Msunduzi Local Municipality: engagement with Municipality, MEC, AGSA, SALGA AND DCOG; with Deputy Minister

Meeting report

Chairperson’s opening remarks

The Msunduzi Local Municipality recently attracted negative publicity, with reports emerging of its poor waste management. Other reports indicated, during an audit, Auditor-General South Africa (AGSA) officials were intimidated and chased by officials of the municipality. The Committee condemned these actions. Two Section 106s are ready to be tabled at the municipality, according to the report provided by the KZN Department Cooperative Governance and Traditional Affairs (COGTA). This action indicates the Department has reason to believe maladministration, fraud, and corruption occurred.

The municipality spent R80 million on security. This amount includes bodyguards who were hired for some of its councillors, including the Mayor and the Speaker. Apart from the EThekwini Metro, no other municipality spent so much on security. The Committee was disturbed by this, and the fact in some instances, bodyguards were provided without the South African Police Services (SAPS) conducting a threat and risk analysis. This is in violation of the municipality’s regulations. The regulations say only Executive Mayors, and Speakers, are entitled to bodyguards. Only SAPS can determine deviation from this norm. Msunduzi flouted this requirement and set aside R27.5 million to allocate six bodyguards to the Mayor, two to the Speaker, and 58 to 15 councillors. It passed an unfunded adjustment budget for 2019/20, due to the increased repairs and maintenance burden arising from service delivery processes. The 2020/21 financial year budget was deemed unfunded by National Treasury (NT). The financial viabilities ratio highlighted in the municipality’s presentation shows, in some instances, there are no sufficient cash reserves to make monthly fixed cash operations. This is an indication of the cash flow problems, and are part of the reasons for the section 139(1)(b) intervention. The Committee is concerned this is the second time in ten years the municipality is placed under administration.  

It is important for the Committee to monitor the progress of each of the interventions in the eight municipalities within the province, including Msunduzi.

State of the Msunduzi Municipality

Mr Mzimkhulu Thebolla, Executive Mayor of the Msunduzi Local Municipality, briefed the Committee on the state of the Msunduzi municipality, first providing the Committee with a brief background. Msunduzi is based in the Umgungundlovu District Municipality and consists of 78 councillors. It is currently an African National Congress (ANC) led municipality. From 2018, the municipality faced many challenges to its stability, which include labour strikes, boycotting of meetings by councillors and poor financial management. To stabilise the municipality, the provincial government invoked a Section 139(1)(b) intervention in April 2019. It was the second time it took this course of action, as the municipality was also placed under administration in March 2010. The intervention in 2010 was terminated the following year, as the municipality stabilised.

The municipality was plagued with community protests as a result of poor service delivery. Residents complained about water rationing, the state of the municipal roads, and poor waste management. A financial recovery plan (FRP) was drafted by NT in July 2018, but after conducting a mid-year performance assessment, it recognised the plan was not effective in turning around the municipality.

The municipality still had challenges with debt collection, and overall, the debt to the municipality continued to increase, amounting to R4.4 billion. The municipality assured the Committee it implemented measures to assist it with the collection of debt owed to it.

AGSA on Msunduzi Municipality

Ms Ntombifuthi Mhlongo, Business Executive, AGSA, briefed the Committee on the audit outcomes of the Msunduzi municipality. She said the municipality received three different audit outcomes in the last three financial years.  These are: disclaimed with three material findings (in 2016/17), adverse with four material findings (2017/18), and qualified with one material finding (2018/19). The AGSA found there were several instances of fruitless, irregular, and wasteful expenditure in the municipality, which amounted to R511.9 million, and little to no consequence management was taken. It also found the municipality had poor revenue management, as it, amongst other things, lacked an effective system of internal control for debtors and revenue. 

Due to poor quality annual financial statements (AFS), the municipality had to spend R6 million on outsourcing consultants. The municipality’s financial statements lacked quality because there were vacancies in its financial unit, and there was a lack of technical accounting knowledge. AGSA recommended the municipality should fill the vacant positions with skilled professionals, to produce quality AFS without the assistance of consultants. 

