South Africa: Salga On NEC Rotational Engagements in Eastern Cape

press release

Members of the Media

As we gather here today for our first contact SALGA NEC meeting since the introduction of lockdown restrictions, I wish to thank you all for taking the time to be with us. Over the past few months, we've had to deal with the gapping reality that COVID-19 has brought within society as a whole. Not only has this pandemic impacted on every person, sector, business, culture, religion and our entire way of life, but as a people we've had to mourn differently as we laid to rest those closest to us. However, as South Africans we've learnt to endure, survive and be resilient.

It is now 210 days since the first case of coronavirus was identified in South Africa and as the sector closest to the people and one which was also hard hit by the impact of the virus with 165 municipal staff and councillors succumbing to date, we, as the SALGA NEC have over the past few months been dealing with the current state of local government and the challenges being faced.

As a result we have resumed interactions with our member municipalities in an effort to attend to urgent and pressing matters confronting them. The planned engagements are as a result of the NEC's decision to intensify regular interaction between SALGA and its members in a bid to resolve various pressing local government concerns.

The NEC is fully aware that local government faces a number of challenges throughout the country. During this visit, the NEC will be engaging with five municipalities from the Eastern Cape, namely: Buffalo City Metropolitan Municipality, Nelson Mandela Bay Metropolitan Municipality; Senqu Local Municipality, Makana Local Municipality and OR Tambo District Municipality. It is common knowledge that not all municipalities are in good shape as the Auditor General's report is a reminder of that reality. Therefore, it is our intention to come up with sustainable interventions to assist these municipalities. Municipalities have been encouraged to present to the NEC issues such as their financial health challenges, political and governance matters; resourcing challenges, review of community outreach programmes as well as a critical inspection of their policy instruments and legislative measures.

This engagement with the Eastern Cape municipalities will be followed by the quarterly SALGA NEC meeting tomorrow 23 October. Some of the topical issues that we will deliberate upon will include:

1. Impact of COVID-19 on Municipalities and the PRESIDENT's economic recovery stimulus plan

As the sphere of government closest to communities, local government has played a critical role in curbing the spread of COVID-19, particularly as municipalities continued to deliver essential services such as water, electricity, waste removal and cleansing, amongst others. Municipal leadership, largely due to their proximity, also played a critical role in communicating and promoting awareness of COVID-19 within communities.

In addition to providing the ordinary municipal services, the Disaster Management Act regulatory directives, have induced significant additional responsibilities and costs for municipalities in responding to the pandemic. Whereas these additional obligations have rather belatedly come with some financial support, it is still requiring municipalities to self-fund other related interventions and has placed a huge financial burden on municipalities, many of whom are already experiencing liquidity challenges. This is further exacerbated by the low collection levels due to high levels of unemployment and reduced household income.

During a joint sitting of Parliament last week, President Ramaphosa announced a set of extraordinary measures to restore confidence in the country's economy, with the main objectives being job creation through aggressive infrastructure investment, as well as re-industrialisation through growing small business, while strengthening medium and large businesses. As it relates to local government, we welcome the Infrastructure Development and Energy Generation as the most prominent priority interventions. It is foreseen that infrastructure development, as a key driver of economic stimulus and growth, will develop other sectors of the economy, while creating employment. Infrastructure development happens within our respective local areas with the potential to "completely transform the landscape of our cities, towns and rural areas".

Even more exciting than the infrastructure development plan, is the announcement of a plan to see massive expansion of the country's electricity generation capacity, which includes municipalities developing their own power generation capacity! A direct spin-off of this development is not only the ability of municipalities to improve their revenue raising capacity and contribute to the creation of new jobs, but also the creation of an enabling environment to attract much-need investment to revive our local economies in our respective municipal areas. The SALGA NEC would be seized defining its role to provide leadership in the sector for effective implementation and enabling success factors for this post COVID economic and job creation recovery strategy.

