INFORMATION SERVICES: RESEARCH

INFORMATION SERVICES: RESEARCH

22 July 2003

2^ndDraft Report on Study Tour of Municipalities in Northern Cape

A. Introduction

1. The Select Committee on Local Government and Administration undertook a study tour of Tsantsabane, Siyancuma and Ubuntu municipalities from 5 to 8 May 2003. The Select Committee also had meetings with the provincial organised local government and three members from three Committees of Enquiry, which were investigating the municipalities. The Select Committee was also supposed to meet the Member of the Executive Committee (MEC) for Housing and Local Government. However, the meeting did not take place as planned because the MEC was engaged.

2. The aims of the study tour were to:

Establish problems experienced by the three municipalities.
Determine whether these municipalities are effectively and efficiently discharging their executive obligations in line with the Constitution of the Republic of South Africa, Act No. 108 of 1996, the Local Government Municipal Structures Act No 117 of 1998 and the Local Government Municipal Systems Act No. 32 of 2000.

3. The decision to visit the three municipalities was based on correspondence and reports that were received by the Select Committee from the MEC for Housing and Local Government. The content of the correspondence indicated that there were political, financial and administrative problems in the three municipalities.

4. Hence, the Committee decided to visit these municipalities in line with section 154(1) of the Constitution, which states that the "national and provincial governments, by legislation and other measures, must support and strengthen the capacity of municipalities to manage their own affairs, to exercise their powers and to perform their functions".

B. Background

1. The three municipalities were established in terms of section 12 of the Local Government Municipal Structures Act, No. 117 of 1998 (as amended). Tsanstabane consists of Olifantshoek and Postmasburg Transitional Councils, Siyancuma consists of … and Ubuntu consists of the now defunct Victoria West, Loxton and Richmond municipalities.

2. The MEC for Housing and Local Government established that there were political, administrative and financial problems in these municipalities. Consequently, he intervened in the three municipalities by appointing Committees of Enquiry into the affairs of these municipalities. This was done in terms of section 106(1)(b) of the Local Government Municipal Systems Act No. 32 of 2000 read with the Committees of Enquiry Ordinance No. 13 of 1978, and assigned to the Office of the Premier, Northern Cape Province under Proclamation No. 108 of 17 June 1994.

C. South African Local Government Association (SALGA)

Administrative and financial problems

1.1 According to SALGA, the three municipalities are affected by administrative and financial problems. The Council of Ubuntu Municipality was unaware that it has financial problems because it did not receive any information from its administration in this regard. The Council received the information that the municipality has financial problems from the Department of Housing and Local Government. SALGA further stated that the municipality has outstanding creditors and debtors. The Municipality also had a problem of mismanagement. The Councillors "become officials and officials become councillors".

1.2 With respect to the Siyancuma Municipality, it did not have a treasury. They had an acting treasury for quite some time.

1.3 With regard to the Tsantsabane Municipality, SALGA stated that there was a political problem between two political parties within the Council. The fight has been going on for many years. SALGA stated that "While these parties were fighting each other the municipality was going down" and this negatively affected the finances of the Municipality.

1.4 SALGA asserted that the municipalities have credit control policies, but its implementation is difficult because some residences and government departments cannot or do not pay and municipalities have no capacity to collect money owed to them. SALGA further stated that the government departments owing municipality include the Department of Education (Schools not paying rates). Smaller municipalities cannot compete with bigger municipalities in employing highly qualified chief financial officers to collect money owed to municipalities. In some cases, when the smaller municipalities hire someone who lacks experience, the person will work for a short period and then leave to the bigger municipalities. Most municipalities in the Northern Cape are struggling to appoint chief financial officers.

1.5 Moreover, while the Municipal Demarcation Board intended to ensure that municipalities are financially viable, Northern Cape has poor rural municipalities that have vast, low-density wards. For example, from one ward to another one can travel about 200 kilometres. Hence, the ability to collect money is limited because the municipalities are rural and have low density. Additionally, the grant that municipalities receive from the National Government with regard to indigents is not enough. In most cases, municipalities also do not have capital budgets for development in most cases.

