ATC151027: Report of the Select Committee on Cooperative Governance and Traditional Affairs on Termination of Intervention issued in terms of section 139(1)(A) of the Constitution (1996) in Mtubatuba Local Municipality, dated 27 October 2015

NCOP Cooperative Governance & Traditional Affairs, Water and Sanitation and Human Settlements

REPORT OF THE SELECT COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON TERMINATION OF INTERVENTION ISSUED IN TERMS OF SECTION 139(1)(a) OF THE CONSTITUTION (1996) IN MTUBATUBA LOCAL MUNICIPALITY, DATED 27 OCTOBER 2015 

 

1. Background

 

1.1     On 03 August 2015, the MEC for Cooperative Governance and Traditional Affairs in KwaZulu-Natal tabled to the Office of the Chairperson of the National Council of Provinces (NCOP) a notice of the termination of intervention in terms of section 139(1)(a) of the Constitution at Mtubatuba Local Municipality.

 

1.2     Subsequent to the tabling, the Chairperson of the NCOP referred the notice of intervention in terms of Rule 101 to the Select Committee on Cooperative Governance and Traditional Affairs, for consideration and report.

 

1.3     On the 21 October 2015, during the loco inspection on the notice of intervention in terms of section 139(1)(b) of the Constitution in Indaka Local Municipality, the Select Committee also called the Department of Cooperative Governance and Traditional Affairs for a briefing on the termination of intervention in terms of section 139(1)(a) of the Constitution in Mtubatuba Local Municipality.                 

 

1.    Objectives of the Briefing Session

 

2.1     The objective of the session was to accord the Department of Cooperative Governance and Traditional Affairs an opportunity to brief the Select Committee on        progress made in implementing the constitutional, procedural and substantive matters          related to the of intervention in the Municipality in terms of section 139(1)(a) of the Constitution and the Provincial Executive Council’s (PEC) decision to terminate the            intervention in

          Mtubatuba Local Municipality.     

 

1. Presentation on Termination Intervention in Mtubatuba Local Municipality

 

3.1     On 21 October 2015, the Department of Cooperative Governance and Traditional Affairs briefed the Select Committee on the termination of intervention issued in terms of section 139(1)(a) of the Constitution in Mtubatuba Local Municipality. The presentation focused on the overview of background and reasons for the intervention; success indicators in the period up to February 2015; extension and emerging challenges; current status and way-forward.            

 

1.     Overview of Background and Reasons for the Intervention 

 

4.1     Mtubatuba is one of five local municipalities in the Umkhanyakude District. The Municipality has 38 council members of which the ANC has 18, IFP (15), NFP (2), the AIC (1), DA (1) and the EFF (1). It is notable that before the May 2015 by-election, the AIC, DA and EFF were not represented in this Municipality.

 

4.2     The Municipality has a population of 175,425 (2011), with 72,203 registered voters (2013) and 19 wards. The Municipality is dominated by the urban areas of Mtubatuba, kwaMsane, St Lucia and Nordale. There is a significant number rural areas including Mpukunyoni, Mfekayi, etc. The Municipality has a budget of about R197 million of which over R48 million was set aside for capital expenditure (2015/2016). Grant reliance accounts for about 75% of its revenue basket.

 

4.3     In September 2012 the PEC instituted the intervention in terms of section 139(1)(b) of the Constitution at Mtubatuba Local Municipality following a number of challenges including the following:

 

•         Continuous instability in financial management, including the Municipality’s persistent breach of its obligation to meet its financial commitments.
•         Failure to exercise supervisory authority in relation to the implementation and enforcement of the Municipality’s credit record and debt collection policy, and bylaws.
  •         Failure to take all reasonable steps to ensure that the Municipality performed its constitutional and statutory functions within the limits of the Municipality’s approved budget.
•         Failure to include measurable priorities, objectives and performance targets for certain functions, as reported by the Auditor-General.
•         Failure to provide adequate performance information in the annual report of the municipality for the 2012/11 financial year, as reported by the Auditor-General.
•         Failure to recover unauthorized, irregular, fruitless and wasteful expenditure, and not informing the MEC responsible for local government, as well as the Auditor-General, of such expenditure.
•         Failure to exercise budgetary control and early identification of financial problems over two consecutive years.
•         Failure to conduct a mid-year budget and performance assessment of the Municipality within the statutory deadlines for two consecutive financial years.
•         Failure to address issues raised in the Auditor-General’s report about the Municipality, for consecutive years.

