municipalities


Councils ‘need help from other state spheres’

Monday, September 5, 2011 No Comments by Zelda

Local government is suffering a reputational crisis as it is perceived to be incompetent, disorganised and riddled with corruption — perceptions which “at best we will be naive, and at worst, arrogant to simply brush off”, acting Co-operative Governance and Traditional Affairs Minister Nathi Mthethwa recently said.

Faltering service, crumbling infrastructure, maladministration and corruption were among the issues highlighted as problems by communities, and prompting service delivery protests. Local government also always scored the lowest in research surveys on public perceptions about the spheres of government.

He recently told delegates at the South African Local Government Association (Salga) conference in Durban that some municipalities were functioning well, and many councillors were performing efficiently, but “bold leadership” and support from other spheres of government were required to ensure municipalities delivered on their constitutional mandate.

Mthethwa said “drastic action” was required for the third tier of government to become more responsive and accountable and to turn around the negative perceptions — local government is often viewed as the coal- face of service delivery.

He said the local government turnaround strategy adopted in 2009, which becomes the municipal turnaround strategy at municipal level, needed to be integrated with municipal budgets and integrated development plans (IDPs).

Plans to target areas where service delivery backlogs were the highest needed to be completed by municipalities by the end of next month. Provinces and municipalities would be required to establish human settlements committees to oversee housing development in municipalities.

A concept document on the revised ward committee framework had been developed to deepen democracy. Community work programmes should be further supported, Mthethwa said. He said all 278 municipalities would also have to establish municipal public accounts committees by November 30 to promote good governance and help achieve clean audits.

Planning Minister Trevor Manuel said IDPs needed to include a broader range of developmental needs such as the provision of healthcare and rest and relaxation facilities.

He said municipalities needed to receive more funding and other government resources. When local governments built houses, they did not receive a concurrent increase in funding and this “puts local government in stress”.

Questioned about the performance of municipalities over the past five years, Salga chairman Amos Masondo said service delivery such as electrification, housing and road construction, was continuing, but “much more needs to be done”.

Credit to: Business Day

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Municipalities have to up their game

Friday, July 22, 2011 No Comments by Zelda

Municipalities have to increase the pace of service delivery to reciprocate the voters’ trust shown during the local government elections, Eastern Cape Local Government MEC Mlibo Qoboshiyane said on Thursday.

Qoboshiyane was speaking at the opening of the Eastern Cape SA Local Government Association (Salga) conference.

“Municipalities need to contribute towards responding to the five priorities of government; which are creating decent work and sustainable livelihoods, education, health, rural development and agrarian reform and the fight against crime and corruption,” said Qoboshiyane in a statement.

He said municipalities had to “up their game” and deliver on all the five priority areas.
The duty of councillors and officials was to deliver services that encouraged development in local municipalities and to be local governments which allowed people to participate in council and ward meetings.

He added that discussions during the conference should encourage those who had attended to exercise financial integrity and effective financial control in municipalities.

Credit to: News 24 and Sapa

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Clamp on cadres in municipalities

Wednesday, July 13, 2011 No Comments by Zelda

Political parties may no longer deploy cadres into top municipal positions now that the Municipal Systems Bill has been signed into law by President Jacob Zuma.

In addition to prohibiting senior party office bearers from holding top municipal jobs, the new legislation aims to ensure that municipalities are managed by skilled people. The act also stipulates that any municipal official found guilty of fraud and corruption may not be hired for 10 years after conviction.

These new requirements follow a recent finding by Public Protector Thuli Madonsela that Hessequa mayor Christopher Taute had abused his power by soliciting funds from businesses for the African National Congress’ s (ANC’s) May municipal election campaign.

Zuma, who signed the bill at the weekend, faced pressure from the South African Municipal Workers Union (Samwu) not to sign the bill after Parliament passed it in April.

Samwu had raised concern about several clauses in the bill, particularly the one prohibiting senior party members from holding top municipal jobs. The union said this would limit individuals’ right of association.

The 115000-strong union threatened to withdraw its support for the ANC in the May election in protest against the bill.

Samwu general secretary Mthandeki Nhlapo said yesterday the union would not comment.

