SALGA 2020/21 Annual Report

Meeting report

The Chairperson welcomed the delegation from SALGA and said that municipalities were being assisted with the coalitions to ensure that services were delivered.

South African Local Government Association (SALGA) Annual Report 2020/21

Mr Lance Joel, Chief of Operations, SALGA, outlined the five-year strategic plan of SALGA, as well as the four outcomes of this plan. On the non-financial audit outcomes for 2020/2021, the presentation showed that for the year under review, SALGA had achieved 85% of its predetermined objectives and had received nine clean audits, with 12 unqualified audit opinions. On the non-financial performance:

Outcome 1:  Municipalities with sustainable inclusive economic growth underpinned by spatial transformation - had achieved 86%;

Outcome 2:  Good governance and resilient municipal institutions - had achieved 80%

Outcome 3:  Financial sustainability of local government and greater fiscal equity - had achieved 78%; and

Outcome 4:  Effective and efficient administration - had achieved 95%.

A total of 117 targets were achieved out of 137.

Challenges which had affected SALGA's performance included limitations introduced by COVID-19; capacity constraints; delays in the appointment of external support (service providers); inability to exhaust the internal governance approval processes (SALGA mandating process); duplication with COGTA impacted the ability of SALGA to execute a similar target; and work commenced but could not be finalised to satisfy the requirements of achieved targets.   

Referring to SALGA's financial performance, Mr Joel highlighted that 93% of its revenue came from the rendering of service membership levies from municipalities that were also facing challenges. The total operating revenue had amounted to R705m, and total operating expenditure to R579.7m, which provided an operating surplus of R125.3m.  

On the compliance with COVID-19 regulations, he outlined the SALGA mitigation actions and some of the challenges that were experienced during the lockdowns and the impact of local government transitions. The support given by SALGA pre- and post elections was outlined, as well as the preparations for the transitions. The main transition concerns included the low voter turnout, the increased number of hung councils, and the calibre of councillors. He pointed out that the number of coalitions had increased from 27 in 2016 to 67 in 2021, and some of the problems were that coalition governments had not become institutionalised -- there were no rules in the legislation or constitution that defined the principles and procedures for political parties to govern together, and there were no guidelines. He said that 9 473 new councillors had been elected, of whom 37% were female and 63% male.

Recommendations to the Committee for consideration were outlined.

(See attached document for details)

Cllr Sebenzile Ngangelizwe, Acting President, SALGA, said that any changes to the policies of the Association had to be discussed with the Committee, and that moving forward it hoped to control the space of parties that did not have the majority and where services could not be provided.

Discussion

Mr G Mpumza (ANC) applauded SALGA for achieving a clean audit. On the outcome of inclusive economic growth, he raised concern as to whether the outcome was part of SALGA’s support to member municipalities, and if the outcome was getting attention to ensure that there was urban spatial planning as well as regional economic development. The urban plan was meant to ensure that the economic hubs were situated in the metropolitan cities and smaller intermediate cities, including smaller municipalities. There was not enough focus on land and spatial planning policies and interventions, which were crucial in building the economy, in the rural and small municipalities. He asked whether municipalities were cooperating in the building of the economy.

On the financial sustainability outcome, he noted that SALGA had incurred irregular expenditure of R250 000 because of an unregistered supplier, and asked if there were remedial actions in place to address the issue. In the 2018/2019 presentation by SALGA, there had been an indication that part of assisting municipalities to ensure financial sustainability was to develop an accountability framework that would ensure consequence management within the municipalities in response to the concerns raised by the Auditor-General (AG). He asked whether the framework had been developed or applied in municipalities to address the issue of consequence management.

He commented that it had been mentioned that political parties concluded coalition talks in secret, and that there was no clear framework. He commended SALGA for developing a coalition framework and although there was a possibility for the framework to be rejected, the Committee had to ensure that it became a policy intervention and support. The framework was important for the stabilisation of municipalities, because political parties were not in a position to institutionalise the framework. This could be achieved only through the Department of Cooperative Governance and Traditional Affairs (COGTA).

Mr C Brink (DA) commented on the state of SALGA’s internal governance and on the effect of the South African Local Government Bargaining Council (SALGBC) agreement on the salaries and benefits of municipal officials that had been concluded in September with a 3.5% increase. He stressed that clause 15 of the agreement referred to the provision of exemptions, and that most municipalities were facing financial distress so they would not be able to make major cuts in services to implement the salary increase. He asked whether SALGA would consider a collective exemption on behalf of municipalities and, if not, what services should be cut to implement the salary increases. He also asked what SALGA would do to assist these municipalities, because the expectations of the relationships between the municipalities and their workforces had to be managed. It was unfortunate that public service workers expected salary increases -- even those that did not work for the state -- and that action had to be taken.

