State of Western Cape Municipalities: MEC briefing

Meeting report

LOCAL GOVERNMENT AND ADMINISTRATION SELECT COMMITTEE
7 September 2005
STATE OF WESTERN CAPE MUNICIPALITIES: MEC BRIEFING

Chairperson: Mr S Shiceka (ANC, Gauteng)

Documents handed out:
State of Municipalities in the Western Cape: MEC’s PowerPoint Presentation

SUMMARY
The Western Cape Member of the Executive Council (MEC) for Local Government and Housing noted that most province’s municipalities were on a sound financial footing. Certain municipalities had experienced some financial problems, but these were being addressed. A number of municipalities experiencing other problems, were also being assisted by the Department through Project Consolidate.

The MEC stated that the provincial capacity audit had found a lack of certain skills, such as financial management, in some of the municipalities. This would possibly impact on their readiness to implement the Municipal Financial Management Act (MFMA). The MEC however noted that the Department and the National Treasury had training programmes to ensure that municipalities could implement the MFMA. He also discussed some of the issues that surrounded service delivery backlogs in the province and the implementation of free basic services. Finally, he outlined some of the Department’s achievements and some of the challenges.

During the ensuing discussion, Members asked:
- whether ward committees were receiving sufficient support from the municipalities;
- why there was not a national development policy;
- why there was a skills shortage in the Western Cape municipalities;
- what support the Department was offering to problematic municipalities;
- whether the Department was involved in the Expanded Public Works Programme (EPWP);
- whether municipalities were implementing the indigent policy;
- whether the Integrated Development Plans (IDPs) were prioritised in the municipalities’ budgets;
- whether progress was being made towards implementing the Unified Public Service; and
- whether the roles and responsibilities of the top level municipal officials had been properly defined.

Members also had a discussion with a representative of the Western Cape Standing Committee on Governance around the oversight work conducted during its visits to the municipalities. Due to time constraints, the Committee could not ask questions about municipal service delivery. As a result, the Chairperson asked the Department to return later in the year, to provide a detailed briefing on these issues.

MINUTES

MEC for Local Government and Housing’s briefing
Mr R Dyantyi (Western Cape MEC for Local Government and Housing) began by discussing the financial state of the municipalities in the Western Cape. He noted that all of the 30 municipalities had submitted financial statements for 2003/04. However, 18 of these municipalities had received qualified audit reports. He added that 27 of the 30 municipalities were in a position to meet all their current commitments. The three remaining municipalities had implemented recovery plans. In general, sound financial management systems had been implemented in the municipalities. All of the municipalities had also implemented council approved credit control policies. Nonetheless, some rural municipalities had experienced internal audit deficiencies. Mr Dyantyi outlined the general expenditure patterns of the municipalities. He was concerned that municipalities were becoming more reliant on external grants to finance infrastructure development. This had come about due to an increased demand for infrastructure development.

Mr Dyantyi noted that consumers owed Western Cape municipalities approximately R5 billion. The debt levels were rising and this could pose a threat to the municipalities’ ability to deliver services at optimum levels. In order to address this, the municipalities were improving their credit control mechanisms. Municipalities were also installing pre-paid metres to address the problem. Added to this, the Department had developed an indigent policy guideline, which had been submitted to the National Department of Provincial and Local Government (DPLG).

Mr Dyantyi stated that the Department had undertaken a capacity audit amongst all Western Cape municipalities. Some of the early findings of this audit included: a growing need for critical skills in the municipalities; a lack of financial skills in the municipalities; and a need for the institutional management of Ward committees and Community Development Workers (CDWs). In order to address these issues, the Department had developed various programmes, which included a mentoring/coaching programme and a technical support programme.

The MEC discussed the readiness of Western Cape municipalities to implement the MFMA. The MFMA’s implementation was being monitored by the Provincial Treasuries. The National Treasury was also providing training on budget processes to municipalities. Added to this, provincial workshops had been held to capacitate municipalities on the implementation of the MFMA. Nonetheless, the municipalities would face a challenge to attract and appoint sufficiently skilled financial personnel to perform some of the functions, which accompanied the implementation of the MFMA.

