Report of the Select Committee on Finance and Appropriations (the
Committee) on the oversight visit to Mpumalanga Municipalities, dated 10
February 2010.
1. Introduction
1.1 Delegation
1.1.1 The oversight visit took place from 21 to 23 September 2009. Meetings
were held at Ermelo and Nelspruit in Mpumalanga. The delegation consisted of:

Hon. CJ de Beer (ANC) (Chairperson of the Committee);

Hon. TA Chaane (ANC);

Hon. Prince MMM Zulu (IFP) ;

Hon. BA Mnguni (ANC);

Hon. SD Montsitsi (ANC);

Hon. BL Mashile (ANC);

Hon. JJ Gunda (ID);

Hon. WM Makhubela (COPE); and

Hon. TD Harris (DA).
1.1.2 The parliamentary officials who accompanied the delegation were: Mr. Z
Rento (Committee Secretary), Mr. M Mkhize (Content Advisor), Mr. M Tau
(Researcher), and Mr. M Vumazonke (Committee Assistant).
1.2 Terms of reference
1.2.1 The visit formed part of the Committee’s ongoing interaction with
municipalities to monitor collaboration and coordination pertaining to the
provision of municipal services and support given to municipalities by provincial
and national departments. The municipalities in Mpumalanga that were identified
for the visit are: Thaba Chweu Local Municipality, Mkhondo Local Municipality,
Pixley Ka Seme Local Municipality, Govan Mbeki Local Municipality, Emalahleni
Local Municipality, Lekwa Local Municipality, and Nkomazi Local Municipality
1.2.2 The stakeholders (including national and provincial departments) who
accompanied the Committee on this visit were: Provincial Department of
Cooperative Governance and Traditional Affairs, Mpumalanga’s Provincial
Treasury, South African Local Government Association, Department of
Cooperative Governance and Traditional Affairs, Department of Water and
Environmental Affairs, National Treasury, Auditor General, Development Bank of
Southern Africa, and ESKOM.
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1.3 Purpose of the Visit
1.3.1 The purpose of the oversight visit was to engage with the above-mentioned
municipalities along with national and provincial departments on the following
areas:
 Development and implementation of municipal budgets;
 Municipalities’ compliance with the Municipal Finance Management Act,
Number 56 of 2003;
 The spending and performance of the municipalities with regards to
conditional grants;
 The municipalities’ relations and collaboration with various national and
provincial departments and entities;
 Capacity constraints of the municipalities (if any);
 The extent to which municipal services are provided; and
 The alignment of municipalities’ Integrated Development Programmes with
the Provincial Growth and Development Strategy.
2. Stakeholders’ Comments on Mpumalanga’s Municipalities
2.1 Auditor General’s Comments
2.1.1 The Office of the Auditor General (AG) briefed the Committee on the audit
outcomes of the selected municipalities in Mpumalanga. The AG divided their
report into three categories of municipalities, namely: high capacity, medium
capacity and low capacity municipalities.
2.1.2 With respect to municipalities with high capacity, two municipalities
(namely, Mbombela and Govan Mbeki) were given a qualified audit opinion and
three municipalities (namely, Ehlanzeni, Nkangala and Steve Tshwete) received
financially unqualified opinion (with other matters). Out of the municipalities with
medium capacity, one municipality (namely, Nkomazi) was given a disclaimer
audit opinion and another municipality (namely, Albert Luthuli) received a
qualified audit opinion. The other three municipalities (namely, Umjindi, Gert
Sibande and Delmas) were given unqualified audit opinion (with other matters).
2.1.3 With respect to municipalities with low capacity, two municipalities (namely,
Dipaliseng and Lekwa) received disclaimers, four municipalities (namely,
Bushbuckridge, Thaba Chweu, Mkhondo and Msukaligwa) were given a qualified
audit opinion and three municipalities (namely, J S Moroka, Emakhazeni and
Thembisile) were financially unqualified (with other matters). In this low capacity
category and compared to five municipalities of this category in the previous
year, only three municipalities obtained disclaimers (namely Dipaliseng, Lekwa
and Nkomazi) in the 2008/9 financial year. The general breakdown in accounting
systems that occurred in the previous year had not been addressed during the
current financial year at Dipaliseng and Lekwa. Nkomazi’s financial management
deteriorated in the 2008/9 financial year. Furthermore, AG reported that most
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municipalities lacked leadership drive as well as financial reporting competencies
to lift themselves out of the existing difficult situation. Ten municipalities had
qualified audit opinions compared to nine municipalities in the previous year. Two
municipalities (Msukaligwa and Govan Mbeki), that were previously unqualified,
deteriorated to qualifications due to lack of leadership, monitoring and financial
skills. However, one municipality (Ehlanzeni) improved to financially unqualified
(with other matters) as a result of improved control activities.
