Draft 43 September 2003 (as approval by PCOF)
REPUBLIC OF SOUTH AFRICA
LOCAL GOVERNMENT: MUNICIPAL FINANCE MANAGEMENT BILL
BE IT ENACTED
by the Parliament of the Republic of South Africa, as follows:—5. General functions of National Treasury
6. Delegations by National Treasury
15. Appropriation of funds for expenditure
16. Annual budgets
17. Contents of annual budgets and supporting documents
18. Funding of expenditures
20. Matters to be prescribed
21. Budget preparation process
22. Publication of annual budget
23. Consultations on tabled budgets
24. Approval of annual budgets
25. Failure to approve budget before start of budget year
26. Consequences of failure to approve budget before start of budget year
27. Non-compliance with provisions of this Chapter
28. Municipal adjustments budgets
29. Unforeseen and unavoidable expenditure
30. Unspent funds
31. Shifting of funds between multi-year appropriations
32. Unauthorised, irregular expenditure and fruitless and wasteful expenditure
33. Contracts having future budgetary implications
CHAPTER 5
CO-OPERATIVE GOVERNMENT
35. Promotion of co-operative government by national and provincial institutions
36. National and provincial allocations to municipalities
37. Promotion of co-operative government by municipalities
38. Stopping of funds to municipalities
39. Stopping of equitable share allocations to municipalities
40. Stopping of other allocations to municipalities
41. Monitoring of prices and bulk resources
42. Price increases of bulk resources for provision of municipal services
43. Applicability of tax and tariff capping on municipalities
44. Disputes between organs of state
45. Short-term debt
46. Long-term debt
47. Conditions applying to both short and long-term debt
48. Security
50. Municipal guarantees
51. National and provincial guarantees
RESPONSIBILITIES OF MAYORS
52. General responsibilities
53. Budget processes and related matters
54. Budgetary control and early identification of financial problems
55. Report to provincial executive if conditions for provincial intervention exist
56. Exercise of rights and powers over municipal entities
57. Municipalities which do not have mayors
58. Municipalities with executive committees
59. Delegations of mayoral powers and duties
61. Fiduciary responsibilities of accounting officers
Financial management
62. General financial management functions
63. Asset and liability management
64. Revenue management
65. Expenditure management
66. Expenditure on staff benefits
67. Funds transferred to organisations and bodies outside government
68. Budget preparation
69. Budget implementation
70. Impending shortfalls, overspending and overdrafts
Reports and reportable matters
71. Monthly budget statements
72. Mid-year budget and performance assessment
73. Reports on failure to adopt or implement budget-related and other policies
74. General reporting obligation
75. Information to be placed on websites of municipalities
76. Protection of accounting officer
Part 2: Financial administration
77. Top management of municipalities
78. Senior managers and other officials of municipalities
79. Delegations
80. Establishment
81. Role of chief financial officer
82. Delegations
83. Competency levels of professional financial officials
CHAPTER 10
MUNICIPAL ENTITIES
Part 1: Establishment
Part 2: Financial governance
86. Bank account details
87. Budgets
88. Mid-year budget and performance assessment
89. Staff matters
90. Disposal of capital assets
91. Financial year
92. Audit
Part 3: Accounting officers
94. Fiduciary duties of accounting officers
95. General responsibilities of accounting officers
96. Asset management
97. Revenue management
98. Monthly reconciliation of revenue and accounts
99. Expenditure management
100. Budget implementation
Part 4: Reports and reportable matters
101. Impending under collection, overspending, overdrafts and non-payment
102. Irregular and fruitless and wasteful expenditure
103. Reporting of improper interference by councillors
104. General reporting obligations
Part 5: Other officials of municipal entities
106. Delegation of powers and duties by accounting officers
107. Competency levels of professional financial officials
Part 6: General
109. Financial problems in municipal entities
CHAPTER 11
GOODS AND SERVICES
Part 1: Supply chain management
110. Application of Chapter
111. Supply chain management policy
112. Supply chain management policy to comply with prescribed framework
113. Unsolicited bids
114. Approval of tenders not recommended
115. Implementation of system
116. Contracts and contract management
117. Councillors barred from serving on municipal tender committee
118. Interference
119. Competency levels of officials involved in municipal supply chain management
Part 2: Public-private partnerships
120. Conditions and process for public-private partnerships
121. Preparation and adoption of annual reports and financial statements
122. Preparation of financial statements
123. Disclosures on intergovernmental and other allocations
125. Other compulsory disclosures
126. Auditing and submission of annual financial statements
127. Submission and tabling of annual reports
128. Compliance to be monitored
129. Oversight reports on annual reports
130. Council meetings open to public and certain public officials
131. Issues raised by Auditor-General in audit reports
132. Submissions to provincial legislatures
133. Consequences of non-compliance with certain provisions
134. Annual report to Parliament
Part 2: Provincial interventions
Part 3: Debt relief and restructuring
151. Legal rights
152. Application for stay of legal proceedings
153. Application for extraordinary relief
154. Suspension of financial obligations
155. Termination of financial obligations and settlement of claims
156. Matters to be prescribed
Part 4: Municipal Financial Recovery Service
157. Establishment
158. Functions and powers
159. Appointment Head
160. Responsibilities of Head
161. Staff
162. Delegations
163. Liabilities and risks payable in foreign currencies
164. Forbidden activities
165. Internal audit unit
166. Audit committees
167. Councillors’ remuneration
168. Treasury regulations and guidelines
169. Consultative processes before promulgation of regulations
170. Departures from treasury regulations or conditions
Part 1: Disciplinary proceedings
171. Financial misconduct by municipal officials
Part 2: Criminal proceedings
173. Offences
174. Penalties
Part 3: General
175. Regulations on financial misconduct procedures and criminal proceedings
177. Delays and exemptions
178. Transitional provisions
179. Repeal and amendment of legislation
SCHEDULE
1. (1) In this Act, unless the context indicates otherwise—
"accounting officer" –
(a) in relation to a municipality, means the municipal official referred to in section 60; or
(b) in relation to a municipal entity, means the official of the entity referred to in section 93,
and includes a person acting as the accounting officer;
"allocation", in relation to a municipality, means–
(a) a municipality’s share of the local government’s equitable share referred to in section 214 (1) (a) of the Constitution;
(b) an allocation of money to a municipality in terms of section 214 (1) (c) of the Constitution;
(c) an allocation of money to a municipality in terms of a provincial budget; or
(d) an allocation of money to a municipality by an organ of state, including another municipality, otherwise than in compliance with a commercial or other business transaction;
"annual Division of Revenue Act" means the Act of Parliament which must be enacted annually in terms of section 214 (1) of the Constitution;
"annual report", in relation to a municipality or municipal entity, means an annual report contemplated in section 121;
"approved budget" means an annual budget –
(a) approved by a municipal council; or
(b) approved by a provincial or the national executive following an intervention in terms of section 139 of the Constitution,
and includes such an annual budget as revised by an adjustments budget in terms of section 28;
"Auditor-General" means the person appointed as Auditor-General in terms of section 193 of the Constitution, and includes a person –
(a) acting as Auditor-General;
(b) acting in terms of a delegation by the Auditor-General; or
(c) designated by the Auditor-General to exercise a power or perform a duty of the Auditor-General;
"basic municipal service" means a municipal service that is necessary to ensure an acceptable and reasonable quality of life and, if not provided, would endanger public health or safety or the environment;
"board of directors", in relation to a municipal entity, means the board of directors of the entity referredhas the meaning assigned to it in section …..1 of the Municipal Systems Act;
"budget-related policy" means a policy of a municipality affecting or affected by the annual budget of the municipality, including –
(a) the tariffs policy which the municipality must adopt in terms of sections 74 of the Municipal Systems Act;
(b) the rates policy which the municipality must adopt in terms of legislation regulating municipal property rates; or
(c) the credit control and debt collection policy which the municipality must adopt in terms of section 96 of the Municipal Systems Act;
"budget year" means the financial year for which an annual budget is or is to be approved in
terms of section 16 (1);
"category", in relation to municipalities, means a category A, B or C municipality referred to in section 155(1) of the Constitution;
"chief financial officer" means a person designated in terms of section 80 (2) (a);
"councillor" means a member of a municipal council;
"creditor", in relation to a municipality, means a person to whom money is owing by the municipality;
"current year" means the financial year preceding the budget year;
"debt" means—
(a) a monetary liability or obligation created by a financing agreement, note, debenture, bond or overdraft, or by the issuance of municipal debt instruments; or
(b) a contingent liability such as that created by guaranteeing a monetary liability or obligation of another;
"delegation", in relation to a duty, includes an instruction or request to perform or to assist in performing the duty;
"financial recovery plan" means a plan prepared in terms of section 141;
"financial statements", in relation to municipality or municipal entity, means statements consisting of at least—
(a) a statement of financial position;
(b) a statement of financial performance;
(c) a cash-flow statement;
(d) any other statements that may be prescribed; and
(e) any notes to these statements;
"financial year" means a year ending on 30 June;
"financing agreement" includes any loan agreement, lease, instalment purchase contract or hire purchase arrangement under which a municipality undertakes to repay a long-term debt over a period of time;
"fruitless and wasteful expenditure" means expenditure that was made in vain and would have been avoided had reasonable care been exercised;
"Head", in relation to the Municipal Finance Recovery Service, means a person –
"irregular expenditure", in relation to a municipality or municipal entity, means –
(a) expenditure incurred by a municipality or municipal entity in contravention of, or that is not in accordance with, a requirement of this Act, and which has not been condoned in terms of section 170;
(b) expenditure incurred by a municipality or municipal entity in contravention of, or that is not in accordance with, a requirement of the Municipal Systems Act, and which has not been condoned in terms of that Act;
(c) expenditure incurred by a municipality in contravention of, or that is not in accordance with, a requirement of the Public Office-bearers Act, 1998 (Act No. 20 of 1998); or
(d) expenditure incurred by a municipality or municipal entity in contravention of, or that is not in accordance with, a requirement of the supply chain management policy of the municipality or entity or any of the municipality’s by-laws giving effect to such policy, and which has not been condoned in terms of such policy or by-law,
but excludes expenditure by a municipality which falls within the definition of "unauthorised
expenditure";
"investment", in relation to funds of a municipality, means –
(a) the placing on deposit of funds of a municipality with a financial institution; or
(b) the acquisition of assets with funds of a municipality not immediately required, with the primary aim of preserving those funds;
"lender", in relation to a municipality, means a person who provides debt finance to a municipality;
"local community" has the meaning assigned to it in section 1 of the Municipal Systems Act;
"local municipality" means a municipality that shares municipal executive and legislative authority in its area with a district municipality within whose area it falls, and which is described in section 155(1) of the Constitution as a category B municipality;
"long-term debt" means debt repayable over a period exceeding one year;
"mayor", in relation to –
(a) a municipality with an executive mayor, means the councillor elected as the executive mayor of the municipality in terms of section 55 of the Municipal Structures Act; or
(b) a municipality with an executive committee, means the councillor elected as the mayor of the municipality in terms of section 48 of that Act;
"MEC for local government" means the member of the Executive Council of a province who is responsible for local government in that province;
"Minister" means the Cabinet member responsible for finance;
"month" means one of the 12 months of a calendar year;
"multi-jurisdictional service utility" has the meaning assigned to it in section 1 of the Municipal Systems Act;
"municipal council" or "council" means the council of a municipality referred to in section 18 of the Municipal Structures Act;
"municipal debt instrument" means any note, bond, debenture or other evidence of indebtedness issued by a municipality, including dematerialised or electronic evidence of indebtedness intended to be used in trade;
"municipal entity" has the meaning assigned to it in section 1 of the Municipal Systems Act;
"Municipal Financial Recovery Service" means the Municipal Financial Recovery Service established by section 157;
"municipality"—
(a) when referred to as a corporate body, means a municipality as described in section 2 of the Municipal Systems Act; or
(b) when referred to as a geographic area, means a municipal area determined in terms of the Local Government: Municipal Demarcation Act, 1998 (Act No. 27 of 1998);
"municipal manager" means a person appointed in terms of section 82 (1) (a) or (b) of the Municipal Structures Act;
"municipal service" has the meaning assigned to it in section 1 of the Municipal Systems Act;
"Municipal Structures Act" "means the Local Government: Municipal Structures Act, 1998 (Act No. 117 of 1998);
"Municipal Systems Act" means the Local Government: Municipal Systems Act, 2000 (Act No. 32 of 2000);
"municipal tariff" means a tariffs for services that which a municipality may set for the provision of a services to the local community, and includes a surcharges on such tariffs;
"municipal tax" means property rates or other taxes, levies or duties that a municipality may impose;
"National Treasury" means the National Treasury established by section 5 of the Public Finance Management Act;
"organised local government" means an organisation recognised in terms of section 2(1) of the Organised Local Government Act (Act No. 52 of 1997), to represent local government nationally or provincially;
(a) in relation to the budget of a municipality, means causing the operational or capital expenditure incurred by the municipality during a financial year to exceed the total amount appropriated in that year’s budget for its operational or capital expenditure, as the case may be;
(b) in relation to a vote, means causing expenditure under the vote to exceed the amount appropriated for that vote; or
(c) in relation to expenditure under section 26, means causing expenditure under that section to exceed the limits allowed in subsection (5) of that section;
"parent municipality" has the meaning assigned to it in section 1 of the Municipal Systems Act;
"political office-bearer", in relation to a municipality, means –
(a) the speaker, executive mayor, deputy executive mayor, mayor, deputy mayor or a member of the executive or mayoral committee of a municipality elected, designated or appointed in terms of a specific provision of the Municipal Structures Act; or
(b) a councillor referred to in section 57 (1) of this Act;
"political structure", in relation to a municipality, means—
(a) the council of the a municipality; or
(b) any committee or other collective structure of a municipality elected, designated or appointed in terms of a specific provision of the Municipal Structures Act; or
"prescribe" means prescribe by regulation in terms of section 168;
"primary bank account" means a bank account referred to in section 8 (1);
"private company" means a company referred to in sections 19 and 20 of the Companies Act,1973 (Act No. 61 of 1973);
"provincial department" means a department listed in Schedule 2 of the Public Service Act, 1994, (Proclamation No. 103 of 1994), which falls within a provincial administration listed in Schedule 1 of that Act;
"provincial treasury" means a treasury established in terms of section 17 of the Public Finance Management Act;
"Public Finance Management Act" means the Public Finance Management Act, 1999 (Act No. 1 of 1999);
"quarter" means any of the following periods in a financial year:
(a) 1 July to 30 September;
(b) 1 October to 31 December;
(c) 1 January to 31 March; or
(d) 1 April to 30 June;
"senior manager" –
(a) in relation to a municipality, means a manager referred to in section 56 of the Municipal Systems Act; or
"security" means any mechanism intended to secure the interest of a lender or investor, and includes any of the mechanisms mentioned in section 48 (2);
"service delivery agreement" has the meaning assigned to it in section 1 of the Municipal Systems Act;
"service delivery and budget implementation plan" means a detailed plan approved by the mayor of a municipality in terms of section 53 (1) (c) (ii) for implementing the municipality’s delivery of municipal services and its annual budget, and which must indicate –
(a) projections for each month of –
(i) revenue to be collected, by source; and
(ii) operational and capital expenditure, by vote;
(c) any other matters that may be prescribed,
and includes any revisions of such plan by the mayor in terms of section 54 (1) (c);
"service utility" has the meaning assigned to it in section 1 of the Municipal Systems Act;
"shared control", in relation to a municipal entity, means the rights and powers a municipality has over a municipal entity which is –
(a) a private company in which effective control as defined in section 1 of the Municipal Systems Act is vested in that municipality and one or more other municipalities collectively; or
(b) a multi-jurisdictional service utility in which that municipality participates;
"short-term debt" means a debt repayable over a period not exceeding one year;
"sole control", in relation to a municipal entity, means the rights and powers a municipality has over a municipal entity which is –
(a) a private company in which effective control as defined in section 1 of the Municipal Systems Act is vested in that municipality alone; or
(b) a service utility established by the municipality;
"standards of generally recognised accounting practice" means an accounting practice complying with standards applicable to municipalities or municipal entities and issued in terms of Chapter 11 of the Public Finance Management Act;
"this Act" includes regulations made in terms of section 168 or 175;
"unauthorised expenditure", in relation to a municipality, means any expenditure incurred by a municipality otherwise than in accordance with section 15 or 11 (3), and includes—
(c) expenditure from a vote unrelated to the department or functional area covered by the vote;
(d) expenditure of money appropriated for a specific purpose, otherwise than for that specific purpose;
(e) spending of an allocation referred to in paragraph (b) or (c) of the definition of "allocation" otherwise than in accordance with the conditions of the allocation; or
(f) a grant by the municipality otherwise than in accordance with this Act;
"vote" means—
(a) one of the main segments into which a budget of a municipality is divided for the appropriation of money for the different departments or functional areas of the municipality; and
(b) which specifies the total amount that is appropriated for the purposes of the department or functional area concerned.
Object of Act
(c) budgetary and financial planning processes and the co-ordination of those processes with the processes of organs of state in other spheres of government;
(b) all municipal entities; and
(c) national and provincial organs of state to the extent of their financial dealings with municipalities.
(2) In the event of any inconsistency between a provision of this Act and any other legislation in force when this Act takes effect and which regulates any aspect of the financial affairs of municipalities or municipal entities, the provision of this Act prevails.
4.
Draft national legislation directly or indirectly amending this Act, or providing for theenactment of subordinate legislation that may conflict with this Act, may be introduced in
Parliament only after the Minister and the Financial and Fiscal Commission have been consulted
in writing on the contents of the draft legislation, and have responded in writing.
(a) fulfil its responsibilities in terms of Chapter 13 of the Constitution, the Public Finance Management Act and this Act;
(c) enforce compliance with the measures established in terms of section 216 (1) of the Constitution, including those established in terms of this Act.
(2) To the extent necessary to comply with subsection (1), the National Treasury may—
(a) monitor the budgets of municipalities to establish whether they—
(i) are consistent with the national government’s fiscal and macro-economic policy; and
(ii) comply with Chapter 4;
(b) promote good budget and fiscal management by municipalities, and for this purpose monitor the implementation of municipal budgets, including their expenditure, revenue collection and borrowing;
(i) this Act; and
(ii) any applicable standards of generally recognised accounting practice and uniform expenditure and revenue classification systems;
(d) investigate any system of financial management and internal control in any municipality or municipal entity and recommend improvements;
(e) take appropriate steps if a municipality or municipal entity commits a breach of this Act, including the stopping of funds to a municipality in terms of section 216 (2) of the Constitution if the municipality, or a municipal entity under the sole or shared control of that municipality, commits a serious or persistent material breach of any measures referred to in that section; and
(3) The functions assigned to the National Treasury in terms of this Act are additional to those assigned to the National Treasury in terms of the Public Finance Management Act.
