EDITOR’S NOTE: Today, we publish the full, devastating report by Parliament’s Portfolio Committee On Cooperative Governance And Traditional Affairs (COGTA) following its visit to Makana in September. The report said Makana Municipality was “a dysfunctional and toxic environment”, which was “a key root cause of Makana’s consecutive audit disclaimers”.
Report lowlights
- The municipality’s consecutive disclaimed audit opinions are the worst possible, as the figures provided are inconsistent with the underlying records and vice-versa. The documentation justifying the adjustments made in the figures has not been provided.
- Unauthorised, Irregular, Fruitless and Wasteful (UIFW) expenditure has been increasing.
- Reporting on the Municipal Infrastructure Grant (MIG) expenditure is particularly problematic as the implementation of MIG projects is not documented. This contravenes MIG reporting requirements.
- The municipality’s expenditure on overtime is also of concern. Salary payments are becoming unaffordable.
- The Financial Recovery Plan (FRP) has not permeated the whole institution, and Provincial Treasury’s recommendations are not adhered to.
- While the Provincial Treasury receives the monthly Section 71 reports from the municipality, it has to contend with significant data integrity issues, including disparities in the data provided, which are difficult to prevent from outside the municipality.
- The repeated findings against the municipality are an indication that it is in need of serious intervention. Its poor performance has led to identifying a material irregularity (MI), as the consequences substantially harm the citizenry.
- The municipality’s water and sanitation problems are unlikely to be resolved until there is a sufficient injection of funds.
- Inefficiencies by the Department of Water and Sanitation, Amatola Water Board and a contractor known as Mamlambo have stalled the work to upgrade the James Kleynhans Water Treatment Plant, which has been in progress since 2016.
- The sanitation infrastructure is in a particularly dire state. All wastewater treatment works are stretched beyond capacity leading to overburdened sewer lines and sewer overflows. Most are beyond repair and need urgent replacement.
- Approximately R300m will be needed to address the state of disrepair on the municipality’s roads.
- Makana has serious internal technical capacity deficiencies that cause it to rely heavily on external service providers.
- The history of instability in Makana’s administrative and political leadership means that there has been no leadership tone set from the top. This legacy of a dysfunctional and toxic environment is a key root cause of Makana’s consecutive audit disclaimers.
Stakeholder contributions
The committee heard from several community groups, residents and other stakeholders about appalling service delivery.
The district’s biggest ratepayer, Rhodes University, said the dire state of the municipality’s two-water treatment works had seen blockages in the university’s municipal sewer pipes, resulting in raw sewage blocking up and fountaining into several residence bathrooms.
The university said it had to purchase an expensive hydro-blaster to alleviate raw sewage overflows on campus. The municipality had not responded to Rhodes’s proposal to expand the inlet unit at the Belmont Valley Waste Water Treatment Plant, which would be sufficient to accommodate its expansion strategy.
“Proper management of the water pressure in the reticulation system and reduction of the high percentage of potable water loss through leakage could also make a discernible difference,” the university told COGTA.
“In addition to load shedding, the municipality’s inadequate and failing electricity supply infrastructure also has a highly disruptive impact on the academic project,” the report read.
Furthermore, the report stated that the municipality had stalled a plan for additional cabling and Eskom supply.
“To mitigate outage impact, the university has installed generators, but the running costs are prohibitive. All these challenges are negatively impacting the university’s reputation and ability to attract students and appoint and retain staff,” it said.
The Makana Residents Association told the committee the service delivery problems remained – and there had been little improvement since it was first placed under administration in 2014.
“Litter collection is still unreliable, and this problem dates as far back as 2011. Failure to get this basic function right has seen several local businesses closing down, costing jobs and livelihoods. Inequities between the poorer east and the more affluent west remain, with the west being more capable of making itself heard compared to the east,” the report read.
The association also said there had been several interventions over the years but no real difference.
“These [interventions]have not made a difference, as evidenced by the municipality’s financial control and service delivery failures,” the report read.
Carin Swart, a resident of ward 4, highlighted sanitation issues. “The resident also had no luck regarding a request for intervention in Coles Lane, an area outside her office window, which has become a dumping ground for rubbish and human faeces. Office windows cannot be opened due to the stench and flies. Cows and donkeys also come to graze in the same space, causing severe disturbances, which is indicative of the municipality’s poor enforcement of animal by-laws,” the report said.
Responding to the litany of service delivery issues, the Makana Municipality admitted its most crucial service delivery failure is water provision. “Delays in upgrades to the James Kleynhans Water Treatment Plant are having an adverse impact on water provision in the municipality. The project’s completion deadline has shifted to 30 June 2023 as the main contractor went bankrupt.
“The municipality will be utilising the sub-contractors to complete the project. The Special Investigating Unit is due to table an investigative report on the escalating project costs allegedly arising from the widening of project scope,” the report read.
Other factors include poor decision-making that led to the collapse of internal municipal systems.
“The new council has resolved to stabilise the administration and mend lost trust so that people are once again willing to pay for municipal services. The recent appointments of senior managers will address institutional capacity constraints,” the committee’s report read.