2.1.4 The AG office (AG) responded to the Committee’s questions by stating that
most municipalities in Mpumalanga either did not have an audit committee at all,
an audit committee was appointed late, or there was an audit committee which
was not functional. AG reported that some municipalities in Mpumalanga are
sharing audit committees. AG raised concerns that although it consulted some of
the municipalities in relation to their auditing requirements, it can not contact all
of them and municipalities were not seeking help from AG until it was nearing the
external auditing process. Most municipalities lacked proactive plans when it
relates to auditing.
2.1.5 The AG office (AG) reported that many municipalities who used consultants
failed to respond to auditing questions because municipalities’ management did
not understand the work that was done by consultants and consultants are
usually not called to account/ unavailable during the auditing process. AG
advised municipalities to invite consultants that they used to perform some of
their functions when an auditing process was unfolding. AG reported that it
planned to monitor and evaluate the effectiveness of the use of consultants by
municipalities in order to determine value for money used to pay these
consultants in relation to service delivery and reporting requirements. The AG
reported that it was willing to suggest innovative interventions in municipalities’
activities but it was constrained by the principle of separation of powers in
Government. The AG reminded the district municipality to play a more active role
in assisting local municipality where needed.
2.2 South African Local Government Association’s Comments
2.2.1 The South Africa Local Government Association (SALGA) reported that it
had identified poor-performing municipalities in Mpumalanga and developed a
programme to assist these municipalities in addressing some of the challenges
raised by the Auditor General. SALGA claimed that this intervention had already
started with municipalities in Bushbuckridge. They also reported that the
Provincial Executive Committee of SALGA had resolved that municipalities must
have their own audit committees dedicated to their functions. SALGA argued that
district municipalities should help local municipalities in this regard as it was one
of their core functions as district municipalities. Furthermore, SALGA reported
that they were in discussion with National Treasury to send interns to
municipalities that were experiencing challenges in terms of financial
management and related matters.
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2.3 National Treasury
2.3.1 National Treasury reported that, in the past, financial management grants
were available to municipalities but these grants were seriously underspent
because municipalities failed to recruit ‘trainable’ interns.
2.3.2 National Treasury also reported that they had designed training courses
aimed at capacitating poor-performing municipalities with financial skills. But
National Treasury indicated that the challenge is that relevant officials from
municipalities, mostly financial and municipal managers, did not attend
workshops/ training sessions. Instead, senior managers send junior officials to
capacity building programmes. In addition to formal training sessions prepared
for municipalities, National Treasury had prepared circulars and electronic
devices. But there is little (if any) evidence that municipalities in Mpumalanga use
these educational resources.
2.3.3 National Treasury advised that Mpumalanga Provincial Treasury should be
at the fore front of the provision of financial skills to municipalities in its province.
National Treasury expressed their dissatisfaction about the support that was
given by the Mpumalanga Provincial Treasury to its municipalities.
3. Municipalities’ Performance and Analysis
3.1 Emalahleni Local Municipality
3.1.1 Emalahleni Local Municipality (ELM) reported that sector departments were
not participating in their Integrated Development Plan (IDP) and that this lack of
cooperation from sector departments has had a negative impact on the
formulation of credible IDPs. The Committee is of the view that the Department of
Cooperative Governance and Traditional Affairs should play a key role in
coordinating activities relating to IDPs; ensuring that sector departments
participates in these plans.
3.1.2 ELM also reported that it was experiencing serious challenges with the
management of waste management sites. For example, the sewer system was
over-capacitated and sewerage was spilling to the nearest river/s. What is of
serious concern is the risk that this polluted water is used by households for
domestic purposes (including drinking) and livestock for drinking purposes.
3.1.3 Furthermore, ELM reported that there are water backlogs in its municipality.
For example, approximately 1200 households did not have access to clean
water. Some of the causes for this inaccessibility to clean water are as a result of
some farmers denying municipality access to their farm land in order to provide
clean water, electricity, and sanitation to communities living on farm lands.
