Notice of Motion and Founding Affidavit 20221006 Final
Notice of Motion and Founding Affidavit 20221006 Final
Notice of Motion and Founding Affidavit 20221006 Final
2022 -10- 07 - -·
SAKELIGA NPC First applicant
COUNTER N0.7
and
NOTICE OF MOTION
PART A:
BE PLEASED TO TAKE NOTICE THAT the applicants shall make application to the
thereafter as counsel for the applicants may be heard, for an order in terms of PART
1 THAT the normal rules pertaining to the service, times and filing of applications
basis in terms of the provisions of Rule 6(12)(a) and (b) of the uniform rules of
court.
2 THAT pending the outcome and final determination of Part B of this application,
providing water to the community of the first respondent, the Ditsobotla Local
2.1 That the first applicant and its duly authorised representative/s be
2.2 That in the event that the first applicant or its duly authorised
this court is authorised and instructed to take all such steps as may be
2.3 That Ditsobotla shall be liable for all reasonable and necessary costs
3 THAT the third respondent, alternatively the fifth respondent, further alternatively
ordered and directed to report back to the court on affidavit within 10 (ten) days
of this order, such affidavit to address all steps that shall be taken to ensure the
provision of access to the basic service of water within the jurisdictional area of
4 THAT in the event that the court finds that the remedy sought herein is for any
reason not appropriate, the court grant an order that is just and equitable, as
envisaged in section 172 of the Constitution of the Republic of South Africa, 1996
(the “Constitution”), which has the remedial effect of the urgent restoration of
5 THAT Ditsobotla, and any of the further respondents to this application that
oppose the relief sought herein, be ordered to pay the costs of Part A of this
application on the scale as between attorney and client, jointly and severally, the
one paying the other to be absolved, such costs to include the costs consequent
6 THAT the court grant the applicants such further and/or alternative relief as the
TAKE FURTHER NOTICE that the founding affidavit of CHRISTO BESTER, as well
TAKE FURTHER NOTICE that the applicant has appointed KRIEK WASSENAAR &
indicated below, at which address all notices and service in these proceedings will be
accepted.
TAKE FURTHER NOTICE that, if you intend opposing PART A of this application:
TAKE FURTHER NOTICE that Part A of the application shall be enrolled for hearing
on the urgent court roll on Thursday 13 October 2022 at 10h00, or as soon thereafter
PART B:
or as soon thereafter as counsel for the applicant may be heard, for an order in terms
1 THAT the normal rules pertaining to the service, times and filing of applications
basis in terms of the provisions of Rule 6(12)(a) and (b) of the uniform rules of
court.
2 THAT it be declared that the first respondent, the Ditsobotla Local Municipality
persistent material breach of its obligations to provide basic services and to meet
its financial commitments and is unable to meet its obligations and financial
commitments.
3 THAT it be declared that the Provincial Executive for the Province of the North
“Provincial Executive”), cannot, alternatively has not and does not, further
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alternatively has not and does not adequately, exercise the powers, alternatively
of the Constitution.
5 THAT pending the resolution of the crisis in the financial affairs of Ditsobotla and
the securing of the ability of Ditsobotla to meet its obligations to provide basic
services:
exercise the powers and perform the functions referred to in section 139
of Ditsobotla.
6 In the alternative to prayer 5: THAT pending the resolution of the crisis in the
financial affairs of Ditsobotla and the securing of the ability of Ditsobotla to meet
its obligations to provide basic services, alternatively the successful and effective
invoke and exercise the powers and perform the functions referred to in
regard to:
of Ditsobotla.
7 In the alternative to prayers 5 and 6: THAT pending resolution of the crisis in the
financial affairs of Ditsobotla and the securing of the ability of Ditsobotla to meet
its obligations to provide basic services, alternatively the successful and effective
occurs first:
take all such steps as may be necessary and assume responsibility for
community of Ditsobotla.
8 In the alternative to prayers 5, 6 and 7: THAT pending the resolution of the crisis
in the financial affairs of Ditsobotla and the securing of the ability of Ditsobotla to
meet its obligations to provide basic services, alternatively the successful and
effective invocation of and exercise of the powers and functions by the Provincial
occurs first:
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services, be ordered and directed forthwith to take all such steps as may
8.2 In the alternative to prayer 8.1, and only in the event that the court finds
that those cited in prayer 8.1 do not have the duty, alternatively the
Ditsobotla:
8.3 In the further alternative to prayers 8.1 and 8.2, THAT a ‘special master’
8.3.2 Such special master shall have such powers and duties
court.
9 THAT National Treasury be ordered and directed to make available such part of
the funds due to Ditsobotla as its share of the local government’s equitable share
referred to in section 214 (1) (a) of the Constitution in order to restore basic
such funds necessary to make payment of the monthly payment of the providers
10 THAT the seventh to the tenth respondents, alternatively the third to the sixth
10.1 To report back to this court on affidavit all relevant facts dealing with the
10.2 Thereafter, and until the court finds that the crisis in the financial affairs
of Ditsobotla has been resolved and the ability of Ditsobotla to meet its
affidavit form at the end of each calendar month dealing with the provision
applicants and to be filed on the court file on or before the last day of
11 THAT in the event that the court finds that the remedies sought by the applicants
are for any reason not appropriate, the court grant an order that is just and
equitable as envisaged in section 172 of the Constitution which has the remedial
of the crisis in the financial affairs of Ditsobotla and the securing of the ability of
Ditsobotla to meet its obligations to provide basic services, alternatively the court
grant an order that is just and equitable as envisaged in section 172 of the
constitution which has the remedial effect that alleviates the constitutional
12 THAT it be declared that the conduct of the third to the sixth respondents in failing
Constitution.
13 THAT the seventh to the tenth respondents, alternatively the third to the sixth
deems appropriate, be ordered and directed to meet with the applicants and their
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financial crisis of the municipality and the various breaches of constitutional rights
amend the notice of motion, and to seek such further relief as may be necessary
granting of this order, alternatively should the applicants be of the view that the
respondents have failed to comply with the order of this court, in which event the
15 THAT the first to the tenth respondents, alternatively the third to the sixth
alternatively the first and second respondents, and any of the further respondents
that oppose the relief sought herein, be ordered to pay the costs of this
application, jointly and severally, the one to pay the other to be absolved, on the
scale as between attorney and client, the one paying the other to be absolved,
such costs to include the costs consequent upon the employ of two counsel
where so employed.
16 THAT the court grant the applicants such further and/or alternative relief as the
TAKE FURTHER NOTICE that the founding affidavit of CHRISTO BESTER, as well
TAKE FURTHER NOTICE that the applicants have appointed KRIEK WASSENAAR
the address below, at which address all notices and service in these proceedings will
be accepted.
TAKE FURTHER NOTICE that, if you intend opposing PART B of this application:
TAKE FURTHER NOTICE that the application in terms of Part B of this application
shall be enrolled for hearing on the urgent court roll on Thursday 10 November 2022
[email protected]
[email protected]
Garona Building
Second Floor, East Wing
Corner James Moroka and University Drive
Mmabatho
North West Province
E-Mail: [email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
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E-Mail: [email protected]
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[email protected]
SERVICE BY E-MAIL AND SHERIFF
Case no: - - - - - -
and
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FOUNDING AFFIDAVIT
Contents
URGENCY: .............................................................................................................. 84
CONCLUSION: ........................................................................................................ 90
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I, the undersigned,
CHRISTO BESTER
applicant, Sakeliga NPC, which has its offices at Building A, Fifth Floor, Loftus
2 Sakeliga NPC and the second applicant have resolved to bring this application.
The third applicant acts in his personal capacity. I attach hereto a copy of a
behalf of Sakeliga NPC in respect of the current constitutional crisis in the first
3 The facts set out herein are true and correct, and such facts fall within my
THE PARTIES
terms of the company laws of South Africa and has its principal place of business
at Building A, Fifth Floor, Loftus Park, 402 Kirkness Street, Arcadia, Pretoria,
Gauteng Province. I shall refer to the first applicant herein as either "the first
applicant" or "Sakeliga".
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6 Sakeliga was established in 2011 and was incorporated and registered as a non-
profit company in terms of the Companies Act, Act 71 of 2008, in 2012. Sakeliga's
interest of its supporters and the common good. In order to give effect to its main
objective, Sakeliga also provides support to its supporters and the public at large,
which support includes legal support. Further, to achieve its objectives and to
perform its functions and mandate, as an ancillary object, Sakeliga seeks to act
in the interest of its supporters and members of the public to protect their
8 What I have set out above is also evident from an extract of Sakeliga's
incorporation which sets out in more detail the objects, ancillary objects as well
as the powers of the first applicant. I request the court to incorporate the content
thereof herein as if specifically set out. I do not attach a full copy of the
papers unnecessarily long. Should the court or any of the respondents wish to
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have sight of the full memorandum of incorporation, the first applicant shall make
this available.
from its members, registered in terms of the relevant laws of South Africa, with
North West Province. I shall refer to the second applicant herein as either "the
10 The CGGSJ was established in 2020 as a public interest organisation with the
specific concern to the CGGSJ is ensuring justice, especially for the poor and
failure in the North West Province are particularly concerning to the CGGSJ.
interest to further its objectives and promote its goals. The CGGSJ is mandated
order, the rule of law and the furtherance of the right to self-determination,
hereto.
Lichtenburg, North West Province. I shall refer to the third applicant herein as
16 As will be shown later in this affidavit, the third applicant, his family, business and
respondent. The third applicant has a material and direct interest in the outcome
of the litigation and the relief sought. A confirmatory affidavit for the third applicant
The respondents:
Act, Act 117 of 1998 (the "Structures Act"), read with section 155 of the
"Ditsobotla". Ditsobotla has its address and offices at Civic Centre, Corner
Province.
19 The third respondent is the PREMIER OF THE NORTH WEST PROVINCE cited
herein in his nominative capacity. According to the official website of the North
Mr Bushy Kaobitsa Maape. I shall refer to the Premier of the North West Province
herein as "the Premier". The Premier is the head of the provincial executive, and
the head of the executive council of the North West Province. The Premier has
offices situated at Garona Building, Second Floor, East Wing, Corner James
PROVINCE, with offices situated at Garona Building, Second Floor, East Wing,
Corner James Moroka and University Drive, Mmabatho, North West Province.
Whilst I am advised that the citation of the Premier as the head of the provincial
executive of the North West Province is the correct respondent to cite in his
executive, the Premier has taken a point in the first application (referred to more
fully later in this affidavit) that the failure to join the "provincial executive councif'
technical and dilatory stratagem, solely in order to avoid any technical delays in
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this matter I have cited the Provincial Executive of the North West province
herein.
shall refer to the aforesaid respondent as "the COGTA MEC". The COGTA MEC
has offices situated at Garona Building, Second Floor, East Wing, Corner James
to the official website of the North West provincial government, the current
aforesaid respondent as "the Finance MEC". The Finance MEC has offices
situated at Garona Building, Second Floor, East Wing, Corner James Moroka
I shall refer to the aforesaid respondent as "the President". The President is the
head of the National Executive. Section 85(1) of the Constitution vests the
executive authority of the Republic of South Africa in the President. The president
Gauteng.
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Gauteng Province.
shall refer to the aforesaid respondent as "the Finance Minister". The Finance
Treasury, with offices situated at 40 Church Square, Old Reserve Bank Building,
Mchunu, cited herein in his nominative capacity. I shall refer to the aforesaid
respondent as "the Water Minister". The Water Minister is the head of the
National Department of Water and Sanitation, with offices situated at 185 Francis
Government: Municipal Structures Act, Act 117 of 1998 (the "Structures Act"),
read with section 155 of the Constitution of the Republic of South Africa, 1996
"the district municipality" or simply "Ngaka". The district municipality has its
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address and offices at corner of Carrington Street and 1st Avenue, Industrial Site,
Mahikeng.
incorporated in accordance with the relevant laws of the Republic of South Africa
entity and Water Board established in terms of section 29 of the Water Services
Act, Act 108 of 1997, with offices situated at 38 Heystek Street, Rustenburg,
Water".
regarding the appointment of the administrator, whose full and further information
is unknown to the applicants at this stage, and have cited the administrator based
on the recent allegation of the state respondents that such an administrator has
offices of the first respondent at Civic Centre, Corner Nelson Mandela and
Transvaal streets, Lichtenburg, North West Province. I shall refer to the aforesaid
31 Eskom and Magalies Water are joined because of their potential interest in the
32 A copy of these papers will also be served on the State Attorney Mmbatho and
33 Due to the urgency of this application, the applicants will in addition to any
physical service attempted, seek service of the application via e-mail to the
known email addresses of the respondents. Copies will also be served via e-mail
to the legal representatives of those respondents in this application who are also
number M311 /2021. The applicants will file the necessary service affidavits as
soon as possible.
34.1 Bring this application by virtue of section 38 (a) of the Constitution, acting
34.2 Also bring the application in the interest of a group or class of persons in
Ditsobotla.
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34.3 Furthermore, also make this application in the public interest in terms of
35 This is an urgent application in which the applicants seek an urgent and effective
municipality of Ditsobotla.
36.2 Municipal employees have not been fully paid and refuse to work due to
explained below.
36.5 Anarchy reigns in the municipal area of Ditsobotla, and the provision of
36.6 There has been a complete collapse of the municipality, with devastating
37 As a result of the aforesaid, and the further facts which I address later in this
affidavit, the community of the municipality are not receiving basic municipal
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acceptable and reasonable quality of life and which, if not provided, endanger
the economic viability of the community. The failure is also a serious public
38 The extent of the constitutional crisis is set out below, read together with the
supporting affidavits that are attached to this affidavit. The matter is of extreme
urgency, and it is imperative that the state be directed to remedy the serious
halt:
39.1 The towns of Lichtenburg and Coligny are receiving little to no water due
weeks.
39.3 The general failure in the supply of water to the Lichtenburg and Coligny
99% of all their water from boreholes situated on municipal grounds and
must keep running. Currently, the lower-lying areas of town receive about
the supply is irregular and has become even more irregular over the last
few weeks. There are further large sections of the community that do not
39.4 Large portions of Lichtenburg and Coligny are without any municipal
water. Some areas in the two towns have been without any water for
showing the general areas that have been without any water for extended
periods of time:
A3 and A4)-
assist with trucking in water from farms and other areas with
whilst there are taps near dwellings such taps are without
water.
boreholes.
(a) The areas represent two areas in the town of Lichtenburg that
2022.
properties.
accommodation areas.
facilities to customers.
facilities to athletes.
D3 and D4)-
(b) Most of the affected properties that are sitting without water
the Lichtenburg reservoir supply levels stand at less than 25% capacity.
39.6 There is no refuse collection in any of the two affected towns. Residents
are required to dispose of their own residential and commercial waste (at
waste removal services, but these services come at a cost and the staff
accessing the municipal refuse dump sites, many people who are unable
to traverse the entrance of the site, have started dumping refuse at the
sewage spilling into and onto the streets. This is especially problematic
without proper tooling, have started pooling money in order to carry the
costs of suction vehicles to clear sewage and grey water build up behind
39.9 Businesses and residents in Lichtenburg have also been struggling with
Mr Seindis.
39.10 The employees of the municipality have not been paid their salaries. As
with municipal employees, who out of fear for victimisation are not willing
to provide affidavits, who have confirmed to me that they have not been
paid salaries at the end of August 2022 and again at the end of
September 2022.
39.11 Ditsobotla's debt to Eskom has continued to spiral and has grown to
39.12 The closing of the administrative offices in Ditsobotla will only further
pay Eskom, nor any of the other service providers and creditors of the
municipality.
causing real harm to the public, and to the safety of the community.
has also informed me that his practice has experienced a sharp increase
of the opinion that the poor quality of water that people are sourcing and
community has been impacted due to the crisis and is under threat. He
has also raised concerns regarding the risk of more serious diseases
explain the dire position that the residents and business find themselves
in.
40 The complete collapse of the municipality and the complete failure to provide any
environment. It is also destroying a local economy that has already seen large
41 I respectfully state that the firm hand of the law is urgently necessary to address
and has impaired rights at a systemic and basic level and continues to do so on
42 The applicants seek an order that is just and equitable, on an urgent basis, in
order to afford its members and the community of the municipality a practical and
effective remedy.
43 The current state of affairs has a direct and seriously prejudicial impact on every
44 In addition to the serious impact on the basic rights of the third applicant and the
communities and people within the municipality, including the supporters of the
first and second applicants, the current collapse further seriously infringes on the
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right of the first applicant's supporters who conduct business within the
community;
community; and
and maintain a stable income for their businesses, and employees, and
45 The supporting affidavits that will be attached hereto confirm the aforesaid facts.
46 Based on the facts set out in this affidavit, the applicants seek an urgent remedy
in respect of the current constitutional crisis as set out in these papers. I do not
repeat the relief sought in the notice of motion herein in order to avoid burdening
these papers, and I refer the court to the notice of motion prefixed hereto.
47 As is apparent from the notice of motion, the applicants seek relief in two parts:
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that requires very urgent intervention which cannot await the hearing of
Part B of this application. Further facts are set out in the body of this
47.2 In Part B, the applicants seek an urgent remedy to the remainder of the
issues arising from the collapse of local government, the financial crisis
Provincial government has not and cannot exercise the powers and
48 In order to assist the court in the determination of a just and equitable remedy in
this matter, and in order to provide legal context to the relief sought, I set out
applicants shall refer the court to further law and authority at the hearing of the
application.
50 While section 40 of the Constitution vests governance of the Republic in the three
spheres, section 41 requires all spheres of government and all organs of state
50.1 secure the well-being of the people of the Republic; (Section 41 (1 }(b} of
the Constitution)
50.3 be loyal to the Constitution, the Republic, and its people; (Section
51 Section 152(1) of the Constitution provides for the following objects of local
51.3 to promote social and economic development; (Section 152( 1)( c) of the
Constitution)
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51.4 to promote a safe and healthy environment; (Section 152(1 )(ct) of the
Constitution) and
the Constitution)
give effect to the provisions of the Constitution and: to give priority to the basic
needs of the local community; promote the development of the local community;
and ensure that all members of the local community have access to at least the
54 The term "basic municipal service" is defined in the Local Government: Municipal
quality of life and which, if not provided, would endanger public health or safety
or the environmenf'.
55 Section 135 of the MFMA requires in peremptory terms that: "A municipality must
meet its financial commitments." Section 65(2) of the MFMA requires the
categories of expenditure.
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56 Section 154 of the Constitution requires the provincial and national spheres of
57 Section 155(6) of the Constitution, read together with section 105 of the Systems
Act, empowers the COGTA MEC to monitor municipalities in her province with a
view to assessing the support needed to strengthen the capacity to manage their
own affairs.
provides that: "If the stopping of funds ... affects the provision of basic municipal
municipality cannot or does not fulfil its obligations with regard to the provision of
those services."
59 Within the context of the aforesaid provisions, section 139 of the Constitution
obligation to provide service delivery in the form of access to basic services and
municipal council has failed to deliver basic services, an appropriate step could
60 The Constitution thereby provides that provincial governments must not only
support but also monitor municipalities and see to the effective performance of
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their functions. A provincial executive is fully entitled, if not obliged, to ensure that
with a duty on the part of the provincial government. The provincial government
provincial executives' recourse is in section 139(5) and not section 139(1) of the
Constitution.
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65 Where the provincial executive fails in its duty to exercise the powers and
all, section 139(7) requires in mandatory terms that the national executive must
67 The national legislation which regulates the implementation of section 139 of the
(i) to determine the reasons for the crisis in its financial affairs;
69 The Municipal Financial Recovery Service referred to in section 139(1 )(a) of the
157 of the MFMA, and functioning, in terms of section 157(2), within the National
Treasury.
as another municipality in the North West Province, being the Naledi Local
case number M311/2021 during or about May 2021. I shall refer to the aforesaid
copy of the amended notice of motion relevant to the first application hereto
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marked annexure CC13. Relief to the following effect is sought in the first
application:
71.2 The Premier and the ME Cs' failure to implement mandatory interventions
Constitution. (Prayer 2)
71.4 The Premier, in the same capacity, be ordered, in the event that the
71.5.1 determine the reasons for the crisis in the financial affairs of
(Prayer 5.2)
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71.6 The COGTA MEC be ordered to prepare and file a report every 2
71.7 The MECS, the COGTA Minister and the Finance Minister be ordered to
provide Sakeliga with copies of all reports and recovery plans prepared
inter alia, to: collect municipal income; ringfence municipal income; and
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and enforcement of section 32 of the MFMA for the financial years 2017
and the affected municipality's failure to address the issues raised by the
71.12 The Court determine the remuneration of the Special Master appointed
71.13 Should the Court find that any of the conduct of Ditsobotla and/or Naledi
amended notice of motion), but that the further relief sought by Sakeliga
which is just and equitable under section 172 of the Constitution and
72 The first application has been opposed by various respondents and is currently
ensure finalisation, the case has been referred to case management. A case
and a further case management hearing has been scheduled for 17 November
enrolled for hearing on 23 and 24 March 2023. I attach hereto as annexure CC14
73 The facts set out below have been established in the first application in relation
to the municipality, and the further respondents in the first application. Such facts
are either common cause or not denied by the state respondents in the first
opposed the application, it failed to deliver any answering affidavits. I deal with
certain of the common cause facts that are relevant to the Ditsobotla municipality
below.
74 The COGTA MEC prepared and signed a report titled "REPOR T ON THE STATE
24 August 2020. I attach a copy thereof hereto marked CC15 (the "COGTA
report").
75 The COGTA report confirms that Ditsobotla is, because of financial crisis, in
serious and persistent material breach of its obligations to provide basic services
government finances and the financial management report'', which details the
affidavit in the first application, the 2019 Treasury report was the most recently
available Treasury report, a copy of the relevant extracts of which I attach hereto
77 The annual Treasury reports published between 2009 and 2019 reveal that
and has been under some form of intervention in terms of section 139 of the
Constitution in 2013, 2014, 2016 and 2017. Until Friday 30 September 2022, I
was under the impression that all previous interventions in respect of Ditsobotla
78.1 The appointment of the Municipal Manager and other Senior Managers
report)
COGTA report)
COGTA report)
78.4 Only two of six senior management positions are filled, being the
78.5 The work of the Municipal Public Accounts Committee ("MPAC") is not
properly resourced and the committees' reports are not processed by the
78.6 Serious and damning allegations exist against key office bearers;
COGTA report)
78.9.3 Ditsobotla fails to pay its creditors and fulfil other commitments;
COGTA report)
COGTA report)
COGTA report)
78.11 At the end of the COGTA report the COGTA MEC makes the following
year-end 2017.
79.3 "Irregular spending" increased 738% between year-end 2017 and year-
80 A useful summary of the fruitless and wasteful spending; irregular spending; and
of the founding affidavit in the first application (derived from the audited financial
81 It is clear from the financial track record of Ditsobotla that it does not conduct
the Auditor-General with sufficient information to conduct the audit on its financial
affairs required by Section 183 of the Constitution and Section 4(1) of the PM
82 Ditsobotla's audit report for financial year-end 2018, a copy of which I attach
hereto marked CC17 (the "Auditor-General report"), evidences the fact of the
financial crisis in the municipality and contains the following findings by the
Auditor-General:
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matters described as the basis for the disclaimer of opinion section of the
82.5 Ditsobotla does not have an adequate system to account for its
Auditor-General report)
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82.6 Ditsobotla could not provide sufficient appropriate audit evidence for cash
General report)
82.9 Ditsobotla could not provide sufficient appropriate audit evidence for
General report)
82.10 Ditsobotla could not provide sufficient appropriate audit evidence for
General report)
the Auditor-General could not confirm that this was the full extent of
82.12 Ditsobotla spent R8,4 76,149 during the year under review in
82.13 Ditsobotla made payments of R53,620,717 during the year under review
Auditor-General report)
municipality. It is evident that there are no proper controls in place. The auditor
Ditsobotla cannot account for millions of Rand's worth of cash and cash
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equivalent transactions. Regardless of the repeated audit failures over the years,
neither the Provincial Executive nor the National executive have effectively
intervened.
84.2 collect, allocate and account for monies for electricity so distributed;
84.3 settle the Eskom liabilities as they become due and payable (mostly due
85 I pause to point out that Eskom filed its own substantial, explanatory affidavit in
the first application supporting the relief sought by Sakeliga and setting out the
in 2020.
85.2 The auditor general has correctly categorised the aforesaid as wasteful
inimical to the principle of legality and the rule of law since the
municipality cannot account for how it uses scarce public resources and
required and is ordered to: "punctually pay [Eskom} for the ongoing
monthly supply of electricity to, and use by, its consumers other than the
breach of the court order, and has " ... consistently demonstrated its
the Constitution.
85.5 Eskom requires the assistance of the court as final arbiter to hold the
unlawful.
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85.8 At the end of July 2021, the electricity debt that Ditsobotla owed to Eskom
85.9 In terms of the financial statements attached to the affidavit of Eskom and
Rand).
Despite repeated requests and demands, and despite thereafter being ordered
and compelled by order of this court to provide the documentation sought in the
COGTA MEC's report, dated 24 August 2020, and 10 March 2021 when
municipality; and
87.3 that businesses in the municipality are failing and either closing or
88 The municipality fails to settle its outstanding water debts and has millions of
R691,783, 110.00.
water supply has become irregular and unpredictable and the municipality no
longer has the necessary skills and funds to service the water reticulation
electricity to the businesses and homes of the community of the municipality; the
premises and onto the streets; sewerage treatment plants are not properly
maintained and continue to seep raw sewerage into the Harts River which as a
the required skills and/or funds to ensure continuous and reliable refuse removal
service delivery, resulting in refuse being dumped along the roads of Lichtenburg
and dumping sites that are not adequately maintained by the municipality;
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91 The common cause facts in the first application show incontrovertibly that:
91.1 Ditsobotla is experiencing a crisis in its financial affairs and has been in
92 Based on the common cause facts in the first application, it was mandatory in
terms of the Constitution of the Republic for the Provincial executive to intervene.
Indeed, one would have expected the Provincial executive to have complied with
its Constitutional duty in this regard. This is what the Constitution in peremptory
terms requires. Instead, the state respondents to the first application opposed
93 It is relevant that in the first application, apart from technical points raised, the
intervention. The following was stated under oath on behalf of the Finance
Minister (I attach hereto marked CC18 the extract from the answering affidavit
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filed on behalf of the Finance Minister which contains the allegations set out
Municipality).
93.2 The municipality (amongst certain other municipalities) was" ... identified
emphasis)
93.3 In terms of section 136( 1) of the MFMA, upon becoming aware that there
required promptly to follow the steps set out in section 136 of the MFMA,
93.4 In making such determination section 138 of the MFMA (criteria for
"31 As this Honourable Court can see from the above, the process
takes time, but it is important to note that the process is underway and
the National Treasury will be offering support to the province to ensure
that the process is achieved and that the municipalities are back on their
feet and ready to function at full capacity."
94 With reference to the facts that I address below, and in respect of the statements
made under oath on behalf of the finance minister, addressed above, there is
94.1 either provincial executive has not taken the steps which are set out in
the affidavit filed on behalf of the Finance Minister and such allegations
are false; or
94.2 the Provincial Executive cannot and has not exercised the powers and
95 The provincial government and executive in the North West province has itself
96 All parties to the first application are ad idem that Ditsobotla has for years
experience a serious crisis in its financial affairs, and as a result is in serious and
persistent material breach of its obligations to provide basic services and to meet
its financial commitments. The aforesaid facts are further confirmed in the
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documents furnished after the filing of the answering affidavits in the first
Sakeliga delivered a notice in terms of rule 35(12) of the uniform rules of court
annexures thereto. In breach of the rules of court, and thereafter having ignored
a rule 30A notice, and thereafter in contempt of an order of this court to provide
THE CRISIS" (the "crisis report") and a document titled "BUDGET ANALYSIS
REPORT MILESTONE 2" (the "analysis report"). I attach a copy of the crisis
report hereto marked CC19 and the analysis report marked CC20.
97 The following inter alia is relevant in relation to the crisis report ("CC??" hereto):
(my emphasis)
97 .1 The content of the crisis report was "... presented, discussed and
97.2 The crisis report confirms that an " ... assessment of the seriousness of
Municipality ... was undertaken ... " (Crisis report, paragraph 1.1)
97.3 The financial position of the municipality reflects inter a/ia: "A
insolvency ... with low cash reseNes and current liabilities in excess of
assets to settle current liabilities ... " (Crisis report, paragraph 1.2)
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97.4 The financial performance of the municipality reflects inter alia: (Crisis
"Creditors payment period has been excessively above the norm for
the entire 5 financial years which indicates non-compliance with the
MFMA regulations guiding the payment of creditors which may result in
interest being charged by creditors and lawsuits being instituted to the
Municipality; resulting in fruitless and wasteful expenditure which has
been noted to be above the norm throughout the five financial
years.
97.5 The budget implementation of the municipality reflects inter alia: (Crisis
97.6 At the conclusion of the executive summary of the crisis report the
"Based on the desktop analysis of the financial ratios the indicators have
revealed evidence that the Ditsobotla Municipality is facing
significant fiscal and service delivery difficulties, which
undermines the effective and efficient performance of its functions
and mandate. More importantly these difficulties are becoming
increasingly severe and unless focused action is undertaken to
address the underlying causes, Ditsobotla Municipality will find it
increasingly difficult to perform its mandate."
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97.7 In conclusion the following is stated in the crisis report: (Crisis report,
99 The following inter alia is relevant in relation to the analysis report (CC20
99.1 The content of the analysis report was " ... presented, discussed and
was done and the municipality triggered S138 and S140 of the MFMA
for the years [2015, 2016, 2017, 2018, 2019, 2020] therefore it is a
emphasis)
bullet point)
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99.4 "Section 18(1)(a) of the MFMA states that an annual budget may only be
99.5 "... The debtors balance is continuously rising year by year with no
owed for more than 90 days and it is highly probable that they are not
going to be recovered considering the period the money has been owed
page 23)
99.6 "The available cash is not sufficient to cover payment plans entered
page 24)
99.7 "... the level of achievement of basic services provision is not being
99.9 Under the heading "SECTION 138 INDICATORS" (Analysis report, page
(h) Current Ratio below the norm over the 5 years is a material
existing condition which indicates that the municipality is likely to be
unable for financial reason to meet its obligations."
99.10 Under the heading "SECTION 140 IND/CA TORS" (Analysis report, page
"... the municipality triggered both S138 and S140 of the MFMA
therefore it is a candidate for intervention. Intervention is inevitable to
assist the municipality to remain financially sustainable." (Analysis
report, page 28, paragraph 6)
100 The following recommendations are made inter alia: (Analysis report, page 28,
"
APPLICANTS:
102 On 21 September 2022, Sakeliga was informed by certain of its supporters and
Ditsobotla that the North West Provincial Executive had proceeded to invoke
section 139(1 )(c) of the Constitution, and had called for the disbanding of the
extract from the minutes of a meeting of the North West Provincial Executive
139(1) of the Constitution, and despite the facts that I have addressed above, it
appeared to Sakeliga that the Provincial Executive had again elected to follow
105 This came as a surprise to Sakeliga and its supporters. Sakeliga was not
informed by any of the litigants in the first application, that any intervention steps
had been taken. In the light of the common cause facts in this matter, and the
fact that such voluntary intervention had repeatedly failed, this did not appear to
r-
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58
106 Indeed, as is evident from the current total collapse of the municipality, nothing
that has been done by the Provincial Executive to date, has been effective.
respondents that appear on the addressee portion of the letter, a copy of which
I attach to marked CC22. I do not intend repeating the content thereof herein
verbatim and I request the court to read the content thereof herein as if
108 The facts indicate quite clearly that a voluntary intervention in terms of section
139(1) of the Constitution is not an option, and that insofar as any Provincial
intervention has been made, the provincial executive cannot and does not
108.1 Ditsobotla does not keep full and proper records of its affairs. This has
April 2022 hereto marked CC23. Ditsobotla has also been identified as
little or no action. I attach a copy of the relevant page from the AGSA
least 2016.
General Report. However, Sakeliga has been advised that the issue has
not improved.
108.4 Municipal workers regularly face problems with the prompt payment of
municipality has still not paid employees for August 2022 due to 'cash
that salaries for September 2022 have already become due, but that
payment is unlikely.
108.5 The failure to pay employees, the lack of any presence of an appointed
administrator, if any, and the anarchy resulting from the dissolving of the
Most of the municipal staff refused to return to work. All other services,
September 2022 - as is evident from the facts that I have set out already.
108.7 The municipal offices have been closed, and no one is supervising the
municipality.
equitable share.
108.9 Ditsobotla remains in breach of its contractual and public duty to pay
have already attached the most recent Eskom account that I have in my
situation is dire.
now reached new heights, and the failure to deliver basic municipal
Ditsobotla have become extreme. I refer the court in this regard to the
facts that I have set out under the heading "PURPOSE OF THE
108.11 Should any of the facts set out in this affidavit be denied by a respondent,
loco which will show unequivocally the desperate and dire situation, and
109 The complete collapse of the municipality and the complete failure to provide any
environment.
110 It appears that there is a dispute between the three levels of government: the
national executive stated under oath that a mandatory section 139(5) intervention
will be embarked upon and is necessary. The stalemate, disputes and loss of
leadership has led to a situation where the people and community of Ditsobotla
are suffering and experiencing severe prejudice. It is their rights which are being
breached on a daily basis, and their constitutional rights which are being
infringed. It is urgently necessary for the courts to step in and provide an effective
remedy.
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without a remedy. I respectfully state that this is an exceptional case that cries
The flagrant breach of the state's positive constitutional duties requires the
112 The current collapse in municipal government at Ditsobotla has shifted the need
emergency. The main features of the crisis in Ditsobotla are (1) the severe and
mandatory intervention has been invoked, the complete failure on the part of the
section 139(5) of the Constitution), (3) the severe cash-flow problems facing the
municipality, and the subsequent failure to pay employees, Eskom and the
relevant Water authorities, (4) the closing of the municipal offices, (5) the failure
services can continue and (6) the dispute between the municipal council and the
province.
113 In the letter of 23 September 2022, Sakeliga requested an urgent meeting with
from government:
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failing and/or refusing to do so, that the national executive impose urgent
Constitution;
2022;
114 Over the weekend of 24 and 25 September 2022, Sakeliga was placed in
possession of:
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114.1 a letter from the Finance MEC to the Mayor of Ditsobotla dated 19 June
follows:
"This serves to inform you that the introductory of the intervention team
will conduct the status quo assessment. The purpose of the status quo
assessment is to identify the municipalities that are on financial crisis in
line with the provisions of chapter 13 of the MFMA and subsequently
placed under mandatory intervention in line with section 139 (5) (a) and
(c) of the Constitution read together with section 139 of the MFMA."
114.2 a letter from National Treasury dated 2 September 2022 confirming that
the equitable share to Ditsobotla was withheld. I attach a copy of the letter
115 On Monday, 26 September 2022, the Kriek Wassenaar and Venter ("KWV")
of the respondents (the "State attorney") stating in essence that the requested
meeting" ... is short notice and therefore impractical ... " and committing to revert
" ... as soon as practically possible with a date of the proposed meeting." I attach
a copy of the email hereto as annexure CC27. The demand for undertakings
116 Accordingly, KWV responded on the same day by email a copy of which I attach
You will note from the contents of the letter that our client deems the
matter to be of a most severe nature. The urgency of the matter requires
an urgent response. Refusal to urgently deal with the case is most
concerning to our client and will most Iikely result in urgent litigation
between the parties. Our client has appointed senior counsel to attend
to the drafting of an urgent application.
We would, of course, prefer to avoid urgent litigation, but that will require
that your clients urgently start meaningfully engaging with our client.
Refusing our invitation is at your clients' own peril. Urgent events result
in urgent letters with urgent demands. The urgent situation in Ditsobotla
has not been convenient for anybody.
Our letter does not only require a meeting. The letter also seeks various
urgent undertakings from the government to avoid litigation. Your e-mail
under reply has failed to respond to the undertakings sought.
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Our instructions are that the matter in Ditsobotla has further deteriorated
over the weekend. Your lacklustre response forces us to proceed with
an urgent application."
117 On 27 September 2022, the state attorney responded by email, a copy of which
I attach hereto as annexure CC29. In the email, the State attorney indicated that
their instructions were to hold a meeting with Sakeliga and interested parties
" ... It is our understanding that the undertaking you are seeking from our
Clients have been complied with:
2. Our client does not share your clients' view that they have already
complied with the demands in our letter. Our primary concern is with the
failure to implement mandatory section 139(5) intervention. Unless the
required mandatory intervention has since been implemented, your
clients continue with voluntary intervention under circumstances where
mandatory constitutional intervention has become an urgent imperative.
Furthermore, our client requires the immediate deployment of an
administrator to take control of the municipality and to ensure that basic
service delivery is restored. Even the undertaking that the administrator
will meet with our client has been qualified.
6. Your clients' position that the financial officer must pay employees
screams a Jack of appreciation of the current crisis. Our client has been
advised that the municipal offices have remained closed and that there
is no money to pay employees. The withholding of the equitable share
under these circumstances, especially considering the delay in
appointing and deploying an administrator, is a major contributor to the
current constitutional crisis.
"
118 In the light of the state respondents undertaking to urgently engage with
I attach hereto as annexure CC31. In addition, on the same day, KWV directed
a letter to the state attorney a copy of which I attach hereto as annexure CC32.
out that there was one issue that was of such urgency that it could not await the
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120 To date of this affidavit, the respondents have yet to respond to any of the issues
121 On 28 September 2022, KWV provided to the State Attorney a list of delegates
who would be attending the meeting. The list included various representatives
from Sakeliga, the CGGSJ, KWV, business and residents in Ditsobotla. A copy
122 On 29 September 2022, Sakeliga was furnished with a letter from the Finance
Minister to the Premier, a copy of which I attach hereto as annexure CC34. This
was the first time that Sakeliga had sight of this letter which is of fundamental
importance. As is apparent from the letter, the letter was copied to all those listed
on the last page of the letter, including various of the respondents in the first
respondents have never to date disclosed the existence of this letter which
required. I request the court to specifically have regard to the content of the letter
which exposes urgency of intervention in Ditsobotla since at least 2021 and the
for the applicants and representatives from the government. A copy of the digital
attendance list is attached as annexure CC35. Mr Wassenaar from KWV led the
discussion on the part of the applicants and the community. The following
service delivery and specifically the major issues facing the community in
has had concerns regarding the direction Ditsobotla was heading for
some time, but that the municipality had now entered an acute and
intolerable phase over the recent weeks. He stressed that the applicants
and their supporters would prefer to avoid litigation, but that the
124.3 Mr Wassenaar made the following statements that are important to this
application:
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124.3.1 "We are not seeking a complete recovery within a day, but we
since 23 September and we are not of the view that any proper
124.3.2 "We have got people driving around already with water
specifically for us at this stage is the most urgent crisis, but also
riderless municipality."
as we go?"
of the municipality.
124.5 Mr Mogale confirmed that the reason for the withholding of Ditsobotla's
share could only occur once the administrator has sorted out the bank
unlikely that the administrator would take immediate control, due to the
124.6 In regards to the issue of water, Mr Mogale made the following statement:
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124.8 Mr Ramagaga confirmed that the province was aware of the water issue
124.9 Mr Ramagaga then informed the meeting that Ditsobotla is already under
team had been appointed and that they are working with the office of the
point out that was the first that KWV or Sakeliga had ever heard that
application had ever whispered a word about this. If true, then this
cannot exercise the powers and functions imposed under section 139(5)
the undertakings sought by Sakeliga in their letter, and the requests made
the following:
It is not acceptable for legislation and barriers to stop people from having
basic services and stop government from effectively intervening. And we
would like government to please meet over the weekend and today and
come back to us Monday morning with a response."
125 After the meeting on 30 September 2022, KWV forwarded a letter to the State
plans to ensure the return of basic service delivery in Ditsobotla. The applicants
126 To date of this affidavit and to my knowledge, the administrator, if duly appointed
as was alleged:
126.2 Has yet to be deployed to Ditsobotla, alternatively has yet to take effective
126.3 Has yet to take control over the supply of basic services to the
communities in Ditsobotla;
126.4 Has yet to ensure the supply of potable water services to the communities
in Ditsobotla;
126.5 Has yet to contact the applicants to discuss or inform them of the
126.6 Has yet to ensure the reopening of the municipal offices and the return of
municipal employees.
