ATC181115: Report of the Select Committee on Co-Operative Governance and Traditional Affairs Inspection in Loco on Notice of Intervention issued in terms of Section 139(1)(B) and (5) of the Constitution (1996), in Great Kei Local Municipality, dated 15 November 2018

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

REPORT OF THE SELECT COMMITTEE ON CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS INSPECTION IN LOCO ON NOTICE OF INTERVENTION ISSUED IN TERMS OF SECTION 139(1)(b) AND (5) OF THE CONSTITUTION (1996), IN GREAT KEI LOCAL MUNICIPALITY, DATED 15 NOVEMBER 2018
 

1.         Background and Overview

 

1.1        The Select Committee on Co-operative Governance and Traditional Affairs, having considered the request by the National Council of Provinces (NCOP), to consider and report on the intervention notice invoked in Great Kei Local Municipality in terms of section 139(1)(b) and (5) of the Constitution, the Select Committee reports as follows:

 

1.2        In terms of NCOP Rule 101, the Office of the Chairperson of the NCOP referred the notice of intervention by the Eastern Cape MEC for Co-operative Governance and Traditional Affairs (CoGTA), to the Select Committee for consideration and reporting. On 14 November 2018, the Multi-Party Delegation of the Select Committee conducted a loco inspection in Great Kei Local Municipality.

           

2.         Objective of the Loco Inspection in Great Kei Local Municipality

 

2.1        The main objective was to interact with the internal and external stakeholders of the Municipality in order to solicit their opinions on the constitutional, procedural and substantive matters related to the invocation of section 139(1)(b) and (5) of the Constitution.

 

3.         Composition of the Delegation

 

3.1        The Select Committee delegation was composed of the following Members of Parliament and officials: Hon J Mthethwa (ANC) KwaZulu-Natal; Hon G Oliphant (ANC) Northern Cape; Hon D Ximbi (ANC) Western Cape; Hon E Mateme (ANC) Limpopo; Hon T Wana (ANC) Eastern Cape; Hon M Chetty (DA) KwaZulu-Natal; Mr TM Manele (Committee Secretary: Committee Section); Mr N Mfuku (Content Adviser: Committee Section); Mr B Mahlangeni (Researcher: Research Unit); Ms T Matthews (Researcher: Research Unit); Mr M Mbebe (Procedural Officer: NCOP) and Mr TM Maunye (Intern: Committee Section). 

4.         General Overview of the Loco Inspection at Great Kei Local Municipality

 

4.1        On 14 November 2018, the delegation of the Select Committee interacted with senior officials of the Department of CoGTA, representatives of the African National Congress (ANC), Independent Municipal and Allied Trade Union (IMATU), the South African Municipal Workers Union (SAMWU) and the Rate-Payers Association.            

 

4.2        The Departmental official made a presentation on the constitutional, procedural and substantive reasons for the intervention. The representatives of the political party, Organised Labour, and the Rate-Payers Association shared their opinions with regard to the intervention, as tabled by the MEC for CoGTA.

 

5.         Presentation by Department of CoGTA

 

5.1        On the 14 November 2018, the Department of CoGTA briefed the delegation of the Select Committee on the constitutional, procedural and substantive matters related to the intervention. The departmental presentation focused on the background, support provided to the Municipality, failure by the Municipality to implement departmental support plan, findings on labour unrest and protests, procedural and substantive matters, terms of reference and progress made in respect of intervention.   

 

6.       Support Provided in terms of section 154 of the Constitution

 

6.1    The MEC has engaged the political leadership of the Municipality, with the view to address the challenges faced by the Municipality. The departmental support team of officials produced a support plan that was presented to the Municipality. However, the Municipality failed to implement the support plan, and the situation led to poor performance of the Municipality and thus negatively affecting service delivery and further led to labour unrest.

 

6.2        The labour unrest, coupled with the community protests actions affected the financial viability of the Municipality to an extend that the Municipality failed to collect its revenue and struggled to make third party payments especially to the South African Revenue Services (SARS).

   

6.3        On 14 May 2018, the MEC met the leadership component of SAMWU and allegations were made with regard to corruption on the golf day organisation, corruption in recruitment processes, nepotism on appointments, court interdicts, abuse of traffic cars, mismanagement of MIG funds, persecution of whistle blowers and victimisation of employees through illegal suspensions and disciplinary processes.  

 

7.         Procedural and Legislative Steps Taken by the Department  

 

7.1        On 18 April 2017, the MEC held a meeting with the Mayor and the leadership of the Municipality. On the 14 May 2018 the MEC met the leadership component of SAMWU, together with the majority party in Council. In its sitting on 30 May 2018, the Provincial Executive Council (PEC) resolved to approve the intervention in the affairs of the Municipality in terms of section 139(1)(b) and (5) of the Constitution.

 

7.2        An Administrator was appointed for a period of six (6) months, subject to review with clear terms of reference, and assumed duties on 04 June 2018. All Statutory bodies (Minister, NCOP, Legislature, SALGA and Executive Mayor of Joe Gqabi District Municipality) were notified about the intervention, within the legislated time frame.  The Administrator was introduced by the MEC to the Municipality on 04 June 2018. The Minister approved the intervention in a letter to the MEC dated 23 March 2018.

