Minister Dr Zweli Mkhize

Budget Vote Speech by Minister Zweli Mkhize to the National Council of Provinces

Budget Vote Speech by Minister Zweli Mkhize, Minister of Cooperative Governance and Traditional Affairs, to the National Council of Provinces

21 June 2018

Good morning to you all.

 

In the State of the Nation Address in February, President Cyril Ramaphosa rallied the nation behind a New Dawn.  

The credo of the New Dawn has been encapsulated in the compelling lyrics of the song, Thuma Mina – Send Me by Hugh Masekela. At COGTA, we are saying send me to go and make a difference in my ward, in my community, in my municipality, my department and in my country.

 

It is in that spirit that we also celebrate the centenary of our icons President Nelson Mandela and Honourable Albertina Sisulu this year, whose legacy inspires us to work harder each day, to build better communities.

The local government sphere is the most important sphere because of its proximity to the people. Everything happens in a municipality and in a ward. For this reason, we are working hard to build stable, well-functioning municipalities, with the support of communities and every sector of society, as we believe that local government is everybody’s business.

A well-functioning municipality is characterised by stability. It has functional council and oversight structures, a consistent spending of capital budgets, unqualified audit outcomes and good financial management.  

It provides services to the people in an efficient and professional manner, putting people first, in line with the Batho Pele principles.  

 

Functional municipalities also deliver the basics. They cut the grass on the verges of roads and streets, fix potholes, clean the streets and remove waste, fix water leaks and repair damaged sewerage systems and street lights.  The municipalities should also be able to detect community concerns before the frustration levels explode into violent protests. At the national level, COGTA is exploring the acquisition of ICT capability and an early warning system dashboard. This ICT capability will improve our effectiveness in supporting early interventions.

 

Statistics SA released the 2017 non-financial census of municipalities earlier this month. The report indicates an increase in the provision of some services, such as solid waste management and the provision of water and electricity during 2016 and 2017. This is encouraging information which indicates that services are being provided to by many municipalities.

 

However, the performance of the majority of the municipalities remains below expectations. Seven percent of the country’s municipalities are classified as well-functioning, 31% are reasonably functional, thirty one percent are almost dysfunctional while the remaining 31% is dysfunctional.  

We have decided to intervene decisively to address this state of affairs. We have identified 87 distressed and dysfunctional municipalities for intervention, with programmes clustered into three main critical areas – governance and administration, financial management and service delivery.

 

Some of the problems of municipalities are structural. The advent of wall to wall municipalities extended service delivery to previously neglected communities at the cost of the fiscus. 

The services were extended beyond the previous boundaries of municipalities which were defined in terms of a concrete rates base that enabled them to raise their own revenue.

Some of the municipalities will struggle to be viable, and creative methods will need to be utilised such as local economic development initiatives tapping on resources such as industrial parks and special economic zones to create revenue streams.

We are also looking at opportunities created by the Special Infrastructure Projects under the auspices of the Presidential Infrastructure Coordinating Commission.

 

Another major project that will change the face of rural areas and our municipalities in these areas is the agrarian revolution. The plan is to utilise the communal land in the hands of traditional leaders and rural communities. This matter has received active support from the National House of Traditional leaders.  Through the programme, traditional leaders will participate at the centre of economic development at district level. They will identify land for cultivation, drive ploughing and harvest programmes and engage in building livestock herds and create markets for the people in rural areas. The National House of Traditional Leaders and the Department of Traditional Affairs are currently in the process of acquiring land that can be used for the programme.

 

Many of our dysfunctional municipalities are facing problems created by poor management and lack of relevant qualifications for key positions.

The right people with the right qualifications must be appointed to key positions in municipalities. We will not compromise on that aspect. During the 2017/2018 financial year, 423 appointments were concluded with competent and suitably qualified senior managers.

 

A total of 95 corrective actions were taken to enforce compliance where appointments were made in contravention of the Municipal Systems Act and its Regulations.

Clean governance is also an imperative for COGTA. Since the amendment of the Municipal Systems Act in 2011, a total of 1651 municipal employees were dismissed for misconduct, and 130 resigned prior to the finalisation of the disciplinary proceedings.  

A total of 1 120 candidates were screened by the Department to advise as to whether the shortlisted candidates appear on the record of staff dismissed and of staff members who resigned prior to the finalisation of disciplinary proceedings.  We have developed a database that will ensure the blacklisting of any manager who is dishonourably discharged from service in any municipality in the country.

As part of building a strong institutional capacity, functional oversight committees such as Audit Committees and Municipal Public Accounts Committees are in place and are fully operational. We also promoting the leadership and institutionalisation of the Code of Conduct for Councillors and Official in order to promote accountability and consequence management.