Mr Dyantyi provided an update on Project Consolidate. The municipalities that were involved in Project Consolidate included Matzikama, Cederberg, Kannaland, Beaufort West, Central Karoo, and certain areas of the City of Cape Town. The focus areas of the project included implementing capital projects in certain service delivery hotspots; finalising capacity building action plans; undertaking a service delivery audit; training 400 CDWs; holding a Public Participation Conference; and finalising the provincial capacity building strategy.

Mr Dyantyi discussed certain of the issues that surrounded service delivery and service backlogs. Indeed, the service delivery audit had found that a number of basic services, such as water and sanitation, were not being delivered to certain communities. These issues had been classified as "red flags" and would be prioritised. The Department would be undertaking a number of initiatives to address service delivery backlogs, which included implementing basic service projects in prioritised areas; establishing a task team to facilitate development processes, engaging with municipalities to develop effective communication strategies; and implementing on-going monitoring of the "red-flag" issues. The MEC added that all the municipalities in the province were providing free basic services to indigent households that were linked to the electricity grid or service delivery infrastructure. He noted that the challenge was to extend basic services to more households once they had received the necessary infrastructure. An agreement was also being brokered to ensure that free basic services were provided to impoverished farm workers.

The MEC provided an update on certain issues surrounding housing accreditation. An agreement had been reached that each of the provincial Housing Departments would enter into negotiations with the relevant large municipalities around accreditation. The City of Cape Town had been identified as a pilot site for accreditation. However, a framework for accreditation had been not finalised, which made discussions around accreditation difficult.

Mr Dyantyi outlined some of the Department’s other achievements, which included:
- spending 100% of the province’s Municipal Infrastructure Grants (MIGs);
- developing a relationship with Treasury around IDPs (Integrated Development Plans);
- successfully managing certain emergency incidents (which included floods, drought, fires and the outbreak of swine fever);
- installing a disaster management satellite communication system;
- establishing the Tygerberg Disaster Management Centre;
- being involved in the N2 Gateway Project; and
- working with the Umsobomvu Youth Fund to create employment opportunities.

The MEC noted that the Department faced a number of challenges, which included:
- refocusing the Department to meet new challenges;
- aligning national, provincial, and local priorities;
- a lack of skilled political and administrative leadership in the municipalities;
- ensuring that smaller housing projects were not neglected while managing the N2 housing project; and
- ensuring a balance in the allocation of units in the N2 project.

Discussion
The Chairperson asked for an update on the activities, which the Western Cape Standing Committee on Governance had been undertaking.

Mr P McKenzie (Chairperson of the Western Cape Standing Committee on Governance) noted that the Standing Committee had been conducting various oversight initiatives. It had visited most of the municipalities in the Western Cape in order to examine their finances, service delivery and capacity. The Standing Committee had found that there had been an improvement amongst most of the Western Cape municipalities. However, it had encountered a number of problems during these visits, which included:

- a lack of capacity in a number of rural municipalities. Certain rural municipalities lacked staff with financial skills. This problem had arisen due to the fact that suitably qualified people were reluctant to work in the rural areas. This was one of the main reasons why a number of rural municipalities had received qualified audit reports. One way to address this was to use staff from the Metro areas to assist these rural municipalities.
- development was not impacting on poverty levels in the rural areas.
- development was not addressing the legacy of apartheid-era spatial planning. The Standing Committee had found that housing developments for poorer people were still being placed on the outskirts of towns and cities. Municipalities were finding that there was a shortage of land, which could be used for low-cost housing, near to town/city centres. Indeed, the land that was close to town/city centres was expensive: many of the landowners asked exorbitant prices for such land. There needed to be an audit of state-owned land in order to address this problem. Once the state had identified the land it owned, it could use some of this land for low-cost/social housing. The Standing Committee had also been working on a plan to create corridors of development, which could link outlying low-cost housing areas with shopping and service nodes.

The Chairperson commented that during the recent Land Summit it was specified that land reform should not be market-driven. The government needed to use instruments to ensure that it acquired land for land redistribution and housing at a reasonable cost. This would perhaps address the problem of overpriced land. The Chairperson agreed that an audit of state-owned land was essential. Indeed, this land needed to be identified so that it could be used for housing or land redistribution. He added that the spatial legacy of apartheid had not been addressed for various reasons. These included the government using cheap outlying land to deliver as many houses as possible and developers selecting cheap outlying land, for low-cost housing projects, to keep their expenses as low as possible. This meant that residential areas were still mostly divided along racial lines. The government needed to tackle this issue by developing low-cost housing near city/town centres.

