The major highlights in this budget speech include the key strategic role that will be played by the sphere of Local Government in creating a conducive environment to drive economic growth through infrastructure. As Cogta, we are supporting municipalities in ensuring that the IDPs are localising the National and Provincial priorities by aligning their plans with the National Development Plan, the New Growth Path, the Provincial Growth & Development Strategy and the Provincial Growth & Development Plan.
We believe that the catalytic projects such as the Dig-out port, Inland port hub, Cornubia, the Dube Trade Port Aerotropolis, the Vulindlela housing development and Isimangaliso Wetland Park will have a cascading effect and help rejuvenate the economies of our municipalities. These projects will translate into job creation, enhance the economic viability of local government and also contribute immensely in addressing the triple challenges of poverty, inequality and unemployment, which are most glaring at local government level.
These catalytic projects help us achieve our vision to re-anchor our municipalities so that they become centres of economic growth. In a highly-competitive global economic environment that we live in today, municipalities should be more than just purveyors of social services such as water and electricity. They should be engines of economic growth.
1. Reflections of the two years in office: State of KwaZulu-Natal Local Governance
We also make a reflection on the state of Local Government in the last two years because for us to know where we are going, it is important to take stock of where we once were. We make the following observations:
We inherited a system of Local Governance, fraught with a number of systemic challenges, and that was increasingly becoming a source of frustration for its communities. Demonstrations over service delivery were on the upsurge. Poor compliance and respect for the legislative prescripts governing local government seemed like a dream in some municipalities. Clean Audits were a rarity rather than a norm.
Indeed, in some of our municipalities the people’s confidence had been eroded and was almost non-existent. The culture of impunity was reigning supreme. It was a system characterised by divergent approaches to our collective goals between the leadership of our people, particularly democratically elected and traditional leadership. Building on the sound legacy created by my predecessors, we rose to the challenge by adopting a stick-and-carrot approach.
We isolated the serial offenders; we threw the book at them and this helped in refocusing our municipalities to the key issues of service delivery. To date, we are a leading province in posting positive audit-outcomes with five of our municipalities receiving clean audits in the recent audit period.
We made a strong endeavour to create a harmonious relationship between the leadership structures of our people so that all can contribute their wisdom and knowledge in improving the lives of the people. We took a stand against corruption and other ills that sought to undermine the march of our local government system to a system of hope for a better life for all our people.
We have put in place a range of structures, policies, and procedures which enhance governance through improved oversight and decision making. A recent national survey indicated the number of service delivery protests country-wide. Our province reflected only three (3) protests for this year, which was by far the least in any province. Whilst one (1) service delivery protest is one (1) too many, we feel that this means that we must be doing something right in KwaZulu-Natal.
We would like to attribute this to the fact that our municipalities spend their allocated funding on service delivery; they do not return unspent funds to the fiscus and that communities are kept informed. These are the achievements often overlooked because they are not as tangible as providing houses and water.
However, they have helped in improving the image of Local Government in our province, which has necessitated an important a stakeholder as the Auditor-General to shower our province with accolades and recognise our municipalities as the best governed in the country. Of course, this is a collective achievement with stakeholders in the sphere, but we still face growth challenges in certain areas.
2. Provincial service delivery picture
We also highlight the fact that to-date, we have, through our support interventions, facilitated improvement in the delivery of infrastructure to historically disadvantaged communities.
- For the years preceding 2009, the achieved delivery of water ranged between 25 000 to 28 000 households per annum. In 2010 / 2011 some 53 000 households were served with water.
- Sanitation delivery jumped from 18 000 households per annum to 44 000 households,
- Electricity form 18 000 households to 26 000.
As at 31 March 2012, approximately 83.47% of households in the province have access to potable water, 80.36% enjoy access to basic sanitation while 76.69 of KZN citizens have been provided with electricity. We still have a backlog in water delivery of approximately 408 000 households, 482 000 for sanitation and 557 000 for electricity.
We, however, make the point that for us to achieve universal access, we need an amount to the tune of R25.178 billion for water, R4.988 billion for sanitation and R9.435 billion for electricity.