127 The applicants have no alternative but to launch the present application.
128 In the event that the court may find that certain of the relief sought herein is
interdictory in nature, I respectfully state that the applicants have made out a
case for an interdict. Whilst the applicants seek an interim order in these
proceedings, pending the resolution of the crisis in the financial affairs of the first
respondent and the securing of the ability of the first respondent to meet its
obligations to provide basic services, I respectfully state that the applicants have
in fact made out a case for both final and interim interdictory relief.
The Right
129 The community of the municipality, including the members of the applicant, have
made out a case for a clear right, including the clear constitutional right to the
provision of basic municipal services, and the further clear rights addressed
municipality, including the members of the applicant, have a right to require the
130 The municipality has the constitutional duty to ensure that there is proper and
effective service delivery within its municipal area. When a constitutional crisis
prevails, as it does in the municipality, the provincial executive and the National
executive have a duty to step in and to ensure that the rights of the community
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the members of the applicant, have the right to require such state respondents
municipal services.
131 The community of the municipality, including the members of the applicant, have
132 Each of the first applicant's members within the municipal area of the municipality
obligations that they have, constitutes illegal conduct. The applicants have a right
to prevent such illegal conduct. Each of the business owners has the section 22
entails that these basic rights ought to be advanced by the municipality providing
133 Sakeliga has a clear right, on behalf of its members residing within the
jurisdictional area of the municipality and in the public interest, and the applicants
have a clear right to enforce their rights in terms of the relief sought in the notice
of motion.
134 The members of the first and second applicants, as well as the community of the
municipality, including the third applicant, his family, business and employees,
have suffered and continue to suffer breaches of their fundamental rights. The
current constitutional crisis within the municipality has escalated such harm to a
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138 I respectfully state that the balance of convenience favours the granting of the
No alternative remedy:
139 The applicants and their supporters have done all within their power to seek an
basic municipal services within the municipality. They have no alternative remedy
140 The Constitutional failures of the municipality are wide ranging, unlawful, and
persistent. The facts in this regard have been addressed in the body of this
affidavit already.
141 The conduct and omissions of the municipality have breached and continue to
142 Without derogating from the aforesaid wide-ranging breaches that have been
the right to have access to sufficient water is currently being breached and
environment. In terms of section 156 (1) (a), read with Schedule 48 of the
sanitation services limited to potable water supply systems and domestic waste-
water and sewage disposal systems." The fundamental right to inter a/ia dignity
the provision of further basic municipal services. It is inconsistent with the right
to dignity to have to live without access to sufficient water, sanitation, and basic
municipal services.
143 The municipality, as a result of a crisis in its financial affairs, is in serious and
persistent material breach of its obligations to provide basic services and to meet
144 The contention on the part of the state respondents made during the 30
September 2022 meeting that Ditsobotla has been under section 139(5)
cannot or does not or does not adequately exercise the powers and perform the
144.1 the provincial executive has failed since November 2021 to impose a
144.2 the provincial executive has failed since November 2021 to impose a
financial commitments.
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144.3 Despite request no recovery plan has been provided, and as is evident
from the meeting held on 30 September 2022, there does not appear to
be any plan at all to address the constitutional crisis, and specifically the
144.4 the provincial executive has failed since November 2021 to provide the
any such measures have in fact been put in place, these have quite
has failed to take any required steps in this regard. The provincial
give effect a recovery plan to provide for the continued functioning of the
municipality.
144.5 The provincial executive has failed since November 2021 to take
that the municipality cannot or does not otherwise implement the recovery
plan.
144.6 Insofar as any such mandatory steps may have been taken, the facts and
145 Based on the information available to me, the provincial executive has failed
145.1.1 to determine the reasons for the crisis in its financial affairs;
urgency; and
145.2 to consult the mayor of the municipality to obtain the municipality's co-
URGENCY:
146 The urgency in this matter lies in the fact of the recent total collapse of the
Ditsobotla municipality and the disruption and failure to provide basic essential
147 The application seeks to address the most urgent and detrimental problems in
148 Fundamental human rights are being seriously breached on a daily and ongoing
basis. The facts in the body of the affidavit demonstrate the urgency of the matter,
and those facts shall be relied upon in advancing the case that this matter ought
149 The community of the municipality, including the people and children in the
jurisdictional area of the municipality, schools and businesses, and some of the
150 The crisis has reached a point where the health and safety of the community of
and safety - people are becoming sick due to the complete collapse of the
municipality and the health hazards that have ensued based on the complete
151 Children and the vulnerable are directly affected. The crisis has led to a situation
where children are forced to walk miles with heavy buckets and vessels to collect
water. Schooling is affected. The dignity of all is seriously impacted. The crisis
152 The situation is such that, absent an intervention, thousands of ordinary people
stand to suffer irreparable harm. The situation has led to lawlessness, to vigilante
gangs exploiting the collapse, and to the break down of law and order. Even the
respondents cannot honestly contend that the matter is not extremely urgent. On
153 Both Part A and Part B of the notice of motion are urgent. However, Part A is
particularly urgent. I refer to and incorporate herein the facts set out under the
attached hereto that deals with the water crisis. It is a matter of days before the
reservoirs in the municipality run out of water. There are already large areas and
fundamental rights of the community are being directly infringed in a serious way.
The breach of the right to water impacts the right to dignity but in fact also the
right to life. The factual consequences of such a breach are real and terrible -
water is required for life; water is required for sanitation and health; water is
required for a safe environment. From businesses that cannot run, cannot serve
infant that needs water to sanitise bottles, cleanse her infant and make formula
safe to drink- the crisis is urgent and the matter is of extreme urgency. The real
life factual examples (all of which I cannot set out in this affidavit) of the
consequences of the water crisis are vast and extremely prejudicial and harmful.
Urgent intervention is required. Ironically the solution to this crisis is not very
0107
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this matter, people suffer and shall continue to suffer irreparable harm.
154 I respectfully request the court to condone the short time periods afforded for the
filing of papers in Part A, and any non-compliance with the uniform rules and the
relevant practice directives of the urgent court. I respectfully state that the hearing
of Part A of the application cannot wait later than the week of 10 October 2022
for hearing and determination. There are already large parts of the community
without water. The levels of the reservoirs are such that the week of by the week
people without any potable water. If the reservoirs dry up, many of those who
now have to walk kilometres to get water to drink will have no water to collect.
155 Should any of the respondents allege that the matter is not urgent, the court shall
156 In respect of Part B, the applicants have afforded the respondents as much time
For the reasons set out above, Part B of this application is urgent and I
respectfully request the court to enrol and hear Part B of the application on an
urgent basis.
157 I respectfully state that the matter is urgent. The applicants and the community
of the municipality shall not obtain substantial redress at a hearing in due course.
I respectfully request the court to enrol and adjudicate the matter on an urgent
158 Despite request and thereafter demand for immediate steps to restore water to
159 The water crisis and the facts relevant thereto have been addressed in the body
of this affidavit read together with the supporting affidavits. Further argument
160 The municipality is facing a water crisis. The rights of the people of municipality
of access to basic water supply and basic sanitation is being breached and
continues to be breached. There are already large areas without any water,
people will be without water at all. The reservoirs have not been filled and there
161 The solution to the problem is relatively simple. Practically all of the water supply
in the municipality comes from boreholes and from underground aquifers. The
water is available but in order to provide it to the residents, the pumps must be
162 Whilst the municipality has previously allowed the community to steps in and to
assist with the pumping of water, the applicants do not wish to take the law into
their own hands, and for this reason seek the consent of the court to ensure that
163 Should the court be inclined to grant such an order, which I respectfully state is
restore potable water supply through reticulation through the existing water
infrastructure. For this purpose, and to avoid taking the law into their own hands,
water reticulation system, to unlock any gates and entrances to any water
infrastructure for purposes of filling reservoirs and tanks, and the commissioning
of any necessary equipment and the conducting of any necessary work for
Ditsobotla.
164 The solution is as simple as turning on the borehole pumps, certain of which are
that the reservoirs that supply the community with water are filled and running
the pumps in order to ensure that the community has at least a basic supply of
potable water.
MEANINGFUL ENGAGEMENT
165 Sakeliga and its supporters are aggrieved by the failure by all spheres of
government to meaningfully engage with them over the last 18 months, but
166 Sakeliga's supporters are people and businesses directly affected by state
failure. Despite litigation having been initiated by Sakeliga and its supporters in
and court oversight in Ditsobotla, Sakeliga and its supporters have only been
ignored.
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167 Whilst national and provincial executives plan, the residents of Ditsobotla face
failures.
168 Not a single party to the first application provided Sakeliga the courtesy of
Sakeliga only found out about the municipal collapse in Ditsobotla when
of the municipal offices and the unlawful debt-collection activities being employed
169 Sakeliga and its supporters in Ditsobotla are surprised with every major
development and need to spend many hours each time to try and source
allegation made during the 30 September 2022 meeting that Ditsobotla has been
seeking similar relief, Sakeliga has continued to spend money pursuing relief in
the first application, blissfully unaware of the steps taken by the respondents.
170 In a similar vein, the CGGSJ's, that focusses on the plight of the poor and
vulnerable in Ditsobotla and the North West Province, is unable to provide any
171 Despite the engagement meeting and the request for clear undertakings and an
Government has not even been able to ensure that water supply is returned to
the town.
172 The applicants insist that government continues to engage with the applicants
the interests of the state parties, the community of the municipality and the
administration of justice.
173 The applicants and the community of Ditsobotla have valuable contributions that
meaningful engagement, the valuable contributions that the applicants can make
in attempting to resolve the crisis and issues faced are lost. Absent meaningful
engagement, the applicants and the community are left in the dark both
174 The applicants and their supporters have a right to meaningful engagement,
especially where state failures directly affect the dignity and constitutional rights
CONCLUSION:
175 An urgent remedy is called for. The municipality, the centre of the quality of life
177 The conduct of the Municipality and those responsible for such conduct does /
breached. The court is requested to grant a just, equitable and effective remedy.
178 The interests of the communities of Ditsobotla, including those of the business
community that serves such communities and that forms part of such
179 The applicants seek a proper, fitting, suitable and effective remedy in th·s matter.
COMMISS
FULL NAMES:
BUSINESS ADDRESS:
DESIGNATION:
cc, 0113
SAKELIGA NPC
REG: 2012/043725/08
DELEGATION OF AUTHORITY
I the undersigned
1) the authority to authorise and/or to institute on behalf of Sakeliga, such further legal proceedings,
which may include urgent proceedings, against the DITSOBOTLA LOCAL AUTHORITY and such
further parties as may be necessary, which includes but is not limited to appeals and/or reviews
of any matter related thereto, and/or the right to have Sakeliga appear, argue, act, support and/or
oppose any matter before any state authority or judicial body in furtherance of this delegation.
2) the authority to represent Sakeliga in all matters referred to in paragraph 1) above, and to sign
any document on behalf of and in the name of Sakeliga as its lawful representative.
3) the authority to incur costs on behalf of Sakeliga and to appoint, instruct and direct attorneys,
experts and/or consultants to assist Sakeliga with any matters relating to paragraph 1) above;
3.3.3. Die aksies neem wat binne hul uitsluitlike diskresie nodig is om die oortreding,
botsing en/of teenstrydigheid aan te spreek, wat insluit maar nie beperk is tot
die voorstel van wysigings tot die Akte en die bele van 'n spesiale
Ledeve1·gadering ten einde d;iardie wysigings goed te keur.
4.1. Ter nakoming van artikel 1 van bylaag 1 tot die Wet, verklaar die Maatskappy hiermee
die volgende hoofdoelstellings:
4.1.3. Die behoud van elendomsreg, holisties geslen, ooreenkomstig die Grondwet
van die Republiek;
4.1.4. Om, sander inperking, bydraes en skenkings te doen tot die Helpende Hand
Beursfonds en/of die Solidariteit Hetpende Hand NPC;
4.1.5. Om kollektief namens Lede, ondersteuners en die pub!iek met Owerh ede te
onderhandel en verhoudinge met Owerhede asook plaaslike, naslonale en
internasionale instansles en persone te beding te einde die doel~ellings van
die Maatskappy te bevorder;
4.2. Die Maatskappy verklaar hierrnee die volgende aanvullende doelstellings, maar sander
inperking van die algemene aard van die Maatskappy hoofdoelsrellings:
4.2.1. Om as 'n openbare sakewaghond wat fokus op die regte en belange van sy
Lede, ondersteuners en lede van dle publiek in die algemeen, op te tree;
4.2.2. Om ondersoek in te stel oor gevalle waar die regte van Lede, ondersteuners
asook die publiek oor die algemeen, geskend en/of ingeperk word, en om waar
nodig oak op te tree ten einde daardie regte te beskerm of te bevorder.
4.3. Die volgende magte word oak, sander inperking van die algemene magte van die
Maatskappy soos uitgeoefen Direksie kragtens die Wet, aan die Maatskappy verleen:
S>
SAKELlG A
4.3.2. Om die Maatskappy se Lede, ondersteuners en lede van die publit2li in die
uitoefen van hul belange en regte. hetsy op plaaslike, casiomde of
intern;isionale vlak, by te staan, te advi$-eer, te ondersteun en/of te
verteenwoordig.
4.3.3. Orn die publiek oor die ;ilgemeen by te staan met die bevord.?ring van hul
regte op 'n pl;i;isHkr., nasionale en internasionale vlak;
4.3.5. Om regsgedingc in tc stel, daartoe toe te tree, om sake te opponeer en/of te.
verdedlg, orn as amicus curiae in sake op te tree, dee! te neern aan appe!le,
hersienings, en orn voor enige Owerheid te verskyn, submissies te maak, te
argurnenteer, op te tree, teen te staan en/of te ondersteun.
4.3.6. Orn met die Owerhede, politieke pa1-tye, lede van die sakewere!d, die media
asook enige ander lid vein die publiek te kommunikeer, te onderhandel, iri te
clebat te tree en om ook waar nodige daardle persone en/of instansies te
voorsi~n met voorstetle, vertoe, submissies, verslae, argument en/of inligting.
4.3.7. Orn navorsing ter bevordering van hierdie doelstellings te doen asook om
inligting in te same!. staristiek op te bou, te verwerk en te publiseer;
4.3,8. Om onafhank!ike regsadvies oor enige saak wat enige doelstelling van hierdie
Akte raak, te bekom en waar nodig om ook regsverteenwoord iging aan te stel
om die Maatskappy te verteenwoordlg in die bevordering van hierdie
doelstellings.
4.3.10. Om decl te neem in die bestuur, beheer of aktiwiteite van enigr ander
organisasie wat soortgelyke daelstellings as die van ciie Maatskappv het en om
in hulle te belr., belange te bekom en/of om vennootskZ!ppe of
samewerkingsooreeni<omste met hulle aan te gaan.
4.3.11. Om enige persoan of orga11isasie te vergoed vir hul dienste gelewer a3n of
CC3
0116
RESOLUTION PASSED BY DIRECTORS AT MR. MAN DLA MPEMPE'S HOUSE ON 4TH OCTOBER 2022
PRESENT:
Mr. Strike Moyakhe [Chairperson]
Mr. Mandia Mpempe [Executive Director]
Mrs. Rebecca Sediti [Management}
Mrs. lebogang Sedidi [Administrator/Secretariat)
RESOLVED:
1) All persons with voting rights having received due notice and being present at the meeting.
2) That Mandia Mpempe is given the full and complete authority to authorise and represent the
organisation in the application against the Ditsobotla Local Municipality and various other state
departments along with Sakeliga NPC and other applicants.
3) This authority includes without limiting the generality of the authority granted, the authority to
institute, and/or oppose any application of whatsoever nature to be brought by and/or against the
organisation before any authority, judicial body, tribunal, arbitrator, mediator and/or presiding officer.
This authority also includes, but is not limited to, the authority to institute or proceed with any special
procedure in law, including but not limited to urgent applications, appeals and/or reviews of any
matters.
4) Mandia Mpempe is furthermore pursuant to paragraph 2) above authorised to sign and/or depose to
any document on behalf of and in the name of the organisation as its lawful representative and, also
to appoint and instruct the attorneys KRIEK WASSENAAR & VENTER INC who will act for the applicants.
5) Mandia Mpempe is hereby granted all necessary powers to take any such further steps and to do all
further things necessary on behalf of the organisation to give effect to this resolution.
_:;i; .. ~min!igoodgovernance,eo.za
0117
CC/+
LICHTENBURG TOWN
l[M1\ CRUSHERS9
>,hUKRAN
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0118
COLIGNY TOWN
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0119
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....
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-- -
--
ARREARS I
>90 DAYS I 61-90 DAYS I 31-liO DAYS I 16.JO DAYS I CURRENT I I TOT Al AMOUNT DUE
s24,943,1 ss.1 0.001 49,344,380.5~ 0.001 23,516,483.971 TOTAL DUE R 897,804,049.87
897,804,049.85
Account OVERDUE • Subject to Disconnection
PAYMENT ARRANGEMENT
42500000
35800000
INSTALMENT
29100000 o.oo I
ARREARS (Due lmmodimtely)
22400000
874,287,S6S.901
15700000
DUE DATE (For curren!Amount)
9000000..,____ _ _ _ _ _ _ _ _ _ _ _ ___,
j 2022-10-24
S O N D J F M A M J J A S
AMOUNT PAID
MONTH I
PAGE RUN NO IEP I
I I LATE PAYMENT CHARGES WILL BE
,~'(3
BILL GROUP
According to our records you are in breach of your electricity supply agreement (ESA) due to the
non-payment of the above account. The overdue amount as at the date of this notice is
R 347135182.09
If you have not paid or made a payment arrangement by2022-09-17 your electricity supply will be
disconnected without further notice and thereafter your ESA will be terminated.
You will be required to comply with the following conditions, before your electricity supply can be
reconnected.
1. Pay the full outstanding amount, including interest thereon;
2. Pay a reconnection fee and if applicable a new connection charge;
3. Provide an updated cash deposit or guarantee
Reconnection of electricity supply takes place during normal working hours (Monday to Friday)
and immediate reconnection of the supply after payment cannot be guaranteed.
Please make use of our on-line platforms (Alfred Our Chatbot; CS-Online or MyEskom Customer
App) to check your account balances. Alternatively contact our Contact Centre (0860) 037566 for
assistance.
Yours sincerely
Eskom Distribution
Maxwell Drive, Sunninghill, Sandton, JOHANNESBURG
PO Box 1091, JOHANNESBURG, 2001
Tel : +27 86 003 7566
www.eskom.co.za
Eskom Holdings SOC Ltd Reg No 2002/015527/30
((13
0146
002188
and
002189
2
FILING NOTICE
DOCUMENTS TO BE FILED:
002190
3
002191
4
Email: [email protected]
Ref.: Mr L Modiboa/00519/nlm/CIV
c/o MOTSHABI & ASSOCIATES
12 Havenga Street
Golf View, Mahikeng
Tel.: 018 381 8187 / 8909
Fax: 018 381 8131
Ref.: Mr P Molelekeng/T01378/CIV
(
0150
002192
I - 1-
and
002193
1-2-
NOTICE OF MOTION
TAKE NOTICE that the applicant intends making application to this Court for an order in
1. That the fifth and sixth respondent municipalities be found, in terms of Section 139
(5) of the Constitution, read with Sections 136 (4), 139 and 140 of the Local
2. That the first, second and seventh respondent's failure to implement mandatory
terms of Section 139 (5) read with Sections 136 (4), 139 and 140 of the MFMA, be
found to be inconsistent with Sections 2, 10, 24, 139 (5), 195 and 237 of the
Constitution.
3. That the seventh respondent, in the capacity as the head of the executive council
intervention as envisaged in Sections 139 (5) of the Constitution and Section 139
(5) of the MFMA and to comply with the provisions of the said legislation.
4.
envisaged in Section 139 of the MFMA and that, should the fifl'-@
That the intervention referred to in prayer 3 supra be a mandatory intervention, as
0152
002194
g I -3 -
such intervention, directing the seventh respondent, in his capacity as the head of
the executive council of the Northwest province to dissolve each of the councils of
the affected municipalities and that administrators be appointed to take over the
the third and fourth respondents be directed to forthwith, alternatively that the
seventh respondent, in his capacity as the head of the executive council of the
forthwith:
5.1. determine the reasons for the crisis in each of the affected municipalities'
financial affairs;
5.3. instruct the Municipal Finance Recovery Service of the fourth respondent
developed;
0153
002195
I' I -4 -
referred to in prayers 5.1 and 5.2 supra, together with the recovery plan
6. That the first respondent be directed to prepare a report to be filed on the court file
in this case, every 60 (sixty) days (or two calendar months) after the date of this
court order, setting out the steps taken by the respondents, as the case may be, in
recovering the fifth and sixth respondent municipalities, which report shall provide
7. The first to fourth respondents are directed to provide copies of all reports and
recovery plans prepared with reference to the recovery of the fifth and sixth
8. That, pending the proper implementation of the financial recovery plan, Advoca
entity/firm as this Court may deem fit, be appointed as a so-called special master
in respect of the fifth and sixth respondents, with the following duties:
accounts all municipal income generated from the sale of electricity and
8.2. effecting the distribution of the municipal income received and ringfenced
002196
1-s-
8.2.1. the monthly running account of Eskom and/or any other supplier
8.3. provide, within 14 (fourteen) days after each month-end, a proper account
water from the community within the municipal area of the relevant
municipality and all money paid out in accordance with prayers 8.2.1 up to
8.2.4 above.
9. That the special master shall have, in addition, the powers as set out in the
alternatively such powers as this Court may deem fit and appropriate.
0155
002197
l-6-
10. That the special master shall compile and provide a report to this Court, the
applicants, the first to fourth respondents and the fifth to sixth respondent
of the MFMA for the financial years ending 2017, 2018, 2019, 2020 and 2021,
10.2. specify every resolution passed and/or further action taken by each of the
10.3. specify every incident of non-compliance with Sections 32(2), 32(3), 32(4 ),
11. That the special master shall compile and provide a report to this Court, the
applicants, the first to fourth respondents and the fifth to sixth respondent
spending and the fifth and sixth respondent's failures to address issues raised by
002198
1-7-
12. The respondents are directed to co-operate with the special master in the
preparation and execution of the special master's duties in terms of the order, and
12.1. the special master is provided with all documents and requested required
12.2. that officials of the fifth and sixth respondents are reasonably available to
meet with the special master if so requested and provide the special master
12.3. that all requests of the special master be timeously responded to.
13. That the Court determine the remuneration of the special master and give any
further directions regarding the terms of the appointment of the special master as
14. Once the reports envisaged in these orders have been received, alternatively if
any of the respondents fails to comply with the provisions of this order, the
applicant shall be entitled to supplement these papers, amend its notice of motion
and seek such further relief as may be necessary to give effect to this order.
15. In the alternative to all the above, and should this Court find that any of the
supra, but that the remedies sought by the applicant are for some reason not
found to be appropriate, the applicant requests this Court to make an order that is
just and equttable as envisaged in section 172 of the Constitution whic~ ave a
·~~
0157
002199
1-s-
complained about.
16. That the first to sixth respondents be ordered to pay the costs of this application on
the scale as between attorney and client, jointly and severally, the one paying the
other to be absolved. Costs against the seventh to ninth respondents will only be
KRIEK WASSENAA
.... •. :: , ttorneys
in t ory application
Tel.: 012 756 7566
Fax: 086 596 8799
Email: [email protected]
Ref.: PJ Wassenaar/es/QB0616
c/o SMIT STANTON INCORPORATED
29 Warren Street
Golf View
Mahikeng
Tel.: 018 381 0180
Fax: 086 274 6253
E-mail: litiqation'[email protected]
Ref.: KRl19/0002/21
002202
Annexu re Z
a) To open, on behalf of The Ditsobotla Local Municipality and The Naledi Local
municipalities, wherein all income derived from water sales and electricity sales shall
b) To take control of and operate the newly opened banking accounts of the
municipalities, for the exclusive purpose as envisaged in 8.2 of the order of this
Court.
water, electricity and water reticulation networks within the areas of the
municipalities.
d) To incur all necessary expenditure to maintain the sanitation, storm water, electricity
e) To claim all costs, charges and other expenditure reasonably incurred by the special
master, including but not limited to travelling, telephone calls and accommodation in
the execution of the special master's duties in terms of the order of this Court, which
shall include own remuneration, as costs payable from the ringfenced rryunicipal
002203
performance of the special master's duties in terms of the order of this Court and to
defray the reasonable charges and expenses thus incurred from the ringfenced
municipal accounts.
***
' ,.
//91_.(~ ::; ~
cc 0160
HAVING HEARD ADV EGAN on behalf of the Applicant and ADV MODIKWA with ADV
DUBE and ADV MAJOKO on behalf of the Respondents and having read the Notice
of Motion and other documents filed of record;
0161
IT IS ORDERED
4. THAT: The Applicant is to set down the matter for hearing on the 23 rd & 24th
MARCH 2023 on which the main application is to be heard; and
5. THAT: The cost of the case management meeting of 07th day of SEPTEMBER
2022 is costs in the cause.
·,:.::,·,;:_~.
\. 2022 -09- 26
c.,_• NWD-NW-005
S & S Att
0162
coghsta
Coopecative Governance, Human
Sehiementz, and Trc:1dittonal Affairs
North W<>Gt Provincial Gov"""™"rrt
Rl:PUBUC Of SOUTH AFl<lCA
The Chairperson
PC on Co-operative Governance and Traditional Affairs
P,O BOX 15
CAPE TOWN
8000
Date: 24 August 2020
1. PURPOSE
2. BACKGROUND
Section 152(1) of the Constitution, stipulates that the mandate of Local Government
is to provide democratic and accountable government for local communities; ensure
provision of services to the communities in a sustainable manner; promote social and
economic development; promote a safe and healthy environment and encourage the
involvement of communities and community organizations in the matters of Local
Government. These constitutional mandates remain our foundation to put necessary
systems and controls in place if we were to change the phase of Local Government in our
province,
0163
Page 2 of 78REPORT ON THE Sl'All: Of LOCAL GOVERNMENT lN TI-IE NORTH WEST PROVINCE
Section 152(2) of the Constitution stipulates that a municipality must strive, within
its financfal and administrative capacity, to achieve the mandate as set out in Section
152(1) above.
Section 153 of the Constitution further stipulates that a municipality must structure
and manage its administration and budgeting and planning processes to give priority
to the basic needs of the community and to promote the social and economic
development of the community.
The National and Provincial Government in terms of Section 154 of the Constitution must
by legislative and other measures support and strengthen the capacity of munlcipalities
to manage their own affairs, to exercise their powers and to perform their functions.
d) Non-compllance with MFMA and other legislative conditions that led to loss and
or withholding of Equitable Share and Conditional Grants such as MIG over the
years;
Pagel of 78REPORT ON THI! STATI: OF LOCAL GOVERNMENT IN THE NORllf WEST PROVlNCE
Bf: Local Municipality with a Large Budget and Containing a Secondary City
$i, Local Municipality with a Large Town as a Core
Local Municipality with a Small Town, with relatively Small Population and Significant
,£13
·, .. proportion of Urban Population but with no Large town as Core•
.. ..
Local Municipality which are mainly Rural with Communal Tenure and with, at most, One or
Mi: Two Small Towns in their Area.
Ngak.aModiriMolema
1. C2 0 14
District Municipality
Mahikeng Local
2. 82 35 69
Municipality
Page 4 of 78RfPORT ON TI-IE STATI!! OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
Naledi Local
8. B3 10 10
Municipality
Mamusa Local
9. 83 9 18
Municipality
LekwaTeemane Local
11, 83 8 16
Municipality
0166
Page 5 of 78REPORT ON THE STATE OF LOCAl GOVERNMENT IN THE NORTH WEST PROVINCE
Kagisano Molopo
12. B4 15 29
Local Municipality
Bojanala Platinum
13. Cl 0 29
District Municipality
Madibeng Local
16, Bl 41 81
Municipality
Rustenburg Local
17. 81 45 89
Municipality
Moretele Local
18. B4 26 52
Municipality
City of Matlosana
20, Bl 39 77
Local Municipality
JB Marks Local
21, 81 34 67
Municipality
0167
P~ge 6 of 78REPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
Page 7 of 7BRf PORT ON THE STATE OF LOCAL GOVERNMENT IN THE NOR.ltt WEST PROVINCE
The table betow summarises the audit outcome of all municipalities in the North West Province for the
past seven (07) financial years to date:
04 Regressions
{.19 Nr, Xmpro•;1eme11t, receiving disclaimer audit outcomes
05 No lmprovement, st3griant in terms of receiving Qua!ified audit outcomes
02 Imprnvement from Disclaimer to Qualified
02 Audit process not yet finalised
#. Bojanala District: AFS submitted 30 Jan 2020, off-site audit currently ln progress.
#. Greater Taung: AFS submitted 30 Jan 2020, off-site audit currently in progress.
Anticipated completion date is June 2020
0169
Page 6 of 78REPDRT ON TIU: STATE Of LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
.~e~~,','.~ ~.-J:ioi,; ;: \,. '":~oiG}~iX f,iors::1,i\; ):~01'4'. ,1s:;, ;:;\~:Zllii ;14,:~ .,:~i(.'il it:;;
0 0 0 0 0 0
0 2 4 6 s 3
B 8 12 12 10 9 6
11 13 8 7 7 9 14
1 0 0 0 a 0 0
2 0 0 0 0 0 0
Total 22 22 22 23 23 23 23
:;4,//t Lekwa-Teemane 04
Page 9 of 78REPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
The District is one of four in the province, with poor rural areas, formerly situated in the
former Bophuthatswana homeland. With the population dispersed across more than 470
villages and towns in a 250km radius (approximately 50km north to south and 200km
east to west), this district presents unique management and organisational challenges.
There are five local municipalities which fall within its jurisdiction and there is largely
rural, consists of a few small towns, with Vryburg as the base of the DRSM offices.
Over past three years, the DRSM has been plagued with crisis after crisis, scandal after
scandal, ranging from total failure to deliver water and sanitation services as the Water
Service Authority to incremental decline in the governance as evidenced by the free fall
from successive Unqualified Audit Report to Disclaimer Report by the Office of the
Auditor•General.
It must be noted that since the current Council was elected in 2016, the Auditor General
Report has regressed from Unqualified to Qualified and now Disclaimer Opinion. This is
against the backdrop of DRSM having been a beacon of hope and best placed to be the
first NW municipality to get a Clean Audit, having run a record unbroken 16 Unqualified
Audit Report in the period preceding the election of the current Municipal Council.
0171
Page 10 of 7BREl'ORT ON ntE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVJNCE
The municipality will approach the next Local Government Electionson the back foot
unless the downward spiral is halted and reversed. This implies consequence
management for the officials and councillors who presided over this morass, to restore
institutional integrity and regain trust by the community.
All senior management posts are filled, with the recent appointment of Director Technical
Services,
DR. Ruth Segomotsi Mompati District Municipality Invested RlS0, 7m in VBS Mutual Bank
and lost the funds which were meant for the following critical investments:.
a) Infrastructure Development,
b) Economic Development;
c) Job Creation,
d) Free Basic Services and
e) Office Building
The District Municipality according to Auditor General in his 2018/2019 Financial Year
Report had to significantly scale back Its Rural Sanitation Programmeas a result
of lack of funding, The District Municipality has failed to provide the support to its local
municipalities as a Water Service Authority. The use of water tankering is continuing to
deplete funds which should be utilised to maintain water and sanitation infrastructure.
It should be noted that DRSMDM pays about R350 000.00 per month on office rental
when the municipality would have completed its own building thus freeing these funds
for other critical infrastructure development, investment and poverty eradication
purposes.
0172
Page 11 of 78REPORT ON THE STAT'I'. OF LOCAL GOVERNMENT lN THE NORTH WEST PROVINCE
According to Auditor General Report of 2018/2019 Financial Year, the municipality had to
enter Into a repayment agreement with National Treasury to repay the R150. 7 m, to avoid
withholding of the entire amount from the equitable share.
Consequence Management
Auditor General in his 2018/2019 Financial Year Report is stressing that even though the
Municipal Manager was suspended, no decisive action has been taken to effect
consequence management despite discipllnary board making recommendations to
Council. The Council instead of taking decisive action opted to generate a resolution to
reinstate the Munlclpal Manager.
The size of the Sewer Plant in Naledi LM was reduced by half due to loss of VBS
investment and the lifespan of the Sewer Plant was reduced by half, meaning that
government will soon be faced with the reality of having to spend much more on an asset
that should last 30 years and the District Municipality according to Auditor General in his
2018/2019 Rnancial Year Report had to significantly scale back its Rural Sanitation
Programmeas a result of lack of funding. The District Municipality has failed to provide
the support to its local municipalities as a Water Service Authority. The use of water
0173
Page 12 of 78REPORT ON THE STATE OF LOCAL GOVERNMENT IN THI! NORTH WEST PROVINCE
tankering is continuing to deplete funds which should be utilise to maintaining water and
sanitation infrastructure.
The 2019/20 MIG expenditure as at 30th June 2020 is 77%. The municipality was allocated
a total amount of R 138 393 000.00 of which R 107 090 187.00 was spent with a balance
of R 31 302 814.00
The municipality is situated in a rural area within the Dr RSM District Municipality with a
population of 102 703 as per the 2016 community survey, consisting of 15 wards. The
municipality is grant dependant as it does not have service charges, such as electricity,
water and sanitation, which results In a low income from own revenue generated sources.
Water shortage and sanitation within the municipality is a concern as the municipality has
been highly affected by draught. Landfill site powers and functions are still not cleared
between the District and Local Municipality, resulting in environmental issues not being
addressed. MEC for Cooperative Governance and Traditional Affairs will make a final
determination on the matter.
The municipality invoked section 139 (1) (b) Intervention of the RSA Constitution in
September 2018. The Intervention was as a result of governance and finance systems
failures characterised by politlcal and administrative instability and non~compllance to
supply chain management processes which impacted negatively on service delivery.
A~er a protracted resistance which lasted almost a period of 8 months, the municipality
took the Provincial Government to court to challenge the Intervention, the court ruled in
favour of the municipality. The Provincial has since applied for a leave to appeal which
0174
Page 13 of 7SREPORT ON THE STATE OF LOCAi. GOVERNMENT IN THE NORTH WEST PROVINCE
was granted by the Court. The appeal will take place as soon as the date is set by the
Court.
There are currently two (2) vacancies within senior management, i.e. Planning and
Development, Infrastructure and Technical services resulting ln service delivery initiatives
not being implemented.
The municipality has adopted an unfunded budget There UIF&W is growing and is linked
to transgression of supply chain management prescripts and lack of oversight. The
municipality has received a qualified audit opinion for the 2018/19 financial year which is
an improvement when comparing it with the 2017/18 audit opinion. According to the
audited AFS for 2018/19 financial year, the Unauthorised, Irregular, Fruitless and
Wasteful expenditure (UIF&W expenditure) stands at R676 759 704.
The following are the figures for the utilisation of Consultants by municipality:
There is a lack of operating and maintenance for internal roads remains a problem,
associated with lack of adequate operating plant and equipment. The municipality is·
experiencing dire shortage of water which exacerbated by unresolved issue of service
provision by and between the municipality and District Municipality.
0175
Page 14 of 78RE"PORT ON THE STATE OF LOCAL GOVERNMENT IN THE NOll.l'H WEST PROVINO;
This is a municipality that was placed on intervention by the provincial government (in
terms of Section 137 of the MFMA, and 139 of the Constitution) with the support of
national government. The National Council of Provinces (NCOP) supported the invocation
of section 137 of the MFMA but not Section 139 (1) (b) of the Constitution, the led to the
Provincial Government withdrawing the Intervention after a period of six months. The
municipality has during the intervention, embraced and demonstrated commitment and
support towards the realisation of the objective of the intervention.
Prior to the provincial intervention, the Executive Committee and Council were not
functional. Failure by Council to fill senior management positions within the prescribed
period has dismally affected the performance of the municipality.
During the Intervention, a number of tangibles were recorded such as filling of position
of Corporate Services, Community and Technical Services; restored stability, most of the
0176
Page 15 of 78REPORT ON THE STATE OF LOCAL GOVERNMl!NT IN THE NORTH WEST PROVINCE
· labour related challenges have been resolved. Improved Council functionality and public
participation.
Post the intervention, the municipality started to experience again political and
administrative instability. The position of the Municipal Manager and Chief Financial
Officer remains vacant despite efforts to fill the positions. The municipality resolved not
to appoint a municipal manager atter following a recruitment and appointment process.
The issue of the recruitment and appointment of the Municipal Manager has recreated
chaos ln the Council and Administration and also attracted a lot of community interest.
As a result, the municipal offices were closed for almost a period of three weeks and in
that period community couldn't access services.
MPAC has been performing its minimum statutory duties, but has regressed due to lack
of permanent support staff in the unit. There is only one support staff member appointed
to assist MPAC. There is insufficient support for MPAC to address the increasing UIF&W
expenditures. The municipality participates in the district shared audit committee.
The municipality has received a disclaimer audit outcome for two consecutive years i.e.
2017/18 and 2018/19 financial years, there is no improvement registered.
During the 2018/19 financial year, the municipality submitted its annual financial
statements late to AGSA, which Is in contravention to the legislated date which states
that AFS should be submitted to AG within two (2) months a~er the financial year end.
0177
The approved budget is not cash-backed, as a result, the municipality is not financially
viable and fails to pay its creditors and fulfill other financial commitments. This is evident
due to the fact that most of its creditors are not paid within 30 days as per MFMA
prescripts.
The municipality has not complied with the submission of section 71 reports as per
requirements of MSCOA, information on debtors and creditors age analysis could not be
verified to determine the current status. Total creditors as at the end of January 2020
amount to R127 millions of which 97 percent or R124 million is outstanding for over 90
days. The municipality is unable to implement credit control measures to recover
outstanding debts from consumers. This is justified by a total of R423 million outstanding
debtors as at the end of January 2020.
There is a costly EPWP programme which the year to date Its expenditure is at R2.5
million against the grant allocation that is Rl.6 million. Employment guidelines in this
program is grossly mismanaged. There is gross non-compliance to Supply Chain
Management (SCM) processes, wherein SCM processes are conducted manually.
The following are the figures for the utilisation of Consultants by municipality:
o 2015-16 (R2 800 000)
o 2016-17 (R2 394 823)
o 2017-18 (R2 100 000)
This clearly shows that UIF&W expenditures are not investigated and loss of money not
recovered as per the requirements of section 32 of MFMA.
The refuse removal and the cleaning of the town and townships not adequately
performed. No landfill sites at Stella and Rekgaratlhile. There is interrupted supply of
water due to lack of maintenance and non-payment for. water services. The old and
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Page 17 of 1SREl>ORT ON TIii: STATE OF LOCAL GOVERNMENT lN THE NORTH WEST PROVJNCE
This anomaly has attracted unwarranted sporadic national media coverage. Poor
expenditure of MIG which affect infrastructure development and lack of upgrade of water
reticulation systems resulting in shortages of water, also lack of installation of meters for
domestic consumption for about 9000 households, hence the municipality experience
community protests relating to water,
The following is a reflection of the MIG allocation during the 2019/20 financial year,
allocation for was R16 979 000.00, Expenditure R 10 390 566.12, % expenditure 61 %
and R 6 588 433.88 balance.
Page 18 or 78REPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
The municipality has been receiving qualified audit opinlonfor the past consecutive years,
since 2014/15.
The following is a reflection of the MIG allocation during the 2019/20 financial year,
allocation for 2019/20 was R 47 604 000, expenditure R 47 604 000, % expenditure 80%
and R 37 864 680 balance.
The following are the figures for the utilisation of Consultants by municipality:
Lack of operating and maintenance for internal roads remains a problem, associated with
lack of adequate operating plant and equipments. Shortage of water including unresolved
issue of service provision by and between the municipality and the District Municipality.
Page 19 of 78REPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
It is one of the municipalities that struggling with collection of their revenue which
impacted negatively on its financial sustainability and delivery of basic services.
