Mogalakwena Local Municipality: engagement with Municipality, MEC, SALGA & DCOG

Meeting report

 

Nomination of Acting Chairperson

The Committee Secretary stated that due to the Chairperson running late, Members need to nominate a new acting Chairperson until she arrives.

Ms M Tlou (ANC) nominated Mr G Mpumza (ANC) seconded by Ms D Direko (ANC).

Acting Chairperson Mpumza welcomed Members and officials to the meeting and asked if there were any apologies.

The Secretary gave an apology from the Minister and Deputy Minister, as well as officials from the SA Local Government Association (Salga). Mr B Hadebe (ANC) would be leaving to attend a meeting of the Standing Committee on Public Accounts (SCOPA).

Mr J Buthane (EFF) called for the Committee’s attention, explaining that he had been mandated by the chairperson of the portfolio committee on Cooperative Governance, Human Settlements and Traditional Affairs (CoGHSTA) in the Limpopo legislature, to raise its issues before the meeting starts. Thus, he asked the Chairperson if he could be granted permission to deliver these points.

Mr Hadebe asked what capacity Mr Buthane is engaging on as CoGHSTA in Limpopo is usually represented by invited government officials. Even though meetings are open to the public, speaking rights are limited to the invitees or a specific delegated authority.

Mr Buthane stated that he is not a member of the public but rather a Member of the CoGHSTA Committee in the Limpopo legislature and they were invited to attend the meeting. He aggressively stated that it was not his fault that the Member did not listen to what he had previously said and that he was in fact speaking as an invited guest.

The Chairperson interjected commanding Mr Buthane to abide by the Committee rules. As an invitee to the Committee, the right to speak is limited thus the Chairperson asked that he explain in detail what he intends to present.

Ms M Aphiri (ANC), chairperson of the portfolio committee on CoGHSTA in the Limpopo Legislature, asked the Chairperson for permission to speak.

The Chairperson agreed.

Ms Aphiri thanked the Chairperson and stated that as the portfolio committee it has been invited to attend the meeting however it has its Legislature sitting at 10am and wanted to ensure that its requests were received. She explained that the provincial committee had visited the Tzaneen Municipality not knowing that the National Portfolio Committee for COGTA had already conducted an oversight visit. It requested that the Committee first meet with them and allow them to present their findings and consolidate the data and in future visit Tzaneen Municipality together and not separately.

Mr K Ceza (EFF) asked the Chairperson to allow Members to speak on the matter of Tzaneen first as they have to leave for a provincial meeting.

Mr Buthane demanded that he be heard by the Committee before the meeting continues.

The Chairperson called a point of order to deal with the request made by Mr Ceza, which was ignored by Mr Buthane. He asserted that he had not given Mr Buthane the right to speak and should wait until he receives permission.

Mr Buthane persisted and aggressively voiced that he is being mistreated by the Committee which is unacceptable. He shouted that the chairperson of the provincial committee had raised certain points which he wants to add to before the Committee makes a decision.

The Chairperson told Mr Buthane to wait and asked the Members to consider the request made by Mr Ceza to allow them to present on the Tzaneen Municipality.

Mr Buthane interjected once again asking why the Chairperson is refusing to listen to him and questioned why he received an invite in the first place if he was going to be treated like a child. He shouted that the two municipalities being discussed are within the provincial committee’s mandate and believes that it would not be granted a fair chance to engage with the Committee on these matters due to its Legislature meeting. There cannot be a divide between the Provincial and National Committees and separate oversight visits as it will lead to confusion of which mandated duties should be followed. He angrily stated that these were the points he wanted to address and that just because they are provincial officials it does not mean that national leaders can treat them with disrespect.

Mr Hadebe called for the Chairperson.

The Secretary pointed out that Mr Mpumza had been disconnected from the meeting.

Mr Hadebe stated that what had transpired was unfortunate. Thus considering that the Chairperson was no longer in the meeting, he proposed that everyone take a five-minute break while they wait for him to re-establish connection.

As Mr Mpumza was unable to connect to the meeting, Mr H Hoosen (DA) nominated Ms Direko to chair the rest of the meeting. Mr Ceza seconded the nomination.

Mr Buthane raised his point once again and asked the Chairperson if the National and Provincial Committee’s could meet first to discuss the two municipalities. He argued that the National Committee will cause problems and confusion within the province, as work had already been done by the provincial officials. He asked Members whose advice the municipalities should consider seeing as they are not operating in unison with the Legislature. It is only fair that upon visiting a province the National Committee informs the provincial officials and meets with them in order to be briefed on the evidence collected.

The Chairperson acknowledged the points raised however she sought clarity on the specific confusion Mr Buthane was referring to. Accordingly, the Constitution outlines the various mandated duties of the National Committee which includes oversight. She explained that provincial officials were invited to the meeting to listen to the concerns raised and if there is a need for comments and input, he will be allowed to do so when necessary. Members who need to attend the Legislature meeting can contact the Committee Secretary once it has adjourned to receive information regarding what took place.

