OUDTSHOORN MUNICIPALITY

1
OUDTSHOORN MUNICIPALITY

• Path to Recovery

2
PATH TO RECOVERY

• Initial Diagnosis
• Section 106 Investigation
• Section 139 Intervention
• Intervention Start-Up
• Need for deeper analysis
• Diagnostic exercise
• Recovery Program
• Funding

3
INITIAL DIAGNOSIS
4
S106 COMMISSION

• MEC instituted investigation in terms of S106 of
  Systems Act
• Commission appointed Adv Joey Moses, Mr. Meko
  Magida Mr. Desmond Grootboom as secretary
• Terms of reference of commission allegations of
  mal-administration, non-compliance with statutory
  obligations and serious malpractice

5
S106 COMMISSION cntd

• Report presented on 2 March 2007
• Detailed numerous instances of mal-administration,
  non-compliance with statutory obligations and
  serious malpractice
• Can be ascribed to political instability
  inexperienced political leadership
• Also instances of dereliction of duty, breaches
  of statutory prescriptions and administrative
  deficiencies

6
S106 COMMISSION cntd

• General Findings
• There is internal strife and conflict in the
  Municipal Council and within the administration.
  There is an acute and destructive sense of
  distrust permeating the political and
  administrative structures of the Oudtshoorn
  Municipality. This has virtually collapsed the
  Oudtshoorn municipality and has effectively
  prevented it from serving its constituency, the
  people, especially the poor and marginalized
  community of Oudtshoorn.
• In the circumstances, the Commission concludes
  and it is their finding, that this represents an
  extraordinary state of affairs within the
  Oudtshoorn Municipality, indicative of a serious
  crisis situation, which must be addressed
  urgently, comprehensively, effectively and
  efficiently. Sections 105 and 106 of the
  Municipal Systems Act, 2000 read with section 139
  of the Constitution, 1996 provide the legislative
  framework to address this crisis situation.

7
S139 INTERVENTION

• Based on report by S106 Commission continued
  political and administrative instability,
  Provincial Cabinet intervened in terms of S139 of
  the Constitution
• Terms of intervention are
• That executive powers of the Council and all
  powers of the Municipal Manager be revoked and be
  assumed by an Administrator functioning under the
  direction of the Provincial Executive
• That the intervention commences on 19 March 2007
• That the Council not be dissolved and that the
  serving Councillors be retained as ordinary
  members in an advisory capacity to the
  Administrator and
• That the intervention will last for six months.

8
S139 INTERVENTION cntd

• Louis Scheepers designated as administrator
• Initial threat of legal challenge to
  intervention, did not materialise
• Intervention commenced on 19 March 2007.

9
INTERVENTION START-UP
10
NEED FOR DEEPER ANALYSIS

• Initial high level assessment by administrator is
  that problems are more severe than initially
  thought
• Political instability subsided to an extent,
  probably based on politicians desire to restrict
  the length of intervention
• Crucial policies, procedures and processes are
  non-existent in the municipality

11
NEED FOR DEEPER ANALYSIS

• Further exacerbated by a high vacancy rate in the
  senior management level
• Organisational structure not based on proven best
  practice models
• Seeming lack of ability, experience knowledge
  throughout the administration
• Municipality was not able to meet requirement
  that draft budget be adopted 90 days before new
  financial year

12
NEED FOR DEEPER ANALYSIS

• CFO and Head of Expenditure position vacant for
  long time
• Head of Financial Planning resigned and will be
  vacant from 1 May 2007
• Outstanding debtors grew from R32m to R50m in
  last two years
• Current recovery rate at 84, predicted to be
  well below 80at end of year

13
NEED FOR DEEPER ANALYSIS

• Position of Head of Housing declared redundant by
  Council in 2006
• Housing section only have 1 permanent official
  (0n long term sick leave) and 1 temporary
  official
• Municipality do not have ability to perform
  housing functions

14
DIAGNOSTIC EXERCISE

• The above are just examples of the administrative
  challenges facing the municipality
• In order to devise a well thought through and
  credible recovery program it was necessary to
  perform a thorough diagnostic exercise through a
  management audit

