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MALUTI-a-PHOFUNG LOCAL MUNICIPALITY

This presentation provides a briefing on the status of the intervention in Maluti-a-Phofung Local Municipality, including challenges, achievements, and the vacancy status of senior management positions.

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MALUTI-a-PHOFUNG LOCAL MUNICIPALITY

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  1. MALUTI-a-PHOFUNG LOCAL MUNICIPALITY Briefing on the status of Intervention in terms of section 139(1)(b) of the Constitution Presentation to Select Committee on Cooperative Governance and Traditional Affairs Date: 15 May 2018

  2. Presentation outline • Briefing on he issuing of section 139(1)(b) • EXCO Terms of Reference • Minister’s Concurrence conditions • Immediate challenges and Progress • Key Achievements • Senior Management vacancy status • IGR Support Required • Governance and / functionality of Council

  3. Briefing on the issuing section 139 (1(b) The Provincial departments of COGTA and Treasury through its monitoring function compiled a report on the overall status of Maluti-A-Phofung Local Municipality This detailed report titled “EXCO memorandum” was presented to the Executive Council during its meeting that was held on the 10th of February 2018 and a decision taken to invoke section 139(1)(b) of the Constitution of the Republic of South Africa (refer attached EXCO memo titled Annexure “A”). Section 139 of the Constitution of the Republic of South Africa read as follows: When a municipality cannot or does not fulfil an executive obligation in terms of the Constitution or legislation, the relevant provincial executive may intervene by taking any appropriate steps to ensure fulfilment of that obligation.

  4. Briefing on the issuing section 139 (1(b) • Section 139, subsection 2, read as follows: If the provincial executive intervenes in a municipality in terms of subsection (1) (b) – • It must submit a written notice of the intervention to – • The Cabinet member responsible for local government affairs; and • The relevant provincial legislature and the National Council of Provinces(NCOP) within 14 days after the intervention began. • The written notices were submitted to the cabinet member, Provincial Legislature and the NCOP on the 19 February 2018. The Minister approval of section 139(1)(b) was obtained on the 20th march 2018 and the NCOP approval is still awaited (minister’s letter attached as Annexure “B”)

  5. Exco Terms of Reference (1 of 10) Implement a system for the control and approval of all expenditure Oversee all budgetary processes Progress to Date Conditionalities Ensure implementation of financial systems, policies and procedures Administrator secured control over management of municipality’s bank account. Work in progress Work in progress; but behind schedule as previous year (2017/18) information only captured in the last 2 weeks on e-Venus financial system.

  6. Exco Terms of Reference (2 of 10) Progress to Date Conditionalities Set out a specific strategy to address the municipality’s problems including a strategy to reduce unnecessary expenditure and to increase the collection of revenue • Enlisted the assistance of National • Treasury in the development of • Financial Recovery Plan. • Implemented cost cutting • Measures - containment of overtime, • acting allowances, travel & • subsistence, etc.

  7. Exco Terms of Reference (3 of 10) Reviewing the Maluti-a-Phofung organogram and focus particularly on curbing the ballooning salary costs, whilst improving performance. Progress to Date Conditionalities • Organogram review discussed in LLF and sub-committees. • Draft policy framework on “Organisational Structure” developed which advocates for the reduction of directorates in Map from nine to five.

  8. Exco Terms of Reference (4 of 10) Ensure implementation of Municipal council resolutions by the Administration which are not to the disadvantage of the municipality Progress to Date Conditionalities • Council resolutions under review. • Resolution to write-off residential debt to the tune of R508m to be rescinded.

  9. Exco Terms of Reference (5 of 10) Engage and enter into payment agreements with the third parties currently owed by the Maluti-a-Phofung Local Municipality Ratify all executive decisions which may be taken by the municipal council and its committees, prior to implementation Progress to Date Conditionalities Executive Decisions under review and decision to transfer officials to positions which renders them “redundant” already reversed. • R13m paid in March 2018 to reduce arrears on pension/ provident of R44m as at 28th February 2018. • March 2018 deductions paid over. • Agreement with unions to pay remaining outstanding contributions over a period of 4 months.

