Enoch Mgijima Local Municipality has been under intervention from the Eastern Cape provincial government and national government for nearly two years and the matter came before the Portfolio Committee on Cooperative Governance and Traditional Affairs (COGTA) yesterday.

The committee received reports from the Auditor-General, the Department of COGTA, National Treasury, Eastern Cape provincial COGTA, the South African Local Government Association (SALGA), the Chris Hani District Municipality and Enoch Mgijima Local Municipality management team. The municipality is currently under intervention in terms of Section 139 (7) of the Constitution, after a previous provincial government interventions were unsuccessful.

The Office of the Auditor-General was the first stakeholder to brief the committee. It identified problems with a lack of compliance with financial laws and regulations, a lack of reliable performance information for predetermined objectives, and the municipality’s qualified audit opinion over the past three years.

The AG found that the quality of the municipality’s financial statements is very poor and it relies heavily on consultants. In addition, the AG’s repeat findings indicate that the municipality does not take seriously the AG’s findings and recommendations.

Other weaknesses, the AG said, are poor record keeping and a lack systems to identify indigents, which means that some people may be benefitting erroneously from the indigent programme, thereby negatively impacting on the municipality’s finances. Poor consequence management is another problem; municipal staff are not being held accountable for flouting rules and procedures, the AG said.

The AG also briefed the committee on various matters relating to irregular expenditure, including procurement transactions in which the minimum prescribed number of written quotations was not sought and the deviation was approved, even though it was possible to obtain the quotations.

“Some awards were made to bidders who had not submitted a declaration on whether they are employed by the state or connected to any person employed by the state; and some awards were made to bidders based on preference points that were not allocated or calculated according to the requirements of the Preferential Procurement Policy Framework Act and its regulations,” the AG reported.

The provincial COGTA emphasised the municipality’s qualified audit opinion has remained in place for three years and said the council adopted an unfunded budget for the 2022/23 and 2023/24 financial years.

The municipality’s huge Eskom debt is another contributing factor to the municipality’s woes and it relies heavily on grant funding. Other problems relate to the excessive salary bill, poor revenue collection, chronic high irregular expenditure, and material losses on electricity.

Briefing the committee on developments in the implementation of the municipality’s Financial Recovery Plan (FRP), the National Treasury also said one of the key drivers of the municipality’s financial crisis is the Eskom debt and withdrawing the municipality’s debt relief will plunge it into a financial crisis. Another problem is that when Tsolwana, Inkwanca and Lukhanji municipalities were amalgamated to establish Enoch Mgijima, jobs were incorrectly graded.

National Treasury told the portfolio committee, “The performance review demonstrates a laissez faire approach to implementation of the FRP and further demonstrates stagnation and regression in the financial recovery processes.”

There is no material progress in addressing the root causes that led to the invocation of the intervention and the imposed FRP, Treasury said, and the progress that has been recorded is trivial and seems to be coincidental with no material impact on the recovery processes. However, the spending of conditional grants is good and there is some improvement in service delivery, particularly in road maintenance and pothole repair. However, the auditing of household meters remains a serious concern.

SALGA, meanwhile, is convinced that the municipality is on the correct recovery trajectory called for the current management team to be supported to continue implementing the FRP.

The Enoch Mgijima mayor, Councillor Madoda Papiyana, replied to the AG saying its report is outdated and reflects the administration under the previous mayor. “This audit report is for the previous term. Our audit is still coming – we cannot be judged on this audit. This municipality is in a better shape, we are trying to turn things around for the better. I have listened to the other reports and they show a positive improvement of the institution since the intervention with a new mayor and new administration,” Mr Papiyana said.

The committee Chairperson, Mr Fikile Xasa, warned against any comment undermining the AG’s report, saying it is an official document. “We are not interacting with this matter for the first time. Yes, there might have been developments, but the Auditor-General report remains official. We don’t want an impression to be created that the AG report is not accepted,” he said.

“We are not in Enoch Mgijima and we hope the information provided by the presenters today is going to help the committee get a better understanding of what is going on in the municipality,” said the Chairperson. The question of whether the committee will conduct oversight in the municipality was not addressed at the meeting.

Sakhile Mokoena
21 February 2024