Executive Undertakings: DSBD & COGTA

NCOP Petitions and Executive Undertakings

02 June 2021
Chairperson: Ms Z Ncitha (ANC, Eastern Cape)
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Meeting Summary

Video: Select Committee on Petitions and Executive Undertakings, 02 June 2021

This was the fourth time that the Select Committee tried to engage with the Minister of Small Business Development without success. Members were in consensus that the Minister’s behaviour towards the Committee was unacceptable and that the Minister must appear in front of the Committee. The Committee resolved to allow the Chairperson to engage with the Minister one last time to invite the Minister to appear before the Committee.

During the interaction with the Department of Cooperative Governance and Traditional Affairs, members emphasized the importance political stability at the municipal level, questioned councillors’ role in municipal governance and urged national government to provide urgent interventions for the people using s139 of the Constitution. Members also raised the issue of consequence management and agreed that wrongdoings must never be allowed to get away scott free. Among other issues, members also enquired about the national COGTA’s measures in dealing with uncooperative municipalities, the lack of technical skills across municipalities, the high vacancy rate and the low spending on municipal infrastructural grant (MIG).

The Committee Report on the Minister of Justice and Correctional Services executive undertakings report was adopted.

Meeting report

This was the fourth time that the Select Committee tried to engage with the Minister of Small Business Development without success. Members were in consensus that the Minister’s behaviour towards the Committee was unacceptable and that the Minister must appear in front of the Committee. The Committee resolved to allow the Chairperson to engage with the Minister one last time to invite the Minister to appear before the Committee.

During the interaction with the Department of Cooperative Governance and Traditional Affairs, members emphasized the importance political stability at the municipal level, questioned councillors’ role in municipal governance and urged national government to provide urgent interventions for the people using s139 of the Constitution. Members also raised the issue of consequence management and agreed that wrongdoings must never be allowed to get away scott free. Among other issues, members also enquired about the national COGTA’s measures in dealing with uncooperative municipalities, the lack of technical skills across municipalities, the high vacancy rate and the low spending on municipal infrastructural grant (MIG).

The Committee Report on the Minister of Justice and Correctional Services Executive Undertakings report was adopted.

Overseeing Minister of Small Business Development executive undertakings
The Minister or the Deputy Minister were not present. The Chairperson said that in the last meeting the Minister had submitted an apology as she was overseas and the Deputy Minister could not attend due to bereavement. This meeting was the fourth time that the Committee had tried to engage with the Ministry without a satisfactory outcome. It was unfortunate the Committee was in the same predicament again. Minister Khumbudzo Ntshavheni said she was unavailable as she was engaging with matters pertaining to the department. The Minister also complained about the short notice given. The Committee sent the invitation on Thursday 27 May for the Wednesday meeting today.

On engaging with the Minister, the Minister's view was that the agenda for this Committee overlapped the content she had just presented in the NCOP plenary session and to the Select Committee on Trade and Industry, Economic Development, Small Business Development. The Minister suggested that this Committee go through her response to that Committee and use it as the Minister’s response to this Committee.

The Chairperson disagreed. She was of the view that each House and Committee has its own rules. The Minister’s response did not satisfy her. She asked Members’ view on the matter. She said she would submit a formal letter of complaint to the NCOP Chairperson indicating the challenge between the Committee and the minister.

Ms C Visser (DA, North West) said the matter was urgent and that the Minister’s behaviour was unacceptable. The Minister must make time and appear before the Committee. The Minister must appear in person and cannot send her a department delegate such as the Director-General as the Minister is the political head of the department.

Mr E Mthethwa (ANC, KZN) said that the Committee must allow the Chairperson to engage with the Minister first. Only after that engagement, could the Committee then invite the Minister to explain to the Committee directly the reasons for her four consecutive absences. He agreed that there is no duplication or overlap as the Minister had explained. This Select Committee tackles work from a different angle and hence could not use Minister’s response to other Committees as her response to this Committee’s questions.

Mr K Motsamai (EFF, Gauteng) recalled an incident in Mpumalanga where the Minister did not recognise this Committee as a serious committee and accused the Minister of being very negligent towards the Committee. The Minister needed to acknowledge the authority of the Committee.

Mr S Zandamela (EFF, Mpumalanga) accused the Minister of not adhering to her constitutional obligations by continually neglecting this Select Committee.

Ms B Bartlett (ANC, Northern Cape) agreed that the Minister must avail herself.

The Chairperson had listened to Members and decided to engage with the Minister one last time. She was firm that the Minister must respond about the executive undertakings made by her.