The municipality remains problematic and lacks sound financial management; and good
governance. There are many on-going political and service delivery risks associated with
the instability of the municipality
The Municipality received an amount of R 7 million from their insurers to enable them to
reconstruct the municipal administration block that burned during riots in June 2017,
approximately 26months after the incident the municipal building still lay in ruins because
the funds provided by the insurer were misused and Council has failed to provide
oversight and hold those responsible for the misuse accountable, The municipality and
municipal services are therefore inconvenienced as a result of the burned building.
The municipality is facing a series of costly litigations which led to municipal assets being
attached in the past few months. Council and its newly established committees are
functional. The newly elected council participated in the induction programme facilitated
by both Cogta and SALGA. Out of five Senior Managers, three positions are vacant and
only two filled, I.e. Director Community Services and Director Corporate Services. The
positions of MM is not filled, former Administrator is appointed in an acting capacity, the
Chief Financial Officer is on suspension.
The municipality has adopted an unfunded budget, the budgeted expenditure far exceed
the projected revenue. The UIF&W is growing and is linked to transgression of supply
chain management prescripts and lack of oversight. No consequence management cases
have been concluded. Poor audit outcomes with recurrent audit findings pertaining to
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Page 20 of 78REPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
UIF&W and the municipality have not addressed them in accordance with section 32 of
the MFMA owing to lack of oversight and consequence management. The municlpality
has been receiving disclaimer audit opinions since inception. There are serious leadership
challenges to oversee effective mSCOA. The municipality is unable to honour the payment
obligation and do not get consistent support from the system vendor.
The following is a reflection of the MIG allocation during the 2019/20 financial year,
allocation for was R 15 696 000, Expenditure R 13 180 506,91, % expenditure 84% and
R 2 515 493.09 balance.
Lekwa-Teemane municipality has been under severe financial challenges in the form of
cash flow problems and inability to raise sufficient revenue which impacted negatively on
its financial sustalnabHity and delivery of basic services.
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Page 21 of 78REPORT ON THE STAT!! OF LOCAL GOVERNMENT IN THE NORTif WcST PROVINCE
The municipality remains problematic and lacks sound financial management; and good
governance. There are many on-going risks associated with the instability of the
munlclpality
This is a municipality that was placed on intervention by the provincial government with
the support of national government and the National Council of Provinces (NCOP). The
municipality has during the intervention, demonstrated inconsistent support for provincial
intervention (minimum resistant/disregard of the authority of the provincial and national
government, including Parliament).
There are serious problems in the municipality because systems have collapsed, the MPAC
and other Committees are not functional. The municipality not holding public/ community
meetings with specific reference to ward 6. Material conditions at the municipality
determine the type of intervention needed to rescue the municipality.
The divisions amongst the ANC councillors are hampering on the functionality of the
administration. The Provincial executive has taken a cautious decision to place the
municipality under section 139(1)(b) of the constitution due to collapse of systems and
poor or biased service delivery. MPAC is not functional and there's a general lack of
commitment from members. The Municipal Manager has been recently suspended by
Council, pending the disciplinary processes. All other positions for section 56/57 Managers
are filled except for the Director Technical Services.
Pag£ 22 of 78!U:PORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEsT PROVINCE:
especially households debt. Households constitutes most of the outstanding debt .at R788
million, followed by Commercials at R121 million, government R45 million and R372 000
attributed to other"'
The total outstanding creditors as at end of June 2020 amounted to R386 million, of
which R339 million is outstanding for more than a year. Total debt owed to Eskom as at
July 2020 amount to R45 482 924 and R37 459 889 is overdue for more than 30 days
period.
The UIF&W expenditure of the municipality is increasing and not dealt with in accordance
with section 32 of the MFMA. The mSCOA implementation is progressing well through the
commitment of Municipal Leadership however not all modules offered by the system have
been fully implemented. The Municipality is still highly dependent to the system vendor.
The following are the figures for the utilisation of Consultants by municipality:
Poor audit outcomes with recurrent audit findings pertaining to UIF&W expenditure and
the municipality has received consecutive disdaimers with regard to AG's reports, in the
past seven financial years has received 5 disclaimers and 1 qualified audit opinions. The
municipality maintained a disclafmer audit opinion from 2017/18 to 2018/19. The result
is indicative that there is no consequence management.
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Page 23 of 78REPORT ON THI! STATE Of LOCAL GOVERNMENT IN THE NORTii WEST PROVINCE
There instances are the cash flow situation deteriorated to an extent that the municipality
is unable to honour its financial obligations.
The conditions are real at the municipality as service delivery is skewed - the Christiana
town receiving or enjoying more advantage than the Bloemhof town as far as service
delivery is concerned.
Service delivery yellow fleet not roadworthy and very unsafe as result the municipality
has procured and announced the delivery of two new service delivery bakkies.
Furthermore, the municipality is changing from conventional to pre-paid electricity
meters. Despite all the challenges refuse collection is happening in the municipality.
Skewed service delivery in Bfoemhof and Christiana continues to be a challenge.
The following is a reflection of the MIG allocation during the 2019/20 financial year,
allocation for was R 14 793 000 and further adjusted to R10 000 000, Expenditure
R19 782 059.82, % expenditure 80% and R 5 010 940.18 balance.
The Bojanala Platinum District Municipality (BPDM) is the home of the cradle of
humankind and Is strategically located on the 'platinum belt' of the north-eastern side of
the North West province. To the north the BPDM is surrounded by Waterberg District
Municipality (Limpopo Province), Tshwane Metropolitan Municipality (Gauteng Province),
West Rand District Municipality (Gauteng Province) to the Southeast. To its south is
surrounded by Dr Kenneth Kaunda District Municipality and the Ngaka Modiri Molema
District Municipality to the west.
The Bojanala Platinum District Municipality accounts for a total population of 1.81 million,
or 44.5% of the total population in the North-West Province, which is the most populous
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Page 24 of 78REPORT ON THE STATE OF LOCAL GOVERNMENT IN THI: NORTli WEST PROVINCE
District in the North-West Province for 2018. The ranking in terms of the size of Bojanala
Platinum compared to the other District remained the same between 2008 and 2018. The
Bojanala District spans over 18 333km 2 , and has 5 local municipalities (Kgetleng~Rivier,
Madibeng, Moses Kotane, Moretele and Rustenburg) with a total of 139 wards.
The District Municipality is on the municipalities in the Province with a full complement of
senior management positions. The municipality experienced labour unrest which affected
its ability to perform constitutional obligations during 2019/20 Financial Year. Key to
labour unrest, was a failure by the Municipality to pay salaries and employee benefits due
to financial crisis.
Bojanala Platinum District Municipality has been experiencing financial crisis since
beginning of the financial year 2019/20. The financial crisis was excercebated by the
misappropriation of R134 million that was erroneously transferred to the municipality by
then Department of Local Government and Human Settlement and had to be repaid by
the District Municipality.
On the 16 th October 2019, the Council convened a special sitting to assess the situation
it found itself in. In that sitting, the Council resolved to place the Municipal Manager and
Chief Financial Officer on precautionary suspension in terms of paragraph 6 of the Local
Government: Disciplinary Regulations for Senior Managers and ultimately suspended the
two senior managers pending the disciplinary process.
The disdplinary processes has commenced after a delay due to the outcome of the
forensic investigation conducted. Council took time to meet and consider the report which
gave effect to the disciplinary process of the Municipal Manager and Chief Financial
Officer.
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Page 25 of 78111:PORT ON THE STATE OF lOCAL GOVERNMENT IN THE NORTH WEST PROVINCI:
The municipality was also without a Council Speaker for some time, thus making the
convening of meetings very hard. A Speaker was ultimately elected in October 2019,
Management of Council meetings are still a challenge to date. Council Committees for
most part of 2019 were not sitting regularly to consider regulatory reports.
The Provincial Government is currently providing support and capacity building measures
to the District Municipality through Section 154 of the Constitution. The support provided
by the Provincial Government ls in a form of an Acting Municipal Manager and the Acting
Chief Financial Officer. The Provincial Government Is also assisting the District Municipality
by preparing Financial Recovery Plan.
Creditors were outstanding for up to 180 days (some more than 6 months unpaid), due
to mismanagement of cash flows. The municipality operated on an overdraft facility in
2019. In Nov 2019, the municipality owed its creditors in excess of R80million. The
municipality currently, in May 2020, owes creditors an amount in excess of R52million
after having gone through invoices and as.sess and enter into the system. Some have
been negotiated with and payment arrangements made,
The municipality has a limited budget to support its local municipalities. There was bad
financial management by the previous Council. Over-expenditure of 100% to 300%
reported.
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Page 26 of 78R£PORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
The following are the figures for the utilisation of Consultants by municipality:
o 2015-16 (R2 100 000)
o 2016-17 (Rl 678 464)
o 2017-18 (Rl 900 000)
Poor audit outcomes with recurrent audit findings pertaining to UIF&W expenditure and
the municipality in the past six financial years has received 2 unqualified and 4 disclaimer
audit opinions. The last financial year i.e. 2017/18 the municipality received a disclaimer
which shows stagnation. The UIF&W expenditure is growing every year.
The municipality submitted the Annual Financial Statements late to Auditor General for
auditing on the 30 th January 2020, audit process is currently underway. Effectively
implemented the following modules on the mSCOA system:
• Revenue and grant management
• Procurement (SCM)
• Budget and planning
With regard to mSCOA implementation, asset management and payroll are hosted on a
sub-system. Implementation challenges include:
• Lacie of training
• Ineffective utilization of the system
There has not been any receipt MFMA Section 71 reports by the Executive Mayor which
are obligatory in terms of the MFMA to report on the finances of the municipality. The
Executive Mayor and her Executive (Mayoral Committee) has never raised the lack of
these reports to her Municipal Manager and CFO so that she is on par with the financial
affairs of the municipality. The Mayoral Committee as a collective failed in their duties to
ensure the sound financial management of the municipality.
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Page 27 of 78REPORT ON THE STATE OF LOCAL GOVERNMfNT IN THE NORTH WEST PROVINCE
If the above MFMA Section 71 reports, inclusive of the MFMA Section 52 (d) Quarterly
Rnancial reports were properly dealt with by Council, Council could have taken action to
remedy the financial situation. Council found itself in sever financial distress as far back
as March 2019. The Annual Financial Statements for the 2018/19 financial year were
never submitted by the relevant officials and this led to the municipality not being audited.
The Council should have known that the matter was unattended and causing the
municipality not to be audited for the 2018/19 FY. Gross financial mismanagement has
been identified in the Forensic Report that was tabled in Council.
The municipality is not a Water Services Authority and is not playing coordinating and /or
supporting role to its local municipalities. The District does not have resources to support
infrastructure development projects in local municipalities.
Moses Kotane Local Municipality is a category B4 Municipality located within the Bojanala
District Municipality in the North West Province. It was established after re~demarcation
of Municipal boundaries and subsequent municipal elections in 2000.
The Municipality covers an area of approximately 5220km 2 and is mostly Rural in nature
comprising 107 villages and 2 T_wo townships namely Mogwase and Madikwe. Moses
Kotane Local municipality is known as one of the best tourism attraction areas through
Sun City in the Pilanesberg as well as Madikwe Game Reserve. The municipality is striving
to promote the minerals, agricultural, tourism, Arts & Culture as their cornerstone.The
economy of Moses Kotane is mainly characterized by Tourism, Mining and Agriculture,
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Page 2B of 78REPORT ON THE STATE Of LOCAL GOVERNMENT IN THE NORTli WEST PROVINCE
owing to its location within the major tourism and mining belt of the North West province
around Pilanesberg and Sun City.
Council is fully functional and stable has ensured that planned programmes are
implemented and realized which bodes well for service delivery acceleration and other
governance. There are two vacancies for senior management positions, namely; Head of
Dept. Corporate Services and Head of Dept. Infrastructure and Technical Services. All
other Senior Management positions are filled. The Municipality is at an advance stage of
recruitment and appointment process to fill Corporate Services and Infrastructure and
Technical Director positions.
Appointment of the ICT Company fs under the investigation by the Hawks and is depleting
Council resourcesas it is expensive. There Is also a service provider appointed for fleet
management with a contract value of R 9million.
MPAC is functional and continues to sit for critical matters. The oversight report was
adopted by council in May 2020. The municipality has recently appointed support staff to
MPAC which commenced fts duties on the 1 July 2020. Council adopts MPAC
recommendatrons, but the weakness is that the adopted recommendations are given to
Management for implementation without any political oversight role by Council.
The municipality has adopted an unfunded budget as the budgeted expenditure exceeds
the anticipated revenue to be collected. As at June 2020, the total outstanding Debtors
amounted to R 1.2 billion, of which Rl.1 billion or 91 % is owed for over a year. Collection
of some of these outstanding debtors is of a concern especially households debt.
Households constitutes most of the outstanding debt at R809 million, followed by
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Page 29 of 78R.EPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVXNCE
Commercials at R220 million, government R184 million and R7 million or 6% of the debt
is attributed to other' category'
The municipality has improved from a disclaimer in 2017/18 financial year to a qualified
audit outcome in 2018/19 financial year.
The following are the figures for the utilisation of Consultants by municipality:
a. 2015-16 (RO.GO)
b. 2016-17 (R 4 09 528)
c. 2017-18 (R2 100 000)
There are serious leadership challenges to oversee effective mSCOA, The municipality is
unable to honour the payment obligation and do not get consistent support from the
system vendor. Moses Kotane is one of the 2 municipalities that have improved on their
audit opinions, from Disclaimer in 2017/18 to qualified audit opinion in 201819.
Lack of operating and maintenance for internal roads remains a problem, associated with
lack of adequate operating plant and equipment. No operations and maintenance plans
for internal roads.
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Page 30 of 78REPOR'T ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
The following is a reflection of the MIG allocation during the 2019/20 financial year,
allocation for R 149 692 000, Expenditure RlOl 331 863.51 % expenditure 68% and R
48 360 136.49 balance.
The municipality has during the intervention, embraced and demonstrated commitment
and support towards the realisation of the objective of the intervention.A brief overview
of the status quo at the municipality since the municipality was placed under
administration. The situation in the municipality can be described as stable and improving
although there are serious underlying challenges which will take a long time to address.
The damage inflicted to the municipal finances, coupled with the dilapidated state of
municipal infrastructure wHI require a complete turn-around in the way in which the
municipality is managed politically and administratively.
The intervention team was warmly welcomed by the majority if not all the stakeholders
in the municipality. To date there has been no visible active resistance to efforts to
stabilise the municipality from both the political and administrative wings of council,
includlng community structures. As this report will indicate, the community has lost trust
in the current political leadership of the municipality and the starting point in bringing
long-term stability in the municipality is to win back the community's trust.
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Page 31 of 7BREPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
There is general stability in the municipality which is characterised by: Council and
Mayoral Committee meetings as per council agenda, the majority of portfolio committees
are meeting regularly and only a few meetings are postponed, MPAC and Audit Committee
are also functional, and there is still mistrust among councillors organised labour
continuously engaged through the Local Labour Forum.
Ward committees have been established in all the forty one municipal wards and they are
functional. There is however not adequate pubHc participation as there are limited
engagement of communities in the form of community meetings. Communities regard
the municipality as corrupt and uncaring. Although there is general stability in that there
has been no labour unrest in the past eight months, the administrative wing of the
municipality is characterised by:
Low staff morale, only three of the seven senior management positions are filled. four
positions of Municipal Manager, Chfef financial Officer and Directors of Infrastructure and
Technical and Human Settlement and Planning are vacant, the organisational structure is
bloated at the top and is not aligned to the municipal functions, high number of
unresolved labour matters, blurred lines of responsibility between council and
administration, there is general trust deficit of council by communities, council seem to
be too scared to engage communities
Page 32 of 76REPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NOR.Tit WEST PROVINCE
The investigations implicated one member of the Mayoral Committee. MPAC is hitting the
wall on cases of maladministration of credit cards, Illegal debit orders in the municipal
primary bank account. There is an irregular staff appointment that needs to be
Investigated because of the allegations of flawed recruitment processes. There is a need
to conduct life style audit starting with Councillors. There are also allegations of irregular
appointments of contractors and related payments~ all contract awarded until April 2019
needs to be investigated. There is a degree of mischief in the municipality. The situation
at Madibeng LM is a cause for grave concern and caHs for the institution of Section 106
of the Municipal Systems Act {MSA) investigation.
The committee is divided into two groups wherein the minority component is supportive
of the Executive Mayor whilst the balance of the Committee (about six) are not in support
of the Executive Mayor. The Intervention Team impressed upon the members of the
Mayoral Committee to participate and honour the schedules of the Portfolio Committees
as Chairpersons of such committees has the potential to strengthen the Mayoral
Committee reports which the Administrator will from time to time table before Council for
noting and decision making when so required.
Some members hold the view that there is section 139 (l)(b) intervention and therefore
the mayoral committee must not be convened because it has no powers. There is a need
to have workshops/working sessions with MMCs and TROIKA to deal with the challenges
to the extent of ascertaining how they affect governance ·issues and to empower the
functionality of the Mayoral Committee.
The Administrator has cleared the misunderstandings and reinforced the need to respect
the legislative prescripts to both councillors and officials. There are community
intermittent projects stoppage which negatively affect the progress of certain projects.
~
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Page 33 of 78Rl!PORT ON THE 5TATf OF LOCAL GOVERNMENT IN THE NORTII WEST PROVINCE
These need urgent political intervention. The structures involved in these disruptions are
being profiled to determine the root cause of the problem so that a proper prognosis can
be instituted.
The limited capacity of MPAC and its implications on accountability and leadership. The
MPAC has not been able to do effective oversight and this has compromised the measures
to hold Councillors and officials accountable. Consequence management is thus not
implemented despite huge irregular expenditure (R130 million) and other forms of
misconduct or non-performance as well as disclaimer audit opinion of over the last three
financlal years. MPAC is unable to deal with UIF&W expenditures due to capacity
constraints.
There are Councillors who for a long time, owe the municipality for rates and services.
These Councillors remain in active service and ordinarily, must be champions of payments
for rates and services to realise the most needed revenue for the municipality. The
Speaker should have also instituted action against Councillors involved as demanded by
the Code of Conduct of Councillors {Schedule 2 of the Systems Act). There is neither
commitment to make reasonable arrangement to settle the debt, nor was there any action
' '
taken. Political Leadership and discipline is required to appreciate the roles and
responsibilities of various committees and structures of Council.
Page 34 of 78REPORT ON THE STATE 01' LOCAL GOVERNMENT lN THE NORTH WEST PROVINCE
advance of the 2021 local government elections where populism and candidacy to
elections will take centre stage. It is therefore important for councillors to hold frequent
and regular ward and sectional meetings to keep the existing gap narrower with the view
to close it completely.
Total outstanding Debtors as at June 2020 amounted to R 2.6 billion, of which R2.3 billion
is owed for over a year. Collection of some of these outstanding debtors is of a concern
especially households debt. Households constitutes most of_the outstanding debt at Rl.9
bilfion, followed by Commercials at R554 million, government at R178 million.
The municipality has been receiving Disclaimer audit opinions for the past 4 consecutive
financial years. The municipality was Identified as one of the top 10 contributors to a high
Irregular expenditure in the country during the 2016/17 financial year. There is generally
none implementation of legislative frameworks to address the UIF&W expenditures,
which leads to an annual increase. The UIF&W expenditures increased to R3 460 380 422
for the 2018/19 F/Y from R3 033 645 601 in the 2017/18 F/Y The AG has raised a finding
on illegal debit orders in the municipality's primary bank account which have not been
dealt with for more than 2 years. There are allegations of fraud and corruption including
tender rigging.
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Page 3S of 78REPORT ON THE STATE OF LOCAL GOVERNMENT IN THE' NORTH WEST PROVINCE
The following are the figures for the utilisation of Consultants by municipality:
The municipality's service delivery challenges are primarily in the provision of clean water
and reliable energy. Among others the following are the municipalfty's service delivery
st.atus: old, dilapidated and inadequate water network, poor st.ate of internal roads,
especially in villages, insufficient funding for infrastructure, vandalism of municipal
infrastructure, stoppages of projects by business forums.
Page 36 or 78R.EPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
is no operations and maintenance plan for roads and water infrastructure assets. Uneven
provision of services, poor standard of internal roads.
The following is a reflection of the MIG allocation during the 2019/20 financial year,
allocation for was R 281 797 000, Expenditure R136 221 809.70, % expenditure 48%
and R145 575 190.30 balance.
There are heightened political tensions in council and EXCO. Sabotage is prevalent in the
running of Council. Incidents of political interference in the administration are prevalent
and this accounts to disrespect for the rule law. A municipal official stole a water JoJo
tank meant to assist the community, was reported but no consequences were meted
against same.
Organizational culture is not in keeping with acceptable ethical norms and standards that
Is, employees report late for work and knock off early.There are other people in the
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Page 37 of 78REPORT ON THE STATE OF LOCAL GOVER.NMl:NT IN THE NORTH WEST PllOVlNCE
municipality who are equally implicated in the VBS scandal not only the Municipal
Manager.
MPAC needs to be reconstituted and include the representation of the opposition parties
as a sign of good practice. It also needs support staff to complement its daunting task.
It is alleged that the Mayor appointing and entertaining rented crowds / people to disrupt
operations of the municipality. The infighting among Councillors is growing and thus
affect their oversight role which then impact on service delivery.
A number of cases have been referred to the Financial Disciplinary Board for processing.
The municipality was visited by the Hawks and SIU on the appointment of an ICT service
provider through Regulation 32 of SCM regulations. The investigation report on the ICT
is finalised and shared with the municipality to implement its recommendations.
Prevalence of malfeasance during the tenure of the then Acting Municipal Manager,
resulted In the appointment of an ITC service provider, through usage of Regul?tion 32
of the National Treasury Regulations (tapping from similar appointment by Madibeng LM).
The appointment of the ITC company by the then Acting Municipal Manager, remains
Irregular and unlawful. Currently, the municipality has extended the contract of the ICT
service provider.
It also points out sharply to weak or lack political oversight, in that on a monthly basis, a
financial report is submitted to the Mayor in terms of section 71 of the MFMA. It therefore,
insinuates that the centre is not holding.
Page 3B of 78REPORT ON THI: STAU Of' LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
Statements indicates a creditors balance of R273 million, R236 millions of which relates
to Current Liabilities.
There is steep cost incurred by the municipality in the Information communicat ion
technology which could be avoided as it drains the llmited financial resources of the
municipality. The Mayor and Executive Committee do not consider and deliberate on the
monthly financial report submitted in terms of Section 71 of the MFMA. This is because
the Members of EXC0, do not report to office to play political oversight.
The disciplinary hearing report on VBS was concluded and received by council during a
special council meeting, the council has not yet acted on the report. Stagnant audit
outcomes with recurrent audit findings pertaining to UIF&W and the municipality have
not addressed them in accordance with section 32 of the MFMA owing to lack of oversight
and consequence management.
The following are the figures for the utilisation of Consultants by municipality:
a. 2015-16 (R3 900 000)
b. 2016-17 (R6 092 475)
c. 2017-18 {R4 500 000)
Page 39 of 7BR.l!PORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
in the municipality opting to run on the mSCOA system parallel to a non-mSCOA compliant
system.
Lack of operating and maintenance for internal roads remain·s a problem, associated with
lack of adequate operating plant and equipment. Shortage of water indudlng unresolved
issue of service provision by and between the municipality and the City of Tshwane.
The following is a reflection of the MIG allocation during the 2019/20 financial year,
atlocation for 2019/20 was R 114 780 000.00, expenditure R107 642 154.36, %
expenditure 94% and the balance is R 7 137 845.64.
Uneven distribution of projects, at a glance through municipal budgets and annual reports
will reveal that only few highly favoured wards is were projects of high values are
concentrated. It Is evident that one Ward has more than one project during the financial
year while some Wards do not have even one project for that financial year.
Kgetleng-Rivier local municipality Is spread over 3 973 square km of land and has 8 wards
with a population of 51 049 and 17 401 households. The municipality is required by the
Water Services Act 108 of 1997 to provlde the right of access to basic water supply &
sanitation.
Page 40 of 78REPORT ON Tl11: STATE OF LOCAL <iOVERHMENT IN THE NORTH WEST PROVINCE
There is community buy-in In the current paradigm shift in council. Although stiU tense,
no protests or disruptions have taken place of late. Resolutions register is in place
Including tracking of implementation. The municipality is prone to litigations due to
negligent decision making.
The positions of Municipal Manager, Technical and Community Services and Chief
Financial Officer are filled and only Local Economic and Corporate Services are vacant.
The process to fill the two vacant positions is awaiting Council approval. The Local Labour
Forum Is not functional due to the term of Officer Bearers of the Trade Unions having
lapsed and once processes of fresh elections are completed, establishment process shall
commence and a program of action be developed.
b) Financial Management
The Approved 2020/21 Budget is not cash-backed, as a result, the municipality is not
financially viable and fails to pay its creditors and fulfill other commitments. The debtors'
book is high and could only be serviced once the equitable share is transferred. No
outstanding payments to third party contributions.
0202
Page 41 of 78REPORT ON THE STATE OF LOCAL GOVERNMENT IN THI! NORTH WE'ST PROVINCE
The following are the figures for the utilisation of Consultants by municipality:
o 2015-16 (R2 500 000)
o 2016-17 (R1 700 000)
o 2017-18 (Rl 700 000)
The UIF&W expenditure remains not investigated owing to lack of internal capacity, thus
resulting in transgression of applicable legislation, lack of oversight and consequence
management. The municipality has thus been exposed to a mixture of, disclaimer,
unqualified two qualified audit outcomes and the last financial being a disclaimer leading
to regression. The munlclpality has maintained a disclaimer audit opinion for the 2018/19
financial year.
The financial challenges of the municipality have a potential to collapse the provisioning
of services to the Community and this might lead to a total collapse of governance.
The persistent draught has reversed all the gains with regard to water provision by the
municlpafity. Poor water conservation and water demand management strategies not In
place and this is compounded by the cracking of the dam-wall. Water provision is
adversely affected by lack of operation and maintenance of water treatment plant and
waste water treatment plant characterized by sewer spillage in the townships.
0203
Pa9f! 4:l of 78REPOl!.T ON THE STA.TE OF l.OCAL GOVERNMENT IN Ttfl! NORTH WEST PROVINCE
Lack of waste management plan and poor maintenance of landfill sites including non-
compliance of the landfill side with applicable legislation exacerbates the non-compliance
with environmental legislation. The incomplete project of waste water treatment plant
has received R Smillion financial boost from the Provincial Infrastructure Grant (PIG) and
expected completion time is 2019. Water tankering remains a key cost driver without
leaving any infrastructure legacy for the municipality.
Road maintenance of potholes is progressing well with the assist.ance from the
Department of Public Works and Roads, including grass cutting on the sides of several
roads.
The following is a reflection of the MIG allocation during the 2019/20 financial year,
allocation for was R25 847 000.00, Expenditure R 16 838 131.71, % expenditure 65%
and R 9 008 868.29 balance.
Page 43 of 78REPORT ON THE STATE OF LOCAL GOYERNM.l:NT IN THf NORTH WEST PROVINCE
There are several media leaks that have been circulating revealing a worrying situation
in the munlcipality, for instance, alleged leaked communication between the Council Whip
and Councillor of the EFF, The MPAC is performing its minimum statutory functions,
although there has been insufficient support from administration,
The municipality is currently transacting in the mSCOA chart and is able to produce
reports on the same system. Debtors balance as at June 2020 amounted to RS.6 billion,
of which RS billion or 89% is outstanding for more than 90 days.
The major contributor Is household which constitute 78% or R4.4 billion followed by at
R689 million and government at R22 million. R503 milllon is been attributed to other'
category. The total outstanding creditors as at end of June 2020 amounted to Rl.1 billion,
of which R665 million or 58% were outstanding for more than 90 days.
Eskom debt as at July 2020 amounted to R286 233 296 of which R148 497 842 is
overdue. This included the disputed balance of R100 mllllon which was referred to NERSA
for the building of the substation standard charges.
The UIF&W expenditure stands at R7 199 326 which makes the municipality to be
considered one of the top 10 contributors to UIF&W in the province.
0205
Page 44 of 78REPORT ON THE STATE Of LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
Poor audit outcomes with recurrent audit findings pertaining to UIF&W expenditure and
the municipality in the past six financial years has received 1 unqualified and 5 qualified
audit opinions. During the 2018/19 financial year, the municipality maintained the
qualified audit opinion.
Backlog with regard to road infrastructure. Potholes and street lights need attention.
The following is a reflection of the MIG allocation during the 2019/20 financial year,
allocation for was R 235 107 000, Expenditure R 224 394 872.94, % expenditure 95%
and R10 712 127 .06 balance.
All positions of senior Managers including Municipal Manager are filled. The expenditure
on personnel budget ls accounts for over 47% of total expenditure which is not
sustainable considering that the municipality is grant funded at 98% total revenue. There
is an organizational process to address the issue of high personnel budget.
0206
Page 45 of 7BREPORT ON THE STATE OF LOCAL GOVERNMENT IN TliE NORTH WEST PROVINCE
There was an lnvestigation by the Public Protector of South Africa against the
municipality. There are aggrieved employees who were favoured by the Remedial Action
of the Public Protector. A Council resolution to adopt the outcome of the report including
implementing the remedial action but to date, no progress has been registered including
reporting back to the department of COGHSTA on implementation.
MPAC is partially functional and performing its minimum responsibilities. The support
staff's contracts have been linked to the current chairperson's term of office. The
municipality will not have institutional memory should the current chairperson vacate the
office for any reason.
b) Sound Financial Management
The municipality has approved the budget that is unfunded. As a result of lack of capacity
in the Budget and Treasury Office, there is non- compliance with Municipal Budgeting
and Reporting Regulations (MBRR) .•
The following are the figures for the utilisation of Consultants by municipality:
o 2015-16 (R3 000 000)
o 2016-17 (R2 094 916)
o 2017-18 (R3 500 000)
This dearly shows that UIF&W expenditures are not investigated and recovered as per
the requirements of MFMA section 32. The municipality has been receiving Disclaimer
audit opinions for over the past 6 financial years, For 2018/19 financial year the
0207
Page 46 of 1BIIEPORT ON THE STATE OP' LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
municipality has regressed from disclaimer to adverse audit opinion. This is so because
of lack of oversight and consequence management. The municipality is one of the top
ten contributors to UIF&W in the province.
Lack of water across the district due to draught and lack of Adequate Water infrastructure
to address water shortages. The municipality disputed Sedibeng Water Board debt over
bulk supply and operations and maintenance resulted in understatement of contracted
se1Vices expenditure in the AFS.
Under budgeting of operations and maintenance of waste water treatment plant. There
is lack of business processes to deal with lack of payments and cash management,
induding lack of operational procurement plan and sound cash flow projections due to
lack of internal controls. Furthermore, there is an unfunded incomplete/abandoned
project which adversely affects service delivery, particularly on provision of water and
sanitation.
There is huge backlog of water and rural sanitation projects which are not costed due
lack of technical capacity. There Is generally lack of water conseNation leading to water
losses and loss of revenue due to illegal and unmetered yard connections in various areas
of the district roll~out the draught relief programme funded by the department of Water
and Sanitation augment the ORF through internal funding to drill new boreholes in the
next financial year.
The following is a reflection of the MIG allocation during the 2019/20 financial year,
allocation for was R 299 499 000.00, Expenditure R 264 601 047.50, % expenditure 88%
and R 34 897 952.50 balance.
0208
Page 47 af 7BREPORT ON. THE STATE OF LOCAL GOVERNMENT [N THE NORTH Wl!ST PROVINCE
There is a recent report from the Public Protector indicating that the Municipality is failing
its obligations to fulfil its responsibility of providing decent access to water and sanitation
as a Water Service Provider. Upon the interaction by the MEC responsible for COGHSTA
with the municipality, it was discovered that the decision by the provincial government
that the budget allocation of water and sanitation to its residents to paid directly to
Sedibeng Water Board, is not assisting the municipality fulfilling its obfigations.
Ditsobotla Local Municipality ls located in the Ngaka Modlri Molema District Municipality
in the North West Province and covers approximately 6500 km 2 • The municipality is
home to approximately 181 8651 people. The total number of households with access to
piped water stands at 43 162 of the total households which translates to 79%, the number
of households without access to water is approximately 6 000 based on the emergence
of informal settlements notably in Itekeng Tlhabologang and Blydeville
The appointment of Municipal Manager and that of Senior Managers had its controversies
and irregularities. The Administrator identified serious procedural flaws relating to these
appointments including the fact that as Administrator, he was not involved in the process
despite the terms of reference directing that he facilitates and lead these processes.
The Munlclpal Manager with the support of other Councillors have dismissed more than
eleven employees, most of whom were newly elected SAMWU Shop stewards. Their
dismissal happened without any disciplinary hearing and has created unnecessary tension
in the administration and Local Labour Forum.
~ .
0209
Page 48 of 78REPORT ON THE STATE OF 1.0CAL GOVERNMENT JN THf NORTH WEST PROVINCE
Only two (2) positions of Senior Managers are filled, namely the Municipal Manager and
the Chief Financial Officer, the remaining four (4) positions are vacant.
The work of the Munlclpal Public Accounts Committee (MPAC) is not properly resourced.
MPAC reports are not processed as expected by the municipal coundl. Serious and
damning allegations against key office bearers and some Councillors have not been
allowed space to be tabled.
The approved budget is not cash-backed, as a result, the municipality is not financially
viable and fails to pay Its creditors and fulfil other commitments. There are serious cash
flow challenges hence Its inability to meet its financial obligations. Section 65(2)(e) of the
MFMA states that all money owing by the municipality must be paid within 30 days of
receiving the relevant invoice or statement, unless prescribed otherwise for certain
categories of expenditure.
The ever increasing creditor book balance is a clear indication that Municipalities fail to
honour the latter section of the MFMA. The municipality owes Eskom bulk account a total
amount of R627 717 201 million of which R607 004 485 is overdue for more than 30 days
period.
Firm of attorneys have been appointed to conduct forensic investigations with regard to
the loss and embezzlement of INEP funds. A register of all UIF&W Expenditures has been
0210
Page 49 or 78REPORT ON THI: STAT!: OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
developed by the MPAC - it forms part of the Post Audit Action Plan. The Supply Chain
management unit is not given attention as the position of SCM Manager is not filled.
Municipality is still operating on the old system version of SEBATA FMS and in a process
to migrate to EMS. Municipality having internal capacity challenges to effectively
implement mSCOA.
The following are the figures for the utilfsation of Consultants by municipality:
• 2015~ 16 (R3 500 000)
• 2016-17 (R3 200 000)
■ 2017-18 (R2 900 000)
This clearly shows that UIF&W expenditures are not investigated and recovered as per
the requirements of MFMA section 32. Poor audit outcomes with recurrent audit findings
pertaining to UIF&W expenditure and the municipality in the past seven financial years
has received 6 disdaimers and 1 qualified audit opinions. The UIF&W expenditure stands
at R360 893 730 in 2018/19 financial year. The municipality has received 3 consecutive
disclaimer audit opinion from financial year 2016/17 to 2018/19. The result is indicative
that there is no consequence management.
The municipality is not collecting refuse as expected, as a result the communities have
to dispose of their own refuse. This led to residents waging violent protests.
Page SD Of 78REPORT ON THE STATE Of LOCAL GOVERNMENT IN THE NORTlt WEST PROVINCE
wherein most of the tarred roads, have informally turned into gravel roads including the
town of Lichtenburg.
Ditsobotla LM is one of the three municipalities that have spent 100% of their MIG
allocation.
This is a municipality that was placed on inteNention by the provincial government with
the support of national government and the National Council of Provinces (NCOP). The
administration started from 1 September 2018 being placed under 137 of the MFMA, on
5 December 2018 EXCO took a decision to escalate the intervention to Section 139 (1)
{b) of the constitution.
The Intervention Team started effectively with Its work during the month of March 2019
after numerous engagements with Council and Mayoral Committee in which the objective
of the intervention was outlined, including the Terms of Reference for the InteNention
Team. The delay was as a result of resistance and rejection of the Provincial Intel'Vention.
The intervention was later extended until the municipal end offinancial year, i.e. 30 June
2020.
0212
Page 51 of 78REPORT ON THI! STATE OF LOCAL GOVERNMENT lN THI: NORTH WEST PROVINCE
There is governance stability in the municipality since the provincial intervention, Council
and its committees do meet as compared to previous years where the municipality was
facing difficulties and service delivery protests. The municipality has resolved the
appointment of Municipal Manager's position.
The municipality investments with the VBS and the repossession of the White and Yellow
Fleet affected the financial position of the municipality adversely, The poor financial
position of the municipality also affected payments of staff statutory deductions such as
pension fund
Page 52 cf 7BREPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
the province, The MPAC has no capacity to address the UIF&W expenditures. There is no
permanent support staff of MPAC office, only one official seconded from Speaker's office.
Poor audit outcomes with recurrent audit findings pertaining to UIF&W and the
municipality have not addressed them in accordance with section 32 of the MFMA owing
to lack of oversight and consequence management.
The municipality has spent 100% of MIG allocation as at the end of June 2020.
YBS Investment
Mahikeng Local Municipality invested R83, 4m 1n VBS Mutual Bank and lost the funds
which were meant for the following critical investments:
a) Infrastructure Development,
b) Economic Development;
c} Job Creation,
Consequence Management
Auditor General in his 2018/2019 Financial Year Report emphasised that even though the
Municipal Manager was suspended and released from his employment contract, no
decisive action has been taken to effect consequence management against those
responsible. Lack of implementing consequence management is a direct result of lack
political oversight.
0214
Page 53 of 7BREPORT ON THE STAT!: OF LOCAL GOVERNMENT lN THE NOR.TH WEST PROVINCE
The VBS investment saga affected the stability of Council, there is no cohesion amongst
TROIKA and this affected the functioning of Council. There has been attempts to remove
the Executive Mayor, Speaker and Single whip of Council, the cause amongst others
include VBS investment.
The lack of leadership was quite glaring since Council could not seat to conduct oversight
over the Executive and the Administration thus the VBS and Kwane saga which saw
millions of the Municipality's yellow and white fleet being lost leaving Mahikeng residents
without machinery and equipment to deliver services. Non~payment of suppliers by
Mahikeng resulted In the cancellation of a contract for vehicles leased for the waste and
refuse removal. As a result all refuse removal services at the municipality came to a halt.
Maflkeng Local Municipality presented the tabled19/20 MTREF budget in full compliance
with Section 16(2) of the Municipal Finance Management Act (MFMA, Act No. 56 of 2003),
the IDP consultation did not take place as scheduled due to meetings being disrupted by
factions fighting within the Council. Therefore, the credibility of the budget could not be
determined and also if the budget is funding the prioritised needs of the community as
community consultation did not happen.
The municipality is reliant on government grants to fund its capital programmes and even
more worrisome is the fact that the funding of capital expenditure from own generated
revenue is not realistic. The tabled budget Is not funded over the 2019/20 MTREF. The
19/20 MTREF budget is not sustainable, not funded and cannot meet the financial
0215
Page 54 of 78REPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PltOVINCE
commitments of the municipality. Operating surpluses over the medium term are not
realistic and are based on overstated revenue and will not be able to address maintenance
of ageing infrastructure and funding of capital projects.
All senior management posts are filled except Chief Audit Executive and the LLF is
functional. We have noted recently with serious concern signs of regression with respect
to the functionality of EXCO.
Page 55 of 7SREP0RT ON THE STATE Of LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
The municipality received disclaimer audit opinion for 2 consecutive years, from 2017/18
to 2018/19. There is no evidence that the municipality is implementing audit remedial
plans, and recommendation of the internal audit unit as well as the MFMA Sec 166 Audit
Committee. Legislative frameworks to address the UIF&W expenditures are not
implemented which leads to an annual increase in the UIF&W expenditures.
This is evident due to the fact that most of its creditors are not paid within 30 days as
prescribed by the MFMA. Recently the municipality experienced electricity disruptions as
a result of non-payment of Eskom account. The municipality owes a total of R49 million
to Eskom as at the July 2020. Furthermore, the munldpality ls unable to implement credit
control measures to recover outstanding debts from customers.
The following are the figures for the utilisation of Consultants by municipality:
• 2015-16 (R2 500 000)
■ 2016-17 (Rl 700 000)
• 2017-18 (Rl 700 000)
Page 56 of 78REPORT ON THE STATE OF LOCAL GOVE"RNMl;NT IN THE" NORTH WEST PRO\IINCE
The persistent drought has reversed all gains with regard to water provision by the
municipality. Service delivery is adversely affected lack of operation and maintenance of
water treatment plant and waste water treatment plants characterized by sewer spillages
in the townships. There is lack of the waste management plan and poor maintenance of
landfill sites including non-compliance of the landfill sites with applicable legislation.