The statement made that an executive committee system was preferable to a an executive mayoral committee system had to be questioned, because an executive committee system allowed different parties to be part of the decision-making process of the municipality, whereas a mayoral system allowed the mayor to make his own appointment without any regard for the composition of the council. He asked whether there was no mistake in the preferred system to solve the underlying problems, because the issue manifested itself in the municipal council. The executive decisions were not reserved for the mayor, but for the council.  

He said that it had been pointed out that SALGA had been discussing the accountability framework for consequence management in municipalities, especially after the reports by the Auditor-General regarding the adverse findings of municipal finances. Three financial years had gone by, and SALGA was still reporting that the development of the framework was in progress. He asked whether there was a timeline for the framework, and asked why it had not been completed or if SALGA had realised that the framework would not achieve certain objectives.

Ms H Mkhaliphi (EFF) referred to the issue of the service provider that was not on the database, and asked how this had happened, because SALGA was an entity of ethics. She asked for examples of the strengthening of the role of local government in community development, because there were areas where the community development was non-existent and community members were frustrated. How was the role of local government strengthened, because it was impossible. She asked for examples of the programmes that empower children and women, and said that engagements with SALGA always included labour matters in municipalities, but the role of SALGA in labour disputes was not mentioned anywhere in the presentation. She asked for clarity and details on the matter, because the Chief Operating Officer (COO) of SALGA was also engaged in the labour dispute matters of the SA Local Govrnment Bargaining Council (SALGBC) but there seemed to be a lack of interest in resolving the matter.

The issues raised by workers to the SALGBC in KwaZulu-Natal included nepotism, discrimination and sexual abuse, which were serious issues. She asked about the role of SALGA in addressing the matters instead of reporting to the executive of the SALGBC. The Department of Labour had been approached on the matter of the SALGBC secretary, but there seemed to be no interest in addressing the matter.

On the reasons given by SALGA for the 85% target achievement, she asked what had been done by SALGA when it discovered that some of its programmes duplicated those of COGTA, and what the way forward was, because had some duplication of programmes with municipalities. The role of SALGA, the municipalities, COGTA and other stakeholders needed to be defined if the issues of service delivery were to be resolved.

She welcomed the framework that had been tabled by the COO on the coalitions, and said that the proposals brought forward could be interrogated and engaged with, because the coalitions could produce an unstable government which was unfortunate, because service delivery would be affected. There must be guidance to ensure that services were delivered. She asked for clarity on what the statement that coalitions must be public meant, and what benefit would this have.    

SALGA's response

Cllr Ngangelizwe said that when the Spatial Planning and Land Use Management Act (SPLUMA) was initiated, the intention by SALGA was to ensure that a development framework was developed in both the rural and urban space. Unfortunately, the traditional leaders had been engaged with on the matter and they had rejected the implementation of SPLUMA. Moving forward, the Portfolio Committee of COGTA should assist SALGA in its engagements with traditional leaders so that a framework could be developed for the whole country instead of just specific areas.

On irregular expenditure, he said that SALGA had to work with the Committee and COGTA to ensure that the defaulters were punished, because SALGA gave high level advice to municipalities and COGTA on the establishment of the framework to punish defaulters. Regulating the accountability framework would take more than six months, but SALGA had concluded to implement a framework that would assist political parties to reach agreements so that municipalities provide services.

On the salary increases, he said that SALGA should be congratulated because it had managed to stabilise the local government space, because previously there had been initiatives to postpone the elections. During this time, SALGA was guided by the Constitutional Court to hold elections at the end of October and the beginning of November to allow political parties an opportunity to campaign. He admitted that some municipalities could not afford the agreements that were entered into with the unions, and said that those municipalities had been allowed to apply for exemptions.  This should not be collective, because there were municipalities that could afford the agreements.

The intention with the coalition framework was to guide political parties to ensure that municipalities approved budgets immediately after the elections, instead of fighting each other.

On the portfolio of evidence on that was being done in communities, he said that during Covid-19 money was donated by the United Nations to assist small businesses, and that the relevant information would be forwarded to the Committee.

Regarding the behavior of senior municipal officials, he said that SALGA provides guidelines to municipalities to ensure that there is stability, but some municipal managers and directors had decided to exclude themselves from the framework. SALGA would ensure that investigations were conducted on the labour issues.

He confirmed that Covid-19 did affect certain areas of SALGA, which was why there was an 85% achievement.