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3.1.4 ELM admitted that it is faced with a major challenge of attracting and,
mainly, retaining scarce skills like finance and engineering because most of
these specialists accept job offers from local mining companies because they are
offering them better remuneration packages than what municipalities could
afford. In other words, specialists may start at municipalities as interns and
proceed to mining companies once they are fully qualified for their specialization.
This practice hampers service delivery by municipalities
3.1.5 ELM is under the impression that the work of community development
workers (CDWs) is not effective and not efficiently co-ordinated, monitored nor
evaluated. According to CDWs, the main cause for the poor performance of
CDWs is poor coordination. For example, CDWs report to the provincial office
(not to municipalities) because they are employed by them, but they work at a
local government (municipal) level. This poses a challenge since monitoring and
evaluation can not be undertaken because no feedback is directed to
municipalities. Consequently, reviews are not properly conducted.
3.1.6 ELM reported that some of its roads are being damaged by heavy trucks
that are using roads which are constructed for smaller vehicles. Legally, there is
nothing ELM can use to stop these heavy trucks from driving on these smaller
roads. The Committee is of the view that a partnership between the departments
of Transport and Cooperative Governance and Traditional Affairs should be
formed in order to address this issue.
3.1.7 When responding to the Committee’s questions, ELM admitted that the use
of consultancies had limitations and reported that it plans to develop its skills inhouse. ELM reported that engineering, financial management and project
management are some of the areas where they seriously lack skills. ELM
indicated that service delivery is compromised by lack of technical skills at a local
government level.
3.1.8 ELM is of the view that national departments who owe them money is
letting them down because these national departments know that municipalities
do not have a lot of money but still these departments are not paying them. ELM
strongly believed that if these departments paid them in time, most of that
revenue collected would have been put into productive use and improve service
delivery. ELM committed to supply the Committee with a list of departments who
are not paying them on time.
3.1.9 ELM reported that there is insufficient land in Mpumalanga that the
municipality can use for developmental purposes. Implications are that most land
was in the hands of farmers. ELM indicated that more municipal land was
required especially because there is huge service delivery backlog in its
municipality owing to inward migration by households seeking job opportunities in
the mining companies in ELM.
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3.1.10 National Treasury acknowledged that ELM is experiencing problems in
obtaining technical skills. National Treasury is under the impression that the
district municipality was to share their technical skills with local municipalities
who could not afford their own. National Treasury advised that local
municipalities may want to explore other recruitment options like sourcing these
scarce skills from neighboring countries. Another option could be to form Public
Private Partnership (PPP) with local mining companies. The Committee advises
that the Department of Cooperative Governance and Traditional Affairs explores
and facilitates these options.
3.1.11 The Department of Co-operative Governance and Traditional Affairs
(COGTA) reported that it had set up a task team to report on the challenges
faced by all municipalities in South Africa and that this task team had started with
Mpumalanga and a report would be made available to the public once it has
been finalised. COGTA is of the view that the highly anticipated report would
enable it to address challenges that are faced by local municipalities.
3.1.12 COGTA reported that Municipal Infrastructure Grant (MIG) amounting to
R28 million that was initially allocated to ELM was taken back by National
Treasury last year because ELM failed to spend this grant. Failure to spend this
grant was due to late implementation of MIG programmes by ELM. However,
after MIG grant was taken back, discussions took place with an aim of assisting
ELM in spending their grant. COGTA reported that, after this intervention, ELM is
amongst the top municipalities that are spending their MIG well. In other words,
interventions helped improve spending on MIG. This is good example to be
followed by other municipalities.
3.1.13 Eskom reported that they are going to fast track short-term electricity
applications made by ELM. Eskom suggested that there is a need to strengthen
the Energy Forum that is headed by SALGA in order to address electricity
backlogs effectively. Eskom commented that the challenge they are facing is that
households are occupying land illegally. Eskom reported that informal
settlements are being formed everywhere in Mpumalanga and that had increased
the demand for municipal services. Eskom advised that Government may want to
review the setting up of informal settlement in South Africa. Failure to do so,
Eskom argued that Government would not meet their long term goal of
formalizing informal settlements in South Africa. For existing formal settlements
in Mpumalanga, Eskom had developed electrification plans for them and these
plans are ready for implementation.
3.1.14 Eskom also reported that municipalities are invited to apply for more
electrification funding by the Department of Energy. However, Eskom reported
that the extent to which municipalities can do in terms of service delivery is
constraint by attitude of farmers. For instance, Eskom reported that some
farmers refuse to allow municipalities to their land in order to provide municipal
services to communities that are living on farm land. Eskom appealed to the
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Committee for assistance on how to deal with farmers who are violating rights of
households in farms to basic services; a right that is enshrined in our
Constitution.