15
DIAGNOSTIC EXERCISE

• Challenges that management audit addressed
  include
• A dysfunctional organisational structure
• A general lack of adequate and acceptable
  processes, procedures and systems
• A lack of the implementation of Batho Pele
  principles in the interaction of especially the
  administration with the community
• High vacancy rate amongst the senior posts of the
  Municipality
• An unsustainable budget
• Payment rate of 84, resulting in an expected
  income shortfall of R24m at the end of the
  2006/2007 financial year
• Inability to meet the statutory requirements in
  respect of the tabling of the draft budget ninety
  days before the beginning of the financial year

16
DIAGNOSTIC EXERCISE cntd

• Complaints by the environmental health officers
  of the Eden District Municipality (Eden) that the
  municipality is discharging raw effluent into the
  Olifants River
• Suspicion about the adequacy of the bulk
  infrastructure of the municipality
• Chaos and disarray in respect of the planning and
  implementation of human settlement projects
• Insufficient capacity and inability to deal with
  the town planning functions of the municipality
  and its negative impact on the financial
  sustainability of the municipality

17
DIAGNOSTIC EXERCISE cntd

• A general lack of managerial responsibilities
• The absence of policies required in terms of
  legislation
• A gap between the skills, experience,
  qualifications and abilities of some officials
  and what is required of them
• Readiness to comply with GAMAP/GRAP and
• Distrust between different sectors of the
  community.

18
DIAGNOSTIC EXERCISE

• Terms of Reference
• An audit of the total administration of the
  municipality to determine the nature of the
  administrative deficiencies in the municipality.
  The recommendations serve as preparation of a
  framework for a recovery programme to put the
  municipality on the path of administrative health
  and sustainability.
• Macro and micro-structure
• Statutory and other policies
• Processes, systems and procedures.
• Staff audit (skills assessment measured against
  the requirements of the posts)

19
OUTCOME

• No doubt exists that the municipality was
  mismanaged to the extent that it is now faced
  with serious difficulties that will require time,
  money and skills to resolve, both in the
  administration as well as the political terrain.
  The functioning of corporate and financial
  services have collapsed to such an extent that
  these services cannot be turned around without
  external intervention and assistance.

20
RECOVERY PROGRAM
21
RECOVERY PROGRAM

• The recovery of the municipality must be based on
  a strategy and planning exercise that is
• Sustainable
• Measurable
• Attainable
• Resourced
• Time-framed

22
RECOVERY PROGRAM

• The timeframe for the intervention is six months,
  and will thus end in September 2007
• The recovery program will however have to go
  beyond this date to be sustainable

23
RECOVERY APPROACH

• The recovery approach must combine short, medium
  and long term planning
• The purpose must be to create a sustainable
  municipality, in alignment with national,
  provincial, district and local strategic policy
  initiatives

24
SUSTAINABLE MUNICIPALITY

• Can perform the functions assigned to it by the
  constitution and other legislation efficiently
  and effectively.
• Involves people in their own governance through
  structures such as ward committees and other
  community participation mechanisms.
• Has the ability to raise the revenue due to it.
• Provides a safety net of free basic services to
  ensure that the poorest of the poor have access
  to the minimum level of service.
• Makes sure that all its actions have human
  wellbeing, economic success and ecological
  responsibility as their aim.
• Ensures that short-term actions are aligned with
  medium- to long-term planning.