(4) The Minister, as the head of the National Treasury, takes all decisions of the Treasury in terms of this Act, except those decisions taken as a result of a delegation in terms of section 6.
Delegations by National Treasury
(a) the Director-General of the National Treasury; or
(b) the MEC responsible for a provincial department, as the Minister and the Premier of the province may agree.
(2) The Minister may not delegate the National Treasury’s power –
(a) to stop funds to a municipality in terms of section 5 (2) (e).; or
(b) to make regulations in terms of section 168 or 175.
(3) A delegation in terms of subsection (1)—
(a) must be in writing;
(b) is subject to any limitations or conditions which the Minister may impose;
(c) may, subject to any such limitations or conditions, authorise –
(i) the Director-General of the National Treasury to sub-delegate a delegated power or duty to a staff member of the Treasury; and
(ii) the MEC responsible for the relevant provincial department to sub-delegate a delegated power or duty to a staff member of that department; and
(d) does not divest the National Treasury of the responsibility concerning the exercise of the delegated power or the performance of the delegated duty.
(4) The Minister may confirm, vary or revoke any decision taken in consequence of a delegation or sub-delegation in terms of this section, but no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.
(3) A municipality may not open a bank account –
(a) abroad;
(b) with an institution not registered as a bank in terms of the Banks Act, 1990 (Act No. 94 of 1990); or
(c) otherwise than in the name of the municipality.
(4) Money may be withdrawn from a municipal bank account only in terms of section 11 (1).
8.
(1) A municipality must have a primary bank account. If a municipality –(a) has only one bank account, that account is its primary bank account; or
(b) has more than one bank account, it must designate one of those bank accounts as its primary bank account.
(2) The following moneys must be paid into a municipality’s primary bank account:
(a) all allocations to the municipality, including those made to the municipality for transmission to a municipal entity or other external mechanism assisting the municipality in the performance of its functions;
(b) all income received by the municipality on its investments;
(c) all income received by the municipality in connection with its interest in any municipal entity, including dividends;
(d) all money collected by a municipal entity or other external mechanism on behalf of the municipality; and
(e) any other moneys as may be prescribed.
(3) A municipality must take all reasonable steps to ensure that all moneys referred to
in subsection (2) are paid into its primary bank account.
(4) No organ of state in the national, provincial or local sphere of government may
(5) The accounting officer of a municipality must submit to the National Treasury and the Auditor-General, in writing, the name of the bank where the primary bank account of the municipality is held, and the type and number of the account. If a municipality wants to change its primary bank account, it may do so only after the accounting officer has informed the National Treasury and the Auditor-General, in writing, at least 30 days before effecting the change.
9.
The accounting officer of a municipality must submit to the National Treasury and the Auditor-General, in writing –(a) within 90 days after the municipality has opened a new bank account, the name of the bank where the account has been opened, and the type and number of the account; and
(b) annually before the start of a financial year, the name of each bank where the municipality holds a bank account, and the type and number of each account.
Control of municipal bank accounts
10. (1) The accounting officer of a municipality —
(a) must administer all the municipality’s bank accounts, including a bank account referred to in section 12 or 48 (2) (d);
(c) must enforce compliance with sections 7, 8 and 11.
(2) The accounting officer may delegate the duties referred to in subsection (1) (c) to the municipality’s chief financial officer only.
Withdrawals from municipal bank accounts
(a) to defray expenditure appropriated in terms of an approved budget;
(b) to defray expenditure authorised in terms of section 26 (4);
(c) to defray unforeseeable and unavoidable expenditure authorised in terms of section 29 (1);
(d) in the case of a bank account opened in terms of section 12, to make payments from the account in accordance with subsection (4) of that section;
(e) to pay over to a person or organ of state money received by the municipality on
behalf of that person or organ of state, including –
(i) money collected by the municipality on behalf of that person or organ of state by agreement; or
(ii) any insurance or other payments received by the municipality for that person or organ of state;
(f) to refund money incorrectly paid into a bank account;
(g) to refund guarantees, sureties and security deposits;
(h) for cash management and investment purposes in accordance with section 13;
(i) to defray increased expenditure in terms of section 31; or
(j) for such other purposes as may be prescribed.
(2) Any authorisation in terms of subsection (1) to a senior financial official to withdraw money or to authorise the withdrawal of money from a bank account must be in accordance with a framework as may be prescribed. The accounting officer may not authorise any official other than the chief financial officer to withdraw money or to authorise the withdrawal of money from the municipality’s primary bank account if the municipality has a primary bank account which is separate from its other bank accounts.
(3) Money may be withdrawn from a bank account in terms of subsection (1) (b) to (j) without appropriation in terms of an approved budget.
(4) The accounting officer must within 30 days after the end of each quarter —
(a) table in the municipal council a consolidated report of all withdrawals made in terms of subsection (1) during that quarter; and
(b) submit a copy of the report to the provincial department of responsible for local government in the province and the Auditor-General.
Relief, charitable, trust and other funds
12. (1) No political structure or office-bearer of a municipality may set up a relief, charitable, trust or other fund except in the name of the municipality.
(2) A municipality may in terms of section 7 open a separate bank account in the name of the municipality for the purpose of a relief, charitable, trust or other fund.
(3) Money received by the municipality for the purpose of a relief, charitable, trust or other fund must be paid into a bank account of the municipality, or if a separate bank account has been opened in terms of subsection (2), into that account.
(4) Money in a separate account opened in terms of subsection (2) may be withdrawn from the account without appropriation in terms of an approved budget, but only –
(a) by or on the written authority of the accounting officer acting in accordance with decisions of the municipal council; and
(b) for the purposes for which, and subject to any conditions on which, the fund was established or the money in the fund was donated.
(a) must conduct their cash management and investments; and
(3) A bank where a municipality at the end of a financial year holds a bank account, or held a bank account at any time during a financial year, must—
(a) within 30 days after the end of that financial year notify the Auditor-General, in writing, of such bank account, including –
(i) the type and number of the account; and
(ii) the opening and closing balances of that bank account in that financial year; and
(b) promptly disclose information regarding the account when so requested by the National Treasury or the Auditor-General.
(4) A bank, insurance company or other financial institution which at the end of a financial year holds, or at any time during a financial year held, an investment for a municipality must—
(a) within 30 days after the end of that financial year, notify the Auditor-General, in writing, of that investment, including the opening and closing balances of that investment in that financial year; and
(b) promptly disclose information regarding the investment when so requested by the National Treasury or the Auditor-General.
14.
(1) A municipality may not transfer ownership as a result of a sale or other transaction or otherwise permanently dispose of a capital asset needed to provide the minimum level of basic municipal services.(2) A municipality may transfer ownership or otherwise dispose of a capital asset other than one contemplated in subsection (1), but only after the municipal council, in a meeting open to the public—
(a) has decided on reasonable grounds that the asset is not needed to provide the minimum level of basic municipal services; and
(b) has considered the fair market value of the asset and the economic and community value to be received in exchange for the asset.
(3) A decision by a municipal council that a specific capital asset is not needed to provide the minimum level of basic municipal services, may not be reversed by the municipality after that asset has been sold, transferred or otherwise disposed of.
(4) A municipal council may delegate to the accounting officer of the municipality its power to make the determinations referred to in subsection (2) (a) and (b) in respect of movable capital assets below a value determined by the council.
(5) Any transfer of ownership of a capital asset in terms of subsection (2) or (4)
must be fair, equitable, transparent, competitive and consistent with the supply chain management policy which the municipality must have and maintain in terms of section 111.
(6) This section does not apply to the transfer of a capital asset to another municipality or to a municipal entity or a national or provincial organ of state in circumstances and in respect of categories of assets approved by the National Treasury.
Appropriation of funds for expenditure
15. A municipality may, except where otherwise provided in this Act, incur expenditure
only –
(a) in terms of an approved budget; and
(b) within the limits of the amounts appropriated for the different votes in an approved budget.
Annual budgets
16. (1) The council of a municipality must for each financial year approve an annual budget for the municipality before the start of that financial year.
(2) In order for a municipality to comply with subsection (1), the mayor of the municipality must table the annual budget at a council meeting at least 90 days before the start of the budget year.
(3) Subsection (1) does not preclude the appropriation of money for capital expenditure for a period not exceeding three financial years, provided a separate appropriation is made for each of those financial years.
(ii) imposing any municipal tax and setting any municipal tariffs as may be required for the budget year;
(iii) approving the budgets for the relevant financial year of each municipal entity under the sole or shared control of the municipality; and
(iv) approving any other matter that may be prescribed;
(c) a projection of cash flow for the budget year by revenue source, broken down per month;
(d) any proposed amendments to the municipality’s integrated development plan following the annual review of the integrated development plan in terms of section 34 of the Municipal Systems Act;
(e) any proposed amendments to the budget-related policies of the municipality;
(f) particulars of the municipality’s investments;
(g) any prescribed budget information on municipal entities under the sole or shared control of the municipality;
(h) particulars of all proposed new municipal entities which the municipality intends to establish or in which the municipality intends to participate;
(i) particulars of any proposed service delivery agreements, including material amendments to existing service delivery agreements;
(j) particulars of any proposed allocations or grants by the municipality to –
(i) other municipalities;
(ii) any municipal entities and other external mechanisms assisting the municipality in the exercise of its functions or powers;
(iii) any other organs of state;
(iv) any organisations or bodies referred to in section 67 (1);
(k) the proposed cost to the municipality for the budget year of the salary, allowances and benefits of –
(i) each political office-bearer of the municipality;
(ii) councillors of the municipality; and
(iii) the municipal manager, the chief financial officer, each senior manager of the municipality and any other official of the municipality at a remuneration package at least equal to that of a senior manager;
(l) the proposed cost for the budget year to a municipal entity under the sole or shared control of the municipality of the salary, allowances and benefits of –
(i) each member of the entity’s board of directors; and
(ii) the chief executive officer and each senior manager of the entity; and
(m) any other supporting documentation as may be prescribed.
Funding of expenditures
18. (1) An annual budget may only be funded from –
(a) realistically anticipated revenues to be collected;
(b) cash-backed accumulated funds from previous years’ surpluses not committed for other purposes; and
(c) borrowed funds, but only for the capital budget referred to in section 17 (2).
(2) Revenue projections in the budget must be realistic, taking into account –
(a) projected revenue for the current year based on collection levels to date; and
(b) actual revenue collected in previous financial years.
Capital projects
19. (1) A municipality may spend money on a capital project only if –
(a) the money for the project, excluding the cost of feasibility studies conducted by or on behalf of the municipality, has been appropriated in the capital budget referred to in section 17 (2);
(b) the project, including the total cost, has been approved by the council;
(c) section 33 has been complied with, to the extent that that section may be applicable to the project; and
(d) the sources of funding have been considered, are available and have not been committed for other purposes.
(2) Before approving a capital project in terms of subsection (1)(b), the council of a municipality must consider –
(a) the projected cost covering all financial years until the project is operational; and
(b) the future operational costs and revenue on the project, including municipal tax and tariff implications.
(3) A municipal council may in terms of subsection (1) (b) approve capital projects
below a prescribed value either individually or as part of a consolidated capital programme.
Matters to be prescribed
20. (1) The National TreasuryMinister, acting with the concurrence of the Cabinet member responsible for local government –
(a) must prescribe the form of the annual budget of municipalities; and
(b) may prescribe –
(i) the form of resolutions and supporting documentation relating to the annual budget;
(ii) the number of years preceding and following the budget year for which revenue and expenditure history or projections must be shown in the supporting documentation;
(iii) inflation projections to be used with regard to the budget;
(iv) uniform norms and standards concerning the setting of municipal tariffs, financial risks and other matters where a municipality uses a municipal entity or other external mechanism for the performance of a municipal service or other function;
(v) uniform norms and standards concerning the budgets of municipal entities; or
(vi) any other uniform norms and standards aimed at promoting transparency and expenditure control.
(2) The Minister may take appropriate steps to ensure that a municipality in the exercise of its fiscal powers in terms of section 229 of the Constitution does not materially and
unreasonably prejudice –
(a) national economic policies, particularly those on inflation, administered pricing and equity;
(b) economic activities across municipal boundaries; and
(c) the national mobility of goods, services, capital or labour.
Budget preparation process
(a) co-ordinate the processes for preparing the annual budget and for reviewing the municipality’s integrated development plan and budget-related policies to ensure that the tabled budget and any revisions of the integrated development plan and budget-related policies are mutually consistent and credible;
(b) at least ten months before the start of the budget year, table in the municipal council a time schedule outlining key deadlines for –
(i) the preparation, tabling and approval of the annual budget;
(ii) the annual review of –
(aa) the integrated development plan in terms of section 34 of the Municipal Systems Act; and
(bb) the budget-related policies;
(iii) the tabling and adoption of any amendments to the integrated development plan and the budget-related policies; and
(iv) any consultative processes forming part of the processes referred to in subparagraphs (i), (ii) and (iii).
(2) When preparing the annual budget, the mayor of a municipality must —
(a) take into account the municipality’s integrated development plan;
(b) take all reasonable steps to ensure that the municipality revises the integrated development plan in terms of section 34 of the Municipal Systems Act, taking into account realistic revenue and expenditure projections for future years;
(c) take into account the national budget, the relevant provincial budget, the national government’s fiscal and macro-economic policy and the annual Division of Revenue Act;
(d) consult –
(i) the relevant district municipality and all other local municipalities within the area of the district municipality, if the municipality is a local municipality;
(ii) all local municipalities within its area, if the municipality is a district municipality;
(iii) the National Treasury; and
(iv) any national or provincial organs of state, as may be prescribed; and
(e) provide, on request, any information relating to the budget –
(i) to the National Treasury; and
(ii) subject to any limitations that may be prescribed, to –
(aa) the national departments responsible for water, sanitation, electricity, health and any other service as may be prescribed;
(bb) any other national and provincial organ of states, as may be prescribed; and
(bb) another municipality affected by the budget.
Publication of annual budget
(a) in accordance with Chapter 4 of the Municipal Systems Act –
(i) make public the annual budget and the documents referred to in section 17 (3); and
(ii) invite the local community to submit representations in connection with the budget; and
(b) submit the annual budget –
(i) in both printed and electronic formats to the National Treasury; and
(ii) in either format to any prescribed national or provincial organs of state and to other municipalities affected by the budget.
23. (1) When the annual budget has been tabled, the municipal council must consider any views of –
(a) the local community; and
(b) the National Treasury and any provincial and national organs of state and municipalities which made submissions on the budget.
Approval of annual budgets
24. (1) The municipal council must at least 30 days before the start of the budget year consider approval of the annual budget.
(2) An annual budget –
(a) must be approved before the start of the budget year;
(b) is approved by the adoption by the council of the resolution referred to in section 17 (3) (a) (i); and
(c) must be approved together with the adoption of resolutions as may be necessary –
(i) imposing any municipal tax for the budget year;
(ii) setting any municipal tariffs for the budget year;
(iii) approving measurable performance objectives for each vote in the budget;
(iv) approving any changes to the municipality’s integrated development plan; and
(v) approving any changes to the municipality’s budget-related policies.
Failure to approve budget before start of budget year
25. (1) If a municipal council fails to approve an annual budget, including revenue raising measures necessary to give effect to the budget, the council must reconsider the budget and again vote on the budget, or on an amended version thereof, within seven days of the council meeting that failed to approve the budget.
(2) The process provided for in subsection (1) must be repeated until a budget,
including revenue raising measures necessary to give effect to the budget, is approved.
(3) If a municipality has not approved an annual budget, including revenue raising
measures necessary to give effect to the budget, by the first day of the budget year, the mayor must immediately comply with section 55.
Consequences of failure to approve budget before start of budget year
26. (1) If by the start of the budget year a municipal council has not approved an annual budget or any revenue raising measures necessary to give effect to the budget, the provincial executive of the relevant province must intervene in the municipality in terms of section 139 (4) of the Constitution by taking any appropriate steps to ensure that the budget or those revenue raising measures are approved, including dissolving the council and –
(a) appointing an administrator until a newly elected council has been declared elected; and
(b) approving a temporary budget or revenue raising measures to provide for the continued functioning of the municipality.
(3) When approving a temporary budget for a municipality in terms of subsection (1) (b), the provincial executive is not bound by any provision relating to the budget process applicable to a municipality in terms of this Act or other legislation. Such a budget must, after the intervention has ended, be replaced by a budget approved by the newly elected council, provided that the provisions of this Chapter relating to annual budgets are substantially complied with in line with any revised time lines approved by the MEC for local government in the province.
(4) Until a budget for the municipality is approved in terms of subsection (1), funds for the requirements of the municipality may, with the approval of the MEC for local government in the province, be withdrawn from the municipality’s bank accounts in accordance with subsection (5).
(5) Funds withdrawn from a municipality’s bank accounts in terms of
subsection (4) –
(a) may be used only to defray current and capital expenditure in connection with votes for which funds were appropriated in the approved budget for the previous financial year; and
(b) may not –
(i) during any month, exceed eight per cent of the total amount appropriated in that approved budget for current expenditure, which percentage must be scaled down proportionately if revenue flows are not at least at the same level as the previous financial year; and
(ii) exceed the amount actually available.
(6) The funds provided for in subsection (4) are not additional to funds
appropriated for the budget year, and any funds withdrawn in terms of subsection (5) must be regarded as forming part of the funds appropriated in a subsequently approved annual budget for the budget year.
Non-compliance with provisions of this Chapter
27. (1) The mayor of a municipality must upon becoming aware of any impending non-compliance by the municipality of any provisions of this Act or any other legislation pertaining to the tabling or approval of an annual budget or compulsory consultation processes, inform the MEC for local government in the province, in writing, of such impending non-compliance.
(2) If the impending non-compliance pertains to a time provision, except section 16 (1), the MEC for local government may, on application by the mayor and on good cause shown, extend any time limit or deadline contained in that provision, provided that no such extension may compromise compliance with section 16 (1). An MEC for local government must –
(a) exercise the power contained in this subsection in accordance with a prescribed framework; and
(b) promptly notify the National Treasury, in writing, of any extensions given in terms of this subsection, together with the name of the municipality and the reasons.
(3) The mayor of a municipality must upon becoming aware of any actual non-compliance by the municipality of a provision of this Chapter, inform the council, the MEC for local government and the National Treasury, in writing, of –
(a) such non-compliance; and
(b) any remedial or corrective measures the municipality intends to implement to avoid a recurrence.
(4) Non-compliance by a municipality with a provision of this Chapter relating to the budget process or a provision in any legislation relating to the approval of a budget-related policy, does not affect the validity of an annual or adjustments budget.
(5) The provincial executive may intervene in terms of the appropriate provision of section 139 of the Constitution if a municipality cannot or does not comply with a provision of this Chapter, including a provision relating to process.