Below is the full report, followed by a list of summary observations and recommendations:
The full report of the Portfolio Committee on Cooperative Governance and Traditional Affairs (COGTA) on its oversight visit to Makana 16-19 September 2022
Delegation: Hon. F. Xasa (Chairperson, ANC); Hon. D. Direko (ANC); Hon P. Xaba-Ntshaba (ANC); Hon. G. Mpumza (ANC); Hon B. Hadebe (ANC), Hon C. Brink (DA) and Hon. E. Spies (DA).
Committee Support Staff: Ms S. Cassiem (Committee Secretary); Mr A. Sokomani (Content Advisor); Mr M. Dumezweni (Committee Assistant).
- INTRODUCTION
The Portfolio Committee on Cooperative Governance and Traditional Affairs has resolved that over its current term of office in Parliament (2019-2024), it will intensify oversight over all the organs of state relevant to its mandate, in line with the intent of Parliament’s 2019 -2024 Strategic Plan. This approach is the Committee’s strategy to confront the deteriorating state of local government in the country and encourage public participation in local government affairs as envisaged in Section 152(1)(e) of the Constitution.
The 2020/21 Municipal Finance Management Act (MFMA) audit outcomes have highlighted several municipalities that have received consecutive disclaimed audit opinions despite being under constitutional intervention. A disclaimed audit opinion is the worst opinion a municipality can obtain.
These municipalities are also subject to investigation by the Auditor-General regarding material irregularities identified in the course of the audit. Not surprisingly, these municipalities are also among the 64 municipalities that have been identified as dysfunctional by the Department of Cooperative Governance’s State of Local Government Report to Cabinet. These municipalities are:
- Northwest: Kgetlengriver, Madibeng, Naledi, Ditsobotla and Ramotshere Moiloa.
- Northern Cape: Phokwane and Renosterberg.
- Mpumalanga: Lekwa
- KwaZulu-Natal: Nquthu and Ilanga Libalele
- Eastern Cape: Makana
The Portfolio Committee has resolved to conduct intensive oversight visits to these municipalities, starting in Makana, which is the subject of this oversight report.
- DAY 1: ORIENTATION MEETING WITH THE OVERSIGHT STRUCTURES RESPONSIBLE FOR OVERSEEING MAKANA LOCAL MUNICIPALITY
On the first day of the oversight, the Committee convened an orientation meeting with the structures responsible for oversight over the Makana Local Municipality, namely the Eastern Cape Provincial Department of Cooperative Governance and Traditional Affairs (COGTA), National Department of COGTA, Eastern Cape Provincial Treasury; Office of the Auditor-General (AG) in the province, and the provincial office of the South African Local Government Association (SALGA). The purpose of this session was for the Committee to have a holistic overview of the pertinent issues that will assist it to engage the municipality from a well-informed perspective.
- Eastern Cape Provincial Department of COGTA
The Department anchored its support to Makana on the Back to Basics and Financial Recovery Plan (FRP) pillars. The municipal political situation is reportedly stable: the council is sitting, the position of the Executive Mayor is filled, Troika (Executive Mayor, Speaker and Council Chief Whip) meetings are taking place, the register to capture council resolutions is functional, and the administration implements the resolutions, the Local Labour Forum (LLF) is sitting, and Section 79 and 80 Committees have been established. The Municipal Public Accounts Committee (MPAC) was only established in November 2021, and therefore its functionality cannot yet be determined. While most positions have been filled (except the Local Economic Development Director), the administration is also still fairly new and lacks institutional memory.
The Provincial Treasury leads the implementation of the municipality’s FRP. However, the Department is confident that the municipality is implementing the activities reflected in the FRP. The Department is not satisfied with the implementation of the audit improvement plan submitted by the municipality to address the consecutive disclaimed audit opinions received over the past three financial years. Expenditure on conditional grants has been problematic since the District no longer receives the grants on the municipality’s behalf.
While several catalytic projects are in progress in Makana, the ageing municipal infrastructure is a serious constraint to economic growth. The key challenge facing the municipality relates to water and sanitation. The municipal water and sanitation infrastructure has exceeded its design lifespan and needs upgrading.
The most critical interventions relate to the upgrading of the Belmont, Mayfield and James Kleynhans Waste Water Treatment Works (WWTW). However, the available infrastructure grants are insufficient, and dedicated funding is needed to replace the ageing infrastructure.
The municipality’s water and sanitation problems are unlikely to be resolved until there is a sufficient injection of funds.
- Eastern Cape Provincial Treasury
Makana previously passed unfunded budgets. Through the Provincial Treasury’s intervention, the municipality has successfully passed funded budgets during the last three financial years. However, most of the municipality’s financial health ratios are unfavourable. At the time of passing unfunded budgets, the municipality was obtaining qualified audit opinions following the Provincial Treasury’s deployment of an acting Chief Financial Officer (CFO).
Unauthorised, Irregular, Fruitless and Wasteful (UIFW) expenditure has been increasing.
In 2020/21, the municipality is responsible for 46 per cent of the unauthorised expenditure incurred by all municipalities under the Sarah Baartman District. Although the Municipal Financial Disciplinary Board exists, and the Provincial Treasury is part of it, it is non-functional. Disciplinary Board meetings are not taking place. The MPAC has not done any expenditure write-offs.
The municipality’s expenditure on overtime is also of concern. Salary payments are becoming unaffordable.
