Challenges Faced by Kagisano Molopo Local Municipality
Kagisano Molopo Local Municipality faced political and administrative instability following the 2021 elections, impacting its compliance with the Municipal Finance Management Act. The municipality's challenges included allegations of maladministration, service delivery issues, and non-compliance with budgetary processes. These issues led to a lack of proper governance, leading to concerns about financial misconduct and irregular expenditure.
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2 ENGAGEMENT WITH THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON THE ASSISTANCE PROVIDED TO KAGISANO MOLOPO LOCAL MUNICIPALITY 16th November 2022 Presentation by MEC for Finance Ms. M.Z. Rosho
3 CONTENTS Background Process that led to the withholding of the ES Adoption of the 2022/23 MTREF Budget Support Provided Conclusion
4 BACKGROUND Within three (3) months following the Local Government elections in November 2021, Kagisano Molopo Local Municipality experienced political and administrative instability; Political Instability, alleged Maladministration and Service Delivery are amongst issues that affected the proper functioning of the municipality; These challenges had a serious impact on compliance with the MFMA which might result in financial misconduct and irregular expenditure.
PROCESS THAT LED TO THE WITHHOLDING OF ES 5 The Provincial Government noted with concern persistent political and administrative instability in Kagisano Molopo Local municipality within three (3) months of the establishment of the new municipal Council. This resulted in multiple challenges that affected the administrative functionality and accountability which is summarised as follows: PILLARS CHALLENGES Persistent (allegations threatened to attend illegal Council meetings) The Council has embarked on an unlawful process of tabling the draft budget as the presiding Officer was found to be unlawfully appointed (by the municipality) by the Courts. Accounting Officer perpetually misleading Council and this affect the entire decorum IMPACT Council is always divided in decision making which leads resolutions not implemented (Council cannot unanimously agree on matters of compliance). Weakened oversight administration. Non-compliance with the MFMA Have not yet adopted the final IDP, the municipality have adopted by the two Councils, the matter is before the Court awaiting verdict. Non-compliance with the MFMA Possibility of fraud and corruption Governance Issues) (Political infighting of within Council being Councillors to council over 2 draft IDP s Financial Management Tabling of an unlawful draft budget and IDP as found by the Courts Allegations of irregular appointment of Bouncers Service delivery prominently discussed, planned and executed by the municipal council. Service Delivery issues are not Community unrest
PROCESS THAT LED TO THE WITHHOLDING OF ES 6 The above-mentioned challenges constituted serious and material breach of the Municipal Finance Management Act and other applicable legislations; The municipality failed to implement the necessary measures as to address the above challenges despite all the support provided and efforts taken by the provincial government to resolve these challenges; This resulted in the Provincial Treasury and COGTA requesting the National Treasury to invoke the provisions of Section 5(2)(e) of the Municipal Finance Management Act read with Section 216(2) of the Constitution of Republic of South Africa and withhold the Equitable Shares as well as other conditional grants which are due to the Municipality in July 2022; The withholding of funds was intended to ensure that Kagisano Molopo Local Municipality address the above-mentioned challenges and non-compliance matters by adhering to the following conditions to activate the release of the equitable share:
PROCESS THAT LED TO THE WITHHOLDING OF ES 7 The Council failed to do the following: 1. The Municipality did not convene Council and follow legislative process to address the tabling of the budget and the IDP as the presiding Officer was ruled by the Court to be unlawfully appointed; 2. Convene Council to investigate and resolve on the alleged conduct of Councillors and measures put in place to implement consequence management; 3. Comply to the court order by the interdicted councillors who established parallel council structure in the municipality; 4. Convene Council to approve the funding plan to address the budget deficit over the medium term and submit Council resolution to the Provincial Treasury;
PROCESS THAT LED TO THE WITHHOLDING OF ES 8 5. Complete the capturing of the Web enabled Audit action plan and FMCMM including its implementation; 6. Submit Council resolution on the implementation of consequence management in line with section 171 of the MFMA on non-compliance with the identified MFMA reporting requirements; 7. Submit the report on the readiness by the municipality to submit the 2021/22 financial statement as required by section 121 and 122 of the MFMA inclusive of the process plan;
9 PROGRESS ON THE RELEASE OF THE EQUITABLE SHARE The Equitable Share was not released on 6th July 2022 because the above conditions was not met by the municipality National Treasury sent a letter to the municipality on 23rd August 2022 requesting documentation/information be submitted to support the process taken by the municipality to adopt the 2022/23MTREF budget The Equitable Share was released on 24th August 2022 as agreed in a mediation process.
10 ADOPTION OF THE 2022/23 MTREF BUDGET The municipality submitted information and documentation to support the process followed to table the 2022/23 MTREF Budget to both National and Provincial Treasury Outcome/Findings of the submission was as follows: Information provided Information not provided Description Comments NO Provide information of the names of the Executive Mayor, Speaker and elected councillors as well as the quorum of meetings of council Provide minutes and all other documentation as evidence that the council that the 2022/23 Adopted Budget was approved by a legally constituted council No information was provided No information was provided if the Speaker called the meeting. 15 Councillors attended (quorum) the Mayor and Speaker did not attend the meeting. No information was provided on how the Acting Mayor and Acting Speaker was appointed, however the council resolution indicated that two councillors took a decision to appoint Clr P M Mereyabone as an acting Mayor of the meeting held on 29 June 2022 1 No 2 No Provide information on compliance with the Court Order by the interdicted councillors Provide the 2022/23 MTREF Adopted Budget A1 budget schedule 3 No Data string provided but not the 2022/23 MTREF Budget document 4 No Provide the 2022/23 Budget Funding Plan as approved by council on 29 June 2022 Provide the 2022/23 Service Delivery and Budget Implementation Plan approved by the Mayor Provide the minutes of the council meetings on the approved 2022/23 Integrated Development plan including the plan as well 8 Provide the minutes of Council meeting of 14 July and 29 July 2022 5 Yes 6 No Plan included Minutes of 29 July 2022 was not signed 7 Yes Yes
11 ADOPTION OF THE 2022/23 MTREF BUDGET Most of the required information was not provided; No proof was received that a legal constituted council adopted the 2022/23 MTREF Budget; The expenditure incurred is therefore unauthorised; PT engaged the municipality and advised as follows: Redo the 2022/2023 MTREF Budget; Send to NT/PT to assess if the budget is funded; The 2022/2023 budget must be adopted by a legally constituted council; Implement consequence management on the unauthorized expenditure incurred since July 2022 to date.
12 SUPPORT PROVIDED Supported provided was on the revised 2022/23 MTREF Budget which resulted in the municipality reducing the budget deficit; On the 27th October 2022, Provincial Treasury met with KMLM to provide technical support on the process of redoing the 2022/2023 MTREF budget and develop a credible funding plan; Operational expenses were reduced; Capital expenses were reduced to only the minimum based on strategic needs of the municipality; This was done to ensure that the municipality s budget achieves a funded and realistic position; The municipal funding plan has been revised based on the changes made to the final budget; Budget and Funding plan was revised to aligned all changes made; The municipal council planned to adopt the revised 2022/23 MTREF budget, IDP including budget related and HR related policies on the 10th November 2022.
13 CONCLUSION Provincial Treasury will continue to support the municipality in ensuring, compliance with the prescripts of the MFMA; Establishment of the disciplinary board in line with the municipal regulation on financial misconduct procedure and criminal proceedings is critical to ensure implementation of consequence management relating to the losses suffered; Reporting in line with the reforms, regulation, norms and standards as setout by National Treasury is key.
14 THANK YOU! REALEBOGA BAIE DANKIE!