1.6 SALGA recommended the following:

Even when the intervention is undertaken, municipalities need to disclose their political, financial and administrative problems. Some councillors transgress legislation intentionally and some unintentionally. Nevertheless, the national and provincial spheres cannot force the municipalities to disclose because local government is an independent sphere.
Local legislatures need to have committees where they share information with officials. Councillors are not aware of what is going on with their financial system because there is no reporting system.
Reporting systems should be established. Reporting has to be done monthly.
There is a need to capacitate municipalities to know local government legislation and be able to collect revenue owed to them.
There is a need for SALGA and the Department of Housing and Local Government to have a structured monthly meeting to inform each other properly. This will enable the Department of Housing and Local Government as well as SALGA to identify municipalities experiencing administrative and financial problems.

1.7 The Select Committee is of the view that:

The interaction between SALGA and itself as well as between SALGA and the Department of Housing and Local Government should continue.
Councils should hold municipal officials accountable.
SALGA should be present in the National Council of Provinces in order for them to debate these issues.
The provincial Department of Housing and Local Government must find a way to monitor these municipalities, e.g. site visits in addition to monthly reports.
The Department of Provincial and Local Government (DPLG), the Department of Housing and Local Government, SALGA and the Local Government, Water and Related Services Sector Education and Training Authority (LGWSETA) need to provide the necessary training to councillors and officials of these three municipalities. Effective capacity-building and training will ensure that these municipalities successfully implement the new system of local government and advances service delivery and development.
The Department of Housing and Local Government, DPLG, SALGA and the Select Committee should assist these municipalities to solve their political, administrative and financial problems.

D. Tsantsabane Municipality

1. Committee of Enquiry

The Committee of Enquiry in Tsantsabane Municipality was conducted on 10 October 2002.
The findings of the Committee of Inquiry include the following:

Conflict between Council members. This impacted negatively on the management of the Council.
Delays with the implementation of the approved staff structure and placement of staff.
Lack of delegated authorities to Council, its Committees, Municipal Manager and Heads of Departments.
Lack of municipal by-laws regulating key activities.
Lack of implementation of key policies.
Unconsolidated financial systems of the Council after demarcation due mainly to a severe backlog that existed in the previous Olifantshoek Transitional Council.
There was no dedicated credit control and debt collection department.
The administration of the Municipality was not functioning properly.

1.2 Hence, the Committee of Enquiry recommended that:

The completion and implementation of delegated authorities to Council, its Committees, Municipal Manager and Heads of Departments in accordance with laws and regulations.
Review and implementation of the draft policies and by-laws currently under consideration by Council.
Review of the applicability of the current personnel structure proposed for the Council and the immediate implementation thereof starting with the appointment of a Municipal Manager and the respective Heads of Departments to drive the process of reform.
Support with updating all financial information for the previous Olifantshoek Transitional Council and consolidation of financial systems as soon as the updated information becomes available.
Preparation of a complete debtors management plan incorporating credit control and the indigent policy of Council to improve collections in all areas.
Support with the maintenance of service delivery equipment to improve the level of service delivered to all communities.
Training of staff in the administrative department to relieve the capacity problems currently experienced.
The preparation of a new valuation roll and amendment of the current budget or incorporation in the budget for 2003/04 of the improved tax base afforded by taxation of all properties in the demarcated area.
Preparation of a complete debt management plan incorporating political intervention to afford a repayment plan of arrear debt to the water board.
Preparation of a long-term financial plan incorporating the debt management plan and cash based budgets for future financial years.

2. Political problems: Council

The Select Committee was informed that the political problems in Tsantsabane were caused by a split into two factions of a political party within the Council. The conflict, which was going on for many years, adversely affected the functioning of the municipality. The faction that split up obtained the mayoral seat when it formed an alliance with another political party within the Council. Some of the councillors attributed the conflict largely to the lack of political tolerance.

2.2 Councillors were also interfering with the administration of the municipality. A member of the Committee of Enquiry informed the Select Committee that councillors did not understand their role and functions within the council.