Conditional grant expenditure is problematic as the municipality applies for rollovers every financial year. Payment of the municipality’s Eskom account has been improving. The municipality has settled all of Eskom’s historical debt and is now addressing the current account. There are still monies owed to SALGA, Amatola Water Board (AWB), Water and Sanitation Department and the Auditor-General. Provincial Treasury last received a progress report on the implementation of Makana’s FRP in July 2022.
The Financial Recovery Plan (FRP) has not permeated through the whole institution, and Provincial Treasury’s recommendations are not adhered to.
Although the Provincial Treasury is usually physically present at the municipality to review annual financial statements before submission for auditing, critical vacancies in Makana’s Budget and Treasury Office (BTO), Supply Chain Management (SCM) and the CFO’s office hamper the effectiveness of the support. It is hoped that the newly appointed CFO will improve the financial accounting process.
While the Provincial Treasury is receiving the monthly Section 71 reports from the municipality, it has to contend with significant issues of data integrity, including disparities in the data provided, which are difficult to prevent from outside the municipality.
To address the identified challenges, the Provincial Treasury proposes a structured approach focusing on the short, medium and long term. In the short term, efforts should be facilitated to ensure municipal financial viability; high staff morale should be maintained and skilled, competent staff to be attracted; and effective financial control and oversight should be ensured. In the medium term, priority should be given to the effort to address infrastructure backlogs and community involvement on all service delivery fronts. In the long term, there should detailed long-term planning around financial stability; the development of Makana as a regional economic hub; and the creation of investment opportunities towards a thriving, safe and healthy community.
- Eastern Cape Auditor-General
The provincial office of the Auditor-General in the Eastern Cape emphasized the stagnation in the municipality’s audit outcomes, highlighting repeat findings on both service delivery and financial performance information. No sufficient evidence has been provided to confirm reported achievements.
The municipality’s consecutive disclaimed audit opinions are the worst possible, as the figures provided are inconsistent with the underlying records and vice-versa. The documentation justifying the adjustments made in the figures has not been provided.
The disclosed irregular expenditure and contingent liabilities were not substantiated by records, resulting in uncertainty about whether the provided figures are understated or overstated. Irregular expenditure that was not reported in the municipal annual financial statements was also identified. Although there is an apparent reduction in irregular expenditure, from R54m to R25m, the auditors could not verify the provided figures’ accuracy. The lack of supporting documentation is an area most susceptible to manipulation.
Makana’s poor revenue accounting systems are another area of great concern for the auditors. The municipality mainly relies on estimates without evidence of meter readings conducted to verify the estimates.
The repeated findings against the municipality are an indication that it is in need of serious intervention. Its poor performance has led to the identification of a material irregularity (MI), as the consequences involve substantial harm to the citizenry.
Some of the activities undertaken by the accounting officer to address the MI are still in progress, but progress reports have not been forthcoming, despite the extension of deadlines. Non-receipt of information and slow action and response to municipal oversight structures’ recommendations indicate poor discipline.
The history of instability in Makana’s administrative and political leadership means that there has been no leadership tone set from the top. This legacy of a dysfunctional and toxic environment is a key root cause of Makana’s consecutive audit disclaimers.
- Eastern Cape South African Local Government Association
SALGA briefed the Portfolio Committee on the support rendered to Makana. The support is a collective effort between SALGA, the Municipal Infrastructure Support Agent (MISA), Provincial COGTA, Provincial Treasury and civil society. The issues plaguing Makana are mainly historical in nature. Civil society organisations in Makana, including the Unemployed People’s Movement (UPM), have been engaged to aid in crafting a programme of action around the municipality’s governance, finance and related challenges. This has assisted to clear confusion around roles and responsibilities in the municipality. SALGA has also identified Makana as a pilot site for testing the Good Governance Maturity Index being developed by its national office.
MPAC and Ethics and Integrity committee members have been trained on King IV report principles as part of enhancing oversight capacity. Working sessions on UIFW, budgeting, preparation of annual financial statements, Municipal Standard Chart of Accounts (mSCOA) and related issues have been convened. SALGA has been visiting the municipality monthly to provide support on identified areas, including a review of certain by-laws and alignment of the municipality’s performance management system (PMS) to organisational strategy. Councillors have been capacitated to understand Waste Water Treatment Works’ performance in terms of Blue, Green and No-Drop programmes. Some of the litigation against the municipality has centred on waste management, which has also attracted the South African Human Rights Commission’s attention as the custodian of environmental and other constitutional rights.
- National Department of Cooperative Governance/MISA
Like SALGA in the province, the Department emphasized that the support provided to Makana has been a collective effort. Expenditure-related problems in the municipality have resurfaced because the Sarah Baartman District is no longer receiving and spending grants on the municipality’s behalf.
Reporting on the Municipal Infrastructure Grant (MIG) expenditure is particularly problematic as the implementation of MIG projects is not documented. This contravenes MIG reporting requirements.
Makana also needs a major infrastructure upgrade as the existing infrastructure is not fit for purpose. The funds currently received through the division of revenue process are insufficient to address the required scale of the infrastructure upgrade.
The sanitation infrastructure is in a particularly dire state. All wastewater treatment works are stretched beyond capacity leading to overburdened sewer lines and sewer overflows. Most are beyond repair and need urgent replacement.
The E. coli levels on the municipality’s water and sanitation infrastructure have not been officially tested.