The people must feel that their elected representatives are here to serve them, using ward committees and the Municipal Community Complaints Management System. Progress is being made in this regard.

 

Many municipalities have been unable to spend the Municipal Infrastructure Grant, and this means people cannot obtain the services they need such as water or roads and electricity. There are 226 municipalities in the country that are receiving the Municipal Infrastructure Grant funds. Over the MTEF period, national government has made an allocation of R47.6 billion and R16 billion is allocated for 2017/18 financial year.

 

In the past five years, since 2012/13, a total of R3.4 billion in MIG transfers was stopped and was reallocated from underspending municipalities to better spending municipalities.

 

This is not ideal as it has an inadvertent consequence of penalising municipalities with a lower capacity and hence punishing the poorer communities. This cannot continue, rather alternatives must be found to support service delivery to poorer communities.

One of the reasons for the failure to spend MIG funds is the systemic problem of skills shortage. Only 55 out of the country’s 257 municipalities have qualified engineers to assist in the rolling out of infrastructure projects.

 We have decided to intervene immediately. Fifty five municipalities have been identified for the intervention, 17 of which had their Infrastructure Grant transfers stopped at least three times in the past five years while 18 eighteen had their transfers stopped at least twice in the same period. Sixteen technical support teams from our Municipal Infrastructure Support Agent have been established and deployed to support the first group of 39 municipalities.

The intervention began in last month, May 2018 and will continue up to the end of April 2021. 

 

The remainder of the municipalities will be covered by December 2018 as MISA augments its current capacity. Such MISA interventions have become visible in the North West province where Cabinet has decided to invoke Section 100 (1) of the Constitution due to several governance challenges observed in the province.

Building on work done last year in October when the former Minister of COGTA visited the North West, I visited the North West province to determine what support and interventions we can undertake. We are providing support in 12 priority municipalities together with the National Treasury.

The municipalities are;

  1. Ditsobotla
  2. Mamusa
  3. Tswaing
  4. Lekwa-Teemane
  5. Naledi
  6. Maquassi Hills
  7. Ngaka Modiri Molema
  8. Mahikeng

9.Ramotshere Moiloa 

10.Madibeng

11.Kgetlengrivier 

     12.Bojanala.

 

The municipalities are facing numerous service delivery challenges and an allocation of about R373 million is required to stabilise and improve service delivery, and in particular the provision of water and sanitation. The community of Extension 3 in Mamusa spent more than three years without potable water, which is one example of the hardships that our people face.

 

Sewerage spillages have also become hazardous to the communities.  MISA has deployed 17 Engineers in North West municipalities. We acknowledge the contribution by the South African National Defence which deployed three engineers, five honey suckers and 40 plumbers to fix sewerage problems at Ditsobotla local municipality on the 8th of June, working with MISA engineers. We are determined to find solutions to the infrastructure problems that make life difficult for our people. We will prioritise the fixing of sewerage systems in Mahikeng, Madibeng, Mamusa, Tswaing and Ratlou in North West.

Last month I visited the Eastern Cape and our visit focused on twelve municipalities that are distressed and need urgent intervention and development of action plans.

These are Mnquma, Amahlati, Raymond Mhlaba, Inxuba Yethemba, Enoch Mgijima, Walter Sisulu, Makana, Dr Beyers Naude, Matatiele, Mbizana, Port St Johns and King Sabata Dalindyebo. 

 We are establishing intervention teams comprising Cogta and the National Treasury to begin intensive work with the 12 Eastern Cape municipalities.  

The Free State Province is also facing challenges. Tomorrow on 22 June, we shall visit Mangaung to work with the provincial government to see what can be done to support Mangaung Metropolitan Municipality which is distressed and dysfunctional, and also nine other municipalities in similar circumstances. 

These are;

  1. a)Mafube
  2. b)Masilonyana
  3. c)Maluti-A-Phofung
  4. d)Kopanong
  5. e)Letsemeng
  6. f)Mantsopa
  7. g)Nketoana
  8. h)Tokologo
  9. i)Mohokare

 

The purpose of the visit is to identify and agree on critical and priority challenges for Ministerial intervention. On the question of financial management, the Auditor-General released his municipal audit report recently which demonstrated a regression in many areas. We welcome the fact that thirty three municipalities received an unqualified audit opinion with no findings in the period 2016-2017. While this number remains very low, it is encouraging that 145 or 56% of the municipal audit outcomes are classified as unqualified. There are municipalities that do get things right and become exemplary to others.

As part of our turnaround strategy, a strong focus will be paid to reversing these negative outcomes. No disclaimers will be tolerated. All interventions in municipalities must show improvements and a reversal of negative audit outcomes within 12 months.

The Department of Cooperative Governance is also piloting the Simplified Revenue Plan Project at 42 selected municipalities, which is aimed at enhancing the municipal revenue management and debt collection system in local government.

