ATC201105: Report of the Portfolio Committee on Cooperative Governance and Traditional Affairs on Oversight Visit to Kwazulu-Natal Province, 06 - 09 October 2020, Dated 4 November 2020
REPORT OF THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON OVERSIGHT VISIT TO KWAZULU-NATAL PROVINCE, 06 - 09 OCTOBER 2020, DATED 4 NOVEMBER 2020
The Portfolio Committee on Cooperative Governance and Traditional Affairs (PC on COGTA), having conducted an oversight visit to KwaZulu-Natal Province, from 06 to 09 October 2020, reports as follows.
The Portfolio Committee on COGTA, herein referred after as the Committee, conducted an oversight visit to KwaZulu-Natal Province (KZN) in relation to Ugu district, uMgungundlovu district and eThekwini Metropolitan municipalities. The focus of the oversight was to oversee, and gain insights into the state of these municipalities in respect of:
- Implementation of section 139 of the Constitution;
- Negative findings by Auditor General –South Africa (AGSA), with particular focus on the financial year ending in June 2019;
- Being identified as a municipality in distress by the Department of Cooperative Governance in terms of the Back to Basics methodology;
- As a follow up on previous engagements with these municipalities; and
- Affirming the institution of traditional leadership as an integral part of municipal and cooperative governance.
- Terms of reference
The oversight activities of the Committee were informedby provisions of both Section 55(2) and Section 56 of the Constitution. Section 56 of the Constitution provides that “The National Assembly or any of its committees may - (a) summon any person to appear before it to give evidence on oath or affirmation, or to produce documents; (b) require any person or institution to report to it, and (c) receive petitions, representations or submissions from any interested persons or institutions.”
The Committee focussed on ascertaining information in relation tomunicipal institutional capacity, good governance, financial viability and management, basic service delivery, adherence to provisions of the Disaster Management Act, and availability of post Covid-19 economic recovery plans.
The Committee adopted an oversight schedule that entailed briefing sessions with municipalities, national and provincial COGTA, KZN Treasury, Auditor-General of South Africa (AGSA), South African Local Government Association (SALGA), Traditional Leadership (including delegates from the National and Provincial Houses of Traditional Leaders), stakeholder engagements and site visits.
- Objectives of the oversight visiting to KwaZulu-Natal Municipalities
The oversight visits in KZNspecifically sought to-
- Evaluate the current state of the identified municipalities which have either been placed under administrative intervention in terms of section 139 of the Constitution, or deemed in distress in term of the Back to Basics methodology, and those that had received negative findings by the AGSA, especially in respect of the previous financial year.
- Evaluate progress attained as follow up on previous engagements with the municipalities.
- Engage with traditional leaders on issues affecting traditional leadership and as follow up on resolutions emanating from the Traditional Leadership Indaba hosted by the Committee.
- Engage with relevant stakeholders on the state of the identified municipalities.
- Engage with petitioners about contents and progress in resolving issues raised in the petition.
- Composition of the Delegation
- Committee members.
The Portfolio Committee delegation was composed of the following Members of Parliament: Hon AF Muthambi (Chairperson: ANC); Hon GG Mpumza (ANC); Hon BM Hadebe (ANC); Hon Inkosi Luthuli (IFP); Hon MH Hoosen (DA); and Hon HO Mkhaliphi (EFF). Hon Lesoma (ANC) also joined the delegation in KZN.
Apologies: HonDD Direko (ANC);HonMM Tlou (ANC);HonPP Xaba-Ntshaba (ANC)
- Committee support officials:
Ms S Cassiem (Committee Secretary: Committee Section); Mr N Mangweni (Committee Secretary: Committee Section); Ms T Mpapela (Content Adviser: Committee Section); Mr A Sokomani(Acting Content Advisor and Researcher);Mr M Erasmus (Committee Assistant: Committee Section); Mr M Molepo (Parliamentary Communications).
- COMMITTEE OVERSIGHT FINDINGS
- Meeting with the MECs for Cooperative Governance and Traditional Affairs and Provincial Treasury
On 06 October 2020, the MEC for Cooperative Governance and Traditional Affairs in the Province, Hon Hlomuka, in collaboration with the MEC for Treasury, Hon Pillay, made a joint presentation that summarised the state of municipalities in the Province, with particular emphasis on those municipalities featuring on the Committee’s oversight programme. Hon Hlomuka delegated Chief Director in the Provincial COGTA, Mr S Duma, to lead the presentation. Among the key highlights of Mr Duma presentations were the following:
- The anomalies of Mpofana and Impendle local municipalities, which had too few councillors to meet the minimum required number for the establishment of Executive Committees. This also saw a situation in Mpofana where one individual assumed the responsibilities of both Mayor and Speaker. The abolishment of plenary type municipalities, as contemplated in the amendments to the Local Government: Municipal Structures Amendment Bill  will resolve these anomalies.
- The dysfunction at Mpofana was particularly severe, due to the prolonged struggle to fill the critical vacancies of the Municipal Manager, Chief Financial Officer, and Technical Services despite numerous attempts.
- There was rampant abuse of Regulation 36 of the Supply Chain Management Regulations at UMzinyathi District Municipality. The Regulation allows the Accounting Officer to ratify any minor breaches of the procurement processes by an official or committee acting in terms of delegated powers or duties which are purely technical in nature. The Accounting Officer is responsible for deciding whether a particular breach of procurement processes is minor or material. However, the Accounting Officer can only rely on this provision if the official or committee who committed the breach had the delegated authority to perform the function. Secondly, the Accounting Office may only ratify a breach of process and not the irregular expenditure itself, which means that the ‘irregular’ expenditure will remain irregular. The responsibility to ratify irregular expenditure vests with Council. The municipality applied the Regulation without always adhering to the conditions.