 

4.4     After several extensions, it became clear that the resources employed by the         provincial authorities in that municipality were not commensurate with the outcomes     achieved as a result thereof:

 

•         The municipal council remained largely dysfunctional. This was accepted by the councillors themselves at a meeting held with the MEC for CoGTA on 20 January 2015.
•         The municipal council and indeed the Executive Committee was still refusing to cooperate with the suspension and investigation into allegations of misconduct against the Municipal Manager, if anything, the two structures openly supported the Municipal Manager against the Ministerial Representative.
•         Council committees, particularly portfolio committees and MPAC were dysfunctional while the Audit Committee was non-existent.
•         The Municipality had not completed the process promulgating their 2nd General Valuation Roll (GVR) which would allow the Municipality to levy property rates with effect from 1 July 2015.
•         The Municipality was still beset with various supply chain management challenges arising from weaknesses in management and maladministration

 

4.5     As a result of these and other factors, on 30 January 2015 the PEC resolved to institute the intervention in terms of section 139(1)(c) of the Constitution. This was approved by both the Minister and the NCOP in February 2015. The intervention lasted until the 7th of May 2015 when the new municipal council was declared elected by the IEC.

 

4.6     On 07 May 2015, a day after the by-election the PEC considered in which it noted the progress made and noted the fact that the intervention in terms of section 139(1)(c) had automatically lapsed when the council was declared elected. In order to support the new municipal council the PEC resolved to institute another intervention (a directive) in terms of section 139(1)(a), from 07 May to 06 August 2015. The municipal council was directed as follows:

 

•         Adoption of the exit strategy in respect of the close-out of the intervention in terms of section 139(1)(c) and accept the continuation and provision of support by the provincial department of CoGTA or any other stakeholder during the period of the intervention.
•         Accept a resource deployed by the provincial CoGTA to assist the municipality to implement the exit strategy.
•         Ensure that the Acting or Municipal Manager and all senior managers account to all indicators included in the exit strategy on a monthly basis.
•         Attend all steering committee meetings convened by the provincial CoGTA on interventions.
•         Develop a strategy of addressing imminent service delivery protests.

 

4.7     On 29 July 2015 the Provincial Executive Council resolved to terminate this intervention as at 06 August 2015.

 

 

5.     Success Indicators in the Period up to February 2015

 

5.1     Following the dissolution of the council in February 2015:

 

•         The Administrator successfully revived the process to prosecute the Municipal Manager, who subsequently resigned before the disciplinary processes where completed.
•         Working with the MPRA Office in CoGTA the Administrator fast-tracked the processes of promulgating the new GVR. The Municipality was able to budget accordingly in the 2015/16 budget and began to implement the new GVR with effect from 1 July 2015.

 

•         The Chief Financial Officer was also charged and also resigned before the commencement of his disciplinary hearing.
•         Working with provincial CoGTA and Provincial Treasury, the Administrator ensured that the municipality ‘ring fenced’ the conditional grants resulting in the Municipality spending 100% of its 2014/2015 MIG allocation by end of June 2015. The Municipality was also able to reconcile and pay back to CoGTA the R7.3 million LED grant that it had received and not fully utilised in previous financial years. This money has subsequently been ploughed back into the Urban Regeneration Project of the Municipality covering Mtubatuba Town and the township of kwaMsane.
•           The Municipality had prepared and implemented an action plan to respond to the queries raised by the Auditor-General in the 2013/14 audit report and management letter. Progress reported as at end of June 2015 was satisfactory, although there were minor outstanding issues.
•           The Administrator, with the assistance of provincial CoGTA was able to appoint the Acting Municipal Manager, with effect from 1 March 2015. The Administrator commenced the processes of appointing the Municipal Manager. The process was taken over by the new Council.