Makana, like the rest of the municipalities in the district, is also contending with serious water shortages. Only the James Kleynhans Water Treatment Plant is functional, but its daily capacity of 10 mega litres is insufficient to meet the daily demand of 18 mega litres.
Inefficiencies by the Department of Water and Sanitation, Amatola Water Board and a contractor known as Mamlambo have stalled the work to upgrade the plant, which has been in progress since 2016.
Supplementary water supply sources, such as springs and boreholes, are inadequate. Some springs and boreholes have failed to pass NGO-administered E. coli level tests and have been discontinued. Issues of inequitable access to water in towns such as Makhanda have also been observed. The town’s poorer eastern side is often bypassed in favour of the more affluent western side.
The state of road infrastructure is also a matter of concern for the Department.
MISA has concluded that approximately R300m will be needed to address the state of disrepair in the municipality’s roads.
The Department has observed that the SCM space in the municipality is very contested. The engineers deployed by MISA to provide technical assistance to the municipality have been barred from participating in and advising on SCM-related processes.
Makana has serious internal technical capacity deficiencies that cause it to rely heavily on external service providers.
The municipality needs more than the technical support provided by MISA.
- DAY 2: ENGAGEMENT WITH THE SARAH BAARTMAN DISTRICT, MAKANA LOCAL MUNICIPALITY AND COMMUNITY STAKEHOLDERS
- Sarah Baartman District
Due to a misreading of the brief, the District’s presentation not only covered Makana but also all the local municipalities under the District’s jurisdiction. Most of the District’s functions have been delegated to the local municipalities, including environmental functions and fire services. The local municipalities are also Water Services Authorities (WSAs) and Water Services Providers (WSPs). The District is considering advocating to be a WSA, as it is currently the only District in the province that is not a WSA. The District is also lobbying for housing-related functions and the implementation of Regional Bulk Infrastructure Grant (RBIG) projects, as it can also handle these. The Portfolio Committee’s support in these endeavours would be appreciated.
Sarah Baartman is currently mainly responsible for Intergovernmental Relations (IGR), including overseeing the establishment of a district-wide infrastructure forum, municipal manager’s forum and CFO forum. Municipalities that do not participate in the IGR structures have been noted, and the District is addressing the matter. The District has also assessed the District Development Model’s (DDM) One Plans. The assessment has identified some gaps, including insufficient involvement of traditional and Khoi-San leaders. The District is in the process of addressing these gaps.
The District is not proud of its stagnation on unqualified audits. It should be receiving clean audits as it does not have many service delivery functions. The revenue collection rate for all the local municipalities under the District is below 90 per cent. The debtors’ account is an increasing problem, and although it mainly relates to households, there are also problematic government departments and businesses.
The District has been exposed to severe drought since 2016, and this has seen the implementation of water shedding. Most service delivery protests around the District relate to water provision.
A request for ministerial intervention in the drought, focusing specifically on the Sarah Baartman District, has been lodged. The District has also been experiencing serious problems with the Amatola Water Board, which is entrusted with government funds but does not have the capacity to implement projects.
Had the Board implemented projects successfully, most of the water problems would have been averted.
As it had submitted to the Portfolio Committee on a previous occasion, the municipality reiterated that it used to be one of the best-run municipalities in the province. Poor decision-making led to the collapse of internal municipal systems, which placed the municipality on a downward trajectory. The new Council has resolved to stabilise the administration and mend lost trust so that people are once again willing to pay for municipal services. The recent appointments of senior managers will address institutional capacity constraints. The Municipal Manager’s contract ended on 31 October, and Phumelelo Kate has been appointed as the new MM. Shortage of general workers remains a problem that affects the municipal capacity to perform its functions.
The municipality’s job evaluation exercise to streamline the organogram has encountered extreme resistance from employees. Progress on this matter has therefore been very slow.
The District’s assistance has been enlisted but due to the difficulties encountered, an external service provider has been appointed. Investigations relating to the Kabuso and Morar Reports are still ongoing. The municipality has invited Treasury and COGTA in the province to assist with SCM and risk management processes.
One of the most critical challenges is the provision of water, especially on the eastern side of Makhanda. Delays in upgrades to the James Kleynhans Water Treatment Plant are having an adverse impact on water provision in the municipality. The project’s completion deadline has shifted to 30 June 2023 as the main contractor went bankrupt. The municipality will be utilising the sub-contractors to complete the project.
The Special Investigation Unit (SIU) is due to table an investigative report on the escalating project costs allegedly arising from the widening of the James Kleynhans project scope.
The Portfolio Committee was urged to follow up with the Standing Committee on Public Accounts (SCOPA) on this matter. The municipality has not always been successful in keeping the citizenry informed about its programmes to address the water challenges.
Makana has also been experiencing a plethora of litigation around waste management. In this regard, funding support has been received from the provincial environmental department to address waste management issues. A service provider has been appointed to manage the municipality’s waste disposal site. Major funding is required to address the dysfunctions in Makana’s Belmont Valley (which was designed for a limited population) and Mayfield Waste Water Treatment Plants.
Currently, no human settlement development around Belmont Valley can go ahead due to the plant’s non-conducive state. Rehabilitating the plant will cost approximately R250m. In the absence of external funding, the municipality will upgrade the plant incrementally, using the small amounts of grants at its disposal. These amount to approximately R30m annually.