3.1.15 The Department of Water and Environmental Affairs (DWEA) reported that
it had budgeted R6 million to provide the municipality with water and waste water
projects. But, DWEA reported that ELM has not made sufficient allocation for
water infrastructure in their capital budget and that ELM had not reported water
shortages. DWEA encouraged ELM to plan for water projects appropriately.
DWEA expressed their concerns that an increasing number of mining companies
in Mpumalanga were given mining licences, but these mining companies had not
committed themselves to water conservation and that has led to water pollution.
3.1.16 The Development Bank of Southern Africa (DBSA) claimed that it was
assisting municipalities with technical skills and funding. Through the Siyenza
Manje programme, DBSA reported that it recruited scarce (technical) skills from
neighbouring countries in order to provide municipalities with these limited
technical skills. DBSA advised that, because technical skills are scarce in
Mpumalanga, municipalities may want to explore option of sharing these skills
instead of head-hunting these skills from one another. The Committee is of the
view that the Department of Cooperative Governance and Traditional Affairs has
an important role to play in terms of facilitating these sharing schemes.
3.1.17 Eskom revealed that it does not encourage municipalities to take loans
although it is provided for in terms of the Municipal Finance Management Act
(MFMA). DBSA reported that the bank intends to meet with municipalities in
order to discuss and plan on how it is to assist them. DBSA also reported that
they had met with the Provincial Treasury and the relevant MECs to plan on how
to assist municipalities.
3.2 Govan Mbeki Local Municipality
3.2.1 Govan Mbeki Local Municipality (GMLM) admitted that it lacked financial
skills and most financial positions are occupied by acting people. However,
GMLM told the Committee that it has developed strategies to fill vacant positions
in the near term. In terms of financial management capacity building, GMLM
informed the Committee that National Treasury is assisting them with training
sessions. GMLM plans to use financial management grant to capacitate the
personnel in finance and, for monitoring and improvement of financial systems.
3.2.2 Govan Mbeki Local Municipality (GMLM) reported that the municipality had
a roll over of R19 million from 2007/08 financial year for the Municipal
Infrastructure Grant. GMLM argued that this huge roll-over was as a result of the
delay in the approval of the business plan by COGTA and DWEA. GMLM pointed
out that it has requested the services of the KPMG Services (Proprietary) limited
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(KPMG) to perform the internal audit function with the intention that KPMG would
transfer skills to GMLM’s personnel working with them.
3.2.3 GMLM admitted that it is experiencing some problems with the eradication
of the bucket system which resulted in the failure of the Embalenhle project
although a large amount of money had been spent.
3.2.4 GMLM reported that the size of their indigent register was increasing and
that is causing a negative impact on the revenue collected. GMLM also reported
that the municipality was having a problem with the ageing infrastructure, mainly
in Bethal and Mzinoni. Added to these challenges, GMLM is experiencing
electricity problems in Bethal. Furthermore, GMLM argued that insufficient
voltages provided by Eskom added to the electricity problems faced by GMLM.
Similarly to Emalahleni Local Municipality (refer to section 3.1 above), GMLM is
faced with a challenge of heavy trucks that are damaging roads which are
constructed for smaller vehicles.
3.2.5 COGTA reported that GMLM is not spending their MIG as expected. With
respect to the technicians deployed to GMLM, COGTA reported that they did not
receive co-operation and acceptance from municipal officials and that the
deployed officials found the working environment within municipalities
unwelcoming and they had to leave.
3.2.6 Eskom reported that it is in discussions with municipalities over applications
for higher electricity voltages in order to improve electrification projects.
3.2.7 GMLM reported that DBSA, through the Siyenza Manje programme, supply
them with deployees in the field of finance and other technical skills.
Unfortunately, GMLM was of the opinion that it did not benefit from these
deployees because deployees are shared among municipalities and are not
available when they are mostly needed. DBSA requested to meet with the
municipality to discuss the challenges municipalities are facing with respect to
DBSA’s deployees.
3.2.8 National Treasury reported that GMLM was not reporting their financial
performance in accordance with the required standards. National Treasury
alleged that GMLM is, in some aspects, not providing the Committee with the
accurate information.
3.2.9 GMLM informed the Committee that it had been partly led down by poor
performing contractors. Contractors could not finish some of the projects owing to
technical reasons. An investigation was conducted and report was made
available to the relevant provincial Member of Executive Committee (MEC).