SALGA’s support to the Msunduzi Municipality

Mr Sabelo Gwala, Director: Operations, SALGA KZN, briefed the Committee on SALGA’s support to the Msunduzi Municipality. During his briefing he said SALGA had several support programmes it hosted, from 2017-18 financial year to the 2019-20 financial year. Some of these are job evaluation training; public-private partnerships (PPP); capacity training and revenue management; and credit control and debt collection training. SALGA also provided the municipality with recommendations to improve its infrastructure services, and governance and intergovernmental relations. SALGA expressed hope in the municipality’s ability to turn around its current financial and political condition.

Msunduzi Municipality’s 2019/20 compliance with the requirements of the Municipal Finance Management Act

Mr Ravigasen Pillay, KZN MEC: Finance, said much of the content in the report was compiled by NT. Treasury is in charge of oversight over municipalities compliance with requirements of the Municipal Finance Management Act (MFMA). NT provides support to the Municipality during its tabling of its 2019/20 Special Adjustments Budget, to ensure the adoption of a funded budget. It also continues to provide support to the municipality on budget related matters, including on its challenges.

With the assistance of NT, the municipality developed a new FRP in 2019. Several additional measures were placed in the plan, to prevent the non-effectiveness of the previous plan. With the appointment of the Municipal Manager (MM), NT noted the municipality’s progress on the implementation of the plan. Challenges in the implementation of the plan still remain. For instance, the municipality did not yet finalise the review of the current organisational structure, and neither did it align capacity to improve service delivery.

Upon the municipality being put under administration, one of the initiatives by the provincial government was to create a war room to assist with inter-government matters. The provincial government used a system of district champions, whose role is to assist the President and the Deputy President to manage the implementation of the District Development Model (DDM). This is intended to enhance the capacity of the state where it matters most. As the district champion, he is himself tasked with chairing the war room.

Over the past few months, the war room focused on the challenges faced by all municipalities within the province. Delegates agreed, in the war room there was progress in tackling challenges. The war room also identified one of the biggest challenges is to rebuild the confidence of society in the capability of the state. To delve more into this matter, the war room will meet the following day. 

Provincial government assisted the municipality with the fire in the New England Road landfill site. It also recently identified all of the challenges Msunduzi faced. Poor and ageing electricity infrastructure was flagged as being the largest challenge the municipality faces. To correct this, the provincial government recommended it conduct a maintenance programme. Nationally, there is a problem of illegal water and electricity. This overloads the system, and in some instances substations exploded.

To better deal with this matter, the KZN Provincial Treasury recommended a national campaign is required. The KZN PT recognised the high levels of inter-governmental debt, and it plans to implement measures to lower this debt in the future.

Ms Nolwazi Njokweni, Director: Corporate Planning, KZN COGTA, said the council sittings collapsed due to failure to comply with the rules and orders of the municipality. Subsequently, the KZN ANC provincial leadership removed the Mayor, Speaker, and the Deputy Mayor.

The suspension of the former MM in August 2018 caused governance challenges in the municipality. With the election of new office bearers, there was a change in administration and governance. A new MM was appointed in April 2020. 60 employees are undergoing disciplinary processes. While there was significant progress in the municipality, the maintenance of landfill sites and cash flow challenges still remain.

During the 2019/20 financial year, the municipality received an allocation of R197 million for its Municipal Infrastructure Grant (MIG). By the end of June 2020, it spent R59.3 million of this allocation and applied for a rollover. The municipality was slow to implement its projects and failed to report its expenditure, as required by the Division of Revenue Act (DORA).

The National Employers Association of South Africa (NEASA) and COGTA observed other challenges, such as poor planning, subcontracting, rollover of projects, delays in payments and processing invoices, all of which led to delays of project implementation. With the lockdown, all of the construction projects were stopped. This delayed planned projects.

