ATC190219: Report of the Select Committee on Cooperative Governance and Traditional Affairs Inspection Loco on Notice of Intervention in issued in Terms of Section 139 (1) (b) of the Constitution in Ditsobotla Local Municipality, dated 19 February 2019
Report of the Select Committee on Cooperative Governance and Traditional Affairs Inspection Loco on Notice of Intervention in issued in Terms of Section 139 (1) (b) of the Constitution in Ditsobotla Local Municipality, dated 19 February 2019
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 Ditsobotla Local 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 North West MEC for Cooperative Governance, Human Settlement and Traditional Affairs (CoGTA), to the Select Committee for consideration and reporting. On 31 January 2019, the Select Committee conducted a loco inspection in Ditsobotla Local Municipality.
2. Objective of the Loco Inspection in Ditsobotla 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 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: (ANC); Hon T Wana, Eastern Cape (ANC); (ANC); Hon G Oliphant, Northern Cape (ANC); Hon D Ximbi, Western Cape (ANC); Hon E Matame Limpopo (ANC); Mr TM Manele, Committee Secretary (Committee Section), Mr B Mahlangeni, Researcher (Research Unit) and Mr N Mfuku, Content Advisor (Committee Section), Mr P Bongco, Committee Assistant (Committee Section) and Mr M Mbebe, procedural Officer, NCOP
4. General Overview of the Loco Inspection at Ditsobotla Local Municipality
4.1 On 31 January 2019, 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, representative of the South African Local Government Association and forums representing Youth and Women in construction
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 Head of the Department of Cooperative Governance, Human Settlement and Traditional Affairs briefed the delegation of the Select Committee on constitutional, procedural and substantive matters related to the intervention. The presentation on the substantive matters related to the invocation of the intervention focused on service delivery, governance and financial management
6. Service delivery
6.1 The department reported that the municipality experienced service delivery problems as the result of lack of maintenance in particular water and sanitation. The municipality experience sewer spillage in the street and water supply interruption due to the poor state of both water treatment plant and waste management treatment plant
6.2. The municipality was unable to provide refuse removal in Coligny and rehabilitation of roads not done due to financial constrain.
6.3. The municipality faced possible recall of electricity licence by National Energy Regulator of South Africa because of the inability to complete planned projects and the grants allocated for electricity related projects could not be accounted for by the municipality
7.1. The governance related problems reported included instability in the council, weak political oversight, high vacancy rate senior management level and, labour instability
7.2. The municipality received a disclaimer opinion for three consecutive years. The main issues that led to the disclaimer were cash equivalents, receivable from exchange and non-exchange transactions, investment, property, unauthorised, irregular, and fruitless and wasteful expenditure
8. Finance management
8.1. The municipality has experienced allegation of fraudulent activities taking place within the revenue management unit. This is based on the appointment of consultants to perform revenue management functions. These activities were not properly monitored and resulted in the municipality not being able to properly account for the municipality’s revenue.
8.2. The municipality encountered the total outstanding debtors amounts to R562 million. The collection rate has been declining over the past five years from 57% to 55% in 2015 and 2016 respectively, despite the fact that the municipality appointed a number of service providers for revenue management
8.3. The municipality is amongst the top ten Eskom Debtor’s in the country. The employee related cost is the largest cost driver, currently at 49% which is way above the norm of (25%-40%).
9. Progress Report on the Status of the Intervention in the Local Municipality
9.1. The Administrator has presented the intervention report to the municipal council and was adopted on 18 November 2018. The municipality has managed to appoint three section 56 managers such as Chief Financial Officer, Director Planning and Local Economic Development and Director of Planning and Community Services
9.2. The major service delivery progress reported relate to completion of the Coligny water treatment plant, unblocking of sewages; completion of waste treatment plant in Lichtenburg, payment of creditors,
9.3. The governance progress reported included the improvement of governance within the municipal council, stabilization and improvement of governance and administration, provision of intervention plans and reports and scheduling of portfolio committees to consider and adopt reports.