Municipal adjustments budgets
(a) must adjust the revenue and expenditure estimates downwards if there is material under-collection of revenue during the budget year;
(b) may appropriate additional revenues that have become available, over and above those anticipated in the annual budget, but only to revise or accelerate spending programmes already budgeted for;
(c) may, within a prescribed framework, authorise unforeseeable and unavoidable expenditure recommended by the mayor of the municipality;
(d) may authorise the utilisation of projected savings in one vote towards spending under another vote;
(e) may authorise the spending of funds that were unspent at the end of the financial year preceding the budget year, where the under-spending could not reasonably have been foreseen at the time when the annual budget for the budget year was approved by the council;
(f) may correct any errors in the annual budget; and
(g) may provide for any other expenditure within a prescribed framework.
(3) An adjustments budget must be in a prescribed form.
(4) Only the mayor may table an adjustments budget in the municipal council, but an adjustments budget in terms of subsection (2) (b) to (g) may only be tabled within any prescribed limitations as to timing or frequency.
(5) When an adjustments budget is tabled, it must be accompanied by –
(a) an explanation how the adjustments budget affects the annual budget;
(b) a motivation of any material changes to the annual budget;
(c) an explanation of the impact of any increased spending on the annual budget and the annual budgets for the next two financial years; and
(d) any other supporting documentation that may be prescribed.
(6) Municipal tax and tariffs may not be increased during a financial year except when required in terms of a financial recovery plan.
(7) Sections 22 (b) and 23 (3) apply in respect of an adjustments budget, and in such application a reference in those sections to an annual budget must be read as a reference to an adjustments budget.
30. The appropriation of funds in an annual or adjustments budget lapses to the extent that those funds are unspent at the end of the financial year to which the budget relates, except in the case of an appropriation for expenditure made for a period longer than that financial year in terms of section 16 (3).
31.
When funds for a capital programme are appropriated in terms of section 16 (3) for more than one financial year, expenditure for that programme during a financial year may exceed the amount of that year’s appropriation for that programme provided that –(a) the increase does not exceed 20 per cent of that year’s appropriation for the programme;
(b) the increase is funded within the following year’s appropriation for that programme;
(c) the municipal manager certifies that –
(i) actual revenue for the financial year is expected to exceed budgeted revenue; and
(ii) sufficient funds are available for the increase without incurring further borrowing beyond the annual budget limit;
(d) prior written approval is obtained from the mayor for the increase; and
(e) the documents referred to in paragraphs (c) and (d) are submitted to the Auditor- General.
Unauthorised, irregular and fruitless and wasteful expenditure
(a) a political office-bearer of a municipality is liable for unauthorised expenditure if that office-bearer knowingly or after having been advised by the accounting officer of the municipality that expenditure is likely to result in unauthorised expenditure, instructed an official of the municipality to incur the expenditure;
(b) the accounting officer is liable for unauthorised expenditure deliberately or negligently incurred by the accounting officer, subject to subsection (3);
(c) any political office-bearer or official of a municipality who deliberately or negligently committed, made or authorised an irregular expenditure, is liable for that expenditure; or
(d) any political office-bearer or official of a municipality who deliberately or negligently made or authorised a fruitless and wasteful expenditure is liable for that expenditure.
(i) authorised in an adjustments budget; or
(b) in the case of irregular or fruitless and wasteful expenditure, is after investigation by a council committee, certified by the council as irrecoverable and written off by the council.
(3) If the accounting officer becomes aware that the council, the mayor or the
executive committee of the municipality, as the case may be, has taken a decision which, if implemented, is likely to result in unauthorised, irregular or fruitless and wasteful expenditure, the accounting officer is not liable for any ensuing unauthorised, irregular or fruitless and wasteful expenditure provided that the accounting officer has informed the council, the mayor or the executive committee, in writing, that the expenditure is likely to be unauthorised, irregular or fruitless and wasteful expenditure.
(4) The accounting officer must promptly inform the mayor, the MEC for local government in the province and the Auditor-General, in writing, of—
(a) any unauthorised, irregular or fruitless and wasteful expenditure incurred by the municipality;
(b) whether any person is responsible or under investigation for such unauthorised, irregular or fruitless and wasteful expenditure; and
(c) the steps that have been taken—
(i) to recover or rectify such expenditure; and
(ii) to prevent a recurrence of such expenditure.
(5) The writing off in terms of subsection (2) of any unauthorised, irregular or
fruitless and wasteful expenditure as irrecoverable, is no excuse in criminal or disciplinary proceedings against a person charged with the commission of an offence or a breach of this Act relating to such unauthorised, irregular or fruitless and wasteful expenditure.
(6) The accounting officer must report to the South African Police Service all
cases of alleged –
(a) irregular expenditure that constitute a criminal offence; and
(b) theft and fraud that occurred in the municipality.
(7) The council of a municipality must take all reasonable steps to ensure that
all cases referred to in subsection (6) are reported to the South African Police Service if –
(a) the charge is against the accounting officer; or
(b) the accounting officer fails to comply with that subsection.
(8) The National TreasuryMinister, acting with the concurrence of the Cabinet member responsible for
local government, may regulate the application of this section by
regulation in terms of section 168.
(i) has, in accordance with section 21A of the Municipal Systems Act –
(aa) made public the draft contract and an information statement summarising the municipality’s obligations in terms of the proposed contract; and
(2) The process set out in subsection (1) does not apply to –
(a) contracts for long-term debt regulated in terms of section 46 (3);
(b) employment contracts; or
(c) contracts –
(i) for categories of goods as may be prescribed; or
(ii) in terms of which the financial obligation on the municipality is below –
(aa) a prescribed value; or
(bb) a prescribed percentage of the municipality’s approved budget for the year in which the contract is concluded.
CHAPTER 5
CO-OPERATIVE GOVERNMENT
Capacity building
34. (1) The national and provincial governments must by agreement assist municipalities in building the capacity of municipalities for efficient, effective and transparent financial management.
(2) The national and provincial governments must support the efforts of municipalities to identify and resolve their financial problems.
(3) When performing its monitoring function in terms of section 155 (6) of the Constitution, a provincial government –
(a) must share with a municipality the results of its monitoring to the extent that those results may assist the municipality in improving its financial management;
(b) must upon detecting any emerging or impending financial problems in a municipality, alert the municipality to those problems; and
(c) may assist the municipality to avert or resolve financial problems.
Promotion of co-operative government by national and provincial institutions
35. National and provincial departments and public entities must –
(a) in their fiscal and financial relations with the local sphere of government, promote co-operative government in accordance with Chapter 3 of the Constitution;
(b) promptly meet their financial commitments towards municipalities;
(c) provide timely information and assistance to municipalities to enable municipalities –
(i) to plan properly, including in developing and revising their integrated development plans; and
(ii) to prepare their budgets in accordance with the processes set out in Chapter 4 of this Act; and
(d) comply with the Public Finance Management Act, the annual Division of Revenue Act and the Intergovernmental Fiscal Relations Act, 1997 (Act No. 97 of 1997), to the extent that those Acts regulate intergovernmental relations with the local sphere of government.
National and provincial allocations to municipalities
36. (1) In order to provide predictability and certainty about the sources and levels of intergovernmental funding for municipalities, the accounting officer of a national or provincial department and the accounting authority of a national or provincial public entity responsible for the transfer of any proposed allocations to a municipality, must by no later than 20 January of each year notify the National Treasury or the relevant provincial treasury, as may be appropriate, of all proposed allocations, and the projected amounts of those allocations, to be transferred to each municipality during each of the next three financial years.
(2) The Minister or the MEC responsible for finance in a province must, to the extent
possible, when tabling the national annual budget in the National Assembly or the provincial annual budget in the provincial legislature, make public particulars of any allocations due to each municipality in terms of that budget, including the amount to be transferred to the municipality during each of the next three financial years.
(a) in their fiscal and financial relations with the national and provincial spheres of government and other municipalities, promote co-operative government in accordance with Chapter 3 of the Constitution;
(b) provide budgetary and other financial information to relevant municipalities and national and provincial organs of state; and
(c) promptly meet all financial commitments towards other municipalities or national and provincial organs of state.
(2) In order to enable municipalities to include allocations from other municipalities
in their budgets and to plan effectively for the spending of such allocations, the accounting
officer of a municipality responsible for the transfer of any allocation to another
municipality must, by no later than 120 days before the start of its budget year, notify the receiving municipality of the projected amount of any allocation proposed to be transferred to that municipality during each of the next three financial years.
Stopping of funds to municipalities
38. (1) The National Treasury may stop –
(2) Before the National Treasury stops the transfer of funds to a municipality in terms of subsection (1) (a) or (b), it must –
(a) give the municipality an opportunity to submit written representations with regard to the proposed stopping of the funds;
(b) inform the MEC for local government in the province; and
(c) consult the Cabinet member responsible for the national department making the transfer.
(3) If the stopping of funds in terms of subsection (1) (a) or (b) may affect the
provision of basic municipal services in the municipality, the provincial executive must monitor the continuation of those services. Section 139 of the Constitution applies if the municipality cannot or does not fulfill its obligations with regard to the provision of those services.
(i) annual financial statements, including the submission to the Auditor-General of its annual financial statements; and
(ii) budgets, including the submission of information on the budget and implementation of the budget to the National Treasury; and
(b) the municipality’s co-operation with other municipalities on fiscal and financial matters, in the case of district and local municipalities.
Price increases of bulk resources for provision of municipal services
42. (1) If a national or provincial organ of state which supplies water, electricity or any other bulk resource as may be prescribed, to a municipality or municipal entity for the provision of a municipal service, intends to increase the price of such resource for the municipality or municipal entity, it must first submit the proposed amendment to its pricing structure –
(a) to its executive authority within the meaning of the Public Finance Management Act; and
(2) The organ of state referred to in subsection (1) must at least 40 days before making a submission in terms of subsection (1) (a) or (b), request the National Treasury and organised local government to provide written comments on the proposed amendment.
(3) Any submission in terms of subsection (1) (a) or (b) must be accompanied by –
(a) a motivation of the reasons for the proposed amendment;
(b) an explanation how the amendment takes account of –
(i) the national government’s inflation targets and other macroeconomic policy objectives;
(ii) steps taken by the organ of state to improve its competitiveness or efficiency in order to reduce costs;
(iii) any objectives or targets as outlined in any corporate or other governance plan applicable to that organ of state;
(c) any written comments received from the National Treasury, organised local government, or any municipalities; and
(d) an explanation how such comments have been taken into account.
(4) The executive authority of the organ of state must table the amendment and the documents referred to in subsection (3) in Parliament or the relevant provincial legislature, as may be appropriate.
(5) Unless approved otherwise by the Minister, an amendment to a pricing structure which is tabled in Parliament or the relevant provincial legislature –
(a) on or before 15 March in any year, does not take effect for the affected municipalities or municipal entities before 1 July in that year; or
Applicability of tax and tariff capping on municipalities
43. (1) If a national or provincial organ of state in terms of a power contained in any
national or provincial legislation determines the upper limits of a municipal tax or tariff, such determination takes effect for municipalities on a date specified in the determination.
(2) Unless the Minister on good grounds approves otherwise, the date specified in a
determination referred to in subsection (1) may –
(a) if the determination was promulgated on or before 15 March in a year, not be a date before 1 July in that year; or
(b) if the determination was promulgated after 15 March in a year, not be a date before 1 July in the next year.
(3) If a municipality has in accordance with section 33 or 46 (3) entered into a
contract which provides for an annual or other periodic escalation of payments to be made by the
municipality under the contract, no determination in terms of a power referred to in
subsection (1) of the upper limits of a municipal tax or tariff applies to that municipality in so far
as such upper limits would impair the municipality’s ability to meet the escalation of its
payments under the contract.
Disputes between organs of state
44. (1) Whenever a dispute of a financial nature arises between organs of state, the parties concerned must as promptly as possible take all reasonable steps that may be necessary to resolve the matter out of court.
(2) If the National Treasury is not a party to the dispute, the parties –
(a) must report the matter to the National Treasury; and
(b) may request the National Treasury to mediate between the parties or to designate a person to mediate between them.
(3) If the National Treasury accedes to a request in terms of subsection (2), the
National Treasury may determine the mediation process.
(4) This section only applies if at least one of the organs of state referred to in subsection (1) is a municipality or municipal entity.
45.
(1) A municipality may incur short-term debt only in accordance with and subject to the provisions of this Act and only when necessary to bridge—(a) shortfalls within a financial year during which the debt is incurred, in expectation of specific and realistic anticipated income to be received within that financial year; or
(b) capital needs within a financial year, to be repaid from specific funds to be received from enforceable allocations or long-term debt commitments.
(iii) if the council approves a credit facility that is limited to emergency use, the accounting officer must notify the council in writing as soon as practical of the amount, duration and cost of any debt incurred in terms of such a credit facility, as well as options for repaying such debt.
(4) A municipality—
(b) may not renew or refinance short-term debt, whether its own debt or that of any other entity, where such renewal or refinancing will have the effect of extending the short term debt into a new financial year.
(5) (a) No lender may willfully extend credit to a municipality for the purpose of renewing or refinancing short-term debt that must be paid off in terms of subsection (4) (a).
(b) If a lender willfully extends credit to a municipality in contravention of
(6) Subsection (5) (b) does not apply if the lender—
(a) relied in good faith on written representations of the municipality as to the purpose of the borrowing; and
(b) did not know and had no reason to believe that the borrowing was for the purpose of renewing or refinancing short-term debt.
Long-term debt
46. (1) A municipality may incur long-term debt only in accordance with and subject to the provisions of this Act and only for the purpose of—
(a) capital expenditure on property, plant or equipment to be used for the purpose of achieving the objects of local government as set out in section 152 of the Constitution, including costs referred to in subsection (4); or
(b) re-financing existing long-term debt subject to subsection (5).
(3) A municipality may incur long-term debt only if the accounting officer of the municipality –
(a) has in accordance with section 21A of the Municipal Systems Act –
(i) at least 14 days prior to the meeting of the council at which approval for the debt is to be considered, made public an information statement setting out particulars of the proposed debt, including the amount of the proposed debt, the purposes for which the debt is to be incurred and particulars of any security to be provided; and
(ii) invited the public to submit written comments or representations to the council in respect of the proposed debt; and
(c) has submitted a copy of the information statement to the municipal council at least 14 days prior to the meeting of the council, together with particulars of –
(i) the essential repayment terms, including the anticipated debt repayment schedule; and
(ii) the anticipated total cost in connection with such debt over the repayment
period.
(4) Capital expenditure contemplated in subsection (1) (a) may include—
(a) financing costs, including—
(i) capitalised interest for a reasonable initial period;
(ii) costs associated with security arrangements in accordance with section 48;
(iii) discounts and fees in connection with the financing;
(iv) fees for legal, financial advisory, trustee, credit rating and other services directly connected to the financing; and
(v) costs connected to the sale or placement of debt, and costs for printing and publication directly connected to the financing;
(b) costs of professional services directly related to the capital expenditure; and
(c) such other costs as may be prescribed.
(5) A municipality may borrow money for the purpose of re-financing existing long-term debt, provided that –
(a) the existing long-term debt was lawfully incurred;
(b) the re-financing does not extend the term of the debt beyond the useful life of the property, plant or equipment for which the money was originally borrowed;
(c) the net present value of projected future payments (including principal and interest payments) after re-financing is less than the net present value of projected future payments before re-financing; and
(d) the discount rate used in projecting net present value referred to in paragraph (c), and any assumptions in connection with the calculations, must be reasonable, and in accordance with criteria set out in a framework that may be prescribed.
(6) A municipality’s long-term debt must be consistent with its capital budget referred to in section 17 (2).
47.
A municipality may incur debt only if –(a) the debt is denominated in Rand and is not indexed to, or affected by, fluctuations in the value the Rand against any foreign currency; and
(b) section 48 (3) has been complied with, if security is to be provided by the municipality.
48.
(1) A municipality may, by resolution of its council, provide security for –(a) any of its debt obligations;
(b) any debt obligations of a municipal entity under its sole control; or
(c) contractual obligations of the municipality undertaken in connection with capital expenditure by other persons on property, plant or equipment to be used by the municipality or such other person for the purpose of achieving the objects of local government in terms of section 152 of the Constitution.
(2) A municipality may in terms of subsection (1) provide any appropriate security, including by –
(a) giving a lien on, or pledging, mortgaging, ceding or otherwise hypothecating an asset or right, or giving any other form of collateral;
(b) undertaking to effect payment directly from money or sources that may become available and to authorise the lender or investor direct access to such sources to ensure payment of the secured debt or the performance of the secured obligations, but this form of security may not affect compliance with section 8 (2);
(c) undertaking to deposit funds with the lender, investor or third party as security;
(d) agreeing to specific payment mechanisms or procedures to ensure exclusive or dedicated payment to lenders or investors, including revenue intercepts, payments into dedicated accounts or other payment mechanisms or procedures;
(e) ceding as security any category of revenue or rights to future revenue;
(f) undertaking to have disputes resolved through mediation, arbitration or other dispute-resolution mechanisms;
(g) undertaking to retain revenues or specific municipal tariffs or other charges, fees or funds at a particular level or at a level sufficient to meet its financial obligations;
(h) undertaking to make provision in its budgets for the payment of its financial obligations, including capital and interest;
(i) agreeing to restrictions on debt that the municipality may incur in future until the secured debt is settled or the secured obligations are met; and
(j) agreeing to such other arrangements as the municipality may consider necessary and prudent.
(3) A council resolution authorising the provision of security in terms of subsection (2) (a)—
(a) must determine whether the asset or right with respect to which the security is provided, is necessary for providing the minimum level of basic municipal services; and
(b) if so, must indicate the manner in which the availability of the asset or right for the provision of that minimum level of basic municipal services will be protected.
(4) If the resolution has determined that the asset or right is necessary for providing the minimum level of basic municipal services, neither the party to whom the municipal security is provided, nor any successor or assignee of such party, may, in the event of a default by the municipality, deal with the asset or right in a manner that would preclude or impede the continuation of that minimum level of basic municipal services.
(5) A determination in terms of subsection (3) that an asset or right is not necessary for providing the minimum level of basic municipal services is binding on the municipality until the secured debt has been paid in full or the secured obligations have been performed in full, as the case may be.
Disclosure
49. (1) Any person involved in the borrowing of money by a municipality must, when interacting with a prospective lender or when preparing documentation for consideration by a prospective investor—
(a) disclose all information in that person’s possession or within that person’s knowledge that may be material to the decision of that prospective lender or investor; and
(2) A lender or investor may rely on written representations of the municipality signed by the accounting officer, if the lender or investor did not know and had no reason to believe that those representations were false or misleading.
50.
A municipality may not issue any guarantee for any commitment or debt of anyorgan of state or person, except on the following conditions:
(a) the guarantee must be within limits specified in the municipality’s approved budget;
(b) a municipality may guarantee the debt of a municipal entity under its sole control only if
the guarantee is authorised by the council in the same manner and subject to the same conditions applicable to a municipality in terms of this Chapter if it incurs debt;
(c) a municipality may guarantee the debt of a municipal entity under its shared control or of any other person, but only with the approval of the National Treasury, and then only if –
National and provincial guarantees
51. Neither the national nor a provincial government may guarantee the debt of a municipality or municipal entity except to the extent that Chapter 8 of the Public Finance Management Act provides for such guarantees.