Msunduzi also faced capacity challenges in its Project Management Unit (PMU). NEASA, in supporting the municipality, held weekly sessions on how to better spend the Municipal Infrastructure Grant (MIG) allocation. These weekly sessions were held from May until June 2020. A recovery acceleration plan with realistic projections was drawn up. The municipality was advised to reprioritise its MIG allocation due to the Covid-19 intervention. It followed this advice. However, it withdrew its application.

Other support provided to the municipality includes the KZN COGTA’s coordinated MIG appraisals, to ensure the delivery of funded projects. NEASA also supported all district municipalities during the lockdown by appraising projects, and monitoring the supply of static banks in various areas.  It assisted with the choice of an engineer to be sent to the municipality to assist within the technical unit. There was an acceleration of capital projects through the service delivery war room. The Department remains hopeful, with the support of the war room, Msunduzi’s service delivery programme will be accelerated. This will prevent further unrest within the community.

Opening remarks of the KZN MEC: COGTA

Mr Sipho Hlomuka  KZN MEC: COGTA, said most of the matters the Department plans to present on, was covered by the other briefings. The Department will still present, so it can be placed on record.

Since Emadlangeni Local Municipality asked to be placed under administration by the Provincial Government, the number of municipalities under administration in the province increased to nine.

He does not agree the implications of intervention are lost by the increase in the number of municipalities placed under administration. Intervention is a mechanism invoked to bring stability to a municipality, and to correct the wrongdoing of the officials. The Department does not consider the duration of administration, as a measure for revoking intervention. Instead it uses the success of the intervention as an indicator for when the intervention should be revoked. For instance, during the Fifth Administration of Parliament, the Limpopo Department of Education was placed under administration by national government. It was only removed once national government was satisfied the intervention proved a success. The duration of an intervention is not viewed as being significant to the Department.  

The Department worked well with the municipality, and it expressed hope the municipality will achieve the targets set by the provincial government. Several of the provincial departments planned to sign a Memorandum of Understanding (MOU) on how the provincial government will assist all of the nine municipalities under administration.  

Support measures provided by the KZN COGTA to the Msunduzi Municipality

Mr Sicelo Duma, Senior Manager, KZN COGTA, briefed the Committee on the support measures provided by the KZN COGTA to the Msunduzi Municipality during the administration period. Some of the support measures include:

• Deployed experts to the municipality to assist the administrators.
• Assisted with the appointment of the senior manager, the MM, and the CFO.
• Assisted the municipality with the preparation of its financial recovery plan.

The Chairperson opened the floor for discussion.

Discussion

Mr H Hoosen (DA) said he appreciates the detailed presentations provided by each of the officials. He said the Msunduzi municipality was the best run city in the province and in the country. It saddens him the situation got this bad. However, there was enormous work and effort done to ensure the municipality turned around. The problems in the municipality should serve as a lesson for all stakeholders present. He asked officials from each tier of government present to provide comments on given the lessons learned.

He asked how, through their own oversight, the officials could work better and ensure this type of situation never happened again. It will take time for the municipality to correct all of its challenges, particularly its financial management. He hopes in the future the Committee can engage the municipality to monitor its progress.

It is concerning, one of the reasons the municipality was placed under administration is because there was no consequence management taken against Councillors and officials responsible for Msunduzi’s decline. The municipality even admitted it took no action against the individuals. He asked if the municipality can confirm, in situations where officials and politicians are fingered in wrongdoing, if action is taken against them.

A report produced by the municipality’s investigation found the former MM was involved in a number of irregular activities during his tenure. This includes paying himself an increased salary. He asked what steps were taken to recover the money as the municipality said it will recover all lost monies.  

There was no mention of a significant number of consumers not billed by the municipality. He estimated consumers in 23 wards were not billed for electricity and water usage. This explains why the Municipality had significant debt.