  10. Exco Terms of Reference (6 of 10) Ratify all decisions taken by the Acting Municipal Manager and Managers directly accountable to the Municipal Manager in terms of delegated or original authority Ensure that all the vacant positions / post of Senior Managers (section 57) are filled Progress to Date Conditionalities Work in progress To be attended to once municipality is stabilized and financially in a position to fill vacancies.

  11. Exco Terms of Reference (7 of 10) Progress to Date Conditionalities Undertake all functions of the Municipal Manager as stipulated in section 55 of the Municipal Systems Act, 2000 Acting Municipal Manager appointed on 1 April 2018 (seconded from COGTA) Implement all governance systems and procedure Work in progress

  12. Exco Terms of Reference (8 of 10) Ensure that the Local Labour Forum resolutions by the Administration which are not to the disadvantage of the Municipality Progress to Date Conditionalities Work in progress • LLF resuscitated in February 2018 and new Chairperson elected. • Sub-committee on Workplace Restructuring had its 1st engagement. Ensure that the Local Labour Forum (LLF) is resuscitated and functional

  13. Exco Terms of Reference (9 of 10) Conditionalities Progress to Date • Existing contracts under review. • Enlisted services of COGTA and State Law Advisor • One contract already cancelled – Cash Collection Service Assess contractual obligations of the Municipality and negotiate contractual payments, scope and agreed schedule with service providers

  14. Exco Terms of Reference (10 of 10) Undertake the functions referred to in Section 67 (1) (h) and Schedule 2 of the Municipal Systems Act, 2000 read with any other legislative provision dealing with disciplinary matters, including criminal, disciplinary and civil action Conditionalities Progress to Date • Several matters currently investigated relating to financial, SCM and human resource irregularities. • Appropriate action to be instituted once sufficient evidence is gathered.

  15. Ministers’ Concurrence (1 of 10) Appointment of the Municipal Manager and other vacant section 56 managers Appointed EXCO Representative should work with the Back to Basics (B2B) Task Team Appointment of an acting municipal manager Progress to Date Conditionalities EXCO Representative is participating in the Section 139 Technical Intervention Steering Committee. Will be actioned when it is affordable for the municipality Acting municipal manager has been appointed - Mr. K Masekoane of COGTA has been seconded

  16. Ministers’ Concurrence Conditionalities (2 of 9) Development and align Financial Recovery Plan of Maluti-a-Phofung to SALGA’s Municipal Audit Support Programme and Revenue Enhancement Programme Progress to Date Conditionalities The municipality has sought the support of National and Provincial Treasuries in developing the Financial Recovery Plan and anticipate to conclude such a plan by the end of June 2018

  17. Ministers’ Concurrence Conditionalities (3 of 10) Reviewing the Maluti-a-Phofung organogram to address the illegal appointment of general workers during the December 2017, for which provision was not made on the approved organogram, and has resulted in a huge salary bill and utilisation of conditional grants for operational expenditure. It is also noted that critical vacancies exist in the supply chain management unit of the municipality Progress to Date Conditionalities • The process of terminating illegal appointments of assistant general workers will be concluded by the 11th of May 2018 • Organogram of Maluti-a-Phofung is being reviewed and will be processed through the Local Labour Forum.

  18. Ministers’ Concurrence & NCOP Conditionalities (4 of 10) An audit to be undertaken to assess the current institutional capacity in the municipality to co-ordinate investment and economic activities for growth related to the establishment of Special Economic Zone (SEZ) Conditionalities Progress to Date • COGTA is supporting the development of Infrastructure Master Plans that will ignite the development of SEZ • Intergovernmental support and investment is required • Engage MISA to assist with Electricity Master Plan

  19. Ministers’ Concurrence Conditionalities (5 of 10) Fast-track the refurbishment of the Intabazwe water- pipeline which has led to several interruptions in the provision of water and electricity services to the Harrismith town, Intabazwe community, a hospital and businesses Prioritize the functionality of the billing system as residents have not been billed for the past nine months Progress to Date Conditionalities To be implemented through MIG 2018/2019 FY Billing for the months of July and August 2017 completed and accounts verified and dispatched to printing company to print and post to customers on 7th May 2018