 

5.2     After the election of the new municipal council in May 2015:

 

•           The new council conducted the public participation processes in respect of both the draft IDP and draft budget that were prepared by the Administrator. The processes were conducted successfully and both the 2015/16 IDP and budget were approved by the council before the start of the financial year. The Provincial Treasury has since confirmed that the budget is funded with a surplus of more than R20 million.
•           The municipal council appointed the Acting CFO and commenced the processes of appointing the CFO properly.

 

•           The municipal Council also ratified and carried on with the processes of appointing the Municipal Manager. The processes will be completed by the end of August 2015 with the new Municipal Manager, expected to commence duty on 1 September or 1 October 2015, depending on the availability of the appointed candidate.

 

 

6.     Residual or Emerging Challenges

 

6.1     Despite the above report, the Municipality is still struggling with the following issues:

 

•         Public protests in respect of electricity installations and district related services (especially water and sanitation) remain a serious threat to stability with the municipal area.
•         While the Municipality, with the assistance of CoGTA has engaged the District Municipality on an ongoing basis in respect of water and sanitation failures. The District Municipality has not been able to resolve these challenges. Thus weaknesses in the provision of these services remain and will continue to pose a risk to Mtubatuba Municipality even though it is not responsible for the provision of these services.
•         The Municipality has been served with a notice by the Department of Environmental Affairs to obtain licenses for their two waste disposal sites failing which these will be closed. The requisite studies such as Environmental Impact Assessment, will cost the Municipality a significant amount of money.
•         Turning around the challenges of revenue collection in township areas is going to remain a big challenge for the Municipality, particularly because these areas have borne the brunt of the service delivery failures in respect of water and sanitation which are rendered by the District Municipality.
•         National government departments (mainly: Public Works, Home Affairs, SAPS and Department of Justice) are not settling their accounts. Provincial Treasury has undertaken to assist the Municipality in this regard.

 

7.     Current Status and Way Forward

 

7.1     The municipal council has operated effectively and harmoniously since their election in May 2015. There have been no major political protests reported since the new council was declared elected.

 

7.2     The Ministerial Representative has, together with the acting Municipal Manager, incorporated in the exit strategy into the Back to Basics support plan of the Municipality. The monitoring of the latter plan is undertaken by provincial CoGTA together with national CoGTA.

 

7.3     The exit strategy forms the basis on which the Municipality will continue to be supported going forward. The Municipality has not performed well in the first two quarterly Back to Basics assessments. This can be attributed to the developments leading up to the May 2015 by-election. The performance is expected to improve going forward.

 

8.       Select Committee Observations

 

8.1     The Select Committee has observed and noted, based on departmental briefing that the national government departments (mainly: Public Works, Home Affairs, SAPS and Department of Justice) are not settling their accounts. Provincial Treasury has undertaken to assist the Municipality in this regard.

 

8.2     The Select Committee has further observed that while the Municipality, with the assistance of CoGTA has engaged the District Municipality on an ongoing basis in respect of water and sanitation failures. The District Municipality has not been able to resolve these challenges. Thus weaknesses in the provision of these services remain and will continue to pose a risk to Mtubatuba Local Municipality even though it is not responsible for the provision of these services.

 

8.3     Public protests in respect of electricity installations and district related services (especially water and sanitation) remain a serious threat to stability with the municipal area.

 

9.      Recommendations 

 

9.1     Having been briefed on the termination of intervention in terms of section 139(1)(a) of the Constitution, the Select Committee recommends to the NCOP as follows: 

 

          9.1.1 The NCOP approves the termination of the intervention in Mtubatuba Local     

                 Municipality in terms of section 139(1)(a) of the Constitution.

 

9.1.2 The Department of Cooperative Governance and Traditional Affairs in KwaZulu-Natal should table the monitoring report on the implementation of exit strategy that has been incorporated with the Back to Basics plan of the Municipality to the NCOP and the KwaZulu–Natal Provincial legislature.   

 

Report to be considered.