He was pleased the municipality had debt collectors to pursue non-paying consumers and force payment. If consumers do not pay they face disconnection. He asked why the residents were disconnected, but not the offices of provincial departments, particularly those who owe the municipality debt. This is unfair to the residents.

While the municipality’s indigent data base is in the region of 5 000, several other people who are indigent, are not captured. As a result, the municipality continues to lose money it could receive for its equitable shares. He asked what progress was made to capture these individuals on its database, so the municipality can be supported by either provincial or national government funding, to increase its equitable shares.

No action was taken against councillors who still owed the municipality money. He asked for the municipality to provide details on all of the councillors, and what action was taken against them. He also asked if the Mayor had an outstanding debt to the municipality. If councillors, including the Mayor, still have outstanding debt to municipality, how can the people be held to account. He suggested the municipality must take annual action against such councillors.

Since it is not included in the presentations, he asked if the municipality could provide the Committee with the amount spent on bodyguards. He also asked why bodyguards were required, and how many were hired. He was pleased the municipality completed the investigation of a specific company, and ordered it to pay back the money owed. He asked if the money was recovered by the municipality and if not, when it will be recovered.

Ms H Mkhaliphi (EFF) appreciated the presentations. AGSA reported the municipality incurred a deficit of R141 million for this current financial year. She asked the reasons for this to be provided to the Committee. Lack of compliance was mentioned in the report. The municipality said it followed recommendations, and there was progress. If there were still cases of irregular expenditure reported, the municipality could not have made progress. She asked if the municipality can provide a progress report to the Committee. She asked how many cases were instituted, and how far in the process the cases are. The Committee is interested to know who does what.

In the previous two days, the media reported protests in some of the municipality’s wards due to the lack of electricity supply. This lasted for three days. One of the reasons the municipality was placed under administration is because it does not provide adequate service delivery, yet these challenges still persist.  

The various reports received are in agreement about progress in the municipality, but the Committee will not congratulate Msunduzi until all of its matters are solved.

She asked how the political heads of the ruling party put an end to the political infighting. Political infighting is a serious challenge for the municipality, and led to many of its challenges. 

The municipality said monies are not used for the purposes intended. This occurred once more during Covid-19, with the alleged corruption of Personal Protective Equipment (PPE) procurement. There was a recent allegation in the media about the municipality spending an additional R10 million on overtime. She said she is disappointed by this, and questioned if the municipality is serious about dealing with corruption. She questioned if the municipality is serious about dealing with corruption, and asked if the municipality is aware R10 million was spent irregularly. It is unusual for officials to be able to claim overtime when the municipality is not able to provide services. These managers must be exposed to the Committee.

She questioned why the municipality did not take the departments who owed it money to task.

She asked the municipality to provide the Committee with a report similar to what the Metsimaholo Local Municipality did. It contained the details on the wrongful acts taken by certain councillors, their names, political affiliation, and the actions taken against councillors by the municipality.

Ms G Opperman (DA) said the municipality’s electricity losses stand at R248 million, which is higher than the debt owed to Eskom, which stands at R209 million. She cited Schedule 4b of the Constitution, which indicates either national or provincial government can revoke the municipality’s right to electricity reticulation when it is not done in a sustainable and viable manner. She asked why the debt to Eskom was allowed to accumulate by both the national and provincial governments, and why neither intervened on this matter.  

She also asked how much was lost due to illegal connections and the plans; what the reason was for national government not invoking a Section 137 intervention; if it decided against doing so because of capacity and financial restraints, or because of other political considerations unknown to the Committee took precedent.

She said she is disappointed the government debt to the municipality stands at R310 million. She asked when Provincial Treasury will resume its support on this matter, and when electricity and water services provided to provincial department offices, will be turned off.

She asked why the municipality has still not finalised the 25 listed suspensions, some of which took longer than ten months; what reasons can be provided for the 85% vacancy rate in the internal audit; and when the municipality will foresee filling the positions.