- The Abaqulusi Local Municipality had the distinction of being the only Water Services Provider (WSP) that had not obtained express agreement, from the Minister responsible for Water and Sanitation, to deliver the service. It also had no agreement with the Zululand District Municipality, which is the Water Services Authority (WSA) in the area.
Supplementing the presentation by Mr Duma, the Provincial Treasury highlighted:
- The unreliability of municipalities’ Section 71 Reports, as these were often erroneous and riddled with incorrect information. Particularly problematic were discrepancies of information around the provision for use of 8 percent of municipal capital budget for maintenance. Exacerbating this handicap was that the reports did not undergo screening by Provincial COGTA but went straight to National Treasury.
- The Provincial Treasury had no permanent deployments in the Cities of eThekwini, Mhlathuze and Msunduzi, as these were non-delegated municipalities in terms of MFMA Circular 20 of 2005. The problem was that National Treasury was too far away to intervene timeously in these municipalities. The MM saga in eThekwini was a direct manifestation of the delegation versus non-delegation matter.
- Members’ observations and concerns
The Members observed as follows:
- The quality of the Report presented was commendable, especially in so far as it provided an honest account without attempting to create a favourable picture. Emerging from the presentation was a dismal state of municipalities, which, was doing the opposite of improving people’s lives. Political leaders were not engaging enough in terms of finding solutions to the political problems.
- As good as the Report was, it said very little in terms of what the Provincial Government was actually doing to arrest the situation.
- The Councillors involved in S&T fraud in Mtubatuba Local Municipality deserved to be in jail.
- The headquarters of the Provincial Department of Cooperative Governance and Traditional Affairs were not exemplary and did not give a good impression. The Department must consider upgrading the premises.
- The efficacy of interventions in terms of Section 139 of the Constitution was debatable and bordered on encroaching on the autonomy of municipalities, local government democracy and the ability of municipalities to govern their own affairs.
- There needed to be consequences management regarding the passing of unfunded budgets in Mpofana and Richmond Local Municipalities.
- It was dismaying to note the latest disclaimed and adverse audit opinions obtained in respect of uMzinyathi, Mpofana and Inkosi Langalibelele, notwithstanding the fact that these municipalities have been under intervention since 2017. UMzinyathi even hired two consultants to the value of R1.2m to assist with preparation of annual financial statements for auditing. Mpofana has had additional experts deployed from COGTA and the Provincial Treasury to assist the Administrator.
- Meeting on the State of Ugu District Municipality
On 07 October 2020, the Committee visited Ugu district municipality.In outlining the purpose of the visit, the Chairperson reminded the municipality about issues raised in a previous engagement with the Committee held in March 2020. She then advised that the Committee would not only be following up on issues raised, but would also look into the current state of UGu Municipality in relation to audit outcomes, water crisis, labour unrest, vandalization of infrastructure and implementation of projects.
The stakeholders reported on the state of Ugu as detailed below.
- Provincial Department of COGTA
The Provincial COGTA outlined critical areas of concern in relation to UGu district municipality. The vacant position of the Chief Financial Officer(CFO) was cited as one of the key issues compromising the institutional capability of the UGu district municipality, and, thus negatively affecting other areas related to financial viability and management within the municipality, such as qualified audit outcomes. The Provincial COGTA also reported about huge Unauthorised, Irregular, Fruitless and Wasteful (UIFW) expenditure, and lack of implementation of remedial and consequence management for the officials responsible. The other financial areas of concern put forward include the following:
- Adoption of an unfunded budget.
- Government debt.
- High employee costs.
- Low revenue collection.
- Low debt collection.
Incidences of fraud and maladministration within UGu district municipality led to section 106 investigation, and the resultant report tabled to Council for implementation of recommendations for consequence management.
Labour unrest within the UGu district municipality which has led to dismissal of 121 employees was also cited as an issue that has contributed to community protests. Labour related challenges were reported as often coinciding with vandalism of infrastructure. The vandalism of infrastructure coupled with the already aging infrastructure contributed to interruptions in provision of water which often led to community protests.
The Provincial COGTA also reported on sewage spillage as an area of concern within the UGu municipality. The budgeting for operations and maintenance costs, reported to be below the prescribed 8% norm was also a concern for the Provincial COGTA taking into consideration the infrastructure related challenges.
In relation to governance, the Provincial COGTA reported that all committees and structures within UGu district municipality are functional including the disaster management centre and rated grant expenditure at 100%.
SALGA representatives, led by Councillor Ngubane, provided information on generic support provided to all municipalities. SALGA urged the Committee to address the issue of revenue collection in all municipalities by encouraging all Members of Parliament to influence their respective constituencies to adopt a culture of paying for services.
In relation to Ugu district municipality, SALGA was concerned about the issue of huge government debt, and businesses operating within municipality who refuse to pay for services and rates. SALGA advised that the success of local government was dependent on the financial viability of municipalities, and all users of municipal services must pay for services and rates to increase revenue collection.SALGA also reported on support provided to Ugu district municipality in line with their adopted SALT model as including technical support,andcapacity building in the form of winter schools,capacitating councillors on issues related to spatial planning and basic finance.
SALGA identified issues crippling and challenging the Ugu district municipality as including, vacancies in key positions, low revenue, governmentdebt (R880 million), debt to Umgeni Water, Eskom debt for Waste Water Treatment Plant use, vandalism, labour unrest, andaging infrastructure.SALGA advised that the challenges facing Ugu district municipality are mostly financial in nature, and therefore remedial action should address the root cause and offer financial solutions, as all support given was technical without any financial intervention.