Overseeing executive undertakings made by President on 27 October 2020
The Chairperson noted the Minister of Cooperative Governance and Traditional Affairs (COGTA) had designated her Deputy to be present in her stead. The Chair expressed her gratitude that COGTA was always willing to accommodate and cooperate with the Committee’s requests.

Deputy Minister Obed Bapela informed the Committee that Mr Themba Fosi, Deputy Director-General, would take members through the three undertakings made by the President on the 27 October 2020. He would explain the lessons learnt in applying the District Development Model and the challenges. It would provide a list of municipalities facing challenges. From the process, COGTA categorised the major challenges into four categories:
• Governance: A variety of factors such as political infighting and mismanagement led to a municipal council’s inability to perform as required by the Constitution and relevant legislation. Non-performance of management and conflict between top management and councillors had all contributed to this.
• Financial: A number of municipalities are financially non-viable as they are heavily dependent on grants. The equitable share which those struggling municipalities received was low as most of them were located in rural areas. Also, there is a lack of revenue which further contributed. There is a lack of adequate systems, incapacity to manage financial situation, poor budgeting weakness, poor billing system, poor infrastructure management, lack of internal control, fraud and misuse of municipal funds across those struggling municipalities. Those municipalities struggled to attract skilled management in the financial profession who are lured away by bigger municipalities with better offers and better lifestyle.
• Institutional capacity: This included high vacancy rate, long turnaround to fill senior management positions, poor leadership, appointment of staff who did not meet the prescribed regulations, allegations of nepotism and corruption, dilapidated infrastructure and lack of infrastructure maintenance. This explains why people were on the streets demanding better service delivery.
•  Service delivery: Sections 152 and 153 of the Constitution had clearly set out the service delivery obligations for municipalities. In those struggling municipalities, services are not being provided in a sustainable manner, tariffs are not cost-effective. There is little to no spending on maintenance resulting in services not being able to be rendered.

To tackle those challenges, a number of interventions had been undertaken. COGTA is working on multiple packages for the municipal profiles to develop them into a comprehensive intervention strategy. It is optimistic that the District Development Model (DDM) it is developing will allow them to work with s154 Municipalities in co-operative government before getting into s139 of the Constitution which placed a municipality under the national government’s administration.

National COGTA is supported by National Treasury in their financial recovery. It is also working collaboratively with other departments such as Department of Water and Sanitation, Department of Human Settlement, state-owned enterprises and municipalities. It has mobilised the private sector as well.

Mr Themba Fosi, Deputy Director-General: Local Government Support and Interventions Management, took members through the presentation (see document).

Discussion
The Chairperson thanked them for informing the Committee on how far they were with the implementation.

Ms C Visser (DA; North West) thanked COGTA. The Committee did not receive the comprehensive report in advance so had not had time to study it. There were many issues it would need clarity on.

Ms Visser drew attention to the dire situation in some North West municipalities where residents had not had water for 11 to 15 days. There is no basic services in those municipalities. Municipalities are in this state as the result of political factionalism. In one case, the municipal bank account had been closed resulting in the municipality being non-functional. She appealed for COGTA to address this and the root cause urgently.

In Ms Visser’s view, a municipality collapses when the administrative staff are more politically active than the council thus causing havoc. People on the ground are so desperate and helpless that communities complain that the only way to get government to listen is to burn down government buildings. She emphasised the importance of listening to people and appealed to officials to listen to the people and pay attention to their needs.

Ms Visser asked if COGTA had power to implement disciplinary measures in those troubled municipalities. Can COGTA ensure that municipalities are obliged to deliver services. She emphasised the importance to instil discipline in the structure and set aside political differences and uphold the Constitution by providing service delivery for these municipalities.

Mr S Zandamela (EFF, Mpumalanga) welcomed the presentation and the DDM which COGTA brought. He agreed with the Deputy Minister that these matters were true and were happening on a daily basis. Knowing that municipal councillors were the root cause, he asked if COGTA had any consequence management measures.

Mr Zandamela expressed his concern about the scope the bill covers. Although the bill sufficiently addresses s100: National intervention in provincial administration and s139: Provincial intervention in local government of the Constitution, he did not believe that the bill covered s106 of the Constitution. In his experience, most municipalities had been referred to s106 before s139 or s100 had been implemented.

Mr Motsamai had a network connection problem [1:04:00-1:06:10]

Mr C Dodovu (ANC, North West) remarked that the presentation had flagged important issues about the state of municipalities in the country.