Mr Buthane explained that the National Committee had previously visited Tzaneen without informing the province and did not brief them on the concerns or issues raised. The Provincial Committee has since met with the Tzaneen municipality twice and offered suggestions for a way forward, thus he queried which recommendations should the municipality apply seeing as it would receive different opinions from the National Committee.

The Chairperson questioned why Mr Buthane fiercely believes that this would lead to confusion. It was explained that the Department did in fact attend the oversight visit with the National Committee and could provide information towards what transpired during this visit. She asked if he was implying that the Provincial Department and Municipalities did not have the capacity to respond to the issues raised by Members.

Mr Hadebe asserted that enough time had been wasted trying to deal with this matter. At no point has the National Committee ever excluded the Provincial Government as it is in constant communication with the MEC of the Provincial Department. As such, it is the MEC’s responsibility to inform the relevant structures on the events which occurred and the issues raised. Further, he pointed out that the work of the National Committee is not dependent upon the Provincial Committee and that it has been invited to attend the current meeting because the importance of its role is recognised. However, the work conducted independently by both Committees should complement each other. As per the rule of order adopted by Parliament, the prerogative of the National Committee allows for oversight to be conducted and it has the right to subpoena any municipality or official it deems fit. There should be no insinuation that the work of the Committee is dependent upon provincial approval.

Mr Hadebde proposed that the Committee proceed with the agenda tabled and engage with the representatives and guests present.

Considering the statements made, Mr Ceza urged that the Committee needs to clarify whether the consultation process did in fact take place in Limpopo. If there was no consultation, as voiced by the province, the Committee should explain why and provide ways to remedy the matter.

Ms Aphiri argued that the National Committee needs to consult with the province to avoid duplication of work conducted and confusion within the municipalities. In order to effectively assist these municipalities, she asked that it be allowed to present its findings and what it has recommended to ensure that it is in unison with the National Committee and is viewed as one government. The letter submitted noted that the Committee did not plan to visit Mogalakwena because it has ample support from both SALGA, Treasury and CoGHSTA. Additionally, right after meeting with the Tzaneen municipality, a letter was received from the Portfolio Committee allegedly dictating what the provincial officials were allowed to investigate and what they needed to leave alone. She reiterated the importance of coming together to assess these matters to ensure that the corruption plaguing these Municipalities can be dealt with sufficiently.

Mr Ceza sought clarity on the letter mentioned by Ms Aphiri asking that the context and contents be provided.

The Chairperson attempted to make a ruling to ensure that the meeting continues with the agenda tabled, however Mr Buthane ignored her authority demanding to be heard. The Secretary was asked to mute all microphones, to no avail, as Members continued to argue.

The Chairperson called for a point of order and asked that the Secretary arrange a bilateral meeting between the two Committees before the end of the next week to address all outstanding issues. Accordingly, during the presentations she requested that the municipalities explain what had occurred between themselves and the Portfolio Committee.

Mr Hadebe asked for the decorum of the house to be maintained and requested the Chairperson to be more assertive when dealing with misconduct as Members have disrespected and ignored previous rulings.

The Chairperson stated that the meeting will move onto the presentation from Mogalakwena local municipality. With regards to the meeting of 25 August 2020, where Provincial COGTA presented on the numerous forensic reports tabled in the ordinary council, she asked how many forensic investigation reports were actually tabled to the Council for consideration and the amount spent to commission these reports. Concerning irregular expenditure, she sought clarity on the specific amount condoned as well as the statistics on irregular expenditure for the previous financial year. She requested that the municipality comment on the suspension of technical service employees and the issue of the irregular appointment of one of the Officials within the Municipality. Lastly, the municipality was asked to update Members on its meetings with the Provincial COGTA Committee as well as its recommendations.

Mogalakwena Local Municipality briefing

Ms Andrina Matsemela, Executive Mayor: Mogalakwena, led the presentation on the municipality’s level of progress made regarding the implementation of:

• The post-audit action plan;
• The yet to be institutionalised and implemented financial recovery plan; and
• The reduction of unauthorised, irregular, fruitless and wasteful expenditure (UIFW) strategy.

She began by informing the Committee that the 2016/2017, 2017/2018 and 2018/2019 financial years had all received an adverse audit opinion. The key findings that resulted in these adverse audit opinions were the Municipalities asset, property, plant and equipment management plans; inventory valuation; impairment provisions; UIFW; along with Material Irregularities in 2018/2019.

Addressing the implementation of the post audit action plan, she stated that of the 223 audit activities listed in the Detailed Action Plan for the 2018/2019 financial year, 146 have already been resolved, with an additional 77 currently in progress (See Presentation for component specific findings, progress, and outcomes).