SALGA also addressed labour related challenges and provided howvandalism is used as an instrument against a municipality byhighly politicised personnel in UGu districtmunicipality. SALGA made a connection between vandalism by disgruntled employees and disruption of services, often resulting in community protests. SALGA implored all municipalitiesto deal decisively with employees that want to co- govern the municipality, and, to adopt administrative instruments to effectively deal with this challenge. SALGA also advised thatSystems Act amendment should have provisions aimed at prohibiting all staff members from being political office bearers.
SALGA also cautioned the Ugu district municipality about the implication of the dismissed 121 employees as it might bring about more instability, asthe former employees might galvanise communities against the municipality.
SALGA submitted that the issue of low revenue collection and the resultant service delivery challenges, often led to reputational damage of local government, including its labelling as ineffective. SALGA summarised and recommended as follows:
- There is an urgent need for financial assistance to Ugu district municipality if the situation is to be turned around. Intervention in municipalities should address the root causes, and as such invocation of Section 139 interventions should be coupled with cash injection if financial instability is the identified root cause.
- Cooperation of all three spheres of government is critical,and government departments must adhere to the spirit of cooperative governance by prioritising paying their debts to municipalities.
- Political parties in Parliament must be vocal in supporting local government by encouraging their constituencies to pay for services.
- Professionalization of local government.
- Culture of non-payment should be addressed and those who can afford must be compelled to pay, and a different route to be adopted for those who cannot afford to pay. Municipalities must adopt a differentiated approach when dealing with non-payment as follows
- for government departments, must make use of IGR structures and measures,
- for businesses, peaceful engagements with business chamber of commerce,
- a multi- pronged approach to communities which includes determining those who can afford from those who are indigents.
- Water being an essential service and a human right might pose a debatable dilemma for the municipality when a decision to switch off is implemented, and as such, UGudistrict municipality must be cognisant of this and take into consideration the type of consumer they are dealing with and implement available remedies.
- National Department of COGTA/Municipal Infrastructure Support Agent (MISA)
Service delivery interruptions including regular water cuts, sanitation problems, inadequate budgeting for operations and maintenance(O&M), and PMU vacancywere identified as some of the issuescontributing to challenges in Ugu district municipality. The National department of COGTA outlined support offered to Ugu district municipality including assistance with additional funding for refurbishment of infrastructure. MISA also completed a study that identified funding misalignment and disjuncture between bulk infrastructure and reticulation. The IDMS support to the municipality involved addressing this matter.
- UGu District municipality
The Ugudistrict municipality, represented by Municipality Manager (MM) Mr Naidoo, addressed the challenges faced by the municipality and reported on progress achieved since meeting with the Committee in March 2020. Progress reported on included training programs for MPAC members, dealing with the backlog and implementation of consequence management for UIFW, 100% grant expenditure with left over savings, and availability and implementation of post audit action plan and water and sanitation plan.
The MM also reported on the issue of thesaltwater problem in Ugu district municipality and, on the financial assistance by Provincial COGTA for funding construction of a structure to address mixing of sea water with potable water.
The MM also addressed the dismissal of 121 employees as being implemented as a measure of last resort. The said former employees engaged in various illegal actions including threatening of MM, unauthorized use of municipal vehicle while threatening senior management, other security concerns and vandalism. In relation to vandalism the MM also pointed out the ineffective response by law enforcement agencies on reported criminal cases. The MM also reported that Premier of KZN instituted a task team to address the issue of labour unrest.
The MM corrected the Provincial COGTA report about the amount owed by Ugu district municipality to Eskom. The MM provided that Ugu district municipality does not have Eskom debt as it is a water services authority and only owes Eskom for electricity used for its water treatment plant machinery, in contrast to a report by Provincial COGTA.
Salt water ingress into abstraction points was a major problem in Ugu. To counter this problem, the municipality needed to erect a concrete weir.
- Members observations and concerns
The Members observed as follows:
- The vacant position of the CFO for over a period of 12 months and having an acting CFO for more than 10 months had a negative effect on the capability of UGu district municipality. Members urged for commitment and timeline for filling the position of CFO.
- The use of vandalism and sabotage of infrastructure and property by disgruntled employees, threatening and intimidation against MM, and ineffective response by law enforcement was regarded as concerning by the Committee.
- The implementation of consequence management against 121 employees and the subsequent appointment of contract workers was regarded as an effective deterrent against future engagement in illegal activities including an unprotected strike actions by employees. The Committee appreciated the efforts by KZN Premier and UGu district municipality Mayor on the issue of labour unrest, but Members were also concerned about the effectiveness of the local labour forum.
- The incongruence and discrepancies in information provided by Provincial COGTA and the Ugu district municipality in relation to Eskom debt was attributed to weak IGR and should be addressed.
- Another manifestation of weak IGR was the absence of representatives from the municipalities within the jurisdiction of Ugu District.
- The adoption of unfunded budgets over consecutive years by Ugu district municipality made Members to question the quality of support provided by Provincial Treasury if the UGu municipality still adopted unfunded budgets.
- Members were of the view that the bankrupt status of Ugu district municipality wasrendering itineffective to meet its constitutional obligations. It was also important for the Committee to understand how R40m deficit, resulting in the bankruptcy, came about.
- Members alsoraised concerns about the billing system, huge UIFW which is close to R1 billion and reasoning for writing it off, and consequence management for those responsible. In this regard, the municipality seemed to have made no progress since the meeting with the Committee in March.
- Members also wanted to know about adopted plans in place to recoup and deal with government Debt.
- Members wanted commitment in implementation of recommendations of Section 106 investigations report, as well as details of those implicated in the report.
- Members were of the view that challenges in Ugu district municipality are a result of collective failure by all represented political parties within Ugu council, and that they should be all held responsible for failing the Ugu communities.
- Accountability and effective consequence management to be implemented for non-payment of services by consumers including communities, businesses, councillors, and municipality employees.The Committee requested a list of all councillors owing the Ugu district municipality and urged for political will to implement radical debt collection and to adopt a “pay now dispute later approach”
- Members were concerned about reported persistent water challenges which include regular water interruptions, unsafe and poor quality of water provided to communities by municipality due to unsanitary water tanks, allegations of officials selling water to communities, and allegations of selective provision of water to ANC affiliated community members. Members requested information about adequacy of water trucks owned by UGu district municipality to reach all communities in need, as some communities reportedly go without water for more than four (04) months.
- Members observed failure by Ugu district municipality to budget for Operations and Maintenance(O&M)even with funds available, and also wondered how the municipality will address the issue of spare parts that are not available in South Africa as original parts were imported.
- Members also were concerned about compliance to DisasterManagement Act by the Ugu district municipality and whether communities are involved in disaster management centre affairs.
- Site Visit: Salt Water Abstraction Project
The Committee also conducted a site inspection to see the construction of a temporary structure to address the challenge of salt water which is due to mixing of sea water with drinking water. The funding provided by Provincial COGTA will provide temporary relief and there is a need for a more permanent solution. The makeshift structure, which did not meet the project quality standards as endorsed by the Municipal Infrastructure Support Agent (MISA), did not justify the millions spent on constructing it.
- Engagement with Traditional Leadership in Ugu district municipality
The engagement with traditional leadership was about following up on resolutions of the Committee’s traditional leadership indaba, where a number of issues were discussed including, the land issue, remuneration and tools of trade, lack of clearly defined roles for Traditional Leaders, and lack of uniform norms and standards in respect of participation in municipal councils in terms of Section 81 of the Municipal Structures Act.
The Chairperson of the National House of Traditional Leadership, Nkosi Mahlangu, reported on a number of initiatives meant to benefit traditional councils and communities. The reported initiatives, which are a result of partnerships with other stakeholders, include the following:
- Agreement with Solidarity Fund for issuing of R700 vouchers to TL for benefit of 22 households in each community.
- Issuing of food parcels including seeds and fertilisers to TL for benefit of communities.
- Provision of loud hailers to TL, which is a donation from the private sector.
- Agreement with National Lotteries to prioritise and give preference to applications for funding from TL on behalf of communities to enableimplementation of community projects. National Lotteries had set aside about R120 million for the 2019/20 financial year.
The National House of TL also reported on initiatives undertaken to restore the dignity and respect for TL, which includes advocating for returning and registering the land under TL to manage on behalf of communities, fighting for tools of trade, incentives, funding and budgeting allocation for traditional councils and other empowerment programs.
The lack of clarity and uniformity in the role of TL participation in municipal councils was one of the issues reported to be concerning and should be addressed.When it comes to traditional leaders, the practice of determining incentives in accordance with the category under which a municipality falls must stop. There was acknowledgment of some improvement as some municipalities were providing the tools of trade necessary for traditional leaders to participate in virtual council sittings during the time of COVID-19. The land matter remained the most important outstanding issue. The Committee must announce intention to meet with traditional leaders well in advance and ensure that there is a follow up on matters raised, as to prevent these meetings from being a cosmetic exercise.
- Ugu community representatives
Community representatives were not happy with the Committeefor being late for their engagement and not sticking with the relayed time for the start of the engagement. Community members voiced their dissatisfaction,but, proposed for re- scheduling to ensure ample time for engagement as there are lot of issues to be shared with the Committee. A new date should be communicated to community representatives, and issues put forward for the re-scheduled engagement include the following:
- Water related issues only affecting black communities.
- Tender irregularities within UGu district municipality.
- Aging infrastructure.
- Dismissed 121 employees and labour unrest.
- Unresponsiveness of MEC responsible forCOGTA in KZN, as well as the UGu district municipality.
- Issues affecting rate payers and willingness of rate payers to assist the Municipality towards financial stability.
- Mismanagement of funds by the municipality.
- UMGUNGUNDLOVU DISTRICT MUNICIPALITY
On the 08 October 2020, the Committee visited uMgungundlovu District Municipality to engage with municipalities (uMgungundlovu DM, Mpofana LM, Richmond LM) and stakeholders.
- Traditional leadership engagement in uMgungundlovu.
The Committee decided to first engage with traditional leadership separately from other stakeholders. The Chairperson of the National House of TL, Nkosi Mahlangu was given an opportunity to address uMgungundlovu TL. Nkosi Mahlangu noted that the institution of traditional leadership, as the other ‘child’ of cooperative governance, suffered prolonged neglect and it was the first time, since joining the NHTL, to see a Committee of Parliament paying serious attention to traditional affairs. The other Amakhosi concurred that it was the first time experiencing National Parliament coming down to visit them, and this was very impressive as it raised their dignity.
Nkosi Mahlangu advised the Committee of a need to conduct oversight over traditional leadership by visiting traditional councils to allow communities to voice out issues ofmisconduct against TL if there are any.Nkosi Mahlangu also encouraged the TL to regroup, rebuild and be at the forefront of economic empowerment of communities by building partnerships with all relevant stakeholders and other developmental partners for economic empowerment of communities.
TheuMgungundlovuTL informed the Committee about their concerns as follows:
In general, there was a good working relationship between the traditional leaders and the UMgungundlovu District. The following remained issues of concern:
- Challenges related to participation of traditional leadership in municipal councils as stipulated in section 81 of the Municipal Structures Act. The TL reported about how lack of uniformity and the inability to play a meaningful role within councils was problematic and undermined the institution of traditional leadership.Concern about lack of clarity on their roles and responsibility in terms of the District Development Model (DDM) was also put forward.
- Lack of uniformity in issuing of tools of trade and preferential treatment of ward councillors without any due regard for traditional leadership.
- Salaries of secretaries of traditional leaders falling below the minimum living wage as Traditional Councils are unable to generate own revenue and have no budget allocation.
- Buildings and infrastructure in traditional councils not in good condition and should be transferred to Department of Public Works as government buildings.
- Traditional Leaders to be empowered on project management and assisted to initiate projects on behalf of communities.
- Respect and recognition for TL to be upheld.
- Increase in subsidy of TL, and the Government to honour the promise to increase subsidy of TL.
- Budget allocation to traditional councils for catering for when hosting meetings with stakeholders.
- Training and empowerment on their roles and responsibilities including on legal issues.
- Provincial Department of COGTA not to have separate engagements with councillors and TL but convene one meeting for sake of uniformity.
Traditional leaders further indicated desire to access a Report on the outcome of the engagement.
- Provincial Department ofCOGTA
The Provincial Department ofCOGTA acknowledgedawareness of the concerns raised by the TL, and reported tohave attempted to resolve some issues, and escalated some to the national department ofCOGTA. The Provincial department of COGTA also advised on their inability to meet some of financial related concerns raised, due to inadequate budget allocation, made worse by the Covid-19 reprioritisation, which led to much reduced available budget. The R1.4bn deficit arising fromthe outstanding payments to Izinduna in the Province also proved a serious constraint. In addressing the challenges related to participation of TL in municipal councils and within the DDM, the Provincial Department COGTAreported on a series of empowerment initiatives rolled out to clarify roles and responsibilities of TL.
- Members observations
Regarding issues raised by the TL, Members observed as follows:
- There must be regular and constant engagements with TL in relation to implementation of resolutions taken during the TL indaba.
- Traditional leadership should be regularly empowered and capacitated for effective implementation of programs to benefit communities.
- The national department of COGTA should expedite on establishment of norms and standards to ensure uniformity within the TL.
- The issue of land by TL should be addressed.
- Members of the Committee to be trained and empowered on traditional leadership as some members are not familiar with the traditional leadership system to ensure effective support to TL.
- Some Tribal Council offices had become white elephants. A shared services model could go a long way in addressing this.
- Engagements on the state of Mpofana local municipality
The Chairperson outlined the purpose of engaging with Mpofana local municipality as means of determining the status of the municipality in relation to negative issues that have plagued the municipality. The identified negative issues include disappointing audit outcomes, invocation of section 139, service delivery interruptions, and maladministration. The Chairperson also relayed the Committee’s interest in determining compliance with provisions of Disaster Management Act seeing that the municipality is a disaster prone area.
- Provincial Department ofCOGTA
The Provincial department of COGTA outlined the structural challenges that are facing the Mpofana local municipality as a plenary municipality, and other critical challenges that have contributed to the negative state of the municipality. One of the identified challenges, is the issue ofvacancies in critical positions,as the only senior management position filled is that of MM, wherein several attempts to fill these vacancies failed due to various reasons including less remuneration due to grading of the municipality.
The financial status of the municipality was reported as being very dire as Mpofana municipality has no funds for provision of services, and is characterised by poor revenue collection, low culture of paying for services as some farmers in the area blatantly refuse to pay for services, and a huge Eskom debt, which at R200m plus 10 percent interest, was several times more than the municipality’s budget in a given year. It was also reported that these financial circumstances are aggravated by current local government funding model which allocates funding on a grading system informed by revenue collection, as well as serious financial irregularities as detailed in the section 106 investigations.The Provincial department of COGTA also reported on lack of improvement in Mpofana municipality despite the technical support provided, as well as on the Demarcation Board’s rejection of a request to re- demarcate themunicipality.
The Department further disputed the assertion regarding the supposed non-functionality of merged municipalities, citing the fact that the country comes from a history of more than 850 separate local authorities and that the current 257 is a product of mergers. Merged municipalities such as Big 5 Hlabisa and Alfred Duma were recent examples of fairly stable mergers.
- AUDITOR GENERAL-SOUTH AFRICA
The office of AGSA detailed negative and regressing audit outcomes over several consecutive years that have plagued Mpofana municipality and a concern over increase in irregular expenditure, including the fact that the disclosed amount of R78m was incomplete.
SALGA questioned the effectiveness of invocation of section 139 of the Constitution on Mpofana municipality. SALGA argued that Mpofana municipality has been under administration in terms of section 139 of the Constitution since December 2017,without any positive results. The following are some of the issues that SALGA provided as proof of the ineffectiveness of the invocation of section 139 in Mpofana local municipality, and its failure to address root causes:
- Themunicipality received negative audit outcomes while under administration in terms of section 139(1) (b) while being assisted by the Provincial COGTA.
- Themunicipality is still not viable to meet its financial obligations.
- The challenges that plagued Mpofana municipality before the intervention are escalating.
- Community protests are continuing while the municipality is under administration.
- Inadequate support by law enforcement agencies in relation to reported criminal cases.
SALGA recommended as follows:
- Mpofana local municipality should be assisted with urgent financial injection.
- Intervention at Mpofana local municipality should not be prolonged.
- Turn around plans with time frames and quarterly reporting must be developed and implemented.
- Demarcation must not be regarded as a solution as it does not address root causes but shiftschallenges from one demarcation area to another.
- Invocation of section 139 interventions should be done after thorough assessments to identify root causes, and the terms of reference for the section 139 must address the identified challenges with all stakeholders effectively playing their respective roles.
- Mpofana municipality should implement a ruthless debt collection and credit control to all those who can afford to pay.
- The local government grading system to be re-looked and reviewed as it negatively affects poor municipalities.
- Provincial Treasury
The KZN Provincial Treasury pointed out various factors that contribute to financial challenges faced by Mpofana municipality. In addition to the high rate of unemployment in Mpofana community, certain issues within the municipality were identified by the Provincial Treasury as exacerbating their financial status, and the identified issues include lack of capacity within the finance department, missing financial records, and billing weaknesses.
The Provincial Treasury also reported about the imminent collapse of electricity infrastructure in Mpofana municipality as substations were not working. The Provincial Treasury outlined how the lack of capacity within Mpofana municipality is compromising transference of skills due to absence of capable and potential people as critical departments are only staffed with interns.The challenge faced by Mpofana in relation to the adoption of unfunded budgets was due to negative balances where the financial commitments were more than the available balance.
- National Departmentof COGTA
The national department of COGTA related challenges and support provided, and how lack of cooperation from municipalities contributes to failure in implementation of terms of reference for section 139 intervention. The Department drew attention to the Mayor/Speaker conundrum in Mpofana and the need to resolve it. There was also the matter of the forensic report on the fleet contract, as well as labour issues, which remained unresolved.
- Members observations
Members of the Committee were really pained by the reported state of Mpofana and had the following concerns:
- The very critical state of deterioration, regression, and collapse in Mpofana local municipalitycoupled with inability to meet constitutional obligations disqualifies it to be regarded as a municipality. Members were of the view that currently there are no legal provisions available to remedy the situation, with negative implications for the community which has been collectively failed by both the governing and opposition parties represented in Mpofana municipal council.
- The implementation of section 139 has not yielded any increase in revenue collection. Debt collection wasstill dismal while under administration and noturnaround strategy was being implemented.
- Collapse of financial controls and other challenges faced due to absence andinability to attracta CFO should be prioritised by the Provincial department of COGTA, as well as assistance in addressing the Eskom debt.
- Members requested commitment, political accountability, and time framesfor implementation of intervention plans to address UIFW relatedchallenges.
- Members voiced concern about support provided by Provincial Treasury in relation to budget if the municipality continues to have unfunded budgets.
- Members were concerned that the invocation of section 139 of the Constitution in Mpofana local municipality was done without a diagnostic assessment to identify root causes, and as such, the terms of references of the section 139 are ineffective in the municipality.
- Members also wanted to know the wayforward for Mpofana local municipality; terms of references already achieved by the administrator and why the administrator was still in Mpofana considering that he had failed to turn the municipality around.
- Members advised that the available interns should be trained to boost the capacity of Mpofana local municipality as means of addressing the inability to attract requisite skills.
- Members observed and were concerned about malicious non-compliance to various legislation and protocolsincluding supply chain management protocols without implementation of effective consequence management to implicated officials.
- Members observed expenditure on consultants to assist with financial reporting with no improvement in audit outcomes. In 2018/19, the municipality spent R1.8m on consultants to assist with preparation of annual financial statements for auditing, and yet it received a disclaimer.
- Research by some Committee members indicated that plenary type municipalities tended to obtain clean audits. The exceptionalism of Mpofana was puzzling.
- Committee members did not take kindly to the sarcastic attitude of the Mpofana Municipal Public Accounts Committee Chairperson and were compelled to instruct him to respect the decorum of the meeting.
- The Committee also felt that the municipality did not answer adequately to questions raised.
By the time the Committee was ready to proceed to stakeholder engagement on the state of municipalities in the District, members of the public had left. Only one person remained, and this turned out to be a District agent acting on the Mayor’s instruction to catalogue the various exciting projects, which the District was rolling out.
- The state of Richmond Municipality
Members were requested to go through various presentations in relation to Richmond local municipality and then make observations.
- Members observations and concerns
Members had the following observations in relation to Richmond municipality:
- Regular interruptions in provision of water coupled with massive water losses wasconcerning.
- Non-adherence to the stipulated norm for budgeting for operations and maintenance having a direct impact on provision of services due to aging infrastructure.
- Members requested commitment from the Richmond municipality to stamp out corruption and fraud by implementing recommendations of the section 106 investigations report.
- Members urged the political leadership in Richmond to ensure sound administration and foster a conducive environment towards effective governance, accountability, and oversight.
- Members cautioned the Richmond local municipality about non-adherence to supply chain management protocols in awarding of contracts and, advised the municipality to blacklist all services providers that fail to honour their contractual obligations.
- Members were concerned about the negative audit outcomes despite an expenditure indicating appointment of financial consultants to assist with financial related matters.
Response by leadership of Richmond Local Municipality
The municipality agreed that there was a dark cloud hanging over it following the murder of councillors and MM. However, the situation had changed and Richmond was now very safe due to a series of interventions, which the municipality had implemented. The municipal leadership was confident that they would not finish this term of local government without obtaining a clean audit opinion for the municipality. Given these improvements, the municipality did not comprehend the reasons for the extension of the constitutional intervention to March 2021.
Committee members welcomed the spirit, commitment and efforts by the Mayor and his team to turn the municipality around.
SALGA conveyed support for Richmond municipality’s efforts and commitment to turn around the municipality as evidenced by the Mayor’s response to observations and concerns of Members of the Committee.
- The state of the uMgungundlovu district municipality.
Members were requested to go through various presentations in relation to uMgungundlovu district municipality and then make observations as reported below.
- Members observations and concerns
Members were concerned about the following in connection with uMgungundlovu district municipality.
- Vacancy of the CFO position likely to compromise the financial capacity of the district municipality.
- Qualified audit outcome due to non –compliance to bid processes in procurement of goods and services.
- UMgungundlovu being labelled as a municipality in distress even though not under section 139 of the Constitution, should be regarded as an early warning system for a turnaround.
- Members were also concerned about the under budgeting for O&M and the negative impact thereof on provision of basic services.
- Members urged the uMgungundlovu DM to commit to implementing the recommendations of section 106 investigations in relation to UIFW, maladministration and misbehaving councillors.
- Members were concerned about employment of 12 bodyguards in uMgungundlovu and wondered about the conduciveness of the municipal council to conduct its affairs effectively if there were issues of safety and security.
- Members pointed out the non -adherence to Disaster Management Act although the area is regarded as disaster prone.
- ETHEKWINI METRO
On 09 October 2020, the Committee visited theeThekwini Metro. The purpose of the visit was to engage with the municipalities and stakeholders and to ascertain progress in respect of a petition by residents of Ward 52 in Brooksfarm.
- Engagement with traditional leadership
Nkosi Mahlangu conveyed appreciation to the Committee for its initiative in recognising and respecting traditional leadership, as well as acknowledging that traditional leadership has a critical role to play towards development and empowerment of communities. Nkosi Mahlangu also welcomed the separate vote for traditional affairs and indicated that traditional leadership had been there even before the establishment of local government in South Africa.
Nkosi Mahlangu pleaded for capacitation of traditional leaders to be effective partners in community development, which must also include decent remuneration to ensure dignified living. Nkosi Mahlangu also reported on some of the initiatives by the National House of Traditional leadership to be implemented, and these include, broad band connectivity for rural areas and sustainable food production projects.
The Chairperson of the Provincial House of Traditional Leadership informed the Committee of some of the challenges facing TL as follows.
- Challenges related to participation of TL in municipal council as stipulated in section 81 of the Municipal Structures Act as there is no uniformity and TL have no voting rights.
- Low salaries of secretaries of traditional councils.
- Low remuneration for traditional leaders as compared to ward councillors.
- Lack of respect and recognition of the role of TL.
- Provincial Department of COGTA
The Provincial department of COGTA reported good relations with the Kwazulu Natal traditional leadership, as well as awareness of the issues raised. The representative from the Provincial department of COGTA promised to escalate the concerns to the Head of Department.
- National Department of COGTA
The representative from the National department of COGTA reported about development of guidelines and framework that would assist in role clarification in relation to traditional leadership participation in municipal councils and other government structures. The Department reiterated the constraint arising from the R1.4bn back pay proclamation for Izinduna in the Province. The proclamation did not make budgeting provisions to the Provincial Treasury in respect of these monies.
- Speaker of eThekwini Metro
The Speaker of the Metro reported that the institution of traditional leadership is regarded as an important stakeholder by the eThekweni municipal council, and attempts are made to engage regularly with traditional leadership. The Speaker undertook to consider all other issues raised that the metro can assist with in order to further improve relations.
- Proposed way forward in relation to traditional leadership
The Chairperson of the Committee provided the way forward as follows:
- To engage regularly with traditional leadership as per the resolutions of the Traditional Leadership Indaba hosted by the Committee.
- To engage the national department of COGTA about development of norms and standards to ensure uniformity and equal treatment of traditional leaders.
- To engage and persuade municipal councils to ensure adequate and effective participation of traditional leadership in municipal councils in terms of section 81 of the Municipal Structures Act.
- Municipal councils to build and strengthen relations with traditional leadership and ensure effective participation of TL in the DDM.
- To advocate for tools of trade to be provided to TL.
- Traditional Councils to be empowered about the requirements of the Disaster Management Act.
- State of the eThekwini Metro
The Chairperson of the Committee outlined the purpose of the visit toeThekwiniMetro. She provided that the overall interaction was about ascertaining the state of the eThekwiniMetro. She mentioned some of the issues that have compelled the Committee to seek engagement with eThekwiniMetro, and these include, unqualified audit outcomes due to non-compliance, irregular expenditure, expenditure on security services, sewage spillage, fraud and corruption, availability of post Covid- 19 economic recovery plan, and to determine progress in dealing with a petition by residents of Brooks farm.
- Provincial Department of COGTA
The KZN provincial COGTA outlined areas of excellence within theeThekwiniMetro including filling of all critical vacancies, functionality of governance structures, and financial viability. At the same time the Provincial COGTA identified four areas of functional distress within the eThekwiniMetro, which are, lack of effective consequence management, imminent retirement of CFO, majority of ward committees not meeting, public protests with negative impact on economic activity, and negative media publicity.
- Auditor General- South Africa
AGSA identified areas of non-compliance with the eThekwini Metro that contributed to negative audit outcomes. Increase in irregular expenditure, lack of effective consequence management, and inadequate remedial action plans were also mentioned as contributing to the negative audit findings.
- National Department of COGTA
The national department of COGTA provided a comparison data of some of areas of concern in relation to eThekwiniMetro including frequency of violent protests, labour disputes, basic service delivery interruptions, and land invasion, theeThekwiniMetro fared better than most in these regards. The National Department of COGTA advised that some of the negative areas of concern within the eThekwini Metro can be effectively addressed via the DDM.
SALGA conveyed its support for the current leadership in eThekwiniMetro which inherited a lot of challenges but has since showed positive improvements and commendable performance. Some of the identified positive performance in eThekwiniMetro include good financial management, more than 80% collection rate, funded budget, good service delivery, commitment to implement consequence management, full staff complement and overall good performance. SALGA encouraged the eThekwini Metro to deal with the negative media publicity and the issues identified by the Auditor General.