RESPONSIBILITIES OF MAYORS
General responsibilities
52.
The mayor of a municipality—(a) must provide general political guidance over the fiscal and financial affairs of the municipality;
(b) in providing such general political guidance, may monitor and, to the extent provided in this Act, oversee the exercise of responsibilities assigned in terms of this Act to the accounting officer and the chief financial officer, but may not interfere in the exercise of those responsibilities;
(c) must take all reasonable steps to ensure that the municipality performs its constitutional and statutory functions within the limits of the municipality’s approved budget;
(d) must within 30 days of the end of each quarter submit a report to the council on the implementation of the budget and the financial state of affairs of the municipality; and
(e) must exercise the other powers and perform the other duties assigned to the mayor in terms of this Act or delegated by the council to the mayor.
Budget processes and related matters
53. (1) The mayor of a municipality must –
(a) provide general political guidance over the budget process and the priorities that must guide the preparation of a budget;
(b) co-ordinate the annual revision of the integrated development plan in terms of section 34 of the Municipal Systems Act and the preparation of the annual budget, and determine how the integrated development plan is to be taken into account or revised for the purposes of the budget; and
(c) take all reasonable steps to ensure –
(i) that the municipality approves its annual budget before the start of the budget year;
(ii) that the municipality’s service delivery and budget implementation plan is approved by the mayor within 28 days after the approval of the budget; and
(aa) comply with this Act in order to promote sound financial management;
(bb) are linked to the measurable performance objectives approved with the budget and to the service delivery and budget implementation plan; and
(cc) are concluded in accordance with section 57 (2) of the Municipal Systems Act.
(2) The mayor must promptly report to the municipal council and the MEC for local
government in the province any delay in the tabling of an annual budget, the approval of the
service delivery and budget implementation plan or the signing of the annual performance agreements.
(3) The mayor must ensure –
(a) that the revenue and expenditure projections for each month and the service delivery targets and performance indicators for each quarter, as set out in the service delivery and budget implementation plan, are made public no later than14 days after the approval of the service delivery and budget implementation plan; and
(b) that the performance agreements of the municipal manager, senior managers and any other categories of officials as may be prescribed are made public no later than 14 days after the approval of the municipality’s service delivery and budget implementation plan. Copies of such performance agreements must be submitted to the council and the MEC for local government in the province.
Budgetary control and early identification of financial problems
54. (1) On receipt of a statement or report submitted by the accounting officer of the municipality in terms of section 71 or 72, the mayor must –
(a) consider the statement or report;
(b) check whether the municipality’s approved budget is implemented in accordance with the service delivery and budget implementation plan;
(c) consider and, if necessary, make any revisions to the service delivery and budget implementation plan, provided that revisions to the service delivery targets and performance indicators in the plan may only be made with the approval of the council following approval of an adjustments budget;
(d) issue any appropriate instructions to the accounting officer to ensure –
(i) that the budget is implemented in accordance with the service delivery and budget implementation plan; and
(ii) that spending of funds and revenue collection proceed in accordance with the budget;
(e) identify any financial problems facing the municipality, including any emerging or impending financial problems; and
(f) in the case of the section 72 report, promptly submit the report to the council.
(2) If the municipality faces any serious financial problems the mayor must –
(a) promptly respond to and initiate any remedial or corrective steps proposed by the accounting officer to deal with such problems, which may include –
(i) steps to reduce spending when revenue is anticipated to be less than projected in the municipality’s approved budget;
(ii) the tabling of an adjustments budget; or
(iii) steps in terms of Chapter 13; and
(b) alert the council and the MEC for local government in the province to those problems.
(3) The mayor must ensure that any revisions of the service delivery and budget implementation plan are made public promptly.
55. If a municipality has not approved an annual budget by the first day of the budget year or if the municipality encounters a serious financial problem referred to in section 136, the mayor of the municipality –
Exercise of rights and powers over municipal entities
56. (1) The mayor of a municipality which has sole or shared control over a municipal entity must guide the municipality in exercising its rights and powers over the municipal entity in a way –
(a) that would reasonably ensure that the municipal entity complies with this Act and at all times remains accountable to the municipality; and
(b) that would not impede the entity from performing its operational responsibilities.
(2) In guiding the municipality in the exercise of its rights and powers over a
municipal entity in accordance with subsection (1), the mayor may monitor the operational
functions of the entity, but may not interfere in the performance of those functions.
57.
(1) The council of a municipality which does not have a mayor, must designate a councillor to exercise the powers and duties assigned by this Act to a mayor.(2) A reference in this Act to the mayor of a municipality must, in the case of
a municipality which does not have a mayor, be construed as a reference to a councillor designated by the council of the municipality in terms of subsection (1).
58.The powers and functions assigned by this Act to a mayor must, in the case of a municipality which has an executive committee referred to in section 43 of the Municipal Structures Act, be exercised by the mayor in consultation with the executive committee.
Delegations of mayoral powers and duties
59. (1) The powers and duties assigned in terms of this Act to the mayor of a
municipality, may –
(a) in the case of a municipality which has an executive mayor referred to in section 55 of the Municipal Structures Act, be delegated by the executive mayor in terms of section 60 (1) of that Act to another member of the municipality’s mayoral committee;
(b) in the case of a municipality which has an executive committee referred to in section 43 of that Act, be delegated by the council of the municipality to another member of the executive committee; or
(c) in the case of a municipality which has designated a councillor in terms of section 57 (1) of this Act, be delegated by the council to any other councillor.
(2) A delegation in terms of subsection (1)—
(a) must be in writing;
(b) is subject to any limitations or conditions that the executive mayor or council, as the case may be, may impose; and
(c) does not divest the mayor of the responsibility concerning the exercise of the delegated power or the performance of the delegated duty.
(3) The mayor may confirm, vary or revoke any decision taken in consequence of a delegation in terms of this section, but no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.
Part 1: Accounting officers
Municipal managers to be accounting officers
60. The municipal manager of a municipality is the accounting officer of the municipality for the purposes of this Act, and, as accounting officer, must –
(a) exercise the functions and powers assigned to an accounting officer in terms of this Act; and
(b) provide guidance and advice on compliance with this Act to –
(i) the political structures, political office-bearers and officials of the municipality; and
(ii) any municipal entity under the sole or shared control of the municipality.
Fiduciary responsibilities of accounting officers
61. (1) The accounting officer of a municipality must—
(a) act with fidelity, honesty, integrity and in the best interests of the municipality in managing its financial affairs;
(b) disclose to the municipal council and the mayor all material facts which are available to the accounting officer or reasonably discoverable, and which in any way might influence the decisions or actions of the council or the mayor; and
(c) seek, within the sphere of influence of the accounting officer, to prevent any prejudice to the financial interests of the municipality.
(2) An accounting officer may not—
(a) act in a way that is inconsistent with the duties assigned to accounting officers of municipalities in terms of this Act; or
(b) use the position or privileges of, or confidential information obtained as, accounting officer for personal gain or to improperly benefit another person.
Financial management
General financial management functions
62. (1) The accounting officer of a municipality is responsible for managing the financial administration of the municipality, and must for this purpose take all reasonable steps to
ensure —
(a) that the resources of the municipality are used effectively, efficiently and economically;
(b) that full and proper records of the financial affairs of the municipality are kept in accordance with any prescribed norms and standards;
(c) that the municipality has and maintains effective, efficient and transparent systems —
(i) of financial and risk management and internal control; and
(ii) of internal audit operating in accordance with any prescribed norms and standards;
(d) that unauthorised, irregular and fruitless and wasteful expenditure and other losses are prevented;
(e) that disciplinary or, when appropriate, criminal proceedings are instituted against any official of the municipality who has allegedly committed an act of financial misconduct or an offence in terms of Chapter 15; and
(i) a tariff policy referred to in section 74 of the Municipal Systems Act;
(ii) a rates policy as may be required in terms of any applicable national legislation;
(iii) a credit control and debt collection policy referred to in section 96 (b) of the Municipal Systems Act; and
(iv) a supply chain management policy in accordance with Chapter 11.
(2) The accounting officer is responsible for and must account for all bank accounts of the municipality, including any bank account opened for –
(a) any relief, charitable, trust or other fund set up by the municipality in terms of section 12; or
(b) a purpose referred to in section 48 (2) (d).
(a) the assets of the municipality, including the safeguarding and the maintenance of those assets; and
(b) the liabilities of the municipality.
(2) The accounting officer must for the purposes of subsection (1) take all reasonable steps to ensure –
(a) that the municipality has and maintains a management, accounting and information system that accounts for the assets and liabilities of the municipality;
(b) that the municipality’s assets and liabilities are valued in accordance with standards of generally recognised accounting practice; and
(c) that the municipality has and maintains a system of internal control of assets and liabilities, including an asset and liabilities register, as may be prescribed.
Revenue management
64. (1) The accounting officer of a municipality is responsible for the management of the revenue of the municipality.
(2) The accounting officer must for the purposes of subsection (1) take all reasonable steps to ensure –
(a) that the municipality has effective revenue collection systems consistent with section 95 of the Municipal Systems Act and the municipality’s credit control and debt collection policy;
(b) that revenue due to the municipality is calculated on a monthly basis;
(c) that accounts for municipal tax, and charges for municipal services are prepared on a monthly basis, or less often as may be prescribed where monthly accounts are uneconomical;
(3) The accounting officer must immediately inform the National Treasury of any payments due by an organ of state to the municipality in respect of municipal tax or for municipal services, if such payments are regularly in arrears for periods of more than 30 days.
(4) The accounting officer must take all reasonable steps to ensure –
(a) that any funds collected by the municipality on behalf of another organ of state is transferred to that organ of state at least on a weekly basis; and
(b) that such funds are not used for other purposes.
Expenditure management
65. (1) The accounting officer of a municipality is responsible for the management of the expenditure of the municipality.
(2) The accounting officer must for the purpose of subsection (1) take all reasonable steps to ensure –
(a) that the municipality has and maintains an effective system of expenditure control, including procedures for the approval, authorisation, withdrawal and payment of funds;
(b) that the municipality has and maintains a management, accounting and information system which –
(i) recognises expenditure when it is incurred;
(ii) accounts for creditors of the municipality; and
(iii) accounts for payments made by the municipality;
(c) that the municipality has and maintains a system of internal control in respect of creditors and payments;
(d) that payments by the municipality are made –
(i) directly to the person to whom it is due unless agreed otherwise or for good reason; and
(ii) either electronically or by way of non-transferable cheques, provided that cash payments and payments by way of cash cheques may be made for exceptional reasons only, and only up to a prescribed limit;
(e) that all money owing by the municipality be paid within 30 days of receiving the relevant invoice, unless prescribed otherwise for certain categories of expenditure;
(f) that the municipality complies with its tax, levy, duty, pension, medical aid, audit fees and other statutory commitments;
(g) that any dispute concerning payments due by the municipality to another organ of state is disposed of in terms of legislation regulating disputes between organs of state;
(h) that the municipality’s available working capital is managed effectively and economically in terms of the prescribed cash management and investment framework;
(i) that the municipality’s supply chain management policy referred to in section 111 is implemented in a way that is fair, equitable, transparent, competitive and cost-effective; and
(j) that all financial accounts of the municipality are closed at the end of each month and reconciled with its records.
Expenditure on staff benefits
66. The accounting officer of a municipality must, in a format and for periods as may be prescribed, report to the council on all expenditure incurred by the municipality on staff salaries, wages, allowances and benefits, and in a manner that discloses such expenditure per type of expenditure, namely –
(a) salaries and wages;
(b) contributions for pensions and medical aid;
(c) travel, motor car, accommodation, subsistence and other allowances;
(d) housing benefits and allowances;
(e) overtime payments;
(f) loans and advances; and
(g) any other type of benefit or allowance related to staff.
Funds transferred to organisations and bodies outside government
67. (1) Before transferring funds of the municipality to an organisation or body outside any sphere of government otherwise than in compliance with a commercial or other business transaction, the accounting officer must be satisfied that the organisation or body –
(a) has the capacity and has agreed –
(i) to comply with any agreement with the municipality;
(ii) for the period of the agreement to comply with all reporting, financial management and auditing requirements as may be stipulated in the agreement;
(iii) to report at least monthly to the accounting officer on actual expenditure against such transfer; and
(iv) to submit its audited financial statements for its financial year to the accounting officer promptly;
(b) implements effective, efficient and transparent financial management and internal control systems to guard against fraud, theft and financial mismanagement; and
(c) has in respect of previous similar transfers complied with all the requirements of this section.
(2) If there has been a failure by an organisation or body to comply with the
requirements of subsection (1) in respect of a previous transfer, the municipality may
despite subsection (1) (c) make a further transfer to that organisation or body provided that –
(a) subsection (1) (a) and (b) are complied with; and
(b) the relevant provincial treasury has approved the transfer.
(3) The accounting officer must through contractual and other appropriate mechanisms enforce compliance with subsection (1).
(4) Subsection (1) (a) does not apply to an organisation or body serving the poor or used by government as an agency to serve the poor, provided –
(a) that the transfer does not exceed a prescribed limit; and
(b) that the accounting officer –
(i) takes all reasonable steps to ensure that the targeted beneficiaries receive the benefit of the transferred funds; and
(ii) certifies to the Auditor-General that compliance by that organisation or body with subsection (1) (a) is uneconomical or unreasonable.
Budget preparation
68. The accounting officer of a municipality must –
(a) assist the mayor in performing the budgetary functions assigned to the mayor in terms of Chapters 4 and 7; and
(b) provide the mayor with the administrative support, resources and information necessary for the performance of those functions.
Budget implementation
69. (1) The accounting officer of a municipality is responsible for implementing the municipality’s approved budget, including taking all reasonable steps to ensure –
(a) that the spending of funds is in accordance with the budget and is reduced as necessary when revenue is anticipated to be less than projected in the budget or in the service delivery and budget implementation plan; and
(b) that revenue and expenditure are properly monitored.
(2) When necessary, the accounting officer must prepare an adjustments budget and
submit it to the mayor for consideration and tabling in the municipal council.
(3) The accounting officer must no later than 14 days after the approval of an annual
budget submit to the mayor –
(a) a draft service delivery and budget implementation plan for the budget year; and
(b) drafts of the annual performance agreements as are required in terms of section 57 (1) (b) of the Municipal Systems Act for the municipal manager and all senior managers.
Impending shortfalls, overspending and overdrafts
70. (1) The accounting officer of a municipality must report in writing to the municipal council –
(a) any impending—
(i) shortfalls in budgeted revenue; and
(ii) overspending of the municipality’s budget; and
(b) any steps taken to prevent or rectify such shortfalls or overspending.
(2) If a municipality’s bank account, or if the municipality has more than one bank account, the consolidated balance in those bank accounts, shows a net overdrawn position for a period exceeding a prescribed period, the accounting officer of the municipality must promptly notify the National Treasury in the prescribed format of –
Reports and reportable matters
Monthly budget statements
71. (1) The accounting officer of a municipality must by no later than ten working days
after the end of each month submit to the mayor of the municipality, the National Treasury and
the MEC for local government in the province a statement in the prescribed format on the state of the municipality’s budget reflecting the following particulars for that month and for the financial year up to the end of that month:
(a) actual revenue, per revenue source;
(b) actual borrowings;
(c) actual expenditure, per vote;
(d) actual capital expenditure, per vote;
(e) the amount of any allocations received;
(f) actual expenditure on those allocations, excluding expenditure on –
(i) its share of the local government equitable share; and
(ii) allocations exempted by the annual Division of Revenue Act from compliance with this paragraph; and
(g) when necessary, an explanation of –
(i) any material variances from the municipality’s projected revenue by source, and from the municipality’s expenditure projections per vote;
(ii) any material variances from the service delivery and budget implementation plan and
(iii) any remedial or corrective steps taken or to be taken to ensure that projected revenue and expenditure remain within the municipality’s approved budget.
(2) The statement must include a projection of revenue and expenditure for the rest of
the financial year, and any revisions from initial projections.
(3) The amounts reflected in the statement must in each case be compared with the
corresponding amounts budgeted for in the municipality’s approved budget.
(4) The statement to the National Treasury must be in the format of a signed document and in electronic format.
(5) The accounting officer of a municipality which has received an allocation referred
to in subsection (1) (e) during any particular month must, by no later than ten working days after the end of that month, submit that part of the statement reflecting the particulars referred to in subsection (1) (e) and (f) to the national or provincial organ of state or municipality which transferred the allocation.
Mid-year budget and performance assessment
72. (1) The accounting officer of a municipality must before 31 January of each year –
(a) assess the performance of the municipality during the first half of the financial year, taking into account –
(i) the monthly statements referred to in section 71 for the first half of the financial year;
(ii) the municipality’s service delivery performance during the first half of the financial year, and the service delivery targets and performance indicators set in the service delivery and budget implementation plan; and
(iii) the past year’s annual report, and progress on resolving problems identified in the annual report; and
(b) submit a report on such assessment to –
(i) the mayor of the municipality;
(ii) the National Treasury; and
(iii) the relevant provincial treasury.
(2) The statement referred to in section 71 (1) for the sixth month of a financial year may be incorporated into the report referred to in subsection (1) (b) of this section.
(3) The accounting officer must, as part of the review –
(a) make recommendations as to whether an adjustments budget is necessary; and
(b) recommend revised projections for revenue and expenditure to the extent that this may be necessary.
Reports on failure to adopt or implement budget-related and other policies
73. The accounting officer must inform the MEC for local government in the province and the National Treasury, in writing, of –
(a) any failure by the council of the municipality to adopt or implement a budget-related policy or a supply chain management policy referred to in section 111; or
(b) any non-compliance by a political structure or office-bearer of the municipality with any such policy.
General reporting obligation
74. The accounting officer of a municipality must submit to the National Treasury, the MEC for local government in the province or the Auditor-General such information, returns, documents, explanations and motivations as may be prescribed or as the National Treasury, that MEC or the Auditor-General may require.
75.
(1) The accounting officer of a municipality must place on the website referred to in section 21A of the Municipal Systems Act the following documents of the municipality:(a) the annual and adjustments budgets and all budget-related documents;
(b) all budget-related policies;
(c) the annual report;
(d) all performance agreements required in terms of section 57 (1) (b) of the
Municipal Systems Act;
(e) all service delivery agreements;
(f) all long-term borrowing contracts;
(g) all supply chain management contracts above a prescribed value;
(h) an information statement containing a list of assets over a prescribed value that have been disposed of in terms of section 14 (2) or (4) during the previous quarter;
(i) contracts to which subsection (1) of section 33 apply, subject to subsection (3) of that section;
(j) public–private partnership agreements referred to in section 120;
(k) all quarterly reports tabled in the council in terms of section 52 (d); and
(2) A document referred to in subsection (1) must be placed on the website not later than five days after its tabling in the council or on the date on which it must be made public, whichever occurs first.