In order to address the internal control deficiencies raised in the Auditor- General of South Africa’s (AGSA’s) report, it was indicated that a full investigation was currently underway regarding the 2016 payments of R13 308 477 through municipal infrastructure grants for work not delivered for the construction of Moshate Stadium. While this continues, the municipality has already begun internal disciplinary processes, along with suspending the Deputy Manager of the technical and project management unit who was involved. The municipality now also ensures that new employees are inducted on the formal code of conduct to address AGSA’s concerns that staff were not trained to properly understand and implement the code.

The municipality had faced challenges addressing the Human Resource management concern that despite the finance section being adequately resourced, financial statements and VAT functions where outsourced to a consultant at a cost of R59 Million. While the finance section may be adequately staffed it is currently without management due to the Deputy Chief Financial Officer (CFO) being under suspension and the position of CFO remaining vacant.

The development of new performance management policies and procedures is currently under way. This will ensure that the municipality can monitor, measure and evaluate the performance of staff other than Directors properly. It will also ensure that management can monitor the implementation of policies and procedures that will guide the operations of the Municipality towards reducing non-compliance with the Municipal Finance Management Act (MFMA).

An audit steering committee, with meetings scheduled regularly, has been established to allow the municipality to adequately develop plans to address internal and external audit findings in a timely manner.

The municipality has updated its ICT governance framework and submitted it to Council for approval. The implementation of this new framework includes developing an IT strategic plan and establishing an ICT steering committee. Further, a filling clerk tasked with record management, has recently been appointed enabling timely retrieval of information.

The Annual Financial Statements (AFS) and Annual Performance Reports (APR) will now be reviewed thoroughly by a newly established technical committee to make sure they do not contain numerous misstatements. Preventable non-compliance with laws and regulations will be stopped as follow-up audits are now being done by internal auditors regularly, who will report to the audit committee on a quarterly basis.

Failures like the irregular expenditure amounting to R613 million incurred in the current year by the municipality are also being addressed. Procurement, contract, and expenditure management failures like this, will now be monitored and prevented by the newly established Financial Misconduct Board. The municipality will also have internal auditors do regular follow-up audits and provide reports of these to the audit committee on a quarterly basis. Lastly, the municipality has appointed service providers to assist with improving systems and asset management controls.

Regarding the municipality’s state of finances, Mayor Matsemela proceeded by providing the Committee with an overview of the Municipalities budgeted COVID-19 related expenditure for the period 1 April 2020 to 24 October 2020 (see presentation for more details).

Due to the Service Level Agreement (SLA) with its previous protective clothing supplier having expired in December 2019, the municipality had challenges procuring Personal Protective Equipment (PPE) for their employees during the national lockdown. Following the directive issued by National Treasury to all government departments and municipalities to procure PPE from the RT57 contract, the municipality liaised with service providers and issued them with the specification of the items required. However, no response was forthcoming. This was largely due to the service providers the municipality was directed to by National Treasury being unable to deliver because of the scarcity of materials at the time, due to such huge demand in the country. It was also due to the fact that, while other service providers were able to deliver, they demanded 50% payment prior to the supply and delivery of materials, which would be against the prescripts of the MFMA and the Municipalities Supply Chain Management (SCM) policy.

The municipality re-allocated funds for COVID-19 related measures, with funds specifically allocated to deal with immediate interventions on water supply issues to service providers already appointed under the municipality’s water and sanitation maintenance contracts. These service providers were appointed following the municipality’s SCM process on an, as and when its required basis, for a period of three years from 1 April 2018 to 1 April 2021. The work conducted by these service providers was allocated on a rotational basis.

The National Department of Human Settlements, Water and Sanitation’s intervention of providing the Mogalakwena Local Municipality with water and JoJo tanks was conducted on its behalf by Lepelle Northern Water, who installed 64 JoJo tanks in various villages. The municipality also appointed seven service providers and allocated to them working areas per cluster, to assist in providing water to 114 villages using water tankers. 34 water tankers were used amongst the service providers. Lastly, DWS/Rand Water assisted the municipality by allocating three water tankers to assist the municipality in addition to the six municipal owned tankers (See presentation for additional details).

Speaking on the municipality’s revenue collection, Mayor Matsemela pointed out that it had experienced a sharp decline, from 77% in March to 55% in June, on the collection rate during the National Lockdown as it could not institute credit control processes.

She explained that the Mogalakwena Local Municipality has reported an escalating trend in UIFW expenditure over the last six years, with the audited 2018/2019 Annual Financial Statements finding irregular expenditure of R2.3 billion, and R11.3 million fruitless and wasteful expenditure (see presentation for more details). The causes of this is expenditure is the lack of preventative mechanics to eliminate reoccurrence, effective internal control measures, detailed reasons for incurring UIFW expenditures as captured in the registers according to the National Treasury Circular 68 Annexure A. regarding further investigation of processes to be followed when dealing with UIFW, financial misconduct consequence management, budget controls, and large interest payments arising from the failure to pay suppliers on time due to cash constraints. In an effort to address these, the municipality has, with the support of National and Provincial treasuries, developed a ‘Reduction Strategy on UIFW Expenditure’ (see presentation for proposed reduction plan specifics).