3. Electricity “islands”
We have taken bold steps towards addressing the challenges of electricity islands which are a creation of dangerous political games played by some in order to coerce our citizens into certain political decisions. Those who refused and continued to exercise their rights paid the ultimate price of being deprived of essential services. In collaboration with Eskom and with the Department of Energy, we have prioritised electricity islands.
Funds to the value of R77 million by the Department of Energy and R50 million by Eskom have been committed at present. Eskom has already started to increase its network capacity in identified areas to carry the additional load. Our Department also chairs the Water and Energy committees in the province and we are vigorously facilitating redress to this senseless injustice visited on some of our people.
4. Job creation
We also highlight the fact that through our Cogta Infrastructure programmes, substantial employment opportunities have been created through the Municipal Infrastructure Grant (MIG) and Massification (Water and Sanitation) programmes.
To date, a total of 125111 jobs were created. While in the 2012/13 financial year, we anticipate that 74106 jobs will be created. Of course, these are construction related in the main but they go a long way in alleviating poverty and ensuring skills transfer.
5. Special intervention in Umkhanyakude
The bulk of service delivery backlogs are found in the uMkhanyakude district. We have since taken a decisive step to confront this challenge. We are pouring more resources in this regard and we have also appointed the former CEO of uMngeni Water to drive the implementation of projects. We are prioritising schools without water and electricity so that we can achieve the goal of quality education for all.
In close co-operation with the Department of Water Affairs, we have also prioritised the following projects:
- Lower Thukela Water Scheme (bulk water ex Tugela river, treatment and transfer south to Ilembe / eThekwini, plus raising of Hazelmere dam (R1,9 billion) [application to Water Affairs]
- Ngagane water treatment works and transfer – augment raw water supply to Dannhauser, Endumeni, Nquthu (R1,2 billion) [application to National Treasury]
- Middledrift water scheme continuation, Nkandla (R500 million)
- Umkhanyakude: Jozini-Ingwavuma bulk water supply (WTW / bulk distribution (R1.35 billion)
- Mooi-Umngeni transfer scheme / Springrove Dam (R1,6 billion)
- Hlabisa – Mandlakazi water scheme (R170 million)
- Dundee/Vant’s Drift bulk – Upgrade Vant’s Drift WTW, bulk distribution (R800 million)
- Msinga bulk and secondary bulk (R880 million)
- Construction of Bulwer Dam (R550 million)
- South Coast augmentation, Mahlabashane dam, WTW and bulk pipelines (R251 million)
6. Operations and maintenance of infrastructure
The condition of municipal infrastructure is a crucial element in our ability to ensure service provision to all communities. The lack of proper maintenance plans for infrastructure by municipalities remains a key cause for concern. Not only will this undermine the progress we have made in investing in community infrastructure to address service delivery backlogs but it is also a risk to the health and well-being of communities.
If municipalities do not budget for maintenance, this situation may result in lower service level standards or municipalities having to incur excessive cost to replace/upgrade infrastructure and equipment. The importance of preventive maintenance of infrastructure cannot be over-emphasised, as failure in this regard can result in municipalities incurring significant expenditure in future to replace assets not well maintained.
We are introducing a new policy approach where we have made it compulsory for municipalities to develop maintenance plans for every new infrastructure project they are undertaking. We will have intense focus on the implementation of this policy.
7. Promoting good, clean and accountable governance
We record the progress we are making on matters of governance and financial management. In our days, municipalities are able to prepare and table their budgets on time; they submit their annual financial statements to the Office of the Auditor- General on time, and most of them compile their annual financial statements in-house.
Clearly we have made enormous strides in reducing the dependency of our municipalities on consultants by emphasising on the importance of internal skills transfer, where consultants have been engaged.
8. Section 139 interventions
We announce that owing to the positive turn of events, which has culminated in financial stability, service delivery and governance and accountability in uMsunduzi anduMhlabuyalingana interventions have been officially terminated.
However, we still retain interventions in uKhahlamba and Indaka. uMsunduzi has transformed itself from an image of a municipality in turmoil to an institution of hope and pride for its rate payers and indeed at the rate at which they are improving, they are putting a compelling case for the exploration of additional metropolitan municipalities in the province.