Protection of accounting officer
76. Any action taken by a political structure or office-bearer of a municipality against the accounting officer of the municipality solely because of that accounting officer’s compliance with a provision of this Act, is an unfair labour practice for the purposes of the Labour Relations Act, 1995 (Act No. 66 of 1995).
Part 2: Financial administration
Top management of municipalities
77. (1) The top management of a municipality’s administration consists of –
(a) the accounting officer;
(b) the chief financial officer;
(c) all senior managers who are responsible for managing the respective votes of the municipality and to whom powers and duties for this purpose have been delegated in terms of section 79; and
(d) any other senior officials designated by the accounting officer.
(2) The top management must assist the accounting officer in managing and co-ordinating the financial administration of the municipality.
Senior managers and other officials of municipalities
78. (1) Each senior manager of a municipality and each official of a municipality exercising financial management responsibilities must take all reasonable steps within their respective areas of responsibility to ensure —
(a) that the system of financial management and internal control established for the municipality is carried out diligently;
(b) that the financial and other resources of the municipality are utilised effectively, efficiently, economically and transparently;
(c) that any unauthorised, irregular or fruitless and wasteful expenditure and any other losses are prevented;
(d) that all revenue due to the municipality is collected;
(e) that the assets and liabilities of the municipality are managed effectively and that assets are safeguarded and maintained to the extent necessary;
(f) that all information required by the accounting officer for compliance with the provisions of this Act is timeously submitted to the accounting officer; and
(g) that the provisions of this Act to the extent applicable to that senior manager or official, including any delegations in terms of section 79, are complied with.
(2) A senior manager or such official must perform the functions referred to in
subsection (1) subject to the directions of the accounting officer of the municipality.
Delegations
79. (1) The accounting officer of a municipality –
(a) must for the proper application of this Act in the municipality’s administration develop an appropriate system of delegation that will both maximise administrative and operational efficiency and provide adequate checks and balances in the municipality’s financial administration;
(b) may, in accordance with that system, delegate to a member of the municipality’s top management referred to in section 77 or any other official of the municipality –
(i) any of the powers or duties assigned to an accounting officer in terms of this Act; or
(ii) any powers or duties reasonably necessary to assist the accounting officer in complying with a duty which requires the accounting officer to take reasonable or appropriate steps to ensure the achievement of the aims of a specific provision of this Act; and
(c) must regularly review delegations issued in terms of paragraph (b) and, if necessary, amend or withdraw any of those delegations.
(2) A delegation in terms of subsection (1)—
(a) must be in writing;
(b) is subject to such limitations and conditions as the accounting officer may impose in a specific case;
(c) may either be to a specific individual or to the holder of a specific post in the municipality;
(d) may, in the case of a delegation to a member of the municipality’s top management in terms of subsection (1) (b), authorise that member to sub-delegate the delegated power or duty to an official or the holder of a specific post in that member’s area of responsibility; and
(e) does not divest the accounting officer of the responsibility concerning the exercise of the delegated power or the performance of the delegated duty.
(3) The accounting officer may confirm, vary or revoke any decision taken in consequence of a delegation or sub-delegation in terms of this section, but no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.
(2) A budget and treasury office consists of—
(a) a chief financial officer designated by the accounting officer of the municipality;
(b) officials of the municipality allocated by the accounting officer to the chief financial officer; and
(c) any other persons contracted by the municipality for the work of the office.
Role of chief financial officer
81. (1) The chief financial officer of a municipality—
(b) must advise the accounting officer on the exercise of powers and duties assigned to the accounting officer in terms of this Act;
(c) must assist the accounting officer in the administration of the municipality’s bank accounts and in the preparation and implementation of the municipality’s budget;
(d) must advise senior managers and other senior officials in the exercise of powers and duties assigned to them in terms of section 78 or delegated to them in terms of section 79; and
(e) must perform such budgeting, accounting, analysis, financial reporting, cash management, debt management, supply chain management, financial management, review and other duties as may in terms of section 79 be delegated by the accounting officer to the chief financial officer.
(2) The chief financial officer of a municipality is accountable to the accounting officer for the performance of the duties referred to in subsection (1).
Delegations
82. (1) The chief financial officer of a municipality may sub-delegate any of the duties referred to in section 81 (1) (b), (d) and (e)—
(c) with the concurrence of the accounting officer, to—
(i) any other official of the municipality; or
(ii) any person contracted by the municipality for the work of the office.
(2) If the chief financial officer sub-delegates any duties in terms of subsection (1) to a person who is not an employee of the municipality, the chief financial officer must be satisfied that effective systems and procedures are in place to ensure control and accountability.
(3) A sub-delegation in terms of subsection (1)—
(a) must be in writing;
(b) is subject to such limitations or conditions as the chief financial officer may impose; and
(c) does not divest that chief financial officer of the responsibility concerning the delegated duty.
(4) The chief financial officer may confirm, vary or revoke any decision taken in consequence of a sub-delegation in terms of subsection (1), but no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.
MUNICIPAL ENTITIES
Part 1: Establishment
Financial implications for municipalities
84.
(1) When considering the establishment of, or participation in, a municipal entity, a municipality must first –(a) determine precisely the function or service that such entity would perform on behalf of the municipality;
(b) make an assessment of the impact of the shifting of that function or service to the entity on the municipality’s staff, assets and liabilities, including an assessment of –
(i) the number of staff of the municipality to be transferred to the entity;
(ii) the number of staff of the municipality that would become redundant because of the shifting of that function or service;
(iii) the cost to the municipality of any staff retrenchments or the retention of redundant staff;
(iv) any assets of the municipality to be transferred to the entity;
(v) any assets of the municipality that would become obsolete because of the shifting of that function or service;
(vi) any liabilities of the municipality to be ceded to the entity; and
(vii) any debt of the municipality attributed to that function or service which the municipality would retain.
(i) has, in accordance with section 21A of the Municipal Systems Act –
(aa) made public an information statement setting out the municipality’s plans for the municipal entity together with the assessment which the municipality must conduct in terms of subsection (1); and
(3) For the purposes of this section "establish" includes the acquisition of an interest in a private company that would render that private company a municipal entity.
Part 2: Financial governance
Bank accounts
(a) abroad;
(b) with an institution not registered as a bank in terms of the Banks Act, 1990 (Act No. 94 of 1990);
(c) otherwise than in the name of the entity; and
(d) without the approval of its board of directors.
86.
(1) The accounting officer of a municipal entity must submit to the entity ‘s parent municipality, in writing –(a) within 90 days after the entity has opened a new bank account, the name of the bank where the account has been opened, and the type and number of the account; and
(b) annually before the start of a financial year, the name of each bank where the entity holds a bank account, and the type and number of each account.
(2) The accounting officer of the municipal entity’s parent municipality, or if there are more than one parent municipality, any one of the accounting officers of those municipalities as may be agreed between them, must upon receipt of the information referred to in subsection (1), submit that information to the Auditor-General and the National Treasury, in writing.
87.
(1) The board of directors of a municipal entity must for each financial year submit a proposed budget for the entity to its parent municipality not later than 150 days before the start of the entity’s financial year or earlier if requested by the parent municipality.(2) The parent municipality must consider the proposed budget of the entity and
assess the entity’s priorities and objectives. If the parent municipality makes any recommendations on the proposed budget, the board of directors of the entity must consider those recommendations and, if necessary, submit a revised budget to the parent municipality not later than 100 days before the start of the financial year.
(b) be consistent with any service delivery agreement or other agreement between the entity and the entity’s parent municipality;
(ii) is consistent with the budget and integrated development plan of the entity’s parent municipality;
(iii) is consistent with any service delivery agreement or other agreement between the entity and the entity’s parent municipality; and
(iv) reflects actual and potential liabilities and commitments, including particulars of any proposed borrowing of money during the period to which the plan relates; and
(e) otherwise comply with the requirements of section 17 (1) and (2) to the extent that such requirements can reasonably be applied to the entity.
(8) A municipal entity’s approved budget must be made public in substantially the same way as the budget of a municipality must be made public.
Mid-year budget and performance assessment
88. (1) The accounting officer of a municipal entity must before 31 January of each year –
(a) assess the performance of the entity during the first half of the financial year, taking into account –
(i) the targets set in the service delivery or other agreement with the entity’s parent municipality; and
(ii) the entity’s annual report of the past year, and progress on resolving problems identified in the annual report; and
(b) submit a report on such assessment to –
(i) the board of directors of the entity;
(ii) the parent municipality of the entity;
(iii) the National Treasury; and
(iv) the MEC for local government in the province.
(2) A report referred to in subsection (1) must be made public.
89.
The parent municipality of a municipal entity must –(a) determine the upper limits of the salary, allowances and other benefits of the chief executive officer and senior managers of the entity; and
(b) monitor the cost to the entity of the remuneration packages of the entity’s directors and staff.
90.
(1) A municipal entity may not transfer ownership of or otherwise dispose of a capital asset needed to provide the minimum level of basic municipal services.(2) A municipal entity may transfer ownership or otherwise dispose of a capital asset other than an asset contemplated in subsection (1), but only after the council of its parent municipality, in a meeting open to the public—
(a) has decided on reasonable grounds that the asset is not needed to provide the minimum level of basic municipal services; and
(b) has considered the fair market value of the asset and the economic and community value to be received in exchange for the asset.
(3) A decision by a municipal council that a specific capital asset is not needed to provide the minimum level of basic municipal services may not be reversed by the municipality or municipal entity after that asset has been sold, transferred or otherwise disposed of.
(4) A municipal council may delegate to the accounting officer of a municipal entity its power to make the determinations referred to in subsection (2) (a) and (b) in respect of movable capital assets of the entity below a value determined by the council.
(5) Any transfer of ownership of a capital asset in terms of subsection (2) or (4) must
be fair, equitable, transparent and competitive and consistent with the supply chain management
policy which the municipality or municipal entity must have and maintain in terms of section
111.
(6) This section does not apply to the transfer of a capital asset to a municipality or another municipal entity or to a national or provincial organ of state.
Financial year
91. The financial year of a municipal entity must be the same as that of municipalities.
Audit
92. The Auditor-General must audit and report on the accounts, financial statements and financial management of each municipal entity.
93.
The chief executive officer of a municipal entity appointed in terms of section 94R of the Municipal Systems Act is the accounting officer of the entity.Fiduciary duties of accounting officers
94. (1) The accounting officer of a municipal entity must—
(a) exercise utmost care to ensure reasonable protection of the assets and records of the entity;
(b) act with fidelity, honesty, integrity and in the best interest of the entity in managing the financial affairs of the entity;
(c) disclose to the entity’s parent municipality and the entity’s board of directors, all material facts, including those reasonably discoverable, which in any way may influence the decisions or actions of the parent municipality or the board of directors; and
(d) seek, within the sphere of influence of that accounting officer, to prevent any prejudice to the financial interests of the parent municipality or the municipal entity.
(2) The accounting officer may not –
(a) act in a way that is inconsistent with the responsibilities assigned to accounting officers of municipal entities in terms of this Act; or
(b) use the position or privileges of, or confidential information obtained as accounting officer, for personal gain or to improperly benefit another person.
General responsibilities of accounting officers
95. An accounting officer of a municipal entity is responsible for managing the financial administration of the entity, and must for this purpose take all reasonable steps to ensure—
(a) that the resources of the entity are used effectively, efficiently, economically and transparently;
(b) that full and proper records of the financial affairs of the entity are kept;
(c) that the entity has and maintains effective, efficient and transparent systems—
(i) of financial and risk management and internal control; and
(ii) of internal audit complying with and operating in accordance with any prescribed norms and standards;
(d) that irregular and fruitless and wasteful expenditure and other losses are prevented;
(e) that expenditure is in accordance with the operational policies of the entity; and
(f) that disciplinary or, when appropriate, criminal proceedings are instituted against any official of the entity who has allegedly committed an act of financial misconduct or an offence in terms of Chapter 15.
(a) the assets of the entity, including the safeguarding and maintenance of those assets; and
(2) The accounting officer must, for the purposes of subsection (1), take all
reasonable steps to ensure that the entity has and implements proper asset and liability management systems.
Revenue management
97. The accounting officer of a municipal entity must take all reasonable steps to ensure –
(a) that the entity has and implements effective revenue collection systems to give effect to its budget;
(b) that all revenue due to the entity is collected; and
(c) that any funds collected by the entity on behalf of a municipality –
(i) are transferred to that municipality strictly in accordance with the agreement between the entity the municipality; and
(ii) are not used for the purposes of the entity.
Monthly reconciliation of revenue and accounts
98. The accounting officer of a municipal entity must take all reasonable steps to ensure
that –
(a) all revenue received by the entity, including revenue received by any collecting agency on its behalf, is reconciled on a monthly or more regular basis; and
(b) all accounts of the entity are reconciled each month.
Expenditure management
99. (1) The accounting officer of a municipal entity is responsible for the management of the expenditure of the entity.
(2) The accounting officer must for the purpose of subsection (1) take all reasonable steps to ensure –
(a) that the entity has and implements an effective system of expenditure control;
(b) that all money owing by the entity is paid within an agreed period, or if there is no agreed period, within 30 days of receiving the relevant invoice;
(c) that the entity complies with its tax, levy, duty, pension, medical aid, audit fees and other statutory commitments;
(d) that the entity’s available working capital is managed effectively and economically in terms of any prescribed cash management and investment framework; and
(e) that the entity has and implements a supply chain management system in accordance with Chapter 11.
Budget implementation
100. The accounting officer of a municipal entity is responsible for implementing the entity’s budget, including taking effective and appropriate steps to ensure that –
(a) the spending of funds is in accordance with the budget;
(b) revenue and expenditure are properly monitored; and
(c) spending is reduced as necessary when revenue is anticipated to be less than projected in the budget.
Part 4: Reports and reportable matters
Impending under collection, shortfalls, overspending, overdrafts, and non-payment
101. The accounting officer of a municipal entity must report, in writing, to the council of the entity’s parent municipality any financial problems of the entity, including –
(a) any impending or actual —
(i) under collection of revenue due;
(ii) shortfalls in budgeted revenue;
(iii) overspending of the entity’s budget;
(iv) delay in the entity’s payments to any creditors; or
(v) overdraft in any bank account of the entity for a period exceeding 21 days; and
(b) any steps taken to rectify such financial problems.
Irregular and fruitless and wasteful expenditure
102. (1) On discovery of any irregular expenditure or any fruitless and wasteful
(a) particulars of the expenditure; and
(b) any steps that have been taken—
(i) to recover the expenditure; and
(ii) to prevent a recurrence of the expenditure.
(2) The board of directors of a municipal entity must promptly report to the South African Police Service any—
(a) irregular expenditure that may constitute a criminal offence; and
(b) other losses suffered by the municipal entity which resulted from suspected criminal conduct.
Reporting of improper interference by councillors
103. The accounting officer of a municipal entity must promptly report to the speaker of the council of the entity’s parent municipality any interference by a councillor outside that councillor’s assigned duties, in –
(a) the financial affairs of the municipal entity; or
(b) the responsibilities of the board of directors of the municipal entity.
General reporting obligations
104. (1) The accounting officer of a municipal entity –
(a) is, except where otherwise provided in this Act, responsible for the submission by the entity of all reports, returns, notices and other information to the entity’s parent municipality, as may be required by this Act; and
(b) must submit to the accounting officer of the entity’s parent municipality, the National Treasury, the MEC for local government in the province or the Auditor-General such information, returns, documents, explanations and motivations as may be prescribed or as the parent municipality, the National Treasury, the MEC or the Auditor-General may require.
(2) If the accounting officer of a municipal entity is unable to comply with any of the responsibilities in terms of this Act, he or she must promptly report the inability, together with reasons, to the council of the entity’s parent municipality.
105.
(1) Each official of a municipal entity exercising financial management responsibilities must take all reasonable steps within that official’s area of responsibility to ensure —(a) that the system of financial management and internal control established for the entity is carried out diligently;
(b) that the financial and other resources of the entity are utilised effectively, efficiently, economically and transparently;
(c) that any irregular expenditure, fruitless and wasteful expenditure and other losses are prevented;
(d) that all revenue due to the entity is collected;
(e) that the provisions of this Act to the extent applicable to that official, including any delegations in terms of section 106, are complied with; and
(f) that the assets and liabilities of the entity are managed effectively, and that assets are safeguarded and maintained to the extent necessary.
(2) An official of a municipal entity must perform the functions referred to in
subsection (1) subject to the directions of the accounting officer of the entity.
106.
(1) The accounting officer of a municipal entity –(a) may delegate to an official of that entity –
(i) any of the powers or duties assigned or delegated to the accounting officer in terms of this Act; or
(ii) any powers or duties reasonably necessary to assist the accounting officer in complying with a duty which requires the accounting officer to take reasonable or appropriate steps to ensure the achievement of the aims of a specific provision of this Act; and
(b) must regularly review delegations issued in terms of paragraph (a) and, if necessary, amend or withdraw any of those delegations.
(2) A delegation in terms of subsection (1)—
(a) must be in writing;
(c) may be either to a specific individual or to the holder of a specific post in the municipal entity; and
(d) does not divest the accounting officer of the responsibility concerning the exercise of the delegated power or the performance of the delegated duty.
(3) An accounting officer may confirm, vary or revoke any decision taken by an official in consequence of a delegation in terms of subsection (1), but no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.
107.
The accounting officer and all other financial officials of a municipal entity must meet the prescribed financial management competency levels.Part 6: General
(a) the entity’s multi-year business plan referred to in section 87 (5) (d); and
(b) the provisions of Chapter 6 to the extent that those provisions can be applied to a municipal entity.
(2) In applying Chapter 6 to a municipal entity, a reference in that Chapter to a municipality, a municipal council or an accounting officer, must be read as referring to a municipal entity, the board of directors of a municipal entity or the accounting officer of a municipal entity, respectively.
Financial problems in municipal entities
109. If a municipal entity experiences serious or persistent financial problems and the board of directors of the entity fails to act effectively, the parent municipality must either –
(a) take appropriate steps in terms of its rights and powers over that entity, including its rights and powers in terms of any relevant service delivery or other agreement;
(b) impose a financial recovery plan, which must meet the same criteria set out in section 142 for a municipal financial recovery plan; or
(c) liquidate and disestablish the entity.
CHAPTER 11
GOODS AND SERVICES
Part 1: Supply chain management
110.
(1) This Part, subject to subsection (2), applies to –(a) the procurement by a municipality or municipal entity of goods and services;
(b) the disposal by a municipality or municipal entity of goods no longer needed;
(c) the selection of contractors to provide assistance in the provision of municipal services otherwise than in circumstances where Chapter 8 of the Municipal Systems Act applies; and
(d) the selection of external mechanisms referred to in section 80 (1) (b) of the Municipal Systems Act for the provision of municipal services in circumstances contemplated in section 83 of that Act.