 

8.         Terms of Reference of the Administrator 

 

8.1        An Administrator has been appointed, to assume the following responsibilities, amongst others: 

• Representing the MEC and take over the functions of the Council in respect of financial management and administration, in particular credit control and debt collection, supply chain management and development of financial recovery plan.
• To be the custodian of the Financial Management Authority, and must after assessment of the financial environment, develop financial sub-delegations.
• The Municipal Manager will continue to perform his other powers that are not related to financial management, but everything that has financial implication must first be ratified by the Administrator.
• To ensure the preparation and implementation of a Financial Recovery Plan, working closely with Municipal Financial Recovery Service of National Treasury.
• To ensure implementation of the financial systems, policies and procedures including preparation and implementation of cost-cutting measures, in order to reduce and ultimately complete the process of paying prior year creditors, increase revenue collection and related measures.
• To be a compulsory signatory on the Municipality’s primary bank account and other bank accounts that the Municipality may operate.
• To establish and act as the Chairperson of the Interim Finance Committee (IFC), to monitor and manage the cash flow of the Municipality, approve or disapprove purchase requisitions and to ensure that the Municipality’s cash position is not overdrawn.
• To ensure that the IFC meets regularly to monitor the cash flow position, payments approved and disapproved and commitments made via approved purchase orders.
• To implement governance systems and procedures, including oversight over the administration, and ratifying of decisions taken by the Municipal Council, the Executive Committee, Committees, Municipal Manager and section 56 Managers in terms of delegated or original authority.
• To ensure implementation of remedial action plans dealing with negative findings from the Auditor-General of South Africa.
• Implementation of all projects undertaken by the Municipality, including unblocking projects that have stalled.
• To open and conclude negotiations with creditors of the Municipality, including the application of processes envisaged in sections 152 and 153 of the Municipal Finance Management Act, (Act 56 of 2003).

 

9.          Progress Made Since the Commencement of the Intervention

 

9.1         The Administrator facilitated the Appointment of the Municipal Manager and ensured that the supply chain management systems are in place for the smooth running of the procurement management processes. As part of fast tracking service delivery, the Department of CoGTA will continue with the Technical support beyond the employment of the PMU Manager.

 

9.2        The Administrator indicated that there was stability in the administration, but needs support from other spheres of government and further elaborated that the new elected Mayor/Speaker will assist Council to go back to basics in terms of strengthening the functionality of the Council, good governance and political oversight will be given more stimulus going forward.

 

10.       Opinions of Political Parties and Stakeholders of the Municipality  

 

10.1      During loco-inspection, the Select Committee interacted and solicited opinions of the political parties, internal and external stakeholders of the Municipality. Their opinions are tabled below:   

 

11.        Opinion of the African National Congress (ANC)

 

11.1      The Chief Whip of the ANC tabled an opinion that supported and welcomed the intervention in terms of section 139(1)(b) and (5) of the Constitution.         

 

12.        Opinion of the Municipal Organised Labour

           

12.1      The representative of the IMATU supported the intervention. Although SAMWU supported the intervention, however, they raised concerns with regard to the funding model, municipal reliance on grant funding, failure of the Municipal Managers to deal with labour related matters, non-payment of the third parties and debt owned by the Municipality to SARS.

 

12.2      SAMWU submitted a dispute in respect to the appointment of Senior Managers in the Municipality. The Union alleged that the recommended candidates did not meet the minimum competency requirements, in terms of section 55 and 56 of the Local Government: Municipal Systems Act (Act 32 of 2000) and section 83 of the Municipal Finance Management Act (Act 56 of 2003).

 

13.        Opinion of the Rate-Payers Association

 

13.1   The representatives of the Association supported the intervention, however, concerns were raised with regard to poor communication, lack of municipal solution to community problems, poor rubbish collection systems, poor road maintenance and mushrooming of informal settlement.  

    

14.        Select Committee Observations and Opinion

 

14.1      In terms of the constitutional and procedural matters, the Select Committee has observed that the National Minister for CoGTA, the NCOP, the Eastern Cape Provincial Legislature and the Municipality were notified of the intervention.

 

14.2      The Minister for CoGTA approved the intervention at the Municipality on the 13 April 2017. The approval was on condition that it must end as soon as the Municipality was able to administer its own affairs.

 

14.3      In the face of massive challenges confronting the Municipality, the Select Committee has observed the absence of the MEC for CoGTA, without a formal apology, during the loco inspection at the Municipality.

 

14.4      The absence of the youth and business formations was regretted, since the successful and effective implementation of the intervention depends on the greater stakeholder participation in the Municipality.

 

 

 

 

15.        Recommendations

           

15.1      Having conducted the oversight visit to Great Kei Local Municipality and interacted with internal and external stakeholders, the Select Committee on Co-operative Governance and Traditional Affairs recommends as follows:   

 

15.1.1   The NCOP approves the intervention in Great Kei Local Municipality in terms of section 139(1)(b) and (5) of the Constitution.

 

15.1.2   The Administrator should assist the Municipality in developing a communication strategy so as to improved public participation of the Rate-Payers Association and the general community members on matters related to service delivery.

 

15.1.3   Since the performance contract of the Administrator is coming to an end, the Eastern Cape MEC for CoGTA should consider renewing it, in order to ensure that the necessary institutional capacity is developed and the transfer of skills is facilitated.

 

15.1.4   The Eastern Cape MEC for CoGTA should table quarterly progress report to the NCOP on the status of the intervention in the Municipality; including challenges encountered.

 

15.1.5   The Select Committee on Co-operative Governance and Traditional Affairs, in co-operation with the relevant Portfolio Committee in the Eastern Cape Provincial Legislature, should in future conduct a follow-up oversight visit to the Municipality in order to evaluate the progress made in respect of the intervention in the Municipality.

 

Report to be considered.