The Chairperson enquired if there were structures for the public to participate in local government in the Western Cape. For example, were the ward committees receiving support from the municipalities? Mr Dyantyi replied that ward committees were being established in all of the Western Cape municipalities. Added to this, certain municipalities were offering support to the ward committees in order to broaden public participation. For example, the Stellenbosch municipality was even providing office space to ward committees. A member of the delegation noted that even though municipalities were offering support to ward committees, working for the ward committees was voluntary. Therefore, ward committee members were not paid. Nonetheless, municipalities should provide support to ward committees in terms of transport and office space. Ms S Majiet (Western Cape Department of Local Government and Housing: Head of Department) added that ward committees were also beginning to understand how the CDWs could assist them. Indeed, the Department was working towards strengthening the relationships between the ward committees and the CDWs.

The delegation noted that certain problems also existed around ward committees. Some councillors only wanted people that shared their outlook to be part of the ward committees. The Department had to guard against this. The Department was also encouraging municipalities to have ongoing structured communications with the ward committees. Community-based development planning needed to be part of the structured communication between the ward committees and the municipalities.

The Chairperson was concerned that some municipalities in the Western Cape, such as Plettenberg Bay and Kannaland, were not performing effectively. The Select Committee was considering summoning such municipalities to Parliament in order for them to explain why they were not performing. Mr McKenzie responded that the Western Cape Standing Committee on Governance had visited the Plettenberg Bay municipality. He noted that the Plettenberg Bay municipality had made progress in addressing the problems that it had experienced. Indeed, it was due to the Standing Committee’s oversight that Plettenberg Bay had started to address its problems.

Mr A Manyosi (ANC, Eastern Cape) asked the delegation to explain how the Department was assisting the three municipalities, which had financial difficulties, to strengthen their capacity. Added to this, how was the Department assisting the Project Consolidate municipalities to build their capacity? Ms H Vermeulen (Western Cape Department of Local Government and Housing Director: Monitoring and Support) responded that progress was being made in the three municipalities. She added that she would forward progress reports to the Committee on the municipalities that had experienced financial difficulties. Ms Majiet added that the Department was co-operating with academic institutions in order to assist the municipalities in Project Consolidate with capacity building. The Department had established a Project Consolidate Advisory Network, which consisted of representative from academic institutions, non-governmental organisations, the private sector, and parastatals. This Advisory Network assisted municipalities in leveraging additional resources for capacity building. She added, however, that the other non-Project Consolidate municipalities also needed some assistance. For example, the Metro needed assistance to properly co-ordinate its resources.

Ms Majiet commented that the Department had redeployed some of the best municipal managers to municipalities that were experiencing difficulties. For example, the Saldanha Bay municipal manager had been deployed to Kannaland in order to address the problems that Kannaland faced. In fact, he had spent three months in the Kannaland municipality. The Department was considering how municipalities, which had sufficient capacity, could assist other municipalities that had capacity problems.

The Chairperson noted that all of the provinces produced their own development plans. However, at a national level there was no legislation that could drive or guide development planning. There needed to be proper co-ordination between the different spheres of government around development. He enquired why the national government was not taking the lead in development planning.

Mr E Afrika (DPLG Deputy Director-General: Systems and Capacity Building) replied that although there was no single national development plan legislation, there were different instruments that shaped development. Indeed, there was a robust development planning system at the local government level. The Presidency had also developed the National Spatial Development Perspective (NSDP), which was an instrument that guided development planning across all the spheres of government. The NSDP also characterised the challenges that were faced in certain regions, and urged government departments to address these. Added to this, a National Planning Cycle (NCP) document had been produced. The NPC document set out guidelines, which would allow the different spheres of government to sequence their development planning processes. If one used the NSDP and the NCP in conjunction, one had something akin to a national development policy. He added that there had been public hearings around the IDPs. These hearings had allowed the national, provincial and local governments to systematically engage with development priorities. These hearings also highlighted the need to establish a national strategic investment plan, which would prioritise developments in certain areas.