(2) This Part, except where specifically provided otherwise, does not apply if a
municipality or municipal entity contracts with another organ of state for –
(a) the provision of goods or services to the municipality or municipal entity;
(b) the provision of a municipal service or assistance in the provision of a municipal service; or
(c) the procurement of goods and services under a contract secured by that other organ of state, provided that the relevant supplier has agreed to such procurement.
(3) The disposal of goods by a municipality or municipal entity in terms of this Part must be read with sections 14 and 90.
111.
Each municipality and each municipal entity must have and implement a supply chainmanagement policy which gives effect to the provisions of this Part.
Supply chain management policy to comply with prescribed framework
112. (1) The supply chain management policy of a municipality or municipal entity must be fair, equitable, transparent, competitive and cost effective and comply with a prescribed regulatory framework for municipal supply chain management, which must cover at least the following:
(a) the range of supply chain management processes that municipalities and municipal entities may use, including tenders, quotations, auctions and other types of competitive bidding;
(b) when a municipality or municipal entity may or must use a particular type of process;
(c) procedures and mechanisms for each type of process;
(d) procedures and mechanisms for more flexible processes where the value of a contract is below a prescribed amount;
(e) open and transparent pre-qualification processes for tenders;
(f) competitive bidding processes in which only pre-qualified persons may participate;
(g) bid documentation, advertising of and invitations for contracts;
(h) procedures and mechanisms for –
(i) the opening, registering and recording of bids in the presence of interested persons;
(ii) the evaluation of bids to ensure best value for money;
(iii) negotiating the final terms of contracts; and
(iv) the approval of bids;
(i) screening processes and security clearances for prospective contractors on tenders above a prescribed value;
(j) compulsory disclosure of any conflicts of interests prospective contractors may have in specific tenders and the exclusion of such prospective contractors from those tenders;
(k) participation in the supply chain management system of persons who are not officials of the municipality or municipal entity, subject to section 117;
(l) the barring of persons from participating in supply chain management processes, including persons –
(i) who were convicted for fraud or corruption during the past five years;
(ii) who wilfully neglected, reneged on or failed to comply with a government contract during the past five years; or
(iii) whose tax matters are not cleared by South African Revenue Service;
(m) measures for –
(i) combating fraud, corruption, favouratism and unfair and irregular practices in municipal supply chain management; and
(ii) promoting ethics of officials and other role players involved in municipal supply chain management;
(n) the invalidation of recommendations or decisions that were unlawfully or improperly made, taken or influenced, including recommendations or decisions that were made, taken or in any way influenced by –
(i) councillors in contravention of item 5 or 6 of the Code of Conduct for Councillors set out in Schedule 1 to the Municipal Systems Act; or
(ii) municipal officials in contravention of item 4 or 5 of the Code of Conduct for Municipal Staff Members set out in Schedule 2 to that Act;
(o) the procurement of goods and services by municipalities or municipal entities through contracts procured by other organs of state;
(p) contract management and dispute settling procedures; and
(q) the delegation of municipal supply chain management powers and duties, including to officials.
(2) The regulatory framework for municipal supply chain management must be fair, equitable, transparent, competitive and cost effective.
114. (1) If a tender other than the one recommended in the normal course of implementing the supply chain management policy of a municipality or municipal entity is approved, the accounting officer of the municipality or municipal entity must, in writing, notify the Auditor-General, the relevant provincial treasury and the National Treasury and, in the case of a municipal entity, also the parent municipality, of the reasons for deviating from such recommendation.
(2) Subsection (1) does not apply if a different tender was approved in order to rectify an
irregularity.
Implementation of system
115. (1) The accounting officer of a municipality or municipal entity must –
(a) implement the supply chain management policy of the municipality or municipal entity; and
(b) take all reasonable steps to ensure that proper mechanisms and separation of duties in the supply chain management system are in place to minimise the likelihood of fraud, corruption, favouratism and unfair and irregular practices.
(2) No person may impede the accounting officer in fulfilling this responsibility.
Contracts and contract management
116. (1) A contract procured through the supply chain management system of a
municipality or municipal entity must –
(a) be in writing;
(b) stipulate the terms and conditions of the contract, which must include provisions
providing for –
(i) the termination of the contract in the case of non- or under performance;
(ii) dispute resolution mechanisms to settle disputes between the parties;
(iii) a periodic review of the contract once every three years in the case of a contract for longer than three years; and
(iv) any other matters that may be prescribed.
(2) The accounting officer of a municipality or municipal entity must –
(a) take all reasonable steps to ensure that a contract procured through the supply chain management policy of the municipality or municipal entity is properly enforced;
(b) monitor on a monthly basis the performance of the contractor under the contract;
(c) establish capacity in the administration of the municipality or municipal entity –
(i) to assist the accounting officer in carrying out the duties set out in
paragraphs (a) and (b); and
(ii) to oversee the day-to-day management of the contract; and
(d) regularly report to the council of the municipality or the board of directors of the entity, as
may be appropriate, on the management of the contract and the performance of the
contractor.
(3) A contract procured through the supply chain management policy of the
municipality or municipal entity may be amended by the parties, but only after –
(a) the reasons for the proposed amendment have been have been tabled in the council of the municipality or, in the case of a municipal entity, in the council of its parent municipality; and
(b) the local community –
(i) has been given reasonable notice of the intention to amend the contract; and
(ii) has been invited to submit representations to the municipality or entity.
118. No person may –
(a) interfere with the supply chain management system of a municipality or municipal entity; or
(b) amend or tamper with any tender or bid after its submission.
Part 2: Public-private partnerships
Conditions and process for public-private partnerships
120. (1) A municipality may enter into a public-private partnership agreement, but only
if the municipality can demonstrate that the agreement will –
(a) provide value for money to the municipality;
(b) be affordable for the municipality; and
(c) transfer appropriate technical, operational and financial risk to the private party.
(2) A public-private partnership agreement must comply with any prescribed regulatory framework for public-private partnerships.
(3) If the public-private partnership involves the provision of a municipal
(4) Before a public-private partnership is concluded, the municipality must conduct a feasibility study that–
(a) explains the strategic and operational benefits of the public-private partnership for
the municipality in terms of its strategic objectives;
(b) describes in specific terms –
(i) the nature of the private party’s role in the public-private partnership;
(ii) the extent to which this role, both legally and by nature, can be
performed by a private party; and
(iii) how the proposed agreement will –
(aa) provide value for money to the municipality;
(bb) be affordable for the municipality;
(cc) transfer appropriate technical, operational and financial risk to the private
party; and
(dd) impact on the municipality’s revenue flows and its current and future
budgets;
(c) takes into account all relevant information; and
(d) explains the capacity of the municipality to effectively monitor, manage and enforce the agreement.
(5) The national government may assist municipalities in carrying out and assessing
feasibility studies referred to in subsection (4).
(6) When the feasibility study has been completed, the accounting officer of the
municipality must –
(a) submit the report on the feasibility study together with all other relevant documents to the council for a decision, in principle, on whether the municipality should continue with the proposed public-private partnership;
(b) at least 60 days prior to the meeting of the council at which the matter is to be considered, in accordance with section 21A of the Municipal Systems Act –
(i) make public particulars of the proposed public-private partnership, including the report on the feasibility study; and
(7) Part 1 of this Chapter applies to the procurement of public-private partnership agreements. Section 33 also applies if the agreement will have multi-year budgetary implications for the municipality within the meaning of that section.
121.
(1) Every municipality and every municipal entity must for each financial year prepare an annual report in accordance with this Chapter. The council of a municipality must within nine months after the end of that financial year deal with the annual report of the municipality and of any municipal entity under the municipality’s sole or shared control in accordance with section 129.(a) to provide a record of the activities of the municipality or municipal entity during the financial year to which the report relates;
(b) to provide a report on performance against the budget of the municipality or municipal entity for that financial year; and
(c) to promote accountability to the local community for the decisions made throughout the year by the municipality or municipal entity.
(3) The annual report of a municipality must include –
(a) the annual financial statements of the municipality, and in addition, if section 122 (2) applies, consolidated annual financial statements, as submitted to the Auditor-General for audit in terms of section 126 (1);
(c) the annual performance report of the municipality prepared by the municipality in terms of section 46 of the Municipal Systems Act;
(e) an assessment by the municipality’s accounting officer of the municipality’s performance against the measurable performance objectives referred to in section 17 (3) (b) for each vote in the municipality’s approved budget for the relevant financial year;
(f) particulars of any corrective action taken or to be taken in response to issues raised in the audit reports referred to in paragraphs (b) and (d);
(g) any explanations that may be necessary to clarify issues in connection with the financial statements;
(h) any information as determined by the municipality;
(i) any recommendations of the municipality’s audit committee; and
(j) any other information as may be prescribed.
(4) The annual report of a municipal entity must include –
(a) the annual financial statements of the entity, as submitted to the Auditor-General for audit in terms of section 126 (2);
(c) an assessment by the entity’s accounting officer of the entity’s performance against any measurable performance objectives set in terms the service delivery agreement or other agreement between the entity and its parent municipality;
(d) particulars of any corrective action taken or to be taken in response to issues raised in the audit report referred to in paragraph (b);
(e) any information as determined by the entity or its parent municipality;
(f) any recommendations of the audit committee of the entity or its parent municipality; and
(i) any other information as may be prescribed.
122.
(1) Every municipality and every municipal entity must for each financial year prepare annual financial statements which –(a) fairly presents the state of affairs of the municipality or entity, its performance against its budget, its management of revenue, expenditure, assets and liabilities, its business activities, its financial results, and its financial position as at the end of the financial year; and
(b) disclose the information required in terms of sections 123, 124 and 125.
(2) A municipality which has sole control of a municipal entity, must in addition to complying with subsection (1), prepare consolidated annual financial statements incorporating the annual financial statements of the municipality and of such entity. Such consolidated annual financial statements must comply with any requirements as may be prescribed.
(3) Both annual financial statements and consolidated annual financial statements must be prepared in accordance with generally recognised accounting practice prescribed in terms of section 91(1) (b) of the Public Finance Management Act.
Disclosures on intergovernmental and other allocations
123. (1) The annual financial statements of a municipality must disclose information on—
(a) any allocations received by the municipality from –
(i) an organ of state in the national or provincial sphere of government;
(ii) a municipal entity or another municipality;
(b) any allocations made by the municipality to –
(i) a municipal entity or another municipality;
(ii) any other organ of state;
(c) how any allocations referred to in paragraph (a) were spent, per vote, unless
prescribed otherwise because of the nature of the allocation;
(d) whether the municipality has complied with the conditions of –
(i) any allocations made to the municipality in terms of section 214 (1) (c) of the Constitution; and
(ii) any allocations made to the municipality other than by national organs of state;
(e) the reasons for any non-compliance with conditions referred to in paragraph (d); and
(f) whether funds destined for the municipality in terms of the annual Division of Revenue Act were delayed or withheld, and the reasons advanced to the municipality for such delay or withholding.
(2) The annual financial statements of a municipal entity must disclose information on—
(a) any allocations received by the entity from any municipality or other organ of state;
(b) any allocations made by the entity to a municipality or other organ of state; and
(c) any other information as may be prescribed.
Disclosures concerning councillors, officials, etc.
124. (1) The notes to the annual financial statements of a municipality must include particulars of –
(a) the salaries, allowances and benefits of political office-bearers and councillors of the municipality, whether financial or in kind, including a statement by the accounting officer whether or not those salaries, allowances and benefits are within the upper limits of the framework envisaged in section 219 of the Constitution;
(b) any arrears owed by individual councillors to the municipality, or a municipal entity under its sole or shared control, for rates or services and which at any time during the relevant financial year were outstanding for more than 90 days, including the names of those councillors; and
(c) the salaries, allowances and benefits of the municipal manager, every senior manager and such categories of other officials as may be prescribed.
(2) The notes to the annual financial statements of a municipal entity must include particulars of the salaries, allowances and benefits of –
(a) the members of the board of directors of the entity; and
(b) the chief executive officer of the entity, every senior manager and such categories of other officials as may be prescribed.
Other compulsory disclosures
(a) a list of all municipal entities under the sole or shared control of the municipality, as at the last day of the financial year;
(b) the total amount of contributions to organised local government for the financial year, and the amount of any contributions outstanding as at the end of the financial year; and
(c) the total amounts paid in audit fees, taxes, levies, duties and pension and medical aid contributions, and whether any amounts are outstanding as at the end of the financial year.
(2) The notes to the annual financial statements of a municipality or municipal
entity must disclose the following information:
(a) in respect of each bank account held by the municipality or entity during the relevant financial year –
(i) the name of the bank where the account is or was held, and the type of account; and
(ii) year opening and year end balances in each of these bank accounts;
(b) a summary of all investments of the municipality or entity as at the end of the
financial year;
(c) particulars of any contingent liabilities of the municipality or entity as at the end of the
financial year;
(d) particulars of—
(i) any material losses and any material irregular or fruitless and wasteful expenditures, including in the case of a municipality, any material unauthorised expenditure, that occurred during the financial year and whether these are recoverable;
(ii) any criminal or disciplinary steps taken as a result of such losses or such unauthorised, irregular or fruitless and wasteful expenditures; and
(iii) any material losses recovered or written off; and
(e) any other matters that may be prescribed.
126.
(1) The accounting officer of a municipality –(a) must prepare the annual financial statements of the municipality and, within two months after the end of the financial year to which those statements relate, submit the statements to the Auditor-General for auditing; and
(b) must in addition, in the case of a municipality referred to in section 122 (2), prepare consolidated annual financial statements in terms of that section, and within three months after the end of the financial year to which those statements relate, submit the statements to the Auditor-General for auditing.
(2) The accounting officer of a municipal entity must prepare the annual financial statements of the entity and, within two months after the end of the financial year to which those statements relate, submit the statements to –
(a) the parent municipality of the entity; and
(b) the Auditor-General, for auditing.
(3) The Auditor-General must—
(a) audit those financial statements; and
(b) submit an audit report on those statements to the accounting officer of the municipality or entity within three months of receipt of the statements.
(4) If the Auditor-General is unable to complete an audit within three months
of receiving the financial statements from an accounting officer, the Auditor-General must
promptly submit a report outlining the reasons for the delay to the relevant municipality or
municipal entity and to the relevant provincial legislature and Parliament.
(5) Once the Auditor-General has submitted an audit report to the accounting
Submission and tabling of annual reports
127. (1) The accounting officer of a municipal entity must, within six months after the end
of a financial year, or such earlier date as may be agreed between the entity and its parent
municipality, submit the entity’s annual report for that financial year to the municipal manager
of the entity’s parent municipality.
(2) The mayor of a municipality must, within seven months after the end of a
financial year, table in the municipal council the annual report of the municipality and of any municipal entity under the municipality’s sole or shared control.
(3) If the mayor, for whatever reason, is unable to table in the council the annual report of the municipality, or the annual report of any municipal entity under the municipality’s sole or shared control, within seven months after the end of the financial year to which the report relates, the mayor must –
(a) promptly submit to the council a written explanation referred to in section 133 (1) (a) setting out the reasons for the delay, together with any components of the annual report listed in section 121 (3) or (4) that are ready; and
(b) submit to the council the outstanding annual report or the outstanding components of the annual report as soon as may be possible.
(4) The Auditor-General may submit the financial statements and audit report –
(a) of a municipality directly to the municipal council, the National Treasury and the MEC responsible for local government in the province and to any prescribed organ of state, if the mayor fails comply with subsection (2) or (3); or
(b) of a municipal entity directly to the parent municipality, the National Treasury, the MEC responsible for local government in the province or any prescribed organ of state, if the accounting officer of the entity fails comply with subsection (1).
(5) Immediately after an annual report is tabled in the council in terms of subsection (2), the accounting officer of the municipality must—
(a) in accordance with section 21A of the Municipal Systems Act –
(i) make public the annual report; and
(ii) invite the local community to submit representations in connection with the annual report; and
(b) submit the annual report to the Auditor-General and the provincial department responsible for local government matters in the province.
(6) Subsection (5), with the necessary modifications as the context may require, is also applicable if only components of the annual report are tabled in terms of subsection (3).
Compliance to be monitored
128. The accounting officer of the parent municipality must –
(a) monitor whether the accounting officer of any municipal entity under the sole or shared control of the municipality has complied with sections 121 (1) and 126 (2);
(b) establish the reasons for any non-compliance; and
(c) promptly report any non-compliance, together with the reasons for such non-compliance, to the council of the parent municipality, the MEC for local government and the Auditor-General.
(2) The accounting officer must –
(a) attend council and council committee meetings where the annual report is discussed, for the purpose of responding to questions concerning the report; and
(b) submit copies of the minutes of those meetings to the Auditor-General and the relevant provincial department responsible for local government in the province.
(3) The accounting officer must in accordance with section 21A of the Municipal
Systems Act make public an oversight report referred to in subsection (1) within seven days of its adoption.
(6) This section, with the necessary modifications as the context may require, is also applicable if only components of the annual report were tabled in terms of section 127 (3).
(a) for the discussion of any written submissions received from the local community or organs of state on the annual report; and
(2) Representatives of the Auditor-General are entitled to attend, and to speak at, any council meeting referred to in subsection (1).
(3) This section, with the necessary modifications as the context may require, is also applicable if only components of the annual report were tabled in terms of section 127 (3).
Issues raised by Auditor-General in audit reports
(a) assess all annual financial statements of municipalities in the province, the audit reports on such statements and any responses of municipalities to such audit reports, and determine whether municipalities have adequately addressed any issues raised by the Auditor-General in audit reports; and
(b) report to the provincial legislature any omission by a municipality to adequately address those issues within 60 days.
132.
(1) The following documents must be submitted to the provincial legislature:(a) the annual report of each municipality and each municipal entity in the province, or if only components of an annual report were tabled in terms of section 127 (3), those components; and
(b) all oversight reports on those annual reports adopted in terms of section 129 (1).
(2) The accounting officer of a municipality must submit the documents
referred to in subsection (1) (a) and (b) to the provincial legislature within seven days
after the municipal council has adopted the relevant oversight report in terms of section 129 (1).
(3) The MEC responsible for local government in a province must monitor
whether municipalities in the province comply with subsection (2).
Consequences of non-compliance with certain provisions
133. (1) If the accounting officer of a municipality or municipal entity fails to submit financial statements to the Auditor-General in accordance with section 126 (1) or (2), or if the mayor fails to table the annual report of a municipality or municipal entity in the council in accordance with section 127 (2)—
(a) the mayor must promptly table in the council a written explanation setting out the reasons for the failure;
(b) the Auditor-General, in the case of any failure to submit financial statements for auditing, must promptly —
(i) inform the speaker of the council, the National Treasury and the MEC for local government in the province of such failure;
(ii) issue a special report on the failure to the relevant provincial legislature; and
(c) the municipal council –
(i) must request the speaker or any other councillor to investigate the reasons for the failure and report to the council;
(ii) must take appropriate steps to ensure that the financial statements are submitted to the Auditor-General or that the annual report, including the financial statements and the audit report on those statements, is tabled in the council, as the case may be; and
(iii) may order that disciplinary steps be taken against the accounting officer or other person responsible for the failure;
(d) the MEC for local government in the province may intervene in the municipality in terms of section 139 of the Constitution; and
(e) the National Treasury may take appropriate steps against the municipality in terms of section 5 (2) (e).