Mr Dodovu had a feeling that the whole governance system was under attack. The attackers are being more tactical than government’s response to curb governance loopholes. The biggest challenge in government is at local government level. Good systems such as Municipal Finance Management Act (MFMA) provided frameworks upon which the country operated. However, councillors needed to be held accountable because they were the root cause of the dire situation in the collapsed municipalities across the country. He came  from the North West province and not a single municipality has obtained a clean audit. The councillors once they were sworn in, colluded with other comrades and made irregular appointments for senior managers and municipal managers. Their irregular and unethical conduct is never scrutinised and they often acted with impunity due to lack of consequence management. This issue had been there for a long time and needed urgent interventions.

On the other hand, he commended government’s approach in handling COVID-19. Some of the measures taken by government in tackling this pandemic should be borrowed and replicated in its approach to addressing the challenges that contributed to the dysfunctional state of some municipalities across the country. COGTA must take notice of these trouble makers that are failing municipalities and who later on work again at other municipalities and cause those to fail.

In his view, national government has the authority to declare local governments a disaster area and place them under its administration. Once national government takes over, it must ensure that it delivers services such as building good roads, providing clean water and electricity which would then restore the confidence of people in their own government.

Mr E Mthethwa (ANC, KZN) appreciated the collaborative work between Treasury and national COGTA on financial recovery. He asked what COGTA's response would be if municipalities do not cooperate. 

The Chairperson asked about the reasons behind the lack of technical skills in some municipalities. Some municipalities do not have certain necessary skills due to their struggle to collect revenue which results in their being unable to pay competitive remuneration to hire people with these skills. She asked if the lack of funding contributed to the high vacancy rate at these struggling municipalities.

The Chairperson noted the extremely low expenditure of grants and asked whose responsibility was grant expenditure as the Committee wanted to see increased accountability.

Department response
Mr Fosi replied about the poor grant expenditure and pointed Members to look at the root causes linked to lack of skills or capacity. There is no capacity to manage the infrastructure value chain from the identification of projects, procurement process, appointment of service providers and so on. COGTA’s intervention is to implement a measure called cost reinvestment. This measure means that COGTA will pay only on the basis of what has been delivered. This measure is mainly introduced to those municipalities that struggle to spend their grants. The Municipal Infrastructure Support Agent (MISA) provided support to those municipalities that experienced technical challenges.

Mr Fosi agreed that lack of funding to attract skilled professionals definitely contributed to the high vacancy rate across these municipalities. However, there is also the disagreement in municipality and among councillors on who should be appointed which contributed to the high vacancy rate. COGTA’s roll out of the District Development Model mobilises different stakeholders to assist and support. MISA engineers are also helping to bring the needed technical, financial and management skills to those struggling municipalities.

Mr Fosi agreed that consequence management is critical. According to legislature, COGTA has some sort of a policy system which articulates what needs to be done and procedures to go through if a municipality is deemed dysfunctional. Some municipalities are in total disregard of laws. He emphasised the importance of holding the administration accountable where disregard of laws happened. However, it becomes more difficult when the political heads are also a mess.

He used the analogy which Minister Dlamini-Zuma often used that the administrative and political sides of a municipality are like egg white and yolk. It becomes troublesome when political heads and administrative staff are mixed together. To solve this predicament, national COGTA has a few measures to provide support. For instance, Mr Fosi addressed Mr Mthethwa’s question on how COGTA deals with non-cooperative municipalities. There is a lessening trend of those municipalities because courts are now being involved in that space where the executive at the national level are being forced to intervene. COGTA has recommended to Cabinet that the national executive needed to be more decisive. Section 139(7) must be applied if a municipality collapses and the provincial department fails to intervene. The North West municipalities have political challenges that cannot be resolved by administrative solutions. What those municipalities needed were political solutions to bring stability to those municipalities.

There is a Section 139 intervention that COGTA initiated at Emfuleni Local Municipality. There is a  water project led by the Department of Water and Sanitation to deal with the spillage of sewage into the Vaal River. The issue had existed for years but was only flagged recently  triggered by the impact on the Vaal. The intervention has exposed governance challenges and corruption.

Mr Fosi explained COGTA’s approach in the Intergovernmental Monitoring, Support and Intervention Bill is that section 100 and section 139 of the Constitution have already laid out the executive obligations in scenarios where municipalities fail to perform. COGTA’s position is that it is now puts interventions as the last resort but emphasises national COGTA’s role in monitoring and providing support. Section 106 of the Municipal Systems Act is a statutory requirement before forensic investigations are implemented which is part of the monitoring as stipulated in section 154 of the Constitution. The purpose is for COGTA to play an oversight role in ensuring local government is implementing council resolutions and proper steps to provide good service delivery. National COGTA would be reviewing all statutory requirements for local government and National Treasury has set up a programme to look at the unfunded budgets of municipalities.

