

 

18.3   Despite the support measures reported, the Select Committee has noted that the District was still facing challenges related to a deficit, projected at more than R117 million, high cost of doing business; high debts; compromised billing and data management; problems of salary parity and non-implementation of consequence management.

 

18.4      In the face of massive challenges confronting the Municipality, the Select Committee has observed the absence of the MEC for CoGTA, without a formal apology, during the loco inspection at the Municipality.

 

 

 

18.        Recommendations of the Select Committee

 

18.1      Having conducted the oversight visit to Uthukela District Municipality and interacted with internal and external stakeholders, the Select Committee on Co-operative Governance and Traditional Affairs recommends as follows:

 

18.1.1   The NCOP approves the intervention in Uthukela District Municipality in terms of section 139(1)(b) of the Constitution.

 

18.1.2   The Administrator should assist the Municipality to develop a stakeholder’s communication strategy, on matters related to basic service delivery, including the provision of water and electricity reticulation.

 

18.1.3   The KwaZulu-Natal MEC for CoGTA should table quarterly progress report to the NCOP on the status of the intervention in the Municipality; including challenges encountered.

 

18.1.4   The Select Committee on Co-operative Governance and Traditional Affairs, in co-operation with the relevant Portfolio Committee in KwaZulu–Natal Provincial Legislature, should conduct a follow-up oversight visit to the Municipality in order to evaluate the progress made in respect of the intervention in the Municipality.

 

Report to be considered.