“We have decided not to issue any comment on this matter until after our special central executive committee meeting on Thursday when we will discuss this issue,” Nhlapo said.

There are indications the union will embark on a strike in the next few weeks to show its dissatisfaction with the new law.

The South African Local Government Association’s spokeswoman, Melissa Kentane, said yesterday the association would ensure that all councillors and municipal officials were aware of the act and its implications on municipal operations.

“Guidelines will be circulated and, if requested, legal opinions will be provided,” Kentane said. She said the prescribed municipal skills and competencies had not yet been published for consultation.

Last month the auditor-general complained that up to 80% of municipalities used consultants to assist with their year-end financial statements, and only seven municipalities achieved unqualified audits.

The director of the University of Western Cape Community Law Centre, Prof Nico Steytler, yesterday said that even though Samwu contested the legislation, it was still justifiable. “The ANC leadership was clear on it and this was a well thought out bill which will help in the provision of proper and impartial service delivery,” Prof Steytler said.

The Independent Democrats (ID) Parliamentary leader, Joe Mcgluwa, said Zuma may have failed to uphold his constitutional obligations by delaying signing the bill.

“The ID hopes the signing of the bill marks the first step in a concerted effort by the ANC to bring this disastrous policy of cadre deployment to an end,” Mcgluwa said.

He said the fact that the bill was signed so long after it was approved by Parliament on April 19 was cause for concern.

“Section 237 of the constitution clearly states that all ‘constitutional obligations must be performed diligently and without delay’.

“The delay in the president’s signing of the bill means that its provisions will have had no effect on key municipal appointments made between April 19 and July 2.”

Credit to: Business Day

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Cape Town, Tshwane top municipalities

Thursday, June 30, 2011 No Comments by Zelda

Cape Town and Tshwane are the country’s two metropolitan municipalities to show improvements in financial management over the previous financial year, Auditor General Terence Nombembe’s report on municipalities reveals.

The Consolidated General Report on the Local Government Audit Outcomes, released in Pretoria on Wednesday, showed that Cape Town was the only metro to obtain a clean audit, while Nelson Mandela Bay, Ekurhurleni, Tshwane and eThekwini all obtained audit reports that were financially unqualified, but with findings.

Cape Town received an unqualified audit report with findings in 2008/09, while Tshwane received a qualified audit report that year.

The Johannesburg metro had not finalised its audit report by January 31 2011.

The findings against most of the metros related to non-compliance with regulatory requirements or unreliable information.

The country’s two newest metros – Buffalo City (East London) and Mangaung (Bloemfontein) – did not fare as well as the more established metros.

Buffalo City deteriorated from having a qualified audited report in 2008/09 to a disclaimer in 2009/10.

The AG highlighted problems with the city’s capital assets, current assets and unauthorised, irregular or wasteful spending.

Mangaung obtained a disclaimer as it had in the previous financial year.

A disclaimer is issued when the auditor could not form an opinion on the financial statements.

This could happen where the entity being audited concealed or failed to provide relevant information, if it was involved in litigation, or if its status as a going concern was threatened.

And in the graph in the AG’s report, there was an almost solid line of red for all the concerns he had, from revenue and expenditure to unauthorised or irregular expenditure.

Only seven municipalities out of the country’s 237 received a clean audit for the 2009/10 financial year.

Credit to: Sapa and News 24

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ANC to make radical municipal changes

Monday, May 23, 2011 No Comments by Zelda

The ANC, in a desperate bid to arrest the decline in its support, plans to make radical changes in the municipalities.

In the coming weeks, the ruling party will introduce measures that will make mayors, municipal managers and other senior officials more accountable, as members of parliament and of provincial legislatures are.

The decision comes in the wake of last week’s local government elections in which the ANC’s support declined from about 66% in the 2006 elections, to about 62%.

Its rival, the DA, has enjoyed an increase in its support, from about 16% in 2006 to about 24% last week.

The municipal reforms are part of the ruling party’s municipal turnaround strategy. Party spokesman Jackson Mthembu said they would be implemented “as soon as possible”, in an effort to deliver services “faster and more efficiently”.

The move, said Mthembu, would help the ANC arrest the gradual erosion of its support by opposition parties.