The role of the District municipality as a Water Service Authority, undermines the
constitutional rights to access basic services like water and sanitation.
The following is a reflection of the MIG allocation during the 2019/20 financial year,
allocation for was R 37 154 000.00, Expenditure R 19 534 522. 79, % expenditure 53%
and R 17 619 477.21 balance.
The functionality of Council and its committees is restored. They convene as per schedule.
There are instances where Council sitting is disrupted by members of the community,
Ratfou LM has a history unstable administrative leadership for the past four years where
they were not able to appoint a substantive Munlcipal Manager and Chief Financial Officer.
The municipalfty only managed appoint a substantive Municipal Manager and the Director
Technical Services.
0218
Page 57 of 78REPORT ON THE STATE OF LOCAL GOVERfll.MENT IN THE NORTH WEST PROVINCE
The positions of the CFO and other senior managers, namely Director Community
Services, Director Corporate Services and Town Planning & Development are still vacant.
The instability in senior administrative leadership has an impact on the performance of
the municipality, hence the qualified audit opinions over the past three years (2015/2016
to 2017/2018), and regression in 2018/19 financial year to a disclaimer audit outcome.
The MPAC has reported that it is not receiving sufficient support from both administration
and council. MPAC is partially functional and performing its minimum statutory functions.
The municipality has adopted an unfunded budget as the total expenditure exceeds
anticipated revenue projections to be collected, The UIF&W is growing and is linked to
transgression of supply chain management prescripts and lack of oversight. The recorded
Irregular, fruitless and wasteful expenditure amount to R121 216 763 in 2018/19 financial
year. No consequence management cases have been concluded.
Poor audit outcomes with recurrent audit findings pertaining to UIF&W and the
municipality have not addressed them in accordance with section 32 of the MFMA owing
to lack of oversight and consequence management. The municipality has been stagnant
of qualified audit opinion for the past 3 consecutive financial years, and now regressed
to a disclaimer in the 2018/19 financial year.
The following are the figures for the utilisation of Consultants by municipality:
a, 2015-16 (R2 3000)
b. 2016-17 (R 1900 000)
c. 2017-18 (Rl 700 000)
0219
Page 58 of 7BREPORT ON THE STATE OF LOCAL GOVERNMENT IN THI! NORTH WfST PROVINCE
Lack of operating and maintenance for internal roads remains a problem, associated with
lack of adequate operating plant and equipment. Shortage of water including unresolved
issue of service provision by the District municipality on water and sanitation. No
operations and maintenance plans for internal roads.
The following is a reflection of the MIG allocation during the 2019/20 financial year,
allocation for was R 29 400 000, Expenditure R6 902 041.04 % expenditure 23% and R
22 497 958.96 balance.
Page 59 of 78REPORT ON THE STATE Of LOCAL GOVERNMENT lN THE NORTH WEST PROVINO:
The municipality was placed under Administration on 2 May 2019 by the Executive
Committee (EXCO) of the Province. Toe intervention commenced on the 17th of July 2019
and expires on 30 June 2020. The intervention team started effectively with its work
during the month of July 2019 after numerous engagements with council in which the
objective of the intervention was outlined, including the terms of reference for the
intervention team. The intervention team spent a lot of time stabilizing the volatile
situation within the municipality by engaging the different stakeholders and pressure
groups across the municipality.
The intervention team has assisted in resuscitating the following governance structures:
Portfolio committees resuscitated and functional. EXCO, Council are functional and
resolution register is kept and regularly updated.
MPAC was not functional and has been resuscitated, to that end this committee has
managed to sit and completed oversight reports for the past ten financial years (2008/09
to 2017/18). The MPAC oversight reports were tabled before council on 22 august 2019.
The biggest challenge with MPAC to function effectively is the lack of complete staff
complement. The municipality does not have Audit committee. Financial Disciplinary
Board still to be appointed by Council.
Now recently the munidpality is experiencing political instability, which resulted in the
ousting of the Mayor and the suspension of the MM and the CFO??
Most of the ward committees are dysfunctional and no effective interaction with
communities done. A disjuncture between committees and departments is a challenge.
The municipal council is in dysfunctional and as such cannot provide any oversight to the
administration. The council committees are dysfunctional and the municipality is unable
to discharge on its mandate as espoused in the Constitution and key pieces of legislation.
Councillors are colludlng with officials for service providers are paying kickbacks.
0221
Page 60 of 7BREPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
Councillors and officials are frustrating municipal processes in order to benefit themselves
materially.
The municipality has adopted an unfunded budget. There UIF&W is growing and is linked
to transgression of supply chain management prescripts and lack of oversight. The results
of lack oversight led to negative audit outcomes as follows, one disclaimer opinion and
three qualified opinion. The municipality maintained a qualified audit opinion from
2015/16 to 2018/19.
The total outstanding Debtors as at June 2020 amounted to R 247rnillion, of which R225
million ls owed fur over a year. Collection of sorne of these outstanding debtors is of a
concern especially households debt. Households constitutes most of the outstanding debt
at R219 million, followed by Commercials at R24 million and government R3.6 rnillion
The total outstanding creditors as at end of June 2020 amounte<:l to R165 millions of
which R137 million is outstanding for more than a year. Total debt owed to Eskom as at
July 2020 arnount to R71 271 976 and 64 884 486 Is overdue for more than 30 days
period.
The following are the figures for the utilisation of Consultants by municipality:
a. 2015-16 (R2 500 000)
b. 2016-17 (R4 662902)
c. 2017-18 (R2 100 000)
0222
Page 61 of 78REPORT ON THE STATE Of LOCAL GOVERNMENT IN THE NORTM WEST PROVINCE
The Municipality does not utilize all ava!Jable modules on the system and opts to perform
manual transactions. There is heavy reliance on the system service provider caused by
lack of training and capacity.
Lack of operating and maintenance for internal roads remains a problem, associated with
lack of adequate operating plant and equipment. Shortage of water induding unresolved
issue of service provision by the District municipality on water and sanitation. No
operations and maintenance plans for internal roads.
The following is a reflection of the MIG allocation during the 2019/20 financial year,
allocation for was R 29 274 000, Expenditure R 22 432 476.64, % expenditure 77% and
R 6 841 523.36 balance.
Dr. Kenneth Kaunda District Municipality, which is one of the four category C (district)
municipalities in the North West Province, with a total population of 742 822 people, in
accordance to Stats SA Community Survey of 2016.
The population is unevenly distributed among the three (3) local municipalities and the
average annual growth rate of the district is 1.07% which dropped from 1.16% between
2001 and 2011 (which can be attributed to death, migration etc.).
Dr. Kenneth Kaunda district is a category C municipality situated in the southern portion
of the North West province. The district municipality has three local municipalities under
its jurisdiction namely and has devolved all of its powers and functions allocated in terms
of Section 84 of the Municipal Structures Act. The municipality retained powers and
0223
Page 62 of 78REPOA.T ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
The vacancies at senior management positions are. at Director: Community Services and
Director LED and Planning. Recruitment process was halted by the Covid-19 lock down,
but it is now activated. Other senior management positions including the Municipal
Manager are substantively filfed. MPAC is performing its minimum statutory functions, but
does not have enough capacity to investigate the UIF&W expenditures.
The following are the figures for the utilisation of Consultants by municipality:
Poor audit outcomes with recurrent audit findings pertaining to UIF&W expenditure and
the municipality in the past seven financial years has received 3 unqualified and 4
qualified audit opinions, According to the audited AFS for 2018/19 financial year, the
~
0224
Page 63 of 7BREPORT ON THE STATE Of LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
The municipality is not a Water Services Authority and Is not playfng coordinating and /or
supporting role to [ts local municipalities. Infrastructure development projects have not
been implemented, resulting in local municipality playing the role of salaries with no
developmental program.
5.1.20. Maguassi Hills Local Municipalitv
Maquassi Hills is· a category 8 municipality (established in terms of the Municipal
Structures Act, Act No. 6 of 2004) in the Dr Kenneth Kaunda District.It is bordered by
Tswaing in the north, the Free State Province in the south, City of Matlosana and the Free
State in the east, and Dr Ruth SegolTiotsi Mompati District in the west.
It is one of the three municipalities that make up the district, accounting for a third of its
geographical area. The main Economic Sectors are Agriculture (49%), domestic (17%),
community services (15%), and manufacturing (14%). The municipality has been under
severe financial challenges in the form of cash flow problems and inability to raise
sufficient revenue which impacted negatively on its financial sustainability and delivery of
basic services.
The municipality lacks sound flnancial management; and good governance. There are
many on-going risks associated with the inst.ability of the municipality
0225
Page 64 of 7SREPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PRO'\llNCE
The Municipality is spread over 4 678.4 square kilometres and has 11 wards with a
population of 82 013 and 24 on households (based on the Community Survey of 2016).
The Municipality is required by the Water Services Act to provide the right of access to
basic water supply & sanitation, hence 22 247 (92.4%) households have access to water
supply and 21 717 (90.2%) households have access to sanitation out of 24 077 total
households.
The former administrator Mr. T. Mokhatla was rejected from the onset by the municipal
council to the point where he had to be replaced by Ms. D. Tlhoaele and the team.
Similarly her team also experienced resistance from councillors in the municipality, which
resulted in three months of the intervention period being lost. Councillors were involved
in violent actiVities to challenge the intervention.
There is instability of Council characterized by infighting that led to political instability and
weak oversight. Furthermore, this has also led to nonwfunctionality of Council and its
Committees and in particular the MPAC.
MPAC ls not fully resourced with permanent support staff and tools of trade. The
institution has a back-log of oversight reports from 2008/09 to current. Lack of stability
in council and non-commitment of majority of members has rendered the MPAC
dysfunctional.
0226
Page 65 of 78REPORT ON THE STATE Of LOCAL GOVERNMf!tlT IN THE NORTH WEST PROVINCE
The recruitment and appointment of senior managers was conducted without the
involvement of the Administrator. This act borders on non-compliance to the Terms of
Reference of the Intervention. The MEC issued a directive to the Mayor for the attention
of Council, directing that they should not appoint any senior manager without consulting
the Administrator since the municipality is under Section 139(1) (b) of the constitution.
The Council disregarded the directive of the MEC and continued with the appointments.
Only two Councillors disassociated themselves from the whole council process of
perpetual defiance. Section 106 of the Municipal Systems Act was invoked and the report
was submitted to the office of the Mayor for tabling In Council, but to date it's still pending
to be tabled in Council.
The report resulted in some of the senior officials and the Mayor being implicated in
wrong doing, especially wlth regard to misuse of municipal vehicles. Public participation
at Ward level has completely collapsed, and this is a recipe for violent public protests.
The municipality has approved the budget that is not funded, this mainly of the fact that
the municipality has projected to have .a positive net cash from operating activities
without factoring in all arrangements in place with creditors. The approved budget is not
cash-backed, as a result, the municipality is not financially viable and falls to pay its
creditors and fulfil other commitments. The total outstanding creditors as at end of June
2020 amounted to R242 million, of which R201 million or 76% were outstanding for more
than 90 days. Eskom debt as at July 2020 amounted to R 38 524 785 of which
R29 336 967 is overdue for more than 30 days period.
0227
Page CSII of 7BR.EPORT ON THE STATE Of LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
The total outstanding Debtors as at June 2020 amounted to R 1.Sblllion, of which R1.4
biliion or 95% is over 90 days. Households constitutes most of the outstanding debt at
Rl.4 billion, followed by commercial /business R60 million, government RU million
The UIF&W expenditure stands at Rl 089 367 513 for 2018/19 which makes the
municipality to be considered one of the top 10 contributors to UIF&W in the province.
With regard to mSCOA compliance - there are serious leadership challenges to oversee
mSCOA implementation.
In the past seven financial years the municipality received 4 disclaimers and 3 qualified
audit opinions, for 2018/19 financial year, the municipality maintained a disclaimer audit
outcome.
The communities of the municipality could go for a long period of up to three weeks
without water. The water crisis was reported as early as May 2019 and to date the
situation is still to be addressed in totality. Service delivery is adversely affected by lack
of operation and maintenance of water treatment plant and waste water treatment plant
characterized by sewer spillages in the townships.
There is lack of plan for waste management and poor maintenance of landfill sites. There
is also poor water conservation and water demand management strategies.
The following is a reflection of the MIG allocation during the 2019/20 financial year,
allocation for was R 28 209 000.00, Expenditure R 27 164 239, % expenditure 96% and
R 1 044 761 balance.
0228
Page 67 of 78REPORT ON THE STATE Of LOCAL GOVERNMENT 1111 THE NOR.TH WEST PROVINCE
This has negatively affected the economy of the municipality resulting in some areas
being as distressed mlnlng towns, The job losses have increased poverty and ability of
households and businesses to pay for municipal services. The municipality in current state
remains financial not viable due to low collection rates and increasing debt book which
has a direct impact on service delivery
The City of Matlosana have been having challenges dating as far as 2017. The Mayoral
Committee is divided and is not coherent, including TROIKA. Some Councillors are a
grouping of the Speaker and others are a grouping of the Executive Mayor.
The municipality continues to experience great instability in that there's been a huge
involvement of criminal elements which threaten both the functionality of the municipality
0229
Page 68 of 7BREPORT ON THE STATE OF LOCAL GOVERNMENT lN THE NORTH WEST PROVINCE
and the council proceedings. A number of councilors have reported on many occasions
how they are under threat and are not able to exercfse oversight or even interrogate
council matters without being intimidated,
After the concerted effort by the MEC to strengthen Council, the following occurrences
took place in the municipality; it was reported that council sat to discuss the performance
report of the Accounting officer, of which a number of thugs were bussed into that
meeting and the council sitting was disrupted with councillors being poured with water
while in council chambers.
There was a council meeting that took place in which the MPAC tabled its oversight report,
upon deliberations by council on the report the council resolved to put the Municipal
Manager on precautionary suspension given the financial misconduct allegations.
The Executive Mayor was ssubsequently instructed by Council to inform the Municipal
Manager of Its decision and further resolved that the Executive Mayor should write to the
Municipal Manager within seven days informing him of the decision. It is alleged that the
Executive Mayor did not oblige to that council resolution and instead a council meeting
was convened by the Speaker at a later stage and reversed the decision arisfng from the
minutes.
As a result of the above there was a removal of some members of the Mayoral Committee
by the Executive Mayor. Council is currently kept in the dark about the precautionary
suspension of the Municipal Manager as the Executive Mayor elected not to implement
the Council resolutions, and Is working in cahoots with the Speaker to undermine the
authority of council.
Page 69 of 78REPORT ON THE STATT. OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
The approved budget is not cash-backed, the budgeted expenditure exceeds anticipated
revenue to be collected. The tot.al outstanding creditors as at end of June 2020 amounted
to Rl.3 billion, of which Rl billion or 76% were outstanding for more than 90 days period.
Eskom debt as at 31 July 2020 amounted to RS24 516 492, of which R417 901 942 is
overdue for more than 30 days period. The municipality is not financially viable and fails
to pay Its creditors within 30 days period.
The Ulf&W expenditure stands at RS 316 108 187 which makes the municipality to be
considered one of the top 10 contributors to UIF&W in the province.
The following are the figures for the utilisation of Consultants by municipality:
o 2015-16 (R4 800 000)
o 2016-17 (R4 300 000)
o 2017-18 (R4 500 000)
Improved audit outcomes is indicative that the municipality is in the right direction with
regard to oversight and consequence management. The municipality in the past seven
financial years has received 1 disclaimer and 4 qualified audit opinions. It has regressed
from unqualified audit opinion in 2017/18, to qualified audit opinion in 2018/19. The
Mun!cipa'I Manager is currently is currently facing criminal charges and Council has not
been able to process this matter in line with the spirit of the relevant legislation.
0231
Page 70 of 78REPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
The following is a reflection of the MIG allocation during the 2019/20 financial year,
allocation for was R 87 489 000, Expenditure R 52 721 954.28, % expenditure 60% and
R 34 767 045.72 balance.
It was established by the amalgamation of the former Ventersdorp and Tlokwe City
Council Local Municipalities in August 2016. It combines the following areas from the
Tlokwe Region: Ikageng and its extensions, Potchefstroom town, Mohadin, Promosa,
Matlwang, Leliespan/Baitshoki, Haaskraal, Turfvlei, Vyfhoek, Mooibank, Machavie,
Buffeldoorn, Miederpark, Kopjeskraal, Wllgeboom, Lindequesdrift. (Agricultural Holdings)
Rooipoortjie, Venterskroon, Buffelshoek. (Rural) Vredefort Dome. (World Heritage Site)
Vaal River. (Tourism attraction) and the rural hinterland.
Ventersdorp Region consists of a vast rural / commercial farming area as well as the
urban area of Ventersdorp, Tshing and Toev1ug and has six (6) villages namely
Goedgevonden, Welgevonden, Tsetse, Ga-Magopa, Boikhutso and Boikhutsong.
Page 71 of 78REPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCf
The Municipal Council rejected the NW EXCO resolution to invoke Section 139(1) (b) and
accordingly approached Mmabatho High Court on an urgent basis to review and set aside
this decision. The MEC of COGHSTA opposed this court application and was successful in
his argument that the matter was not urgent since the decision had been made and
communicated to the municipality a couple of months preceding the urgent court
application challenging it. In other words, the NW EXCO decision to place the municipality
under administration through S139(1)(b) remained in force until set aside successfully by
the municipality through the normal court application In which process the merits of the
matter would be considered. In effect, the invocation of S139 (1) (b) remained in force.
Accordingly, the MEC COGHSTA, instructed the Administrator to resume his duties as per
the Terms of Reference and submit monthly progress report on the terms of reference.
The Administrator obliged and resumed his duties as there was legal certainty and clarity.
The municlpal council, however, defied the court ruling and resolved to not accept being
placed under administration.
Since the application by JB Marks Council to set aside Provincial EXCO resolution on
urgency was dismissed, the application was enrolled again for hearing in the ordinary
course which was initially set down in the court roll of 28 February 2020. The matter was
removed from the roll by the Municipality without consulting with the Provincial
Government. The matter is again enrolled on the court roll and ls set for hearing on the
31 51 July 2020.
Page 72 of 78REPORT ON TI-IE STATE OF LOCAL GOVERNMEIIIT IN THE NORTI-1 Wl::ST PROVJNCE
Present at this meeting with the Deputy Minister COGTA were MEC COGHSTA, Executive
Mayor and Municipal Manager of JB Marks LM and the Administrator. It becomes
fundamentally important to observe tha~ the municipality have been constantly defiant
to the authority of the Provincial Government with respect to the implementation of the
Provincial Intervention.
The MEC of COGHSTA made efforts again during the month of April 2020 to engage with
Municipal Leadership to reconsider their stance with regard to Provincial Intervention. A
meeting was coordinated for 3 and 6 April 2020 with Members of Troika, Members of
Mayoral Committee and Municipal Manager. Both meetings couldn't materialise, the
Municipal Leadership requested a postponement to a later date due to COVID-19.
The department has therefore agreed to the postponement. Finally the meeting took
place on 5 May 2020 in which the MEC and the Deputy Minister emphasised that the
Municipality is still under administration until the Provincial EXCO resolve otherwise, but
should be noted that the Mayoral Committee is not in support of the Intervention and
requested that only Council can rescind its decision to reject the intervention.
The department sought a legal opinion from the Senior Counsel representing EXCO in the
matter between provincial governments V/S JB Marks LM regarding implementation of
Section 139 (1) (b). The legal opinion suggest that in an instance that the effective date
of intervention is postponed, and such decision is challenged In the High Court, the
municipality has prospects of success.
Page 73 of 78REPORT ON THI: STATE OF LOCAL GOVERNMENT IN THE NORTH WEST PROVINCE
The municipality continue to give no cooperation to the Hawks and the MEC in spite the
fact that, there is empirical evidence of financial impropriety against some Councillors and
officials involving royalties paid towards the municipality by one mining house into a Trust
fund Account that is allegedly being held at Wlllem Coetzee Attorneys. For example, there
were local and national media reports about an alleged Durban July Trip that took place
at great financial cost to the municipality.
Apparently officials who are not as per their job description part of the Sub-Directorate:
Local Economic Development were part of the expensive trip, monies from the Trust Fund
were allegedly paid into the personal bank account of officials and it ended up as a trip
not being value for money.
In addition, there is an amount of R 200 000.00 which was withdrawn through the
Executive Mayor purporting to assist the Non-Governmental Organisations. It is on record
that the Executive Mayor made a promise to the attorneys who are the administrators of
that the money shall be returned to the trust account later, but in vain.
Financial Governance
Council not sitting regularly as Scheduled, this is evident by the approval of the 2020/21
Budget and IDP after the legislated time frame.
Although the municipality has improved audit opinion for 2017/18 financial year from
disclaimer to Qualified audit opinion, it remained stagnant with a qualified audit opinion
for the 2018/19 financial year. The municipality was identified as one of the top 10
contributors to a high UIF&W expenditure in the country during the 2017/18 financial
~
0235
Page 74 of 78REPORT ON THE STATE OF LQCAL GOVERNMENT [N THE NORTH WEST PROVINCE
year with UIF&W expenditure of R 3 084 446 315 for the 2018/19 financial year and R2
889 876 047 for the previous financial year.
Legislative frameworks to address the UIF&W expenditures are not implemented which
leads to an annual increase in the UIF&W expenditures
Totaf outstanding Debtors as at June 2020 amounted to R 636 million, of which R478
million is owed for over a year. Collection of some of these outstanding debtors is of a
concern especially households debt. Households constitutes most of the outstanding debt
at 244 million, followed by government at 65 million, businesses R45million and
R281mlllion is classified under "other".
There is therefore a need to focus on winning the trust of the community by strengthening
council's capacity to play an oversight role and improving the image of the
municipalities as a caring. responsive and cgrruption free hlstitutions.
The inability of several municipalities to collect revenue from the provision of basic
services results in low revenue collection rate and ultimately the inability to meet
0236
Page 75 of 78REPORT ON THE STATE Of LOCAi, GOVERNMENT IN THE NORTH WEST PROVINCE
There is noti)ble liquidity risks at municipalities that are highly indebted to ESKOM,
Water Boards, Auditor General and other key creditors. Despite the hands-on-support by
the Provincial Treasury on revenue management and implementation of credit control
policies, municipalities remain stagnant. This is so because, there is political Inertia
and lack of oversight by Councils, characterised by lick of accountability to both
the higher authorities of national and provincial government and the electorate in general.
Leadership in all municipal councils, did not provide adequate political oversight and
monitoring of the c.ontrol environment, financial performance, implementation of
consequence management, oyer recurring sypply Chain Management
transgresslon1 and lack of implementation of post audit action plan. One of the key
elements that characterise the desperate governance situation is the anecdotal
eyidence of disregard for the local government applicable legislation,
unethical l@adership. disregard of dem0<;ratlc centralism, and a cylture of non-
accountability.
0237
Page 76 of 7SREPORT ON THE STATE OF LOCAL GOVl:RNMENT IN THE NORTH WE;ST PROVINCE
Page 77 of 78REPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORTlt WEST PROVINCE
Constitutional
objects of
local Sound Political Laad&r.iihlp
government Gc>od govemanco prac-tlcoa 1'1at mcilttate transporent 1
accountable and partJcipallve crectsfon--maklng and oventght
Rasp,onsivoness to communtty participaban and feedback
Choice of Technology
0239
Page 78 of 78REPORT ON THE STATE OF LOCAL GOVERNMENT IN THE NORlll WEST PROVINCE
8. FINANCIAL IMPLICATIONS
Use the budget allocated for 2020/21 Financial Year to fund the Municipal Recovery
Programme.
9. CONSULTATION IMPLICATIONS
The MEC for COGTA and PT to engage with the both political and administrative
leadership of the affected municipalities for the implementation of Municipal Recovery
Programme.
The MEC for COGTA and PT to engage with the both political and administrative
leadership of the affected municipalities for the implementation of Municipal Recovery
Programme.
11. RECOMMENDATION
It is recommended that the Provincial Executive Council mandate the MEC of
COGTA working with MEC of PT to develop a Municipal Recovery Programme focusing on
Kgetleng; Moretele; Maqquasi Hills; Ditsobotla; Mahikeng; Lekwa-Teemane; Ratlou;
Mamusa; Naledi; Dr RSM and Bojanala DM.
HON. B. MOILOA
MEC: COGHTSA
DATE: 24/08/2020
0240
ry
11
Department:
National Treasury
REPUBLIC OF SOUTH AFRICA
0241
CONTACT PERSON:
JAN HATTINGH
Chief Director: Local Government Budget Analysis,
Intergovernmental Relations (IGR)
Tel: (012) 315-5009 I Fax: (012) 395 6553
E-ma ii: ja [email protected]
national treasury
Department
National Treasury
REPUBLIC OF SOUTH AFRICA
· - ~.... \
',;: ,,
~
0242
The State Of Local Government Finances and Financial Management - As at 30 June 2019
118. Liquidity challenges are the most common manifestation of financial distress in a municipality. Municipalities with
liquidity challenges are failing at effectively delivering services, billing for services and collecting the revenue due.
Consequently, outstanding debtors are increasing, and municipalities are not able to maintain positive cash flows to
pay creditors within the thirty days'timeframe as legally prescribed.
119. Outstanding consumer debt owed to municipalities, as reported in terms of 2018/19 audit outcomes, has increased
significantly since 2011. Curremly, the outstanding municipal debt (Rl 32.9 billion as per the audited AFS for
2018/19 (Rl 15.8 billion in 2017/18)) exceeds the total amount allocated to local government through direct and
The State Of local Government Finances and Financial Management - As at 30 June 2019
indirect grants from the national fiscus (Rl 14.9 billion). While households continue to be the largest contributor
to outstanding municipal debt comprising 64.8 per cent of the total, there is wide-spread non-payment across all
customer segments.
120. Municipalities in turn owe creditors Rl 37.9 billion (audited AFS, 2018/19) (R 109.8 billion in 2017 /18). This includes all
categories of creditors and indicates that many municipalities are not paying creditors within the required 30-day
period (as per sections 65(1) and (2)(e) of the MFMA). Although it is the monies owed to Eskom and Water Boards
that has attracted most attention, cases of non-payment of other municipal creditors and suppliers have resulted in
attachment and sale-in-execution of municipal assets by the courts. In some cases, this can further undermine the
ability of the municipality to deliver basic services.
121. When diagnosing the reasoris that contribute to the municipal liquidity challenges it is prudent to holistically
examine the organisational and operational management inefficiencies. Among the audit issues raised with respect
to municipal financial management inefficiencies are weak internal controls; weaknesses and non-compliance to
policies and procedures; and fruitless and wasteful, unauthorised and irregular expenditure.
122. Causes of financial distress can be classified into:
Structural (or fixed) factors, including the erosion or interruption of the tax base, decrease in population
size, residents' socio-economic status, government resource allocation, loss of financial independence (e.g.
through reliance on government transfers), and decline in economic productivity. Structural factors are
known to be the hardest to resolve, as they are sometimes outside the municipality's control;
Organisational factors including mismanagement, transparency and labour unions power in public
administration and other political factors. Organisational factors are relatively easier to resolve because
they are often internal to the organisation. Research shows that mismanagement, one of the organisational
factors, is a major cause of fiscal distress; and
Hybrid factors, which relate rn intergovernmental relatioris and coordination. Sometimes grey areas exist in
intergovernmental relations, especially regarding roles, responsibility and accountability.
123. When National Treasury engaged the defaulting municipalities, rhe following issues were tabled for consideration as
the root causes that impact on their ability to operate:
Several municipalities with poor cash flows have adopted unfunded budgets. Unrealistic budgeted revenue
collection levels are not realised while operating costs (such as employee related costs) remain high with no
effort made to contain expenditure particularly on non-priority spending has led to persistent negative cash
balances;
Weak management of the overall revenue value chain, including tariff setting for trading services,
administering the property transfer process, and misalignment of tariffs, billings and credit control measures
with indigent policies. The local government equitable share is mainly used to fund operating costs rather
than utilised for the purpose of service delivery targeting the poorest of the poor;
Weak internal controls, risk management and supply chain management (SCM) inefficiencies resulting in
poor audit outcomes and wasteful expenditure;
The State Of Local Government Finances and Financial Management - As at 30 June 2019
Historically inadequate budget allocation for repairs and maintenance and asset management have
weakened revenue potential;
Limited evidence based financial management such as cash Aow management;
Inefficient management of electricity demand means that penalty charges are unnecessarily incurred
(fruirless and wasteful expenditure);
Payment arrangements negotiated with creditors are not subsequently provided for in the municipal budget.
It may be argued that the signed payment arrangements are merely a case of malicious compliance; and
Inadequate human resources capacity and a shortage of rechnical skills.
124. In most cases weak municipal leadership underpins these issues. Political instability, poor administrative governance
and weak financial management remains the common denominator and at the heart of the problem impacting on
the municipality's ability to deliver services as per their mandate. l<ey issues include:
Ineffective councils and governance structures that contributes to weak fiscal discipline and consequently
financial mismanagement;
An inappropriate or ineffective political-administrative interface within a municipality, with councillors
irregularly involved in administrative decisions or action, and administrators often participating in political or
factional activities;
Vacant positions for municipal managers or appointment of remporary incumbents: accounrability is
notably weaker at municipalities where the position of municipal manager is vacant or occupied by an
"acting" incumbent, as an "acting" municipal manager is less inclined to take decisions and responsibility for
actions; and
The absence of a suitably competent CFO: this presents a risk to sound financial management as it provides
opportunities for the flouting of internal controls, non-compliance to the legal framework and general
mismanagement of public funds.
125. The AG has also identified key causative factors for financial distress as the lack (or total absence) of leadership
commitment, and a management system that is almost complerely devoid of consequences for poor performance
and wrong-doing.
The State Of Local Government Finances and Financial Management • As at 30 June 2019
126. South Africa's local government financial management system has undergone a number of reforms and there has
been considerable progress. It is internationally acknowledged that South Africa has some exceptional financial
management legislation. National government has introduced changes to the local government equitable share
formula, announced multi-year allocations, and other reforms to bring predictability and certainty into the fiscal
system. However, there is still a long way to go before all 257 municipalities are fully functional and sustainable. A
multi-pronged approach that includes addressing operational inefficiencies, incompetence and governance failures
is required to ensure sound fiscal discipline in the longer term.
127. The financial management reform agenda for local government is an evolutionary process and needs to be nurtured
to maturity. Government has initiated a number of capacity building initiatives to support municipalities in achieving
this, including:
a) Implementing Minimum Competency Levels: Prescribed minimum competency levels were introduced
13 years ago for Municipal Managers, Chief Financial Officers (CFOs) and Chief Executive Officers (CEOs) of
municip,1I entities where they exist, Senior Managers, SC:M managers and Middle Managers including other
officials dealing with financial management (FM) and supply chain management (SCM). Table 21 below
summarises the provincial patterns of enrolment in the Minimum Competency Levels programme across
the regulated positions. Out of 2 747 municipal officials, only 1 565 officials meet the minimum competency
levels as at 31 January 2020. Out of 248 C:F0s 8, only 128 (51.6 per cent) have achieved minimum competency
levels. 53.7 per cent of senior managers have achieved minimum competency levels.
However, please note that the amendment to the regulation, through Government Gazette No. 41996 of 26
October 2018, allows municipalities to appoint officials that have not completed the required unit standards
and this affects the number of officials compliant with the regulation since 2007. The officials are given 18
months from day of appointment to obtain the unit standards.
~
~
ID
►
....,
0
C r-
Q, e
n
0 ~
C FS Free State 20 131 2! 2 22 9 0 65 ! 29 i 81 2 18 ls 115 ~13
Cl
o
n GTGauteng 11 91 16 I 6 11 81 16 19 I 45 i 6 3 68 50 66 47
0
<
ID
3
(R
KZN K\•,1azuiu-
54 36 2 [J 52 ,-[
_, 2 166 103 13 10 54 40 166 100
3
Nata! 3
~ ID
5'-
<1)
LIM Limpopo 25 17 1 1 26 12 0 101 43 3 21 16 I 1281 62 ~
-n
MP Moumalanga 21 13 0 0 19 I 11 I [J 0 7'}. 35 7 3 21 1:' 79 42 :r
"'':: NC 1'\orthern Cape 32 23 0 cl 3, 101 0 0 ?o I 24 19 3 19 10 68 43
0,
::,
n
~ NW No11h West 22 8 0 ol 19 sl 0 0 76 i 31 3 16 8 79 35
ID
\0 "'
0,
:;;,
::, WC ¥Ve stem Cape 30 24 0 oi 29 ~2 0 90 72 17 12 33 25 80 58 ::,
c..
'"n
::, TOTAL 253 174 23 111 248 1281 22 4 8731 469 I 93 45 298 210 937 524 -n
:r
~ 0,
::,
Mi Source: National Treasury- Capacity Building Unit n
~ ~
s:
s" 0,
::,
¾
i:=i'
b) The Municipal Standard Chart of Accounts (mSCOAJ Regula,ions were promulgated on 22 April 20i 4 and prescribes the uniform recording and 0,
l,Q
ID
D classification of municipal budget and financial inforr1;ation at a nansacrion level. All municipalities and r1;unicipal entities had to comply with the 3
D ID
2 ~
:3 Regulations by 01 July 2017.
"";?. l>
"'
mSCOA is one of the key game changers to address municipal performance failures. This standard classification framework enforces the link
..,~
0
,._
C
between planning (IDP) and the budget through the project segment and enables annual reporting and performance management linked to ::,
ID
strategic service delivery objectives. It should be noted that the mSCOA Regulations also incorporates the modernisarion ofrhe Local Government "'
!:
,D
business processes through the regulation of minimum business processes and system specifications.
Phase 5 of the reforr1; commenced on O, April 20i 7 and focus on the implementation (post 01 July 2017) and institutionalisation of mSCOA.
Notwithstanding the massive strides that has been made with mSCOA implementation and the institutionalisarion thereof in a relatively short
period of time, a number of challenges are still hampering the effective implementation of the mSCOA reform at municipalities.
Extensive engagements were held with key system providers during which the system functionality on the following modules were demonstrated
live: IDP and Budget (November 2018); SCM (February 2019); and Asset Management (June/July 20'! 9). These engagements provided National and
Provincial Treasuries with an understanding of what functionality is available on each system and what the key system related challenges are.
0246
0)1!'
0247
The State Of Local Government Finances and Financial Management - As at 30 June 2019
Although these demonstrations indicated that most of the financial systems in the market contain the
required functionality, it was evident that municipalities are not using their systems optimally. Some of the
challenges that were identified in this regard include the following:
Some municipalities have budgetary constraint/ inadequate funds to:
Purchase all the modules of the core financial system or upgrade to the Enterprise Resource
Planning (ERP) (mSCOA enabling) version of systems;
Acquire the required licences to use system solutions; and
Upgrade and maintain their servers, hardware and sohware to become and remain mSCOA
complaint.
Due to perceived non-compliance of some systems with mSCOA, a number of municipalities
are still transacting on their legacy systems that are not mSCOA enabling, while they are paying
for maintenance and support for the mSCOA enabling system that was procured. This constitutes
fruitless and wasteful expenditure;
A number of municipalities are not using all the modules of the core financial system (using 3rd party
systems) while they have procured these modules. This is once again fruitless and wasteful expenditure;
Dependency on system vendors to operate financial systems is still a challenge. Some municipalities
are not taking ownership for their own data and processes, (e.g. cleansing, testing version changes,
transaction capturing, etc.);
Weak contract management is implemented by municipalities to address non-compliance or lack of support
by system vendors. This is exacerbated when service level agreements (SLAs) are unfairly prejudiced and
protecting the system vendor but the municipality signed (therefore agreed to it) such a SLA;
Non-payment of vendors by municipalities, resulting in support services (not the access to the actual
financial system) being suspended by the vendor until payment has been received;
Information and communications technology (ICT) connectivity problems at rural municipalities' impact
on submission of data srrings to cloud/web-based solutions and the Local Government Upload Portal; and
Poor ICT internal controls and securities impact on the optimal use of core financial systems solutions.
Most municipalities are using third party systems in conJunction with their core financial management and
internal control system due to cost implications and resistance ro change.
Two years into implementation, at least 11 of the 18 systems in the municipal space (including those municipalities
with in-house systems) are complying with the minimum mSCOA requirements, while the submission rate of
financial information in the form of mSCOA data strings by municipalities are exceeding 80 per cent.
Ultimately the aim is to get to a point where all municipalities budget and transact directly in and report from
their core financial system. This will result in one version of the 'truth'where the financial performance reported to
Council will not differ from the performance information submitted to and published by National and Provincial
Treasuries. This will also reduce the reliance on consultants and system vendors to prepare municipal reports.
Further training and change management 1s required as mSCOA has not been fully embraced as yet and 1t
1s still seen as a finance reform and not a business reform and municipal offic:1als are still not budgeting and
transacting correctly.
The State Of Local Government Finances and Financial Management - As at 30 June 2019
Poor ICT connectivity and maintenance at municipalities are impacting on the implementation of rhe
mSCOA reform and there is a need for an intergovernmental ITC Working Group that looks into the ICT
infrastructure needs and challenges of municipalities.
c) Capacity building grants: R7.1 billion (for the period 2016/17 to 2019/20) and R6.6 billion (for the period
2020/21 to 2022/23) was allocated to support capacity building in municipalities to improve financial
management. However, despite this unqualified audit outcomes (both with findings and without findings)
were reduced from 147 municipalities in 2016/17 to 111 municipalities in 2018/19.
TABLE 22: CAPACITY BUILDING AND OTHER CURRENT GRANTS TO LOCAL GOVERNMENT, 2016/17 · 2022/23
Table 22 shows capacity building and other current grants to local government for the period 2016/17 and
2022/23. Among these programmes, the Financial Management Grant (FMG) was introduced in 2004 in response
to the scarcity of suitably skilled and experienced municipal finance staff, especially in rural areas. It funds among
others the appointment of financial management and accounting graduates as interns in municipalities. Interns
are sourced from a pool of unemployed regionally-based Accounting, Economics, Finance and Risk Management
graduates and appointed for 24 to 36 month periods. In 2018/19, R505 million in FMG funding was transferred
to municipalities, of which 38 per cenr was spent on the appointment of at least five interns perm unicipality; 20
per cent on upgrading and maintenance of financial management systems; 15 per cent on training municipal
officials to attain minimum competencies; and 14 per cent on the preparation and timely submission of Annual
Financial Statements.
d) Municipal Finance Improvement Programme (MFIP ///):The MFIP procured and deployed 80 technical advisors
The State Of Local Government Finances and Financial Management • As at 30 June 2019
(TAs) during the 2019/20 financial year. The increased number ofTAs placed compared to previous years was
mainly as a result of the increase in the number of municipalities supported that were classified by National
Treasury and Department of Cooperative Governance (DCoG) as financially distressed and institutionally
dysfunctional. As at 31 March 2020, the programme was supporting the following institutions and work streams:
Direct capacity support to municipal budget and treasury offices in general financial management:
23 TAs were deployed in municipalities across the nine provinces;
Direct capacity support to the 'municipal finance units of provincial treasuries: 32 TAs were placed, of
whom five provided general support. Specialist support was offered in the following game changer
areas: supply chain management (seven advisors), the Municipal Standard Chart of Accounts or
mSCOA (six advisors), asset management (seven advisors) and revenue management (seven advisors);
18 TAs were placed to provide direct capacity support to the following National Treasury Chief
Directorates: Local Government Budget Analysis, MFMA Implementation and SC:M Policy and Legal
on the six game changers (funded budgets, revenue management, mSCOA, asset management, SCM
and audit outcomes), the Financial Management Capability Maturity Model, the Municipal Financial
Recovery Service; and
Seven TAs were procured to provide programme and project management capacity support to the
officials in the MFIP project management unit.