It is reported uncollectable debt stands at R3.67 billion. She asked what challenges the municipality faced during the collection of old debt, and how had it plans to mitigate the 85% impairment loss.  

Ms D Direko (ANC) said her questions were covered by Ms Mkhaliphi.

Mr G Mpumza (ANC) said the KZN COGTA reported the municipality faced service challenges which arose from the capacity within the project management unit (PMU). The Department also said it supports Msunduzi by facilitating MIG expenditure, as there was under-spending of the MIG. He said it is critical to build the assets of the municipality, and to speed up the delivery of services. He asked how the KZN COGTA and the PT addresses the capacity challenges.

It is reported the municipality was placed under administration because of political infighting. Given PT and the KZN COGTA received reports on the poor state of the financial, and governance state, of the municipality, he asked why the provincial government was slow to implement the intervention. This gives the impression the provincial government allows for a toxic environment to fester, and only intervenes when the situation is dire. He suggested in the future it should intervene early to stop further decline.

While the provincial departments said the municipality stabilised, and is improving; tense labour relations remain. This created difficulties, since 60 employees underwent disciplinary charges. He asked how the Local Labour Forums (LLF) performed in the municipality, and if it provided labour stability. He suggested poor performing officials and councillors must be removed to better render services to the people of the municipality.

The Chairperson asked what action the municipality took against the ward councillors who failed to attend Committee meetings. She said she is disappointed these are individuals who were elected but chose not to do their job.

She asked how the intervention by the provincial government ensured there are fully functional ward committees; if the municipality identified and took action against the persons responsible for intimidation and threats against the AGSA officials; if disciplinary charges were instituted against the former MM and CFO, who did not respond to the request by AGSA to provide details on revenue management for audit; and how the province helped the municipality to spend its MIG, given it is one of the worst performers in the province.

It was reported PT rejected the municipality’s applications for rollovers, as it requested a rollover of the same Grant three consecutive times. It was also reported PMU negatively affected Grant expenditure and sustainable service delivery projects. She asked what assistance national government provides in this regard.

Response

Mayor Thebolla said the Speaker joined the meeting, and she and the other officials from the Municipality would assist him in answering all of the questions.

The municipality acknowledged it had a billing challenge, but it recently resolved issues with 7 000 accounts. It struggled with moving from its previous billing system, which was not compliant with the Municipal Standard Charter Accounts (MSCOA), to a new one, which was compliant with MSCOA.

With the assistance of PT and NT, it was able to implement its new billing system. Council agreed, Councillors who owe money to the municipality, should be given from September until November to service debt to the municipality. He said he did not owe the municipality, and there were not disputes on this.

It is not correct to say 23 wards were not billed by the municipality. Recently the municipality was preoccupied with the naming of streets, so it could send bills to the correct addresses. He acknowledged there were service delivery protests in wards five, six, and seven. With the assistance of Eskom, the municipality was able to restore electricity in those areas. There was a service delivery protest in ward two recently, but the municipality reached out to the community and was able to resolve the matter by returning electricity supply to the community.

Protestors caused serious damage to the electricity infrastructure, and burned substations in other wards. It will continue to engage with the public.  

A settlement was agreed between the Council and the former MM, and one of the terms in the agreement is his debt to the municipality will be deducted from the settlement. This process is facilitated by the former administration, and the agreement still stands. The municipality viewed this as strong action taken against one of its officials.

Having paid R277 million to Eskom, the municipality’s debt to Eskom stands at R133 million. Both parties reached a six month payment arrangement. The debt increased during the lockdown period, as the majority of citizens could not pay. This is a national problem.

The abuse of overtime by officials is not related to Covid-19 expenditure, but rather to the intervention of the provincial government. A report on how this process unfolded must be provided to the Committee. Once the country was placed under lockdown, the Council agreed it will institute an investigation into Covid-19 expenditure. From March, the municipality spent R24 million on Covid-19 relief. This amount will be audited by Council even though it did not receive complaints on its Covid-19 expenditure. At least R10 million was spent on recovery efforts at the landfill site on New England Road.