Mr Fosi agreed with Ms Visser on the vital role that political heads needed to be providing to ensure stability and governance at local government level. On supporting areas, Mr Fosi assured members that issues such as serious crisis or water shortage are being attended to by national COGTA together with the Department of Water and Sanitation and provincial government.

Ms Mapatane Kgomo, Deputy Director-General: Municipal Infrastructure Support Agent (MISA) replied about poor Municipal Infrastructure Grant (MIG) expenditure. Firstly, there is poor claiming on the municipality’s side on infrastructural development certainly contributed to poor expenditure. Secondly, weak procurement practices in most municipalities resulted in MIG underspending. The internal differences between the administrative and political sides of municipalities also resulted in not spending or underspending MIG. In some instances, Municipal Manager, CFO and technical directors have different views and thus are unable to be united to deliver services.

Ms Kgomo explained the role of Municipal Infrastructure Support Agent (MISA) is limited where it comes to MIG spending. What it can do is to provide support to identify and package priority projects and register them but MISA does not have the authority for procurement. Sections 20 and 21 of the Divisions of Revenue Act (DORA) enabled national government to intervene when there is under expenditure at the local government level but it has to be directly implemented by national government.

Ms Kgomo said the key contributory factor for the inability of municipalities to attract skills is they cannot offer competitive remuneration to skilled professionals such as engineers. Those municipalities have difficulties in retaining them as well because they are highly sought after by both private and public sectors. MISA is trying to capacitate these municipalities by deploying young graduates and trainees and it is advising municipalities to retain these skills for their municipal infrastructure development.

Deputy Minister’s response
Deputy Minister Bapela said that Minister Dlamini-Zuma’s diagnosis of local government is that the administrative and political sides are like scrambled egg so that national government cannot separate the egg white from the egg yolk. The Minister’s perspective to this mess in local government  is that it has to start afresh and ensure the two are separated. The administrative part of a municipality should be stable and professional and serve the people - not themselves. He hopes the local government elections will sort out the political element comes and goes every five years.

He acknowledged the challenge of municipalities to collect revenue given the rising unemployment coupled with the dire economy. COVID-19 has only worsened this with more people now declared as indigent.

Deputy Minister Bapela thought that the formula for local government finance ought to be reviewed in the long term. The percentage for local government had been unchanged at 7% but got raised to 9% three years ago. We have to relook at the equitable share formula but not now as currently the national government transfers go into a deep bottomless pit. He also pointed to the great inequity between the equitable share of metros and rural areas. Of the 9%, 44% of that share goes to eight metros and the remaining 249 municipalities share the balance of whatever is left.

The Deputy Minister pointed to the impact of rapid migration from rural to urban areas as it is easier to find jobs in the towns and cities. However, the expansion of infrastructure has not kept pace with the rapid migration. The infrastructure is too small and has not been attended to for decades and the sudden spike in population added a burden to the infrastructure.

The Deputy Minister explained that in terms of national intervention as provided in s139(7) of the Constitution, there is a lot of prerequisite steps that need to be satisfied such as provincial government’s intervention. The Deputy Minister noted that in some instances it is difficult to get provinces on board. Hence, it resulted in the prolonged period of political instability among some municipalities where they even have two mayors and two speakers.

The Deputy Minister commented on consequence management. You cannot deprive councillors of salaries as they go to court  and lamented the extremely long time period to follow up on criminal charges. On average, it could take two to three years for investigation while the money disappears. The role model macro-factor is impunity in the society with a lack of examples of people being punished for wrongdoing. Also communities needed to partner with local government to root out corruption and vandalism of infrastructure. He pointed to the law passed three years before that makes it a crime to damage infrastructure that bringing services to people.

The Chairperson requested the Ministry to forward a list to the Committee of the municipalities that were not cooperative in adopting IDPs. The Committee ought to know the list.

The Chairperson agreed with the Deputy Minister that government needed to look at how municipal budgets are financed. It disadvantages rural smaller municipalities if the biggest slice of equitable share goes to metros and further burdens their existing incapacity.

Committee Report on Minister of Justice and Correctional Services Executive Undertakings report
The Committee adopted its report on the Minister of Justice and Correctional Services Executive Undertakings report presented on 4 November 2020.

The minutes of 19 May 2021 was adopted and the meeting adjourned.

Documents

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