MFIP capacity building and skills transfer initiatives support various institutional and technical areas in financial
management in terms of the Municipal Finance Management Acr and the local government reform agenda
of rhe National Treasury. While these interventions are mostly informal and non-accredited, they assist in
enhancing the practical, on-the-job skills of officials involved in municipal financial management. During the
year, 2 280 capacity building sessions were held, involving 13 603 officials.The municipal advisors conducted 948
capacity building sessions, reaching 1 507 officials across 29 municipalities. The provincial advisors conducted
199 capacity building sessions, involving 1 007 officials from both provincial treasuries and municipalities.
Finally, MFIP specialisrs conducred 1 133 capacity building sessions with 11 089 officials on topics such as SCM,
revenue management, asset management, mSCOA and the Municipal Financial Recovery Service.
e) Cities Support Programme (CSP): Located within the IGR division of the National Treasury, the CSP is aimed
at supporting metros to drive an effective spatial transformation agenda. The second phase of the CSP
started in March 2019 and its focus continues ro be working with merros and a broad range of stakeholder
to support the achievement of the immediate outcomes in the CSP Theory of Change being:
Capable cities: where metros are to implement strategies ro accelerate inclusive economic growth by
building inclusive, productive and sustainable cities;
Enabling fiscal and financial platform: ensuring the alignment of fiscal frameworks, policies, incentives
and grants by all sector departments to support sustainable urban financing and transformation; and
Enabling policy environment: strengthened intergovernmental relations and coordination to support
the transformation agenda of metro and reviewed and refined national and provincial policies and plans
to support metros in implementing reforms and promote metros' role in the transformation agenda.
For this second phase, the CSP 1s tasked to 1nst1tut1onal1se and embed changes into the: policy e:nv1ronment
and the fiscal and financial platforms.
The State Of Local Government Finances and Financial Management - As at 30 June 2019
The Programme is implemented through five components, namely Municipal Governance and Fiscal
Reforms, Public Transport, Human St:ttlements, Economic Development and Climate Resilience in the form
of 40 support projects in the eight metros.
The focus is on the revenue value chain and all related internal and external dependencies and identifying catalytic
areas where attention should be focused to derive the largest financial benefit. Various stakeholders are part of this
work stream to avoid duplication in efforts.
INTERVENTIONS IN MUNICIPALITIES
128. The powers of other spheres of government to intervene in the affairs of a municipality is regulated by the
Constitution and the MFMA. Section 139 of the Constitution providC's for provincial (and national) interventions in
municipalities as a last resort in response to serious problems. It envisages thrC'e kinds of failures in local government,
with responses to address each of these problems, set out in the different sub-sections. The role of the province
is to assess the nature of the problem, and to respond in terms of the relevant sub-section of Section 139 of the
Constitution as follows:
Section 139(1) should be invoked in response to a "failure to fulfil an executive obligation": these are
discretionary interventions;
Section 139(4) should be invoked in response ro a failure by Council to pass a budget or budget related
measures: this refers to a failure to fulfil a legislative function and is a mandatory intervention; and
Section 139(5) should be invoked in response to a financial crisis, specifically a material breach of financial
obligations or ability to provide basic services: th~'se are also mandatory interventions.
129. Sections 139(4) and (5) of the Constitution are re:gulated by Chapter 13 of the MFMA. Chapter 13 also addresse:s
the requirements for discretionary interventions that require the development of a financial recovery plan. Any
mandatory intervention invoked in a municipality must be referred to the Municipal Finance Recovery Se:rvices Unit
within the National Treasury for the development of a financial recovery plan. Section 139(7) of the Constitution also
provides that if the: province fails to intervene when the conditions for a mandatory intervention exist, the national
executive must do so.
130. Research conducted on behalf of the National Treasury into the efficiency of Section 139 interventions revealed
that triggers for Section 139 interventions have not usually been informed by a careful review of the: proble:ms in
municipalities. Since 1998 to 2018, 140 interventions have: been invoked in municipalities. 15 of these interventions
have subsequently been set aside. Of the remaining interventions, most were invoked in terms of Section 139(1)
of the Constitution, even though in many cases conditions existed for invoking a Section 139(5) intervention. Only
11 interventions were actually initiated using other subsections of Section 139 and 4 of these were invoked in
combination with Section 139(1 ). Of these 11 interventions, 6 interventions were in terms of Section 139(4) (failure
to pass a budget) and 5 were in terms of Section 139(5) (as a result of a financial crisis in the municipality).
131. As at January 2020, there were 36 interventions in terms of Section 139 of the Constitution. Most of these
interventions were in North West Province (9 municipalitie:s), followed by KwaZulu-Natal Province (8 municipalities)
and Mpumalanga (6 municipalities). Gauteng only recorded one intervention, while Limpopo and Northern Cape
only re:corded two interventions.
132. As at January 2020, financial recovery plans were in place in 33 municipalities with 9 of these being voluntary
recovery plans. More and more municipalities are requesting voluntary financial recovery plans. As January 2020,
there: were 16 municipalities that had made requests for a voluntary financial recovr:ry plans.
133. The State of Local Government and Financial Management Re:ports comprehensively discusses the financial health
of all 257 of the country's municipalities. Annexure A 1 lists the 163 municipalities that were assessed as in financial
The State Of Local Government Finances and Financial Management - As at 30 June 2019
ANNEXUREA1
Municipalities in financial distress as at 30 June 2019 (municipalities identified as being in financial distress are
highlighted).
As a result of expanding the set of indicators from eight to thirteen the scoring had to be adjusred as follows:
1 - Good
0 - Poor
A municipaliry shows signs of financial distress when it receives a score of less than 7 from the 13 indicators. Also note that
when the municipality's current assers/currem liabilities are less than 1 or when the total assets/roral liabilities are less than
1, it is an indication of financial distress, irrespective of the total score.
Please note that the Auditor General's data shown below reAects the audit outcomes as released by Auditor Ceneral
when they first ran their first snap shots by end January. National Treasury is aware that after the end January deadline,
subsequently, AG has since concluded the audit for some municipalities that appear to be outstanding below.
56
G
Audit Outcomes of the 2018/19 financial year: Anolysis Documenr
0254
The State Of Local Government Finances and Financial Management - As at 30 June 2019
North West Naledi (NW) NW392 Dr Ruth Segomotsi Mompati Financial Distress Outstanding
North Wesl Dr Ruth Segomotsi Mompati 0(39 Dr Ruth Segomotsi Mompati Financial Dislress Oisclaimerof opinion
North West B City of Matlosana NW403 Dr Kenneth Kaunda Financial Distress Qualified
North West JBMarks NW405 Dr Kenneth Kaunda Financial Distress Qualified
North West Maquassi Hills NW404 Dr Kenneth Kaunda Financial Distress Disclaimer of opinion
North West Dr Kenneth Kaunda 0(40 Dr Kenneth Kaunda Qualified
Northern Cape Ga-Segonyana NC452 John Taolo Gaetsewe Financiill Distress Outstanding
Northern Cape B Gamagara NC453 John Taolo Gaetsewe Financial Distress Qualified
Northern Cape B Joe Morolong NC451 John Taolo Gaetsewe Financial Distress Disclaimer of opinion
Northern Cape John Taolo Gaetsewe 0(45 John Taolo Gaelsewe Financial Distress Unqualified - No findings
Northern Cape Hantam NC065 Namakwa Financial Distress Unqualified -Wilh findings
---·----···---··-··-
Northern Cape Kamiesberg NC064 Namakwa Financial Distress Disclaimer of opinion
Northern Cape B Karoo Hoogland NC066 Namakwa Financial Distress Qualified
Northern Cape B Khai-Ma NC067 Namakwa Financial Distress Qualified
Northern Cape Nama Khoi NC062 Namakwa Financial Distress Qualified
Northern Cape Richtersveld NC061 Namakwa Financial Distress Qualified
--------
Northern Cape Namakwa 0(6 Namakwa Financial Distress Unqualified -With findings
Northern Cape B Emthanjeni NC073 Pixley ka Seme (NC) Financial Distress Qualified
··--···---·------
Northern Cape Kareeberg NC074 Pixley ka Seme (NC) Unqualified -With findings
Northern Cape Renosterberg NC075 Pixley ka Seme (NC) Financial Distress Outstanding
Northern Cape Siyancuma NC078 Pixley ka Seme (NC) Financial Distress Unqualified -With findings
Northern Cape B Siyathemba NC077 Pixley ka Seme (NC) Financial Distress Qualified
Northern Cape B Thembelihle NC076 Pixley ka Seme (NC) Financial Distress Qualified
Northern Cape Ubuntu NC071 Pixley ka Seme (NC) Financial Distress Qualified
Northern Cape Umsobomvu NC072 Pixley ka Seme (NC) Financial Distress Qualified
Northern Cape Pixley Ka Seme (NC) OC7 Pixley ka Seme (NC) Financial Distress
Northern Cape !Kai! Garib NC082 Zf Mgcawu Financial Distress Disclaimer of opinion
Northern Cape !Kheis NC084 ZF Mgcawu Financial Distress Disclaimer of opinion
Northern Cape B Oawid Kruiper NC087 ZFMgcawu Financial Distress Unqualified -With findings
Northern Cape Kgatelopele NC086 ZFMgcawu Financial Distress Disclaimer of opinion
Northern Cape Tsantsabane NC085 ZFMgcawu Financial Distress Oulstanding
Northern Cape ZFMgcawu DCB ZFMgcawu Financial Distress Unqualified -With findings
Northern Cape B Dikgatlong NC092 Frances Baard Financial Distress Disclaimer of opinion
Northern Cape Magareng NC093 Frances Baard Financial Distress Qualified
Northern Cape Frances Baard 0(9 Frances Baard Unqualified -With findings
Western Cape A Cape Town CPT Metro Unqualified-With findings
Western Cape Bergrivier WC013 West Coast Unqualified - No findings
Western Cape B Cederberg WC012 West Coast Financial Distress Unqualified -No findings
Disclaimer of opinion
1. I was engaged to audit the financial statements of the Ditsobotla Loca I Municipality set out on
pages xx to xx, which comprise of the statement of financial position as at 30 June 2018, the
statement of financial performance, statement of changes in net assets, cash flow statement
and lhe statement of comparison of budget and actual amounts for the year then ended, as
well as the notes to the financial statements, including a summary of significant accouflting
policies.
2. I do not express an opinion on the financial statements of the municipality. Because of the
significance of the matters described In the basis for disclaimer of opinion section of my report,
I have not been able to obtain sufficient appropriate audit evidence to provide a basis for an
audit opinion on these financial statemeflts.
3. l was unable to obtain sufficient appropriate audit evidence for property, plant and equipment
due to differences between the financial statements and the accounting records. I was unable
to confirm these assets by alternative means. Consequently, I was unable to determine
whether any adjustments to property, plant and equipment of R869 673 552 disclosed In note 4
and depreciation expense of R40 951 003 disclosed in note 28 to the financial statements,
were necessary.
4. I was unable to obtain sufficient appropriate audit evidence for payables from exchange
transactions due to differences between the financiai statements and the accounting records. I
was unable to confirm these payables by alternative means·. Consequently, twas unable to
determine whether any adjustment to payables from exhange transactions of R493 488 099
disclosed in note 17 to the financial statements, was necessary.
5. The municipality did not have adequate processes and systems in place to correctly account
for impairment on consumer debtors as required by GRAP 104, Financial instruments as an
impairment assessment of outstanding consumer debts was not performed. I was unable to
quantify the resultant misstatement as it was impracticable to do so. In addition, I was unable to
obtain sufficient appropriate audit evidence for consumer debtors due to differences between
0256
the financial statements and the accounting records. I was unable to confirm these debtors by
alternatlve means. Consequently, I was unable to determine whether any further adjustment to
consumer debtors of R348 936 971 (2017: R 152 224 803) disclosed in note 12 to the financial
statements was necessary.
6. I was unable to obtain sufficient appropriate audit evidence for investment property as the
municipality did not maintain a register for investment property. I was unable to confirm the
investment property by alternative means. FurthermorG, during 2017 ttie municipality
incorrectly included sold properties in the investment property register contrary to the
requirements of GRAP 16, Investment properties, which resulted in investment property being
overstated by R48 583 657. This misstatement was still not corrected in the current year.
Consequently, I was unable to determine whether any further adjustment to investment
property of R104 569 063 (2017: R 104 569 063) disclosed in note 3 to the financial statements
was necessary.
7. I was unable to obtain sufficient appropriate audit evidence for cash and cash equivalents due
to differences between the financial statements and the accounting records. I was unable to
confirm these cash and cash equivalents by alternative means. Consequently, l was unable to
determine whether any adjustment relating to cash and cash equivalents of R43 168 235
(2017: R66 650 284) disclosed in note 13 to the financial statements was necessary.
8. During 2017 the municipality did not have adequate systems to maintain records for
receivables from non-exchange transactions. This resulted in receivables from non-exchange
transaction_s being overstated by R7 016 043 and payables from exchange transactions also
being overstated by the same amount. This misstatement was still not corrected in the current
year.
9. In addition, the municipality incorrectly recognised outstanding debts on property rates as
consumer debtors. This resulted in consumer debtors being overstated and receivables from
non-exchange transactions being understated by R95 705 590 (2017: 72 802 391 ).
10. Furthermore, I was unable to obtain sufficient appropriate audit evidence for receivables from
non-exchange transactions due to the status of the accounting records and non-submission of
information in support of these receivables. I was unable to corifirm these receivables by
alternative means. Consequently, I was unable to determine whether any adjustment was
necessary to receivables from non-exchange transactions of R11 060 586 disclosed in note 10
to the financial statements. ·
11. l was unable to obtain sufficient app;opriate audit evidence for the VAT receivable due to
differences between the financial statements and the accounting records. I was unable to
confirm the VAT receivable by alternative means. Consequently, I was unable to determine
whether any adjustment relatlng to VAT receivable of R42 061 467 disclosed in note 11 to the
financial statements was necessary.
12. I was unable to obtain sufficient appropriate audit evidence that management had properly
accounted for the employee benefit obligation, due to the status of the accounting records and
the non-submission of information in support of the employee benefit obligation. I was unable
to confirm the employee benefit obligation by alternative means. Consequently, I was unable to
determine whether any adjustment to the employee benefit obligation of R 17 820 000 disclosed
in note 7 to the financial statements, was necessary.
0257
13. I was unable to obtain sufficient appropriate audii evidence that management liad
properly
accounted for provisions. due to the status of the accounting records and non-subm
ission of
information in support of these provisions. I was unable to confirm these provisions
by
alternative means. Consequently, I was unable to determine whether any adjustmen
t to
provisions of R29 272 946 disclosed in note 16 to the financial statements was necessar
y.
·j 4. i was unable to obtain sufficient appropriate audit evidence for the accumulated surplus
due to
differences between the financial statements and the accounting records. I was unable
to
confirm this account balance by alternative means. Consequently, I was unable to
determine
whether any adjus1ment relating to the accumulated surplus of R874 935 524 disclosed
in note
14 to the financial s1atements was necessary.
15. [ was unable to cbtain sufficient appropriate audit evidence that revenue f;on,
service charges
had been properly accounted for, due to the status of the accounting records and
non-
submission of information in support of this revenue. I was unable to confirm revenue
from
service charges by alternative means. Consequently, I was unable to determine whether
any
adjustment to service charges of R329 799 777 disclosed in note 20 to the financial
statements, was necessary.
16. Furthermore, I was unable to obtain sufficient appropriate audit evidence that
revenue,
expenditure and receivables relating to the provision of retail water services have
been
correctly accounted for by the municipality as the service delivery agreement entered
into
between the Ngaka Modiri Mo!ema District Municipality as water service authority
and the
municipality as water service provider had expired. In terms of section 22 of the Water
Services
Act, 1997 (Act No. 108 of 1997), no person may operate as a water service provider
without
the approval of the water service authority. I was unable to confirm. by alternative
means. that
the local municipality was authorised to operate as the water service provider. Conseque
ntly, I
was unable to determine whether any adjustments relating to revenue from sale
of water of
R64 799 674 included in the service charges disclosed note 20 to the financial statemen
ts or
any other related receivable, expenditure relating to the provision of retail water services
by the
municipality, were necessary.
17. l was unable to obtain sufficient appropriate audit evidence that Interest received
had been
properly accounted for, due to the status of the accounting records and non-subm
ission of
information in support of this revenue. I was unable to confirm revenue from interest
by
alternative means. Consequently, I was unable to determine whether any adjustmen
t to interest
received of R41 415 396 disclosed in the Statement of Financial Performance, was
necessary.
18. I was unable to obtain sufficient appropriate audit evidence that management
had properly
accounted for property ;ates, due to the status of the acc:c.1unt.ing records ar,ct non-sub!T
'ission
of information in support of this revenue. l was unable to confirm ine revenue from
propeny
rates by alternative means. Consequently, I was unable to determine whether any
adjustment
to property rates of R56 084 797 disclosed in note 24 to the financial statements,
was
necessary.
19. During 2017, I was unable to obtain sufficient appropriate audit evidence for other
income as
the municipality did not have an adequate system of internal control to account for
other
income and did not keep proper records. I was unable to determine whether any
adjustment to
\
/,~
v ...
\_,
0258
24. The municipality did not correctiy disciose prior perioa errors
In note 42 to the financial
statements, as required by GRAP 3, Accoun ting policies, estimat
es and errors as the nature
and the amount of the correction for each financial statement
item affected and the amount of
the correction at the beginning of the earliest prior period, were
not disclosed. In addition, I was
unable to obtain sufficient appropriate audit evidence for the prior-ye
ar adjustments disdose d
as the supporting information was not provided. I was unable
to confirm these disclosu res by
alternative means. Consequently, I was unable to determi ne whethe
r any further adjustm ent to
0259
the the disciosure of prior-year adjustments in note 42 to the financial statements, was
necessary.
25. I was unable to obtain sufficient appropriate audit evidence for the calculation of net cash
flows
from operating activities as well as investing activities in the cash flow statement, as the
municipality did not appropriately account for cash and non-cash items as required by GRAP
2
Cash flow statements. The municipality's system did not allow for the performance of
alternative procedures to determine the extent of this misetaternent. Consequently, f was
unable to determine whether any adjustment to the net cash flows from operating activities
and investing activi1ies in the cash flow statement and the note thereto, was necessary.
26. Section 125 of the Municipal Finance Management Act of South Africa, 2003 (Act No. 56
of
2003) (MFMA) requires the disclosure of unauthorised expenditure incurred. The municipality
incurred unauthorised expenditure of R38 186 563 during the current year, (previous years:
R255 408 303) due to overspending of individual votes within the budget, however no
unauthcrised expenditure was disclosed. As the municipality did not quantify ihe full extent of
the unauthorfsed expenditure, it was impracticable to determine the total unauthorised
expenditure that should have been disclosed.
27. Section 125 of the MFMA requires the disclosure of irregular expenditure incurred. The
municipality made payments of RS 476 149 during the current year, (previous years:
RBO 301 548) in contravention with the supply chain management requirements, however no
irregular expenditure was disclosed. As the municipality did not quantify the full extent of the
irregular expenditure, it was impracticable to determine the total irregular expenditure that
should have been disclosed.
28. Section 125 of the MFMA requires the disclosure of frui11ess and wasteful expenditure incurred.
The municipality made payments of R53 620 717 during the current year, (previous years:
R50 959 266) that were regarded as fruitless and wasteful expenditure, however no fruitless
and wastful expenditure was disclosed. As the municipality did not quantify the full extent of the
fruitless and wasteful expenditure, it was impracticable 1o determine the total fruitless and
wasteful expenditure that should have been disclosed.
29. The municipality did not disclose waler and electricity distribution losses as required by section
125(2}(d)(i) of the MFMA. As the municipality did not have adequate control measures in place
to accurately determine the nature and extent of these losses, I was unable lo quantify the
resulting understatement as it was impracticable to do so. In addition, the municipality did not
include the other compulsory MFMA disclosure;>, as required by section 125(1 )(b) and (c} of the
MFMA, in the financial statements, I was unable to quantify the omitted disclosure as it was
impracticable to do so.
Other matter
30. I draw attention to the matter below. My opinion is not modified in respect of this matter.
0260
Respon sibilitie s of the accoun ting officer for the financia l stateme
nts
32. The accounting officer is responsible for the preparation and fair presenta
tion of the financial
statements in accordance with the SA standards of GRAP and the requirem
ents of the MFMA
and the DoRA and for such internal control gs the accounting officer determin
es is necessa ry
to enable the preparation of financial statements that are free from material
misstatement,
whether due to fraud or error.
33. In preparing the financial statements, the accounting officer is responsi
ble for assessing the
municipality's ability to continue as a going concern, disclosing, as applicab
!e, matters relating
to going concern and using the going concern basis of accountin
g unless the appropriate
governance structure either intends to liquidate the or to cease operation
s, or there is no
realistic alternative but to do so.
Auditor -genera l's re.spon sibilities for the audit of the financia l stateme
nts
34. My responsibility is to conduct an audit of the financial statements in
accordance with
International Standards on Auditing (ISAs) and to issue an auditor's report
However, because
of the matters described in the basis for disclaimer of opinion section of
my report, I was not
able to obtain sufficient appropriate audit evidence to provide a basis for
an audit opinion on
these financial statements.
35. I am independent of the in accordance with the International Ethics
Standards Board for
Accountants' Code of ethics for professional accountants (IESBA code)
together with the
ethical requirements that are relevant to my audit of the financial statemen
ts. I have fulfilled my
other ethical responsibilities in accordance with these requirements and
the IESBA code.
36. I am unable to audit and report on the usefulness and reliability of the
performance information
as the annual performance report of the municlpality was not prepared
as required by section
46 of the Municipal Systems Act of South Africa, 2000 (Act No. 32 of 2000)
(MSA) and section
121(3)(c) of the MFMA.
37. In accordance with the Public Audit Act of South Africa, 2004 (Act No.
25 of 2004) (PM) and
the general notice issued in terms thereof I have a responsibility to report
material findings on
the compliance of the municipality with specific matters in key legislatio
n. I performed
procedures to identify findings but not to gather evidence to express assuranc
e.
.,,.••-ho.
~:.:9
0261
38. The material findings on compliance with specific matters in key legislation are as follows:
39. The financial statements submitted for auditing were not prepared in all material respects in
accordance with the requirements of section 122(1) of the MFMA. Material misstatements
identified by the auditors in the submitted financial statements were not adequately corrected
and the supporting records could not be provided subsequently, which resulted in the finandal
statements receiving a disclaimer audit opinion. Similar non-compliance was also reported in
the prior year.
40. The 2016-17 annual report was not tabled in the municipal council within seven months after
the end of the financial year, as required by section 127(2) of the MFMA. Similar non-
compliance was also reported in tile prior year.
41. The council failed to adopt an oversight report, containing the council's comments on the
annual report, within the prescribed timelines as required by section 129(1) of the MFMA.
Similar non-compliance was also reported in the prior year.
42. An adequate management, accounting and information system which accounts for revenue
and debtors was not in place, as required by section 64(2)(e} of the MFMA. Similar non-
compliance was also reported in the prior year.
43. I was unable to obtain sufficient appropriate audit evidence that accounts for service charges
were prepared on an accrual basis, as required by section 64(2)(c) of the MFMA.
44. I was unable to obtain sufficient appropriate audit evidence that interest had been charged
on
all accounts in arrears, as required by section 64(2)(g) of the MFMA.
45. An adequate management, accounting and information system which accounts for assets
was
not in place, as required by section 63(2)(a) of the MFMA.
46. Money owed by the municipality was not always paid within 30 days, as required by section
65(2Xe) of the MFMA. Similar non-compliance was also reported in !he prior year.
47. An adequate management, accounting and information system was not in place which
recognised expenditure when it was incurred, as required by section 65(2)(b} of the MFMA.
48. Reasonable steps were not taken to prevent unauthorised expenditure, as required by section
62(1 )(d} of the MFMA. The full extent of the unauthorised expenditure could not be quantified
as indicated in the basis for qualification paragraph. Similar non-compliance was also reported
in the prior year.
49. Reasonable steps were not taken lo prevent irregular expenditure, as required by section
62(1 )(d) of the MFMA. The full extent of the irregular expenditure could not be quantified as
indicated in the basis for qualification paragraph. Similar non-compliance was also reported in
the prior year.
50. Reasonable steps were not taken to prevent fruitless and wasteful expenditure, as required
by
section 62{1 )(d) of the MFMA. The full extent of the fruitless and wasteful expenditure could not
be quantified as indicated in the basis for qualification paragraph. Similar non-compliance was
also reported in the prior year.
51. Unauthorised expenditure incurred by the municipality was not investigated to determine if
any
person is liable for !he expenditure, as required by section 32(2}(a) of the MFMA.
0262
52. Irregular expenditure incurred by the municipality were not investigated to determine if any
person is liable for the expenditure, as required by section 32{2)(b) of the MFMA. Similar non-
compliance was also reported in the prior year.
53. Fruitless and wasteful expenditure incurred by the municipality was not investigated to
determine if any person is liable for the expenditure, as required by section 32(2)(b} of the
MFMA. Similar non-compliance was also reported in the prior year.
54. Allegations of financial misconduct laid against officials of the municipality were not
investigated. as required by section 171(4)(a) of the MFMA.
55. A performance management system was not established. as required by section 38(a) of the
MSA. Similar non-compliance was also reported in the prior year.
56. Performance in respect of programmes funded by the Municipal Infrastructure grant (MIG) and
Integrated National Electrification Programme grant (INEP) was not evaluated, as required by
section 12(5) of the DoRA. Similar nan-compliance was also reported in the prior year.
57. The INEP grant was not spent for its intended purposes in accordance with the applicable grant
framework, as required by section 17(1) of the DoRA.
58. Sufficient appropriate audit evidence could not be obtained that contracts and quotations were
awarded in accordance with the legislative requirements as no record management system
was in place. Similar non-compliance was also reported in the prior year.
59. Sufficient appropriate audit evidence could not be obtained that some goods and services with
a transaction value of below R200 000 were procured by obtaining the required price
quotations as required by SCM regulation 17(a) & (c). Similar non-compliance was also
reported in the prior year.
60. Sufficient appropriate audit evidence could not be obtained for some of quotations accepted
from prospective providers, that these providers were on the list of accredited prospective
providers or meet the listing requirements prescribed by the SCM policy, as required by SCM
regulations 16(b) and 17(b). Similar non-compliance was also reported in the prior year.
61. Sufficient appropriate audit evidence could not be obtained that awards and contracts were
awarded only to bidders who submitted a declaration on whether they were employed by the
state or connected to any person employed by the state, as required by SCM regulation 13(c).
Similar non-compliance was also reported in the prior year.
62. Sufficient appropriate audit evidence could not be obtained that quotations and contracts were
only accepted from bidders whose tax matters had been declared by the South African
Revenue Service to be in order, as required by SCM regulation 43. Similar non-compliance
was also reported in the prior year.
63. Sufficient appropriate audit evidence could not be obtained that deviations approved by the
accounting officer were only if it was impractical to invite competitive bids, as required by SCM
regulations 19(a) and 36(1 ). Similar non-compliance was also reported in the prior year.
64. Sufficient appropriate audit evidence could not be obtained that bid specifications were
unbiased and allowed all potential suppliers to offer their goods or services, as required by
SCM regulation 27(2){a). Similar non-compliance was also reported in the prior year.
65. Sufficient appropriate audit evidence could not be obtained that invitations for competitive
bidding were advertised for a required minimum period of days, as required by SCM regulation
22{1) & 22(2). Similar non-compliance was also reported in the prior year .
..~· ..!;~
·~~~
0263
66. Sufficient appropriate audit evidence could not be obtained that the preference point system
was applied in all procurement of goods and services above R30 000 as required by section
2(a) of the Preferential Procurement Policy Framework Act. Similar non-compliance was also
reported in the prior year.
67. Sufficient appropriate audit evidence could not be obtained that construction contracts were
awarded to contractors that were registered with the Construction Industry Development Board
(CIDB) and qualified for the contract in accordance with section 18(1) of the CIDB Act. Similar
non-compliance was also reported in the prior year.
68. Sufficient appropriate audit evidence could not be obtained that a!I extensions or modifications
to contracts were approved by a properly delegated official, as required by SCM regulation 5.
69. The performance of contractors or providers was not monitored on a monthly basis, as r.=iquired
by section 116{2)(b) of the MFMA.
70. Awards were made to providers who are in the service of other state institutions, in
contravention of MFMA section 112(j) and SCM regulation 44. Similar awards were identified in
the previous year and no effective steps were taken to prevent or combat the abuse of the
SCM process, as required by SCM regulation 38(1 ).
71. Persons in the service of the municipality who had a private or business interest in contracts
awarded by the municipality failed to disclose such interest, in contravention of SCM regulation
46(2}(e). Similar non-compliance was also reported in the prior year.
72. I considered internal control relevant to my audit of the financial statements, reported
performance information and compliance with applicable legislation; however, my objective
was not to express any form of assurance thereon. The matters reported below are limited to
the significant internal control deficiencies that resulted in the basis for disclaimer of opinion,
the findings on the performance report and the findings on compliance with legislation included
in this report.
• Leadership did not ensure that there is appropriately skilled staff in key positions within
the finance, performance and compliance units. Furthermore, leadership's in-year
monitoring and oversight was inadequate to prevent material limitaHons in the financial
statements, non-compliance with laws and regulations and the absence of a system to
support the collection, processing and reporting of performance against pre-determined
objectives .
., Lack of sufficiently skilled staff negatively impact on the implementation of proper systems
to collate, process and report financial and performance information. This has fed to
excessive reliance on consultants to compile financial information and statements. Lack of
internal controls and oversight contributed to inaccurate and unreliable financial reports
and records. Furthermore, !here are no systems in place to enforce compliance with laws
and regulations and no actions are taken against staff that is responsible for these
transgressions.
" There 1.vere r:o appropriate gcvernaoce stn.!cturas at ths municipality, as an audit
committee and internai audit unit were not appointed for the year under review.
0264
Rusten burg
30 November 2018
s.:::ilJTH A~RICA
and
1
0266
000614
I, the undersigned,
DONDO MOGAJANE
respondent.
3 The facts to which I depose are within my own knowledge, or derived from
records under my control, and are true and correct. Where I deal with questions
4 I have read the founding affidavit filed on behalf of the applicant in this matter. I
shall respond only to the allegations of fact contained in the founding affidavit
2
0267
13
0268
26.1 The Mayor would table the MFMA section 138 and 140
feedback report
to the Municipal Council within 30 days and submit the
Council resolution
to the Provincial Treasury;
16
0271
31 As this Honourable Court can see from the above, the process
takes time, but it
is important to note that the process is underway and the Nation
al Treasury will
be offering support to the province to ensure that the process
is achieved and
that the municipalities are back on their feet and ready to functio
n at full capacity.
Prepared by:
0273
TABLE OF CONTENTS
1.1 lntroductfon
An assessment of the seriousness of the state of municipal finance in relation to the crisis in
Ditsobotla Local Municipality (the Municipality) was undertaken using the MFMA Circular No. 71
Financial Ratios and Norms developed by the National Treasury for assessment of sustainable
management of fiscal and financial affairs of municipalities.
A detailed analysis of the results of 32 financial ratios will be used to provide an overview of the
financial crisis status within the municipality. Ratios are divided into various categories to address
different financial aspects and operations of a municipality.
1. Financial Position
2. Financial Performance
3. Budget Implementation
The results of the analysis will be a measure of the need for intervention to analyse the root
causes of the current financial distress in order to come up with remedies to improve the short-
term financial liquidity and the long-term financial sustainability of the municipality. Overall efforts
will place the municipality on a sustainable footing which will result in an effective and efficient
organization that is financially stable and able to provide services to the community on a
sustainable basis.
Key aspects needing attention are highlighted in the detailed report. These require attention from
the municipal Council and municipal management.
The technical financial position incorporates; asset management, debtors management, liquidity
management and liability management. It has been noted that for three of the five financial years
the municipality has been prioritising more expenditure towards current operations than towards
future and for the entire five financial periods the municipality has been insufficiently spending on
repairs and maintenance which all holds potential risks to service delivery.
Challenges in collecting outstanding amounts due has been witnessed with low debtors collection
rate and excessively high net debtors days for the major part of the period under review.
A continuous exposure to significant cashflow risk and state of insolvency has been witnessed
with low cash reserves and current liabilities in excess of current assets which may eventually
result in liquidation of non-current assets to settle current liabilities.
Low capital cost and debt ratio throughout the period under review indicating inability to access
borrowed funds because of the distressed financial position.
Page 3 of 26
Assessment of the seriousness of municipal state of financial crisis in Ditsobo/la Local Municipality.
0275
The technical financial performance incorporates; efficiency, distribution losses, revenue and
expenditure management. It has been identified that for four of the five financial years under
review the municipality has recorded a negative net operating surplus margin implying that the
municipality is operating at a deficit in all services. Non-Disclosure of the electricity and water
distribution losses which is a non-compliance with GRAP standards and the requirements of
section '125 of the MFMA.
Creditors payment period has been excessively above tt1e norm for the entire 5 financial years
which indicates non-compliance with the 111'/FfViJI, regulations guiding the payment of creditors
which rnay result in interest being charged by creditors and lawsuits being instituted to the
Municipality; resulting in fruitless and vJasteful expenditure which has been noted to be above the
norm throughout the five financial years.
Notable observations identified under Budget Management includes under spending of capital
expenditure budget for three of three of !he five financial periods under review which is an
indication of cashflow problems within the municipality as the monies would have been spend on
operational activities.
Overspending on operational expenditure budget for three of the five financial years which is an
indication of ineffective controls in place which ensures that expenditure is incurred in accordance
with an approved budget. The fluctuations are also an indication of poor budgeting controls.
In addition, the municipality has a cumulative unauthorised expenditure of R87 080 043 in
2018/19 which has not yet been dealt with in accordance with section 32 of the MFMA.
Based on the desktop analysis of the financial ratios the indicators have revealed evidence that
the Oitsobotla Municipality is facing significant fiscal and service delivery difficulties, which
undermines the effective and efficient performance of its funciions and mandate. More importantly
these difficulties are becoming increasingly severe and unless focussed action is undertaken to
address the underlying causes, Ditsobotla Municipality will ·find it increasingly difficuli to perform
its mandate.
Page 4 of 26
Assessment of the seriousness of municipal state of financial crisis in Ditsotxilla Local Municipality.
0276
Municipalities need to implement and maintain sound and effective financial management
practices for the long-term sustainability and improvement in service delivery. To support focal
government in their financial management, the North West Provincial Treasury has contracted
Thuso Financial Consultants to do an assessment of municipal state of financial crisis using the
32 Financial Ratios. The purpose of this report is to outline the results obtained from the
assessment and determine the seriousness of the financial crisis status to inform the required
support measures in the implementation of the MFMA and complementary legislation.
Assessment of the seriousness of municipal state of financial crisis in Di/sabot/a Local Municipality.
Page 5 of 26
0277
The Project scope entails undertaking an assessment of the financial state and performance of
each municipality. The project will be implemented in phases with project milestones. At this stage
the following will be the deliverables of milestone 1 of Phase 1:
Page 6 of 26
Assessment of the seriousness of municipal state of financial crisis in Ditsobot/a Local Municipality.
0278
.i
Finding/Observation
Capital Expenditure to Total Expenditure ratio measures level of investmentin assets in relation
to total expenditure made by the municipality in each year and the recommended norm range lies
between 10% and 20%. Based on the assessment done it was identified that the municipality has
been spending lower than the recommended level in infrastructure which holds potential risks to
service delivery. Over the three of the five financial years under review the municipality's Capital
Expenditure to Total Expenditure ratio has been below the norm averaging at 8.2% each year.
The line graph below shows the trend of the ratio over the 5 financial years under review:
Interpretation of Results
In 2014/15 and 2015/16 the municipality was at 5% and 6% respectively which significantly
improved to 15% in 2016/17. However, the ratio declined in the succeeding years to 5% in
2018/19. Capital expenditure has been below the normal in 3 out of the last 5 years which
indicates lower spending by the municipality on infrastructure.
Operating below the norm indicates that the municipality is prioritizing more on expenditure
towards current operations than for future capacity in terms of Municipal Services. It is critical that
capital expenditure is largely directed toward service delivery infrastructure and not administrative
assets.
Lower investment in assets holds potential risks to service delivery. It is important for the
municipality to have a well-maintained asset base to ensure continued operations and service
provision and from which future revenue flows will be secured.
Page 7 of 26
Assessment of the seriousness of municipal slate of financial crisis In Ditsabatla Local Municipality.
0279
Finding/Observation
The Repairs and Maintenance Ratio measures the level of repairs and maintenance to ensure
adequate maintenance to prevent breakdowns and interruptions to service delivery. The
acceptable norm is set at 8%. Based on the assessment done it was identified that the municipality
has not been spending sufficient monies towards repairing and maintaining its assets. Over the 5
financial years under review the municipality's repairs and maintenance ratio was averaging at
0.84% which is significantly below the acceptable norm.
The line graph below shows the trend of the ratio over the 5 financial years under review:
lnl:erprntatkm of Results
Over the periods under consideration !he municipaliiy has been significantly operating below the
norm. This is an indication of insufficient spending on repairs and maintenance to the extent that
it could impact on the use of the assets and has a resulting increase on the impairment of useful
assets.
The municipality need to ensure adequate maintenance of assets to prevent breakdowns and
interruptions to service delivery,
Page 8 of 26
Assessment of the seriousness of municipal state of financial crisis in Dilsobol/a Local Municipality.
0280
Flnding/Obsennition
Collection Rate Ratio provide an indication of the performance against quality of credit conirol
and quality of revenue management. The recommended norm of this ratio is 95%. Based on the
assessment done ii was identified that the municipality has been operating below the norm for 4
of the 5 years under review indicating that the municipality has been collecting billed revenue at
a lower level than recommended for the major part of period under review. The collection rate for
the municipality was averaging at 53.6% for each year over the 5 financial years.
The line graph below shows the trend over the 5 financial years under review:
Interpretation of R<Hm!ts
The municipality's Collection Rate has been below the norm for 4 of the 5 years under review and
has been regressing from 2016/'!7 to 20'i 8/19. This is an indication that the municipality is
continuously taking longer than before to collect payments from debtors which might lead to cash
shortages.
Revenue collection (billing), and credit control of the municipality requires urgent attention and
corrective measures should be implemented. Quality Credit Control should be implemented to
ensure that what is billed is collected. FZevenue Management should ensure affordable tariffs are
set and correct billing is done.
Page 9 of 26
Assessment of the seriousness of municipal state of financial crisis in Ditsobotla Local Municipality,
0281
Finding/Observation
Bad Debts Written-off as % of the Bad Debts Provision ratio assesses the sufficiency of the
provision for bad debts. Based on the assessment results it has been identified that the
municipality has not been writing off long outstanding debts after a provision for bad debts has
been raised over the entire 5 financial years under review. Jt is recommended that 100% of the
debtors identified as potential defaulters should then be written off in the next period to indicate a
level of accuracy in calculation of the provision for Bad Debts.
The line graph below shows the trend of !he ratio over the 5 financial years under review:
Interpretation of Results
The results of this ratio clearly indicates that the municipality has not written off any bad debts
for the past 5 years. The outstanding debtors balance keeps increasing every year as defaulting
debtors are not being correctly accounted for. This is an indication that there is lack of financial
management capacity within the municipality to correctly manage and account for debtors.
The municipal officials should seek council resolution to write off all irrecoverable debt for a true
and fair view to be presented on the financial information disclosed in the AFS of the municipality.
Page 10 of 26
Assessment of the seriousness of municipal state of financial crisis in Ditsobol/a Local Municipality.
0282
Finding/Observation
Net Debtor Days refers to the average number of days required for a Municipality or Municipal
Entity to receive payment from its Consumers for bills/invoices issued to them for services and
the norm is set at an average of 30 days. Based on the assessment done it was identified that
the municipality is experiencing challenges in collecting outstanding amounts due. This is
witnessed by the net debtors days ratio which has been excessively above the norm averaging
at 343 days over the 5 financial years under review.
The line graph below shows the trend of the ratio over the 5 financial years under review:
Interpretation of Results
Net Debtors' Days ratio for the past five years has been above the norm of 30 days. This is an
indication that the municipality is exposed to significant cash flow risk and ii is experiencing
challenges in the collection of outstanding amounts due.
The municipality needs to reassess its indigents register if it shows a true reflection of the situation
on the ground and try to improve its debt collection processes.