Payment of municipal creditors also remains a serious challenge. Although the Eskom arrear debt has been settled, the municipality is starting to fall back into arrears. A repayment agreement has been concluded with SALGA. The CFO has been instructed to recover monies owed by municipal employees. The majority of the municipality’s debtors are poor households, and the municipality’s indigent register needs to be adjusted to reflect this. Some debtors are unwilling to pay due to inaccuracies in the municipal billing system. As part of improving revenue collection, the District has assisted the municipality by conducting a door-to-door data cleansing exercise, installing smart water meters, embarking on weekly disconnection programmes, devising a debt incentive scheme, and will sell unused assets.
Despite the adoption of a funded budget, the municipality’s most critical financial health ratios remain unfavourable. Some of this is attributed to service providers who are now demanding advance payment owing to the municipality’s history of chronic late payments.
A session will be convened with the service providers to resolve this matter.
Four workstreams are dedicated to implementing Makana’s Financial Recovery Plan. Monthly meetings are convened, and progress reports are submitted to COGTA and Treasury. The FRP’s implementation so far has seen the municipality’s salary bill reduced from 45 per cent to 37 per cent. However, provincial government support for the implementation of the FRP is not as substantive as the municipality would have loved to see.
The municipality is under mandatory financial recovery for the third time, as FRPs were imposed in 2016, 2019 and 2021.
As part of implementing its post-audit action plan, the municipality has appointed an internal assets accountant to deal with assets-related audit findings, including ensuring that the asset register is GRAP 17-compliant. Leave automation has been introduced to address challenges around manual leave management. Remedial measures have also been introduced to curb the abuse of the municipal fleet.
The MPAC is finalising a report on UIFW consequence management. However, there is less consequence management than the municipality would like to see. During the recalled MPAC Chair’s tenure, the Committee functioned poorly. The current Chair was appointed during the last council sitting. The Committee will be dealing with backlogs going as far back as 2014/15. All council committees are sitting to address the consecutive disclaimed audit findings, including a risk management committee and an external audit committee. The disclaimers reflect the history of poor working relations between the previous executive Mayor and the Accounting Officer, which the Auditor-General has characterised as a manifestation of poor political leadership.
On the question of material irregularities and the finding that no municipal official could be held accountable, it was clarified that this was not the accounting officer’s finding but that of the external audit committee. Although the municipality faces serious challenges around water, sewage, roads, illegal dumping and a high unemployment rate, service delivery has improved compared to 2016. For example, there is now daily refuse collection (except on weekends to manage overtime claims), and the community has access to potable water. New garbage trucks were expected towards the end of October 2022. The municipal political leadership affirmed its interest to change the situation in Makana and deliver on its promise to the communities.
- Stakeholder engagement
Several stakeholders in Makana were invited to contribute perspectives on the state of the municipality. Oral presentations were received from representatives of the Unemployed Peoples Movement; Makhanda Legends; Makhanda Business Forum; Kagiso Trust; Makhanda Circle of Unity; Public Service Accountability Monitor; Grahamstown National Arts Festival; Makana Residents Association, and from Rhodes University’s Prof Pedro Tabensky. Written inputs were also received from the Makana Citizens Front, Rhodes University, and Carin Swart (Makhanda Ward 4 citizen). The following is a summary of key inputs from these stakeholders.
Unemployed People’s Movement. The problem of access to water remains unresolved. The Joza area has been without water for four days, and the municipality has not provided any alternative water supply. Consequently, learners cannot attend classes. When available, the water is of poor quality and unfit for consumption. Water Treatment Plants are unsafe and vulnerable to deliberate pollution. They should at least be protected if not made a national key point.
Makhanda Legends. The organisation has tabled a petition relating to governance issues in the municipality, including the question of consecutive disclaimers. No response has been received to date. Another petition submitted to SCOPA has also elicited non-response. The former municipal manager, Moppo Mene, has a history of disclaimers, and his continued employment in the municipality was inexplicable. The municipality appears to be a dumping ground for incompetent individuals. The Portfolio Committee must pay attention to the abuse of overtime and municipal vehicles, employees’ academic qualifications, and the moral conduct of municipal leaders. A Commission of Inquiry into the state of local government will go a long way in preventing siphoning of funds from the municipality.
Makhanda Business Forum. The Forum has a keen interest in the creation of an enabling environment for businesses to thrive in Makhanda. While the national unemployment rate is already too high, it is even worse in the municipal area. The municipal environment is not conducive to economic activity due to infrastructure and governance deficiencies, institutional incapacity, excessive overtime claims, poor community linkages, ineffective stakeholder engagement, and unrealistic budgets. In 2014, the then administrator Pam Yako raised these issues, and the municipality has not resolved them. MISA’s road resurfacing intervention has been fantastic and should continue. Urgent upgrades to the electricity distribution network, and Waste Water Treatment Works, are needed. The Central Business District (CBD) has gone as long as three days without a power supply.
