ATC130910: Report of the Select Committee on Cooperative Governance and Traditional Affairs on the Oversight visit to Bushbuckridge Local Municipality – dated 10 September 2013

REPORT OF THE SELECT COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON THE OVERSIGHT VISIT TO BUSHBUCKRIDGE LOCAL MUNICIPALITY – DATED 10 SEPTEMBER 2013

1. Background

1.1 On the 02 ^nd May 2013, the MEC for Cooperative Governance and Traditional in Mpumalanga Province tabled to the Office of the Chairperson of the National Council of Provinces (NCOP), a notice of intervention in Bushbuckridge Local Municipality, in terms of Section 139(1 )( b) of the Constitution. Subsequent to the tabling, the Chairperson of the NCOP referred the notice of intervention in terms of Rule 101, to the Select Committee on Cooperative Governance and Traditional Affairs, for consideration and reporting. On the 13 ^th August 2013, the Committee then conducted an oversight visit to the Bushbuckridge Local Municipality.

2. Purpose and Objectives of the Oversight Visit

2.1 The purpose and objectives 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 intervention in the Municipality in terms of section 139(1 )( b) of the Constitution.

3. Composition of the Delegation

3.1 The delegation of the Committee was composed of the following Members of Parliament and Officials: Hon MH Mokgobi , Limpopo (ANC); Hon AG Matila , Gauteng (ANC); Hon LPM Nzimande, KwaZulu-Natal (ANC); Hon B Nesi , Eastern Cape (ANC); Hon TMH Mofokeng , Free State (ANC); Hon MV Manzini , Mpumalanga (DA); Hon J Bekker, Western Cape (DA); Hon MW Makhubela, Limpopo (COPE); Hon JJ Gunda, Northern Cape (ID); Hon MMM Zulu, KwaZulu-Natal (IFP); Mr NA Mfuku , Content Adviser (Committee Section); Mr MT Manele , Committee Secretary (Committee Section); Mr BM Mahlangeni , Committee Researcher (Research Unit); Mr MC Mbebe , Procedural Officer (NCOP) and Mr N Mangweni , Administration Assistant (Committee Section).

4. General Overview of Oversight Visit to Bushbuckridge Local Municipality

4.1 On the 13 ^th August 2013, the delegation of the Select Committee on Cooperative Governance and Traditional Affairs 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, the Administrator and representatives of the Business Sector and Organised Labour and Ward Committee Members.

5. Progress Report on the Turn-Around Strategy in Bushbuckridge Local Municipality

5.1 The Administrator, as appointed by the Provincial Department of Cooperative Governance and Traditional Affairs, briefed the delegation of the Committee on the Turn-around Strategy developed for the Municipality as a result of the intervention. The notice of intervention in the affairs of Bushbuckridge Local Municipality was issued by the MEC for Cooperative Governance and Traditional Affairs on the 17 ^th April 2013. The main issues raised by the MEC included the ineffective rendering of water service provision and the municipal over-commitment with regard to financial viability and management.

5.2 The presentation on the progress in respect of the Turn-around Strategy focused on the water reticulation implementation strategy; property rates; filling of critical posts; revenue enhancement and supply chain management.

6. Water Reticulation Implementation Strategy

6.1 The MEC and the Premier of the Province have intervened in accelerating the implementation of the water reticulation programme, by engaging Rand Water Board to become an implementation agent. The Rand Water Board has already begun with the construction processes.

6.2 The procurement plan for materials, tools, equipment, vehicles and heavy machinery would be ready for auctioning in August 2013. The Municipality would be using the Extended Public Works Programme, to supplement the necessary capacity due to ageing staff and limited financial resources. As far as water tankers are concerned, the existing municipal fleet has been overhauled and new trucks will be procured. Furthermore, new water meters have been installed to assist the Municipality with cost recovery.

7. Financial Viability and Management

7.1 The Municipality’s financial position has steadily improved. As far as the Water Board is concerned, the Municipality has concluded a negotiated process to repay the Board over a period of time, so that the cash flow does not deteriorate further and debt does not escalate.

7.2 The Municipality was no longer using the Municipal Infrastructure Grant (MIG) funding to cover operational costs. Attention has been directed to expenditure on items that assist in service delivery. However, curtailing costs in this manner has presented only half the answer to the issue of financial viability. The real answer lies in the effective revenue management and enhancement processes.

8. Property Rates

8.1 The Property Rates Task Team has been established to review and adjust property rates tariff charged on properties. The Task Team consists of the delegation from the Provincial Department of Cooperative Governance and Traditional Affairs, Revenue Manager and the Municipal Valuer.