KZN COGTA and PT worked with the municipality to deal with government debt to Msunduzi. The municipality is pleased the provincial government made a payment of R120 million to the municipality to service its debt. Recently the Provincial Department of Education assisted the municipality to retrieve money owed to it by schools. The municipality remains firm on government owed debt and is not afraid to disconnect electricity and water supply to provincial department offices. 

In a previous Council sitting, it was decided the municipality had to improve its indigent register system. Only 5 000 people are registered as indigent. The municipality acknowledges the number is too low, as Msunduzi had a population of one million, half of which are classified as being below the poverty line.

In the same Council sitting, it was decided any property worth less than R200 000 will be classified as indigent. While it recognises there will be discrepancies in this classification, it sees it as the best method to identify such families. The municipality lost money through the illegal connection of water and electricity, and if people do not recognise the need to be registered as indigent, these actions will continue to occur.  

During the current financial year, the municipality prioritised maintenance. This includes providing maintenance on potholes, and aging electricity and water infrastructure. It reported it covered up to 24 000 square metres of potholes. Its maintenance plan indicates it has to do more to fix the road infrastructure. Maintenance forms part of the municipality’s plan to return Msunduzi’s acclaimed status. He reminded the Committee its landfill sites were once rated as second in the country.  

Ms Eunice Nomagugu Majola, Speaker of the Msunduzi Local Municipality, said the political infighting which took place in the Council occurred before the intervention. Meetings continuously collapsed because of the boycott of meetings by councillors.  The Speaker’s Office attended to the boycotting of meetings and requested guidance from the legal department to deal with the matter in legal terms. During this process, her Office found, before boycotting two Council sittings, the councillors tendered applications for leave.

She was advised that even though it is wrong for sittings not to take place, the municipality has no case, according to the rules of the municipality. Intervention must be made by the leaders of the political parties. Once the provincial government intervenes, all Council sittings and portfolio committee meetings took place.

KZN COGTA reported on the 2019/20 financial year in the last quarter. Ward committees and ward communities are not functioning. Registers for meetings and portfolio reports were not submitted by the Speaker’s Office to the Department. The Department was mandated to render a committee as non-functional without the submission of these documents. Several ward committees did not sit between April and June, due to the Covid-19 regulations, which prevented conventional sittings. Some meetings were not able to take place because Members struggled with the virtual meetings format. Thus, it was classed as non-functional by the Department. There was a significant improvement in ward committees’ sittings recently.  

Ms Neliswe Ngcobo, CFO: Msunduzi Municipality, said there were challenges with budgeting non-cash items. As a result, the municipality suffered deficits at the end of its financial year. The municipality had to cut down on expenditure to increase its surplus. This improved its cash reserves. It submitted these plans to its Internal Audit Unit.

The municipality acknowledged unauthorised expenditure is a long-standing problem. Some of the spending in the previous financial year was classified as unauthorised by the AGSA due to write-offs which were not budgeted for. Officials who were responsible for fruitless expenditure were suspended by the municipality, but the suspension was since lifted by the MM. The cases are being dealt with internally.

Mr Madoda Khathide, Municipal Manager: Msunduzi Municipality, clarified the matter of overtime related to water security and traffic. The municipality must provide additional traffic measures, such as roadblocks set after 22h00. It also has to house homeless people, and provide these homeless people with security. Many are alcohol and drug abusers. All of these actions are in line with the Covid-19 regulations.

A resolution was taken by Council on employees who were suspended because of fruitless and irregular expenditure. It was decided the suspensions will be uplifted while the court adjudicated on the cases. Once the cases are adjudicated on, it will finalise the investigations, as some of the evidence was taken by the Special Investigative Unit (SIU) for its own investigations. In the report presented to the Municipal Public Accounts Committee (MPAC), the municipality also cited fuel theft and absenteeism as part of the charges filed against the officials.   