Makana has never provided relief to ratepayers. The Forum is still awaiting the report emanating from SCOPA’s oversight visit in mid-2021. The Makana Citizen’s Front recently won five seats in the municipal council, which is indicative of citizens’ frustration with municipal failures. Political assassinations, including the killing of whistle-blowers, are an increasing concern. The municipality has also failed to honour court judgments on waste management, Eskom debt, and the UPM case. The Forum echoes the sentiment that real state capture happens at the local government level. It calls on the Portfolio Committee to ensure that COGTA delivers on its municipal support and oversight mandate
Kagiso Trust. The Trust’s main interest is the socio-economic development of disadvantaged communities. It envisions local government as a key player in this regard, and Makana has a potential to be a role model for the rest of the country. All the issues highlighted previously are symptoms whose root cause lies in the collaboration deficit between the municipality and citizens. These issues are not foreign to the municipality and are not insurmountable if municipal personnel have the right attitude, eschew a silo mentality and pursue an organisational strategy.
The current organisational culture is chaotic, and it is therefore unsurprising that municipal performance, by the municipality’s own admission, is 50 per cent and below.
Kagiso Trust
Although the problems are well-understood, there is no deliberative action. Makana is a hostile environment without any customer centricity. Addressing this requires a change in the way people view their daily functions in the municipality. The municipality must advertise collaborative intentions and create a climate of honesty and acceptance of vulnerability. Everyone must own up to the problems, build relationships, remove polarisation, and shift from egocentric thinking to ecosystem thinking. Local government needs to give way to local governance, which involves community structures. Makhanda has an abundance of intellect, and the municipality would do well to draw on it.
Prof Pedro Tabensky. Philosopher and ethicist Prof Tabensky highlighted the importance of community involvement in municipal affairs. Drawing on his frustrating experience with the Home Affairs Department as a foreign national, the professor noted a culture of refusal to take responsibility. This is a hard-to-break mindset issue. South Africans will have a hard time getting the country right if a small town like Makhanda cannot be managed properly. Prof Tabensky also found the unhealthy relationship between the poorer Makhanda east and the more affluent Makhanda west and the poor relationship between residents and the municipality most troubling. A sense of shame and humility is key to the culture shift and mindset change required to fix Makana’s problems.
Makhanda Circle of Unity. The organisation’s major concern is the unresponsiveness of municipal structures. This includes the inability to provide meaningful responses within a reasonable time. This unresponsiveness is likely to discourage citizens’ willingness to collaborate. This will eventually push out those who can leave, but the consequences will adversely affect those who can never leave. The organisation would also like Parliament to provide meaningful responses to its inputs from previous engagements, including the engagement with the National Assembly Speaker on the launch of the Makhanda constituency office, and the engagement with SCOPA.
Public Service Accountability Monitor. The organisation noted with concern Makhanda’s state of decline and the municipality’s run-away staffing and employee cost, especially those relating to overtime. Municipalities generally rarely comply with Section 66 of the Municipal Systems Act (MSA), which deals with municipal staff establishments. They also do not generally adhere to the guidelines of MFMA Circulars No.112 and No.115, which are municipal budget circulars for the 2022/23 Medium Term Revenue and Expenditure Forecast (MTREF). As part of its recommendations, the organisation proposes that the municipality should submit monthly reports relating to compliance with Section 66 of the MSA. To address the problem of ghost workers, the municipality should, by December 2022, conduct a staff headcount to verify correspondence with payroll. Finally, the MEC must also be engaged to invoke Section 106 of the MSA.
Grahamstown National Arts Festival. While the organisation did not wish to minimise the importance and relevance of the matters raised by other stakeholders, it believed that the negative narrative about Makhanda is one of the most critical challenges. The organisation prides itself on being one of the strongest brands in Makhanda and on having a strong partnership with the town. It does not envision itself functioning optimally apart from partnerships with the business and the municipality. The issues of power supply and long-term drought were other important challenges. Power supply shortcomings also affect the water supply. Makana’s stakeholders are oriented towards change and the introduction of new and nuanced ways of participatory governance. The division of Makhanda into east and west, and the attendant infrastructure inequities, are also troubling to the organisation. Unauthorised expenditures, including expenditures outside Integrated Development Plan (IDB) priorities, and unfavourable audit outcomes, are part of the bigger narrative that needs changing.
Makana Residents Association. The Association submitted that Makana’s problems remained the same as when the municipality was first put under administration in 2014. Litter collection is still unreliable; this problem dates back to 2011. Failure to get this basic function right has seen several local businesses closing down, costing jobs and livelihoods. Inequities between the poorer east and the more affluent west remain, with the west being more capable of making itself heard compared to the east. Over the past eight or nine years, there have been several interventions and oversight visits to the municipality, but these have not made a difference, as evidenced by the municipality’s financial control and service delivery failures.
The municipal management’s active exclusion of public participation and prevention of oversight has contributed significantly to this state of affairs. The Association drew the Portfolio Committee’s attention to the 2014 Makana Intervention Plan, which was attached to the written submission, and the important recommendations made therein, including the need to set up a customer care centre as part of a strategy to rebuild trust and enhance revenue collection. Had the Plan been followed, it would have helped to restore the municipality as an attractive place for investment and job creation.
Makana Citizens Front. Due to late receipt of notice relating to the Portfolio Committee’s oversight visit, the Front could not participate as it would have liked. Written input was, therefore, received highlighting, among other things, the lack of consequences following the SCOPA visit in May 2021, where it was clearly revealed that the Municipal Manager is incompetent. Following an oversight visit by the Portfolio Committee on Water and Sanitation, the organisation wrote a letter, for which a response is being awaited, demanding a forensic audit of failed projects.