GMLM expect legal action to be taken against poor performing contractors.
SALGA reported that it would develop a programme to monitor and evaluate the
service provided by consultants within municipalities.
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3.2.10 The Committee is of the view that National and Provincial Treasuries
assist GMLM in its plan to spend MIG. GMLM is encouraged to make use of
approved reporting guidelines provided by National Treasury.
3.2.11 Similarly to Emalahleni Local Municipality, GMLM informed the Committee
that it is experiencing difficulty when it is attempting to access farm lands in order
to provide basic services to communities living on farm lands. GMLM reported
that some farmers refuse them entry into their farm land. GMLM is of the view
that Government should intervene and assist municipalities when they are trying
to access farm lands for community development purposes.
3.2.12 COGTA expressed their dissatisfaction with the rate at which GMLM is
spending their conditional grants. COGTA is of the view that GMLM did not plan
accordingly on spending conditional grants and provides invalid reasons for their
failure to spend conditional grants. COGTA reported that GMLM provides good
projections on how they plan to spend their grants but fails to provide proof that
funds are committed. The Committee advised GMLM and COGTA to meet and
discuss how GMLM is going to improve their spending trend.
3.3 Pixley Ka Seme Local Municipality
3.3.1 The executive mayor of the Pixley ka Seme Local Municipality (PSLM)
informed the Committee that, six months ago, Mpumalanga provincial executive
intervened in the management of PSLM in terms of section 139 (1b) of the
Constitution of the Republic of South Africa, Act 108 of 1996. Currently, PSLM is
under the management of the administrator.
3.3.2 The administrator of PSLM cited high vacancy rate and negative audit
reports as some of the causes for PSLM to be put under administration. The
other concern of the PSLM’s residents that led to a public protest was that PSLM
failed to provide such refuse removal service and its residents refuse to pay for
this service. The administrator reported that the council has conceded to the
writing-off of refuse removal debts over the period starting from July 2008 to
August 2008. This had obviously led to a decline in the service revenue collected
by PSLM over the 2008/09 financial year. The high vacancy rate within the
finance division means that PSLM did not have sufficient expertise to
management their financial matters well, including debtors’ collection. This is one
of the serious challenges for most municipalities in Mpumalanga.
3.4 Lekwa Local Municipality
3.4.1 Lekwa Local Municipality (LLM) reported that the chief financial officer and
the municipal manager had resigned from LLM. Due to scarce financial
management skills, the budget and treasury unit of LLM is comprised of only four
personnel (that is, two permanent staff and two interns). Obviously, LLM’s
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finance and treasury unit is under-capacitated and that situation has a negative
impact on service delivery.
3.4.2 LLM also reported that the former Department of Local Government and
Housing had compiled a report after investigating late submission of financial
statements and non-compliance with the Municipal Finance Management Act. It
is reported that LLM’s council is implementing recommendations of the report.
Furthermore, LLM reported that it experienced technical challenges when it was
trying to conform to the new reporting requirements of National Treasury. LLM
did not have an internal auditor.
3.5 Mkhondo Local Municipality
3.5.1 Mkhondo Local Municipality (MLM) reported that Mpumalanga provincial
executive intervened in the management of MLM in terms of section 139 (1b) of
the Constitution of the Republic of South Africa, Act 108 of 1996. Currently, MLM
is under the management of the administrator. This intervention was as a result
of allegations of fraud, corruption and maladministration. These allegations had
led to unrests within the municipality. Consequently, both the municipal manager
and the chief financial officer were placed under special leave. MLM informed the
Committee that an investigation report would be completed in the near term and
a copy of that report would be made available to the Committee.
3.5.2 MLM reported that it did not have funds to spend on projects that were
under construction. MLM admitted that its Integrated Development Plan (IDP)
was not credible owing to insufficient public participation. In order to address that
challenge, MLM had asked provincial treasury to assist it with the development of
sound IDP. In the 2009/10 financial year, MLM did not have sufficient funds to
implement sewer treatment plant. This project was postponed for the following
financial year.
3.5.3 MLM reported that it had serious shortage of staff in the supply chain
management unit. Even worse, three staff members of the afore-mentioned unit
were suspended owing to allegations of supply chain mis-management. MLM
reported that it had made late submission of financial statements for the past
three years owing to bank reconciliation challenges.