Page i 1 of 26
Assessment of the seriousness of municipal state of financial crisis in Ditsobotla Local Municipality,
0283
Finding/Observation
Cash/Cost Coverage Ratio assesses the municipality's ability to meet at least its monthly fixed
operating commitments from cash and short-term investment without collecting any additional
revenue during that month. The norm range of Cash/Cost Coverage Ratio is 1-3 months. Based
on the assessment done it was identified that the municipality is currently vulnerable and at a
higher risk in the event of financial 'shocks/set-backs'. The ratio has been below the norm for the
2 recent consecutive years of the 5 financial years under review.
The line graph below shows the trend of the ratio over the 5 financial years:
The municipality's ratio has been within the norm fron1 2014/15 to 2016/17 and fallen to be below
the norm in 2017/18 and 2018/19 financial years. This indicates that the municipality is currently
vulnerable and at a higher risk in the event of financial set-backs.
It was clear that the municipality's ability during 201 l/18 and 2018/19 to meet its obligations to
provide basic services and honour its financial commitments was compromised.
Page 12 of 26
Assessment of the seriousness of municipal state of financial crisis in Dilsobot/a Local Municipality.
0284
Finding/Observation
Current Ratio assesses the municipality's ability to pay back its short-term Liabilities (Debi and
Payables) with its Short-term Assets (Cash, Inventory, Receivables). Based on the assessment
done it was identified that the municipality's current liabilities exceed its current assets. The Ratio
norm is set at 1.5 to 2:1. For !he entire 5-year period the current ratio has been significantly below
the norm averaging at 0.564 each year.
The line graph below shows the trend of the ratio over the 5 financial years under review:
Interpretation of Results
The municipality's Current Ratio has been below the norm for the entire 5 financial years under
review. This is an indication that current liabilities exceed current assets, highlighting insufficient
cash lo meet short-term financial obligations.
The municipality need to increase its current assets to appropriately cover current liabilities
othen,vise it will risk non-current assets to be liquidated to settle current liabilities.
Page 13 of 26
Assessment of the sen·ousness of municipal state of financial cnsis in Ditsobolla Local Municipality.
0285
Based on the assessment done it was identified that the municipality had a capital cost ratio of
0% throughout the 5 years under review.
The fine graph below shows the trend of the ratio over the 5 financial years under review:
interpretation of Results
Operating below the norm could indicate that the Municipality has cash flow problems where it is
unable to access borrowed funds.
Relating to the low cash reserves and low current ratio this also support that the municipality is in
a state of insolvency and it is unable to access borrowed funds.
Page 14 of 26
Assessment of the seriousness of municipal state of financial crisis in Ditsobotla Local Municipality.
0286
Based on the assessment done it was identified that the municipality debt ratio has been way
below the norm over the entire 5 financial years under review.
The line graph below shows the trend of the ratio over the 5 financial years under review:
Interpretation of Results
Operating below the norm could indicate that the municipality is unable to access borrowed funds
because of its financial distress position.
4.1.5 Sustainability
Finding/Observation
Based on the assessment done it was identified that the municipality did not have any cash
backed reserves for all the five years under review.
Interpretation of Results
If a Municipality has no cash reserves it could negatively impact its ability to comply with the
conditions for creating the reserves and on its ability to fund current and future operations.
Page 15 of 26
Assessment of the seriousness of municipal state of financial crisis in Ditsobotla Local Municipality.
0287
4.2.1 Efficiency
Finding/Observation
Net Operating Surplus Margin Ratio assesses whether the municipality is at least recovering
operational costs for the services being delivered. Based on the assessment done it was identified
that the municipality has been in overall providing services at a deficit for 4 of the 5 financial years
under review. This is witnessed by a negative net operating surplus margin averaging at -22%
each year which is significantly below the acceptable norm.
The line graph below shows the trend of the ratio over the 5 financial years under review:
Interpretation of Results
The ratio has been below the norm for 4 of the 5 financial years under review which is an indication
that the municipality has been operating at a deficit for these 4 years.
The significant deficit in 2015/16 was a result of an increase operating expenditure and the
decrease in revenue. Measures must be implemented to address this situation to ensure
sustainable service delivery.
Page 16 of 26
Assessment of the seriousness of municipal stale of financial crisis in Ditsobolla Local Municipality.
0288
Finding/Observation
The Electricity Distribution Losses Ratio measures the percentage loss of potential revenue from
Electricity Services through electricity units purchased and generated but not sold as a result of
losses incurred through theft (illegal connections), non or inaccurate metering or wastage. Based
on the assessment done it was identified that the municipality has not been disclosing the
distribution losses of electricity for 4 of the 5 financial years under review. This is a non-
compliance with the GRAP standards on the presentation of Annual Financial Statements.
The line graph below shows the trend of the ratio over the 5 financial years under review:
Interpretation of Results
Electricity Distribution losses were not disclosed in the 2015, 2016, 2018 and 2019 Annual
Financial Statements which is a non-compliance with GRAP standards and as required by section
125 of the MFMA.
Page 17 of 26
Assessment of the seriousness of municipal stale of financial crisis in Ditsobolla Local Municipalily.
0289
Finding/Observation
The Water Distribution ratio determines the percentage loss of potential revenue from water
service through kilolitres of water purchased but not sold as a result of losses incurred through
theft (illegal connections), non-· or incorrect metering or wastage as a result of deteriorating water
infrastructure. Based on the assessment done it was identified that the municipality has not been
disclosing the water distribution losses for the recent consecutive years 2017/18 and 2018/19.
This is a non-compliance with the GRAP standards on the presentation of Annual Financial
Statements.
The line graph below shows the trend of the ratio over the 5 financial years under review:
Interpretation. of Results
Water losses were within the norm in 2015/2016 and was below the norm in 2015/16, 2016/2017
indicating an increase in distribution efficiency.
The municipality did not disclose water distribution losses from 2017/18 and 2018/19 which is a
non-compliance with GRAP standards and as required by section 125 of the MFMA.
Page 18 of 26
Assessment of the seriousness of municipal state of financial crisis in Dilsobot/a Local Municipality.
0290
Creditors Payment Period Ratio indicates the average number of days taken for Trade Creditors
to be paid. It is a set standard that the municipality must not exceed an average of 30 days without
paying its creditors in terms of the MFMA regulations and Circular 71 norms. Based on the
assessment done it was identified that the municipality is not complying with MFMA regulations
guiding the payment of creditors. The creditors days ratio has been excessively above the norm
averaging at 508 days each year which is excessively above the recommended norms and
standards.
The line graph below shows the trend of the ratio over the 5 financial years under review:
Interpretation of Results
The municipality's ratio is significantly above the norm which is an indication that the municipality
is experiencing cash flow problems. In addition, a ratio that exceeds the norm indicates that the
Municipality may not be adequately managing iis working capital or that effective controls are not
in place to ensure prompt payments.
Urgent attention must be paid lo cash flow management, avoidance of interest charged by
creditors and non-compliance with MFMA regulations guiding the payment of creditors should be
considered.
Page 19 of 26
Assessment of the seriousness of municipal state of financial crisis in Ditsobolla Local Municipality,
0291
Finding/Observationi
Municipalities are recommended to comply with the prescripts of the MFMA and complimentary
legislation in order to avoid incurrence of Irregular, Fruitless and Wasteful and Unauthorised
Expenditure. Based on the assessment done it was identified that the municipality is not
complying with MFMA regulations and guideline resulting in incurrence of irregular, fruitless and
wasteful and unauthorised expenditure above the norm for all the past five financial years.
The line graph below shows the trend of the ratio over the 5 financial years under review:
Interpretation of Results
The municipality's ratio for the past 5 financial years is above the norm. This indicates
weaknesses within the municipality's SCM processes and non-compliance with procurement
regulations and guidelines.
The municipality must investigate the incurrence of this expenditure in line with applicable
legislation.
Page 20 of 26
Assessment of the seriousness of municipal state of financial crisis in Ditsobotla Local Municipality.
0292
Based on the assessment done it was identified that the municipality's contracted services ratio
has been below the acceptable norm throughout the 5 financial years under review.
A zero percent has been recorded in 2015/16, 2016/17 and 2018/19 which is unusual.
The line graph below shows the trend of the ratio over the 5 financial years under review:
Operating below the norm could an indication of incorrect disclosure of the contracted services
expenditure.
This is a non-compliance with the GRAP standards for ihe presentation and disclosure of ,L\nnual
Financial Statements.
Page 21 of 26
Assessment of the seriousness of municipal slate of financial crisis in Dilsobotla Local Municipality.
0293
Finding/Observation
Municipalities are expected to have effective controls in place to ensure that expenditure is
incurred in accordance with an approved budget. Based on the assessment done it was identified
that the municipality's Capital Expenditure Budget Implementation Indicator has been below the
norm for 3 of the 5 financial periods under review pointing either challenge to implement, issues
of financial controls and management and/or poor budgeting.
The line graph below shows the trend of the ratio over the 5 financial years under review:
Interpretation of results
The capital budget indicator has been less than 95% for 3 of the 5 years under review. This
indicates discrepancies in planning and budgeting, capacity challenges to implement projects
and/or a lack of effective controls in place to ensure that expenditure is incurred in accordance
with an approved budget. Ideally, under-spending should be as a result of improved efficiencies
and not as a result of non-implementation of programmes and/or projects.
Underspending of the capital expenditure budget may also be an indication that the municipality
is experiencing cash flow difficulties to implement projects as a result of spending capital
expenditure budgeted funds on operating activities for which the funds were not intended for.
Page 22 of 26
Assessment of the sen'ousness of municipal state of financial crisis in Ditsobot/a Local Municipality.
0294
Municipalities are expected to have effective controls in place to ensure that expenditure is
incurred in accordance with an approved budget. Based on the assessment done it was identified
that the municipality's Operating Expenditure Budget Implementation Indicator was above the
norm for 3 of the 5 financial years under review. This shows that the municipality has been
spending more than the budget over all these years.
The line graph below shows the trend of the ratio over the 5 financial years under review:
There has been overspending on operating expenditure for the 3 out of 5 years under review.
This is an indication of ineffective controls in place wl1ich ensures that expenditure is incurred in
accordance with an approved budget. In addition, this shows inaccurate budgeting methods.
Page 23 of 26
Assessment of the seriousness of municipal state of financial crisis in Ditsobotla Local Municipalffy.
0295
From the perspective gained from the financial and performance analysis Ditsobotla Local
Municipality is under serious financial crisis and an intervention is inevitable to assist the
municipality to remain financially sustainable.
The municipality need to improve its liquidity position by implementing good debtor's management
process and billing of cost reflective tariffs to reduce deficits witnessed in all services, in order to
stabilise financially.
Institutionally the municipality need to capacitate its employees and follow the prescripts of the
MFMA and complementary legislation in order to reduce high reported irregular, fruitless &
wasteful and unauthorized expenditure.
The municipality need to ensure adequate repairs are done to infrastructure to avoid high
impairment, breakdowns and interruption of service delivery. Most of the key financial and service
delivery ratios are unfavorable and without intervention, the municipality will not be able to deliver
on its mandate in the foreseeable future.
Page 24 of 26
Assessment of the seriousness of municipal state of financial crisis in Ditsobot/a Local Municipality.
0296
Yours Sincerely
. '"'i
C•
.,
. ____ __
,
D Muradya
KKumbe
Project Manager
21/05/2021
L Nengovhela
Project Sponsor
Asses.."Yllent of Iha seriousness of municipal slate of finarn;lal crisis fr, Dftsobotla Local Municipality. Page 25 of 26
0297
7.1
7.3
Page 26 of 26
Assessment of the seriousness of municipal stale of financial crisis in Ditsobotla Local Municipality.
0298
ccw
Department:
UDGET IS PORT
ILESTON
Prepared by:
Tl!USO
TABLE OF CONTENTS
5. OBSERVATIONS/FINDINGS ................................................................................................. 9
6. CONCLUSION .....................................................................................................................28
7. RECOMMENDATIONS ........................................................................................................28
Page 2 of 29
0300
Ditsobotla Local Municipality (the Municipality) is a Category B Municipality situated in the Ngaka
Modiri Molema District of the North West Province. Other than the Equitable shares allocations
from the National Government, the Municipality derives its other significant revenue from sources
such as property rates taxes, services charges levied from sales of water and electricity as well
as from collection of solid waste and waste water. Other sources of revenue which are trivial
include traffic fines, sale of cemeteries, sale of tender documents, agency fees charged on
administration of services conducted on behalf of the North West Department of Transport
Management.
Ditsobotla Local Municipality is unable to generate and collect sufficient revenue to be able to
finance its operating and capital expenditure, expenditure management is a serious concern as
the Municipality is over committed. Consequently, the cash coverage of the Municipality is very
low resulting in the Municipality being unable to settle its financial obligations and commitments
as and when they fall due, the Municipality is also unable to generate surpluses and invest them
in the capital reserve account that will be utilised to fund capital future replacement procurements.
The result of this is that the Municipality is highly reliant on Government Grants to fund its capital
projects.
Poor planning and spending on capital projects have resulted in the municipality being unable to
finish its planned projects and consequently being unable to meet the service delivery needs of
communities. Service delivery backlog still exist in critical areas such as provision of basic water
electricity sanitation as well as removal of waste to ensure that the environment is preserved.
Financial accounting and reporting have also been identified as an area where the Municipality
fails to register good performance. The internal control environment of the Municipality has
collapsed and this can be attributed to the fact that the municipality has failed to implement
standard operating procedures relating to financial management, accounting and reporting, as a
result, critical records and documents pertaining to directions and events are not being properly
secured and kept for audit purposes, transactions and events are not being recorded in the
financial system and accounts are not being reconciled and properly closed on monthly basis.
FINANCIAL MANAGEMENT
Proper financial management must ensure that unauthorised, irregular or fruitless and wasteful
expenditure and other losses a're prevented through strict implementation and effective operating
of key internal controls. Disciplinary actions or, where appropriate, criminal proceedings must be
instituted against any official of the Municipality who has committed an act of financial misconduct
or an offence in terms of Chapter 15 of the MFMA.
Page 3 of 29
Assessment of municipal state of finance and porformanco of Ditsobot/a Local Municipality.
0301
Critical Financial Management components that will be discussed based on the scope of this
milestone deliverables includes;
.. Budget Management
BUDGET MANAGEMENT
Section 18(1 )(a) of the MFMA states that an annual budget may only be funded from realistically
anticipated revenues to be collected.
Section 16(1) of the MFMA states that the Council of a Municipality must for each financial year
approve an annual budget for the Municipality before the start of that financial year. A Municipality
must adopt a funded budget to ensure that there are sufficient financial resources to enable
delivery of services as would have been determined by the communities through the Integrated
Development Planning processes. A Municipality is directed to determine a projection of revenue
that is anticipated to be collected and appropriate it to fund the anticipated expenditure.
Table below shows a summary of the A4 Budgeted Financial Performance for the past five (05)
budget years in which budget deficit was recorded:
Tolal Expenditure
Surplus/(Deficil)
371 877 0351
3 867 965 r----- .--
I
406 246 000 400 220 000
5 322 000
488 317 087
18139 389
624 264 866
58 681 848
Transfers and subsidies - capilal 39 875 000 55 133 000 45 851 000 75 961 098
Surplusl(Deficil) after capital
transfers and contributions
3 867 965 i 39 875 000 60 455 000 63 990 389 17 279 250
Drawing from the table above, the Municipality has been tabling and subsequently adopting
surplus budgets for the past five (05) budget years.
Although there were surplus budgets, these other factors contributed to the budget being
UNFUNDED:
Page 4 of 29
Assessment of municipal state of finance and performance of Dilsobotla Local Municipality.
0302
Based on the above, the status of the budget for the period under review is presented below:
Tabling and adopting an unfunded budget might be an indication that the Municipality is struggling
to generate as well as collecting billed revenue for appropriation into funding the expenditure
priorities, or the Municipality might be collecting sufficient revenue but struggling with expenditure
management, thereby spending on non-core and non-essential expenditure items.
Overspending is normally caused by the Municipality incurring more expenditure than the
anticipated revenue, this inevitably leads to the Municipality being unable to settle the invoices
received from service providers and as a consequence, increasing the creditors book. The
creditors book that does not have concomitant cash reserves results in the budget being
unfunded, Ditsobotla Local Municipality has for a long period of time been exposed to these
challenges which eventually escalated to become a crisis.
Municipalities have been directed to implement the Municipal Standard Chart of Accounts
(mSCOA) effective from 01 July 2017, the Municipal Standard Chart of Accounts would ensure
that Municipalities record, classify and account for their transactions in a manner that is uniform
and standardised. Municipalities were also assessed to determine their Financial Management
Capacity Maturities and Municipalities were directed to develop action plans to address capacity
gaps identified by the Financial Management Capacity Maturity Model (FMCMM). The
intervention and directive was for Municipalities to customise, adopt and implement Standard
Operating Procedures (SOPs) to ensure that internal controls are implemented in Municipalities
for improved financial management.
Ditsobotla Local Municipality has failed to adequately implement the above directives and
measures as a result the financial accounting reporting of the Municipality has not improved and
this is confirmed by the negative audit outcomes that the Municipality has been receiving over the
past five years as demonstrated below;
Audit Opinions
Page 5 of 29
Assossmont of municipal state of tinanco and performance of Ditsobotla Local Municipality.
0303
The table below summarises the analysis of section 138 and section 140 triggers:
Page 6 of 29
Assessment of municipal stale of finance and performance of Dilsobol/a Local Municipality.
0304
According to S136 ( 1) of the MFMA if the MEC for local government in a province becomes aware
that there is a serious financial problem in a municipality, the MEC must promptly:
(b) Assess the seriousness of the situation and the municipality's response to the situation;
and
(c) Determine whether the situation justifies or requires an intervention in terms of section
139 of the Constitution
Page 7 of 29
Assessment of municipal state of finance and performance of Dilsobotla Local Municipality.
0305
The supporting data collected and used in the analysis included, Mid-Year Budget and
Performance Reports, Annual Reports, Annual Financial Statements, Management and Audit
Reports issued by the AGSA.
4.2 ASSESSMENTS
A desktop analysis was conducted to assess the state of municipal finance and performance. Key
financial challenges were identified with possible reasons and contributing factors of the crisis
being highlighted.
Page 8 of 29
Assessment of municipal state of finance and performance of Oitsobotla Local Municipality.
0306
For a projected revenue collection to be deemed realistic the Municipality must take into account
the projected revenue for the current year based on collection levels to date as well as actual
revenue collected in previous financial years.
Funding the budget basically means "funding the expenditure". Funding the expenditure in
essence means that the Municipality will realistically project revenue that it anticipates to collect
during the budget year. The Municipality will then fund the expenditure by appropriating the
realistically anticipated revenue to budgeted expenditure.
The implication of the above is that, budgeted expenditure should not exceed budgeted revenue
because budgeted expenditure can only be to the maximum of the realistically budgeted ,revenue.
It then follows that, a budget wherein expenditure exceeds anticipated revenue is not compliant
with provisions of Section 18(1 )(a) of the MFMA, and such budget is UNFUNDED.
Table below shows a summary of the A4 Budgeted Financial Performance for the past five (05)
budget years in which budget surplus was recorded:
Tolal Expenditure 371 877 035 406 246 000 400 220 000 488 317 087 624 264 866
S urplus/(Deficit) 3 867 965 5 322 000 18139 389 . 58 681 848
Transilrs and subsidies - capi1al 39 875 000 55 133 000 45 851 000 75 961 098
Surplus/(Deflcit) after capital
3 867 965 39 875 000 60 455 000 63 990 389 17 279 250
transfers and contributions
Drawing from the table above, although the Municipality has been tabling and subsequently
adopting surplus budgets for the past five (05) budget years there are other factors that need to
be considered to determine whether the budgeted was funded/unfunded.
Table below shows a comparison of creditors and cash & cash equivalents and investments for
the past five (05) years under review:
Page 9 of 29
Assessment of municipe/ slate of finance and performance of Ditsobolla Local Municipality.
0307
Factors which have contributed to the budget being UNFUNDED are the following:
Based on the above, the status of the budget for the period under review is presented below:
Tabling and adopting an unfunded budget might be an indication that the Municipality is struggling
to generate as well as collecting billed revenue for appropriation into funding the expenditure
priorities, or the Municipality might be collecting sufficient revenue but struggling with expenditure
management, thereby spending on non-core and non-essential expenditure items.
Overspending is normally caused by the Municipality incurring more expenditure than the
anticipated revenue, this inevitably leads to the Municipality being unable to settle the invoices
received from service providers and as a consequence, increasing the creditors book. The
creditors book that does not have concomitant cash reserves results in the budget being
unfunded, Ditsobotla Local Municipality has for a long period of time been exposed to these
challenges which eventually escalated to become a crisis.
Page 10 of 29
Assessmont of municipal state of finance and performance of Ditsobot/a Local Municipality.
0308
5.1.2 Revenue
Section 18(1)(a) of the MFMA states that an annual budget may only be funded from realistically
anticipated revenues to be collected.
For a projected revenue collection to be deemed realistic the Municipality must take into account
the projected revenue for the current year based on collection levels to date as well as actual
revenue collected in previous financial years.
Revenue is defined as the gross inflow of economic benefits or service potential during the
reporting period when those inflows result in an increase in net assets, other than increases
relating to contributions from owners. Therefore, any funds which do not increase the net assets
base of the Municipality cannot be classified and recognised as revenue.
Operating Revenue
The table below depicts revenue adjusted budget for the five (05) financial years ending 2019/20
Ren!a! of b:olnes and equiprrent 3 092 J 748 3 500 2 000 1 067 21% -7% -43% -47%
ln~restcamud - exk:mal investnen~ 1100 1100 1000 1 000 1.000 0% .911;.. I 0% 100%
ln:Cresteamed - ou~nding de-bbls 6 336 '1500 4 500 28 000 56000 -29% 0% 522¾ 100%
01\/idendsrereived
Fines, pona11es and fi>rfeit 325 205 200 201 507 -37% -2% 0% 153%
Licences 2nd permit 2 522 2149 300 4 300 2 900 -15% -85% 1333% -33%»
Agency servtees 4581, 4032 4 000 7 600
Transhrsand subsid~s 95 419 i 96 792 102 042 115 707 135203 1.4% 5% 13% 17%
I
Otier revenue 2 1383! 1350 2000 1908 2 000 -2% 48% -5% 5%
i
Total Revenue (excluding capital
transfers and contributions) T 3757451 406 246 405 542 506 456 565 5B)
-- '-------~-------
6% 0% 25o/tt 12'%
The following are highlights of the observations made from the table above:
,!, Property Rates budget increase of 8% and 6% was recorded in 2016/17 and 2017/18
financial years respectively. The budget was stagnant in 2018/19 indicating a deterioration
in the revenue generating potential of the municipality during this year. An increase of 11%
was witnessed in 2019/20 indicating an improvement.
Page 11 of 29
Assessment of municipal state of financo and performance of Ditsobolla Local Municipality.
0309
2019/20 were below the CPI indicating that these increases were not real growth as the
growth rate was below inflation rate.
·.4- Water budgeted revenue increased by 26% in 2016/17 and decreased by 13% in 2017 /18.
Another increase of 53% was recorded in 2018/19 and in the most recent financial year
2019/20 a decrease of 16% was recorded. There is an inconsistence in budgeting for
water revenue as the amounts keep fluctuating from year to year and being at worst in the
most recent years call for urgent attention for corrective measures to be implemented.
J;. Sanitation budgeted revenue increased by 55% in 2016/17 and decreased by 13% in
2017/18. A significant increase of 240% was recorded in 2018/19 and there was no
movement in 2019/20. Inconsistent fluctuations in budgeted sanitation revenue are
concerning which may require urgent attention to analyse the cause for corrective
measures to be implemented.
,I, Transfers and subsidies budget increased by 1,4%, 5%, 13% and 17% in 2016/17,
2017/18, 2018/19 and 2019/20 respectively. The transfers and subsidies budget has been
gradually increasing over the years.
,I,, Interest on investment revenue maintained the same revenue in 2016/17 decreased by
9% in 2017/18 and remained constant in 2018/19 and increased by 100% 2019/20.
,I., License and permits decreased by 15% in 2016/17 and maintained a decrease of 86% in
2017/18. A drastic increase of 1333% was recorded in 2018/19 and 33% in 2019/20. The
significant fluctuating movements implies that municipality's projections are not
realistically anticipated and calls for urgent attention for corrective measures to be devised
and implemented.
"L Other revenue also recorded significant fluctuations of -2%, 48%, -5% and 5% over the
respective years 2016/17, 2017/18, 2018/19 and 2019/20 which implies unrealistic
projections and inconsistent revenue classification.
Page 12 of 29
Assessment of municipal state of finance and performance of Ditsobotla Local Municipality.
0310
The following table reflects a comparison of the actual and budgeted revenue per source for the
five (05) financial years ending 30 June 2020.
Actual
Variance
Variance%
Actual Growth Rate
--------~"~-----------+- - - - - + - - - -
Service Charc;es
Budgeted
Actual
Variance
Variance%
Actual Growth Rate
~
Budgeted
Actual
Varlance
Variance%
Actual Growth Rate
Other Revenue
Budgeted
Actual
Variance
Variance%
Actual Growth Rate
Total Revenue
Budgeted
Actual
Variance
Variance%
Actual Growth Rate
Own Revenue
Budgeted
Actual
Variance
Variance%
Actual Growth Rate
Own Revenue as % of
Total Revenue.~A_c_tu_a_l~/- ~ - - - -
The following are highlights of the observations made from the table above:
Jc, Property rates showed a consecutive under achievement of revenue targets over two out
of the five years under review. The extent of the under achievement each year was -23%
and -6% for 2015/16 and 2016/17 respectively. Under achievement of property rates
budget is an indication of either ineffective billing or weakness in compilation of budgets
or issues of financial controls and management of the municipality.
Page 13 of 29
Assessment of municipal state of finance and performanco of Ditsobol/a Local Municipality.
0311
,l; Service charges recorded an under achievement of its revenue targets for 4 out of the 5
years under review. The extent of the variance between budgeted and actual revenue
each year was -17%, -2%, 32%, -10% and -40% for the five years under review
respectively. An adverse variance is an indication of poor budgeting methods and
unrealistic determination of budgeted figures.
i Transfers and subsidies/Grants recorded an over achievement of budget in all the financial
years as a result budgeted amount being lesser than actual amounts received for the 5
years. This indicates ineffective budget and forecasting controls.
Other revenue recorded an under achievement of revenue targets for the last year,
2019/20 with the extent of the variance between the actual and budget being -3%.
·J. Total Revenue, recorded an underachievement of-2% and -17% in 2015/16 and 2019/20
respectively. Under achievement of budget is an indication of either a challenge in capacity
to implement, ineffective billing and credit control, weakness in compilation of budgets or
issues of financial controls and management of the municipality. The municipality needs
to investigate the cause in order to devise corrective measures to be implemented.
·J. Own Revenue, recorded an under achievement of revenue targets for 2 of the 5 years
under review. An under achievement was recorded in 2015/16 and 2019/20 with the extent
of variance between actual and budgeted revenue being -13% and -27% for the respective
financial years. Own revenue constitutes an average of 70% of the total revenue for each
year.
The following table reflects actual revenue per source for the five (5) financial years ending 30
June 2020.
2016 37 295 453 176744513 122 798 276 31108 415 367 946 657 245 148 381
2017 49 089 879 235 481 620 151 228 079 37 916 532 473 716110 322 488 031
2018 56 084 599 307 950 307 130 293 224 51 692 530 546 020 660 415 727 436
2019 59 996 429 269 511 966 161400036 70 467 577 561 376 008 399 975 972
2020 65 614 538 177 272 318 157 555 796 70 194 634 470 637 286 313081490
Total 268 080 898 1166 960 724 723 275 411 261 379 688 2 419 696 721 1696421310
% 11% 48% 30% 11% 100% 70%
Page 14 of 29
Assessmen/ of municipal state of finance and performance of Ditsobol/a Local Municipality.
0312
The graph below reflects sources of revenue for the municipality for the five (5) financial years.
Total revenue raised by the municipality for the 5 years amounts to R2.4 billion and service
charges is the biggest source of revenue which contributes 48%, followed by grants transfers at
30% then other revenue and property rates at 11 %.Of total revenue, own revenue accounted an
average of 70%.
Revenue collection remains a challenge witnessed by high debt impairment amounts, low
collection rate and high net debtors days throughout the five years and that derails service
delivery.
5.1.3 Expenditure
Section 18(1 )(a) of the MFMA states that an annual budget may only be funded from realistically
anticipated revenues to be collected.
Funding the budget basically means "funding the expenditure". Funding the expenditure in
essence means that the Municipality will realistically project revenue that it anticipates to collect
during the budget year. The Municipality will then fund the expenditure by appropriating the
realistically anticipated revenue to budgeted expenditure.
The implication of the above is that, budgeted expenditure cannot exceed budgeted revenue
because budgeted expenditure can only be to the maximum of the realistically budgeted revenue.
It then follows that, a budget wherein expenditure exceeds anticipated revenue is not compliant
with provisions of Section 18(1 )(a) of the MFMA, and such budget is UNFUNDED.
Page 15 of 29
Assessment of municipal state of finance and performance of Dilsobolla Local Municipality.
0313
Operating Expenditure
The table below depicts operating expenditure adjusted budget for the 5 financial years ending
30 June 2019-20.
---------------
North West: Ditsobotla(NW384) • Table A4 Budgeted Financial Performance (Expenditure)
..
Oescrtp11on I Ref i 2015/16 2016/17
!
I 2011/16
I 2018/19 '
I
I
2019/20 Percentage Growth each year
--•---
' 1 I Adjusted Adjusted Adjusted Adju,ted Adjusted
2016117 2017118 2018119 2019/20
I Budget Budget Budget Budget Budget
ExQendtture B~ T~Q• ROOD ROOO ROOD ROOO r ROOO
Errployeerelall<ICDSG r2
I
145 253 156292 167 882 186 21J i 187 531 8% 7% 11% 1%
Remmernfionofoourd\ors 12910 13700 31186 !
Debl~irirenl
l3
I 28893 20000
14700
20500 39343
16500
233107
6%
-31%
7%
3%
112%
92%
-47%
492%
Dcprecia&on and asset ITTl}aifrrl!nl
r
2 32 531 31764 31764 50123 300(,() -2% 0% !i8% -40%
Finance charges 1100 870 930 -21% 7% -100% 0%
The following are highlights of the observations made from the table above:
Employee related costs recorded a budget increase of 8%, 7%, 11 % and 1% in 2016/17,
2017/18, 2018/19 and 2019/20 respectively. The increase in employee costs budget over
the years could be a sign of an increase in 'acting' costs for unfilled vacancies.
,;\,. Remuneration of councilors maintained an increase over the first 3 years of 6%, 7% and
112% respectively. In 2019/20 there was a drastic decrease of 42% for the remuneration
budget.
4- Depreciation and asset impairment has recorded a decrease of 2% and 40% in 2016/17
and 2019/20 respectively. The only increase of 58% was recorded in 2018/19.
Page 16 of 29
Assessment of municipal stale of finance and performance of Dilsobolla Local Municipality.
0314
4'- Bulk purchases: Electricity recorded an increase of 17% and 12% in 2016/17 and 2019/20
respectively. A continuous decrease in successive years 2017/18 and 2018/19 of -22%
and -11% was recorded indicating that the municipality planned to procure less electricity
from the previous years. The municipality is advised to curb distribution loss by budgeting
sufficiently for repairs or maintenance of infrastructure assets.
·4- Contracted services recorded an increase of 40% in 2016/17 and an abnormal increase
of 212% in 2018/19. Decreases of 14% and 42% in 2017/18 and 2019/20 respectively
reflect lack of consistency in budgeting methods for contracted services.
J. The municipality tabled a deficit budget on financial performance in the most recent
financial year, which implies that budgeted revenue was exceeded by the budgeted
expenditure, this is a clear indication that the budget was unfunded for this year which is
a non-compliance with Section 18 of the MFMA.
The following table reflects a comparison of the actual and the budgeted operating expenditure
per source for the five (5) financial years ending 30 June 2020.
2015116
2016/17
2017/16
2018/19 !Actual...._
I
iVarianco
2019/20
The following are highlights of the observations made from the table above:
,I,. Employee related costs recorded an overspending of the budget for four of the five years
under review in 2015/16, 2016/17, 2017/18 and 2018/19. The municipality overspent on
the employee costs in these years despite an increase in the budgets for the afore
Page 17 of 29
Assessment of municipal state of finance and performance of Ditsobotla Local Municipality.
0315
l, Bulk purchases recorded an overspending in 3 of the 5 years under review and the extent
of the overspending was by 19%, 82% and 55% in 2015/16, 2018/19 and 2019/20
respectively. A decrease of budget 2018/19 of 11% was recorded which was unrealistic
when the municipality ended up overspending in this year in which the budget was
reduced. This is an indication of poor budgeting methods and unrealistic determination of
budgeted figures.
i Debt impairment was under budgeted in three of the 5 years under review with an adverse
percentage variance of -91%, -17% and -67% in 2015/16, 2018/19 and 2019/20
respectively. Although the debt impairment budget remained fairly high, budget increases
in 2016/17 and 2017/18 led to a positive variance over these years. The adverse variance
of the budget and actual reflects debtors were impaired more than what was anticipated
reflecting that the recoverability of debtors is on a worse state than what the municipality
is anticipating.
+ Depreciation and asset impairment recorded an unfavorable variance for 3 out of the 5
years under review indicating that poor budget and depreciation policies are being
implemented.
J,. Contracted services recorded a favorable variance for the 5 years under review. However
there have been drastic increases in the budget despite the actual expenditure being lower
that the budget the prior year. This is an indication of poor budget management and
controls.
The following table reflects actual operating expenditure per source for the five (5) financial years
ending 30 June 2020.
2015116 151 384 869 125 220 265 55 307 230 64 224 8861 2 065 640 134 061 423 532 264 313
2016117 168 253 411 114 710 529 11 322 031 54 690 992 2119513 121114876 472 211 352
--~----
2017118 172 220 854 82 341 359 41 879 230 1 586 366 120 635 475 418 663 284
------·~-~-- --•----
2018/19 194 792 930 156 643 065 46 015 095 36 101 566 2 188 750 140581046 576 322 452
2019/20 165 911 712 148 458 609 389 086 122 28119 917 13 674 866 118 329 563 863 580 789
Total 852 563 776 627 373 827 501 730 478 225 016 591 21 635 135 634 722 383 2 863 042190
30% 22% 18% 8% 1% 22% 100¾
Page 18 of 29
Assessment of municipal stale of finance and performance of Ditsobotla Local Municipality.
0316
The graph below reflects sources of expenditure for the municipality for the five (5) financial years.
The muncipality recorded a total operating expenditure of R2.8 billion over the five years under
review. Employee costs are the main cost driver as they constitute an average of 30% of the total
expenditure in each year, followed by bulk purchases and other expernditure at 22%, followed by
debt impairement at 18%, depreciation and asset impairement at 8% and contracted services at
1%. Contracted services shows to have contributed only 1 % of the total expenditure which is likely
an under statement due to misclassification of contracted services in the annual financial
statements.
Debt impairments amounts are of great concern as they constitute R501 million of the total own
generated revenue of R1.6 billion which translates to an average of 31% for each of the five
financial years under review. This is an indication that 31 % of the billed revenue is being written
off each year reflecting inability to collect revenue.
Depreciation & asset impairment constitutes an average of 8% of the total expenditure which is
an indication that municpality's assets continue to depreciate rapidly and loosing their value in
use. To compensate for this the municipality is expected to invest more on repairing and
maintaining its service delivery assets to ensure that their life span as well as the value-in-use
gets to be preserved and extended.
Page 19 of 29
Assessment of municipal stale of finance and performance of Ditsobotta Local Municipality.
0317
I Ref I 2015/16 2016/17 2017/18 2016/19 2019120 Percentage Growth each year
t>r~-
-AilTusteci
-Adjusted· Adjusted Adjusted
1
/ Adjusted
i,. Budget 2016117 2017/1B 2018/19 ! 1, 2019/20
Budget Budget
~ Budget I
Funded by ROOD ROOD ROOD ROOD ROOD
Naional C-overnrrenl 37 392 39 875 55133 45 851 43 440 7% 38% -17% ·5%
Provincial Government 28 421
Dis~icl Municipality
iransllrs and subsi:Jies- capilal j
·-····-·
Transfers recognised• capital 4 37 392 39 B75 55133 45 851 71861
w
Borrowing 6
Internally generated funds
Total Capital Funding 7 37 392 39 875
' ·-···-
55133
.
-·-·- -
45 851
3 000
··--·
74 861
I
!
Grant funding as¾ of Total Capital Funding! : 100% 100% 100% ! 100% 96%
The following are highlights of the observations made from the table above:
·4,; The funding provided by the National Government has increased for the years 2016/17
and 2017/18 and eventually started decreasing for the last two years under review. The
budgeted grants increased by 7% in 2016/17 and by 38% in 2017/18, in 2018/19 the
budget decreased by 17% and by 5% in 2019/20. This is an indication that the National
Treasury has reduced the level of funding it was offering to the municipality most likely
due to non-compliance to its regulations.
Ji. There were no internally generated funds budget for the 4 out of 5 years under review.
This indicates that the Municipality has been highly reliant on Government Grants to fund
its capital projects.
J. From the calculation Grant Funding as a percentage of Total Capital Funding it can be
concluded that the municipality is highly dependent to grant funding for their capital
projects funding witnessed by average of 99% grant funding percentage over the years
under review.
Page 20 of 29
Assessment of municipal state of finance and performance of Ditsobotla Local Municipality,
0318
The following table reflects a comparison of the budgeted and the actual capital expenditure for
the five (5) financial years ending 30 June 2020.
Budget Capital Expenditure 37 392 000 39 875 000 55 133 000 45 851 000 74 861 098
Actual Capital Expenditure 34 237 443 80 506 698 46 244 856 30 577 658 19 137 226
lnvestrrent Property Additions
PPE AddiGons 33 758 172 80 506 698 46 244 856 30 577 658 19137226
lnfllngib~ Additions 479 271
Heritage Assels Addruons
Variance
Variance%
The following are highlights of the observations made from the table above:
J,. Capital expenditure was underspent for all the years except in 2016/17 where the budget
was overspent by R40 631 698, the extend of the variance from the budget being 102%.
,4. Underspending of the capital expenditure budget may also be an indication that the
municipality is experiencing cash flow difficulties to implement projects as a result of
spending capital expenditure budgeted funds on operating activities for which the funds
were not intended for .
.~ Variances witnessed all the years indicates discrepancies in planning and budgeting,
capacity challenges to implement projects and/or a lack of effective controls in place to
ensure that expenditure is incurred in accordance with an approved budget.
The table below reflects percentage capital expenditure per each category of assets for the
municipality for the five (5) financial years
Page 21 of 29
Assessmont of municipal state of finance and performance of Ditsobotla Local Municipality.
0319
The graph below reflects capital expenditure per each category of assets for the municipality for
the five (5) financial years.
Property Plant and Equipment is the highest spender category of the capital budget followed by
intangible assets. Nothing was spent on investment property and heritage assets for the all the
five years under review.
Page 22 of 29
Assessment of municipal state of finance and performance of Ditsobotla Local Municipality.
0320
The table below presents debtors book of the Municipality for the five (5) years ending 30 June
2020.
Low revenue collection negatively affects Municipalities' ability to finance their operations which
subsequently lead to increased debtors. Households debtors constitute the major part of the
debtors book balance averaging at 64 % of the total debtors. The debtors balance is continuously
rising year by year with no expectation of reducing. The above table indicates that 85% of the
total debtors' balance is being owed for more than 90 days and it is highly probable that they are
not going to be recovered considering the period the money has been owed for. Revenue
collection of the municipality requires urgent attention and corrective measures should be
implemented.
Quality credit control and effective collection methods needs to be implemented to improve
collection of billed revenue. Revenue Management should ensure affordable tariffs are set and
correct billing is done. Number of indigent households supported by the municipality may need to
be reviewed.
Debtors age analysis information was not captured in the budget tables for the years 2018/19 and
2019/20 highlighted in red above which was a limitation in our analysis.