Mayor Matsemela provided the Committee with an overview of the consequence management measures previously undertaken by and currently in progress within the municipality as well as an overview of the current state of institutional capacity within the municipality (see presentation for details).

The presentation was concluded by indicating the composition, functionality, effectiveness, and the support staff required by the internal audit and Municipal Public Accounts Committees (MPAC).

SALGA Support to Mogalakwena Local Municipality

Ms Ledile Sebati, Salga Director of Operations: Limpopo, briefed the Committee on the support provided to Mogalakwena. As such, upon conducting a major audit of the past three financial years, findings indicate that that the key issues are; inadequate record keeping supporting some disclosures, adjustable and non-adjustable misstatements, inadequate internal controls and basic controls (daily discipline) and non-compliance with laws and regulations.

SALGA’s Municipal Audit Support Program (MASP) follows a multidisciplinary approach that is based on four pillars namely;

• institutional capacity,
•  financial management,
• leadership and
• governance.

These pillars need to be strong and functioning effectively in order for a municipality to obtain and sustain unqualified audits and good service delivery.

In the 2017/2018 financial year, SALGA implemented two support programs to assist the municipality. The first program being the capacity building on asset management hoped to produce GRAP-compliant asset registers and Annual Financial Statements (AFS). The Record Management Training program was launched to ensure compliance with record management standards. In 2018/2019, SALGA assisted with portfolio-based training for the MMC of Finance to capacitate Councilors to ensure they discharge their oversight responsibly and effectively.

 Lastly, in 2019/2020, SALGA Limpopo partnered with PricewaterhouseCoopers to create a capacity building programme on GRAP and AFS. The aim of the programme was to provide technical knowledge on the preparation of the AFS to municipal officials and improve the audit outcomes of the municipalities. SALGA also participated in the audit steering committee meetings of the municipality to provide assistance in addressing the findings raised by the AGSA. Members of the MPAC received regular training on how to carry out their roles and responsibilities effectively and efficiently. Further, a revenue, credit and debt control workshop was introduced to assist with the implementation of the best practice framework on revenue, credit and debt as well as improving revenue collection and the payment of creditors.

As a result of technical issues, the Acting Chairperson lost connection thus Ms F Muthambi (ANC) proceeded to chair the remainder of the meeting.

COGTA briefing: state of Mogalakwena Local Municipality

Ms Regina Ravele, Limpopo Provincial Manager, Municipal Infrastructure Support Agent (MISA), briefed the Committee on the support to Mogalakwena. Referring to slide 10 of the presentation, five key service delivery challenges facing the municipality were highlighted. Firstly, the expansion of the collection of solid waste to rural areas needs to be prioritised as this service is currently only operating in the town and townships but not yet the villages. Further, she pointed out the capacity of bulk water services is insufficient and cannot support the new residential developments. Additionally, mixed modes of transport in the CBD was also seen as an issue as some individuals are still using donkey carts as a mode of transport around the town. It was noted that currently the Municipality has no plan in place to deal with this matter and recommends that it be prioritised into its development plans.

Regarding the Municipality Infrastructure Grant (MIG), three officials were dispatched by MISA: a civil and technical engineer as well as a town planner, to provide the necessary support to Mogalakwena largely focused on the MIG programme. She stated that at the end of the previous financial year, the municipality only spent around 50% of the MIG. As reported on slide 11, of the R155 326 000 allocated for the year 2020/2021, by the end of August, only R10 781 581, 11 (6.94%) of the grant was spent on the 16 projects created. Ms Ravele argued that this is a clear indication that the municipality is not doing well in terms of implementing infrastructure programmes. Concerning COVID-19 support, Mogalakwena reprioritised the unspent grant of 2019/2020 to implement ten various water infrastructure projects which are all currently under construction.

Ms Ravele explained that MISA has collaborated with National COGTA, Limpopo CoGHSTA and the Waterberg District to provide the following support:

• Monthly district and provincial MIG project management meetings with all municipalities, to discuss project progress, challenges and interventions;
• One-on-one municipal intervention sessions;
• Quarterly intervention meetings with management of the municipality;
• Project site visits and site meetings for progress and expenditure verification;
• MISA engineer deployed to assist on technical issues;
• Acting Technical Manager seconded from Waterberg District Municipality;
• Reprioritisation of MIG funds to deal with the effects of COVID-19;
• Project registrations and monthly expenditure reporting

The challenges identified at the municipality are primarily a consequence of political and administrative instability as seen with the suspension of the Municipal Manager, the Manager and Deputy Manager of the Program Management Unit (PMU) and the resignation of CFO. These factors have negatively impacted the program as the support relies on the proper functioning of internal structures in order for the necessary information to be collected from the municipality. There has been an increase in delays with PMU’s monthly reporting and compliance due to a shortage of technical skills. Furthermore, despite water scarcity and droughts in the area being a constant issue over the past few years, only one water project was prioritized by the municipality during the 2019/2020 financial year. Reporting in line with the MIG requirements is also an issue as the implementation plans are commonly submitted late.