(2) The Auditor-General must submit to Parliament and the provincial
legislatures –
(a) by no later than 31 October of each year, the names of any municipalities or municipal entities which have failed to submit their financial statements to the Auditor-General in terms of section 126; and
(b) at quarterly intervals thereafter, the names of any municipalities or municipal entities whose financial statements are still outstanding at the end of each interval.
134.
The Cabinet member responsible for local government must annually report to Parliament on actions taken by MECs for local government to address issues raised by the Auditor-General in audit reports on financial statements of municipalities and municipal entities.
RESOLUTION OF FINANCIAL PROBLEMS
Part 1: Identification of financial problems
Primary responsibility for resolution of financial problems
135.
municipality rests with the municipality itself.
(3) If a municipality encounters a serious financial problem or anticipates problems in meeting its financial commitments it must immediately –
(a) seek solutions for the problem;
(b) notify the MEC for local government in the province; and
(c) notify organised local government.
Types of provincial interventions
136.
(1) If the MEC for local government in a province becomes aware that there is a serious financial problem in a municipality, the MEC must promptly –(a) consult the mayor of the municipality to determine the facts;
(b) assess the seriousness of the situation and the municipality’s response to the situation; and
(c) determine whether the situation justifies or requires an intervention in terms of section 139 of the Constitution.
(2) If the financial problem has been caused by or resulted in a failure by the municipality to comply with an executive obligation in terms of legislation or the Constitution and the conditions for an intervention in terms of section 139 (1) of the Constitution are met, the provincial executive must promptly decide whether or not to intervene in the municipality. If the provincial executive decides to intervene, section 137 applies.
(3) If the municipality has failed to approve a budget or any revenue raising measures necessary to give effect to the budget, as a result of which the conditions for an intervention in terms of section 139 (4) of the Constitution are met, the provincial executive must intervene in the municipality in accordance with section 26.
(4) If the municipality, as a result of a crisis in its financial affairs, is in serious or persistent material breach of its obligations to provide basic services or to meet its financial commitments, or admits that it is unable to meet its obligations or financial commitments, as a result of which the conditions for an intervention in terms of section 139 (5) of the Constitution are met, the provincial executive must intervene in the municipality in accordance with section 139.
Discretionary provincial interventions
137. (1) If the conditions for a provincial intervention in a municipality in terms of section 139 (1) of the Constitution are met and the provincial executive decides in terms of section 136 (2) of this Act to intervene in the municipality, the provincial executive may take any appropriate steps referred to in section 139 (1) of the Constitution, including –
(a) assessing the seriousness of the financial problem in the municipality;
(b) seeking solutions to resolve the financial problem in a way that would be
sustainable and would build the municipality’s capacity to manage its own financial affairs;
(c) determining whether the financial problem, singly or in combination with other problems, is sufficiently serious or sustained that the municipality would benefit from a financial recovery plan and, if so, requesting any suitably qualified person –
(i) to prepare an appropriate financial recovery plan for the municipality;
(ii) to recommend appropriate changes to the municipality’s budget and revenue raising measures that will give effect to the recovery plan; and
(iii) to submit the recovery plan and any recommendations referred to in subparagraphs (i) and (ii) to the MEC for local government in the province within a period determined by the MEC; and
(d) consulting the mayor of the municipality to obtain the municipality’s co-operation in resolving the financial problem, and if applicable, implementing the financial recovery plan.
determination in terms of subsection (1) (c) and a copy of any request in terms of subsection (1) (c) to the municipality and the Cabinet member responsible for local government.
financial problem in a municipality.
138. When determining for the purposes of section 137, the seriousness of a financial problem, all relevant facts must be considered, and the following factors, singly or in combination, may indicate a serious financial problem:
(c) the actual current expenditure of the municipality has exceeded the sum of its actual current revenue plus available surpluses for at least two consecutive financial years;
(d) the municipality had an operating deficit in excess of five per cent of revenue in the most recent financial year for which financial information is available;
(e) the municipality is more than 60 days late in submitting its annual financial statements to the Auditor-General in accordance with section 126;
(f) the Auditor-General has withheld an opinion or issued a disclaimer due to inadequacies in the financial statements or records of the municipality, or has issued an opinion which identifies a serious financial problem in the municipality;
(g) any of the above conditions exists in a municipal entity under the municipality’s sole control, or in a municipal entity for whose debts the municipality may be responsible, and the municipality has failed to intervene effectively; or
(h) any other material condition exists which indicates that the municipality, or a municipal entity under the municipality’s sole control, is likely to be unable for financial reasons to meet its obligations.
139.
(1) If a municipality, as a result of a crisis in its financial affairs, is in serious or persistent material breach of its obligations to provide basic services or to meet its financial commitments, or admits that it is unable to meet its obligations or financial commitments, the provincial executive must promptly –(a) request the Municipal Financial Recovery Service –
(i) to determine the reasons for the crisis in its financial affairs;
(ii) to assess the municipality’s financial state;
(iii) to prepare an appropriate recovery plan for the municipality;
(iv) to recommend appropriate changes to the municipality’s budget and revenue raising measures that will give effect to the recovery plan; and
(v) to submit to the MEC for local government in the province –
(aa) the determination and assessment referred to in subparagraphs (i) and (ii) as a matter of urgency; and
(bb) the recovery plan and recommendations referred to in subparagraphs (iii) and (iv) within a period, not to exceed 90 days, determined by the MEC; and
(b) consult the mayor of the municipality to obtain the municipality’s co-operation in implementing the recovery plan, including the approval of a budget and legislative measures giving effect to the recovery plan.
(2) The MEC for local government in the province must submit a copy of any request
in terms of subsection (1) (a) and of any determination and assessment received in terms of subsection (1) (a) (v) (aa) to –
(a) the municipality;
(b) the Cabinet member responsible for local government; and
(c) the Minister.
(3) An intervention referred to in subsection (1) supersedes any discretionary provincial intervention referred to in section 137, provided that any financial recovery plan prepared for the discretionary intervention must continue until replaced by a recovery plan for the mandatory intervention.
Criteria for determining serious or persistent material breach of financial commitments
140. (1) When determining whether the conditions for a mandatory intervention referred to in section 139 are met, all relevant facts must be considered.
(2) The following factors, singly or in combination, may indicate that a municipality is in serious material breach of its obligations to meet its financial commitments:
(a) the municipality has failed to make any payment to a lender or investor as and when due;
(b) the municipality has failed to meet a contractual obligation which provides security in terms of section 48;
(c) the municipality has failed to make any other payment as and when due, which individually or in the aggregate is more than an amount as may be prescribed or, if none is prescribed, more than two per cent of the municipality’s budgeted operating expenditure; or
(d) the municipality’s failure to meet its financial commitments has impacted, or is likely to impact, on the availability or price of credit to other municipalities.
(3) Any recurring or continuous failure by a municipality to meet its financial commitments which substantially impairs the municipality’s ability to procure goods, services or credit on usual commercial terms, may indicate that the municipality is in persistent material breach of its obligations to meet its financial commitments.
(4) Subsections (2) and (3) do not apply to –
(a) disputed obligations as to which there are pending legal actions between the municipality and the creditor, provided that such actions are not instituted to avoid an intervention; or
(b) obligations explicitly waived by the creditor.
141.
(1) Any suitably qualified person may, on request by the provincial executive, prepare a financial recovery plan for a discretionary provincial intervention referred to in section 137.(2) Only the Municipal Financial Recovery Service may prepare a financial recovery plan for a mandatory provincial intervention referred to in section 139.
(3) When preparing a financial recovery plan, the person referred to in subsection (1) or the Municipal Financial Recovery Service must –
(a) consult –
(i) the relevant municipality;
(ii) the municipality’s principal suppliers and creditors, to the extent they can reasonably be contacted;
(iii) the MEC for local government in the province; and
(iv) organised labour;
(b) take into account –
(c) at least 14 days before finalising the plan –
(i) submit the plan for comment to –
(aa) the municipality;
(ee) any supplier or creditor of the municipality, on request; and
(ii) publish a notice in a newspaper of general circulation in the municipality –
(aa) stating the place, including any website address, where copies of the plan will be available to the public free of charge or at a reasonable price; and
(bb) inviting the local community to submit written comments in respect of the plan.
(4) The person charged with preparing the financial recovery plan or the Municipal Financial Recovery Service must –
(a) consider any comments received pursuant to subsection (3) (c);
(b) finalise the financial recovery plan; and
(c) submit the final plan to the MEC for local government in the province for approval in terms of section 143.
Criteria for financial recovery plans
142. (1) A financial recovery plan must be aimed at securing the municipality’s ability to meets its obligations to provide basic services or its financial commitments, and such a plan, whether for a mandatory or discretionary intervention –
(a) must –
(i) identify the financial problems of the municipality;
(ii) be designed to place the municipality in a sound and sustainable financial condition as soon as possible;
(iii) state the principal strategic objectives of the plan, and ways and means for achieving those objectives;
(iv) set out a specific strategy for addressing the municipality’s financial problems, including a strategy for reducing unnecessary expenditure and increasing the collection of revenue, as may be necessary;
(v) identify the human and financial resources needed to assist in resolving financial problems, and where those resources are proposed to come from;
(vi) describe the anticipated time frame for financial recovery, and milestones to be achieved; and
(vii) identify what actions are necessary for the implementation of the plan, distinguishing between actions to be taken by the municipality and actions to be taken by other parties; and
(b) may –
(i) provide for the liquidation of specific assets, excluding those needed for the provision of the minimum level of basic municipal services;
(ii) provide for debt restructuring or debt relief in accordance with Part 3 of this Chapter;
(iii) provide for special measures to prevent unauthorised, irregular and fruitless and wasteful expenditures and other losses; and
(iv) identify any actual and potential revenue sources.
(2) In addition, a financial recovery plan –
(a) for a mandatory intervention must –
(i) set spending limits and revenue targets;
(ii) provide budget parameters which bind the municipality for a specified period or until stated conditions have been met; and
(iii) identify specific revenue raising measures that are necessary for financial recovery, including the rate at which any municipal tax and tariffs must be set to achieve financial recovery; and
(b) for a discretionary intervention may suggest for adoption by the municipality –
(i) spending limits and revenue targets;
(ii) budget parameters for a specified period or until stated conditions have been met; and
(iii) specific revenue raising measures that are necessary for financial recovery.
Approval of financial recovery plans
143. (1) On receipt of a financial recovery plan pursuant to a discretionary intervention referred to in section 137, the MEC for local government in the province may approve the recovery plan with or without amendments, as the MEC considers appropriate.
(2) On receipt of a financial recovery plan pursuant to a mandatory intervention referred to in section 139, the MEC for local government must verify that the process set out in section 141 has been followed and that the criteria contained in section 142 are met, and –
(a) if so, approve the recovery plan; or
(b) if not, direct what defects must be rectified.
(3) The MEC must submit an approved recovery plan to –
(a) the municipality;
(b) the Minister and the Cabinet member responsible for local government;
(c) the Auditor-General; and
(d) organised local government in the province.
Amendment of financial recovery plans
144. (1) The MEC for local government in the province may at any time, but subject to section 141 (1) and (2), request any suitably qualified person or the Municipal Financial Recovery Service to prepare an amended financial recovery plan in accordance with the directions of the MEC.
(2) Section 141, read with such changes as the context may require, apply to the amendment of a financial recovery plan in terms of this section.
(3) No amendment of a recovery plan may impede the implementation of any court order made or agreement reached in terms of the plan before the amendment.
Implementation of financial recovery plans in discretionary provincial interventions
145. (1) If the financial recovery plan was prepared in a discretionary provincial intervention referred to in section 137, the municipality must –
(b) report monthly to the MEC for local government in the province on the implementation of the plan, in such manner as the plan may determine.
(2) The financial recovery plan binds the municipality in the exercise of its executive authority, but only to the extent to resolve the financial problems of the municipality.
Implementation of financial recovery plans in mandatory provincial interventions
146. (1) If the recovery plan was prepared in a mandatory provincial intervention referred to in section 139 –
(a) the municipality must implement the approved recovery plan;
(b) all revenue, expenditure and budget decisions must be taken within the framework of, and subject to the limitations of, the recovery plan; and
(c) the municipality must report monthly to the MEC for local government in the province on the implementation of the plan in such manner as the plan may determine.
(2) The financial recovery plan binds the municipality in the exercise of both its
Regular review of provincial interventions
147. (1) The MEC for local government in a province must at least every three months –
(a) review any discretionary provincial intervention referred to in section 137 or
any mandatory provincial intervention referred to in section 139, including –
(i) progress with resolving the municipality’s financial problems and its financial recovery; and
(ii) the effectiveness of any financial recovery plan; and
(i) the municipality;
(ii) the Minister;
(iii) the Cabinet member responsible for local government;
(iv) the provincial legislature; and
(v) organised local government in the province.
(2) The MEC may request the person who prepared the recovery plan, or the
Municipal Financial Recovery Service, to assist the MEC in complying with subsection (1).
148.
(1) A discretionary intervention referred to in section 137 must end –(a) if it is terminated in terms of section 139 (2) (b) of the Constitution; or
(b) when –
(i) the municipality is able and willing to fulfil the executive obligation in terms of legislation or the Constitution that gave rise to the intervention; and
(ii) the financial problem that has been caused by or has caused the failure by the municipality to comply with that obligation is resolved.
(2) A mandatory intervention referred to in section 139 must end when –
(a) the crisis in the municipality’s financial affairs has been resolved; and
(b) the municipality’s ability to meet its obligations to provide basic services or its financial
commitments is secured.
(3) When a provincial intervention ends, the MEC for local government in a
province must notify –
(a) the municipality;
(b) the Minister, in the case of a mandatory intervention;
(c) the Cabinet member responsible for local government;
(d) any creditors having pending litigation against the municipality;
(e) the provincial legislature; and
(f) organised local government in the province.
Access to information, records and documents of municipalities
149. If a provincial executive intervenes in a municipality in terms of section 139
of the Constitution, the provincial executive and its representatives have access to such information, records and documents of the municipality or of any municipal entity under the sole or shared control of the municipality as may be necessary for the intervention, including for identifying or resolving the financial problem of the municipality.
National interventions
150. (1) If the conditions for a provincial intervention in a municipality in terms of section 139 (4) or (5) of the Constitution are met and the provincial executive cannot or does not or does not adequately exercise the powers or perform the functions referred to in that section, the national executive must –
(2) If the national executive intervenes in a municipality in terms of subsection (1) –
(a) the national executive assumes for the purposes of the intervention the functions and powers of a provincial executive in terms of this Chapter;
(b) the Minister assumes for the purposes of the intervention the functions and powers of an MEC for local government in terms of this Chapter; and
(c) a reference in this Chapter –
(i) to a provincial executive must be read as a reference to the national executive;
(ii) to an MEC for local government must be read as a reference to the Minister; and
(iii) to a provincial intervention must be read as a reference to a national intervention.
Part 3: Debt relief and restructuring
Legal rights
151. Except as expressly provided for in this Part, nothing in this Chapter limits or affects –
(a) the rights of any creditor or other person having a claim against a municipality;
(b) any person’s access to ordinary legal process in accordance with the common law and relevant legislation; or
(c) the rights of a municipality or municipal entity, or of the parties to a contract with a municipality or municipal entity, to alternative dispute resolution mechanisms, notice procedures and other remedies, processes or procedures.
Application for stay of legal proceedings
152. (1) If a municipality is unable to meet its financial commitments it may apply to the High Court for an order to stay, for a period not exceeding 90 days, all legal proceedings, including the execution of legal process, by persons claiming money from the municipality or a municipal entity under the sole control of the municipality.
(c) the Cabinet member responsible for local government;
(d) organised local government; and
(e) to the extent that they can reasonably be contacted, all persons to whom the municipality or the municipal entity owes an amount in excess of a prescribed amount, or if no amount is prescribed, in excess of R100 000.
(3) An application in terms of subsection (1) may for the purposes of section 139 (5) of the Constitution be regarded as an admission by the municipality that it is unable to meet its financial commitments.
Application for extraordinary relief
153. (1) A municipality may apply to the High Court for an order –
(a) to stay, for a period not exceeding 90 days at a time, all legal proceedings, including the execution of legal process, by persons claiming money from the municipality;
(b) to suspend the municipality’s financial obligations to creditors, or any portion of those obligations, until the municipality can meet those obligations; or
(c) to terminate the municipality’s financial obligations to creditors, and to settle claims in accordance with a distribution scheme referred to in section 155.
(2) The Court may make an order in terms of subsection (1) only if –
(a) the provincial executive has intervened in terms of section 139 and a financial recovery plan to restore the municipality to financial health has been approved for the municipality;
(b) the financial recovery plan is likely to fail without the protection of such an order;
(c) section 154 has been complied with, in the case of an application for an order referred to in subsection (1) (b); and
(d) section 155 (1) has been complied with, in the case of an application for an order referred to in subsection (1) (c).
(3) Notice of an application in terms of subsection (1) must be given to –
(a) all creditors to whom the municipality owes an amount in excess of a prescribed amount, or if no amount is prescribed, in excess of R100 000, in so far as those creditors can reasonably be contacted;
(b) the municipality;
(c) the MEC for local government in the province;
(d) the Minister;
(e) the Cabinet member responsible for local government; and
(f) organised labour.
Suspension of financial obligations
154. Before issuing an order in terms of section 153 (1) (b) for the suspension of a municipality’s financial obligations to creditors, the court must be satisfied that –
(b) all assets not reasonably necessary to sustain effective administration or to provide the minimum level of basic municipal services have been or are to be liquidated in accordance with the approved financial recovery plan for the benefit of meeting creditors’ claims.
Termination of financial obligations and settlement of claims
155. (1) Before issuing an order for the termination of a municipality’s financial obligations to creditors in terms of section 153 (1) (c), the court must be satisfied that –
(a) the municipality cannot meet its financial obligations to its creditors and is not likely to be able to do so in the foreseeable future;
(b) all assets not reasonably necessary to sustain effective administration or to provide the minimum level of basic municipal services have been liquidated in accordance with the approved financial recovery plan for the benefit of meeting creditors’ claims; and
(c) all employees have been discharged except those affordable in terms of reasonably projected revenues as set out in the approved financial recovery plan.
(2) If the court issues an order referred to subsection (1), the MEC for local government in the province must appoint a trustee to prepare a distribution scheme for the proportional settlement of all legitimate claims against the municipality as at the date of the order. Those claims must be settled against the amount realised from the liquidation of assets referred to in subsection (1) (b).