Page 23 of 29
Assessment of municipal state of finance and performance of Ditsobo/la Local Municipality,
0321
The table below presents the outstanding creditors of the Municipality for the five (5) years ending
30 June 2020.
2015/16
2016/17
0
::::: c\:~~Eitly J "3 049 4_-721r·-· -----~7~-~-1~1L._27 300 -~-70 +--27~~~~ :_~: ---
t
3~~ :~~ :_~: I ---·90;0,_,,; __ _
.
~1=·=~~0~-l,~·r--··-··: I
l
-~~~-=
T rDrJe Creditors
201711 8
f-- - ...-.3-.0-4-9L
- - - -+:_,-~_l:-::-'-l_;_r--G~'e_·-n_e-cr-al--+-- . : -+--· :1
Bulk Electricily #DIV/0!
Bulk Water #OIV/01
2018/19 Trade Creditors #DIV/0!
Auditor-General
---·---·-·" -·-- -
Total
Bulk Electricity #DIV/0!
'Bulk Water ·· #OIV/0!
2019/20 Trade Creditors
Auditor-General
#DIV/0! ...•,
-- --#OMO,- --· I
Total #DIV/0l I
Total outstanding creditors over 90 days reported at 30 June 2018 amounted to over R300 million.
This is non-compliance with Section 65(2){e) of the MFMA which requires Municipalities to pay
invoices or statements within 30 days of receipt. The above table indicates that over 90% of the
total creditors' balance is outstanding for more than 90 days and that indicates financial distress.
Non payment of creditors can further be attributed to poor cash flow management and low
revenue collection.
Eskom which supplies bulk electricity is the highest owed creditor currently constituting 96% of
the total creditors.
The available cash is not sufficient to cover payment plans entered into with Eskom.
Creditors exceeds available cash and investments, meaning the Municipality is unable to service
the financial obligations as they are due and payable.
Creditors age analysis information was not captured in the budget tables for the years 2018/19
and 2019/20 highlighted in red above which was a limitation in our analysis.
Page 24 of 29
Assessment of municipal stale of finance and performance of Ditsobotla Local Municipality.
0322
[¼tcffradla>J: S1r(~U{\l\'.iloi:fo""1.S11t~;,'OCJOj
I m..16kl;il~poiMl9~1ll!'.l'J:cliotlpe1rrmi.J
'Sa1Bl:n(ia,,a.,.,,,,,,,v,r,ildgo,1ho!,ulioldll
-!
- r
! Eat1'jlrht ..,,1 (>~.roWg,,,tl"1<roll po m,,t,: 1511 1571 1571
: Rd."'ire.medcoo,a...iforll<ilj<nll»ui,liol!s\
i¼toft"'!~l!.~S~,{lll'.tl¢.:.fn!..,,,,.fe<mliS!lll,rr•n~5'0001 -I
lfot>l...iofFBSpv;i®il 1511 1511 mt
:ffiIIJWIMJoflrl•11n1N°mxtw!whwirn1t1
I l'Itr;"11""1R,alJet,m~1
/ 11a,t(i1>tes·pe1~'li!"'trortl
s.tt.(klit,si,rblo,1-dl!>'nmh)
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i Satto(f1"'1;,ilomjjp,ll!L,'j
i Ehlq (t,lre: 1«oeh:llr,,rrmt,I
; Rela,/,,,rac,nc,pa,ilffi)
:Rev!!001 cost of ~ """" proyll«I (~OOCI
[ l'I<¢11<e(tmif 1dJ!ilMnl)(i,,..-.os,b,nliaJl"""Dll 1/cl!l?ilA)
i l'It!"l/fitle,er.pli:,,s:,...;i,,o:dret.t.arul~•:tli¼i1,icos,of
',,<tie-017itl!P:'l,IJ
' ll'E(nB"'5c!6licllo,l"'nJiJ<ot""1!thcllp1u,,,,111
I SJll!ID1(il'101llc!lro,w,l~lol"""°toill<ligolthcsneliol:hl
llilq/ct,,, "'~f In"''" cl~ lr.!Jl'1UldJ;«.1 i>:Mrocll fl"""'1hl
R,w I•'""" of on, ,.,.,,.1 ....u~ l:~g,nl hotMliol!sl
llm:cl HM,i• ,et,1,_
11:mi>J-q>~t<l<e-
(m
The following are highlights of the observations made from the table above:
,4- Table A 10 of A schedules which indicates the level of achievement of basic services
provision is not being completed by the municipality which is an indication that the
municipality is not addressing service delivery performance.
i The table is supposed to provide details of how the Municipality is delivering services to
the communities and consequently reducing the developmental backlogs.
!- How the Municipality is providing Free Basic Services to indigent communities and
consequently reducing the financial and poverty strains.
Page 25 of 29
Assessment of municipal state of finance and performance of Dilsobotla Local Municipality,
0323
In terms of Section 138 which states that 'When determining for the purposes of section 137 the
seriousness of a financial problem, all relevant facts must be considered, and the following
factors, singly or in combination, may indicate a serious financial problem:
(a) the municipality has failed to make payments as and when due; which is witnessed by an
creditors payment period which are abnormally above the norm of 30 days over the entire
5-year period under review and creditors age analysis with over 350 million rand being
owed for more than 90 days at 30 June 2020.
Creditors Payment
Period (Trade Creditors)
(d) The municipality had an operating deficit in excess offive percent of revenue in the most
recent financial year for which financial information is available, as witnessed by a negative
net operating surplus margin for the four out of five years since 2014/15 financial year.
(e) Non submission of Annual Financial Statements to Auditor General for auditing within two
months after the end of the financial year as required by section 126(1 ){a) of the MFMA. For
the past recent financial year Auditor General reported late submission of AFS by the
municipality.
(f) The Auditor-General has withheld an opinion or issued a disclaimer due to inadequacies
in the financial statements or records of the municipality, or has issued an opinion which
identifies a serious financial problem in the municipality, as witnessed by the qualified audit
opinions in 2015/16 and disclaimer of opinion over 4 years of the 5 years under review.
(h) Current Ratio below the norm over the 5 years is a material existing condition which
indicates that the municipality is likely to be unable for financial reason to meet its obligations.
Current Ratio
Page 26 of 29
Assessment of municipal slate of finance and performance of Ditsobotla Local Municipality.
0324
S140 of the MFMA provides criteria for determining serious or persistent material breach of
financial commitments. S140(2) states factors which singly or in combination, may indicate that a
municipality is in serious material breach of its obligations to meet its financial commitments:
S140(2)(C) the municipality has failed to make any other payment as and when due, which
individually or in the aggregate is more than an amount as may be prescribed or, if none is
prescribed, more than two per cent of the municipality's budgeted operating expenditure.
The table below presents the percentage of total creditors (payables from exchange transactions)
as a percentage of the budgeted operating expenditure.
In all the years under review, the percentage of creditors as a percentage of the budgeted
operating expenditure has drastically exceeded 2% which is in contravention of S140 (2)(c)
therefore the municipality is in material breach of financial commitments and in did a candidate
for intervention.
Page 27 of 29
Assessment of municipal state of finance and p0rformanco of Ditsobotla Local Municipality.
0325
From the perspective gained from the budget analysis Ditsobotla Local Municipality is struggling
to generate as well as to collect billed revenue for appropriation into funding the expenditure
priorities, or the Municipality might be collecting sufficient revenue but struggling with expenditure
management, thereby spending on non-core and non-essential expenditure items.
In addition, the municipality triggered both S138 and S140 of the MFMA therefore it is a candidate
for intervention. Intervention is inevitable to assist the municipality to remain financially
sustainable.
The municipality need to improve its liquidity position by implementing good debtor's management
process and review its tariffs to ensure they are cost reflective to reduce deficits witnessed in all
services, in order to stabilise financially.
Institutionally the municipality need to capacitate its employees and follow the prescripts of the
MFMA and complementary legislation in order to reduce high reported irregular, fruitless &
wasteful and unauthorized expenditure.
Deterioration of budgeted figures has been witnessed year by year being at its worst in the most
recent financial year which calls for urgent attention for intervention, otherwise the municipality
will not be able to deliver on its mandate in the foreseeable future.
The municipality needs to start reporting on service deivery performance which it has not been
reporting on for the past years to indicate their level of achievement of basic services provision.
We therefore recommend a status quo assessment for factual correctness and context of the
identified possible causes of the financial difficulties indicators raised during the analysis in order
to devise corrective measures for implementation.
Page 28 of 29
Assessment of municipal state of finance and performance of Ditsobotla Local Municipality.
0326
Whilst due care has been taken by Thuso Financial Consultants in the preparation of the
opinions, assessments and information provided in this document Thuso does not give any
warranties as to their correctness, accuracy or completeness, nor do they assume liability for
any losses arising from actions taken based on the information provided.
This document contains information that is confidential and is for use by intended parties only.
Yours Sincerely
D Muradya
The contents of this report were presented, discussed and accepted by the Provincial Treasury
represented by the following officials.
Ms M Ledingoane
Director; MFM
Project Sponsor
Page 29 of 29
Assessment of municipal state of finance and performance of Dilsobotla Local Municipality.
CC21
0327
the Pre:rn1er
0328
f) EXCO agreed that in view of the Dltsobotla local Munldpallty being In financial
distress. a flnanciai recovery plan should be developed and Implemented for the
Municipality to become sustainable .
• ,'Q, f( Jonkers
Executive Council Support
I
Dn: -"t;f~~~~
•
0329
CC22.
I
KRIEK WASSENAAR & VENTER ING ROKUREURS -- ATTORNEYS
THE PRESIDENT
REPUBLIC OF SOUTH AFRICA
UNION BUILDINGS URGENT ATTENTION
PRETORIA
By e-mail: [email protected]
[email protected]
[email protected]
[email protected]
By e-mail: [email protected]
Mand isa [email protected]
[email protected]
[email protected]
sifiso [email protected] .za
[email protected]
[email protected]
[email protected]
MINISTER OF FINANCE
40 CHURCH SQUARE
2ND FLOOR, OLD RESERVE BANK BUILDING
PRETORIA
By e-mail: [email protected]
[email protected]
Cleopatra .Mosa [email protected] .za
[email protected]
www.kwv-inc.com
(t) (+27) 12 756 7566• (f) (+27) 86 596 8799 (a) 3,a Floor, HB Forum Building, 13 Stamvrug Road, Val de Grace, Pretoria 0184
'IJi;!! ,~;~il[~!i:f!!~!;~ ;a,~iritHi iir :L :L,, !F~r!!tliH!;!f:F~s.mik l F1'f"i)!ifi!iti!!: E~G'ilft! :iti:J:J:!!'~I" t,V,i'j'iiij;1::1;j;i!i:! m~!;ii!ifi:ij~; ;~~[~i:1{1: ,. (f.'i"~N !P~e~n:; ,!W[i:~l'.i!;t~itMllii!!i:!~
0330
www.kwv-inc.com
MMABATHO
By e-mail: [email protected] a
m [email protected] .za
[email protected] .za
[email protected] v.za
kra ba [email protected] .za
[email protected] a
[email protected] .za
mathibeditsholofelo@ gmail.com
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By e-mail: [email protected]
[email protected]
M [email protected]
By e-mail: [email protected]
[email protected]
Mr President/Minister/S ir/Madam
URGENT: SAKELIGA NPC / THE PRESIDENT OF THE REPUBLIC OF SOUTH AFRICA & OTHERS
constitutional rights, constitutional order, the rule of law, free market principles and a just and
sustainable business environment within the Republic of South Africa. Our client specifically
seeks to promote economic prosperity and the sustaining of favourable business environments
3. Sakeliga is already the applicant in a High Court application issued in the North West High Court,
Mahikeng, under case number M311/2021. Except for the President, all the parties to which
4. Sakeliga inter alia seeks a structured interdict with the intention that the Court, for as long as it
may be necessary, retains a constitutional oversight role to ensure that all relevant players in
the three different spheres of government (national, provincial and local government) comply
with their constitutional duties in regard to the severely financially distressed Ditsobotla Local
Municipality. The application has one goal: ensuring effective and functional local government.
5. Ditsobotla Local Municipality has over the last 10 years suffered a progressive collapse in
municipal governance. Currently, the residents and businesses within Ditsobotla suffer due to
municipal management and basic service delivery failure. Despite various attempts to enforce
voluntary intervention in terms of section 139(1) of the Constitution, the North West province
has been unsuccessful in its attempts to remedy the growing crisis in Ditsobotla.
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factionalism, and corruption. Fiscal and administrative control in the municipality is non-
existent. The municipality is factually insolvent. According to our client's records, the
municipality has received year-on-year qualified audits with serious detrimental findings. This
situation has had a direct negative social and economic impact on every resident and every
business operating within its jurisdictional area. Many businesses, including large industries,
have moved their operations to other jurisdictions. Ditsobotla has become an unsustainable
7. Gross mismanagement in the municipality also endangers the national electricity and water
networks. Ditsobotla plays a significant role in the Eskom debt-crisis. According to our client's
records, the municipality has also failed to pay its debts to the former Sedibeng Water Board.
Sedibeng Water has apparently since the issuing of Sakeliga's application collapsed.
8. Like the Eskom debt-crisis, concerns exist about the municipality's ability to provide its residents
proper water, sanitation, and other municipal services. Sakeliga believes that Ditsobotla is no
9. In the already issued application, our client inter alia seeks the following relief:
9.1 That Ditsobotla be found to be in serious and persistent material breach of its
terms of section 139(5) of the Constitution, read with sections 136(4), 139 and 140 of
9.3 That the MEC for Cooperative Governance, alternatively the provincial government of
9.4.1 Determine the reasons for the crisis in Ditsobotla's financial affairs;
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9.4.3 Instruct the Municipal Finance Recovery Service of the National Treasury to
9.4.4 Recommend appropriat e changes to the municipali ty's budget and revenue
9.5 That the MEC: Cooperative Governance be directed to prepare a report to be filed
with the court every two calendar months after the granting of the order, setting out
the steps taken by the respondents, as the case may be, in recovering the Ditsobotla
Local Municipali ty, which report shall provide updates on the implemen tation of the
9.6 That all reports prepared during the recovery of Ditsobotla be provided to Sakeliga and
10. It is worth mentioning that the national and provincial respondents to the application have
all
opposed our client's application. Ditsobotla has filed a notice of intention to oppose but failed
to file any answering affidavits in response to the applicant's constitutio nal challenge. Eskom
Holdings SOC Ltd, who is also a respondent in the application, filed an affidavit which largely
11. We can confirm that the application has been referred to case manageme nt and that a meeting
with the presiding judge occurred on 7 September 2022. A further case manageme nt hearing
has been scheduled for 17 November 2022 to dispose of interlocuto ry applications and finally
12. Sakeliga believes that answering affidavits filed by the respondents, except those filed
by
Eskom, have raised only procedural defences to the constitutio nal challenge, whilst effectively
admitting that Ditsobotla is in long-term systemic financial and administra tive collapse.
13. On 21 Septembe r 2022, our client was informed by supporters conducting business
in
Ditsobotla , that the provincial governme nt on 15 Septembe r 2022 proceeded to invoke section
139(1) of the Constitutio n and called for the disbanding of the municipal council, the
appointme nt of an administra tor and the developme nt of a recovery plan. This decision to again
invoke discretiona ry interventio n, particularly in the view of the severe and persistent breach
by Ditsobotla of its ability to provide basic services and the serious and continuing crisis
in
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Ditsobotla's financial affairs, came as a shock to our client- especially given the already pending
14. On what basis can voluntary intervention in terms of section 139(1) of the Constitution still be
an option?
15.1 Ditsobotla does not keep full and proper records of its affairs. This has resulted in
According to the AGSA's Material Irregularities Status Report as of 15 April 2022, the
position was so poor that it disclosed a material uncertainty regarding its ability to
continue operations. (AGSA Material Irregularities Status Report 15 April 2022 p72-
p73).
15.2 Ditsobotla has also been identified as one of twenty-four public institutions that have
failed to make any progress in resolving material irregularities over the last audit
15.3 According to the AGSA's General Report issued on 15 June 20222, Ditsobotla's audit
where the accounting officers have taken little or no action {AGSA General Report 15
June 2022 p52). The audit outcomes have remained disclaimed outcomes and
15.4 Unauthorised expenditure increased from R87.1 million (2019), to R134 million (2020).
Fruitless and wasteful spend increased from R153.9 million (2019), to R209.1 million
(2020). Irregular spending increased from R119.9 million (2019) to R159.9 million
(2020). No further entity specific opinions have been made available since publication
of the AGSA General Report. However, Sakeliga has been advised that the issue has
not improved.
15.5 Municipal workers regularly face problems with the prompt payment of salaries.
According to Sakeliga's supporters in Ditsobotla, the municipality has still not paid
employees for August 2022 due to 'cash flow problems' (the municipality's
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spokesperson, Pius Batsile has admitted this fact to journalists on 22 September 2022).
Sakeliga has been advised that salaries for September 2022 has already become due,
15.6 The failure to pay employees, the lack of an appointed administrator and the anarchy
resulting from the dissolving of the municipal council, have resulted in unsupervised
15.7 Only a handful of workers are working (without payment) to ensure that at least water
and electricity services remain. Most of the municipal staff have refused to return to
15.8 The municipal offices have been closed, and no one is supervising the municipality.
15.9 The provincial executive has continued to withhold the municipality's equitable share.
15.10 Ditsobotla remains in breach of its contractual and public duty to pay Eskom. According
to our sources, Ditsobotla's outstanding account with Eskom is currently more than
16. The municipality is clearly in persistent breach of its service delivery obligations. Ditsobotla's
17. Section 139(1) can only be implemented under circumstances where there is a failure to fulfil
an executive obligation in terms of the Constitution or legislation. The section is not designed
18. Where a municipality faces a crisis in its financial affairs, is in serious or persistent material
breach of its obligations to provide basic services or to meet its financial commitments, or admits
that it is unable to meet its obligations or financial commitments, the relevant provincial
executive is constitutionally obligated to intervene in terms of section 139(5) of the
Constitution. If the provincial executive fails to intervene, the obligation falls onto the national
executive to do so in terms of section 139(7) of the Constitution.
19. Sakeliga believes that the provincial executive is acting in breach of its constitutional obligations
by placing Ditsobotla under section 139(1) voluntary intervention under circumstances where
a clear case for mandatory intervention under section 139(5) has existed since prior to the
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issuing of our client's first application. However, the current collapse in municipal government
at Ditsobotla has shifted the need for mandatory from a constitutional priority to a
constitutional emergency.
20. The main features of this crisis in Ditsobotla are (1) the severe and persistent financial
mandatory intervention, (3) the severe cash-flow problems facing the municipality, and the
subsequent failure to pay employees, (4) the closing of the municipal offices, (5) the failure to
ensure that an administrator is appointed to ensure that basic municipal services can continue
and (6) the dispute between the municipal council and the provincial executive regarding those
21. Sakeliga and its supporters are aggrieved by the failure by all spheres of government to
meaningfully engage with them over the last 18 months, especially during the months preceding
the collapse in Ditsobotla. Our client's supporters are people and businesses directly affected
by state failure. Despite litigation having been initiated by Sakeliga and its supporters to seek
long-term solutions, specific mandatory intervention, and court oversight in Ditsobotla, our
client and its supporters have only been ignored. Whilst national and provincial executives plan,
the residents of Ditsobotla face the consequences of failing municipal structures and constant
22. Not a single party to Sakeliga's current application before the High Court has provided our client
plans. Our client only found out about the municipal collapse in Ditsobotla when supporters
started contacting Sakeliga on 21 September 2022 about the closure of the municipal offices
and the unlawful debt-collection activities being employed by desperate unpaid employees.
23. Sakeliga insists that government, especially the national executive, meet with our client to
meaningfully engage on the issues underlying the crisis and possible solutions to those
problems facing recovery. Our client and its supporters have a right to meaningful engagement,
especially where state failures directly affect municipal residents' dignity and constitutional
rights.
24. Our client requests an urgent meeting with government representatives and suggests a meeting
on 27 September 2022 at 09h00, alternatively for an urgent time and date to be arranged.
25. Furthermore our client demands the following undertakings from government:
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25.1 That the provincial executive immediately impose urgent mandatory intervention in
Ditsobotla in terms of section 139(5) of the Constitution, alternatively and in the event
of the provincial executive failing and/or refusing to do so, that the national executive
Constitution;
25.3 That that the provincial executive release to the administrator a sufficient portion of
salaries for August 2022 and September 2022 by no later than 27 September 2022;
25.4 That the appointed administrator be authorised to pay municipal employees and to
oversee the day to day management and control of the municipal administration and
25.5 That the appointed administrator be instructed to meet with Sakeliga and the residents
26. Our client requires a response to this letter by no later than Monday, 26 September 2022 at
10h00. Our client reserves the right to approach the High Court for constitutional, declaratory,
and mandatory relief, which can include relief sought by means of an urgent application. Our
client would of course prefer to meaningfully engage with government to seek solutions.
Yours faithfully,
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Rohann Eloff
Importance: High
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
1
0339
Recipient Delivery
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
Mekgwe Nthabiseng
[email protected]
[email protected]
Zenani Zingisa
Good day
We refer to the above matter and attached hereto a letter for your urgent attention.
Yours faithfully
Rohann Eloff
Prokureur / Attorney
• (a) 3de Vloer / 3rd Floor, HB Forum Gebou / Buidling, Stamvrugstraat 13 Stamvrug Street, Val de Grace, Pretoria, 0184
• (p) Postnet Suite #11, Privaatsak / Private Bag X025, Lynnwood Ridge, 0040 • BTW Reg: 4020260685 • Reg: 2012/030418/21
2
rt)
rJ
0340
u STATUS OF MATERIAL
U IRREGULARITIES IN
NATIONAL, PROVINCIAL
ND LOCAL GOVERNMENT
AUDITOR-GENERAL
SOUTH AFRICA
We did not hesitate to use our enforcement mandate if the AO/ AA did not take appropriate action.
The report is presented per sphere of government. Included in the report are the 278 Mis to which the
AO/ AA responded. The movement from total Mis notified to those reported in the Ml report is as follows:
MATERIAL IRREGULARITIES
Notified Type Ml description Status Status description
0342
lrregulqrjly: Non-compliance with section 65(2)(1) of The municipality also instructed the attorneys to initiote legal
the MFMA action to recover the losses, which was still in progress.
l!r!QgQ: Moterial finoncial loss of R43,3 million
The municipality referred the matter to the Hawks. This
investigation was still underway.
·.
Ditsobotla LM
.
113. 11 June 2021 Repeal The municipality did not keep full and proper records Recommendations The AO failed to implement the plonned actions to resolve the
disclaimed audit of its financial affairs, which resulted in a repeat Ml.
opinion disclaimed opinion on its financial statements of We notified the AO of the following recommendations, which
2019-20. The impoct was substantial harm to the should be implemented by 9 June 2022:
municipality as its financial position was so poor that • The non-complionce with section 62(1 )(b) of the MFMA
it disclosed a moterial uncertainly regarding its obility should be investigoted to detennine the reasons ond
to continue operations. This, in turn, is likely to have circumstances that led to the non-complionce for the
on impact on the municipolity's ability to discharge purpose of taking oppropriote corrective octions ond
its service-delivery mondate. addressing control weaknesses.
• Based on the reasons ond circumstances, appropriate action
lrregulqrily: Non-compliance with section 62( 1){b) of should be taken lo develop ond commence with !he
!he MFMA implementation of an action plan lo oddress poor record
l!r!QgQ: Substantial harm to public sector institution keeping so Iha! full and proper records of !he financial affoirs
of the municipolity are kepi in accordonce with any
prescribed norms and standards, as required by 62( 1) (b) of
!he MFMA. The plan should include onticipoled lime frames
and oddress !he following key areas, as a minimum:
0 Complete asset register of oll of the municipolity's
infrastructure assets, including work in progress ond
informotion for assets Iha! have been fully depreciated
bu! are still in use
0 Billing information ond reconciliations lo support revenue
from service charges
0 Reconciliations of all bank accounts of !he municipolity
MATERIAL IRREGULARITIES
No, Notified Type description Status ·ipti
0343
114. 3 March 2021 Loss of During 2018, the municipality invested with VBS, Appropriate A claim was lodged with the liquidators. The municipality
investments which was not a registered bank in terms of the action is being received a payment of R10,5 million from the VBS liquidators.
Banks Act. taken to resolve
An investigation was undertaken and responsible officials
the Ml
identified. Certain officials were disciplined in respect of their
Irregularity: Non-compliance with municipal
involvement in the matter, including the suspended AO, where
investment regulation 6(c)
disciplinary proceedings were also finalised during December
Impact: Material financial loss of R150 million
2021, and the contract was terminated.
(Recovered loss to date: Rl0,5 million)
MATERIAL IRREGULARITIES
0344
CC24
AUDITOR-GENERAL
SOUTH AFRICA
We ore fully committed to implementing the enhanced In 29 cases where municipal managers did not
powers given to our office - without fear, favour appropriately address the Mis we reported to them,
or prejudice. If accounting officers and authorities, we used our expanded mandate by including
supported by their political leadership, fulfil their recommendations in the audit reports or the auditor-
legislated responsibilities and commit to toking swift general invoked her additional powers of referral and
action when we notify them of an Ml, there is no need remedial action. The municipalities where we took
for us to use our remedial and referral powers. Yet we further action (as detailed in the following graphic), ore
do not hesitate to use these powers when accounting also where we typically experience a slow response to
officers or authorities do not deal with Mis with the our findings and to improving the control environment.
required seriousness.
oction
Enquiries: MJ Nengovhela
--Tel: · · · ... Q18'188 2142
Email:
OFFICE OF THE MEC
[email protected]
Cllr. M Mokgothu
The Mayor
Ditsobotla local Municipality
P. 0. Box 7
LICHTENBURG
2470
This serves to inform you that the introductory of the intervention team will conduct the status quo
assessment.The purpose of the status quo assement is to identify the municipalities that are on
financial crisis in line with provisions of chapter 13 of the MFMA and subsequently placed under
mandatory intervention in line with section 139 (5) (a) and (c) of the Constitution read together with
section 139 of the MFMA.
Yours sincerely
MS M:l-ffOSHO
MEC FOR FINANCE
DATE: I'
1
Jfl ,, / ::Jo ;:;,J
0347
CCU
ury
Department:
National Treasury
REPUBLIC OF SOUTH AFRICA
Private Bag Xl 15, Pretoria. 0001 • 40 Church Squnre, PRETORIA. 0002 • Tel:+27 12 315 5111, F11x:+27 12 4069D5S • www.treasury.gov.za
The letter dated 04 July 2021 from the North West Provincial Treasury to the Mayor hereby refers.
The National Treasury is aware of the most recent political infighting in Ditsobotla Local Municipality
as well as the alleged leadership battle between two Municipal Managers. As a result of this
leadership challenges, there is allegedly disagreements over who should have access to and control
over the municipal banking accounts. It is disheartening to observe this debacle in Ditsobotla in spite
of numerous municipal government structures' efforts, recommendations or initiatives from national
and provincial departments, and interventions put in place to remedy the situation. Notably, the
municipality has persistently demonstrated leadership instability (both at the political and
administrative level), negative audit outcomes and unfunded budgets for the past five years. At
most, the weak oversight by councils, significant financial problems and lack of consequence
management led to this crisis. Consequently, the municipality's ability to fulfil its constitutional
mandate, i.e., to provide sustainable services to its community, was negatively impacted by these
operational inefficiencies.
The municipality has been obtaining disclaimer audit opinions over the past three consecutive years
(2016/17 - 2020/21) as a result of internal controls deficiencies and inadequate record keeping. This
is a worse position as the municipality continuously fail to provide evidence for financial information
and disclosures in the financial statements. The concern is that the municipality has been relying on
consultants to fill the capacity gap within the Budget and Treasury Office (BTO).
Nkwiima wa liko • Gwama la Mllvhuso • Nasional~ Tcsourie • Lefaphii la BoseHhaba 1,, Matlotlo • uMnyango wezezimali • Litiko leT~timali ti'tVelonkhe • ·1irelo ya Matlotlo i!l BosetSh3haba
Tshebeletso ya Matlotlo a Naha • UMny,rngo wez.iMali • lseb-e leNgxowa Mali yelizwl:!
Furthermore, provision for service delivery has deteriorated in the municipality due to aged
infrastructure, which in most cases is affected by inadequate repairs and maintenance. As a result,
there are constantly service protests in the municipality. Residents of Ditsobotla have lost
confidence in the municipality to deliver basic services.
Given these challenges, the municipality was identified to be in financial and service delivery crisis
since it met the criteria outlined in Section 140 of the MFMA. The municipality has met the legal
requirements for a mandatory intervention under Section 139(5) of the Constitution read together
with Chapter 13 of the Municipal Finance Management Act of 2003 (Act No. 56 of 2003). Whilst the
process of developing and implementing the mandatory intervention in the municipality is in process,
the National Treasury will closely monitor the state of affairs in the municipality to ensure and enforce
compliance with the provisions of the MFMA.
Additionally, the municipality has been adopting unfunded budgets for the past five financial years
(2017/18 - 2021/22). Similar to previous years, National Treasury's preliminary assessment
indicates that 2022/23 MTREF budget is also unfunded and unsustainable over the medium term in
contravention of the provisions of Section 18 of the MFMA, which provides that a budget must
essentially be funded from a combination of cash derived from realistically anticipated revenues to be
collected in that year and cash backed surpluses of previous years not committed for other purposes
and borrowed funds. Therefore, adopting an unfunded budget constitutes a serious and material
breach of the MFMA.
The municipality has also failed to implement the measures necessary to address the challenges
and adhere to the requirements outlined in the letter from the North West provincial government. It is
within this context that the National Treasury withheld the July 2022 Equitable Share in terms of
Section 216(1) of the Constitution, which clearly state that the National Treasury must prescribe
measures to ensure both transparency and expenditure control in each sphere of government, by
introducing, generally recognised accounting practice, uniform expenditure classifications, and
uniform treasury norms and standards. Further, the above stated directs the National Treasury to
enforce compliance with the measures established in terms of the controls and may stop the transfer
of funds to an organ of state if that organ of state commits a serious or persistent material breach of
these measures.
The municipality is herewith given an opportunity in terms of Section 38(2)(a) of the Municipal
Finance Management Act (MFMA) to submit written representations to National Treasury for the
release the Equitable Share and all other funds to the municipality that are due in terms of S38(1 )(a)
and (b) of the MFMA by providing the following information:
1. Provide names of the Mayor, Speaker and other councillors elected in terms of the Structure
Act as amended;
0349
2. Provide a council resolution on the appointment of both acting Municipal Manager and Chief
Financial Officer;
3. Provide minutes and all other documentation (attendance register etc.) as evidence that the
council that adopted the 2022/23 MTREF Budget was approved by a legally constituted
council in terms of the Structure Act as amended;
4. Submit the 2022/23 MTREF budget information i.e. Adopted Budget A1 budget schedule,
Service Delivery and Budget Implementation (SDBIP) and Integrated Development plan
(IDP);
5. Provide the process plan for the recruitment and filling of all vacant senior positions (the plan
should not exceed three months);
6. Submit Council resolution on the invocation of S139(5)(a) and (c) of the constitution read with
section 139 of the Municipal Finance Management Act (MFMA);
7. Submit the Council Resolution on the roadmap to implement the SIU report;
8. Submit a detailed report on the unspent INEP grant earmarked for the upgrading the power
station and measures put in place to address the impasse;
9. Submit a progress report of the Disciplinary Board on matters referred to in relation
allegations against municipal officials;
10. Provide a council resolution on how the municipality will address the Eskom debt;
11. Convene Council to approve the funding plan to address the budget deficit over the medium
term and submit the Council resolution in this regard;
12. Complete the capturing of the Web enabled Audit action plan and FMCMM including its
implementation;
13. Submit council resolution on the implementation of consequence management in line with
section 171 of the MFMA reporting requirements;
14. Submit the report on the readiness by the municipality to submit the 2021/22 financial
statements as required by section 121 and 122 of the MFMA inclusive of the process plan;
and
15. Submit approved names of officials delegated as bank signatories.
0350
The above information should formally be submitted within seven days (7) of the date of the letter
to National Treasury. Once the National Treasury has received all these documents and has done
its own independent assessment and evaluation of the factual information, a meeting will be
arrangement with the Municipality to share our observations and findings.
Kind regards,
l
MALIJENG NGQALENI
DEPUTY DIRECTOR-GENERAL: INTERGOVERNMENTAL RELATIONS
DATE: 2 September 2022
.; l Ii,
0351
Elbie Swanepoel
The above matter and more specifically your dated 23 September 2022 and received by writer on the 26th September
2022 at 14H32 pm refers.
We however advise that the time allowed for the meeting is short notice and therefore impractical.
We commit to revert to you as soon as practically possible with a date of the proposed meeting.
t.\•v•.i;~• ...,v,1
J<,,.,,.~•: ,w,: C1:~· ~t;·J:•.:"•,.-, ~1~,.,,.)h~,...~'.-t:'i:
~~P-UBl.t-C (l,F S,Ch}TH Al'RJC.A.
Disclaimer
Privileged/Confidential information rnay be contained in this message. If you ai-e not the addressee indicated in this
message (or responsible for delivery of the message to such person) you may not copy or deliver this message to
anyone. In such case, you should destroy this message and kindly notify the sender by reply E-Mail. Please advise
imm(odiately if you or your employer do not consent to e-mail rnessagE,s of this kind. Opinions, conclusions and
other information in this message that clo not relate to the official business of the Department of Justice and
Constitutional Development shall be understood as neither given nor endo1·sed by it. All views expressed he1·ein are
the views of the author and do not reflect the views of the Department of Justice unless specifically stated
otherwise.
1
0352
ccz~
Elbie Swanepoel
Sir/ Madam
I acknowledge receipt of your email below, which refers to an urgent letter direct to our client in response to the
collapse of government in the Ditsobotla Local Municipality.
You will note from the contents of the letter that our client deems the matter to be of a most severe nature. The
urgency of the matter requires an urgent response. Refusal to urgently deal with the case is most concerning to our
client and will most likely result in urgent litigation between the parties. Our client has appointed senior counsel to
attend to the drafting of an urgent application. We would, of course, prefer to avoid urgent litigation, but that will
require that your clients urgently start meaningfully engaging with our client. Refusing our invitation is at your clients'
own peril. Urgent events result in urgent letters with urgent demands. The urgent situation in Ditsobotla has not been
convenient for anybody.
Our letter does not only require a meeting. The letter also seeks various urgent undertakings from the government to
avoid litigation. Your e-mail under reply has failed to respond to the undertakings sought.
Our instructions are that the matter in Ditsobotla has further deteriorated over the weekend. Your lacklustre response
forces us to proceed with an urgent application.
I Peter Wassenaar
Kriek Wassenaar & Venter Ing
Direkteur / Director
• (t) (+27) 12 803 4719 (c) 0829204474
• (a) Third Floor, HB Forum Building, 13 Stamvrug Street, Val de Grace, Pretoria
• (p) Postnet Suite# A7, Privaatsak / Private Bag X592, Silverton, 0127 • BTW Reg: 4020260685 • Reg: 2012/030418/21
The above matter and more specifically your dated 23 September 2022 and received by writer on the 26 th September
2022 at 14H32 pm refers.
0353
We however advise that the time allowed for the meeting is short notice and therefore impractical.
We commit to revert to you as soon as practically possible with a date of the proposed meeting.
L'>,.·p,;!\'"l"..'.,C,i!_
;.,,,-1.~.:,; ,w,,,; (,\,~i;;t >t';c,..r,., \;•~.•f•,,¼\>\'"'~:·,i
~EPUB~,C !;>f' SQVTH A.tl\lCA
Disclaimer
Privileged/Confidential information ,nay be contained in this rnessage. If you are not: tl1e addressee indicated in this
message (or responsible for delivery or the message to such person) you may not copy or deliver this message to
anyone. In such case, you should destroy this messa9e and kindly notify the sender by reply E-Mail. Please advise
immediately if you or your ernploye1· do not consent to e·-mail messages of this kirid. Opinions, conclusions and
other infom1ation in this message that do not relate to the official business of the Departrnent of Justice and
Constitutional Development shall be understood as neither given nor endorsed by it. /-\II views expressed herein dre
the views of the author and do not reflect the views of the Department of Justice unless specifically stated
otherwise.
2
0354
Elbie Swanepoel
The above matter and more specifically your letter dated the 23 rd September 2022 refers.
We continue to act for the Premier and MEC: Cooperative Governance and Traditional Affairs North West Province.
It is our instructions that the we should meet with you on Friday the 30 th September 2022 at lOH00 am on virtual
platform Microsoft Teams to be precise.
It is further our instruction to solicit from you as we hereby do the Agenda of the said meeting by no later than
Wednesday the 28 th September 2022 at l0H00am
It is our understanding that the undertaking you are seeking from our Clients have been complied with:
It is our clients view that protracted litigation is not in the best interest of the residents of Ditsobotla therefore we are
willing and able to engage to find solutions.
Sir/ Madam
I acknowledge receipt of your email below, which refers to an urgent letter direct to our client in response to the
collapse of government in the Ditsobotla Local Municipality.
You will note from the contents of the letter that our client deems the matter to be of a most severe nature. The
urgency of the matter requires an urgent response. Refusal to urgently deal with the case is most concerning to ou'
client and will most likely result in urgent litigation between the parties. Our client has appointed senior counsel to
attend to the drafting of an urgent application. We would, of course, prefer to avoid urgent litigation, but that will
u
require that your clients urgently start meaningfully engaging with our client. Refusing our invitation is at your clients/4(._.
1
0355
own peril. Urgent events result in urgent letters with urgent demands. The urgent situation in Ditsobotla has not been
convenient for anybody.
Our letter does not only require a meeting. The letter also seeks various urgent undertakings from the government to
avoid litigation. Your e-mail under reply has failed to respond to the undertakings sought.
Our instructions are that the matter in Ditsobotla has further deteriorated over the weekend. Your lacklustre response
forces us to proceed with an urgent application.
I Peter Wassenaar
Kriek Wassenaar & Venter Ing
Direkteur / Director
• (t) (+27) 12 803 4719 (c) 0829204474
• (a) Third Floor, HB Forum Building, 13 Stamvrug Street, Val de Grace, Pretoria
• (p) Postnet Suite# A7, Privaatsak / Private Bag X592, Silverton, 0127 • BTW Reg: 4020260685 • Reg: 2012/030418/21
The above matter and more specifically your dated 23 September 2022 and received by writer on the 26 th September
2022 at 14H32 pm refers.
We however advise that the time allowed for the meeting is short notice and therefore impractical.
We commit to revert to you as soon as practically possible with a date of the proposed meeting.
:Eest&,aru
~r. J1 :A1olio{o
Office of'lne State Jl.ttomey -:M.ma6atfio
1st Pwor, :Mega City Compfe:(
Privileged/ Confidentia l informatio n may be contained in this message. you are not the addressee indicated in this
message (or i-esponsible for of the messa~Je to such you may not copy or deliver this message to
anyone. In such case, you should destroy U1is message and kindly notify the sender
by reply E-Mail. Please advise
immediate ly if you or· your employer do not consent to e-mail messages of this kind.
Opinions, conclusion s and
other informatio n in this messa~Je that do not relate to the official business of the Departme
nt of Justice and
Constitutio nal Developme nt shall be understood as neither given nor endo1·sed by it.
All views expressed her·ein are
the views of the author and cio not reflect the views of tile Departme; 1t of Justice unless
specifically stated
otherwise.
