Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698926125930.pdf (South Africa)
Monday, 24 April 2023] No 51—2023] FIFTH SESSION, SIXTH PARLIAMENT PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA _____________________ ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS _____________________ MONDAY, 24 APRIL 2023 _____________________ TABLE OF CONTENTS ANNOUNCEMENTS National Assembly and National Council of Provinces 1.

Referral of Bill to National House of Traditional and Khoi-San Leaders ....................... 2 National Assembly 1.
Membership of Committees ............................................................................................. 2 National Council of Provinces 1.

Referral to Committees of papers tabled .......................................................................... 3 TABLINGS National Assembly and National Council of Provinces 1.

Speaker and Chairperson .................................................................................................. 3 1 2.
Minister of Finance .......................................................................................................... 3 3.

Minister of Public Service and Administration ................................................................ 4 4.

Minister of Sport, Arts and Culture .................................................................................. 4 COMMITTEE REPORTS National Assembly and National Council of Provinces 1.

2.
2.

Financial Management of Parliament .............................................................................. 5 Financial Management of Parliament ............................................................................ 20 National Assembly 1.

Higher Education, Science and Innovation .................................................................... 36 2.

Cooperative Governance and Traditional Affairs .......................................................... 84 3.
Cooperative Governance and Traditional Affairs .......................................................... 97 4.

Cooperative Governance and Traditional Affairs ........................................................ 112 5.

Cooperative Governance and Traditional Affairs ........................................................ 125 6.
Cooperative Governance and Traditional Affairs ........................................................ 149 ANNOUNCEMENTS National Assembly and National Council of Provinces The Speaker and the Chairperson 1.

Referral of Bills to National House of Traditional and Khoi-San Leaders (1) The Secretary to Parliament has, in accordance with section 39(1) of the Traditional and Khoi-San Leadership Act, 2019 (Act No.
3 of 2019), referred the Prevention of Illegal Eviction from and Unlawful Occupation of Land Amendment Bill [B6–2023] (National Assembly – sec 76) to the National House of Traditional and Khoi-San Leaders, which must, within 60 days from the date of the referral (viz.

28 June 2023), make any comments it wishes to make.

National Assembly The Speaker 1.
Membership of Committees (a) The following committee membership changes have been made by the Democratic Alliance with effect from 4 March 2022: Powers and Privileges Committee Discharged: Hoosen, Mr M H 2 Appointed: van der Walt, Ms D Discharged: Appointed: Julius, Mr J W W Gwarube, Ms S (b) The following committee membership changes have been made by the Inkatha Freedom Party and the Other Parties with effect from 19 April 2023: Powers and Privileges Committee Discharged: Appointed: Msimang, Prof C T Majozi, Ms Z Appointed: Zungula, Mr V (c) Ms V S Siwela has been elected as Chairpersons of the Powers and Privileges Committee, with effect from 18 November 2022.
National Council of Provinces The Chairperson 1.

Referral to Committees of papers tabled (1) The following papers are referred to the Select Committee on Cooperative Governance and Traditional Affairs, Water and Sanitation and Human Settlements for consideration: (a) Annual Performance Plan of the Municipal Infrastructure Support Agent for 2023/24; and (b) Annual Performance Plan of the Municipal Demarcation Board for 2023/24.

TABLINGS National Assembly and National Council of Provinces 1.
The Speaker and the Chairperson (a) Annual Performance Plan of the Financial and Fiscal Commission for 2023 – 2024.

(b) Strategic Plan of the Financial and Fiscal Commission for 2020 – 2025.

2.

The Minister of Finance (a) Draft Prudential Standard: Transfer of assets and liabilities of a designated institution in resolution, in accordance with section 103(1) of the Financial Sector Regulation Act, 2017 (Act No 9 of 2017), as amended.
3 (b) Draft Prudential Standard: Stays on early termination rights and resolution moratoria on contracts of designated institutions in resolution, in accordance with section 103(1) of the Financial Sector Regulation Act, 2017 (Act No 9 of 2017), as amended.

3.

The Minister of Public Service and Administration (a) Annual Performance Plan of the National School of Government for 2023/24.

(b) Annual Performance Plan of the Centre for Public Service Innovation for 2023/24.

4.
4.

The Minister of Sport, Arts and Culture (a) Agreement between the Government of the Republic of South Africa and the Government of the French Republic on Cinematographic and Audiovisual Co- production, tabled in terms of section 231(3) of the Constitution, 1996.