The municipality faced serious challenges with its infrastructure, particularly with its electricity infrastructure, where it had a backlog of R4 billion. It submitted a plan to NT on how it intended to improve its infrastructure. Assistance will only be provided depending on how well the intervention process unfolds. The municipality asked the Committee to assist it with its efforts to receive additional funding for infrastructure projects. It moved from stage one to stage two on the approval of the Budget Facility for Infrastructure (BFI), awaiting approval in the following month.

The MIG system was designed for an independent PMU within the infrastructure department. The core functions and sections within the Department were fully active in implementation of the projects. The municipality looked at refining the job description of the PMU and clarifying its intention. An official in the unit was suspended, but he was on paid leave, as the municipality did not submit the evidence he spent the money to the KZN COGTA.

MEC Pillay said national government had to look at the issue of classifying municipalities as either delegated or non-delegated. Municipalities classified as non-delegated continue to struggle to receive assistance from NT. Due to the physical distance of national government and the province of KZN, its ability to deal with the issues is compromised.

Secondly, it is not true the municipality did not take action against provincial departments which did not service their debts to the municipality. In fact, there are several instances where it turned off electricity supply to its offices. No department wants to have an outstanding debt, but due to accounting problems, the provincial departments struggled to service its debt to municipalities.

Thirdly, regarding the issue of political infighting in the municipality, he said, the deterioration in the Municipality is largely caused by political infighting. This was recognised by the Mayor and the Speaker, and eventually new political leadership was installed. The new leadership should fight the corrupt elements in the municipality to correct some of the problems. Currently, it does not have the right machinery to fix all of the problems, but is in the process of creating one. Another area the leadership must focus on labour disputes. This requires the political will the new leadership already displayed.

Fourthly, government should look at creating unity within society. The MM and the Mayor must instil confidence into residents, as this will create a better working environment. Security expenditure is unacceptable, and the municipality must question this expenditure.

Mr Thando Tubane, Head of Department: KZN COGTA, said in June/July last year, the Department conducted an assessment of all municipalities in the province. It tabled the report, which includes its recommendations to all municipalities and the Executive Council. Immediately thereafter, many acted on the recommendations. The change of political leadership in Msunduzi occurred after the tabling of the report. Before the Department decided to intervene, the Department had to explore the reasons for intervention, and if all support avenues were exhausted before it decided to intervene. It could not just intervene immediately without following this procedure.

By characterising certain municipalities as non-delegated, national, or provincial governments, the Department identified the ability to provide support to constrained municipalities. National government might need to reconsider this policy in the future. Recently, the Department proposed government must look at changing the current framework for monitoring grants, particularly the MIGs. The Department acknowledged some of the challenges faced by municipalities are because of policy considerations. There must be a different framework for monitoring grants, particularly the MIGs.

NEASA and the Department are attending to the non-functionality of the municipality’s PMU unit. It recently discovered certain challenges to it, one of which is financial constraints. To assist the unit with sourcing finance, the Department engaged with the Department of Water and Sanitation, the Office of the Premier, the Planning Commission, and the PT. It was suggested all parties should meet at certain intervals to assess grant expenditure in municipalities. The Department expressed hope the Portfolio Committee will also assist in detecting the challenges faced by municipalities. 

The Provincial Executive Council and SALGA expressed its willingness to honour its debt commitments. It said non-payment was also, in part due, to the lack of invoices from municipalities. The Provincial Executive Council (PEC) reached an agreement with the municipality that outstanding debt which is not disputed must be paid. Where there is disagreement on monies owed, payment will only be made once the parties come to an agreement. The provincial department is committed to providing support to the municipality, to help it overcome its challenges.

