sunday's river valley municipality turnaround status report national council of provinces 20...
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SUNDAY'S RIVER VALLEY MUNICIPALITY
TURNAROUND STATUS REPORT
NATIONAL COUNCIL OF PROVINCES20 APRIL 2010
Background• Paterson town had been without water supply for a number months and the
municipality was unable to buy chemicals to purify water for the whole area. This indicated that there was no money within the operational budget.
• The department learnt that the municipality utilized the conditional grant of R10, 5m earmarked for Paterson water for other operational expenditure.
• Whilst the budget has been approved by Council the budget remained unfunded and was unrealistic.
• The monthly income of the municipality was R1,5m whereas the salaries on monthly basis amounted to R2m which left a deficit of R500 000 per month.
• The municipality had been ravaged with adverse and disclaimer audit reports since the year 2006/7, 2007/08 and 2008/09 financial years.
• Supply Chain Management processes of the municipality were flawed.
Background cont...
• There are fourteen members of Council, (Twelve ANC and two DA). The ANC Councillors are divided into two groups, a difficult situation that compromises the decision of the Council. A consensus is as a result never reached on any matter.
• Eskom continuously threatened to cut power supply because of a failure by the municipality to meet its monthly obligations.
• After visits from the MEC and SG it became clear that the situation was deteriorating rapidly
• Court actions launched by Ratepayers Association was premised on Council’s inability to resolve issues decisively and clearly
Introduction to Intervention DLGTA S139 (b) intervention with effect from 18/2/10 Administrator assumed duties on 23/2/10 Areas of intervention
Finance Human resources Infrastructure and service delivery Legal Public participation/stakeholder engagement
Turnaround strategy and plan adopted by council on 25/3/10
Financial recovery plan integrated into turnaround plan
Problem Statement - Finance The turnaround plan and the financial recovery plan must address the
following:
Non payment for services rendered
Debt book at R55m+ and 80% is rates
Poor collection rates at about 40%
Tariffs setting is poorly structured, grossly undercharged and not considering
cost of service provision
Limited financial competencies and skills
Completeness and validity of accounting records
Problem Statement - Finance
Failure to implement credit and debt management policies and by-laws
Poor indigent policy and system
Inadequate structure and high vacancy rate
No optimal use of financial management systems
Lack of adequate financial policies and procedure manuals
Complete disregard of procurement policies
Non-credible budget
No proper budget monitoring and control
Turnaround Focus Areas - Finance Implementation of financial recovery plan
Revenue collection Credit and debt management policy review Indigent policy review and register consolidationTariff policy reviewDatabase cleansing and managementMetre reader capacity enhancementElectricity and water loss managementFinalisation of property valuationFinancial department structure review Critical vacancy fillingTraining and capacity building of finance staff
Achievements - Finance Credit control and debt management policy reviewed and adopted by
council 25/3/10 Recalling of chief financial officer Draft financial management policies developed for council approval by
30/4/10 Delegations manual workshopped on 13/4/10 Adjustment budget approved on 25/3/10 Draft IDP and budget 2010-11 approved on 31/3/10 as per treasury
regulations Finance structure reviewed Critical posts budgeted for in 2010-11 Cost cutting measures in place, eg Telephone and 3G cards, travelling
and fleet management
Problem Statement Institutional Development
• Structure not aligned to the IDP• High vacancy rate• High staff turnover• Lack of required competencies in critical departments eg Infrastructure and
finance• Non-functioning of local labour forum• No training and capacity building interventions• Lack of procedure manuals and critical policies• Performance management not measured nor cascaded • Outdated policies • Outdated delegations and rules of order
Turnaround Focus Areas – Institutional Development
• Human resource policy review• Procedure manual review• Rules of order review• Delegations review• Organisational review - finance and infrastructure to be prioritised• Review of local labour forum representation and membership• Develop a training plan based on skills audit• Develop a change management programme• Train staff on performance management• Cascade performance management to all levels
Achievements – Institutional Development• Structure reviewed to align to IDP (finance approved)• Roles and responsibility manual developed and workshopepd• Rules of order developed and workshopped • Draft delegations developed to be workshopped before 30/4/10• Draft telecommunications policy developed• HR policies under review• Performance management system workshop due in by 30/4/10 to revive process• Policy to be reviewed to include all levels by 30/06/10• Local labour forum structure reviewed• Pro-active labour engagement (3 meetings to date)• Service delivery at the core of council agenda, 3 council meetings have taken
place in the last six (6) weeks• Political and administrative stability prevailing
Problem Statement – Service Delivery
