ATC100404: Report on Consideration of the 2007/08 Report of the Kwa-Zulu Natal Municipalities’ Performance

NCOP Economic and Business Development

REPORT OF THE SELECT COMMITTEE ON CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON CONSIDERATION OF THE 2007/08 REPORT OF THE KWA-ZULU NATAL MUNICIPALITIES’ PERFORMANCE: DATED 04TH APRIL 2010

 

 

1.         Background and Overview

1.1        The Select Committee on Co-operative Governance and Traditional Affairs having considered the directive of the National Council of Provinces (NCOP) to consider and report on the 2007/08 Report of Kwa-Zulu Natal Municipalities’ Performance tabled by the MEC for Co-operative Governance and Traditional Affairs in terms of the requirements of the Local Government Municipal Systems Act (Act 32 of 2000), reports as follows:

 

1.2        Municipalities are required to produce annual performance reports in terms of section 46 of the Local Government Municipal Systems Act. Based on these reports, the MEC responsible for local government has to compile a consolidated report on the performance of municipalities in the province and submit to the NCOP in terms of section 47 of the Act. This report provides an analysis of the municipal performance in the Kwa-Zulu Natal Province and also makes recommendations for corrective measures to be undertaken in that regard.

 

1.3        In terms of NCOP rule 101, the Office of the Chairperson of the NCOP referred the 2007/08 Report of Western Cape Municipalities’ Performance to the Select Committee on Co-operative Governance and Traditional Affairs for consideration and reporting.

 

2.         Introduction

 

2.1        On the 29th October 2009, the Kwa-Zulu Natal MEC for Co-operative Governance and Traditional Affairs tabled a report to the Office of the Chairperson of the NCOP on the Performance of Municipalities in KwaZulu-Natal for the 2007/08 financial year, in terms of section 47 of the Local Government Municipal Systems Act. Subsequent to the tabling, the report was referred to the Select Committee on Co-operative Governance and Traditional Affairs for consideration and report in accordance with Rule 101. In compliance with the Council referral, the Select Committee had a briefing meeting on the 19th February 2010 with the MEC of Kwa-Zulu Natal for Co-operative Governance and Traditional Affairs.

 

 

 

3.                   Presentation on Kwa-Zulu Natal Municipal Performance Report

 

3.1        The MEC for Co-operative Governance and Traditional Affairs presented Kwa-Zulu Natal 2007/08 Municipalities Performance Report to the Committee. The presentation focused on the key five performance areas of local government such as Municipal Transformation; Basic Services and Infrastructure; Municipal Financial Management and Viability; Local Economic Development and Good Governance.

 

3.2        The MEC reported that in assessing the performance of municipalities in the Province, the Department has developed a Municipal Institutional Performance Model in order to differentiate between municipalities based on the development of their institutional capacity and performance for provincial monitoring, support and capacity programmes could be appropriately targeted.  The model is indicated below:

 

LEVEL	EXPLANATION
1	A level 1 municipality is fully compliant, has audited data to measure its performance and its performance and is performing generally at or above the performance expectations of sustainable municipalities.
2	A level 2 municipality is mostly compliant, has accurate data to measure its performance and is performing generally at or above the performance expectations of consolidated municipalities.
3	A level 1 municipality is partially compliant, relies on rough estimates to measure its performance and is performing generally below expectations of consolidated municipalities.
4	A level 0 municipality is significantly non-compliant, is not measuring its performance and is performing generally very poorly from what is known. If not under intervention already, they should be.

 

3.3        In general, most municipalities in the Province were performing on average with regard to data quality. There was still a great need for municipalities to do better record keeping and have systems in place to collect, store and manage data so that they can measure and report accurately on their performance indicators. Only thirteen municipalities were able to provide good quality data for reporting. Six municipalities provided the poorest quality due to different reasons including unwillingness to co-operate with the reporting process. Only 14 municipalities out of 61 are mostly compliant with the legislative requirements. The majority of municipalities are performing poorly to very poorly (scoring below 50%), and there was a need to put more efforts in fulfilling their legislative requirements.

 

4.          Municipal Transformation and Organisational Development

     

4.1        It was reported that only two municipalities have been found to perform at level 3. The majority of municipalities were still performing at level 2 whilst fifteen were still at level 1. The largest number of vacancies occurred within the Metro and B1 (cities) municipalities at 54% and 33% respectively. The average vacancy rate in the Province was at 20%. Half of the engineers employed at districts and B1 Municipalities (water and sanitation provision authorities) were registered professionals. Although CFOs positions were not an apparent challenge (most are filled), the challenge relied on the skills of the individuals.

 

4.2        Furthermore, employment equity was progressing well with 83% of Section 57 Managers being from the previously disadvantaged group and 18% being women. Less than half of the municipalities have functional Performance Appraisal Committees for Section 57 Managers in place, with the challenging areas being B3 and B4 municipalities (semi to mainly rural). Implementation of the Work Place Skills Plan was challenging as the provincial average stood at 0, 5% of the operating budget (the norm is 1%). The worst performing areas were B1 (cities) and B3-B4 (semi to mainly rural) municipalities.