COMMITTEE REPORTS National Assembly and National Council of Provinces 4 1.
Report of the Joint Standing Committee on the Financial Management of Parliament on the Parliament of the Republic of South Africa’s Draft 2023/24 Annual Performance Plan, dated 21 April 2023.

The Joint Standing Committee on the Financial Management of Parliament, having considered the Parliament of the Republic of South Africa’s draft 2023/24 Annual Performance Plan, reports as follows: 1.

1.1 Introduction Section 4 of the Financial Management of Parliament and Provincial Legislatures Act, No.
10 of 2009 (the FMPPLA) provides for the establishment of an oversight mechanism to maintain oversight of the financial management of Parliament.

The Joint Standing Committee on the Financial Management of Parliament (the Committee) was established in terms of the Joint Rules of Parliament.

The Committee has the powers afforded to parliamentary committees under sections 56 and 69 of the Constitution.
1.2 Parliament derives its mandate from: - - - - Chapter 4 of the Constitution of the Republic of South Africa, 1996, No 108 of 1996, which sets out its composition, powers and functions; the FMPPLA which regulates the institution’s financial management; the Money Bills Amendment Procedure and Related Matters Act, 2009, No 9 of 2009 (Money Bills Act) which provides procedures to amend money bills; and the Powers, Privileges and Immunities of Parliament and Provincial Legislatures Act of 2004, No 4 of 2004 which defines and declares the national and provincial legislatures’ powers, privileges and immunities.
1.3 Parliament has as its vision to be an activist and responsive people’s Parliament that improves the quality of life of South Africans and ensures enduring equality in our society.

Its mission is to represent the people and to ensure government by the people in fulfilling its constitutional functions of passing laws and overseeing executive action.
To this end, the institution conducts its business in line with the following values: openness, responsiveness, accountability, teamwork, professionalism, and integrity.

1.4 Section 17(1) of the FMPPLA requires that the Executive Authority table planning and budgeting documents in Parliament for referral to the oversight mechanism.
These include the 1 5 draft annual performance plan (APP) and draft budget which should be tabled at least one month before the draft budget must be submitted to the National Treasury.

Accordingly, the Executive Authority tabled the APP on 10 June 2022.

On 2 December 2022, the institution presented the plan to the Committee for its consideration.
1.5 This report comprises four parts: an overview of the draft APP (Part A); an overview of the draft budget (Part B); observations (Part C); and recommendations (Part D).

1.6 This report should be read with the Committee’s report on the Strategic Plan of the Sixth Parliament.

PART A 2.
PART A 2.

Overview of the draft Annual Performance Plan 2.1 Strategic Plan of the Sixth Parliament 2.1.1 Section 14(1) of the FMPPLA requires that the accounting officer must prepare and present the draft strategic plan to the Executive Authority within 6 months of the election of the National Assembly (NA), or by another date determined by Parliament.
2.1.2 Section 14(2) of the FMPPLA requires that the draft strategic plan must: - - - - - cover the following five years or another period determined by Parliament; specify the administration’s priorities for the period of the strategic plan; include objectives and outcomes for each of Parliament’s programmes; include multi-year projections of all revenue and expenditure; and include performance measures and indicators for assessing the administration’s performance in implementing the strategic plan.
2.1.3 The Medium Term Strategic Framework sets out the government’s strategic plan for 2019 to 2024.

It contains 7 priorities, 81 outcomes with 561 indicators.

Parliament will monitor the overall impact of the development indicators contained in it.

2.1.4 The implementation of the strategic plan is achieved through annual performance plans (APPs) and associated operational plans and budgets.

APPs outline the outputs that must be delivered 2 6 to achieve the outcomes in strategic plans.
Operational plans in turn focus on the activities and inputs needed to deliver outputs.

2.1.5 The 2023/24 APP will be the third towards the implementation of the Strategic Plan of the Sixth Parliament which was approved in 2020.

It is a continuation of the changes that were first introduced on 2021/22.

2.1.6 In 2021/22 Parliament reduced its programmes from five to three.
Since that time performance has also been measured using the client satisfaction model rather than the more conventional method informed by the Department of Planning, Monitoring and Evaluation’s framework on strategic and annual performance plans.

