ATC190327: Report of the Select Committee on Cooperative Governance and Traditional Affairs in Loco Inspection on the Notice of Intervention in terms of Section 139 (1) (b) of the Constitution in Abaqulusi Local Municipality, dated 27 March 2019

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

Report of the Select Committee on Cooperative Governance and Traditional Affairs in Loco Inspection on the Notice of Intervention in terms of Section 139 (1) (b) of the Constitution in Abaqulusi Local Municipality, dated 27 March 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 Abaqulusi 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 KwaZulu-Natal MEC for Cooperative Governance, and Traditional Affairs (CoGTA), to the Select Committee for consideration and reporting. On 14 March 2019, the Select Committee conducted in loco inspection in Abaqulusi Local Municipality.

           

2.         Objective of the in Loco Inspection in Abaqulusi 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: Hon D Ximbi, Western Cape (ANC); Hon M Chetty, KwaZulu-Natal (ANC) Hon B Engelbrecht, Gauteng (ANC), Mr TM Manele, Committee Secretary (Committee Section), Ms T Mathews, Researcher (Research Mr P Bongco, Committee Assistant (Committee Section) and Mr M Mbebe, Procedural Officer (NCOP)

 

4.         General Overview of the in Loco Inspection at Abaqulusi Local Municipality

 

4.1        On 15 March 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

 

5.2.    The departmental official indicated that the 2016 election resulted in Abaqulusi LM being a hung Council with 44 seats. The Council comprise of 19 IFP, 1 EFF, 3 DA and 21 ANC councillors. Currently there are two vacancies in the Council as a result of the resignations of 1 IFP and 1 ANC ward councillors. By-elections will be held on 27 March 2019 and the 10th of April 2019. 

 

 

 

 

5.3.    On 20 March 2013, the municipality was placed under constitutional intervention by the Executive Council as a result of a number of failures in undertaking executive functions. The Executive Council assumed the functions specified in terms of sections 51, 54A and 56 of the Systems Act.

 

6.          building institutional capacity and development 

 

6.1.       The positions of Director Technical Services and Director Community Services remain vacant. The municipality has not investigated the circumstances surrounding the resignation of Mr A Khumalo who resigned because of allegations that he did not possess matriculation, nor has it laid a criminal complaint with the SAPS as required despite requests from COGTA.

 

6.2.       The MEC disputed the appointed of the Municipal Manager at the municipality on the basis of nondisclosure of critical information relating investigations that were ongoing at his previous employment, namely Nongoma Municipality. The MEC referred the matter to the Minister for consideration.

 

7.          Governance

 

7.1.       As at January 2019, the last four (6 December 2018, 13 December 2018, 15 January 2019, 22 January 2019) attempts at convening a Council at Abaqulusi LM had failed. The meeting of the 31st of January 2019 did not successfully dispose of all the matters that were on the agenda, even though compliance matters were considered.

           

 7.2.      The municipality has 22 wards and 6 CDWs. Most OSS war rooms are not properly functioning since there are no intervention plans in place provided by sector departments, in spite of concerted efforts to provide support these structures.  All Ward committees have provided evidence of holding their meetings, except wards 11 and 17, which have been rated as dysfunctional.

 

 

 

 

7.3.       The provincial rapid response team is entrusted with the responsibility of handling service delivery protests, liaising with local stakeholders, including the Abaqulusi RRT.  There has been poor functionality of the local team, as the Speaker is hardly available to provide the required leadership in this regard.  This usually increases the number of protests as communities feel they are deliberately ignored.

 

7.4.       The issue of high number and costly litigations that Council is dealing with remains a challenge.  As at November 2018, Abaqulusi was dealing with about eight (8) very costly litigations. The financial impact of these litigations has already negatively compromised the financial position of the municipality.

 

7.5.       The close protection service is outsourced to Qomukufa Security which includes inter alia escorts, evacuations, armed response, ad hoc patrols and guards depending on the nature of the threat or attack.  As at November 2018, there were no threat and risks assessment reports in place.

 

7.6.       The municipality claims that the SAPS had not finalised the assessments. This means that the municipality is not compliant with the Minister’s directives in this regard as it provides security without assessments having been conducted.