25
RECOVERY PATH
RECOVERY PROGRAM RECOVERY PROGRAM RECOVERY PROGRAM
SHORT TERM MEDIUM TERM LONG TERM
1 6 Months 7 36 Months 37 60 Months
ACTIVITIES ACTIVITIES ACTIVITIES
Strategic session Reality Check Review IDP develop 20 year vision align IDP with provincial national strategic agendasUrgent intervention iro role of councillors vis a vis administration e.g. training Admin Law, Code of Conduct, Public Finance and Budgeting Draft template for annual report Promulgate various policies in by-laws Review all council resolutions taken over past 2 years verify validity lawfulness Forensic investigate alleged maladministration iro tender award of Rosebank/ Neppon 660 units Procedures iro change of banks Excess payment R 640 000 to former chief housing
26
RECOVERY PATH
RECOVERY PROGRAM RECOVERY PROGRAM RECOVERY PROGRAM
SHORT TERM MEDIUM TERM LONG TERM
1 6 Months 7 36 Months 37 60 Months
ACTIVITIES ACTIVITIES ACTIVITIES
Review of Delegations Review all policies policy training for councillors rate policy tariff policy Appoint municipal manager Appoint Sect 56 managers Develop service and performance contracts in line with new regulations Determine policy iro Mayoral Fund Emergency Aid Fund Review water services development plan align with IDP Address critical services backlogs Functional review of organi-sational structure affected job descriptions (current staff costs 42 of operational budget) Finalise job evaluations Identify critical vacancies finalise staffing
27
RECOVERY PATH
RECOVERY PROGRAM RECOVERY PROGRAM RECOVERY PROGRAM
SHORT TERM MEDIUM TERM LONG TERM
1 6 Months 7 36 Months 37 60 Months
ACTIVITIES ACTIVITIES ACTIVITIES
Introduce system of regular management meetings Address outstanding 2005/ 2006 audit report issues Reconcile balance outstanding financial records statements Implement supply chain management system Withdraw/ cancel contract iro creditors outsourcing re-establish functional creditors section Individual skills assessment of all staff Prioritise urgent training programs e.g. general management training, supervisory behaviour skills, disciplinary hearings, financial management, report-writing skills, budgetary control, performance measurement appraisal reporting, management of financial IT system (Promun 2)
28
RECOVERY PATH
RECOVERY PROGRAM RECOVERY PROGRAM RECOVERY PROGRAM
SHORT TERM MEDIUM TERM LONG TERM
1 6 Months 7 36 Months 37 60 Months
ACTIVITIES ACTIVITIES ACTIVITIES
Budget review 2007/ 2008 to ascertain validity realism Preparation for GAMAP conversion review asset management policy Update asset register asset valuation of investment properties assets survey chart of accounts accounting format Review meter reading route, readings, reconciliation accounts deliveries Develop a system of council resolution dissemination execution reporting Finalise other staff training programs identified by skills audit Compile statutory services delivery maintenance plan Finalise numerous outstanding disciplinary hearings Introduce functional cost effective credit control system Verify debtors database for validity
29
RECOVERY PATH
RECOVERY PROGRAM RECOVERY PROGRAM RECOVERY PROGRAM
SHORT TERM MEDIUM TERM LONG TERM
1 6 Months 7 36 Months 37 60 Months
ACTIVITIES ACTIVITIES ACTIVITIES
Establish proper contracts administration system Guidelines for functioning of ward committees Monthly newsletters that reflect the progress in the municipality
30
FUNDING

• The municipality does not possess the financial
  ability to fund the recovery process on its own
• The recovery program will require multiple
  sources of funding, including Oudtshoorn
  Municipality, Eden District Municipality,
  Provincial Government (various departments),
  Development Bank of Southern Africa, others
  (Ilima Trust), etc.

31
IMMEDIATE STEPS

• Advertise Fill key positions (municipal
  manager, chief finance officer, manager corporate
  services, head of expenditure, and head of budget
  office)
• Review intervention (bring forward date of
  political intervention and extend administrative
  intervention)
• Establish task team.

32
CONCLUSION
33
CONCLUSION

• The purpose of a S139 intervention is to assist a
  municipality to become a sustainable and self
  sufficient local government, able to
• Perform the functions assigned to it by the
  constitution and other legislation efficiently
  and effectively.
• Involve people in their own governance through
  structures such as ward committees and other
  community participation mechanisms.
• Has the ability to raise the revenue due to it.
• Provide a safety net of free basic services to
  ensure that the poorest of the poor have access
  to the minimum level of service.
• Make sure that all its actions have human
  wellbeing, economic success and ecological
  responsibility as their aim.
• Ensure that short-term actions are aligned with
  medium- to long-term planning.

34
DANKIEENKOSITHANK YOU