2.2 Programme overview Programme 1: Administration 2.2.1 Programme 1 provides strategic leadership, governance, management, corporate and support services to Parliament.
It consolidates three former programmes namely Strategic Leadership and Governance, Administration and Support Services.

Programme 1 comprises the following sub-programmes: Executive Authority, Office of the Secretary, and Corporate and Support Services.

2.2.2 The parliamentary service intends addressing the prevailing and future way of work.
Such efforts will include significant transformation and change in the approach to management, enabling policy, business processes, related skills, and re-thinking facilities.

This is intended towards, over time, creating a new institutional culture that is driven by professionalism, service excellence and technology-enabled processes.
2.2.3 Over the next five years the institution will adopt and implement modern technologies towards working smarter, investing in skills development to build and improve institutional capacity, and improving the working environment to ensure motivated and engaged employees.
To this end, management capacity to build institutional agility will have to be developed, institutional responsiveness must be enhanced, and a programme of ICT infrastructure and skills development to shield the institution from possible external shocks, must receive a significant investment.
2.2.4 An investment in ICT infrastructure, systems and skills must enable a move away from its traditional and current capabilities to, amongst others, the convergence of content, interaction, networks, application, devices and channels.

Such IT developments must provide a seamless 3 7 and valuable experience for parliamentarians who are the primary clients of the parliamentary service.
2.2.5 For greater effectiveness and efficiency, the parliamentary service must develop and implement the following interventions: - - - - - - - - develop a new business model to address the future way of work and build in the principles of e-Parliaments; redesign and optimise core and support business processes through technology including the development of a legislative drafting system, an oversight monitoring and tracking system, a public involvement and engagement system (including petitions, submissions and representations), an ERP processes for decision-making, supporting infrastructure, networking and end-user tools and support; implement upskilling and re-skilling programmes to ensure the effective use of modern systems and technology; develop specialised skills programmes to ensure expertise and specialisation, and the integration of existing functions using a multi-skilling approach; ensure continuous innovation and improvements of processes and skills, allowing for co-creation and value adding; integrate service offerings through a collaborative approach where service recipients are offered a holistic response; provide policy, tools and facilities for remote employment conditions; and implement virtual meetings on collaboration platforms; 2.2.6 The programme must ensure that employees work smarter, improve skills and capacity, and improve the working climate so as to ensure an engaged workforce.
Table 1 below, outlines the targets under this programme.
4 8 Parliamentary Output Service Indicator Annual Performance Targets Actual Estimated MTEF 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 Digital Service % Member 72 74 86 80 80 80 80 Satisfaction Facilities % Member 67 48 76 75 75 75 75 Management Satisfaction Service Table 1: Programme 1 Performance Indicators (Source: Parliament of the RSA) Programme 2: Legislation and Oversight 2.2.7 Programme 2 provides for support services for the effective functioning of the National Assembly (NA) and the National Council of Provinces (NCOP) including procedural, legal and content advice; information services and record keeping; and secretarial and support services for the houses and their committees.
The programme covers the core business of Parliament and focusses on the outputs, activities and inputs related to legislation and oversight functions.

2.2.8 The programme comprises the following sub-programmes: NA (House; Committees); NCOP (House; Committees); Public Participation and External Relations; Shared Services; Sectoral Parliaments and Joint Business.
Parliamentary programme 2.2.9 A key input towards the strengthening of committee oversight includes adequate time for committees to conduct oversight.

Therefore, the parliamentary programme framework must be based on statutory and strategic requirements, the direction provided by the Executive Authority, and that of the programming committees.

The new programming framework will be implemented over time, with a gradual shift towards dedicated constituency, committee and plenary weeks.
The new framework must also include joint committee and inter-sectoral work.

2.2.10 In addition, the Parliamentary Service must prepare a draft oversight plan, based on the input of office bearers and key stakeholders, to direct the oversight work of Parliament.

This plan 5 9 must address key elements required to improve the overall outcome of oversight activities and processes.