2.3 Some councillors asserted that the relations between councillors have improved because of the floor crossing, which changed the balance of power. However, one councillor indicated that the differences between political parties continue. The Council is still unable to appoint a Municipal Manager. Throughout the discussions, the Committee could detect that there are still problems in the Council, as there were sharp differences of opinion between councillors.

2.4 However, when the Select Committee asked the Council of Tsantsabane whether it has implemented the recommendations of the Committee of Enquiry, some of the councillors indicated that they implemented some of the recommendations. However, later when they were asked about the same report, they said that they did not receive the report. It is unclear whether the report was handed over to the Council or not. Since the Council indicated that it did not receive a copy of the recommendations a staff member from the Department of Housing and Local Government who was present at the meeting, gave the Mayor a copy of the report.

2.5 The Committee is of the view that:

Political parties have different believes. In any democratic system, there will always be a majority. The political party that has a political majority has a duty to lead the Council of Tsantsabane Municipality. However, the political parties should ensure that they manage their relations effectively for the benefit of the residents.
Councillors should learn to rise above political differences and co-operate in order to ensure that services are delivered to the community.
The municipality should appoint a Municipal Manager as soon as possible. This is a crucial position in the management of the municipality. Unless a Municipal Manager is appointed, the Council will have staff that will be unable to implement Council’s policy decisions, since they will not be having any leadership at senior management level.
The Council should implement recommendations contained in the Committee of Enquiry Report.

3. Administrative problems: Senior Management

3.1 It was reported that the conflict within the Council also spilt over to the administration of the municipality. It emerged during the discussions that there were also factions in the administration that were aligned with the factions within the Council.

3.2 Because of the disagreements between political parties with regard to the appointment of the Municipal Manager, the municipality has an acting Municipal Manager. The position of the Municipal Manager was advertised five times and no agreement was reached between the political parties regarding a suitable candidate.

3.3 The issue of the appointment of a Municipal Manager is also linked to the placement of staff. Delays with the implementation of the staff structure and placement were reported as a major cause of concern due to the uncertainty it is causing among staff, some of whom were neglecting their duties.

3.4 A problem with personnel shortage was also reported. In terms of the municipal organogram, the municipality needs more staff. The organogram was finalised in January 2003 with the help of a consultant that was appointed by the Department of Housing and Local Government. The appointment of the consultant was part of the Municipal Support Programme (MSP).

3.5 The acting Municipal Manager stated that the situation has improved. He asserted that he has a good cooperative relationship with the councillors, especially the Mayor.

3.6 The Select Committee believes that:

It should interact with the Department of Housing and Local Government in order to ensure that the recommendations of the Committee of Enquiry are implemented.
The acting Municipal Manager should ensure that staff do not neglect their duties.
The municipality should place staff as soon as possible in order to ensure that there is efficiency, effectiveness and accountability.

4. Local government finances

4.1 The municipality has a credit control and debt collection policy. The problem is to implement it effectively. The municipality does not have a dedicated credit control and debt collection department. The staff complement currently allocated to this function is reported to be inadequate. According to the Council, some households are not paying for services. The percentages of payment are 53 per cent and 69 per cent respectively for Olifantshoek and Postmasburg service centres. The municipality has a debt of R5 million. If everybody could pay, it would still need R2,5 million. Even if a 100 per cent debtors payment rate is achieved, the interest accumulating on the arrears amount will still result in a net cash loss on the service. One of the factors that are contributing to the non-payment of services is leaking water pipes in Olifantshoek. The cost of leakage to the municipality is approximately R70 000 a month. Because of this, it is difficult for the municipality to convince residents to pay for water when there are leakages.

4.2 However, the Council has started implementing the credit and debt collection policy through assistance of the civics.

4.3 The Select Committee is of the view that:

The municipality should do more to collect the arrears owed to it for service charges, particularly from those who can afford to pay.
The issue of leaking water pipes in Olifantshoek should be addressed immediately.

5. Delivery of services

5.1 The municipality stated that it does not have vehicles to deliver services. This issue, together with the staff shortage, make it difficult for the municipality to deliver services to Communities.

