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OUDTSHOORN MUNICIPALITY. Path to Recovery. PATH TO RECOVERY. Initial Diagnosis Section 106 Investigation Section 139 Intervention Intervention Start-Up Need for deeper analysis Diagnostic exercise Recovery Program Funding. INITIAL DIAGNOSIS. S106 COMMISSION.
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OUDTSHOORN MUNICIPALITY Path to Recovery
PATH TO RECOVERY • Initial Diagnosis • Section 106 Investigation • Section 139 Intervention • Intervention Start-Up • Need for deeper analysis • Diagnostic exercise • Recovery Program • Funding
S106 COMMISSION • MEC instituted investigation in terms of S106 of Systems Act; • Commission appointed: Adv Joey Moses, Mr. Meko Magida & Mr. Desmond Grootboom as secretary; • Terms of reference of commission allegations of mal-administration, non-compliance with statutory obligations and serious malpractice;
S106 COMMISSION cntd • Report presented on 2 March 2007; • Detailed numerous instances of mal-administration, non-compliance with statutory obligations and serious malpractice; • Can be ascribed to political instability & inexperienced political leadership; • Also instances of dereliction of duty, breaches of statutory prescriptions and administrative deficiencies;
S106 COMMISSION cntd • General Findings: • There is internal strife and conflict in the Municipal Council and within the administration. There is an acute and destructive sense of distrust permeating the political and administrative structures of the Oudtshoorn Municipality. This has virtually collapsed the Oudtshoorn municipality and has effectively prevented it from serving its constituency, the people, especially the poor and marginalized community of Oudtshoorn. • In the circumstances, the Commission concludes and it is their finding, that this represents an extraordinary state of affairs within the Oudtshoorn Municipality, indicative of a serious crisis situation, which must be addressed urgently, comprehensively, effectively and efficiently. Sections 105 and 106 of the Municipal Systems Act, 2000 read with section 139 of the Constitution, 1996 provide the legislative framework to address this crisis situation.
S139 INTERVENTION • Based on report by S106 Commission & continued political and administrative instability, Provincial Cabinet intervened in terms of S139 of the Constitution; • Terms of intervention are: • That executive powers of the Council and all powers of the Municipal Manager be revoked and be assumed by an Administrator functioning under the direction of the Provincial Executive; • That the intervention commences on 19 March 2007; • That the Council not be dissolved and that the serving Councillors be retained as ordinary members in an advisory capacity to the Administrator; and • That the intervention will last for six months.
S139 INTERVENTION cntd • Louis Scheepers designated as administrator; • Initial threat of legal challenge to intervention, did not materialise; • Intervention commenced on 19 March 2007.
NEED FOR DEEPER ANALYSIS • Initial high level assessment by administrator is that problems are more severe than initially thought; • Political instability subsided to an extent, probably based on politicians desire to restrict the length of intervention; • Crucial policies, procedures and processes are non-existent in the municipality;
NEED FOR DEEPER ANALYSIS • Further exacerbated by a high vacancy rate in the senior management level; • Organisational structure not based on proven best practice models; • Seeming lack of ability, experience & knowledge throughout the administration; • Municipality was not able to meet requirement that draft budget be adopted 90 days before new financial year;
NEED FOR DEEPER ANALYSIS • CFO and Head of Expenditure position vacant for long time; • Head of Financial Planning resigned and will be vacant from 1 May 2007; • Outstanding debtors grew from ± R32m to ± R50m in last two years; • Current recovery rate at 84%, predicted to be well below 80%at end of year;
NEED FOR DEEPER ANALYSIS • Position of Head of Housing declared redundant by Council in 2006; • Housing section only have 1 permanent official (0n long term sick leave) and 1 temporary official; • Municipality do not have ability to perform housing functions;
DIAGNOSTIC EXERCISE • The above are just examples of the administrative challenges facing the municipality; • In order to devise a well thought through and credible recovery program it was necessary to perform a thorough diagnostic exercise through a management audit;