Regarding technical capacity issues, Ms Ravele stated that it was important to provide a detailed description of what these issues entail. On the lack of planning, it was reported that the municipality is behind on meeting the Division of Revenue Act requirements (submission of implementation plan, infrastructure procurement plan, cashflow projection, delays on project registration) needed to meet targets. The following issues were also highlighted:

• Delays in procurement of contractors
• Lack of capacity in the municipality to develop and review designs and drawings
• Project implementation
  • The municipality is failing to report progress on the implementation of MIG projects (financial and non-financial reports on the MIG-MIS)

• Lack of discipline with high absenteeism and no consequences
•  Lack of basic project management and ignorance
• Poor supervision and monitoring: non completion of projects, municipality increasing project values on appointment letters without financial backing
• Closeout report: mrojects are closed without being functional

(see presentation for further information).

Mr Mpho Mogale, Chief Director: LGSIM, CoGTA stated that the Provincial Department would be engaging with the municipality to discuss these matters to ensure that there is further collaboration to assist with finding a solution. He noted that it is awaiting the October report as it is aware that there has been a lot of activity in the municipality in terms of consequence management as well as the issues of arrest. Once the report is received it will engage with the province however it is concerned over the fact that only two months of intervention remains. Evidence indicates that the impact of these interventions are only beginning to show, thus there was concern as to how these interventions will continue to assist the municipality once the programme has ended.

(see presentation for more information)

The Chairperson called on Mr Basikopo Makamu, Limpopo MEC: Cooperative Governance, Human Settlements and Traditional Affairs, to present the progress of these interventions in the province.

MEC Makamu thanked the Chairperson and argued that within his personal observations he can confirm that the interventions did attempt to remedy the issues, which will be reflected within the presentation. He called on Dr Modjadji Malahlela (Limpopo CoGHSTA)  to lead the presentation.

Briefing by Provincial Department on the stabilisation of Mogalakwena Local Municipality

Dr Malahlela briefed the Committee on the progress made thus far on the support and stabilisation of the Mogalakwena local municipality in terms of s139 (1) (b) of the Constitution. COGTA believed that it was necessary for an intervention team to be deployed to the province which consisted of an intervention head, two financial experts, an IT specialist and a legal expert. The team assumed its responsibilities on 17 January 2020 guided by a set of terms of reference developed to guide the intervention. An intervention plan was developed and adopted by the municipality detailing the focus areas of the intervention. Based on the findings from the assessment report the following areas were identified for intervention:

• Improve labour relations
• Strengthen recruitment process
• Ensure sound financial management and strength SCM processes
• Improve functionality of Council and Committees
• Improve basic service delivery

Labour Relations

The process of absorbing the general workers into the municipal establishment as permanent workers has been finalised as of 01 April 2020. However, workers are now demanding to be paid retrospectively from July 2019 as per a court order. The municipality has no option but to pay these workers to fully comply with the court order. To date, the municipality is assessing the cost and if there is enough budget available.

The Local Labour Forum is functional and the relation between the employer and the labour unions has improved. The intervention team has been monitoring the current disciplinary cases on a regular basis to ensure that cases are finalised within the stipulated time. Further, the suspensions of two officials from the Traffic and Emergency Services have been lifted as they were not implicated by the investigation findings. The investigation on the allegations of misconduct against the Manager of Corporate Support Services and the Municipality Manager have been completed however, there have been disputes raised relating to both cases. The Mayor has requested the MEC’s intervention on the process relating to the handling of the suspension of the Municipality Manager’s case.

The Department received a report on an investigation of allegations of the irregular appointment of Mr J Mashamaite to a position of Deputy Manager: Corporate Services. The MEC referred the report to the municipality for consideration and currently the Department is sourcing a legal opinion. Once the opinion has been received, it will engage with the municipality to ensure that there is corrective action The Municipality has since reverted Mr Mashamiate back to his original position before the irregular appointment and has further reverted his salary and other financial benefits back to his previous position before the irregular appointment. 

(see presentation for further details on these intervention programs)

Strengthening recruitment process

An investigation is currently underway to uncover the illegal appointment of workers which will hopefully shed light onto the magnitude of this issue and how it has impacted the salary bill of the municipality.

(see presentation for more details).

Improve functionality of Council and Committees

To date, the responsible officials are issuing the Council and EXCO notices on time. However, in some instances the reports are being submitted to the Council Committees without being signed off by the Head of Intervention. This is an area that requires attention to ensure efficient and effective coordination of council process.