5.2 The Select Committee suggests that:

The Department of Housing and Local Government and the Department of Local Government assist the municipality in ensuring that they have the necessary vehicles for service delivery.

6. Capacity-Building and training

6.1 The Department of Housing and Local Government appointed a consultant on behalf of the Tsantsabane Municipality as part of the Municipal Support Programme (MSP). The consultant was responsible for assisting the municipality with the development of an organogram, credit control policy, debt collection policy and standardising filing system.

6.2 The consultant has been with the municipality for about three years. This poses serious question regarding the transfer of skills to the staff of the municipality.

6.3 The Committee feels that:

i. The should be a transfer of skills from to the staff of the municipality. There must be strict conditions were the municipality is given assistance, such as Municipal Support Programme (MSP).

E. Siyancuma Municipality

1. Committee of Enquiry

The Enquiry into Siyancuma Municipality was conducted from 6 to 7 February 2002.
The findings of the Committee of Enquiry include:

Lack of access control and security.
Weak financial system.
No reporting system between the senior management and the Council.
Maladministration, financial mismanagement and non-compliance with local government legislation.
Lack of development and implementation of key municipal policies.
Councillors’ lack of understanding of local government legislation.

The Committee of Enquiry recommended, among other things, that:

A public liaison officer must facilitate appointments in order to avoid a situation were people could come in and out without being checked.
Financial systems must be strengthened by appointing a consultant.
The Acting Municipal Manager must write monthly reports to the MEC on executing his executive authority and other duties.
Legal proceedings should be taken against the former mayor.
The Mayor must be reprimanded.
All outstanding policy and implementation to come into effect.
Councillors should familiarise themselves with local government legislation.

2 Political problems

2.1 A member of the Committee of Enquiry stated that the ex-mayor of the municipality was involving himself in the administration of the municipality.

2.2 According to a Councilor, another problem is that most of the Councillors were inexperienced. Hence there was also a lack of knowledge regarding the role of Councillors.

2.3 There are policies outstanding, for example, for housing.

2.4 Councillors from the opposition parties stated that they were not consulted when senior managers were appointed.

2.5 The ex-mayor was given a responsibility to implement political recommendations but he never did.

2.6 The Select Committee feels that:

The Department of Provincial and Local Government, the provincial Department of Housing and Local Government, SALGA and Local Government Water Seta should do more in training councillors on their roles and responsibilities.
The Council should ensure that the new Mayor implement the political recommendations of the Committee of Enquiry by holding him accountable.
The new Mayor should report monthly to the Council regarding the implementation of recommendations.
The outstanding policies should be developed.

3. Administrative problems

3.1 The municipality had an administrative problem because of the conflict between the previous manager and executive mayor. According to some members of the Council, the problem started with the amalgamation process. A very inexperienced Manager was appointed during the process. This former Municipal Manager promoted and increased salaries of some of the employees without the approval of the Council. In addition, there was no person who was qualified to administer the finances of the municipality.

3.2 The municipality also has a problem of placement. The municipality placed staff, but the South African Municipal Workers Union (SAMWU) declared a dispute against the municipality with regard to the proposed placements. Additionally, other staff members were not placed, while others were placed in positions they could not perform. As a consequence of this, the Municipal Manager cannot hold anybody accountable as nobody has been placed to an appropriate position.

3.3 The municipality also had problems with regard to discipline of staff. According to one councillor, the senior management comes to work late. Some of the senior staff explained that they had to be in a meeting in Kimberley. Because the municipality has business in Kimberley, there is a possibility that they are using this as an excuse even when they are late.

3.4 There is also a communication problem between senior personnel and workers. However, the communication gap is closing.

3.5 The municipality had no by-laws in place, as required by legislation. The new mayor has tried to ensure that there are by-laws in place.

3.6 The Municipal Manager asserted that councillors did not know the standard rules of order of Council. For example, resolutions were not proposed for adoption, councillors raised issues that were not on the agenda and minutes of the Council were not signed as a true reflection of the discussions. The municipality acknowledged the need to address this through training on the standard order rules.