DIAGNOSTIC EXERCISE • Challenges that management audit addressed include: • A dysfunctional organisational structure; • A general lack of adequate and acceptable processes, procedures and systems; • A lack of the implementation of Batho Pele principles in the interaction of especially the administration with the community; • High vacancy rate amongst the senior posts of the Municipality; • An unsustainable budget; • Payment rate of 84%, resulting in an expected income shortfall of R24m at the end of the 2006/2007 financial year; • Inability to meet the statutory requirements in respect of the tabling of the draft budget ninety days before the beginning of the financial year;
DIAGNOSTIC EXERCISE cntd • Complaints by the environmental health officers of the Eden District Municipality (Eden) that the municipality is discharging raw effluent into the Olifants River; • Suspicion about the adequacy of the bulk infrastructure of the municipality; • Chaos and disarray in respect of the planning and implementation of human settlement projects; • Insufficient capacity and inability to deal with the town planning functions of the municipality and its negative impact on the financial sustainability of the municipality;
DIAGNOSTIC EXERCISE cntd • A general lack of managerial responsibilities; • The absence of policies required in terms of legislation; • A gap between the skills, experience, qualifications and abilities of some officials and what is required of them; • Readiness to comply with GAMAP/GRAP; and • Distrust between different sectors of the community.
DIAGNOSTIC EXERCISE • Terms of Reference: • An audit of the total administration of the municipality to determine the nature of the administrative deficiencies in the municipality. The recommendations serve as preparation of a framework for a recovery programme to put the municipality on the path of administrative health and sustainability. • Macro and micro-structure; • Statutory and other policies; • Processes, systems and procedures. • Staff audit (skills assessment measured against the requirements of the posts)
OUTCOME • No doubt exists that the municipality was mismanaged to the extent that it is now faced with serious difficulties that will require time, money and skills to resolve, both in the administration as well as the political terrain. The functioning of corporate and financial services have collapsed to such an extent that these services cannot be turned around without external intervention and assistance.
RECOVERY PROGRAM • The recovery of the municipality must be based on a strategy and planning exercise that is: • Sustainable • Measurable • Attainable • Resourced • Time-framed
RECOVERY PROGRAM • The timeframe for the intervention is six months, and will thus end in September 2007; • The recovery program will however have to go beyond this date to be sustainable;
RECOVERY APPROACH • The recovery approach must combine short, medium and long term planning; • The purpose must be to create a sustainable municipality, in alignment with national, provincial, district and local strategic policy initiatives;
SUSTAINABLE MUNICIPALITY • Can perform the functions assigned to it by the constitution and other legislation efficiently and effectively. • Involves people in their own governance through structures such as ward committees and other community participation mechanisms. • Has the ability to raise the revenue due to it. • Provides a safety net of free basic services to ensure that the poorest of the poor have access to the minimum level of service. • Makes sure that all its actions have human wellbeing, economic success and ecological responsibility as their aim. • Ensures that short-term actions are aligned with medium- to long-term planning.
FUNDING • The municipality does not possess the financial ability to fund the recovery process on its own; • The recovery program will require multiple sources of funding, including Oudtshoorn Municipality, Eden District Municipality, Provincial Government (various departments), Development Bank of Southern Africa, others (Ilima Trust), etc.
IMMEDIATE STEPS • Advertise & Fill key positions (municipal manager, chief finance officer, manager corporate services, head of expenditure, and head of budget office); • Review intervention (bring forward date of political intervention and extend administrative intervention); • Establish task team.
CONCLUSION • The purpose of a S139 intervention is to assist a municipality to become a sustainable and self sufficient local government, able to: • Perform the functions assigned to it by the constitution and other legislation efficiently and effectively. • Involve people in their own governance through structures such as ward committees and other community participation mechanisms. • Has the ability to raise the revenue due to it. • Provide a safety net of free basic services to ensure that the poorest of the poor have access to the minimum level of service. • Make sure that all its actions have human wellbeing, economic success and ecological responsibility as their aim. • Ensure that short-term actions are aligned with medium- to long-term planning.