Poor maintenance of infrastructure No street lights Internal roads not maintained Water and electricity losses Lack of service standards Lack of procedure manuals No infrastructure maintenance plan Lack of capacity (staff and required competencies) Irregular utilisation of conditional grants meant for infrastructure (DWAF and
DOH) Housing development challenges/capacity
Turnaround Focus Area – Service Delivery
Financial bailout is critical for the survival of the municipality (-+r20m) Refund all funds utilised for operating expenses – on agreed terms (2010-11) Outsource capacity (DBSA Intervention, Cacadu and provincial and national government – in
process and under consideration) Build inhouse skills (critical vacancies provided for in 2010-11) Prioritise infrastructure organisational review and vacancy filling Review implementing agency status of SRVM until the financial position and capacity
challenges are resolved (revert developer role to DOH) Develop an infrastructure maintenance plan (2010-11) Develop an infrastructure master plan (2010-11) Increase operations and maintenance budget (done in 2010-11) Prioritise infrastructure that is critical to economic growth eg. local road maintenance and
street lighting (2010-11 budget) Develop service standards and procedure manuals (outsource)
Problem Statement - Governance• Public participation not effective• Poor relations between council and administration• Gross lack of policy compliance, especially procurement policy and other
policies• Internal control environment generally weak at all levels• Disclaimers for successive years• No risk management nor anti-corruption and fraud measures• Management oversight/governance• No internal audit function• Performance management ineffective• Corruption allegations/ misconduct
Turnaround Focus Areas - Governance
• Develop a public participation policy• Develop a stakeholder engagement plan• Create and support sectoral structures • Review audit committee charter• Co-source an internal audit function• Develop a risk management plan• Develop an anti-corruption and fraud policy• Strengthen support for ward committees• Integrate matters of internal controls into PMS• Align PMS, to SDBIP and IDP• Investigate all allegations of corruption, maladministration and misconduct• Discipline and report criminal conduct
Achievements - Governance• Stakeholder engagement has taken place with Addo community, Cacadu
district municipality, unions, ratepayers association to present turnaround plan• Draft public participation policy has been developed• A first internal audit steering committee with AG and internal auditors has taken
place• A process plan to deal with internal audit and risk management will be
presented to council by 30/4/10 • An audit committee and internal audit committee charter is being developed • An anti-corruption and fraud policy is being developed• Current investigations of allegations of corruption, maladministration and
misconduct are underway• Disciplinary processes and possible criminal charges will be considered once
the investigation is completed
Problem Statement Local Economic Development
• LED strategy a stand alone plan and not aligned to spatial development framework and iDP
• Strategy not specific about strategic objectives to be achieved and how those will be met
• Other departments not aligning their plans and programmes to enhance LED
• LED strategy focusing on short term projects and not on a long term vision
• No core pillars or strategic thrusts
Turnaround Focus Areas - LED• The development of a master plan for SRVM as part of the
turnaround strategy for economic growth is starting point. • The master plan will provide a detailed map and practical
programmes to be pursued, for the future development and growth of this area
• The master plan will entail a comprehensive land use planning and development strategy that can be used to guide all development within the SRVM municipality.
• The plan should reflect the vision contained in the SRVM integrated development plan and should be aligned to the broader spatial development framework of SRVM.
Turnaround Focus Areas - LED• Funding for the master plan to be leveraged from DBSA and DEDEA• The outcome of the plans should be the following:
– Land audit analysis– SDF– Infrastructure plan– Land use management– Precinct or nodal developments– Strategic or special projects– Environmental management plan
• DEDEA and DBSA has been approached for potential funding of the master plan and there is an in-principle consideration
Other Achievements • Cacadu providing extensive capacity building support on council policies and
standing orders• Municipal manager position to be advertised• External specialist support to be provided by DLGTA, provincial and national
treasury on CFO support• Good political support to the administrator• Councillor and official training on rules, roles and responsibilities and policies • Review of all contracts with suppliers is underway• Focus on resolving current litigations (2) resolved so far• Good relations with union so far• Cash flow improving slightly• Relations with DWAF and DOH have improved
Critical Success Factors• Service standards to be improved at all times• Payment for rates & services critical for the success of the plan• Specialist intervention critical in finance and infrastructure• Political stability within Council is critical• Performance driven culture should be instilled • Appointment of competent staff not to be compromised, to sustain
intervention achievements • Commitment of all stakeholders in supporting the plan• A corrupt free environment• A vibrant local economy
Thank you