AGSA officials are also intimidated in EThekwini. Intimidation of AGSA also occurred in EThekwini and Mpofana Local Municipality. In the case of Mpofana, the CFO made an advance to AGSA, and was subsequently recalled by the MEC. In all three municipalities, police were called, and escorted the officials to conduct audit work. Eventually an agreement was reached between AGSA and the municipality, for AGSA not to return to the sites until all the necessary security measures were taken. Since then, AGSA officials are able to return all three municipalities, as the necessary security measures were taken to allow it to conduct its audit work.

MEC Hlomuka said there was a joint collaboration between the provincial departments and the municipalities to ensure the District Development Model is implemented.

Political intervention by the KZN ANC Provincial Executive Committee (PEC) led to the change of political leadership in the municipality. The Department believed this produced political stability for the Council. An assessment exercise was conducted in June last year. The intention of this is to better understand the challenges faced by municipalities. In other instances, political authorities used this report to intervene politically when there are signs of political instability in municipalities. The Department committed to continue providing support to all distressed municipalities, and it will ensure this support will lead to positive results. It appealed to the Committee to engage with the NT on increasing funding provided to municipalities, as all municipalities indicated it had a shortage of funds to conduct affairs.

Further discussion

Mr Hoosen said the municipality did not answer the question on the number of councillors who owed money to the municipality. Also, the question on what the reasons were for the municipality to have taken so long to recover the money was not answered.

Mr B Hadebe (ANC) said for the municipality to avoid political instability, it must have referred to the Code of Conduct for Councillors under Section 54 of the Municipal Systems Act. Clause Three of the same Act says Councillors must attend each meeting of the municipality and the committee unless a leave of absence is granted. According to the rules, any Councillor who seeks leave has to submit its leave form 72 hours before the start of a meeting, so the Presiding Officer can establish if there will be a quorum. Councillors who take leave must get approval from the municipality. He asked if the Rules of Order of Council allow for the Speaker to approve leave, or if councillors are automatically allowed to take leave once submitting a leave form. If this is the case, he recommended the rules must be looked at by Council. It is the duty of councillors to perform functions in good faith, in an honest manner, and with the best interests of the municipality. To prevent further instances of Councillors collapsing Council sittings, and committee meetings, the municipality’s leadership must take hard action. The Committee is displeased with these individuals not being punished by the municipality. He also questioned the legal advice provided to the Speaker on the rules of the municipality.  

Responses

Mayor Thebolla said the CFO will provide a list of the number of councillors who settled accounts with the Municipality. Councillors are provided an opportunity to settle accounts with the municipality from September, to November 2020. The Mayor has no outstanding debt.

He agreed the municipality might have to look at the Rules of Order of the municipality, and said leave of absence must be approved by Council. The provincial government’s intervention is heavily influenced by the collapse of Council meetings.  

Mr Duma told the Committee the municipality applied consequence management to provincial departments which did not pay property rates. The municipality took action against the departments in the previous week.

The former MM was not paid the amount agreed in the settlement because he did not provide a plan on how to repay his debt to the municipality.

In a Council session with the Speaker, the current MM said the implicated councillors had to appear in front of the Rules Committee first, to state their case. Once this process is completed, the committee will provide recommendations on its findings.

Mr Hadebe said his question is based on if the Rules of Conduct of the Council mentioned a leave of absence had to be granted first, before an individual is permitted to take leave.

Mr Duma said there is such a rule in the Rules of Conduct. However, in this instance, the Council had no reason to grant leave, as the meetings collapsed.

Mr Parks Tau, Deputy Minister of COGTA, acknowledged significant progress was seen in the municipality since it was placed under administration. Msunduzi serves as a lesson for national government on how to conduct future interventions. Even though the Department noted progress, it is still concerned by Msunduzi’s various challenges. He recommended the Committee continue oversight on the municipality’s progress. The Department will continue to provide support to the municipality and will also monitor its progress.

The Chairperson said the Committee is committed to engage with the Department on the content of the report. She expressed her appreciation for the input made by all the parties present at the meeting, and for the work done by the officials in the municipality to turn around the situation.

The meeting was adjourned