3
0357
CC30
I
KRIEK WASSENAAR & VENTER ING
PROKUfH:URS ATTOHNEYS
By e-mail: [email protected]
[email protected]
[email protected]
[email protected]
Sir/Madam
URGENT: SAKELIGA NPC / THE PRESIDENT OF THE REPUBLIC OF SOUTH AFRICA & OTHERS
2. Our client does not share your clients' view that they have already complied with the demands
in our letter. Our primary concern is with the failure to implement mandatory section 139(5)
intervention. Unless the required mandatory intervention has since been implemented, your
constitutional intervention has become an urgent imperative. Furthermore, our client requires
the immediate deployment of an administrator to take control of the municipality and to ensure
that basic service delivery is restored. Even the undertaking that the administrator will meet
3. On your clients' admission, Ditsobotla's equitable share is still being withheld pending the
appointment of an administrator. However, your clients are also the party responsible for the
appointment of the said administrator. Notwithstanding our demand, your clients have failed
to provide us with a date for the appointment and deployment of an administrator. Our letter
did not demand undertakings that something will potentially happen on an unknown future
date.
www.kwv-inc.com
{t) {+27) 12 756 7566• {f) {+27) 86 596 8799 {a) 3'' Floor, HB Forum Building, 13 Stamvrug Road, Val de Grace, Pretoria 0184
(p) Postnet Suite# 11, Privaatsak / Private Bag X025, Lynwood Ridge, 0040 • B1W Reg: 4020260685
0358
www.kwv-inc.com
4. Our client requires urgent and decisive action by the government in response to a potentially
5. The lack of urgency on the part of provincial and national governments is concerning. We have
received reports from the community that, due to the dosing of the municipal offices and the
non-payment of employees, Ditsobotla is facing a serious risk of running out of water. There is
simply no one available to grant access to municipal works to turn on the municipality's water
pumps and maintain reservoir levels. Large portions of the municipality are already sitting
without water. Our instructions are that residents are required to source their water from
alternative sources. Those who can afford it, use vehicles to collect and distribute water. Despite
having access to water, residents residing in informal settlements must again collect water by
wheelbarrow. There is simply no one in the municipality to fix the available water systems.
6. Your clients' position that the financial officer must pay employees screams a lack of
appreciation of the current crisis. Our client has been advised that the municipal offices have
remained dosed and that there is no money to pay employees. The withholding of the equitable
share under these circumstances, especially considering the delay in appointing and deploying
7. We deem the matter to be of the utmost urgency. Our senior counsel is continuing to prepare
an urgent application given the failure to respond to our client's demands adequately.
8. However, we accept your offer for a virtual meeting on 30 September 2022 at 10h00. We will
attend the meeting with the hope of avoiding urgent litigation and potentially settling disputes
in regards to Ditsobotla. We trust that actual decision-makers from various government spheres
will be available to engage with our client and leaders in the community meaningfully. The fact
that we are accepting the invitation does not detract from the urgency of the matter.
9. An agenda will be provided shortly. We request that you kindly also provide us with a list of
attendees to the meeting so that the necessary Teams meeting invitation can be distributed.
Yours faithfully,
Bladsy / Page
2/2
0359
Elbie Swanepoel
Sensitivity: Private
Good day,
We refer to the above and attach hereto a letter for your attention.
Regards,
ELBIE SWANEPOEl
• (a) 3de Vloer / 3rd Floor, HB Forum Gebou / Buidling, Stamvrugstraat 13 Stamvrug Street, Val de Grace, Pretoria, 0184
• {p) Postnet Suite# 11, Privaatsak / Private Bag X025, Lynnwood Ridge, 0040 • BTW Reg: 4020260685
1
0360
CC31
Time 10h00
Attendees To be confirmed
MEETING AGENDA
AGENDA ITEMS
28 September 2022.
recovery of Ditsobotla.
9 Meeting close.
Please ensure that all attendees provide their e-mail addresses to Melissa Jansen
I
KRIEK WASSENAAR & VENTER ING
?ROKUHEUHS 1UTORNEYS-----
~
By e-mail: [email protected]
[email protected]
[email protected]
[email protected]
Sir/Madam
URGENT: SAKELIGA NPC / THE PRESIDENT OF THE REPUBLIC OF SOUTH AFRICA & OTHERS
1. We refer to the agreed virtual engagement meeting scheduled for 30 September 2022 at 10h00.
2. We request that your offices kindly provide us with a list of attendees. Please provide us with
the necessary e-mail addresses for each attendee so that a Microsoft Teams link can be
generated. Please also advise on the relevant state departments which will be represented at
the meeting. Your offices already represent both provincial and national executives.
3. In order for our client to meaningfully engage with government during the meeting, we urgently
3.1 A copy of the Ditsobotla 'status report' referred to in the provincial executive's section
3.2 Full information regarding the current status of the section 139(1) intervention.
3.3 Confirmation of whether an administrator has been appointed. We kindly request that
you provide us with the name of the person whom your clients have appointed to act
www.kwv-irn:.com
{t) {+27) 12 756 7566• {f) (+27) 86 596 8799 {a) 3'' Floor, HB Forum Building, 13 Stamvrug Road, Val de Grace, Pretoria 0184
{p) Postnet Suite# 11, Privaatsak / Private Bag X025, Lynwood Ridge, 0040 • BTW Reg: 4020260685
0363
www .kwv-inc.com
Municipality;
3.5 Confirmation that the administrator will take part in the engagement meeting on 30
September 2022;
3.6 Confirmation of all current supervisory and monitoring steps taken by government in
regards to the closure of municipal offices and services in Ditsobotla Local Municipality
address the disruption in the supply of potable water to the communities in the
order to ensure the urgent restoration of existing basic service delivery in Ditsobotla
services);
3.9 Confirmation of the current equitable share being withheld by the provincial and/or
3.10 All status update reports in regards to the financial crisis in Ditsobotla Local
3.11 A confirmation of whether government has engaged with Eskom Holdings Soc Ltd and
the relevant water boards to ensure that the supply of electricity and water to
Ditsobotla Local Municipality is not disrupted whilst the provincial and/or national
intergovernmen tal procedures have been followed in respect of Eskom Soc Ltd and the
relevant water boards to resolve any disputes concerning the continued supply of
electricity and water to Ditsobotla Local Municipality during the engagement of its
3.12 Confirmation of the scope of intergovernmen tal engagement with and regarding the
September 2022;
Bladsy / Page
2/4
0364
www.kwv-inc.com
3.13 A copy of the recovery plan, alternatively a draft recovery plan, for Ditsobotla Local
3.14 Confirmation of whether the Municipal Recovery Task Team of the National Treasury
3.15 Confirmation of whether the provincial and/or national executives have taken control
of the municipal bank account of Ditsobotla Local Municipality since the decision was
supervisory steps have been taken to ensure proper municipal oversight of the
3.16 An explanation as to the reasons for the delay in the appointment of an administrator
3.17 All reports issued to the National Assembly and/or the National Council of Provinces in
4. Our client and the community do not have the same access as the government to the
information listed above. Our client and its community supporters are serious about ensuring
stability and the recovery of Ditsobotla Local Municipality. We sincerely desire to engage with
the government on 30 September 2022 in a constructive manner. Please urgently provide the
5. We look forward to our meeting on 30 September 2022 and hope that sufficient agreement can
6. There is one aspect that is of such urgency that it cannot wait for an outcome in the meeting,
namely the termination of the supply of potable water to the communities in Ditsobotla. We
require that your clients take urgent steps to immediately restore the supply of potable water.
Bladsy / Page
3/4
0365
www.kwv-im:.c om
7. We await your list of attendees and will also provide our own within the next day. Our client's
rights remain strictly reserved and we will continue in the preparation of our urgent application.
PITER
(f)OS
(e)"'e===== =
Bladsy / Page
4/4
0366
NJ Nel
From: NJ Nel
Sent: Wednesday, 28 September 2022 14:06
To: [email protected]; [email protected]; [email protected];
[email protected]
Cc: Peter Wassenaar; Elbie Swanepoel
Subject: URGENT: SAKELIGA NPC / THE PRESIDENT OF THE REPUBLIC OF SOUTH AFRICA &
OTHERS (DITSOBOTLA LOCAL MUNICIPALITY)
Attachments: State Attorney Mmabatho sent 2022-09-28.pdf; Agenda 2022-09-30.pdf
Importance: High
Good day
Kindly find attached hereto a letter for your urgent attention as well as an Agenda for the meeting scheduled to take
place on 30 September 2022 at 10h00.
Yours faithfully,
N.J. Nel
• (a) 3de Vloer / 3rd Floor, HB Forum Gebou / Buidling, Stamvrugstraat 13 Stamvrug Street, Val de Grace, Pretoria, 0184
• (p) Postnet Suite #11, Privaatsak / Private Bag X025, Lynnwood Ridge, 0040 • BTW Reg: 4020260685 • Reg:
2012/030418/21
Hierdie e-pos is onderhewig aan voorwaardes. Kliek hier vir meer besonderhede.
This e-mail is subject to certain conditions. Click here for more information.
0367
0368
CC33
ATTENDING
'~~
Mpempe and Social Justice NPO -
CEO
0369
Elbie Swanepoel
Importance: High
Sensitivity: Private
Good day,
We refer to the above and attach hereto a letter, with attachment thereto, for your urgent attention.
Regards,
ELBIE SWANEPOH
• (a) 3de Vloer / 3rd Floor, HB Forum Gebou / Buidling, Stamvrugstraat 13 Stamvrug Street, Val de Grace, Pretoria, 0184
• (p) Postnet Suite# 11, Privaatsak / Private Bag X025, Lynnwood Ridge, 0040 • BTW Reg: 4020260685
0370
MINISTRY: FINANCE
REPUBLIC OF SOUTH AFRICA
Private Bag X115, Pretoria, 0001 Tel: +2712 323 8911 Fax: +2712 323 3262
PO Box 29, Cape Town 8000 Tel +27 21 401 7000
Website: www.treasury.gov.za, email: [email protected]
Ref: M3/4/3/2(1110-2021)
In April 2021, National Government was for the first time ordered by a High Court to intervene
in the financial and service delivery affairs of a municipality as provided for in S139(7) of the
Constitution of South Africa, 1996. The intervention was the result of a court action initiated
by the business community in the municipality who were suffering financially as a result of the
municipality's inability to provide consistent and reliable services coupled with the subsequent
failure of the Provincial Executive to successfully monitor and oversee the S139(5) intervention
invoked in this municipality in 2018.
National Treasury believes that this landmark decision by the Gauteng High Court will set a
precedent for many other frustrated communities who suffer similarly in other parts of the
country. In order to ensure that such matters are addressed consistently amongst Provinces,
in full compliance with S139 Constitutional provisions and to avoid further litigation, his
Excellency, the President of South Africa, instructed in May 2021 that a list be compiled of all
municipalities in the country currently in a financial and service delivery crisis.
To comply with this request and ensure objectivity in this process, the National Treasury and
the Department of Cooperative Governance developed a matrix. The matrix was based on
the four pillars of municipal sustainability, namely, governance, service delivery, institutional
capability and financial management. Information on hand for all municipalities were
populated into the matrix and the final analysis showed that there are 43 municipalities in the
country who are in a financial and service delivery crisis. These municipalities require urgent
intervention in terms of S 139 of the Constitution. However, some of these municipalities
already have S139 interventions underway and it will be necessary for the Province to review
these interventions to determine if they are still appropriate under the circumstances.
0371
To assist in this task, the National Treasury and CoGTA have recently concluded roadshows
in all nine provinces on the correct interpretation and implementation of S 139 interventions.
Provinces were alerted to the hierarchy of interventions provided for in the Constitution and
the conditions that must exist for each type of intervention to be invoked. In particular,
Provinces were reminded that a S 139(1) intervention should not be invoked when the criteria
for persistent financial problems and crises are already present in a municipality. The correct
mode of intervention in this case would be to invoke a mandatory intervention in terms of
S139(5) of the Constitution read together with Chapter 13 of the Municipal Finance
Management Act, 2003 (Act No. 56 of 2003).
Such intervention would require the MEC for Finance in a Province to request from the Minister
of Finance, the development of a financial recovery plan by the Municipal Finance Recovery
Services Unit in the National Treasury. Typically, legislation allows for a financial recovery
plan to be concluded within 90 days inclusive of all consultations that must take place with
municipal stakeholders, including the municipality's top creditors. However, given the urgency
of the situation, an interim recovery plan will be drafted for implementation within the first
month of the intervention being invoked. This interim plan will focus on issues across all the
sustainability pillars that can be remediated swiftly within the municipality without significant
cost burdens or additional resources being required. Parallel to this process, a financial
recovery plan will be prepared and approved by the MEC for Finance in the Province and
handed to the municipality for implementation.
The Provincial Executive will be required to monitor on a monthly basis, the implementation
thereof by the municipality to ensure that objectives are met timeously, challenges are
unblocked and that there is incremental and sustained improvement in municipal performance.
Should the Province not be successful in overseeing this intervention, National Government
retains the right to intervene under S139(7) of the Constitution, however, this is a remedy of
last resort and we are confident that Provinces will be able to effectively fulfil their functions in
this regard.
For the North West Province, the attached addendum to this letter lists the municipalities
identified as being in a financial and service delivery crisis. Of these municipalities, 2
municipalities already have existing interventions. We recommend that these interventions
be revised where necessary to ensure that they give effect to the right mode of intervention
under S139 of the Constitution and Chapter 13 of the MFMA. To assist the Province, the
attached addendum further articulates the mode of intervention per municipality in your
province that must be considered and implemented by the Provincial Executive Council
(EXCO).
We would also like to draw the attention of Provinces on how to deal with current interventions
following the local government elections in November 2021. In this regard, Provinces are
reminded that any intervention invoked prior to the local government elections will not result
in an automatic termination of the intervention following the election of a new municipal
council. Sections 148 (1) and (2) of the Municipal Finance Management Act, 2003 (Act No.
56 of 2003), provides clear guidelines as to conditions that must exist in order to terminate a
discretionary or mandatory intervention.
2
0372
The National Treasury has shared this information with the National Department of
Cooperative Governance and the Provincial Treasury in your province. Should, you require
any further clarification or information, please contact Ms Malijeng Ngqaleni, Deputy Director-
General: Intergovernmental Relations at the National Treasury.
We would also like to reiterate that while we have shared the information with National CoGTA
and we are working very closely, this process is not synonymous with the Municipal Support
and Intervention Plan (MSIP) process of CoGTA currently underway. These processes are
complementary, however, the National Treasury is giving effect to both Constitutional
considerations and the instruction from His Excellency, the President of South Africa.
We trust that the Province will find this in order and look forward to your cooperation and
monthly progress reports in terms of Section 142 of the MFMA.
Your sincerely,
ENOCH GODONGWANE
MINISTER OF FINANCE
DATE: 26/10/2021
CC: Minister of Corporative Governance and Traditional Affairs, Dr. Nkosazana Dlamini
Zuma
MEC: Cooperative Governance and Traditional Affairs: North West Province, Ms
Lenah Migah
MEC: Provincial Treasury: North West Province, Ms Motlalepula Ziphora Rosho
HOD: Cooperative Governance and Traditional Affairs, North West Province, Mr
James Keatlegile Mashego (Acting)
HOD: North West Provincial Treasury, Mr Ndlela Kunene
MFMA Co-ordinator, North West Provincial Treasury: Ms Linda Nengovhela
3
0373
ADDENDUM
1. Madibeng S139(5)(a) & (c) of the Constitution with S139 of the MFMA
2. Kgetlengrivier S139(5)(a) & (c) of the Constitution with S139 of the MFMA
3. Rat/au S139(1)(c) of the Constitution and 139 of the MFMA
4. Tswaing S139(5)(a) & (c) of the Constitution with S139 of the MFMA
5. Mafikeng S139(5)(a) & (c) of the Constitution with S139 of the MFMA
6. Ditsobotla S139(5)(a) & (c) of the Constitution with S139 of the MFMA
7. Ramotshere Moi/oa S139(5)(a) & (c) of the Constitution with S139 of the MFMA
8. Dr Ruth S-Mompati S139(5)(a) & (c) of the Constitution with S139 of the MFMA
9. J B Marks Continue with S139(1)(b) of the Constitution
\
4
cc3S
0374
1.Summary
Meeting Utie Sakeliga / President of South Africa and others (01150BOTLA LOCAL MUNICIPALITY)- Meffi:lng
Attended participants 29
Starttime 22/09/30, 09:43:09
End time 22/09/30, 11:32:49
Meeting duration 1h49m41s
Average attendance time lh 21m 57s
2. Partktpants
Name First join Last leave In-meeting duration Email Participant ID (UPN) Role
Peter Wassenaar 22/09/30, 09:45:03 22/09/30, 11:29:19 lh 44m 16s [email protected] [email protected] Presenter
Pletle Roux 22/09/30, 09:45:18 22/09/30, 11:29:23 lh44m4s [email protected] [email protected] Presenter
NJ Nel 22/09/30, 09:46:39 22/09/30, 11:30:06 lh 43m 27s [email protected] [email protected] OrA:anlser
Naude Pienaar (Guest) 22/09/30, 09:48:25 22/09/30, 10:09:23 20m57s Presenter
Rohann Eloff 22/09/30, 09:49:08 22/09/30, 11:29:30 lh40m 22s [email protected] [email protected] Presenter
Melissa Jansen van Vuuren 22/09/30, 09:49:35 22/09/30, 11:29:37 lh40m ls [email protected] [email protected] Presenter
Christo Bester 22/09/30, 09:58:17 22/09/30, 11:29:52 lh 31m 35s [email protected] [email protected] Presenter
nan Alberts 22/09/30, 09:58:19 22/09/30, 11:29:29 lh 31m 105 [email protected] [email protected] Presenter
Johan Kriek 22/09/30, 10:00:09 22/09/30, 11:29:36 lh 29m 26s [email protected],za '[email protected] Presenter
Benedict Modise 22/09/30, 10:01:18 22/09/30, 1"29:22 lh 28m 4s [email protected] [email protected] Presenter
John Rankin (Guest) 22/09/30, 10:01:20 22/09/30, 11:29:28 lh 28m 7s Presenter
Kedlbone Mhlaba 22/09/30, 10:01:22 122 09 30 11:29:24 1h28m2s [email protected] [email protected]:ov.za Presenter
Lesego Mathe 22/09/30, 10:01:22 11:29:28 lh 21m 27s [email protected] [email protected] Presenter
Mpone Motsamai 22/09/30, 10:01:24 11:29:33 lh 28m 9s [email protected] [email protected] Presenter
Thabang Samuel Leslta 22/09/30, 10:01:24 2/09/30, 11:29:48 lh 28m Bs [email protected] [email protected] Presenter
Slbonglle Slgodl 22/09/30, 10:01:25 22/09/30, 11:29:20 lh 27m 55s [email protected] [email protected] Presenter
Mokadlkoa chauke 22/09/30, 10:01:27 22/09/30, 11:29:21 lh 27m 53s Presenter
Annel/ze Lee (Guest) 22/09/30, 10:02:16 22/09/30, 11:29:36 lh 27m 19s Presenter
ADV. M MAJOKO (Guest) 22/09/30, 10:02:45 22/09/30, 11:29:28 lh 26m 43s Presenter
Chris (Guest) 22/09/30, 10:03:51 22/09/30, 11:32:49 lh 28m 58s Presenter
MoholoMusa 22/09/30, 10:03:51 22/09/30, 11:29:20 lh 25m 28s [email protected] [email protected] Presenter
Boitumelo Tihale 22/09/30, 10:04:26 22/09/30, 11:29:31 lh 25m 4s Boltume!oT@nwpi;i,gov.za 8oltume1oT@nwpg,gov.za Presenter
Naude Plenaar (Guest) 22/09/30, 10:06:10 22/09/30, 11:32:41 lh 26m 30s Presenter
ratshlkana 22/09/30, 10:06:13 22/09/30, 11:00:15 S4m ls Presenter
MphoMog.ale 22/09/30, 10:06:51 22/09/30, 11:29:22 lh 22m 30s [email protected] [email protected] Presenter
Elizabeth Mmutle (Guest) 22/09/30, 10:18:55 22/09/30, 11:29:33 lh 10m 37s Presenter
Lovlso Ncoko 22/09/30, 10:18:58 22/09/30, 11:29:17 lh 10m 18s LovisoN@)cogta.e:ov.za [email protected]!ov.za Presenter
SETH RAMAGAGA 22/09/30, 10:33:52 22/09/30, 11:29,14 SSm 21s Presenter
Tsheoo Khasl 22/09/30, 11:08:58 22/09/30, 11:29:21 20m 22s TsheDOK@coi;tta./il.ov.za [email protected]:ov.za Presenter
3 In-Meeting activities
Name Join time Leave time Duration Email Role
Peter Wassenaar 22/09/30, 09:45:03 22/09/30, 11:29:19 1h44m 16s [email protected] Presenter
Piet le Roux 22/09/30, 09:45:18 22/09/30, 11:29:23 1h44m4s [email protected] Presenter
NJ Nel 22/09/30, 09:46:39 22/09/30, 11:30:06 lh 43m 27s [email protected] Organiser
Naude P!enaar (Guest) 22/09/30, 09:48:25 22/09/30, 10:09:23 20m 57s Presenter
Naude Pienaar (Guest) 22/09/30, 10:06:10 22/09/30, 11:32:41 lh 26m 30s Presenter
Roh.ann Eloff 22/09/30, 09:49:08 22/09/30, 11:29:30 lh40m 22s [email protected] Presenter
Melissa Jansen van Vuuren 22/09/30, 09:49:35 22/09/30, 11:29:37 lh 40m ls [email protected] Presenter
Christo Bester 22/09/30, 09:58:17 22/09/30, 11:29:52 lh 31m 35s [email protected] Presenter
Tian Alberts 22/09/30, 09:58:19 22/09/30, 11:29:29 lh31m 10:s t.a/[email protected] Presenter
Johan Kriek 22/09/30, 10:00:09 22/09/30, 11:29:36 lh 29m 26s [email protected] Presenter
Benedict Madise 22/09/30, 10:01:18 22/09/30, 11:29:22 lh 28m 4s [email protected] Presenter
John Rankin (Guest) 22/09/30, 10:01:20 22/09/30, 11:29:28 lh 28m 7s Presenter
Kedibone Mhlaba 22/09/30, 10:01:22 22/09/30, 11:29:24 lh 28m 2s [email protected] Presenter
Lesego Mathe 22/09/30, 10:01:22 22/09/30, 10:16:42 lSm 20s [email protected],za Presenter
LeseR:o Mathe 22/09/30, 10:21:05 22/09/30, 10:58:54 37m48s [email protected] Presenter
Lesei;i:o Mathe 22/09/30, 11:01:09 22/09/30, 11:29:28 28m19s [email protected] Presenter
Moone Motsamal 22/09/30, 10:01:24 22/09/30, 11:29:33 lh 28m9s [email protected] Presenter
Thabang Samuel Leslta 22/09/30, 10:01:24 22/09/30, 11:29:48 lh 28m 23s [email protected] Presenter
Slbonglle Sigodl I.U11t•i13Q, 1Q;Ql:25 22/09/30, 11:29:20 lh 27m 55s [email protected] Presenter
Mokadlkoa chauke IHIINl-<11 10:01:27 22/09/30, 11:29:21 lh 27m 53s Presenter
Annellze Lee (Guest) 2/09/30, 10:02:16 22/09/30, 11:29:36 lh 27m 19s Presenter
ADV. M MAJOKO (Guest) 2/09/30, 10:02:45 22/09/30, 11:29:28 lh 26m 43s Presenter
Chris (Guest) 2/09/30, 10:03:51 22/09/30, 11:32:49 lh 28m 58s Presenter
MoholoMusa 22/09/30, 10:03:51 22/09/30, 11:29:20 lh 25m 28s MuMoholo@iustlce,i;i:ov.za Presenter
Boitumelo Tlhale 22/09/30, 10:04:26 22/09/30, 11:29:31 lh 25m 4s [email protected] Presenter
ratshlkana 22/09/30, 10:06:13 22/09/30, 11:00:15 54m1s Presenter
Mpho Mogale 22/09/30, 10:06:51 22/09/30, 11:29:22 lh 22m 30s [email protected] Presenter
Elizabeth Mmutle (Guest) 22/09/30, 10:18:55 22/09/30, 11:29:33 lh 10m 37s Presenter
Loyiso Ncoko 22/09/30, 10:18:58 22/09/30, 11:29:17 lh 10m 18s [email protected] Presenter
SETH RAMAGAGA 22/09/30, 10:33:52 22/09/30, 11:29:14 SSm 21s Presenter
Tshepo Khasi 22/09/30, 11:08:58 22/09/30, 11:29:21 20m22s [email protected] Presenter
0375
CCsb
I
KRIEK WASSENAAR & VENTER ING
'ROKUREURS ATTORNEYS-----
By e-mail: [email protected]
[email protected]
[email protected]
[email protected]
Sir/Madam
URGENT: SAKELIGA NPC / THE PRESIDENT OF THE REPUBLIC OF SOUTH AFRICA & OTHERS
2. We confirm that no specific outcomes could be agreed upon during the meeting. We
understand that government is still trying to break through various legislative barriers and
other barriers in order to ensure that the administrator is deployed and that he will be able to
3. We refer your clients back to our letters since 23 September 2022. Our demands have not
changed and we do require that government provide us with clear undertakings as to how they
intend to ensure that basic services are returned in Ditsobotla, by no later than Monday, 3
October 2022 at 09h00. Failing a full and proper reply and clear undertakings as to urgent steps
taken in order to restore basic services, our client will have no choice but to approach the court
4. We thank government for the engagement but do require decisive and immediate intervention
Yours faithfully,
NJ Nel
From: NJ Nel
Sent: Friday, 30 September 2022 14:02
To: Moholo Musa; [email protected]; Mahlakoleng Morong wa;
[email protected]
Cc: Elbie Swanepoel
Subject: URGENT: SAKELIGA NPC / THE PRESIDENT OF THE REPUBLIC OF SOUTH
AFRICA &
OTHERS (DITSOBOTLA LOCAL MUNICIPALITY)
Attachm ents: State Attorney Mmabat ho sent 2022-09 -30.pdf
Importance: High
Good day
We refer to the abovem entione d matter and attach hereto a letter for
your urgent attentio n.
Yours faithfull y
N.J. Nel
• (a) 3de Vloer / 3rd Floor, HB Forum Gebou / Buidling, Stamvrug straat
13 Stamvrug Street, Val de Grace, Pretoria, 0184
• (p) Postnet Suite #11, Privaatsak / Private Bag X025, Lynnwood Ridge,
0040 • BTW Reg: 4020260685 • Reg:
2012/030 418/21
Hierdie e-pos is onderhewig aan voorwaardes. Kliek hier vir meer besonderh
ede.
This e-mail is subject to certain conditions. Click here for more information.
1
0377
Case no: - - - - - -
and
SUPPORTING AFFIDAVIT
I, the undersigned,
1 I am a major male executive director of the Centre for Good Governance and
West Province.
2 I can confirm that I am duly authorised to attest to this affidavit on behalf of the
third applicant.
3 I confirm that the contents hereof falls within my personal knowledge, unless
4 I confirm that I have read the founding affidavit of Christo Bester, and that the
THUS signed and sworn before me, at :T@evsG-/elvfon this the Ob,}-(.,,,., day of
COMMISSIONER OF OATHS 0
FULL NAMES: /--\.&G)tJ) /A,€,,,$e <8 18 1
BUSINESS ADDRESS: Ss, s ~ Pl/v S"lfl..J _ 2X-/-t~l""ud<-,- ~ ~ U , ?-?~O
DESIGNATION: (.,.-6>JV'z>1 RI e ve
csc
06 OCT 2022
f·. \. :(}L;~,G
- -- - ~1ED1t;NS
SUIO-AF ~~/:'~iJ,S!;L~~~:,s 1mVlCE
SOUTH r, ___ - - . -
I<£ /ll'A
0380
Case no: - - - -
--
and
CONFIRMATORY AFFIDAVIT
I, the undersigned,
BARENDLOURE NSSNYMAN
Street in Lichtenburg. I confirm that the contents hereof fall within my personal
knowledge, unless specifically indicated otherwise and is both true and correct.
4 I can confirm that my residence has been without water since approximately 4
properties and businesses are also without water supply. I furthermore confirm
that my business has interrupted water supply and is without water at least two
receives water for about two hours daily which is insufficient considering our
demand.
tanks of 7500 litres and 5000 litres at both my residential and business premises
about 15km from Lichtenburg to pump water from the farm's borehole a
0382
trailer with water tanks which I then in turn use to fill my Jojo tanks and to
incurred the cost for the purchase of the trailer with water tanks to address the
also incurred R5 000.00 for a small water pump which I installed on the farm in
6 I confirm that my business deals with the sale of short-term and life insurance
policies which means that we regularly receive walk-in clients. The lack of water
leads to severe sanitation problems for both my staff and the walk-in clients that
we regularly deal with. The business has about 15 full-time employees who now
have to plan their day around the water crisis. My business needs approximately
2 500 litre water per day to conduct our trade in a safe and sanitary environment.
at a great expense to lessen the losses that we suffer as a result of the water
shortage. Besides the costs already mentioned, we incur further costs with
regard to the fuel and running costs of the transport of water to the business. My
incurred for drinking water, transport of water for sanitary and other uses and
7 The lack of water results in further sewage and sanitation issues which we
assist businesses with their sewage and sanitation needs. This has resulted in
8 The refuse and waste management has also broken-down to such a degree of
disrepair that we had to take matters in our own hands. I purchased another
trailer specifically for transporting the refuse and waste from my residence and
business premises to the waste and refuse dump. The cost of this trailer
which has led to the road being in an absolute state of disrepair. I have incurred
various personal costs to fix the road in front of my residence and in front of my
business. These costs have amounted to more than R100 000.00 for materials
10 I do not know what the reason is for the interruption in the supply of water to the
property. I have been unable to make contact with the municipal offices and have
been informed that the offices have closed. As of date of this affidavit and as far
as I have been able to determine, the offices of the Ditsobotla Local Municipality
assist me.
11 The Lichtenburg community is one of the only reasons why people are still
12 The situation is becoming desperate. There are too many people without water
and other services for the community to support. We cannot do without water
much longer. The general lack of service delivery in regards to water, sanitption,
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0384
13 From the 15 employees employed at G3 Brokers, most of them struggle with the
lack of water, but are able to find alternative sources of water. The business's
personal situation and ability to adapt has meant that we have not had to retrench
14 I confirm that I have read the founding affidavit of Christo Bester and that I
I
\.
\ \
1·(,.
THUS signed and sworn before me, at L!GlfTf.v /;µrt.·· on this the _b__ day of
and
CONFIRMATORY AFFIDAVIT
I, the undersigned,
1 I am a major male attorney and director of the firm Kriek Wassenaar & Venter
2 The facts deposed to herein fall within my personal knowledge, unless the
context indicates otherwise, and are to the best of my belief both true and correct.
4 I have read the founding affidavit by Christo Bester. I confirm the correctness of
DEPONENT
I HEREBY CERTIFY THAT THE DEPONENT HAS ACKNOWLEDGED:
THUS signed and sworn before rne, at j\.'uC)jc[/'.1. on this the fu f Ii day of
()c[oBf£_. 2022, the Regulations contained in Government Notice No. R1648 of
FULL NAMES:
BUSINESS ADDRESS:
DESIGNATION:
0389
Case no: - -- - - -
and
SUPPORTING AFFIDAVIT
I, the undersigned,
Mandela Drive, Lichtenburg, 2740. I confirm that the contents hereof fall within
and correct.
4 I can confirm that both my residence and place of employment has interrupted
water supply and is without water for most of the week since approximately 6
premise we have two 20 000 litre and one 10 000 litre Jojo tanks while we have
three 10 000 litre Jojo tanks at our residential premise. In addition to the water
storage system, we have to transport water from a farm located about 60km from
Lichtenburg where we have to pump water from the farm's borehole into trucks
0391
and trailers which we then in turn use to fill the Jojo tanks and to dispense water
to the residential and business premise as required. These transport costs are
not only personally incurred for our trade in stationery and other similar goods,
but also to supply the surrounding properties with their water and sanitation
6 I can confirm that our business suffers severe financial losses as a result of the
lack of service delivery from the municipality. The sewage system in Lichtenburg
our family's property and asked that they could come and repair the blockages
in the sewage system. I was however informed that the municipality employees
are unwilling to repair the sewage system themselves due to the lack of funds for
take municipal service delivery in their own hands. As a result, our business had
to incur several costs with regards to the purchase of pipes and other materials
to repair the sewage system. On the day on which repairs were done, our staff
as well as about 10 municipal employees repaired the sewage system. After the
sewage system was repaired the municipal employee approached us and asked
for payment in the amount of R1 500.00 for their services. They furthermore
indicate that we had to pay for any future repairs that we expect them to carry
purchasing materials and incurring costs for a TLB (Tractor Loader Backhoe) and
operator to mend the sewage system to such a degree that it could operate.
0392
7 Our business and the properties that we rent out needs approximately 5 000 litre
water per day to conduct our trade in a safe and sanitary environment. It costs
our business about R1 500.00 per day to ensure that these properties receive
5 000 litres of water for its daily water and sanitation usage. Our business's
profitability has been affected in so far as additional costs had to be incurred for
drinking water, transport of water for sanitary and other uses, upgrades to the
by employees having to leave their normal tasks and complete tasks which
municipality, but was informed that we just have to pay the normal amount that
electricity. They indicated that once payment is received and the amount is
allocated, our account will be placed in credit for payment made above the
R23 000.00 for electricity, but even after this, during the month of September the
electricity supply was cut off for approximately 3 days. On enquiry, they could
only supply us with an account for the month of May and indicated that they are
switching systems and that it is difficult to generate accounts for account holders.
We, in turn confronted them with all our proof of payments made and inquired
how they could cut of electricity without proof that the account is paid in short.
They could not supply us with an answer and agreed to switch our electricity back
9 The refuse and waste management has also broken-down to such a degree of
disrepair that we had to take matters in our own hands. I confirm that the
community of Lichtenburg have to attend to their own refuse and waste removal.
Our employees use our truck for transporting the refuse and waste from our
residences, business and from the businesses that rent from us to the waste and
refuse dump. This amounts to several trips daily to empty more than 8
wastebaskets at the refuse and waste dump. Besides the costs already
mentioned, we incur further costs with regard to the fuel in order to transport the
which has led to the road being in an absolute state of disrepair. We have
incurred various personal costs to fix the road in front of our residences, the
11 I do not know what the reason is for the interruption in the supply of water to the
property. I have been unable to make contact with the municipal offices and have
been informed that the offices have closed. As of date of this affidavit and as far
as I have been able to determine, the offices of the Ditsobotla Local Municipality
assist me.
12 The Lichtenburg community is one of the only reasons why people are still
13 The situation is becoming desperate. There are too many people without water
and other services for the community to support. We cannot do without water
0394
6
much longer. The general lack of service delivery in regards to water, sanitation,
14 Our business employs about 10 people from the Lichtenburg community. Most
of our employees struggle with the lack of water but are able to find alternative
sources of water. The business's personal situation and ability to adapt has
meant that we have not had to retrench employees as a result of the municipality
crisis, but the number of residents leaving Lichtenburg could result in a shortage
of clients for our business. Furthermore, more than 100 employees of the
Lichtenburg and surrounding areas are dependent on our ability to adapt to the
situation since the companies that rent from us employ various people from the
community. We therefore not only have to cater for our own business needs with
regards to the water, sanitation, electricity, waste, and sewage problems but also
for the companies who have contracted with us and expect to receive certain
services as prescribed in our rental agreements. To this date none of our tenants
have moved out due to the municipality's dilapidation, but it is a serious concern
and urgently support any application in as far as it seeks to urgently restore basic
service delivery and especially water supply to the towns in the municipality. The
th
THUS signed and sworn before me, at
1
L /ch~-,~ this the b day of
0 6 oc, 2022
,, I ooce"' 7
Uchtenburg 27 r 0 .
Case no: _ _ _ _ __
and
SUPPORTING AFFIDAVIT
I, the undersigned,
4 I can confirm that my place of employment has been without water since
5 I confirm that my place of employment does have water storage systems installed
on the property i.e. JoJo tanks. In addition to my water storage system, we have
We transport approximately 3000 litres of water every second day which costs
affected in so far as additional costs had to be incurred for the supply of drinking
water and the transport of water for sanitary and other uses. J
tdS!f?y
'-Q!Jr!! J
,i....,,~
0398
6 I confirm that the community of Lichtenburg have to attend to their own refuse
and waste removal as the Ditsobotla Local Municipality no longer ensures that
services to attend to my refuse and waste removal. Due to the lack of municipal
service delivery for the past 6 years, and specifically service deliver in regards to
refuse and waste removal, the community had no other option but to start
health crisis.
affairs and as such we regularly receive walk-in clients. The lack of water causes
sewage and sanitation problems for the employees and the walk-in clients that
we regularly deal with. This led to the unfortunate circumstances that the amount
of walk-in client we receive now compared to prior to the water crisis, has
8 I do not know what the reasons is for the interruption in the supply of water to the
property. I have been unable to contact the municipal offices and have been
informed that the offices have closed. As of date of this affidavit and as far as I
have been able to determine, the offices of the Ditsobotla Local Municipality
assist me.
9 The Lichtenburg community is one of the only reasons why people are still
10 The situation is becoming desperate. There are too many people without water
and other seNices for the community to support. We cannot do without water
much longer. The general lack of service delivery in regards to water, sanitation,
and urgently support any application in as far as it seeks to urgently restore basic
service delivery and especially water supply to the towns in the municipality. The
provided by me.
DEPONENT
THUS signed and sworn before me, at N\c~~f'\h~on this the 06 day of
l- - - - - - - ·- - -- -
0401
Case no: - - - - - -
and
SUPPORTING AFFIDAVIT
I, the undersigned,
LEONDAS SEINDIS
'DEPONENT
I HEREBY CERTIFY THAT THE DEPONENT
HAS ACKNOWLEDGED:
e;e & ~
/
L
2022, the Regulations contained in Governm
on this the CJ C day of
~
r,~ .
COMMISSIONER OF OATHS
FULL NAMES: 0/Y " _,/4~,
' /4/
/ ,
BUSINESS ADDRESS: /,,;,/,Y /7 #~
?,¢
DESIGNATION: ::- r
COMM UNll'f Si:.~VIC E CENTRI;.
2022 ·10· 06
0406
Case no: -
-----
and
I, the undersigned,
2 I can confirm that the contents hereof falls within my personal knowledge, unless
4 My practice has over the last 4 weeks seen a drastic increase in viral
5 I am of the view that the increase in cases is a direct result of the lack of proper
(and their surrounding communities), are at risk of being exposed to more serious
diseases such as cholera developing with the supply of regular clean portable
raw untreated sewerage in the two towns, but especially within the Coligny and
Boikhutso areas.
0408
3
DDEPONENT
OATH
FULL NAMES:
LIAAN JOHANNES KRIEL
BUSINESS ADDRESS~4 B UCH Ai~A i~STRAAT /S TREET
· LI CHTE NBU RG
Km.~~v1 iSSA RIS VA/'-J EDE/
DESIGNATION: CO MMIS SION ER OF OATH S
PRAK TISE REND E PRO KURE UR/
PRAC TISI NG ATTO RNE Y
0409
SUPPORTING AFFIDAVIT
I, the undersigned,
2 My business address is 116 Voortrekker Street. Witch is the main road of the
mentioned town.
3 I am the owner of TCC Sande & Vervoer. I confirm that the contents hereof fall
4 I can confirm that my business has been without water for a long period of time.
And that I therefore had to make a decision on installing a JOJO tank for the
have a JOJO tank and a steel water tank that we help the community of
Thlabologang and Scotland with, when they have functions and funerals. We
have to arrange transport and ask the community and/or the municipality to fill
6 The manucipality has a tracktor with a sewerage tank that operates in town to
T.
! ~ ,rt\i.' 1 L l l
sEc·ptrnrij>..ibEb§eWerag' tanks of houses not connected to the main sewer line. The
2022
0410
2
2022
r
0411
3
DEPONENT
2022
V
-- --
0412
4
THUS signed and sworn before me, at a .~;~ on this the !farµ day of
&c;ro£'§e1 I
2022, the Regulations contained in ovemment Notice No. R1648 of
19 August 1977 (as amended) having been fully
complied with.
2022 •!j• Gu
COM MIS SIO NER OF OAT HS
FULL NAMES: ~j 'fef -\-' \-te ~'f::: j~ C¥ -e:, t--fJ
BUSINESS ADD RES S:= \.~ ~~~ ~"V ---e
"c- "-e ~ ~·\ Z
DESIGNATION: "'c:>~~,
Ce ,l...-\ u
~-~
0413
Case no: - - - - - -
and
CONFIRMATORY AFFIDAVIT
I, the undersigned,
CHRIS BREEDT
Province.
2 The facts deposed to herein fall within my personal knowledge, unless the
context indicates otherwise, and are to the best of my belief both true and correct.
3 I have read the founding affidavit by Christo Bester. I confirm the correctness of
DEPONENT
COMMISSIONER OF OATHS
FULL NAMES:
BUSINESS ADDRESS:
DESIGNATION: