ATC130507: Report of the Select Committee on Cooperative Governance and Traditional Affairs on the Oversight visit to Imbabazane Local Municipality – dated 7 May 2013 

REPORT OF THE SELECT COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON THE OVERSIGHT VISIT TO IMBABAZANE LOCAL MUNICIPALITY – DATED 7 MAY 2013

1. Introduction and Background

1.1 On the 4 ^th February 2013, the MEC for Cooperative Governance and Traditional Affairs in KwaZulu-Natal Province tabled to the Office of the Chairperson of the National Council of Provinces (NCOP) a notice of intervention in terms of section 139(1 )( b) of the Constitution at Imbabazane Local Municipality . Subsequent to the tabling, the Chairperson of the National Council of Provinces referred the notice of intervention in terms of Rule 101 to the Select Committee on Cooperative Governance and Traditional Affairs for consideration and report. The Committee reports as follows:

1.2 On the 12 February 2013, the Committee resolved to conduct an oversight visit to Imbabazane Local Municipality on the 8 March 2013.The main objective of conducting the oversight visit was to consult and interact with the internal and external stakeholders of the Municipality in order to solicit their opinion with regard to the placement of the Municipality in terms of section 139(1 )( b) of the Constitution.

2. Overview of the Oversight Visit to Imbabazane Local Municipality

2.1 On the 8 ^th March 2013, the delegation of the Committee had interaction and consultative meeting with the internal and external stakeholders of the Municipality. The stakeholders the delegation interacted with included the Mayor, Speaker, Chief Whip, Administrator and representatives of the Business Sector, Organised Labour and Ward Committee members.

3. Provincial Department of Cooperative Governance and Traditional Affairs

3.1 On the 23 January 2013, the Executive Council resolved to intervene in terms of section 139(1 )( b) of the Constitution in Imbabazane Local Municipality as a result of non-compliance to legislation, and for the fact that the Council was governing unlawfully including the failure to meet in terms of statutory requirements. Since the election of the Council in 2011 there have been challenges related to walk-outs, disagreements and disruptions of Council business. The termination of the contract of employment of the former Municipal Manager has caused greater disagreement amongst the Council. The former Municipal Manager’s contract of employment in terms of section 57(6) of the Local Government: Municipal Systems Act (Act 32 of 2003), and hence by operation of law it was terminated in May 2012.

3.2 On 14 June 2012, a request for a meeting was submitted by the National Freedom Party (NFP) and Inkatha Freedom Party (IFP), together with a motion of no confidence against the Mayor and the Speaker. The Speaker and the Municipal Manager could not agree on the order of the items on the agenda, hence the notice of meeting was not signed by the Speaker.

3.3 The Municipal Manager proceeded to sign the notice calling for the meeting to be convened on the 20 June 2012, and circulated such notice to the councillors. This happened despite the advice of the Provincial Department. However, certain councillors proceeded with the meeting. The Department instituted an urgent High Court proceeding for orders declaring that the Municipal Manager contract had terminated, that his continued employment was null and void, and further declaring the resolution taken on 20 June 2012 to be invalid.

4. Appointment and Responsibility Ministerial Representative

4.1 The Ministerial Representative (Administrator) was appointed and introduced to the Council on the 31 January 2013. The appointed Ministerial Representative, in undertaking the functions assumed by the Provincial Executive Council must, inter alia:

(a) ensure that the municipal council meets regularly and in line with section 18(2) of the Local Government: Municipal Structures Act (Act 117 of 1998) or as often as it is necessary to conduct council business in keeping with council’s standing Rules and Orders and all applicable legislation, particularly this Act.

(b) revise Council’s standing rules, orders, roles and responsibility of Office Bearers, Municipal Manager and any other senior officials in order to ensure good governance and legality at all council meetings.

(c) monitor and assess the adherence to policy, principles and frameworks applicable to council and the administration.

(d) address challenges in respect of adherence to such policy, principles and frameworks by reviewing; amending and ensuring adoption and implementation.

(e) ratify all decisions of the municipal council and its committees prior to implementation.

(f) ratify all decisions taken by Municipal Manager and managers directly accountable to the Municipal Manager in terms of the delegated or original authority.

(g) review any decision of the municipal council, its committees and that of the Municipal Manager or managers directly accountable to the Municipal Manager for the purpose of ensuring legality.

(h) ensure implementation of council resolution by the administration and implement a system to control and approve all expenditure.

(i) implement all governance systems and procedures including appropriate councillor and oversight mechanisms.

(j) review the organisational structure and implement financial systems, policies and procedures.

(k) devise a turn-around strategy for the Municipality including a strategy to promote good governance.

5. Municipal Turn-Around Strategy

5.1 The Administer had developed a municipal turn-around strategy in order to stabilize the municipality. The strategy focused on key performance areas such as financial viability and management; good governance and public participation; institutional development and transformation and; local economic development and development planning

6. Briefing by the Provincial Department of Cooperative Governance and Traditional Affairs

6.1 On the 30 ^th April 2013, the Provincial Department briefed the Committee on the justification for intervention and the progress made since the appointment of the Ministerial Representative with regard to the implementation of municipal recovery plan and turn-around strategy. The progress report focused on key performance areas and measurable outcomes related to financial viability; supply chain management; financial reporting; expenditure management; planning and budgeting; financial control; governance and institutional development.

7. Financial Viability

7.1 Currently there is a review on the Municipality financial viability, in order to implement credit control policy. Monthly billing as per government property rates which is in line with policy was being implemented.

8. Supply Chain Management

8.1 The Supply Chain Management policy (SCM) of the Municipality was reviewed, and will be adopted by the Council. The development of SCM performance Management template was in progress. Consolidated deviations register has been developed and will be tabled in the next Council meeting for adoption. The development of procurement plan was in progress.

9. Financial Reporting

9.1 On financial reporting, all SCM decisions were in a process of review and in progress, the list of all tenders awarded has been compiled. Preparation and distribution/submission of section 71 reports have been compiled and submitted as required in terms of the Municipal Finance Management Act (MFMA), Act 56 of 2003, and will be tabled in next Council meeting. Lastly, the development and monitoring of cash flow projection are due to take place.

10. Expenditure Management and Financial Control

10.1 The adjustment budget has been prepared and adopted by the Council. Equally, the development and implementation of the financial controls matrix, the tracking tool developed by Provincial Treasury has been customised and adapted to the Municipality.

11. Planning and Budgeting

11.1 The annual budget for the 2013/14 financial year was prepared and tabled at the Council meeting held on the 29 March 2013. The budget process is at the public participation stage.

12. Governance

12.1 The Audit Committee has been established and held its first meeting on the 09 April 2013. A system of reporting from MANCO, Portfolio Committees, EXCO and Council was established. The system is to have strategic objective and PMS to facilitate the oversight role of the Council. The dates for Portfolio Committees have been set.

12.2 The developing of the system of delegations in terms of section 59 of the Municipal Systems Act has not started yet. In terms of reviewing the framework of roles and responsibilities in terms of section 53 of the Act, it was not started. The register of all decisions taken between 20 June 2012 and February 2013 has been compiled for reviewing of any decisions of the municipal council, its committees and that of the Municipal Manager or managers directly accountable to Municipal Manager for the purpose of ensuring legality.

13. Institutional Development

13.1 The appointment of the Municipal Manager was declared unlawful and has since vacated the position. The expenditure on the municipal manager’s salary was irregular and will be recovered from all those who caused it. The Council was not cooperative hence a requests was granted to extend the scope of the intervention to include functions listed under section 54A and 56 of the Municipal Systems Act. The Acting Municipal Manager was appointed on the 12 April 2013.

13.2 All section 56 managers appointed in the period between 20 June 2012 and January 2013 were placed on special unpaid leave to avoid the perpetuation of illegality. They have since been informed of their unlawful appointments and vacated their positions. Twenty five (25) employees who were appointed by the Municipal Manager, operating illegally have been informed of their unlawful appointments and have since vacated their positions. They have referred the matter to the Bargaining Council for conciliation.

13.3 The conciliation was due to take place on the 30 ^th April 2013. The Acting CFO and Director: Corporate Services have been appointed on a three months contract. The Council was informed of the appointments at the meeting held on 22 April 2013 and that the positions including that of the Director: Technical Services will be advertised. The draft organogram has been developed. Consultation with the unions will commence prior to the adoption by the Council together with the annual budget for 2013/14 by the end of May 2013.

14. Local Economic Development and Development Planning

14.1 The development of the Local Economic Development Strategy has not started, including the reviewing of the IDP key performance indicators. The alignment of KPIs to Organisational Performance scorecard has not started, including the development and implementing the reporting mechanisms of the performance information.

15. Independent Municipal and Allied Trade Union (IMATU)

15.1 The Chairperson of the Union raised concerns with regard to unemployment; poverty; level of illiteracy; teenage pregnancy rate; HIV/AIDS and service delivery backlogs. The Union further raised concerns with regard to the termination of contracts of two Directors, three Financial Interns. The Union further made a plea to politicians to rise above the politics in order to solve the challenges facing the Municipality.

16. Business Sector

16.1 The business sector raised concerns with regard to the lack of consultation on matters related to the IDP, budget and local economic development. The sector further raised concerns with regard to service delivery challenges facing the Municipality.

17. General observations and Committee Opinion

17.1 The Committee has observed that the placing of the Municipality under section 139(1 )( b) of the Constitution, and the appointment of the Ministerial Representative has been a good corrective measure to assist the Municipality in dealing with the service delivery and administrative challenges facing the Municipality.

17.2 The Committee has further observed the progress made by the Ministerial Representative with regard to the development of the municipal turn-around strategy, that paid particular focus on key performance areas on supply chain management; financial reporting; expenditure management; planning and budgeting; financial control; governance and institutional development.

17.3 The Committee is of the opinion that political parties within the Municipality need to put aside their political differences, so as to ensure stability within the Municipality and the implementation of the municipal turn-around strategy developed by the Ministerial Representative under the leadership of the Provincial Department of Cooperative Governance and Traditional Affairs.

18. Recommendations

18.1 Having conducted the oversight visit to the Municipality and interacted with the internal and external stakeholders, the Committee recommends as follows:

18.1.1 The NCOP approves the intervention in terms of section 139(1 )( b) of the Constitution in Imbabazane Local Municipality , for a period of six months.

18.1.2 The Provincial Department of the Cooperative Governance and Traditional Affairs should submit quarterly progress reports to the Provincial Legislature and the NCOP.

18.1.3 The Provincial Department of Cooperative Governance and Traditional Affairs to conduct capacity building programme focusing on responsibilities, roles and functions of the politicians and officials within the Municipality.

Report to be considered.