The Chairperson noted that the Department was undertaking a skills audit amongst the municipalities. It had made certain preliminary findings, which included noting that there was a skills shortage in the municipalities. The Department would be developing a strategy to address these skills shortages. The Chairperson noted that he had met with a group that had suggested that learnerships, internships and apprenticeships needed to be linked in order to tackle the skills shortages in South Africa. They had also stated that South Africa needed to establish schools of excellence to provide quality skills training. Added to this, they had suggested that a mentorship system needed to be created. The Chairperson stated that perhaps this group could assist the Department, in some way, in developing its skills development strategy.

Ms H Fast (Western Cape Department of Local Government and Housing Director: Policy and Strategy) replied that one had to differentiate between hard and soft skills. The hard skills, which municipalities required, included town planning, financial management, and management skills. The soft skills referred to shifting the mindsets of municipal employees towards development and support. A municipality could have the hard skills but lack the soft skills. The Department needed to improve the soft skills of some of the municipalities. She added that the audit had found that some municipalities were experiencing a skills shortage due to funding problems. Some municipalities had sufficient budgets, but did not prioritise their spending properly. This needed to be addressed.

Mr Moseki thought that, due to the Western Cape’s history, there would not be a skills shortage problem. The Western Cape had a number of educational institutions, which should be producing graduates that were skilled in areas such as financial management. He enquired whether the educational institutions were in fact producing graduates with the necessary skills.

Mr Moseki also asked whether local governments had strategies to entice people who had financial skills to work in the municipalities. Added to this, he asked whether the local governments had strategies to retain such people once they were employed.

The Chairperson commented there were problems around local economic development. There were no examples of developmental initiatives, which had changed the lives of entire communities. Communities needed to benefit from the economic growth that South Africa was experiencing. If they did not, people would remain dependent on social grants for an income.

Mr Afrika responded that municipalities were skilled at implementing poverty alleviation projects; however, they were perhaps weaker at driving local development. The Department was developing national guidelines for Local Economic Development (LED). Ms Majiet added that the Provincial Department was working on two aspects of the LED. The first aspect involved formulating an economic development strategy for impoverished regions, such as the Central Karoo municipality. This strategy aimed to create an environment in which an economic turnaround could take place. The second aspect was to undertake regional planning in areas that had sound economic growth, such as the Garden Route area. The aim of this was to ensure that municipalities co-ordinated their economic activities, rather than competing with one another.

Mr Z Ntuli (ANC, KwaZulu-Natal) commented that an indigent policy had been developed; however, it appeared as if there were difficulties around its implementation. He enquired whether the Western Cape was making progress in implementing the indigent policy.

Ms Vermeulen replied that all of the 30 Western Cape municipalities had indigent policies, and had to maintain annual indigent registers. Some of the CDWs were involved in updating these registers. There were, however, problems around the criteria that the municipalities used to decided whether a person was indigent: different municipalities had different criteria. The free services that were provided to indigent households also differed from municipality to municipality. There was, therefore, a need for a national indigent policy, which could be used as a guideline by the municipalities. Added to this, many indigent households were not linked to service delivery infrastructure, such as the electricity grid, which meant that they did not receive free basic services.

Mr Ntuli enquired whether the IDPs were prioritised in the municipalities’ budgets. Ms Fast responded that the Department had assisted municipalities in linking their overall budgets to IDPs. Indeed, all of the Western Cape municipalities had linked their overall budgets, to a greater or lesser extent, to the IDPs. In the future, the Department needed to ensure that the municipalities linked their operating budgets to the IDPs.

Mr Ntuli asked whether the Department was involved in the EPWP (Extended Public Works Programme).

Mr F Naude (Western Cape Department of Local Government and Housing Chief Director: Local Government) replied that the Department was involved in the EPWP through the MIG. However, a number of difficulties surrounded the MIG. For example, the provinces did not have direct control over the MIG and, therefore, the Department had to indirectly influence the manner in which the municipalities used the MIGs. The Department had achieved some success in ensuring that the MIGs were used to apply the EPWP principles.

There was also a disjuncture between the manner in which the Department’s engineers, and the municipalities’ engineers, interpreted the EPWP principles. A workshop had been planned to ensure that the Department and the municipalities shared a common understanding of the EPWP principles. Under the MIG, the Department had assisted various municipalities to expand their refuse removal, housing, sanitation, and electricity infrastructure. One of the main aims of the MIG was to ensure that job opportunities were created.