9.4. Despite the progress reported, the major challenges facing the municipality relate to resignation of the municipal manager, negative audit opinion and lack of capacity to deal with, lack of audit committee and internal audit capacity, connivance and sabotage by some officials, security threats hampering the smooth operations of the municipality and involvement of senior managers in business and neglecting their responsibilities
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 representative of the ANC indicated that the municipal council has acknowledged and welcomed the intervention. However, the member of the ANC raised concerns with regard to tabling of section 71 reports, capacity within the supply chain management and absence of the chief financial officer.
11.2. In conclusion the ANC member welcomed the progress made by the local municipal as the result of the intervention and appointment of the administrator.
12. Opinion of the Democratic Alliance (DA)
12.1 The representative of the DA tabled an opinion that supported the intervention. However, concerns were raised with regard to the lack of consultation, fruitless expenditure; non- compliance with tender procedures; lack of service delivery; non-payment of salaries; delays on payment of pension funds; non-implementation of council decisions; lack of consequence management and Eskom debts.
13. Opinion of the Economic Freedom Fighters
13.1 The representative of the Economic Freedom Fighters tabled an opinion that supported the intervention, and further raised concerns with matters related to lack of service delivery; payment of rates and taxes; technical problems on water, sanitation, street lights and non-maintenance of road and road signs
14. Opinion of South African Local Government Association
14.1. The representative of the South African Local Government Association tabled opinion that welcomed and supported the invocation of section 13 (1) (b) of the constitution. The representative emphasized with the framework of intergovernmental relation the need to ensure that at both political and technical level, there is a platform for common understanding and approach to the issuing of interventions in the municipalities.
15. Opinion of Organised Labour
15.1. The representative of South African Municipal Workers Union tabled opinion that welcomed and supported the issuing of intervention in terms of section 139 (1) (b) of the Constitution. The representative, however, raised concerns with regard to administrative instability, high level of management intimidation, lack of security and protection of municipal worker.
16. Opinion External Stakeholders
16. 1 The representative of youth forum tabled the opinion that support the invocation of section 139 (1) (b) of the constitution. However, the youth representative raised concerns that related to the failure of learner ship programmes, appointment at management level of people who are not from the local municipality, poor infrastructure programme,
16.2. The representative of women in construction tabled the opinion that negate the invocation of section 139 (1) (b) of the constitution. Concerns were raised with regard to lack of municipal programmes to support local economic development, youth unemployment, misuse of equitable share and grants. The representative of the women in construction, further recommended the invocation of section 139 (1) (c) of the Constitution
17. Select Committee Observations and Opinion
17.1 In terms of the constitutional and procedural matters, the Select Committee has observed that the National Minister for CoGTA, the NCOP, the North West Provincial Legislature and the Municipality were notified of the intervention about the substantive matters related to the invocation of section 137 of the Municipal Finance Management Act.
17.2 The Select Committee has also noted general concerns raised by stakeholders on matters related to lack of security and involvement of senior management of the municipality in business.
18. Recommendations of the Select Committee
18.1 Having conducted the oversight visit to Ditsobotla Local Municipality and interacted with members of African National Congress, the democratic party and representatives of, the Select Committee on Co-operative Governance and Traditional Affairs recommends as follows:
18.1.1 The NCOP approves the intervention in Ditsobotla Local Municipality in terms of section 139 (1) (b) of the Constitution
18.1.2 The Administrator should fast-tract the process of implementing the municipal turn-around plan, in accordance with the terms of reference assigned by the North West MEC for CoGTA.
18.1.3 The Administrator should provide progress reports on allegation of senior managers doing business with the municipality and ensure the implementation of proper management consequences.
18.1.4 The North West MEC for CoGTA should conduct Forensic Investigation on Supply Chain Management and table report to the National Council of Provinces
18.1.5 The North West MEC for CoGTA should table quarterly progress report to the NCOP on the status of the intervention in the Municipality; including challenges encountered.
18.1.6 The Select Committee on Co-operative Governance and Traditional Affairs, in co-operation with the relevant Portfolio Committee in North West Provincial Legislature, should in future 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.
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