3.7 The Select Committee feels that:

There should be a reporting system that will ensure that senior staff report were they would be going.
There should be a mechanism that the municipality and SAMWU put in place to address the dispute of staff placement to ensure the smooth running of the municipality.

4. Delegation of powers and functions

4.1 The Council did not delegate powers and functions to the Municipal Manager. Everything had to be approved by the Council.

5. Local government finances

5.1 The municipality has a credit control and debt collection policy.

5.2 The Siyancuma Council stated that it did not know what was the financial situation of the the municipality, because it did not receive financial statements for two years. Some staff received salary increase without the input and approval of the Council.

5.3 The ex-mayor took advances on his salaries and misused Mayoral vehicles, as well as interfered in the finances of the municipality. The matter regarding the money owed by the former mayor has been handed over to the Public Protector. Employees also took advances and some advances were even more than their salaries. They had to pay it in six months. The municipality has stopped this practice and employees must demonstrate the need for salary advances.

5.4 The municipality did not have a treasury and had an overdraft of

R300 000. Moreover, there are a lot of people who are employed but do not pay for municipal services.

5.5 About 54 percent instead of 39 percent of the municipal budget is spent on salaries. This means that the 15 percent that is supposed to be used for providing services is used for salaries. The income of the municipality is R14 million and about R7 million goes to salaries.

5.6 However, the Council is now receiving financial statements monthly. It received its first financial report in March 2003. The municipality has turned the situation around. Currently the municipality has about R2 million in its bank account. The municipality is subsidising 200 000 people and does not owe creditors.

5.7 Because some people are not paying, the councillors are going door to door to explain to people why they should pay for municipal services.

5.8 The Select Committee raised concerns that:

Despite the fact that the Council was meeting for two years it did not use its power to take action.

6 Integrated Development Planning

6.1 The Council is still in the process of compiling the Integrated Development Plan (IDP) for the municipality.

7. Provision of services

7.1 According to some members of the Council, the municipal tariffs were raised by 30 percent. The Council used the services of a consultation company to determine tariffs. The consulting firm was used because the municipality did not have a qualified person. As a result of determination of tariffs, the water tariff was doubled but the services rendered were not that good.

7.2 The Select Committee:

i. Is concerned with the huge increase in tariffs and the impact this could have on poor residents.

8. Support from Provincial Government

8.1 The provincial government provided training and the MEC traveled there on more than one occasion to assist the municipality.

F. Ubuntu Municipality

1. Committee of Enquiry

1.1 The Committee of Enquiry in Ubuntu Municipality was conducted from the 29^th to the 31^st January of 2003.

1.2 The Committee of Enquiry recommended that:

Proper channels of communication between councillors and officials are established.
Appropriate powers are delegated to the Municipal Manager to enable him to function effectively.
Proper financial controls are implemented immediately. If necessary, a consultant should be appointed to assist the municipality in this regard.
Proper records are kept of all documentation, especially minutes of meetings.
The personnel situation is addressed immediately with reference to placement, evaluation, training and discipline amongst staff.
The Municipal Manager as accounting officer should be held accountable for the failure to pay deductions from salaries of officials to the relevant institutions.
Council should take appropriate action against Councillor P. Minnies for his failure to pay the purchase price of a dwelling bought from council.
The Mayor should report in writing monthly to the MEC on the execution of his duties, obligations and powers.
All amounts due to the municipality by councillors and officials are recovered immediately.

2. Political Problems

2.1 Before the Committee of Enquiry was established, there was conflict between the Municipal Manager and the Mayor. It seems that councillors misunderstood their role and their relationship with the administration. Hence, there was interference in the administration of the municipality.

2.2 The Committee of Enquiry also found that councillors from an opposition party did not accept a mayor from another party and there were no proper policies in place. Additionally, the implementation of Council resolutions was not monitored. Furthermore, councillors had no knowledge of the code of conduct for councillors as enshrined in Schedule 1 of the Systems Act. Moreover, there was political instability within the Council, because in two years it has appointed its fifth mayor.

