REPORT OF THE SELECT COMMITTEE ON CO-OPERATIVE GOVERNANCE AND
TRADITIONAL AFFAIRS ON CONSIDERATION OF THE PROGRESS REPORTS ON THE
INTERVENTIONS IN ALFRED NZO DISTRICT, SUNDAY’S RIVER VALLEY AND KOUKAMMA LOCAL
MUNICIPALITIES IN THE EASTERN CAPE, ISSUED IN TERMS OF SECTION 139(1)(B) OF THE
CONSTITUION, 1996 – DATED 23 NOVEMBER 2010
1. Background
and Overview
1.1 Intervention
in local government in terms of section 139 of the Constitution is an integral
part of the institutional framework for developmental local government. It is a
necessary corrective when a municipality fails to govern and thus jeopardises
the enterprise of development. It is also an aspect of intergovernmental
relations and, as such, it must be exercised within the spirit of co-operative
government as outlined in Chapter 3 of the Constitution.
1.2 Against this background, three municipalities in the
·
Absence of
co-operative governance amongst critical stakeholders
·
Poor institutional
capacity and organisational systems impacting on service delivery
·
Problems with respect
to municipal debt and inadequate billing systems
·
Problems with
financial management and control. There was no adherence to regulations of the
MFMA.
·
Public
accountability has been one of the worst challenges as the municipalities
continue to obtain disclaimers and qualified opinions from the Auditor-General.
·
Performance
challenges of senior municipal officials.
2. Introduction
2.1 On 19 October 2010, the Eastern Cape MEC for Local Government
and Traditional Affairs, Hon S Gqobana briefed the Select Committee on
Co-operative Governance and Traditional Affairs on the progress made in respect
of interventions at Alfred Nzo District, Koukamma and Sunday’s
3. Progress Report on the Intervention in
3.1 It was reported that an Administrator had been appointed from 20 April 2009,
and he assumed responsibilities on financial management (financial recovery
plan); corporate services, including general administration and human resource;
infrastructure development and MIG funding and public participation.
3.2 On financial management systems,
progress made was with regard to the activation of a financial system (SAMRAS) which had been bought and
abandoned by the Municipality. A reliable billing system on SAMRAS has been
developed. It was reported that accurate annual financial statements were
submitted on 31 August 2009. Furthermore, a debt recovery plan was approved and
implemented, and all creditors whose payments had been outstanding for more
than 120 days were paid. In addition, an improved record-keeping system and a
fully integrated payroll was now in place.
3.3 Significant achievements were also
registered with regards to the appointment of the Municipal Manager, as well as the Chief Financial
Officer. Specific financial policies were now in place, and public
participation was starting to yield the desired results. The Municipal
Infrastructure Grant (MIG) projects were ring-fenced and thus used for their intended
purpose only. Intervention has since been terminated and the Administrator
submitted a close-out report.
4.
Progress Report on the Intervention in
4.1 The Department reported on
good governance and public participation. The lax attitude towards corporate governance processes and the lack of
organizational leadership has been addressed. Steps have been taken to improve
communication with the community through the establishment of the stakeholder
forum. All of the recommendations of the Special Investigations Unit (SIU) have
been implemented.
4.2 On financial reporting and billing
management, progress has been made in terms of the new financial record-keeping systems which have been
introduced using clean data. The annual financial reports for 2008/09 were
compiled and the Auditor-General has started the audit.
4.3 Significant achievements
were reported on the revenue management and enhancement strategy that has been
developed. A Debt Collection Policy has
since been adopted and promulgated. A total of 4 730 debtors who owed the
Municipality a total amount of R47 416 683.14 have been contacted. An Asset Register has been developed and a draft fraud prevention plan is
in place, with various cost-cutting measures having been approved and
implemented.
4.4 The new draft organogram was approved by
Council and was costed. It is envisaged that the new positions will be advertised
and interviews completed. The appointments of a new Municipal Manager and other
Section 57 Managers were finalized. A Performance Management System (PMS) has
since been initiated, with PMS contracts being drafted. Lastly, the
disciplinary matters for the Municipal Manager and other Managers have been
finalized.
4.5 The remaining challenge is the lack of
water resources in the area due to a long-term drought. Government intervention is required. In
addition, the culture of non-payment for services by the community has not been
completely overcome and needs more attention.
5. Progress Report on the Intervention in Sunday’s
5.1 In Sunday’s
5.2 Progress reported on
finance related to Credit Control and the Debt Management Policy which has been
reviewed and adopted by the council. The staff complement at Finance has
increased, with 13 new positions, of which 10 have been filled. There are now
cost-cutting measures in place, e.g. telephone and 3G cards, travelling and
fleet management.
5.3 In terms of
institutional development, an HR Plan was now in place. The Local Labour Forum
structure was reviewed and it has started pro-active labour engagement (5
meetings to date). It was reported that service delivery is at the core of the
council’s agenda, and five council meetings have taken place in the past three
months.
5.4 On good governance, it
was reported that investigations of allegations of corruption,
maladministration and misconduct are being dealt with administratively, but the
council has been awaiting the outcome of SIU investigations since June 2010.
Disciplinary processes and possible criminal charges have been considered for
two officials at Community Services Directorate, with one official on
suspension for alleged fraud and corruption.
5.5 What remains a challenge
is the financial bailout needed for the survival of the Municipality. This is estimated
at R20 million. If this is not forthcoming, the achievements on the
interventions will be compromised.
6.
Committee Observations and Opinion
6.1 The Committee has observed the
remarkable improvements brought about by the
interventions in the three municipalities. However, the Committee is of the
opinion that the success of any intervention rests on the collective co-operation
of all stakeholders in a municipality.
6.2 The
Committee is of the opinion that, for service delivery to be effective and
efficient in a municipality, there has to be a committed political and
administrative leadership with sound administrative and management processes in
place. The Department should continue providing this
kind of support to all its municipalities in the Province.
7. Recommendations
7.1 Having deliberated on the progress reports of the three municipalities in
7.1.1
The NCOP should endorse the progress reports
on the interventions in Alfred Nzo District, Koukamma and Sunday’s
7.1.2
The Eastern Cape
Department of Local Government and Traditional Affairs should continue
providing ongoing support to all its municipalities, in order to help indicate
potential problems before they become crises, so that municipalities are able
to implement their own corrective measures when problems arises.
Report to be considered.