HON MB GWALA MPL
Many municipalities in South Africa are financially in a disastrous situation. When one looks at these municipalities then you notice that there is a fixed road that was travelled from prosperity to financial disaster. As many as 93% of municipalities in South Africa have cashflow problems. The root causes of financial problems can be ascribed to elections. Councils do not want to anger voters by forcing them to pay for services, lack of financial discipline, non-compliance with legislation and lack of knowledge by councillors on finance and legislation. We want to use Newcastle and the Msunduzi Municipalities as an example.
The last time I checked unauthorised expenditure in the Newcastle Municipality in 2015/16 was R673 829 662 and there was a sharp increase in 2016/17 with R793 827 005. The Newcastle municipality is in shambles as the deficit cash is R522 484 482 which indicates that current liabilities are not cashbacked. There is a financial unsound in this municipality and the compliance with MFMA is a major issue.
In all these municipalities there are a large number of consumers that do not pay for services. For example, in Newcastle town, where the municipality supplies the electricity and non-payment leads to disconnection of electricity, 93 % of the consumers pay their monthly accounts. In Newcastle East where Eskom supplies electricity only 20% of the consumers pay their monthly accounts. This leads to a debt of R900m owed to the municipality.
When the Municipality can no longer pay salaries, contractors and creditors, the unspent conditional grant money, that is meant for capital projects, is used to pay salaries. In Newcastle (February 2018) the unspent conditional grant was R112m but there was only R52m in the bank.
When cash flow problems arise criditors are not paid within 30 days. The two main creditors that are not paid are Eskom and DWA (WATER). Newcastle municipality is at least three months in arrears with payments to Eskom. Contractors are not being paid within 30 days.
As the financial position gets worse municipalities struggle to pay salaries on time. From 2005 to 2006 the IFP alliance ran the Newcastle municipality and as from 2006 to 2007 the ANC alliance took over. Again, the IFP Alliance again took over from 2007 to 2009. Up to this time the CFO enforced strong financial discipline and did not allow unauthorised expenditure. He left when the ANC took over. From 2010 the ANC embarked on a campaign of massive Capital Projects to increase their voter base. By 2013 the accumulated surplus cash was spent. From 2013 to 2016 money that was meant to pay current liabilities, was used for capital expenditure. Our councillors in Newcastle municipality have warned each year that this would lead to financial disaster but the ANC refused to listen to them. From 2016 to the present the ANC is still in charge and the financial position has further deteriorated.
The Msunduzi municipality is yet another municipality that is in shambles. The deficit cash is R451 968 573 and finances are in a serious situation and increasing liabilities is warrying. The current liabilities of Msunduzi municipality stands at R1 051 572 905 and its long-term liabilities stands at R 2 251 898 615. To substantiate that this municipality is in shambles is that the ANC Councillor Mtuza Mkhize Ward 21 in Dambuza led a march against the Msunduzi Municipality calling it to be placed under administration. Recently, Msunduzi municipality received a disclaimer from the Auditor General that the municipality had incurred irregular expenditure of about R150 million and about R11m in fruitless and wasteful expenditure.
The Inkatha Freedom Party demands that a skills audit must be conducted at Msunduzi Municipality to see if the municipality has the right people placed in the right positions after a senior official at Msunduzi Municipality has allegedly been caught on an audio recording giving instruction to manipulate job interview scores.
The manipulation is meant to secure a job for a candidate favoured by a senior politician in the municipality.
The IFP strongly believes that a skills audit must conducted in order to root out officials who are holding back this municipality from providing services to the people. The Msunduzi Municipality has been reported as most dysfunctional municipality in the province. The KwaZulu-Natal Premier Willies Mchunu promised to announce measures to deal with allegations of corruption at Msunduzi Municipality but we have not heard anything about this matter. Who is being protected in the Msunduzi Municipality?
These allegations put the competency of many of the municipality’s staff into question. Cadre deployment is used by the ANC to reward those that are loyal to the ANC; then be appointed in positions at all levels in the society and all institutions of government in the country.
Speaker, the IFP is NOT pleased with the Department of Cooperative Governance and Traditional Affairs hands-on approach to solving the problems facing local government.
It must be pointed out at the outset that many of the financial and management problems outlined in the MEC’s report, have traceable political roots. The MEC for COGTA is known across the province’s municipalities as someone who will intervene in their affairs in a jiffy or not at all – depending on their political affiliation.
By contrast, ANC-controlled councils, such as Msunduzi, Inkosi Langalibalele, Dr Nkosazana Dlamini Zuma, and Mooi Mpofana have been allowed to disintegrate into chaos without the MEC taking notice.
The MEC for Cogta always said: “If we are dealing with criminals, we do not see party political colours.” My question is: Will the MEC be willing to look past politics and take action against these municipalities as they continue to paralyse the work of the council with a negative impact on service delivery? We are not against any intervention by the MEC because the IFP when was in power in KwaZulu-Natal it had Umsekeli. Umsekeli intervenes immediately when the problems were detected but this ANC led administration waits until the municipalities collapse and become dysfunctional.