 

5.         Basic Service Delivery

 

5.1        The performance assessment has indicated that there were no municipalities performing at level 3 on basic services and infrastructure. There were only two municipalities performing at level 2. The majority of municipalities were performing as level 0, therefore warranting urgent attention for support after the underlying issues have been investigated.

 

5.2        All water and sanitation services authorities managed to spent their allocated budgets for water. The rate of addressing water and sanitation backlog was exponentially higher in the Metro and B1 (cities) municipalities. Within the district municipalities covering vastly and dispersed rural areas, slower progress was noted.

 

6.                   Municipal Financial Management and Viability

 

 

6.1        A total of four municipalities were performing at level 3 in terms of Finance. The majority of municipalities were performing at level 2 to 1, which was indeed a concern. Most municipalities were able to spend their allocated operating budgets. What was of concern was that in the B2-B4 municipalities, the salary bill comprises more than 35% of that operating budget and in B4 municipalities (mostly rural) reached 47%.  The challenge arises with spending the capital budget. The Metro and B1 (cities) municipalities spent 100%, whilst C2 (districts) spent on average 80%. The B2 to B4 municipalities only managed to spend up to 70% of their capital budgets.

 

6.2        Most municipalities manage to collect cash from the bills they send out. The challenge arises in how quickly they manage to collect that cash (debtor days). The average debtor days (age of debt) in B4 municipalities (mostly rural) are 224. This means they take up to 224 days to collect a billed amount from the consumer. In B3 municipalities it is 162 (not much better), in B2 municipalities it is 107(not better), in the B1 municipalities it is 92 (not better) in the Metro it is 80 (getting better) and in districts it is 164 (not better). This means that municipalities at some stage will face cash-flow challenges as more money was being paid out than what was collected in billable revenue. And this was evident more rapidly in the B1 and B2 municipalities due to more overheads.

 

7.                   Local Economic Development (LED)     

 

  

7.1        There was generally poor reporting that could enable a sound assessment on this indicator. There were no level 3 performers and only 2 municipalities at level 2. Much on the poor performance on this performance indicator could be attributed to poor reporting on associated indicators. Municipal contributions to LED were measured by collecting information on the preferential procurement policies. Only a few municipalities managed to keep record of this information, those who did report indicated that on average 66% of goods were procured from local SMMEs and 67% procured from BBBEE suppliers.

 

7.2        The number of jobs created (per 10 000 unemployed) by the municipalities capital budget shows that the Metro and B1 (cities) municipalities managed to create 395 and 699 jobs/10 000 unemployed respectively. This number reduces when data from the B2-4 municipalities are recorded. This demonstrates that economic activity was still predominantly focused around the urban nodes.

 

8.         Good Governance and Public Participation     

 

8.1        There are 14 municipalities that are performing at level 3. The vast majority are performing at level 2, which is considered to be generally at or just above the consolidation phase. Ten municipalities are performing at level 1 which is generally below the expectations of the consolidation phase and effectively are showing characteristics of a municipality still struggling with establishment issues.

 

8.2        Council meetings were not held as regularly as the statutes prescribe (at least 4 times/year). This again was more evident in the B4 municipalities where only half of municipalities managed to hold 4 Council meetings. The absence of a Roles and Responsibility Framework is of concern in 30 of the municipalities in the Province, and this was most evident in the B1, B3 and B4 municipalities.

 

8.3        Most municipalities have their auditing structures in place. The effects of this can be seen in a substantial improvement in audit outcomes since 2005/06 to 2007/08, with an increase in unqualified reports from 16/61 to 38/61 and disclaimers from 17/61 to only 9/61, respectively.

 

8.4        Anti-Corruption Strategies and Structures were a challenge with only 38% of municipalities indicating that these were in place. The best performers are the Metro and B2 (urban) municipalities. This accompanied by a lack of oversight and reports, are challenges the Department aims to address in the coming years.

 

8.5        On average 66% of the 771 ward committees in Kwa-Zulu Natal are functioning (meet quarterly and document their issues to Council). The most challenging areas are B2 (urban) and B4 (mostly rural) municipalities, with only 54% and 64% of committees functioning effectively.

 

9.         Committee Observations and Opinion

 

9.1        The Committee observed that there was slow progress of municipal processes in preparing Annual Performance Reports in terms of section 46 of the Local Government Municipal Systems Act, as part of Annual Report in terms of section 121 of MFMA.  Furthermore, it was observed that the Department has capacity constraints in supporting municipalities in the Province.

 

10.        Recommendations

 

10.1      Having deliberated on the 2007/08 Report of the Kwa-Zulu Natal Municipalities Performance, the Select Committee on Co-operative Governance and Traditional Affairs recommends as follows:   

 

10.1.1      The NCOP should endorse the 2007/08 Report of the Kwa-Zulu Natal Municipalities Performance.

 

10.1.2      The Kwa-Zulu Natal Department of Co-operative Governance and Traditional Affairs should assist the municipalities in the Province to improve their spending capacity on capital budgets and MIG.

 

10.1.3      The quality of data compilation with regard to service delivery in the Province should be improved by the Kwa-Zulu Natal Department of Co-operative Governance and Traditional Affairs.

 

10.1.4      The Kwa-Zulu Natal MEC for Co-operative Governance and Traditional Affairs should table quarterly progress reports to the NCOP in respect to municipal performance in the Province.

 

Report to be considered.