 

7.7.       There are allegations that the provision of security services is partisan as it excludes opposition councillors who have filed requests with the municipality following alleged incidents of threats and intimidation.

 

8.         Finance management

 

8.1.       The Budget and Treasury Office (BTO) at Abaqulusi LM is seriously challenged. The municipality re-employed the current CFO despite indications that the CFO had presided over the depletion of the reserves and did not correctly advise the municipal council on several key factors.

 

8.2.       In terms of the Audit Report for 2017/2018, the municipality received a qualified audit opinion for the 2017/2018 financial year. The basis for the qualification included Property, plant and equipment were not properly accounted for and there was insufficient evidence to determine the correctness of the asset register (recurring finding). Investment properties were not properly accounted for and there was insufficient evidence to determine the correctness thereof.

 

8.3.       The municipality experienced non-compliance issues continued on Sec 129(3) of the MFMA – Oversight report was not made public, SCM Regulation 17(a) and (c) – Goods and services below R200 000 were procured without the required price quotations, SCM regulation 43 – Contracts accepted from bidders whose tax affairs were not declared to be in order by SARS, SCM regulation 22(1) and 22(2) – Invitations for bidding were not advertised for the required minimum number of days, Preferential procurement regulation 8(2) – The minimum threshold for local production and content was not stipulated (recurring), Preferential procurement regulation – Suppliers did not submit a declaration on local production and content.  

 

8.4.       Grants were not cash backed for all periods under review as indicated in the table above. The cash coverage has deteriorated significantly which indicates that the municipality will not be able to cover its short term expenditure requirements.

 

8.5.       The current ratio has remained below the norm over the period under review and is an indication that the municipality is unable to meet its short term obligations as they fall due. The information provided from various sources used to determine the ratios is inconsistent and will require a deeper analysis. A full reconciliation of the grant register is necessary to ensure the credibility of information and resultant ratios computed.

 

9.         Service Delivery

 

9.1.       The municipality has a total of 51 472 households and 81.3% of these households have access to piped water and 95% have access to VIP sanitation.  In terms of electricity 83% of the households have access to electricity.

 

9.2.       One of the major challenges that face the municipality is water and electricity losses which cost the municipality millions every year. Both management and the political leadership are unable to resolve these losses partly because of their inability to confront defaulting consumers particularly residents.  

9.3.       Abaqulusi Local Municipality is neither an official water service authority (WSA) nor provider (WSP) for the local area but continues to manage the operation of the water infrastructure in the local municipality

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9.4.       This is a role for which the municipality does not have the financial and technical resources. Several attempts were made by Cogta officials to facilitate an amicable resolution to the matter without success

 

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 related to unblocking and completion of outstanding projects and 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 in 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 did not support 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 did not support 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 Inkatha Freedom Party

 

14.1.  The representative of the South African Local Government Association tabled opinion that did not support the invocation of section 139 (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 (IMATU)

 

15.1.     The representative of South African Municipal Workers Union tabled opinion that did not support 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 did not 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,   

 

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 KwaZulu-Natal Provincial Legislature and the Municipality were notified of the intervention about the substantive matters related to the invocation of section 139 of the Constitution.

 

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.

 

1.7.3. The Select committee has noted also the concerns with regard to the identification of stakeholders more especially the exclusion of South African Municipal Workers Unions and the forum representing women

   

 

 

 

18.        Recommendations of the Select Committee

           

18.1      Having conducted the oversight visit to Abaqulusi Local Municipality and interacted with representative of the political parties, the Union, Youth formation. the Select Committee on Co-operative Governance and Traditional Affairs recommends as follows:   

 

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

 

18.1.2   The Administrator should fast-track the process of implementing the municipal turn-around plan, in accordance with the terms of reference assigned by the KwaZulu-Natal 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 KwaZulu-Natal for CoGTA should table quarterly progress report to the NCOP on the status of the intervention in the Municipality; including challenges encountered.

 

18.1.5   The Select Committee on Co-operative Governance and Traditional Affairs, in co-operation with the relevant Portfolio Committee in KwaZulu Natal Provincial Legislature, should after 2019 National Election and during the 6TH Parliamentary period 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.