2.2.11 Table 2 below, sets out the performance targets in relation to the programming service.
Parliamentary Output Service Indicator Annual Performance Targets Actual Estimated MTEF 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 Programming Number of - 1 1 1 1 1 1 Service Annual Parliamentary Programmes Adopted Number of - 4 4 4 4 4 4 Annual Programmes Adopted Number of - 4 4 4 4 4 4 NCOP programmes adopted Table 2: Programme 2 – Programming Service Targets Member capacity-building 2.2.12 During their tenure parliamentarians are required to apply a diverse range of skills.
If Parliament is to operate more efficiently and effectively, specific and needs-based capacity-building programmes must be in place to equip parliamentarians with the skills needed to perform their functions.
2.2.13 In order to provide more relevant and better quality capacity development programmes the parliamentary service must: - - ensure that capacity building programme development is based on a continuous needs assessment, with input and feedback from stakeholders; improve co-ordination and co-operation of role-players in the capacity- building area; 6 10 - - - integrate individual capacity building programmes under a holistic curriculum, with separation into various programmes, courses, modules and subjects; centralise resources and funding; and initiate processes to measure the usefulness of programmes through regular satisfaction feedback.
2.2.14 Table 3 below summarises the performance targets in relation to members’ capacity building programmes.

Parliamentary Output Service Indicator Annual Performance Targets Actual Estimated MTEF 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 % - 70 70 70 73 75 75 Members Satisfaction Capacity Building Service Table 3: Programme 2 – Members Capacity Building programmes (Source: Parliament of the RSA) 2.2.15 Table 4 below illustrates the proposed budget for this programme.
In summary, in 2023/24 this programme will be allocated R815,960 million of the institution’s R2, 973 091 billion annual budget.

Table 4: MTEF Estimated budget for Programme 1 7 11 2.2.16 Parliamentarians represent the interests of people through the processes of legislation, oversight, appointments and international participation.

Such representation requires access to several vast and different streams of information.
Better scrutiny and recommendations will require improved synthesis, analysis and research services.

2.2.17 Sufficient research capacity in Parliament remains a challenge.

The 2017 Global Parliamentary Report indicates new trends in this regard.

Accordingly, parliaments are establishing capacity to specialise and provide the following: information for Members; research for committees; procedural research; budget analysis, and gender analysis.
Research and information services in Parliament must access and review data sets and information, and must analyse, evaluate and synthesise evidence and information.

2.2.18 Parliament must also increase its ability to monitor, track and evaluate the implementation of recommendations and resolutions.

The institution will benefit from tracking its own data, to build an evaluative culture, and to gain insights into legislative impact.
The institution can further improve accountability by engaging and interacting with evaluations done by the Executive and other institutions, thereby providing a broader range of information and insight on the effectiveness of government programmes.

Providing a real-time country dashboard may help in holding the Executive to account and keeping citizens informed on service delivery progress.
2.2.19 In order to provide quality information services, the parliamentary service must: - - - - - - develop a three-year research plan in support of the institutional oversight plan; co-ordinate the various parliamentary service information providers into an integrated and seamless delivery model; ensure equal access to information services; forge improved collaboration with partners and third party/external stakeholders; augment the information dissemination process, ensuring improved packaging, information simplicity, and ease of use of information products; introduce institutional standards and quality management processes to ensure quality and objectivity; 8 12 - - establish a research advisory panel to guide and advise information services; and implement an institutional knowledge management strategy, ensuring institutional data and information management processes.
2.2.20 Table 5 below reflects the performance targets in relation to information services.
Parliamentary Output Service Indicator Annual Performance Targets Actual Estimated MTEF 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 Research % 57 53 81 75 75 75 75 Service Members Satisfaction Content Advice Service % 44 70 81 75 75 75 75 Members Satisfaction Procedural % 64 69 77 75 75 75 75 Advice Service Members Satisfaction Legal Advice % 48 43 77 75 75 75 75 Service Members Satisfaction Committee % 63 76 83 75 75 75 75 Support Service Members Satisfaction Table 5: Programme 2 – Information Services performance targets (Source: Parliament of the RSA) Public Involvement 2.2.21 The involvement and participation of the public are key to ensuring a participatory democracy and more responsive government.
Increasing public participation will require improved information dissemination and greater access to participate.

This, in turn, will require the use of more official languages, broadcasting on radio, social media and mobile technology, and external networks to reach the public.