  20. Ministers’ Concurrence Conditionalities (6 of 10) Prioritize the signing of a realistic repayment plan between Maluti-a-Phofung and ESKOM to avoid the disrupting of electricity supply by Eskom scheduled on 23 March 2018 due to R2.7 billion outstanding debt owed by Maluti-a-Phofung Progress to Date Conditionalities • Continuous engagement with Eskom facilitated by provincial Government. • Court granted provisional ruling that big businesses pay Eskom directly - matter is up for decision on the 18th of June 2018.

  21. Ministers’ Concurrence & NCOP Conditionalities (7 of 10) Engaging and entering into payment agreement with third-parties currently owed by Maluti-a-Phofung Progress to Date Conditionalities • Signed an agreements with unions on outstanding 3rd Party payments. • Medical Aids, garnishee orders and bonds are up to date. R31million still outstanding on pension and Provident funds

  22. Ministers’ Concurrence Conditionalities (8 of 10) Payment of salaries and overtime to municipal employees Facilitate the resolution of IGR disputes between MaP and the Department of Water and Sanitation Conditionalities Progress to Date • Payment for the months of February, March and April have been done. • Challenge will be payment of salaries for May and June 2018 • Confirmed that funds intended for water pipeline from Sterkfontein to Kestell has been utilized for operation and the municipality has forfeited the money. • Municipality engaging Department on future funding.

  23. Ministers’ Concurrence Conditionalities (9 of 10) An assessment be performed of sector projects implemented and budgets allocated towards these projects in the Maluti-a-Phofung municipality during the 2018/2019 FY. This assessment should prioritize the investment required to address the challenges related to the electricity and water infrastructure. Progress to Date Conditionalities COGTA is supporting and funding the development of Infrastructure Master Plan that will ignite the development of SEZ

  24. Immediate challenges and progress (1 of 5)

  25. Immediate challenges and progress(2 of 5)

  26. Immediate challenges and progress(3 of 5)

  27. Immediate challenges and progress(4 of 5)

  28. Immediate challenges and progress(4 of 5)

  29. Immediate challenges and progress(5 of 5)

  30. Key Achievements (1 of 6) Un-used Grant funding for MIG ring fenced and capital projects are being implemented in relation to upgrading of roads and storm-water, provision of sanitation services and the construction of social amenities; MIG Expenditure Rate is R78.8 million as at 30 April 2018 and this represent 56% of the revised allocation for R140.7 million

  31. Key Achievements (2 of 6)

  32. Key Achievements (3 of 6)

  33. Key Achievements (4 of 6)

  34. Key Achievements (5 of 6)

  35. Key Achievements (6 of 6)

  36. Senior Management Vacancy Only three (3) section 57 managers posts have been filled i.e. Corporate Services, Human Settlement and Planning and Sports, Arts and Culture. The position of Municipal Manager, CFO, Infrastructure and Community Services still vacant. To be filled once the cash flow has improved. COGTA has seconded the acting Municipal Manager and also appointed the two Administrators Assistant for HR and Governance. • .

  37. IGR Support required (1 of 13)

  38. IGR Support required (2 of 13)

  39. IGR Support required (3 of 13)

  40. IGR Support required (4 of 13)

  41. IGR Support required (5 of 13)

  42. IGR Support required (6 of 13)

  43. IGR Support required (7 of 13)

  44. IGR Support required (8 of 13)

  45. IGR Support required (9 of 13)

  46. IGR Support required (10 of 13)

  47. IGR Support required (11 of 13)

  48. IGR Support required (12 of 13)

  49. IGR Support required (13 of 13)

  50. Governance/ functionality of Council Special Council meetings were convened on 12 March 2018, 19 April 2018 and 3 May 2018 to pass a Motion of no confidence in Executive Mayor. All three sittings, were either disrupted, aborted or postponed and it is envisaged that the next continuation Council meeting is scheduled for 10 May 2018

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