3.5.4 MLM informed the Committee that households in rural areas were using
water from the river which was polluted by live stocks. In order to temporary
address that this undesired situation, the administrator had hired five water
tankers in order to provide rural communities with clean water. Mondi Paper
Milling Company had donated R750 000 towards service delivery by MLM. MLM
also reported that it had unused land within their jurisdiction.
3.5.5 MLM admitted that they had huge service delivery backlogs; some of which
were inherited from the past. In order to address some of these backlogs, MLM
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had asked for assistance from Nkangala District Municipality which had received
a clean audit opinion in the past. MLM reported that it was receiving great help
from Nkangala District Municipality.
3.6 Comments on the Reports of Pixley Ka Seme, Lekwa and Mkhondo
Municipalities
3.6 1 The Committee is of the opinion that there are serious challenges facing
Pixley Ka Seme, Lekwa and Mkhondo municipalities. Because of those
challenges, the Committee committed itself to conducting a follow-up oversight
visit to these three municipalities. Members are in agreement that the abovementioned municipalities require urgent and aggressive service enhancement
interventions. The Committee agreed that these three municipalities need help
from relevant departments/stakeholders, like departments of Water and
Environment Affairs, Co-operative Governance and Traditional Affairs, Eskom,
National Treasury, Provincial Treasury and so forth.
3.6.2 After much deliberation with these three municipalities, the Committee was
of the view that the level of support that is provided by the Development Bank of
Southern Africa (DBSA) to these municipalities requires serious improvement.
The Committee urged DBSA’s representatives to upgrade and fast-track support
mechanisms given to these and other municipalities.
3.6.3 The Committee was not completely satisfied with the reports provided by
the administrators on the status quo of their municipalities because it felt that
they only mentioned negative things that was happening in municipalities without
mentioning any good things (if any). The Committee raised its concern over
litigation whereby officials are taken to court and later settle dispute through
alternative dispute resolution (ADR); resulting in a large amount of money being
paid by the municipality. The Committee is of the view that litigation should be
undertaken only if there is high probability for the municipality to win the court
case. Otherwise, a municipality may waste money and time on unsuccessful
litigations that are usually settled out of court with huge financial implications;
thus compromising service delivery due to wasteful monetary and non-monetary
costs.
3.6.4 The Committee commented that councilors should be discouraged from
regarding their positions as a tool for making money without advancing the
interests of the poor. The Committee subscribes to the initiative that aims to
ensure that corrupt councilors face ‘the full arm of law’.
3.6.5 With respect to these three municipalities, Auditor General’s report
indicated that they lacked leadership, technical and general management skills.
To address these skills shortage, the Committee urged all relevant
departments/stakeholders to assist these three poor-performing municipalities
and others.
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3.6.6 The Committee advised that the Department of Cooperative Governance
and Traditional Affairs leads a team of departments and other stakeholders that
would collectively design, implement, monitor and evaluate service enhancement
interventions.
3.6.7 The Committee is of the view that the existence of administrators in
municipalities should be a temporary solution. The Committee supports the idea
of having administrators as temporary caretakers; transferring skills to the
municipalities so that municipalities become self-sufficient and independent. Put
differently, the Committee sees the role of an administrator as temporary aimed
at helping, coaching, educating, mentoring and developing employees of a poorperforming municipality. The Committee emphasized that much of the success of
an administrator is dependent on the cooperation between an administrator and
officials working for that particular municipality.
3.6.8 National Treasury reiterated that it provides Parliament with information on
the spending trends of municipalities compiled through section 71 of the
Municipal Finance Management Act. National Treasury appealed to
Parliamentary committees to make use of this information in order to get a better
understanding of spending trends in municipalities. For example, National
Treasury revealed that a total of R444 million is unspent by twelve (12)
municipalities in Mpumalanga. National Treasury informed the Committee that it
is only Parliament’s committees, not National Treasury, who can ensure that
municipalities spend appropriately. National Treasury can only withdraw funds if
they were not spent. Put differently, only Parliament’s committees can ensure
that municipalities deliver improved services to its citizens.
3.6.9 National Treasury advised Government that they need to strengthen
cooperative governance. National Treasury urged municipalities to work closely
with them and to refrain from denying that they are in trouble until a disaster
happens. In other words, National Treasury strongly believed that municipalities
‘grow’ problems into mountains and only try to act against them when things are
beyond control. Recent service delivery protests across the country attest to this
argument. National Treasury confidently stated that some municipalities’ report
do not reveal problems in municipalities until service delivery protests erupt.