The organisation fears that Parliament’s oversight visits risk being pointless if the dysfunctions, corruption and incompetence remain unaddressed. Among the recommendations proposed in the submission are amendments to the MFMA to impose sanctions on senior management and political leadership in relation to irregular, fruitless and wasteful expenditure; establishment of an independent body to recover, through civil action, lost monies; and the introduction of an urgent programme to capacitate councillors to exercise their oversight function.
Rhodes University. The university submitted written input drawing the Portfolio Committee’s attention to the challenges it faces due to the municipality’s inefficiency. These inefficiencies affect the University’s capacity in several ways. Firstly, the municipality’s inability to provide sufficient water and the imposition of a water rationing system has enormously impacted the University’s functioning as a research-intensive and highly-residential institution. The University’s difficulties in this regard could be somewhat mitigated if the municipality enforces adherence to the original water restriction of 50 litres per person per day. Proper management of the water pressure in the reticulation system and reduction of the high percentage of potable water loss through leakage could also make a discernible difference.
The dire state of the municipality’s two water treatment works has seen blockage in the University’s municipal sewer pipes, resulting in raw sewerage blocking up and fountaining into several residence bathrooms. The municipality has not actioned a proposal to expand the inlet unit at the Belmont Valley Waste Water Treatment Plant, which would be entirely sufficient to accommodate the University’s expansion strategy. The University has had to purchase a hydro-blaster, at a significant own cost, to alleviate raw sewerage overflow on campus.
In addition to load-shedding, the municipality’s inadequate and failing electricity supply infrastructure also has a highly disruptive impact on the academic project. The municipality has stalled a plan for additional cabling and Eskom supply, notwithstanding constant pressure from the University. The university has installed generators to mitigate outage impact, but the running costs are prohibitive. These challenges negatively impact the university’s reputation and ability to attract students and appoint and retain staff.
Carin Swart (Makhanda Ward 4 Citizen). The written submission from the Makhanda Ward 4 resident highlighted a personal experience of major service delivery issues in Makhanda. Through the Makana Residents Association, Swart brought to the municipality’s attention the illegal omission of Wards four, eight and 12 during the IDP Budget Roadshows for the May 2021 period. This was to no avail. Imvuso Trading, a contractor appointed to replace asbestos pipes, left asbestos waste in Ward four and other areas and also failed to clear alien vegetation that had cropped up after construction, in contravention of environmental regulations. When this was reported to the municipality and the contractor, there was silence from the former and denial from the latter.
The resident also had no luck regarding a request for intervention in Coles Lane, an area outside her office window which has become a dumping ground for rubbish and human faeces. Office windows cannot be opened due to the stench and flies. Cows and donkeys also come to graze in the same space, causing serious disturbances, which is indicative of the municipality’s poor enforcement of animal by-laws. The municipality has taken no action against the serious safety hazard posed by the roads around Graeme College and uncontrolled illegal dumping in Ward four. The municipality’s unresponsiveness has discouraged reporting of other problems, such as the uncontrolled illegal cutting down of trees. All the highlighted issues are in addition to the daily experience of water and sanitation-related problems.
- DAY 3: SITE VISITS
The Portfolio Committee visited three sites: The James Kleynhans Water Treatment Plant, the Belmont Valley Waste Water Treatment, and a portion of Hill Street where MISA had resurfaced.
- James Kleynhans Water Treatment Plant
The manager responsible for Makana’s Water and Sanitation Department briefed the Portfolio Committee on the state of the treatment plant. The plant was originally designed to produce a daily yield of 10 mega litres. Currently, the municipality is unable to supply water 24 hours a day, as water must be closed off at 8 pm every day to manage demand. The municipality is in the process of upgrading the plant from this to 20 mega litres daily yield in order to meet the 18 mega litre daily demand. The first phase of this work started in 2016. The whole Makana relies on this plant for most of its water needs.
At the time of the Committee’s visit, construction work at the plant had halted due to the liquidation of the contractor, known as Mamlambo, in June 2022, as it could not pay its sub-contractors. This has affected completion timelines for other projects, such as the Ncame Road rehabilitation. A new contractor is expected to commence work in October 2022. The DWS has appointed the Amatola Water Board as the project’s implementing agent. The project is, therefore, a tripartite agreement between the DWS, AWB and the Makana Local Municipality. The project budget is R237 million, which has escalated from the original R50 million budget following project re-scoping. The project is 85 per cent complete, and at the time of the Portfolio Committee’s visit, R160 million had been spent. This leaves a balance of R77 million for the project’s completion.
The plant’s water quality is not optimal, as it ranks at the bottom in terms of the blue drop status. Contributing to this is the fact that the municipality is constrained from undertaking the required periodic flushing of water pipes to eliminate dirt due to the need to conserve as much water as possible.
- Belmont Valley Waste Water Treatment Plant
This is one of the oldest Waste Water Treatment Plants in Makhanda, going as far back as the 1950s. It was designed as a 5.4 mega-litre plant. However, over the years, demand has increased, and this has seen the plant pushed to 8 mega litres beyond capacity. The plant is dysfunctional, and the non-functional components are too numerous for the municipality to quantify. The problem will worsen as more sewage flows into the plant following the completion of the current upgrades to the conveyancing lines. Consequently, there is little hope of compliance with the green drop standard. The plant’s state is beyond repair, and there is no value to be derived from repairing it as it has reached the end of its design lifespan. The effluent receives minimal treatment, spills and pollutes freshwater sources.