On the publication of the coalition agreements, he said that SALGA had signed a second agreement with other political parties to try and build credibility in the political system, because there might be issues where people did not vote and then secret meetings were held by political parties that betrayed the voters. Regarding accountability, political parties had been advised on the selection of candidates who could build credibility and candidates who could read documents, to avoid a collapse in the system.

Cllr Deon de Vos, Deputy President, SALGA, said that the information presented on the frameworks was not final, because SALGA did not have legislative powers or authority over municipalities, and could only enrich and provide guidelines. On the executive committee system, he said that the use of either system was a choice, and that the process also helped SALGA to identify issues where they were previously not detected. Where coalitions have taken place, there would be an agreement to make the negotiations public by informing communities of the final outcomes.

On the SALGBC, Mr Rio Nolutshungu, Chief Officer: Municipal Capabilities & Governance, SALGA, said that the SALGBC had its own legal jurisdiction. All the possibilities of exemption applications in a collective agreement had been explored by SALGA, such as appointing senior counsel, and engaging with the Minister of Labour who had the authority of strengthening the collective agreements and extending them to non-parties. He said that every exemption procedure must provide for circumstances that would encourage a party to obligate to a collective agreement under procedures and provisions that would be exceptional in nature. SALGA aimed to include the exemption application hybrid so that hearings could be attended by arbitrators and financial assessors who could assist SALGA by assessing the weighted criteria of the Municipal Finance Management Act (MFMA). This determined whether municipalities would be able to pay salary increases. A municipality with a healthy balance sheet was less likely to approach the Master of the Court for an exemption application. SALGA assists municipalities to apply for exemptions by helping them put together the application with some senior officials of the municipality. An exemption application lasts until salary increases have been paid, and then the application concludes. SALGA also provides legal services to assist with arguments over the applications, and some SALGA members appear as witnesses to the arguments, as well as to ensure that preparations at the municipal level were in accordance with the pre-conditions that were in the agreement for an exemption application to pass.

Since the last time a matter was raised in the COGTA Portfolio Committee, SALGA had gone back to the SALGBC to ensure that the necessary attention was given to the issues that were raised. In order for matters to be investigated, the employees with complaints must come forward. This was done with the help of a task team from SALGA, and a progress report would be issued later in November and shared with the Committee. so that there was assurance. He said that the accountability framework was concluded and submitted to COGTA so that it became a secondary regulation after the elections to ensure that municipalities were given no choice but to implement the framework. If a municipality failed to implement the framework, then an index would be used to track the municipalities that did not comply. He stressed that SALGA had tried in every way to ensure consequence management.

On whether there was traction in relation to the SPLUMA initiatives, Mr Mthobeli Kolisa, Chief Officer: Infrastructure Delivery, Spatial Transformation & Sustainability, SALGA, said that there was traction based on a tool that was used -- a barometer used to measure spatial transformation. The barometer was used to measure whether municipalities were making progress, and spatial integration was one of the accounting tools for leadership. He provided details on the various land initiatives and housing policies. He highlighted that there were provincial legislations that were problematic in municipalities when implementing SPLUMA, as well as traditional leaders, especially in more rural municipalities.

On the role of local government in community development, he said that the focus of SALGA was not to deliver social packages to communities but to look at how the social packages were being implemented and what could be done to promote social inclusion.

Ms Thembeka Mthethwa, Chief Financial Officer, SALGA, said the irregular expenditure of R250 000 was a result of the United Nations Development Programme (UNDP) project for beneficiaries to be provided with carwash equipment which had been invoiced at a higher price by the manufacturer. The amount was already credited, even though it was later discovered that the manufacturer was not registered on the central database. An audit was conducted and it was found that 50 beneficiaries had been assisted through the project. She admitted that there was no oversight by SALGA to ensure that the service provider was registered, and as part of consequence management SALGA had discussed with National Treasury the condonement of the irregular expenditure, especially since all the beneficiaries had been assisted.

The Chairperson asked when the accountability framework was expected to be shared with the Committee, because discussions on the framework had started in the 2018/2019 financial year.

Ms Mkhaliphi acknowledged SALGA’s response regarding the secretary of the SALGBC, and raised concerns that when issues of nepotism, racial discrimination and sexual abuse were raised, they took too long to be resolved. It was almost as if there was no interest in resolving the matter.

Mr De Vos thanked the Committee for the opportunity to present, and said that improvements would be made, based on the feedback from the Committee.

The Chairperson thanked SALGA for its consistency in achieving results and being a role model for municipalities.

Cllr Ngangelizwe said that the quality of the questions asked by the Committee also helped SALGA to reposition itself and progress to avoid negative results.

The Chairperson thanked the leadership of SALGA and everyone present for attending the meeting.

The meeting was adjourned