(3) A distribution scheme must –
(a) determine the amount available for distribution;
(b) list all creditors with claims which qualify for the purposes of a distribution scheme, indicating which of those are secured and the manner in which they are secured; and
(c) provide for the distribution of the amount available amongst creditors in the following order of preference:
(i) first preference must be given to the rights of secured creditors as to the assets with which they are secured in terms of section 48, provided the security in question was given in good faith and at least six months before the mandatory provincial intervention in terms of section 139 began;
(ii) thereafter the preferences provided for in the Insolvency Act, 1936 (Act No. 24 of 1936), read with the necessary changes as the context may require, must be applied; and
(iii) thereafter non-preferent claims must be settled in proportion to the amount of the different claims.
(4) A distribution scheme may not be implemented unless approved by the court.
Matters to be prescribed
(a) provide for an equitable process for the recognition of claims against a municipality for the purposes of sharing in a distribution scheme, provided that rejection of any claim does not prevent a creditor from proving the claim in a court; and
(b) provide for public access to a distribution scheme.
Part 4: Municipal Financial Recovery Service
Establishment
157. (1) A Municipal Financial Recovery Service is hereby established as an
institution within the public service.
(2) The Municipal Financial Recovery Service forms part of, and functions within, the National Treasury.
Functions and powers
158. The Municipal Financial Recovery Service –
(a) must perform the duties and may exercise the powers assigned to the Service in terms of this Act;
(b) may, on request by an MEC for local government, prepare a financial recovery plan for a municipality or, with the approval of the Director-General of the National Treasury, instruct any suitably qualified person to prepare the plan in accordance with the directions of the Service;
(c) may, at the request of the MEC for local government in the province, monitor the implementation of any financial recovery plans that it has prepared, and may recommend such amendments and revisions as are appropriate;
(d) may on request by any municipality that is experiencing financial problems, and in co-ordination with any other provincial or national efforts, assist the municipality to identify the causes of, and potential solutions for, these financial problems;
(e) may, with the approval of the Director-General of the National Treasury, obtain the services of any financial expert to perform any specific work for the Service; and
(f) may collect information on municipal financial problems and on best practices in resolving such problems.
Appointment of Head
159. (1) The Minister must appoint a person as the Head of the Service, subject to subsection (2) and legislation governing the public service.
(2) A person appointed as the Head of the Service holds office in the
National Treasury on terms and conditions set out in a written employment contract which must
include terms and conditions setting performance standards.
Responsibilities of Head
160. (1) The Head of the Service –
(a) is responsible for the performance by the Service of its functions and the
exercise of its powers; and
(b) takes all decisions of the Service in the performance of its functions and the exercise of its powers, except those decisions of the Service taken in consequence of a delegation in terms of section 162.
(2) The Head of the Service performs the functions of office subject
to the directions of the Director-General of the National Treasury.
Staff
161. The staff of the Municipal Financial Recovery Service consists of –
(a) the Head of the Service;
(b) persons in the service of, or contracted by, the National Treasury and designated by the
Director-General of the National Treasury for the work of the Service; and
(c) persons seconded from an organ of state or organisation to the Service by agreement between the Director-General and that organ of state or organisation.
Delegations
162. (1) The Head of the Service may delegate, in writing, any of the powers or duties of the Service to a member of the staff of the Service.
(2) A delegation in terms of subsection (1) –
(a) must be in writing;
(b) is subject to the limitations or conditions which the Head of the Service
may impose; and
(c) does not divest the Head of the Service of the responsibility concerning the
exercise of the delegated power or the performance of the delegated duty.
(3) The Head of the Service may confirm, vary or revoke any decision taken in consequence of a delegation in terms of subsection (1), provided that no such variation or revocation of a decision may detract from any rights that may have accrued as a result of the decision.
(2) The internal audit unit of a municipality or municipal entity must –
(a) prepare a risk based audit plan and an internal audit program for each financial year;
(b) advise the accounting officer and report to the audit committee on the implementation of the internal audit plan and matters relating to –
(i) internal audit;
(ii) internal controls;
(iii) accounting procedures and practices;
(iv) risk and risk management;
(v) performance management;
(vi) loss control; and
(vii) compliance with this Act, the annual Division of Revenue Act and any other applicable legislation; and
(c) perform such other duties as may be assigned to it by the accounting officer.
(3) The internal audit function referred to in subsection (2) may be outsourced if the municipality or municipal entity requires assistance to develop its internal capacity and the council of the municipality or the board of directors of the entity has determined that this is feasible or cost-effective.
166.
(1) Each municipality and each municipal entity must have an audit committee, subject to subsection (6).(2) An audit committee is an independent advisory body which must –
(a) advise the municipal council, the political office-bearers, the accounting officer and the management staff of the municipality, or the board of directors, the accounting officer and the management staff of the municipal entity, on matters relating to –
(i) internal financial control and internal audits;
(ii) risk management;
(iii) accounting policies;
(iv) the adequacy, reliability and accuracy of financial reporting and information;
(v) performance management;
(vi) effective governance;
(vii) compliance with this Act, the annual Division of Revenue Act and any other applicable legislation;
(viii) performance evaluation; and
(ix) any other issues referred to it by the municipality or municipal entity;
(b) review the annual financial statements to provide the council of the municipality or, in the case of a municipal entity, the council of the parent municipality and the board of directors of the entity, with an authoritative and credible view of the financial position of the municipality or municipal entity, its efficiency and effectiveness and its overall level of compliance with this Act, the annual Division of Revenue Act and any other applicable legislation;
(c) respond to the council on any issues raised by the Auditor-General in the audit report;
(d) carry out such investigations into the financial affairs of the municipality or municipal entity as the council of the municipality, or in the case of a municipal entity, the council of the parent municipality or the board of directors of the entity, may request; and
(e) perform such other functions as may be prescribed.
(3) In performing its functions, an audit committee –
(a) has access to the financial records and other relevant information of the municipality or municipal entity; and
(b) must liaise with –
(i) the internal audit unit of the municipality; and
(ii) the person designated by the Auditor-General to audit the financial statements of the municipality or municipal entity.
(4) An audit committee must—
(a) consist of at least three persons with appropriate experience of whom the majority may not be in the employ of the municipality or municipal entity, as the case may be; and
(b) meet as often as is required to perform its functions, but at least four times a year.
(5) The members of an audit committee must be appointed by the council of
the municipality or, in the case of a municipal entity, by the council of the parent
municipality. One of the members who is not in the employ of the municipality or municipal
entity must be appointed as the chairperson of the committee. No councillor may be a member of
an audit committee
(6) A single audit committee may be established for—
(a) a district municipality and the local municipalities within that district municipality; and
(b) a municipality and municipal entities under its sole control.
(2) Any remuneration paid or given in cash or in kind to a person as a political office-bearer or as a member of a political structure of a municipality otherwise than in accordance with subsection (1), including any bonus, bursary, loan, advance or other benefit, is an irregular expenditure, and the municipality –
(a) must, and has the right to, recover that remuneration from the political office-bearer or member; and
(b) may not write-off any expenditure incurred by the municipality in paying or giving that remuneration.
(3) The MEC for local government in a province must report to the provincial legislature –
(a) any transgressions of subsection (1); and
(b) any non-compliance with sections 17 (3) (k) (i) and (ii) and 122 (l) (a).
168.
(1) The Minister, acting with the concurrence of the Cabinet member responsible for local government, may make regulations or guidelines applicable to municipalities and municipal entities, regarding—(a) any matter that may be prescribed in terms of this Act;
(b) financial management and internal control;
(c) a framework for regulating the exercise of municipal fiscal and tariff fixing
powers;
(d) a framework regulating the financial commitments of municipalities and municipal entities in terms of public private partnership agreements;
(e) the establishment by municipalities of, and control over –
(i) municipal entities; and
(ii) business units contemplated in section 76 (a) (ii) of the Municipal Systems Act;
(f) the safe-guarding of the financial affairs of municipalities and of municipal entities when assets, liabilities or staff are transferred from or to a municipality or a municipal entity;
(i) the information to be disclosed when municipalities or municipal entities issue or incur debt and the manner in which such information must be disclosed, including by way of a prospectus or other document;
(j) the circumstances under which further or specific disclosures are required after money has been borrowed by a municipality or municipal entity;
(k) the circumstances under which documentation or information pertaining to municipal debt must be lodged or registered;
(l) the establishment of a registry for the registration of documentation and information pertaining to municipal borrowing;
(m) the settlement of claims against a municipality following an order of court in terms of section 153;
(n) the information that must be placed on the websites of municipalities;
(o) a framework regulating investments by municipal entities; and
(p) any other matter that may facilitate the enforcement and administration of this Act.
(2) A regulation or guideline in terms of this section may—
(a) differentiate between different—
(i) kinds of municipalities, which may, for the purposes of this section, be defined either in relation to categories, types or budgetary size of municipalities or in any other manner;
(ii) categories of municipal entities;
(iii) categories of accounting officers; or
(iii) categories of officials; or
(b) be limited in its application to a particular—
(i) kind of municipality, which may, for the purposes of this section, be defined either in relation to a category, type or budgetary size of municipality or in any other manner;
(ii) category of municipal entities;
(iii) category of accounting officers; or
(iv) category of officials.
Consultative processes before promulgation of regulations
169. (1) Before regulations in terms of section 168 are promulgated, the Minister must –
(a) consult organised local government on the substance of those regulations; and
(b) publish the draft regulations in the Government Gazette for public comment.
(2) Regulations made in terms of section 168 must be submitted to Parliament for
parliamentary scrutiny at least 30 days before their promulgation.
170.
(1) The National Treasury may on good grounds approve a departure from a treasury regulation or from any condition imposed in terms of this Act.(2) Non-compliance with a regulation made in terms of section 168, or with a condition imposed by the National Treasury in terms of this Act, may on good grounds shown be condoned by the Treasury.
Part 1: Disciplinary proceedings
171.
(1) The accounting officer of a municipality commits an act of financial misconduct if that accounting officer deliberately or negligently—(a) contravenes a provision of this Act;
(b) fails to comply with a duty imposed by a provision of this Act on the accounting officer of a municipality;
(c) makes or permits, or instructs another official of the municipality to make, an unauthorised, irregular or fruitless and wasteful expenditure; or
(2) The chief financial officer of a municipality commits an act of financial misconduct if that officer deliberately or negligently—
(a) fails to carry out a duty delegated to that officer in terms of section 79 or 81 (1) (e);
(b) contravenes or fails to comply with a condition of any delegation of a power or duty in terms of section 79 or 81 (1) (e);
(c) makes or permits, or instructs another official of the municipality to make, an unauthorised, irregular or fruitless and wasteful expenditure; or
(d) provides incorrect or misleading information to the accounting officer for the purposes of a document referred to in subsection (1)(d).
(3) A senior manager or other official of a municipality exercising financial management responsibilities and to whom a power or duty was delegated in terms of section 79, commits an act of financial misconduct if that senior manager or official deliberately or negligently –
(a) fails to carry out the delegated duty;
(b) contravenes or fails to comply with a condition of the delegated power or duty;
(c) makes an unauthorised, irregular or fruitless and wasteful expenditure; or
(d) provides incorrect or misleading information to the accounting officer for the purposes of a document referred to in subsection (1)(d).
172.
(1) The accounting officer of a municipal entity commits an act of financial misconduct if that accounting officer deliberately or negligently—(a) contravenes a provision of this Act;
(b) fails to comply with a duty imposed by a provision of this Act on the accounting officer of a municipal entity;
(c) makes or permits, or instructs another official of the municipal entity to make, an irregular or fruitless and wasteful expenditure; or
(d) provides incorrect or misleading information in any document which in terms of this Act must be –
(i) submitted to the entity’s board of directors or parent municipality or to the Auditor-General; or
(ii) made public.
(2) A senior manager or other official of a municipal entity exercising financial management responsibilities and to whom a power or duty was delegated in terms of section 106, commits an act of financial misconduct if that senior manager or official deliberately or negligently –
(a) fails to carry out the delegated duty;
(b) contravenes or fails to comply with a condition of the delegated power or duty;
(c) makes an irregular or fruitless and wasteful expenditure; or
(d) provides incorrect or misleading information to the accounting officer for the purposes of a document referred to in subsection (1)(d).
(b) deliberately misleads or withholds information from the Auditor-General on any bank accounts of the municipality or on money received or spent by the municipality; or
(b) deliberately misleads or withholds information from the Auditor-General or the entity’s parent municipality on any bank accounts of the municipal entity or on money received or spent by the entity; or
(3) A senior manager or other official of a municipality or municipal entity exercising financial management responsibilities and to whom a power or duty was delegated in terms of section 79 or 106, is guilty of an offence if that senior manager or official deliberately or in a grossly negligent way contravenes or fails to comply with a condition of the delegation.
(4) A councillor of a municipality is guilty of an offence if that councillor—
(a) deliberately influences or attempts to influence the accounting officer, the chief financial officer, a senior manager or any other official of the municipality to contravene a provision of this Act or to refrain from complying with a requirement of this Act;
(b) interferes in the financial management responsibilities and functions assigned in terms of this Act to the accounting officer of the municipality or delegated to the chief financial officer of the municipality in terms of this Act;
(c) interferes in the financial management responsibilities and functions assigned in terms of this Act to the accounting officer of a municipal entity under the sole or shared control of the municipality; or
(d) interferes in the management or operational activities of a municipal entity under the sole or shared control of the municipality.
(5) A councillor, an official of a municipality or municipal entity, a member of the board of directors of a municipal entity or any other person is guilty of an offence if that person deliberately or in a grossly negligent way —
(a) impede an accounting officer from complying with a provision of this Act;
(b) gives incorrect, untrue or misleading information material to an investment decision relating to borrowing by a municipality or municipal entity;
(c) makes a withdrawal in contravention of section 11;
(e) contravenes a provision of section 115 (2), 118 or 126 (5).
(f) provides false or misleading information for the purposes of any document which must in terms of a requirement of this Act be –
(i) submitted to the council, mayor or accounting officer of a municipality or to the Auditore-General or the National Treasury; or
(ii) made public.
Penalties
174. A person is liable on conviction of an offence in terms of section 173 to imprisonment for a period not exceeding five years or to an appropriate fine determined in terms of applicable legislation.
175.
(1) The Minister, acting with the concurrence of the Cabinet member responsible for local government, may make regulations prescribing—(a) the manner, form and circumstances in which allegations and disciplinary and criminal charges of financial misconduct must be reported to the National Treasury, the MEC for local government in the province and the Auditor-General, including—
(i) particulars of the alleged financial misconduct; and
(ii) steps taken in connection with such financial misconduct;
(b) matters relating to internal investigations by municipalities and municipal entities of allegations of financial misconduct;
(c) the circumstances in which the National Treasury or the MEC for local government in the province may direct that disciplinary steps be taken or criminal charges be laid against a person for financial misconduct;
(d) criteria for the composition and functioning of a disciplinary board which hears a charge of financial misconduct;
(e) the circumstances in which the findings of a disciplinary board and any sanctions imposed by the board must be reported to the National Treasury, the MEC for local government in the province and the Auditor-General; and
(f) any other matters to the extent necessary to enforce the provisions of this Act.
(2) A regulation in terms of subsection (1) may—
(i) kinds of municipalities, which may, for the purposes of this section, be defined either in relation to categories, types or budgetary size of municipalities or in any other manner;
(ii) categories of municipal entities;
(iii) categories of accounting officers; or
(iv) categories of other officials; or
(b) be limited in its application to a particular—
(i) kind of municipality, which may, for the purposes of this section, be defined either in relation to a category, type or budgetary size of municipality or in any other manner;
(ii) category of municipal entities;
(iii) category of accounting officers; or
(iv) category of other officials.
176.
(1) No municipality or any of its political structures, political office-bearers or officials, no municipal entity or its board of directors or any of its directors or officials, and no other organ of state or person exercising a power or performing a function in terms of this Act, is liable in respect of any loss or damage resulting from the exercise of that power or the performance of that function in good faith.(2) Without limiting liability in terms of the common law or other legislation, a municipality may recover from a political office-bearer or official of the municipality, and a municipal entity may recover from a director or official of the entity, any loss or damage suffered by it because of the deliberate or negligent unlawful actions of that political office-bearer or official when performing a function of office.
Delays and exemptions
177. (1) The Minister may by notice in the Gazette –
(a) delay the implementation of a provision of this Act for a transitional period not exceeding five years from the date when this section takes effect; or
(b) where practicalities impede the strict application of a specific provision of this Act, exempt any municipality or municipal entity from or in respect of such provision for a period and on conditions determined in the notice.
(2) A delay or exemption in terms of subsection (1) may—
(a) apply to—
(i) municipalities generally; or
(ii) municipal entities generally; or
(b) be limited in its application to a particular—
(i) municipality;
(ii) kind of municipality, which may, for the purposes of this section, be defined either in relation to a category, type or budgetary size of municipality or in any other manner;
(iii) municipal entity; or
(iv) category of municipal entities.
(3) To facilitate the restructuring of the electricity industry as authorised by the Cabinet member responsible for such restructuring, the Minister, acting with the concurrence of the Cabinet member for local government and after consultation with organized local government, may, by notice in the Gazette, exempt any municipality or municipal entity from any specific provision of this Act for a period of not more than four years and on conditions determined in the notice, provided that such exemption may not be understood as obligating any municipality to transfer any staff, assets or liabilities.
Transitional provisions
178. (1) Anything done in terms of a provision repealed by section 179 (1), which can be done in terms of a provision of this Act, must be regarded as having been done in terms of this Act.
(2) All municipalities must within three months of the date on which this section takes effect, submit to the National Treasury a list of –
(a) all corporate entities in which the municipality or a municipal entity under its sole or shared control has an interest, specifying—
(ii) the purpose, extent and other particulars of the interest;
(iii) if such corporate entity is a municipal entity, whether the entity is under the sole or shared control of the municipality; and
(iv) such other information as may be required by the National Treasury;
(b) all public-private partnerships to which the municipality is a party, with a value of more than one million Rands in total per annum to which the municipality is a party, specifying—
(c) all other types of contracts of the municipality for a period beyond 1 January 2007 and with a value of more than one million Rands in total per annum., together with information on those contracts as may be required by the National Treasury
.
Repeal and amendment of legislation
179. (1) The legislation referred to in the second column of the Schedule is hereby amended or repealed to the extent indicated in the third column of the Schedule.
Short title and commencement
180. (1) This Act is called the Local Government: Municipal Finance Management Act, 2003, and takes effect on a date determined by the Minister by notice in the Gazette.
(2) Different dates may in terms of subsection (1) be determined for different provisions of the Act.
SCHEDULE
REPEAL AND AMENDMENT OF LEGISLATION
(Section 119)
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No. and year of Act |
Short title of Act |
Extent of repeal or amendment |
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Act No. 21 of 1988 |
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