All this makes the plant one of the key inhibitors of Makhanda’s economic growth. The municipality has been submitting proposals for upgrading the plant to 12.4 mega-litres. However, no adequate funding has been secured thus far. Of the R180m required, only R31m (R16m from the Water Services Infrastructure Grant and the rest from the Municipal Infrastructure Grant) has been secured, which is insufficient to improve the plant’s capacity or the effluent’s quality. The municipality is unable to secure RBIG funding as this is already tied to the James Kleynhans Water Treatment Plant. This is one of the ways in which the delays in James Kleynhans are adversely impacting other projects. Notwithstanding the insufficient funds, the municipality is progressing with the designs for the envisaged 12 mega-litre upgrade.
- Hill Street, Makhanda
MISA was appointed as the implementing agent for the resurfacing of Hill Street during the 2020/21 financial year. Despite having been completed recently, the project’s workmanship quality is questionable. It was explained that tree roots are the underlying problem that has compromised the road’s structural integrity. In this regard, it would have been preferable to reconstruct rather than rehabilitate the road. Instead, the MISA-appointed sub-contractor constructed the asphalt seal and did not do any layer works as per instructions and work scope given. MISA, therefore, denied that the defects emanated from the subcontractor’s negligence, poor workmanship or use of inferior (poor quality) materials. MISA could not assume responsibility for the design oversights or maintenance negligence, as it only came in as a funder.
Committee observations
Having listened to inputs from the oversight structures supporting the Makana Local Municipality, the municipal stakeholders and the municipality itself, and having undertaken site visits to critical infrastructure projects in Makana, the Portfolio Committee noted the following:
- All critical financial health indicators in the municipality have deteriorated. There seems to be no Financial Disciplinary Board in place, and there is no evidence that Makana is implementing its financial recovery plan (FRP). It is concerning that the accounting officer has not furnished the FRP when requested to do so by the auditors considering the legal requirement to submit these progress reports to the Court Registrar in line with stipulated timeframes.
- The provincial executive must also be held accountable for the lack of evidence regarding the implementation of the FRP. It is not enough for the province to impose an FRP and leave it at that. The MFMA places a legal obligation on the province to monitor FRP implementation.
- Makana needs to get simple things right, including having a good political leadership and a stable administration that has will to bring positive change and promote community involvement on issues of common interest.
- While reducing employee-related costs from 45 per cent to 37 per cent is welcome, it is still concerning as this expenditure should ideally be not higher than 30 per cent.
- Administrative instability is created when critical municipal posts are not filled timeously. The recruitment process for the accounting officer should have started in time, considering that the expiry date of the current incumbent’s contract was known.
- All the issues raised by Makana stakeholders resonate well with the matters raised by the Portfolio Committee to the municipality, including the concerns around the excessive use of external service providers and the provision of water and sanitation services.
- The oversight visit to Makana was most meaningful but also most disheartening. The Portfolio Committee appreciates seeing citizens wanting to participate actively in municipal affairs but finds it disturbing that this willingness is not finding space and acceptance within the municipality.
- Given its central role in the municipality’s key infrastructure, the Amatola Water Board should have been invited to answer some of the Portfolio Committee’s questions.
Committee recommendations
- The Makana Local Municipality should furnish the Portfolio Committee with a copy of its Financial Recovery Plan within 14 days.
- The municipality must also furnish the Portfolio Committee with a report that shows the R160 million spent thus far in the James Kleynhans Water Treatment Plant upgrade. The report, to be submitted within 14 days, must include the Bill of Quantities, the original project scope, additional scope details, and project completion timeframes.
- To enable the Portfolio Committee to follow up on funding to upgrade the Belmont Valley Waste Water Treatment Plant, the Makana Local Municipality must, within 14 days, submit records of the business plans submitted to secure the funding.
- The Portfolio Committee should start involving National Treasury when conducting oversight visits to municipalities under intervention in terms of Section 139(5)(a) of the Constitution due to its central role in the preparation of mandatory Financial Recovery Plans.
- While below the 40 per cent norm, the 37 per cent in employee-related costs in Makana is still too high. The municipality is advised to aim for 30 per cent as the absolute maximum.
- The Member of the Executive Council responsible for Cooperative and Traditional Affairs in the province should consider launching an investigation into Makana in terms of Section 106 of the Municipal Systems Act (2000).
- The Portfolio Committee should follow up with SCOPA regarding the SIU investigation into the James Kleynhans Water Treatment Works, and the tabling of the investigative report in the Makana council.
- The Portfolio Committee must convene a meeting with the Makana Local Municipality, Amatola Water Board, and the Department of Water and Sanitation to discuss challenges around the completion of upgrades to the James Kleynhans Water Treatment Plant. A copy of the tripartite agreement among these institutions should be furnished to the Portfolio Committee.
- The engineer responsible for the upgrade of the CBD roads, Anton Westerberg, should be called to account to the Portfolio Committee regarding the instruction to rehabilitate rather than reconstruct Hill Street in Makhanda.