Other critical challenges include the R10 billion debt that the municipalities owe to Eskom. I met the ten highly indebted municipalities here in Cape Town ahead of their presentations to the Standing Committee on Public Accounts last week. We also made a presentation to SCOPA as the Inter-ministerial Task Team on Electricity Reticulation and Distribution, and assured parliament that this critical matter is being attended to.

Municipalities are also owed R139 billion for municipal services, which then makes it difficult for them to pay Eskom, water boards and other debtors.

I have established an Advisory Panel to coordinate and help all parties to work closely together to find lasting solutions. We have also undertaken as government to persuade Eskom to avoid the discontinuation of electricity supply to municipalities with debt as that tends to punish the innocent, including those who have paid for electricity. We will return to parliament in September to report back.

On Tuesday this week, 19 June, I met the 14 municipalities that invested money with VBS Mutual Bank. About R1,5 billion was deposited into the bank by the municipalities from North West, Limpopo and Gauteng Provinces.  I met with the Mayors on Tuesday the 19th of June. We have urged the provincial CoGTA departments and the affected Municipalities to work on recovery plans to augment possible service delivery disruptions due to the budget shortfall as a result of loss of investment. All municipalities are expected to report to CoGTA on the issues around the finances and their impact on service delivery within a month. The South African Reserve Bank is investigating the matter and has our full support.

The fourth aspect requiring more attention in local government is the impact of the local political environment on municipal governance. Political infighting within organisations, undue political interference in governance and administration as well as unstable political coalitions in some areas seriously affect governance. 

We are also seriously concerned about conflicts that we often observe among public representatives. KwaZulu-Natal has borne the brunt of the killing of councilors and other leaders.

I will lead MECs responsible for local government and the South African Local Government Association to a meeting with the Justice, Crime Prevention and Security Cluster soon to discuss the killing of councillors and its impact on local government. We urge our communities to report the perpetrators to the police so that we can put a stop to these despicable actions.

On disaster management, I announced last week that I would not renew the national state of disaster that had been declared on 13 March 2018, which had lapsed in terms of the legislation on 13 June, as assessments by the National Joint Drought Coordinating Committee last month had indicated that the  acute phase of the drought in the Western Cape, Eastern Cape, Northern Cape and some smaller pockets in the country was ending and was now entering theresilience building phase.

 

Since the March declaration, the respective spheres of government accessed more than R433 million to implement the augmentation and other immediate relief projects.

The Community Work Programme (CWP) which is designed to alleviate poverty through the provision of work opportunities for poor and unemployed peoplehas provided more than 700 000 work opportunities over the MTEF period.

The programme has a footprint in all local and metropolitan municipalities and is being implemented in 226 sites. The CWP work cuts across key sectors such as the environment, social, health, education, agriculture and infrastructure. The work done enhances the quality of life of many in beneficiary communities.

During his official visit to COGTA offices on the 10th of May, the President directed us to lead the charge around integrated urban development and to decisively dismantle the legacy of apartheid spatial planning.

Through our Integrated Urban Development Framework, we will ensure that, as part of their spatial development frameworks, municipalities identify strategically located land that is required to transform the apartheid spatial patterns, boost economic growth and provide opportunities to our communities.

We continue to provide support to our traditional leaders through the Department of Traditional Affairs.

The Department of Traditional Affairs is addressing the concerns of traditional leaders about the tools of trade, such as salaries, transport, security as well as support staff. We are also looking into the refurbishment of traditional councils and courts. Discussions are also taking place with the Department of Cooperative Governance and SALGA on best options for participation of traditional leaders in municipalities.

We have tabled three Bills in Parliament, namely, the Traditional and Khoi-San Leadership Bill, the Traditional Leadership and Governance Framework Amendment Bill and the Customary Initiation Bill, in order to address gaps in legislation in our sector.

As we call upon municipalities to shape up and improve the way they work, the people must also play their role. We need to clean our towns, cities and villages.

We also appeal to all consumers to pay their municipal bills.  Municipalities are struggling in part due to the culture of non-payment for services by households and also by the private sector and government departments. This culture must be eradicated. 

Local government is everybody’s business. We shall continue to work with provincial and local government, the business community, traditional leaders, religious leaders and other sectors of society in building efficient and functional municipalities.

We are inspired by President Mandela’s words when he reminded us that challenges still remain, but that we shall overcome if we work together.

He said;

“We understand it still, that there is no easy road to freedom.

We know it well, that none of us acting alone can achieve success.

We must therefore act together as a united people, for national reconciliation, for nation building, for the birth of a new world.

Let there be justice for all.

Let there be peace for all.

Let there be work, bread, water and salt for all’’.

I thank you.