Additionally, the Audit Committee is functioning well and holds its meetings as per schedule. However, the human resource capacity of the Internal Audit Division must be strengthened through the appointment of competent and qualified auditors to assist the Internal Audit Manager. Members of the intervention team are participating and attending the Audit Steering Committee meetings. It needs to be noted that the attendance by Management at the Audit Steering Committee meetings is poor. The Financial Recovery Plan progress and the AFS preparation are also tracked in these meetings. To date, the addressing of audit findings related to finance is at 0% and the overall progress to date on addressing the 2018/2019 audit findings is very slow.

(see presentation for further details)

Improve basic service delivery

The intervention team continues to review payment requests on an ongoing basis to ensure compliance and that payments are made for the services rendered. It is noted that MISA is assisting the intervention team with verifying the physical progress of all capital projects, in order to strengthen the internal control mechanism within the municipality.

Regarding the tabling of previous forensic reports, the Executive Council resolved that the municipality must table all previous reports in council for adoption and further ensure that the recommendations are implemented.  

(see presentation for details on these reports)

Challenges

The suspension and resignation of key managers has resulted in the loss of institutional memory which becomes evident when management is required to report to sector departments. The lack of providing supporting documentation for the reports submitted to the intervention team for review has improved since the last reporting period but remains a concern. Further, concerns were raised regarding not having a standing invite to the Finance Portfolio Committee meetings, as the terms of reference for the intervention team indicate that “(e) All financial management reports must be submitted and signed-off by the head of the intervention team before submission to any institution/stakeholder”. This means that the intervention team is not present when reports that it does not concur with, are presented thus hindering its ability to sufficiently conduct oversight. Further, it is noted that the municipality reports are not completed timorously as required by the law as seen with the Section 71 reports being submitted late to National Treasury. The legislated deadlines are not being adhered to by the municipality with regards to their financial reports which resulted in the Municipality receiving a non-compliance letter for the 2019/2020 mid-year assessment. As such, it is clearly evident that the municipality is not yet fully compliant with all legislation.

Discussion

The Chairperson thanked the DDG for the presentation and reiterated that the reason for the report was to understand the progress these interventions have made over the 12-month period. Evidently however, some of these interventions have not achieved the preferred results which Committee Members will comment on. An apology from the MEC of Finance was received, however he indicated that he would be attending the evening meeting later on that day. As such, the Chairperson stated that she will allow him to respond to her queries at that time, as well as explain what Treasury has done to assist the municipality.

Mr Ceza stated that the municipality has been characterised as dysfunctional which has resulted in poor service delivery and protests. He asked what immediate action the municipality has put in place to improve the situation. Concerning the lack of accountability of individuals responsible for managing the municipality, clarity was sought on the actions taken to deal with such matters. In this municipality there is evidence of incompetence, dysfunction, mismanagement and corruption, thus he asked how many Officials have been identified as suspects involved with these crimes. As a result of poor management, there are many failures in the municipality such as; water shortages, power failures, potholes, sewage and sanitation issues. Therefore, if these services are failing, he questioned whether the municipality should be characterised as functional as well as if the administration has the capabilities to resolve them. A municipality cannot exist without the proper infrastructure.

Further, the unauthorised and wasteful expenditure that was reported illustrates the magnitude of the issues plaguing the municipality. Mr Ceza argued that superficial reporting of improvements made on the matter is not enough and asked that a timeframe be included to indicate when it will be resolved.

Concern was raised towards the consultants appointed, as the financial statements issued were not up to standard which illustrates the non-effectiveness of these consultancy firms. Thus, he asked the municipality how much it had spent on these consultants. Additionally, regarding the consequence management plan he asked how many bids issued were identified as fraudulent, who was responsible and how many individuals were involved and if any service was rendered to assist on this issue.

During the Limpopo presentation, the DDG stated that the impact of the interventions has ensured functionality. However, Mr Ceza questioned the basis of this claim and asked for an explanation as the presentation later notes that officials have not been attending meetings. Further, on the matter of impact he asked for the amount of cases involved in this process, how many have been finalised and the reasons for their delays if any.

Mr Ceza raised his concern regarding the Community Work Programme (CWP) as he believes that it does not provide any meaningful assistance to the municipalities. He asked what work the municipality has done in collaboration with national leadership to improve the situation as the Committee is still waiting for the improvements on the core model of the CWP. Regarding the irregular appointment of officials, he asked if the municipality had followed the selection and recruitment process.

The AGSA described the municipality as being corrupt, having maladministration, poor performance, consistently receiving disclaimer audit opinion, lack of political leadership and having inadequate capacity to deal with human resource needs. He asked the municipality to comment on the above statement and explain their status to the Committee.

Concerning the letter mentioned earlier by the officials who left to the legislature meeting, stating that certain Members must not be touched, Mr Ceza asked the Committee to explain which letter it was referring to.

The Chairperson stated that the letter had been shared to the group and no such information was included and urged Members to first read the letter prior to commenting.

Lastly, he asked the municipality to comment on the issue of an official misrepresenting their qualifications and provide an explanation as to how this occurred and what plans are in place to deal with the matter.