The people on the ground are not happy and you cannot blame them when they are not accessing their guaranteed free basic services 24 years into democracy. I would like to request the MEC to be bold and take the bull by the horns and deal with non-viable municipalities directly, not through strategies which have proven to be unsuccessful.
Honourable Speaker, dilapidated infrastructure has troubled the Province’s municipalities for years and despite the complaints, service delivery protests and service interruptions to the communities, nothing has been done to take corrective steps to improve our infrastructure.
There is a stipulation that 8% of all municipal budgets should be set aside for dealing with infrastructure challenges, I hope the MEC will hold municipalities to this.
The municipalities are wasting millions on unnecessary and wasteful expenditure, I would like to see this 2018/19 budget improve audit outcomes so that the money our municipalities waste can go towards improving the lives of our people.
We have noted that recently the ANC has been seen as caring organisation to the Izinduna by boasting about their salary payments. To us this is not something new because in fact it was Inkosi Nyanga Ngubane who proposed that izinduna should be remunerated, whilst amakhosi had to further their studies and the traditional council secretaries. Iqembu leNkatha lithi awenyuswe amaholo omabhalane bamakhosi ukuze bakwazi ukuphila ngendlela efanele kade babekhala. Sinxusa noNdunankulu uMacingwane ukuthi akangenelele kuloludaba.
Furthermore, we would like to raise our discomfort in a manner in which COGTA handle the issue of ubukhosi. There are many cases where the department is being accused of being in cahoots with the enemies of the late inkosi when the inkosi passes away. This is done in such a way that even before the funeral of inkosi takes place the department would start consulting with the people perceived to be the enemies of Inkosi in selecting the rightful person or the heir to take over the reins. This happens even before the cleansing ceremony takes place. During these shenanigans oNdlunkulu are excluded from taking part in these negotiations which degrades them into non-existing entities.
We need a leadership that does more than pay lip-service to the traditional structures of community governance. The institution of traditional leadership is not a vehicle to secure political support. It is a valuable partner in the pursuit of social justice, community development, employment generation, social cohesion and participatory governance. The IFP challenges COGTA to raise its game as far as respect for the role of traditional leadership is concerned.
As it is often stated, local government is a sphere of government that is closest to the people. This sphere is constitutionally mandated to provide services to residents in an equitable manner. It must also ensure that citizens become active participants in the development of their communities. It is therefore critical that municipalities have the requisite capacity to execute their mandate.
Local government has been the bane of South Africa’s service delivery and a breeding ground for corruption. This must change, as we fully rely on municipalities to be the wheels of service delivery. Every effort must be made to ensure that public money is spent to the benefit of the people, especially the poor, who find life to be a virtually daily struggle.
Strong nations are built on the ability to fulfil promises, and therefore responsiveness to the needs of the public must take centre stage. The reality is that when communities begin to feel that they are not getting proper services from government and feel that promises are not being kept and their needs, hopes and aspirations are not being met, public – and often violent – protests rightly or wrongly become the order of the day, as we have experienced. If things don’t change for the better, we shall continue to experience such.
The KZN provincial government seems unable to stem this woeful tide of mismanagement in our municipalities in particular the ANC led municipalities. If you look at the architecture of managerial roles, a chief financial officer is responsible for managing the finance department, while the municipal manager is in charge of the entire system. More needs to be done to hold officials to account.
For many municipalities notwithstanding engagement by the auditor-general’s office and numerous support programmes audits clearly remain last-minute annual scrambles to comply with auditing requirements. Credible information needed to achieve clean audits will only start to emerge with committed leadership and oversight. But perhaps even more fundamental a mind shift is needed in many municipalities.
Public funds must be managed in a rigorous transparent and accountable fashion.
The IFP believes that there is an urgent need to ensure that there is adequate political commitment in all municipal councils in terms of oversight and political guidance over administration in ensuring that municipalities become critical agents for socio-economic transformation through spatial integration and economic enhancement.
It is thus important that we contextualise the microscopic lens on Local Government as a reflection of government. In that context, service delivery protests have become part and parcel of our democratic form of expression. While we condemn in the strongest terms the violent nature of some of these protests, we must confront the challenges still befalling our people. It is also critical that leadership of Local Government, be hands-on in responding to the issues raised by communities.
It is a fact that many of the issues raised in these protests are in fact not Local Government functions. But Local Government represents all of government to communities, so councillors (in particular ward Councillors) bear the brunt of the violent elements of the protests, often leading to damage or destruction of property and most tragically, loss of life. Yet, Councillors who are at the coalface and most vulnerable to public outrage, receive no risk cover against these deadly attacks. We are strongly of the view that this must be urgently corrected.
I thank you