The municipal turnaround strategy was conceived in 2009 by Co-operative Governance Minister Sicelo Shiceka in an attempt to revive failing municipalities.

“Our showing in the recent polls has spurred us into action. But we had already started working on the turnaround strategy.

“Even before the elections, we had started showing concerns about the performance of some councils. We didn’t bury our heads in the sand when our people were not satisfied with services. When people vote you into office, you owe it to them to deliver faster and more efficiently.

“We want to implement [the measures] as soon as possible so that people will realise that their vote is not misplaced,” Mthembu said.

The mechanisms being considered include:
•    Introducing municipal bodies to which mayors and their executives, including the mayoral committee, will have to account;
•    Forcing municipalities to be monitored and evaluated, as are all national and provincial government departments, by Minister in the Presidency Collins Chabane;
•    Monitoring councillors at a political level, by making them accountable to party branches, which, will in turn account to subregions. Subregions will account to regions, and the regions their province and;
•    Asking the national Treasury to reallocate unspent municipal budgets.

The ANC, Mthembu said, could not return money to the Treasury while people lacked services.

“Mayors have both legislative and executive powers – and these need to be separated.

“Some sections of a council must look into the main work of the mayor and the executive.

The council must be able to sit on its own without the mayor and the executive,” Mthembu said.

He said the ANC’s national executive committee will this weekend discuss the outcome of the elections, and evaluate the party’s performance and the way forward.

“We plan to implement these [reforms] as soon as possible. You will need a legal framework to implement some of them,” he said.

Independent political analyst Daniel Silk said that all councillors, particularly those from the ANC, will be under “tremendous pressure” to deliver.

“South Africans will be more vigilant and more aggressive in demanding services. The ANC will have to be more responsive to the needs of the people.

“The defining feature of the next five years will be that South Africans will become more vocal in their criticism of the ANC, even those who voted for it.

“ANC councillors are in for a rough, tough time – otherwise they will see an increased erosion of their support.”

Silk said the monitoring and evaluation of performance at municipal level would mean nothing if the administration failed to appoint skilled and talented people.

“It’s all about finding the right skills. Chabane has been there but we haven’t seen much from him.”

ANC president Jacob Zuma, whose authority will be tested next year when his party holds its elective conference, has promised to act against public officials who fail to deliver.

His tenure will largely depend on the ANC halting the slide in its support, and winning back support in the tripartite alliance, especially that of unions federation Cosatu.

Mayors are to be named this week and Zuma will have to explain to the party’s Women’s League why women have been overlooked for top posts in metro councils.

Credit to: Times Live

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eThekwini among those fingered in report

Thursday, May 19, 2011 No Comments by Zelda

It is hard to believe that just 20 years ago the municipality of Durban was regarded as one of the most creditworthy local authorities in the world.

Today the eThekwini metropolitan municipality, encompassing Durban and seven formerly independent local councils with 3 million people, is one of many municipalities fingered in a research report by Ratings Afrika for its deteriorating municipal governance.

The intensive survey, carried out over the past five years, aims to highlight the state of financial governance at municipalities. The information will allow banks to assess the business merit of lending to municipalities that need to supplement their budgets.

Ratings Afrika found a worrying picture in eThekwini, with debt climbing and cash flow under pressure. Similar circumstances exist at many other metros and municipalities in the country as they struggle to extend basic services to all.

A lack of revenue is particularly pronounced in eThekwini, though. Net income as a percentage of total income declined from 25,41% in 2007 to 10,44% in 2010.

With income from water and electricity services under pressure since 2007, the metro did what many of its peers have done — it increased property valuations.

Even increasing this source of income was not enough for the municipality to avoid taking on further debt. Interest- bearing debt as a percentage of operating revenue has climbed from 46,3% to 54,2% while long-term liabilities have risen by R3bn from R5.1bn in 2008 to the present R8.2bn.

Provinces receive a budget from national government, but municipalities and metros mainly have to raise their own funds through rates. This has proved to be ineffective and they are turning to debt to run services.

Ratings Afrika CEO Charl Kocks says municipalities such as eThekwini cannot keep on borrowing to run basic services.

He is especially concerned about liquidity: “It is the lifeblood of any municipality.” At eThekwini, cash from operations as a percentage of income has declined from 34,5% in 2008 to only 13,47%.