9. Filling of Critical Posts

9.1 The Municipality has made progress in advertising critical positions of the Chief Financial Officer, Director Communication; Director Corporate Services, Legal Advisor, Communication Manager, Audit Committee Members, Internal Auditor and Junior Internal Auditor. The short-listing and interviews have been completed and appointments would be finalized in October 2013.

10. Revenue Enhancement

10.1 In order to deal with the challenge of low revenue collection, the Provincial Treasury will be appointing a service provider to undertake data cleansing. The Municipality has already appointed debt collectors and initiated a process of updating customer database and auditing of water meters.

10.2 A Task Team has been established to indentify water users in all the villages. In order to deal with limited resources to collect data, all Regional Managers have been requested to collect data and submit to the Task Team for analysis.

10.3 In order to maximize opportunities for revenue collection, the Department of Water Affairs will be installing water meters as a component of the implementation of water reticulation. In order to ensure that business on the ground reconcile with information on the billing system, the Municipality has developed a business master file to collect data through the assistance of field workers.

10.4 Town Planning will be exploring the leasing of state land and conducting awareness to Tribal Authorities, pertaining to land ownership.

11. Supply Chain Management

11.1 The Municipality has conducted training on supply chain management to the relevant staff for understanding of BID Committees. Manuals on supply chain management, expenditure, internal controls and procedures have been developed and implemented. Capital budget procurement plans has been developed, and Managers will be trained for future development of municipal procurement plans. The Municipality has also made progress on drafting supply chain management policy and, the National Treasury will be conducting training on supply chain management for Directors. All contracts are now procured through supply chain management, and the enforcement of Municipal Finance Management Act Circular 62.

12. Opinions of the Municipal Internal and External Stakeholders on the Intervention

12.1 During the period of oversight visit, the delegation of the committee interacted and solicited opinions of the internal and external stakeholders of the municipality on the intervention. The stakeholders included South African Local Government Association; Ward Committee Members; Organized Labour and the representative of Business Sector.

13. Opinion of the South African Local Government Association

13.1 The representative of the South African Local Government Association submitted their support for intervening in the Municipality in terms of section 139(1 )( b) of the Constitution. The Association further welcomed the progress made in respect of the development of the Municipal Turn-around Strategy.

14. Opinion of the Ward Committee Members

14.1 Members of the Ward Committees generally welcomed the intervention in the Municipality, and the progress made in terms of the development of the Municipal Turn-around Strategy. They further raised concerns related to the short period of the intervention, non-alignment of integrated development planning with problems affecting sewerage system, reticulation of water, community protests and lack of capacity within the Municipality.

15. Opinion of Organised labour

15.1 The representations of South African Municipal Workers Union (SAMWU) and the Independent Municipal and Allied Trade Union (IMATU) expressed their support for the intervention, and the progress made since the appointment of the Administrator, more especially with regard to the Municipal turn-around Strategy.

15.2 Some of the concerns raised by the representatives of both Unions, which in their opinions would require the assistance of the Department of Cooperative Governance and Traditional Affairs related to the short period of the intervention. They request the period of intervention to be extended.

16. General Observations and Committee Opinion

16.1 The Committee has observed that the intervention of the Department of Cooperative Governance and Traditional Affairs in the Municipality, has brought about political and administrative stability.

16.2 The Committee has further observed that the appointment of the Administrator in the Municipality has also contributed to the significant progress, more especially with regard to the development and implementation of Municipal Turn-around Strategy.

16.3 The Committee has, through interaction with both the internal and external stakeholders, noted the progress made by the Municipality more especially on water reticulation implementation strategy; property rates; filling of critical posts; revenue enhancement and supply chain management.

16.4 The Committee welcomed the progress made by the Municipality in conducting training on supply chain management, developing manuals on supply chain management, expenditure, internal controls and procedures.

16.5 Furthermore, the Committee also welcomed the commitment and involvement of the National Treasury in conducting training on supply chain management, and the municipal emphasis to ensure that all contracts are procured through supply chain management and the enforcement of Municipal Finance Management Act Circular 62.

17. Committee Recommendations

17.1 Having conducted the oversight visit to Bushbuckridge Local Municipality in terms of section 139 (1 )( b) of the Constitution, the Committee recommends to the House as follows:

17.1.1 The House approves the intervention Bushbuckridge Local Municipality in terms of section 139(1 )( b) of the Constitution, for a period of six months after the adoption of this report.

17.1.2 The Administrator, in collaboration with the Provincial Department of Cooperative Governance and Traditional Affairs and the South African Local Government Association, should provide proper training to the Ward Committee Members and Councillors in accordance with the Local Government: Municipal Structures Act, Municipal System Act and the Municipal Finance Management Act.

17.1.3 The Provincial Department of Cooperative Governance and Traditional Affairs should fast track all matters related to the forensic investigation on corruption, and table the findings to the NCOP and the Mpumalanga Provincial Legislature.

Report to be considered.