Mr Hoosen appreciated the information shared by the various departments, however he stated that it did not instill a sense of confidence or reassure Members that matters are improving in the municipality. The culture of poor governance, mismanagement and corruption plaguing the municipality is going to be very difficult to overcome.

The Chairperson apologised for interjecting, however as a result of the time lost at the start of the meeting, he brought it to the Committees attention that there is limited time remaining to complete the tabled agenda. As the MEC would be briefing the Committee in the evening, she asked that questions be reserved until the evening meeting in order to allow for the Tzaneen presentations.

Mr Hoosen voiced his support for the proposal.

The Chairperson reminded Members that the Tzaneen presentation was a follow-up from the matters which unfolded in the previous Portfolio Committee meeting. The first issue dealt with was the suspension of the Municipal Manager and the road construction project. However during that meeting it was agreed that the suspension was unlawful and illogical which the court later confirmed. During the lockdown, Members agreed to conduct oversight in the area, which the Chairperson confirmed she had completed as a means to fully understand the plans implemented to assist communities. Additionally, in that meeting, a petition submitted by Ms D Van der Walt (DA) was discussed where Members felt that the petition should have been resolved at municipal level. This was not the case due to communication issues between the petitioners and the municipality and as such, the Committee decided that a follow-up meeting with Tzaneen was necessary.

Regarding the events which transpired at the start of the meeting as well as the allegations made, the Chairperson asserted that the Committee needs to condemn it with contempt. It was noted that the Chairperson had delivered a letter prior to the meeting, to inform the Provincial Committee that she would be meeting with the relevant municipalities, as well as extend an invite to them in order to ensure that they were updated on the progress presented. She questioned the intentions of the Officials who complained about the National Committee’s involvement and stated that no one can deter the Committee from their constitutional responsibilities. She expressed her appreciation towards the way in which Members handled the situation especially the Acting Chairperson.

The Chairperson handed over to the MEC to begin the presentation.

Briefing by Limpopo CoGHSTA on support provided to Greater Tzaneen and Mogalakwena Municipalities

Tzaneen was acknowledged for its successful spending of the MIG over a four-year period leading to additional funds being received in the 2016/2017 financial year (see presentation for further details). As illustrated on slide six, Tzaneen is largely more successful, spending over 90% of its MIG. Over the past four financial years, the municipality has prioritised roads and storm water (73.9%) as well as sport facilities (15%) in the allocation of resources. However, the Municipality has failed to allocate resources towards the critical sector of solid waste (refuse removal).

Challenges identified

External factors:

• Poor contractor performance
• Demands by communities – community unrest which delays processes

Internal factors:

• SCM processes
• Delay in the appointment of contractors

Interventions to be implemented by the municipality

• Implementation processes need to be undertaken in time to avoid a situation in which activities need to be rushed without adhering to the set policies.
• Proper planning is needed to avoid poor administration and unsatisfactory standard of physical works in progress 
• Technical experts need to be included during the evaluation of bids in order to avoid court interdicts

Current support provided to municipality

Support is provided through various structures, primarily through CoGHSTA, CoGTA, MISA, Government Technical Advisory Centre (GTAC) as well as other sector departments. This support is in the form of monthly provincial and district MIG meetings where expenditures, progress, challenges, policies and guidelines are vigorously discussed. One-on-one meetings are also scheduled when necessary. Further, during the Provincial Treasury mid-year assessment, the performance of the entire municipality is analysed, discrepancies are highlighted, and recommendations are made.

Regarding Municipal Institutional Development and Transformation, the Department is assisting with the job evaluation process. The municipality currently has 420 jobs on the approved organisational structure and has already been evaluated and is waiting to be submitted to the Provincial Audit Committee for auditing and moderation. In collaboration with GTAC, the Department has conducted capacity interventions on the Municipalities Standard for Infrastructure Procurement and Delivery Management (SPDIM) and Infrastructure Delivery Management System (IDMS) (see presentation for further information)

Integrated Development Plan (IDP)

The Department has supported the development and annual review of the municipalities IDPs by:

• Coordinating and supporting the municipality during IDP engagement sessions (analysis, strategies and project phases).
• Analyisng the draft and final IDP/budget documents as well as providing recommendations (IDP Analysis Report as well as the MEC’s IDP Assessment Report).
• Supporting the municipality during the IDP Steering Committee meetings, Rep Fora and strategic planning sessions.
• Ensuring that the municipality has adopted its IDP by the end of June 2020 as required amidst the COVID-19 pandemic and the subsequent lockdown.

Although the IDP of the municipality is credible and has been rated high as per the 2020/2021 MEC IDP Assessment Report, it is not aligned for two consecutive years (2019/2020 and 2020/2021).

