Parliament, Thursday, 8 October 2020 – The Portfolio Committee on Cooperative Governance and Traditional Affairs (Cogta) has urged the leadership of Ugu District Municipality to speedily conclude the recruitment process of filling the position of the Chief Financial Officer (CFO), a position which is very critical in ensuring that the financial resources of the municipality are handled judiciously.

The committee visited the municipality yesterday as part of its week-long oversight programme in the KwaZulu Natal Province to assess, among other things, the delivery of services to the communities.

The Chairperson of the committee, Ms Faith Muthambi said: “It is unacceptable that a municipality that is experiencing a monthly expenditure shortfall of R40 million does not have in place a permanent CFO to drive the municipality’s financial recovery plans and ensure fiduciary duty over the municipal finances. It is in this context that the committee views it necessary to urgently conclude the recruitment process of the CFO which has dragged on for over a year.”

The committee raised its concerns over the fact that the municipality is currently technically insolvent, it is operating on an unfunded budget and with cash coverage of less than a month which is below the treasury norm of 1.5 to 2.1 months. Furthermore, the committee said it is concerning that total liabilities of the municipality exceed assets by 73%.

The financial challenges that are currently experienced by the municipality result to, among other things, intermittent water cuts, sewage spillages due to inability to service infrastructure and bad quality of water. This situation has resulted in the decline of tourism in the municipality and unemployment rate has also increased within the municipality.

The municipality’s inability to deal and do so urgently with its financial challenges, will result in further deterioration of the standard of living of the people in the district.

The committee welcomed the assurance it received from the leadership of the municipality that the filling of the position of the CFO will be concluded by the end of this year. The committee will monitor the process and has committed to holding the municipal leadership accountable on their own deadlines.

Meanwhile, the committee has condemned the reported vandalism of infrastructure that has a potential of exacerbating an already dire situation. “While we acknowledge the frustration of the residents of Ugu municipality, vandalising infrastructure undermines the progressive efforts to turn the municipality around. We thus call on the residents of the municipality to exercise caution when venting their frustration,” Ms Muthambi emphasised.

The committee has urged the municipality to urgently enhance its revenue collection rate which is currently at 64%. It also told the leadership that it is unacceptable that it takes the municipality more than 180 days to pay its creditors something which impacts on the ability of those creditors to function optimally and create employment opportunities in the municipality.

Regarding the provision of water, the committee raised concerns over the feeling expressed by the people in the communities, that water is provided mainly in the urban areas and less provision in the rural communities. The committee has also called on the municipality to improve its billing system to ensure that the residents are given accurate bills as that will improve and increase revenue collection in the municipality.

The committee has also urged the municipality to implement remedial actions according to Section 106 of the Municipal Systems Act report that was tabled in the municipal council on 30 September 2020. The implementation of remedial actions is necessary to ensure that the municipality is returned to its full functionality.

Also, the committee has welcomed the assurance that a financial expert has been allocated to the municipality to address financial distress, to facilitate and compile a Water and Sanitation Recovery Plan that will adequately address all the long standing water service delivery challenges faced by the municipality.

The committee has told the leadership that protests that have engulfed the municipality are unacceptable in the context of vandalism of property. The committee said it is cognisant that the right to protest is guaranteed by the constitution, but it has called for that right to be exercised within the rule of law and be exercised peacefully.

Meanwhile, the committee engaged the traditional leaders within the municipality and it was resolved that the committee will lead and engage the national Department of Cooperative Governance and Traditional Affairs to resolve some of the issues such as provision of tools of trade.
The committee said the institution of traditional leadership remains important and must be supported to ensure, among other things, the promotion of cooperative governance.

The committee will today visit uMngungundlovu District Municipality to assess service delivery and the impact of Section 139 at Mpofana and Richmond local municipalities.


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