The ratings index has a maximum score of 100 and assess 50 municipalities. They take into account the financial position of the municipality as well as its operating performance, debt position and liquidity management. Particular focus is placed on liquidity, which forms 40% of the weighting, followed by debt governance at 28%.

The average score of all municipalities was 62 points in 2007. It has fallen to 48 in 2010.
The lowest-scoring municipality was Madibeng (Brits) with 16 points, followed by Westonaria and Richards Bay with 21 each. Though scoring a full 100 points is technically possible, the best- performing council in 2010 was Saldanha Bay with 87.

Kocks says it is scary that the number of municipalities scoring 35 and less is increasing. In 2007 only three fell into this category but the number has increased to 15. “We are hitting the wall right now,” he says.

The number of municipalities with scores above 80 has declined from nine in 2007 to five now.

As with eThekwini, a marked deterioration is occurring in the bigger metros. Of particular concern is Johannesburg, which experienced a significant decline between 2007 and 2010 and only a moderate improvement over the past year.

The problems in Johannesburg relate to the integration of IT billing systems, negatively affecting revenue. Kocks says there is a real possibility that revenue and debtor figures are at least 10% in error. “But the biggest deterioration is with reputational risk and this could lead to more people not paying or defaulting because the figures cannot be trusted.”

Johannesburg’s performance declined quite rapidly but in 2009 it was one of four municipalities out of 283 receiving a clean audit opinion from the auditor-general.
Research Afrika’s research shows that little has improved since last year. The auditor-general was unable to give an opinion on 81 municipalities because of inadequate data.

Altogether 38 municipalities did not submit reports and 47 received qualified reports.
Kocks says it is not necessarily a political problem. Saldanha Bay is an ANC-controlled municipality while the controversial DA-led Midvaal performed only on average. Other municipalities doing well include Stellenbosch (80) and Lephalale (Ellisras) with 81. Tlokwe (Potchefstroom) was also a good performer at 82.

Sources within municipalities have disputed the figures used by Ratings Afrika in its research. They have questioned the validity of conclusions reached. But Kocks says this criticism should really get one worried. “We used only official data from treasury and all the municipalities had the opportunity to comment.”

Institute of Municipal Finance Officers president Chris Nagooroo says some of the findings could be unduly negative, though he has not read the report. He admits cash flow is a serious problem at most municipalities.

Many municipalities have improved their performance. “But much more needs to be done and we are definitely not where we want to be.”

Credit to: Financial Mail

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Third of municipalities need intervention

Friday, May 13, 2011 No Comments by Zelda

An explosive report into municipal financial management recommended national government intervention in more than a third of municipalities.

The aim would be to try to stop unauthorised, irregular, fruitless and wasteful expenditure amounting to billions.

The report, presented to the cabinet by Finance Minister Pravin Gordhan on March 14, paints a picture of corruption, waste and incompetence.

According to the Beeld, the report had caused discomfort among cabinet members, prompting ministers to decide not to release it but to send it back to its authors for “reworking”.

But spokesman Jimmy Manyi said the report had been compiled by the auditor-general and no instruction had been given for it to be revisited. “The assertion that the cabinet ordered the National Treasury to ‘repackage’ the report is not only untrue, but also an affront to the integrity and ethical conduct of the cabinet,” said Manyi.

The report recommended “intervention” in 35 percent of municipalities on the basis of poor financial management; in 33 percent on the basis of poor leadership; and in 35 percent due to weak governance.

It comes as a blow to the ANC, which governs most of the 237 municipalities. The report revealed that 107 municipalities and two municipal entities accounted for R5 billion in unauthorised expenditure, of which R1.1bn had since been written off.

In addition, 168 municipalities and 22 municipal entities incurred irregular expenditure of more than R4.1bn. Municipalities themselves only reported R2.7bn of the former and R440 million of the latter, with the remaining R6bn being uncovered by auditors.

The probe was to measure how well local government was doing in meeting the requirements of the Municipal Finance Management Act.

Accordingly, the report noted a shocking rise in the number of municipalities guilty of unauthorised, irregular and wasteful expenditure.