Implementation of Spatial Planning and Land Use Management Act (SPLUMA)

The municipality was assisted during the development and approval of the SPLUMA by-laws which are currently being implemented. Additionally, the municipality has opted for an Independent Municipal Planning Tribunal which is currently operational with the participation of CoGHSTA officials as observers. The Spatial Development Framework was approved and adopted however the Department continues to conduct oversight during the implementation process.

Municipal Financial Viability and Management

The municipality is being monitored to ensure compliance with the provision of the Municipal Property Rates Act and currently there are no issues indicated. Assistance was provided during the 2019/2020 AFS processes where a readiness assessment was conducted and support granted during its implementation as well as attending the Audit Steering Committee meetings. Lastly, through the CoGTA Provincial Debt Forum it has conducted government debt reconciliation/working session for the municipality to ensure that government departments pay municipalities the amounts owed. Reconciliation has been identified as a key challenge.

Briefing by the Mayor on the State of Greater Tzaneen

Mr Maripe Mangena, Mayor: Greater Tzaneen Municipality, said the Municipal Manager (MM) of Tzaneen would be presenting the report to the Committee. The Mayor would return at the end to answer questions which have been raised. The Mayor invited Members to pay special attention to the report and decide if Tzaneen is a municipality in crisis, if it has been successful in terms of it expenditure and whether the municipality has managed to reduce the UIF as per the reduction plan. The Mayor expressed his opinion, stating that like other municipalities, Tzaneen has its challenges but the team of administrators is hard at work to address these issues.

Mr Obby Mkhombo, Municipal Manager: Tzaneen, before starting the presentation, highlighted that the municipality concurs with the presentation made by the provincial CoGTA as it is a true reflection of the events taking place within it. As such, the presentation will skip the points which have already been mentioned.

State of municipalities

• The Council meets at least once per quarter with Special Council meetings held when the need arises.

•  Receive reports directly from the Audit Committee and MPAC.
• EXCO holds at least one meeting a month and has special meetings whenever there is a need.
• The Portfolio Committees meet at least once a month
• Constant training for officials is provided through the support of SALGA, CoGTA and Provincial Treasury
• Representatives of all seven traditional leaders in the municipality attend and participate in Council meetings

Regarding the capacity of MPAC, the MM explained that it consists of nine members including the Chairperson, who receive constant training as well as meet twice a month which is in line with the approved annual work plan. The Labour Forum is operating effectively, however there will always be challenges between the employer and employees from time to time as seen with the work stoppage which took place in August and has since been referred to the South African Local Governing Council.

Regarding the issue of training, it was indicated that 355 employees received training to enhance their work within the Municipality during the 2019/2020 financial year. The training plan could not be fully implemented due to lockdown regulations. The municipality received a mandatory grant of R702 846,72 from the Local Government Sector Education and Training Authority (LGSETA), along with a discretionary grant of R 699 763,80.

Management

Providing the Committee with an overview of the municipalities financial management, the MM stated that while the 2016/2017 audit opinion was unqualified, the 2017/2018 and 2018/2019 financial statements received qualified audit opinions. Speaking on the major audit findings of the 2018/2019 financial report, the MM noted that actions to address the inappropriate estimation of useful lives of assets, inaccurate performance reporting and discrepancies in the SCM processes, had all been implemented.

 UIF

While the municipality is still awaiting the AG’s 2019/2020 audit, irregular expenditure of R24 862 274, and fruitless and wasteful expenditure amounting to R3 717 605 has been discovered, while no unauthorised expenditure has been identified

(see presentation for the irregular expenditure, and fruitless and wasteful expenditure registers).

Revenue Collections

The municipality will now offer settlement discounts of 30%-45% to customers in arrears based on their individual debt payment patterns to enhance cash flow. Other measures to enhance revenue collection include the completed electricity and water meter audits, an electricity tariff review, along with the investigation of the Municipalities revenue base.

COVID-19 expenditure

The MM proceeded to provide the Committee with an itemised breakdown of the Tzaneen Local Municipality’s COVID-19 related expenditure as of September 2020

(see presentation for details).

Provision of Basic Services

Regarding service delivery, the municipality has a water service backlog of 26 373 households, a sanitation service backlog of 1 836 households, and an electricity service backlog of 2366 households. The MM told the Committee that the water supply interruptions faced in many towns and townships within the Municipality occur because of insufficient bulk water sources. This is as a result of the DWS reducing the volume of water from Ebenezer Dam to Great Letaba river from 1.6m3 to 0.6m3 per second, negatively affecting the levels of the Tzaneen Dam.

(See presentation for further details).

Eskom Debt

Regarding the outstanding balance of R118 480 518.95 that was owed to Eskom, the MM informed the Committee that this account would be settled by the end of the 2019/2020 financial year. The payment of the municipalities Eskom account places pressure on its finances and therefore from time to time the municipality may fall behind. In such a situation, the municipality will make alternative payment arrangements with Eskom.

As a result of the time constraints the Chairperson adjourned the meeting. The evening session of the meeting would continue at 19h00