3.6.10 COGTA admitted that service delivery protests in Mpumalanga are clear
evidence that there are deep service delivery challenges in Mpumalanga.
COGTA reported that it plans to invite all relevant stakeholders and to discuss
better ways of addressing unrest and service delivery in Mpumalanga. Report on
the outcomes of this proposed service delivery workshop/s in Mpumalanga would
be forwarded to the Committee.
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3.7 Thaba Chweu Local Municipality
3.7.1 Thaba Chweu Local Municipality (TCLM) reported that it had experienced
unrest after it was discovered that an amount of R3.2 million was missing in the
financial system. Although TCLM had recovered R2 million, R1.2 million was still
missing. Investigation to recover the latter is underway, TCLM reported. Another
challenge reported by TCLM was that it is finding it difficult to service a loan that
was taken out in 1972 because it is 76 per cent of their total funds comprises of
grants. These grants could not be used for other purposes other than purposes
intended for.
3.7.2 TCLM reported that its mayor and thirteen (13) councilors were suspended
and protests were still going on, demanding the remaining councilors to resign
owing to poor service delivery. Because most councilors were on suspension and
their positions are not vacant as yet, their positions could not be advertised. The
Committee expressed their disappointment that the remaining councillors did not
come to account to the Committee when they were mostly expected to do so and
as provided for in terms of section 69 of the Constitution.
3.7.3 TCLM admitted that they have thirty-three (33) percent vacancy rate which
obviously led to capacity constraints. TCLM attributed this high vacancy rate to
inability to recruit scarce skills because municipalities are offering unattractive
packages when they are compared to packages offered by the private sector.
The Committee advised that TCLM should explore other options of developing
and retaining scarce skills, including Private Public Partnerships. TCLM
committed itself to providing the Committee with additional information on
qualifications and vacancy rate for their municipality.
3.8 Nkomazi Local Municipality
3.8.1 Nkomazi Local Municipality (NLM) reported that court hearings are
demanding time from its leadership. For example, its municipal manager and the
chief financial officer were not present to brief the Committee. Instead, they
attended court hearings. The Committee is of the view that the representative
from NLM was a junior official who may be unable to engage with the Committee
at a strategic level.
3.8.2 NLM admitted that they do not have an up-to-date indigent register. NLM
reported that they plan to update it so that they could base their developmental
plans on reliable data.
3.8.3 Similarly to most municipalities visited in Mpumalanga, NLM revealed that
they were struggling with the recruitment of scarce skills. NLM reported that,
although financial systems are in place, there were no ‘warm bodies’ to use and
support them. NLM indicated that they lacked other types of technical skills like
engineering.
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3.8.4 NLM reported that the sector departments are providing ‘a mouth service’
to it. For example, sector departments had promised to assist NLM in providing
better municipal services, but they have failed to honour their promises. NLM is
of the view that much of their weaknesses are partly caused by lack of
assistance from sector departments.
3.8.5 NLM admitted that their plans are still based on the community census that
was conducted in 2001. Obviously, NLM’s plans are not based on real figures,
but on out-dated numbers because NLM is experiencing rapid population growth
due to inward migration as the municipality is close to the borders of
Mozambique and Swaziland.
3.8.6 Overall, the Committee is not impressed with the service of municipalities
visited in Mpumalanga. With respect to questions of Members that
representatives from municipalities could not answer, Members requested that
NLM forward responses to un-answered questions in writing to the Committee’s
Secretariat. The Committee is of the view that the Department of Co-operative
Governance and Traditional Affairs (COGTA) should play a leading role when all
relevant departments and stakeholder are assisting municipalities; starting with
the struggling ones.
3.9 Comments on the Reports of Thaba Chweu and Nkomazi Municipalities
3.9.1 National Treasury is of the view that relevant departments and provincial
treasury did not adequately monitor these struggling municipalities in
Mpumalanga. National Treasury suggested that more emphasis must be placed
on monitoring and evaluation. National Treasury is of the view that the financial
management grant (FMG) is used for incorrect purposes. For example, TCLM
used FMG for customer care courses and National Treasury is of the view that
the use of FMG for customer care courses was a wasteful and useless
expenditure. National Treasury advised TCLM that FMG was to be used for
strategic finance. According to National Treasury, municipalities like TCLM are
not capacitating interns with appropriate skills, namely financial management.