Of the 177 municipalities inspected in the 2008/09 financial year, qualifications on the basis of unauthorised, irregular and wasteful expenditure accounted for only 13 percent of all qualifications issued. In 2009/10 this figure rocketed to 63 percent, suggesting a collapse of financial controls.

In the past financial year, 77 percent of municipalities received qualifications related to their accounting for “capital assets”, 75 percent for “current assets” and 75 percent in the category “liabilities”.

Almost a quarter of all municipalities failed to submit service delivery reports and 89 percent were found not to have complied with “regulatory requirements on service delivery reporting”.

There were “material misstatements” (185), issues related to “supply chain management” (161), and “payments not made within 30 days” (93).

In terms of financial management, the Eastern Cape was the worst-run province, followed closely by the Free State and Limpopo. The best-performing provinces were the Western Cape and Gauteng.

Credit to: Independent Online

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Consumer act should protect all ratepayers

Wednesday, March 30, 2011 No Comments by Zelda

Civil society groups have called on government to ensure that the Consumer Protection Act is fully applied to all municipalities in the country as well.

The Act comes into effect on Friday.

It is expected to have a drastic impact on the way business is conducted in South Africa, giving consumers wider protection, and legal recourse to demand value for the goods and services they pay for.

The Black Sash says rate payers should also be able to use the legislation to demand efficient service delivery from municipalities.

The Co-operative Governance Department has asked for the country’s poorer municipalities to be deferred from the Act for the time being.

However, the legislation will apply to the country’s 50 high capacity municipalities.

Spokesperson for the Black Sash, Nkosikhulule Nyembezi, says they want the government to be held accountable under the act.

“We would like to see the Act applied fully when it comes to government services, particularly at municipal level,” he said.

“Understanding that the quality of water that people get, the interruptions of electricity without an explanation and the provision of quality health care services …  all those rights are experienced at municipal level and we would like to see the provisions of the Consumer Protection Act covering those areas as well.”

Corporate law firm Webber Wentzel has urged the relevant ministers to take urgent steps to equip the low and medium capacity municipalities to meet their obligations under the Consumer Protection Act.

They said it would be in the best interest of South African consumers if the deferment of the Consumer Protection Act in respect of these municipalities is lifted as soon as possible.

“The tragedy now is that many residents of these municipalities are SA’s most impoverished citizens who are least able to defend their rights,” Trudie Broekmann, a consumer law expert at Webber Wentzel said.

Municipalities are categorised by the Treasury as high, medium or low capacity under the Local Government: Municipal Finance Act of 2003.

High capacity municipalities have adequate resources and include the City of Cape Town, Stellenbosch, Mossel Bay, Nelson Mandela Bay, the City of Johannesburg, Tshwane, Emfuleni, Randfontein and Polokwane. The metros also fall into this category.

Broekmann said the new legislation did pose challenges, even for high capacity municipalities. The act was complex and sometimes difficult to interpret, she said.

“However, the Consumer Protection Act confers valuable rights on ratepayers and consumers, and municipalities should make every effort to implement the act correctly.”

Credit to: East Coast Radio and Business Day

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Half of SA unhappy with service delivery

Sunday, March 6, 2011 1 Comment by Zelda

More than half of all urban South Africans are dissatisfied with the service they get from their local municipalities, and the level of unhappiness is greatest among the very poor.

Results of a survey released to the Sunday Times suggest that the ANC may have its work cut out in traditionally loyal townships and informal settlements in the municipal elections to be held on May 18.

“Service delivery, or the lack of it, will be the key election issue,” said TNS Research Surveys pollster Neil Higgs.

“Protests can be expected almost anywhere, feelings are so strong. That this will spill over into violence in many instances should not be a surprise,” he said.

The South African Institute of Race Relations reported last month that four people were killed, 94 were injured and 750 were arrested in community protests linked to service delivery last year.

Municipal IQ, which monitors South Africa’s local governments, reported recently that 40% of the country’s 283 local governments had been affected by service delivery protests, mostly in Gauteng and the Western Cape, with 111 major incidents in the year.

The most recent eruption was in Wesselton, near Ermelo, where a protester was killed when police opened fire two weeks ago before arresting about 100 people. However, some reports said the violence had more to do with competition for electable positions in the forthcoming elections than with service delivery.