3. Administration

3.1 The former Municipal Manager lost the confidence of Council and this adversely affected his performance. The former municipal manager and the heads of departments did not have written employment contracts and performance agreements, as required by law. This is a critical breach, as there are no instruments to measure the performance of the officials. It emerged during the meeting with the municipality that the exact roles and responsibilities of heads of departments, apart from the financial manager, are unclear.

3.2 The heads of departments did not have employment and performance contracts. There is also sketchy information on how the former municipal manager was appointed. The former municipal manager was not interviewed, but only short-listed. The only person appointed correctly was the financial manager.

3.3 The acting Municipal Manager has been acting for two months on seconded from the District Council. The report was tabled in the Council before the acting Municipal Manager was appointed.

3.4 According to Council cheques are signed by two people, one from administration and one from the Council (all in all 4 people, they alternate in case one is not in).

3.5 The report of enquiry was not presented to the Acting Municipal Manager, senior managers or officials.

3.6 The municipality stated that the following recommendations have been implemented:

Interference from the Council has discontinued.
The organogram has also been finalised. It will be implemented in July 2003.

3.7 The Committee feels that the:

Acting Municipal Manager should have a copy of the report and should implement administrative recommendations.
Municipality must be encouraged to conclude performance contracts with the Municipal Manager and other senior managers. The performance contracts should be linked with the IDP of the municipality.

4. Financial Problems

4.1 The municipality was in serious financial difficulties. Since 2000, the Council has never received financial statements from the administration and was not aware of the position of the municipality. The Council received the information regarding the financial standing of the municipality from the Department of Housing and Local Government.

It was unable to pay its creditors and at some point, i.e. January 2003, the municipality was unable to pay the salaries of staff.

4.3 According to one member of the management, the credit control of this municipality was not good either. Since the Acting Municipal Manager was appointed, he has set up a unit of credit control to deal with the finances of the municipality.

4.4 The municipality had three separate bank accounts, that is, in Richmond, Loxton as well as in Victoria West.

4.5 There is no system or procedure for buying goods. The financial manager does not always sign cheques. Cheques are signed by the Municipal Manager and the Mayor.

4.6 According to a member of the Committee of Enquiry, subsidies from national and provincial government towards the services of indigent municipal ratepayers were utilised to pay the salaries of officials.

4.7 Bad debt in respect of municipal services was written off instead of handing it over to attorneys for collection. The former mayor instructed a cashier in Loxton to write-off arrears worth R200 000 without a Council resolution.

4.8 Advances, subsistence and travelling costs have had an enormous impact on the cash-flow position of the municipality. However, according to the municipality such costs have now been reduced dramatically as individuals are only allowed to attend to matters outside of the municipality when necessary.

4.9 The Committee of Enquiry also found that the cash-flow problems of the municipality might be attributed to the services payment percentage of between 52% to 54% and the absence of a proper credit control system.

4.10 A councillor purchased a dwelling from Council that has not been paid for to date.

4.11 No accurate asset register is in existence at the municipality.

4.12 A member of the Committee of Enquiry stated that contributions of officials in respect of their medical-aid, pension benefits etc. were never paid over to the relevant institutions for a considerable time.

4.13 The Municipality has never submitted its annual report for the financial year 2000/01 and 2001/02 as required by section 46(1) of the Systems Act.

4.14 Nevertheless, the municipality is busy with credit control measures. The municipality is now in a position to pay salaries.

4.15 According to the municipality, costs associated with advances, subsistence and travelling have now been reduced dramatically as individuals are only allowed to attend to matters outside of the municipality when necessary.

The Select Committee:

Welcomes the assertion that the municipality is busy with credit control measures and that the municipality is now in a position to pay salaries.

5. Delegation of Powers and Functions

5.1 There was no system of delegation of powers and functions for its internal functionaries like ward committees, the municipal manager and financial manager in order to maximise administrative and operational efficiency as contemplated by section 32(1) and (2) of the Municipal Structures Act.

5.2 The Committee feels that:

The municipality’s state of finances is terrible. It is depdent on the sue of its equitable share and conditional grants; hence, there is a need to improve municipal management of the area.

6. Service delivery

6.1 It is not clear how the difficulties affected service delivery.