9. Progress on the Ethekwini intervention
You will recall that we undertook an investigation into the affairs of the eThekwini Municipality. We then designated Mssrs Manase & Associates to conduct a forensic investigation. We tabled the report to the municipality. Indeed a lot of progress has been made in correcting the weaknesses in the municipal systems and controls and to eliminate any risks that were threatening the effective functioning of this municipality.
We are happy with the progress the municipality is making in implementing the recommendations of the report. Disciplinary action has commenced against 10 councillors and the 123 officials who were implicated in the report. Indeed there is now strong monitoring in the utilisation of section 36 delegations.
A senior advocate has been appointed to lead evidence against implicated senior officials. The Municipality has requested additional time to implement fully the recommendations of the report owing to a number of legal procedures and processes they have to observe including on the side of those who may be subjected to remedial measures. We have also received various requests for this report in terms of the Promotion of Access to Information Act and will process these.
The reason for not releasing the report at this stage is that many parties, including outside entities, have been implicated in the report, and therefore, further investigation may also be required in some instances, which may in turn compromise future investigations. This does not negate the fact that eThekwini municipality is now firmly focused on developing its citizens. It remains a world class city that is the envy of many.
We want to make a humble plea to everybody to allow the municipality space to implement the report and turn things around in eThekwini. We are very pleased with the progress made under the leadership of Mayor James Nxumalo. Ethekwini Metro Municipality is a vital cog in our province’s endeavour for the creation of a better life for all.
No one, including opposition parties, should rejoice when this municipality goes through turbulent times for this would be tantamount to rejoicing at the plight of our people. We plead with caution with political parties against any form of miscommunication or exaggeration. This investigation was commissioned by the ANC and therefore cannot be used as a political football to improve waning fortunes of certain political parties.
10. Fighting fraud, corruption and maladministration
We are intensifying our efforts to root-out maladministration, fraud and corruption in our municipalities. We have discovered that supply chain management irregularities are the major causes of irregular, fruitless and wasteful expenditure, with municipalities excessively using procurement delegations reserved only for emergencies without just cause and deviations and variations in terms of regulation 44 which is not procedurally correct.
This has led to approximately R520,6 million in unauthorised expenditure; R2,1 billion in irregular expenditure and R11,7 million in fruitless and wasteful expenditure based on the audit of municipalities. We have strengthened Municipal Scopas and Audit Committees so that they can have the required capacity to investigate this bad financial management practice and take the necessary action in terms of the legislation.
I must be upfront in saying that irregularities in expenditure does not automatically equates to corruption but of course it concerns us because if left unchecked it may be a breeding ground for corrupt elements. Owing to the negative impact of Municipal supply chain management units’ poor decisions in infrastructure delivery as well as their exposure to fraud and corruption, we are therefore investigating whether it will not be a better option to have a supply chain shared service for Local Government in the province. Once we have finalised our study, we will engage with all the relevant partners in the province.
11. Cheque fraud in municipalities
We observe that while we are making progress in eliminating the scourge of corruption, the reality is that there are individuals who have made it their profession; they spend sleepless nights to perfect their corruption acts so that they can escape our anti-corruption systems. In recent times we have observed an increase in a new scam involving the stealing of municipal cheques.
We are happy that we have succeeded in preventing a major loss of funds through this scam and that we have arrested suspected syndicates. However, we have since discouraged municipal councils from utilising cheques and advised them to facilitate payments via the electronic funds transfer system.
12. Uthukela water scam
The department has uncovered large scale fraud and corruption in the Uthukela District. This has led to the arrest of five individuals of which 3 are municipal employees. One of the senior officials has resigned and others are to face disciplinary action.
We uncovered that officials in this municipality were running their own businesses, contracting with the municipality and siphoning monies from the municipality. Some of these officials were running a security company and providing guards to the municipality, and even charging for more services than were provided. A supplier was also defrauding the municipality in conjunction with municipal officials by not supplying goods or over-charging for goods and services provided.
Most alarming has been some instances where these senior municipal officials actually deliberately sabotaged water service delivery for personal gain. Despite the existence of the Woodstock Dam in the Uthukela District and sufficient water there, municipal officials allegedly prioritised the use of water tankers to deliver water to our people.