3.9.2 The Department of Co-operative Governance and Traditional Affairs
(COGTA) suggested that political support is one of the key requirements for
sorting out governance issues in Mpumalanga. COGTA is of the view that
political support should precede a sound turnaround strategy to assist struggling
municipalities. COGTA advised that municipalities should research better ways of
spending their grants. For example, the Municipal Infrastructure Grant is
amounting to R78 million; municipalities are failing to spend grants according to
their business plans. COGTA revealed that, as a department, they had
developed a turnaround strategy for all municipalities in South Africa. In addition
to this national strategy, COGTA had devised a special turnaround strategy for
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municipalities in Mpumalanga in response to a current ‘wave’ of service delivery
protests and unrests in some of the municipalities in Mpumalanga.
3.9.3 Eskom reported that Thaba Chweu and Nkomazi municipalities are not
paying their bills on time. Eskom revealed that it planned to meet with
Department of Energy and discuss how to assist municipalities, starting with the
struggling ones.
3.9.4 South African Local Government Association (SALGA) advised
municipalities to use their scarce resources effectively. SALGA added on saying
that Members are expected to visit projects that are being implemented by
municipalities in order to verify the success of these projects. SALGA cited an
example in Buskbuckridge where a municipality claimed that they had a
successful project but, on inspection, it was found that there was no project.
SALGA advised municipalities in rural areas like Nkomazi Local Municipality to
identify innovative ways of generating their own revenue. For example, SALGA
reported that there was land in Mpumalanga that was selling for approximately
R1 million per plot and these plots are highly sought after for the erection of
holiday homes.
3.9.5 The Department of Water and Environmental Affairs (DWEA) reported that
it is updating indigent register for Mpumalanga but the challenge was that
municipalities lacked appropriate policies. For example, there was a repetitive
illegal connection of water in some municipalities.
4. Recommendations
After extensive consideration and analysis of the reports and verbal/written
submissions from the above-mentioned municipalities in Mpumalanga, sector
departments and other stakeholders, the Committee recommends the following:
4.1 The Department of Co-operative Governance and Traditional Affairs leads a
task team comprising of National Treasury, Auditor-General and other
relevant stakeholders to discuss and report on the minimum job requirements
for management positions in municipalities;
4.2 The Department of Co-operative Governance and Traditional Affairs leads a
task team comprising of National Treasury, Auditor-General and other
relevant stakeholders to analyse and evaluate the advantages and
disadvantages of shared internal audit committees for municipalities;
4.3 The Department of Cooperative Governance and Traditional Affairs, in
consultation with relevant stakeholders, develops, implements and evaluates
strategies for improving the effectiveness of ward committees;
4.4 The Department of Cooperative Governance and Traditional Affairs coordinates, monitors and evaluates the assistance of sector departments to
municipalities when they are developing Integrated Development Plans;
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4.5 The Department of Cooperative Governance and Traditional Affairs, working
together with the Department of Justice and Constitutional Development, the
Department of Rural Development and Land Reform, Human Rights
Commission, South African Local Government Association, and any other
relevant stakeholders, develops strategies on how to manage farmers who
refuse municipalities access to their farm land to provide services to
communities that are residing on farm lands;
4.6 The Department of Cooperative Governance and Traditional Affairs, working
together with the structures of community development workers and other
relevant stakeholders, develops strategies aimed at increasing the
effectiveness of community development workers;
4.7 The Department of Transport, working together with the Department of
Cooperative Governance and Traditional Affairs, expedites the process of
road reclassification with an aim of finalizing the process within six months
from the adoption of this report by the house;
4.8 The Department of Cooperative Governance and Traditional Affairs leads a
team to be tasked with the development of strategies aimed at ensuring that
municipalities recruit, train and retain key personnel;
4.9 The Department of Cooperative Governance and Traditional Affairs, in
consultation with National and Provincial Treasuries, Development Bank of
Southern Africa and any other relevant stakeholders, work together with
municipalities to develop their own skills competencies without outsourcing
their core functions to consultants and to develop policies and guidelines for
appointing outside consultants;
4.10 Statistics South Africa, in consultation with national departments of
Cooperative Governance and Traditional Affairs, Home Affairs and
municipalities, updates statistics of communities in municipalities every year
in order to ensure that municipalities base their service delivery plans on
reliable data; and
4.11 The Presidency, working together with the Department of Cooperative
Governance and Traditional Affairs and National Treasury, develops an
intergovernmental payment policy aimed at ensuring that interdepartmental
debts are settled when they fall due especially when a national department
owes a municipality.
Report to be considered.
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