- eThekwini Metro
The Mayor of eThekwini Metro provided an overview of the general progress and achievements and, handed over to the Chief Operations Officer (COO). The COO provided a detailed progress in relation to the state of eThekwiniMetro and on addressing issues raised by AGSA and the Provincial department of COGTA. The COO also addressed issues raised by Brooks farm petition.
- Site visit to Brooks Farm
The Committee visited the Brooks farm in response to check on progress to a petition by Ward 52 residents.
- Stakeholder engagement
A miscommunication in relation to stakeholder engagements which led to the Committee erroneously attending an incorrect stakeholder engagement in an incorrect venue led to postponement of the stakeholder engagement.
- Member’s observations and concerns in relation to eThekwini Metro
Members were generally impressed with state of eThekwiniMetro, and urged the Metro to aid surrounding struggling municipalities, but also raised the following concerns and observations:
- Reasons and justification of the decision by the Metro to write off R351 millions of irregular expenditure, including reasons behind incurring huge amount of UIFW.
- Identified structural damages in a housing project amounting to R70 million and no one held responsible.
- Arrest of councillors by Hawks as well as reported incidents of maladministration and corruption.
- Plans in place to recoup and deal with government debt including debt by the Ingonyama Trust and national departments.
- Reasons for non-functionality of 62% of ward committees and plans in place to revive these ward committees.
- Plans in place to address regular water services interruptions and sewage spillage especially in poor communities.
- Imminent retirement of CFO and the presence of a succession plan for skills transference.
- Members were concerned about the disciplinary hearings by the eThekwini Metro against 436 officials, and wondered whether theMetro had diagnosed the root causes of such a huge number of misconduct by Metro officials,and whether the disciplinary measures were only targeting low ranked officials.
- Members voiced concern about purchasing of vehicles, that is BMWs, immediately after assuming office by current leadership in eThekwini Metro.
- Members wanted clarity about R8 million expenditure for an online concert during Covid- 19 lockdown as well as expenditure for Covid-19 related items deemed above Treasury baseline.
- Members also observed decline on capital expenditure by the Metro and requested reasons thereof.
- Members were concerned about reported irregularities in appointment of service providers and delays in implementation of section 106 report recommendations.
- Members also sought to ascertain adherence by the Metro in reporting annually on disaster related matters as stipulated by the Disaster Management Act.
After interacting with the all the stakeholders, during the oversight, the Committee makes the following recommendations:
- The MECs for Cooperative Governance and Traditional Affairs and Provincial Treasury in KwaZulu Natal must facilitate discussion on political solutions to the political nature of the problems beleaguering the dysfunctional municipalities in the Province.
- The Provincial COGTA must share with the Committee success stories of mergers or amalgamations of municipalities in the Province since the 2016 Local Government elections.
- The National Department of Cooperative Governance must urgently consider amendments to Section 106 of the Local Government: Municipal Systems Act to empower the MEC to enforce recommendations of the Section 106 investigative reports. In this regard, the Department could take cue from the amendments to the Special Investigating Unit (SIU) Act and use these as a model.
- The National Department of Cooperative Governance must consider adding, in the envisaged Monitoring, Support and Interventions Management Bill, a clause pertaining to a cooling off period of two years for councillors implicated in the decision to intervene in terms of Section 139 (1) (c) of the Constitution. This is to minimise the problem of returning the same councillors implicated in the collapse of a municipality.
- The National Department of Cooperative Governance must consider introducing a mechanism to empower the Provincial COGTAs to scrutinise and exercise oversight over Section 71 Reports before submission to Provincial and National Treasuries, as to minimise information discrepancies.
- The Ugu District Municipality must immediately furnish the Committee its water and sanitation plan, 2018/19 post audit action plan, post Covid-19 economic recovery plan, and list of councillors owing the municipality. The water and sanitation plan in particular must address the misalignment between water and sanitation provision and human settlements.
- The Portfolio Committee must write to the KZN MEC for Safety and Security to put pressure on the relevant police station to support the Ugu District Municipality on reported cases of infrastructure vandalism.
- The Portfolio Committee must schedule a new date for conducting public engagement in Ugu District Municipality.
- The Portfolio Committee must consider including Traditional Council within its oversight ambit, as to provide traditional leaders opportunity to account in respect of their custodianship over these Councils.
- The Portfolio Committee must consider conducting an oversight to Mpofana Local Municipality as the situation in that municipality is dire.
- The KZN Provincial Department of Cooperative Governance and Traditional Affairs must furnish the Portfolio Committee Close-Out Reports in relation to all constitutional interventions in Mpofana and Richmond Local Municipalities.
- The Richmond Local Municipality must furnish the Committee a spreadsheet of Unauthorised, Irregular, Fruitless and Wasteful Expenditure in respect of the 2018/19 financial year. This should include the names of the responsible individuals as well as a plan on how the municipality is dealing with these matters.
- The Department of Traditional Affairs must furnish the Committee a progress report on the implementation of the 2017 Traditional Leadership Indaba Resolutions.
The Committees appreciates the cooperation and valuable inputs from the MECs and officials of Provincial COGTA and Treasury. The Committee is also grateful to the leadership and officials of the visited municipalities, as well as representatives from SALGA, for availing themselves for the oversight. Grateful acknowledgement is also due to the representatives from the National and Provincial Houses of Traditional Leaders, as well as the traditional leaders who enriched the oversight with their well-considered inputs. The unstinting commitment of Committee members and support staff despite the long and arduous working hoursdeserves utmost commendation.
Report to be considered
No related documents