Ms Majiet added that the Department was working with the Department of Public Works on the EPWP. The MIG had only resulted in limited success; for example, some temporary jobs had been created. The Department needed to focus on the broader capital budget to unearth greater opportunities. The Department, along with the Public Works Department, was formulating a number of plans, under the auspices of the EPWP, which would include a more aggressive approach to employment creation. This would perhaps involve setting specific job creation targets for each of the municipalities.

Mr Ntuli enquired whether progress had been made in implementing the Unified Public Service. Ms R Baziel (Western Cape Chairperson of the South African Local Government Association) replied that the South African Local Government Association (SALGA) was involved in the discussions around the Unified Public Service Bill.

Mr A Moseki (ANC, North West) noted that the delegation had stated that its analysis of the municipalities’ financial statements had indicated that most of them had a "positive solvency ratio". She asked what exactly a "positive solvency ratio" meant. Ms Vermeulen replied that a "positive solvency ratio" meant that a municipality’s current assets covered their current liabilities.

Mr Moseki noted that local governments often hired consultants to undertake certain work, which their staff were not qualified to do. He asked whether such consultants were obliged to transfer the skills that they had to the municipalities.

Ms Vermeulen replied that the municipalities sometimes appointed consultants to assist with support programmes. The Department would have to approve the appointment of these consultants, which ensured that the municipalities appointed quality consultants. The Department also stipulated the details of the agreements between the municipalities and the consultants. Part of these stipulations included clauses, which stated that skills transfers should take place from the consultants to the municipalities. Indeed, the Department investigated whether skills transfers had taken place before the consultants were paid.

Mr Manyosi noted that the Department had stated that there was a lack of sound political leadership in some of the Western Cape municipalities. He asked what this actually meant. Mr Dyantyi replied that a lack of effective political leadership was a critical issue in a number of municipalities. A lack of political leadership often caused many problems, such as poor decision-making. Added to this, there were cases where municipal managers were stronger than the councillors. They would then pressurise these councillors into making certain decisions that were not to the benefit of their constituencies. This was an issue for all political parties.

The Chairperson asked what would happen to the revenue of the municipalities and districts once the Regional Electricity Distributors (REDs) were established. Ms Baziel replied that RED 1 was a pilot project, which cut across the boundaries of the Western Cape and the Northern Cape. Municipalities in the affected areas would receive an income through RED 1. Eskom and the municipalities were involved in a partnership on RED1.

The Chairperson enquired about the roles and responsibilities of top-level officials in the municipalities. For example, what were the responsibilities of the Mayors, the Speakers, the accounting officers and the municipal managers? One found that sometimes the roles and responsibilities of these officials were not clearly defined.

Ms Baziel acknowledged that there was some confusion around the roles and responsibilities of certain municipal officials. Nonetheless, SALGA had guidelines for the roles and responsibilities of municipal officials.

Ms Majiet added that problems around the roles and responsibilities of different municipal officials usually arose in instances where one of these officials was stronger than another. For example, a very strong Executive Mayor might encroach on the areas of a weak municipal manager. It became difficult for the Department to interface properly with municipalities that were experiencing such issues.

Mr Dyantyi added that there was a need to shift away from personalities dominating municipalities. One needed to implement the correct systems and strengthen institutional mechanisms. This would address the problem of certain officials encroaching on other officials’ jurisdictions.

The Chairperson asked whether the Department would be able to produce a booklet, which outlined the roles and responsibilities of the various municipal officials. This would assist with the problems that were being experienced in certain municipalities. Mr Dyantyi replied that the Department would examine the possibility of producing such a booklet. Nonetheless, the MFMA would also alleviate some of these problems.

The Chairperson noted that there would not be time to deal with service delivery issues in the meeting. He asked the Department to return later in the year to brief the Committee on service delivery problems in the Western Cape municipalities. The MEC answered that the Department would be willing to return to Parliament to provide such a briefing.

The Chairperson asked the MEC to forward detailed reports to the Committee on the financial status of the municipalities, their readiness to implement the MFMA, and on the IDP public hearings. The Committee also wanted to have regular meetings with the MEC regarding the state of the Western Cape municipalities. This would assist the Committee with its oversight function. He also asked the Department to return to provide briefings on RED 1 and Project Consolidate.

The meeting was adjourned.