The TNS survey of 2000 adults in the seven major metropolitan areas shows that satisfaction grows with wealth. While no one in the lowest of the 10 income categories, used to outline the population, admitted to being happy with municipal service delivery, almost half of those in the top two categories were satisfied.

Confirming that trend, fewer than half of those living in houses and flats said they were unhappy, but more than three-quarters of those living in shacks said they were.

“It is the poorest of the poor who are the most unhappy – a powder keg indeed,” said Higgs.

In Port Elizabeth, dissatisfaction soared from 42% in February last year to 60% in November last year, and from 40% to 48% in Bloemfontein. It dropped significantly in East London and on the East Rand.

The survey confirmed other polls that show Cape Town to have the best service record and the happiest population. There, dissatisfaction dropped from 42% to 39%, the best score in any area.

Cape Town and the Western Cape are controlled by the Democratic Alliance.

“These figures confirm that the DA enters the local government elections in a very positive environment,” said DA strategist Ryan Coetzee.

He said the trend towards greatest dissatisfaction among the poorest people was partly inevitable. “People are, to an extent, just commenting on the circumstances of their lives.”

But he said the DA’s own research showed that Cape Town’s reputation for better service delivery had spread across the country and among all population groups, though it was highest among whites.

“What’s clear is that if you do the basics of local government consistently and right, you win the support of the people.”

Municipal IQ said last month that the elections were unlikely to spark new protests, but violence could flare several months after the poll “when electioneering promises are perceived to have been” reneged upon.

In responses to a separate question, a third of residents in the seven biggest cities said the ANC, SACP and Cosatu should split and fight the next election separately.

Blacks and whites gave similar answers on whether the alliance should split, but whites were more decided, with 45% saying they should not.

With a higher proportion of undecided’s, 36% of blacks opposed a split.

Credit to: Times Live

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Municipalities owed R62.3bn

Tuesday, December 21, 2010 No Comments by Zelda

The Treasury has reported that 276 municipalities across the country were owed R62.3bn at the end of September and the bulk of this amount – nearly R38bn – was made up of household rates and service charge debts.

The six metropolitan cities made up well over half of the amount owed at R35.4bn.

Money owed to the 276 municipalities that report to Treasury – of the 283 in total – grew by R2bn a month between June and September.

Local Government Research Centre director Clive Keegan said the ever increasing amounts owed to municipalities was testimony to the fact that the government had been “singularly unsuccessful” in breaking the back of what he called “the payment boycott mentality”.

“It is the hangover from the resistance period. It tells us there is no political will to implement effective revenue control measures and in most municipalities the billing systems are in complete disarray.”

Keegan said there needed to be “a profound up-scaling of municipal financial systems” and the political will to gather the monies owed.

The debt owed to the metros – including Cape Town, Ekurhuleni, Nelson Mandela Metropole, Johannesburg, Tshwane and eThekwini – grew by just short of R4bn in the 12 months to September.

Johannesburg had the biggest growth at 23.5 percent, or R2bn a year, while Cape Town’s debt grew 11.8 percent, or R558m. Johannesburg was owed R10.5bn in total while Cape Town was owed R4.7bn.

eThekwini’s debt level decreased slightly by 1.3 percent, or R70m, to R5.3bn while money owed to Tshwane dropped by R1.7m to R3.7bn. It is an indication that they both improved their debt collection procedures.

Secondary cities were owed just short of R13bn at the end of the first quarter, an increase of R2.3bn, or 18.3 percent.

Households once again made up the largest component at R7.7bn, or 67.3 percent of the total.

Government departments, including national and provincial, owed the least to the municipalities at 5.5 percent, or R3.4bn, while businesses owed just short of R14bn, or 22 percent. Those falling outside the categories of business, households and government owed R7.3bn in outstanding debt, just short of 12 percent of the total.

Water made up the bulk of the outstanding debt at 27 percent, or R17.5bn, of the total money owed while property rates were in second place at 25.6 percent, or R16.3bn.

Electricity was in third place at R10.6bn (16.6 percent) if one excludes the assorted “other debt” category at 17 percent, or R11bn.

The remaining debt was made up of sanitation and refuse removal.

Credit to: Business Report

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