Our investigations revealed that water services were not delivered and that fictitious vehicles were used. It appears that huge amounts were paid towards the use of 10 000 litre water tankers and upon investigation, we discovered that the number plates were those of motorcycles. Preliminary investigations reveal that approximately an amount to the tune of R12 million has been siphoned through this corruption scam in uThukela alone. This is enough budget to supply a village with sustainable water delivery.
I must add that these shenanigans have been taking place before the new council took over. Our investigation is still on-going and we hope to nip all acts of malfeasance in this municipality in the bud. This is a severe indictment on us as a society, and these unscrupulous perpetrators will not get away with such acts.
We are working with law enforcement agencies to expose all these corrupt elements and have them paying for defrauding taxpayers money. Our investigations are comprehensive and the alliances we have built with the SAPS Commercial Crime Unit, its HAWKS unit and Asset Forfeiture will ensure that we are able to deal effectively with such criminals.
Whilst we will continue dealing with reported instances of maladministration, fraud and corruption, we will proactively be supporting municipalities to implement mechanisms to mitigate the risk of fraud and corruption. These will include development, adoption and implementation of fraud prevention policies, strategies and plans in municipalities.
13. Local government elections
We also record the contribution of the department in the successful hosting of local government elections including the facilitation of a seamless transition from older councils to the new ones.
Call for amendment to the electoral act to include Traditional Council elections
We also highlight the hosting of Traditional Council elections and further call for the amendment to the electoral act so that these elections can form part of the elections calendar of our country as opposed to the current state of affairs, where the IEC conduct the election on request by the department.
14. Tools of Trade for Traditional Leaders
As part of the continuous support to Amakhosi, we have purchased cars for the Chairperson and Deputy Chair of the Provincial House. Amakhosi are being trained on leadership programme at UKZN; they have been provided with computers and 3Gs. These are the tools of trade to assist them in fulfilling some of their duties. We are building Imizi Yezizwe and Traditional Administration Centres.
15. Community service centres
We are unveiling a new initiative to build community service centres which will serve as embryos for the development of new towns. The centres will organically grow and will eventually attract commercial activities that will become the core drivers for the growth of new service and town nodes.
This will require the private sector to work closely with the government to identify and map out the best location for the community service centres. Initial focus will be on those areas adversely affected by a lack of such facilities resulting in travelling long distances to access government services.
16. Small towns rehabilitation
We announce that in the year under review, we will develop the following rural towns: Nongoma, Ulundi, Danhausser, Mandeni, Ndwedwe, Edumbe and Bergville.
17. Disaster management
Owing to the impact of climate change, the province needs to up the gear in preparing for disasters. We will soon sign a MOA with the 911 fund so that we can tap into their wisdom and knowledge in the event that we experience disasters, such as those of 911 proportions and cyclones. The head of the 911 fund visited our province recently and teamed up with the Provincial PDMC to assess the fire fighting capacity of the province.
18. Partnership with British Institutions to help resolve traditional disputes
You will recall that early this year, we undertook a trip to the UK and visited the British National Archives with a view to form partnerships that will help us access some of the critical information we need to resolve some disputes within the institution of traditional leadership.
I must say it was intriguing to observe the amount of our own history that is still held in foreign hands by our former colonial masters. It has been a challenge for us to access some of this information owing to the fact that every time we needed it, we had to beg the authorities and travel abroad.
This proved to be a costly exercise indeed. Since our visit, we managed to build relations that will facilitate our easy access to this information. We also managed to reach an understanding with the School African Studies at the Oxford University.
As part of this understanding, the university will provide a student who will conduct research so that this wealth of information about our history may be returned home where it rightfully belongs.
Conclusion
These are just the synopsis entailed in our policy speech. As you know, this is embargoed until 14pm today. We have provided this platform for media to dissect timeously some of the key issues that are in the public interest and in respect of your deadlines. As I said earlier on, the speech will be made available in full to you as soon as we commence with delivery inside the chambers.
Contact:
Vernon Mchunu
Cell: 082 474 1882
Lennox Mabaso
Cell: 082 884 2403