2. Update and further proposals on SALGA's response to the Municipal Audit Outcomes

Following the SALGA NEC engagement with the Auditor General on 18 June 2020 on the Municipal Audit Outcomes for the year 2018/19, we approved an approach under the theme to "Extract consequences and accountability from municipalities". In this regard we already directed municipalities to furnish us with their response plans to address the occurrence resulting in the negative audit results as well as provide the results of a skills assessment of the respective finance departments with a view to establish the necessary capacity to prevent recurrence of the citation by the Auditor-General.

Having secured detailed information from the Auditor General, we are highly concerned about municipal employees and staff in the employee of the state doing business with municipalities as well as consultants that provided financial support to municipalities with no resultant improvements or impact on the financial management and reporting of municipalities.

It is disturbing that the information confirms that in 40 municipalities tender awards were made to municipal officials; in 77 municipalities awards were made to close family members of employees and/or councillors; in 151 municipalities prohibited awards were made to other state officials and in 107 municipalities false declarations were made by employees/councillors. It is further concerning that despite the use of 393 service providers providing financial management and reporting support to municipalities, at a cost of R1.25 billion, we are not seeing the concomitant results. With the law enforcement agencies already scooping those implicated in this self-serving act of depriving the poorest of the poor and in our quest to extract consequence management and accountability, this NEC will tomorrow direct the further steps to be taken to address this scourge.

3. ESKOM/Municipal ongoing resolution of the debt challenges

For nearly 2 years, as this NEC we have focused largely on debts owed to and by municipalities. The stumbling blocks in resolving the debts owed to Eskom and Municipalities respectively, include disputed debts owed to municipalities by national government, provincial government or organs of state; disputes on the quantification of debts owed by municipalities to Eskom based on correct application of relevant legislation, the reasonable interest charges and correctly applied penalties; determining the appropriateness of repayment arrangements between Eskom and Municipalities on outstanding debt owed to Eskom; and the Service Delivery Agreement to be entered into between Eskom and Municipalities.

The Political Task Team under the leadership of Deputy President Mabuza, had resolved that a Facilitator should be appointed to process and verify the amount of debt owed by Organs of State to municipalities, and in turn the debt owed by municipalities to Eskom. Despite these agreements in the IGR arena, the situation is becoming untenable for municipalities constantly threatened by disconnections from both Eskom and Water Boards. We have also witnessed these matters being ventilated in our courts of law.

From a SALGA perspective, it is evident that despite our gallant attempts to amicably resolve this matter in line with the IGR dispute resolution mechanisms, ESKOM has unilaterally not adhered to these arrangements. Similarly, despite agreement that Service Delivery Agreements (SDA) are to be entered into between Eskom and Municipalities, ESKOM continues to raise concerns with the terms and conditions of the SDA.

It goes without saying that the proposed SDAs will be worthless if ESKOM refuses to be a contracting party. Based on our legal opinions which essentially contend that municipalities have an exclusive right to electricity reticulation within their jurisdictions, Amongst others, the SALGA NEC will tomorrow consider if ESKOM's actions ha left us with no other option but to approach the courts for an order declaring ESKOM's supply of electricity within municipal jurisdictions as unconstitutional. Should the Court find that ESKOM's distribution of electricity within municipal areas is indeed unconstitutional, then the court may make a just and equitable order in terms of section 172(1)(b) directing that ESKOM hand over distribution of electricity within municipal areas to the relevant municipalities alternatively directing that ESKOM enter into SDAs.

As we conclude, as the SALGA NEC, we would like to echo the sentiments of the Health Minister Dr Zweli Mkhize in urging South Africans to remain responsible as the risk of a resurgence remains high. We should continue with the spirit of fighting and preventing the spread of this disease. As local government we are committed to doing our bit to breathe life into the economic recovery plan as presented by President Ramaphosa a week ago.

Stay Safe

The President of SALGA, Cllr Thembi Nkadimeng addressing members of the media at a media briefing in Buffalo City Metropolitan Municipality, East London, CLIP can be viewed at SALGA TV

https://www.youtube.com/watch?v=9NhcQFMupns

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