Greater access to participate in Parliament will require 9 13 more joint public hearings, e-hearings, online submissions, and better use of constituency offices.
2.2.22 To ensure improved public involvement, the parliamentary service must: - implement interventions focussing on the delivery of public education and information programmes, empowering people to participate in parliamentary processes, mobilising public stakeholders, and capitalising on the use of digital and preferred platforms; - - - - - implement virtual public meetings, e-hearings, e-petitions; broaden cooperation with partners and stakeholders including the legislative sector, government, community organisations and institutions; improve co-ordination of programmes with that of constituency offices; strengthen the petitions process; and consolidate current programmes, capacities and resources into a single service to support public participation activities.
2.2.23 In 2014 Parliament initiated an annual external survey to measure public awareness, access and participation in the processes of the institution.

Since then the main indicators have shown increases in awareness, access and participation.
To improve on these, the 2019 survey report recommended the following: - - - - increasing familiarity with Parliament through easy to understand and user-friendly communication strategies aimed at educating not overwhelm; increasing the use of social media and the internet which are the media of the future; communicating how to engage with Parliament by using both traditional and modern forms of communication; and targeting those demographic groups that have been identified as having less awareness and knowledge of Parliament and how to access it.
10 14 2.2.24 Table 6, below, reflects the performance targets related to public participation.

Parliamentary Output Service Indicator Annual Performance Targets Actual Estimated MTEF 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 Public % Members 57 53 74 75 75 75 75 Participation Satisfaction Service Table 6: Programme 2 – Public Participation Service targets (Source: Parliament of the RSA) 2.2.25 Table 7 below illustrates the budget allocated towards the programme.
Table 7: MTEF Estimated Budget for Programme 2 Programme 3: Associated Services and Transfers 2.2.26 Programme 3 provides for the facilities and financial support to political parties including leadership, administrative and constituency support.

It also provides for transfer payments to entities in Parliament.
It comprises the following sub-programmes: Members’ Facilities; Leadership, Administrative and Constituency support to political parties; Transfer to the PBO; Legislative Sector Support; Office Supporting ISDs.

Performance in respect of this programme will not be measured.

11 15 2.2.27 Table 8 illustrates the budget allocated towards this programme.

Table 8: MTEF Estimated Budget for Programme 3 PART B 3.
Budget Information 3.1 Overview of proposed 2023/24 Budget 3.1.1 The Medium Term Expenditure Estimates for 2023/24 financial year amounts to R2,973,091 billion increasing to R3,062,496 billion in 2024/25 financial year, and R3,139,680 billion in 2025/26 financial year.

3.1.2 Table 9 below reflects the proposed budget across the medium term, as well as economic classification.
12 16 Table 9: Estimates of Expenditure 3.2 Financial Constraints 3.2.1 Parliament reported significant shortfalls based on current budget estimates.

These will impact the quality of Parliament’s oversight and public participation mandates.

3.2.2 The goods and service and retained earnings allocation is used to fund the compensation of employees-item.

However, the retained earnings can only subsidise this item until the 2024/25 financial year.
3.2.3 There is a significant need to modernise the Parliamentary ICT infrastructure and Parliamentary facilities.

The need to do so has been exacerbated by the fire that destroyed certain parliamentary buildings and infrastructure in January 2022.

Such a modernisation project will require significant funding.

3.2.4 Although Parliament’s strategy has evolved significantly, the baseline has not been aligned to it.

National Treasury should therefore review Parliament’s baseline.
3.2.5 The longstanding challenges around how the medical aid contributions to the Parliamentary Medical AID Scheme (Parmed) should be managed, remain.

The Parmed Board must be engaged on how this may finally be addressed.

3.2.6 The allocation of political party allowances as part of Parliament’s baseline requires reconsideration.

3.2.7 Funding must be provided for strategic offices that support the oversight and public participation mandate i.e.
the Parliamentary Budget Office (PBO), and the Office on Institutions Supporting Democracy (OISD).

3.2.8 The National Treasury must make funding available to finance the restoration of the infrastructure affected by the 2022 fire.

Part C 4.

4.1 Observations As indicated in previous reports, Parliament does not yet have a guideline to inform the drafting of its plans, but ought to have ensured that it complied with what the FMPPLA requires i.e.

the inclusion of objectives and outcomes for each programme.
In order to have the desired impact, it is critical to identify outcomes to be pursued over the period of the strategic plan.

The 13 17 Committee is disappointed that the institution has not yet addressed longstanding concerns challenges in terms of measuring performance.

4.2 Although Programme 3 will receive a substantial allocation and includes Members Facilities, there are no performance indicators under this programme.

This means that it will not be measured throughout 2023/22.
This is a perennial concern.

4.3 The Committee notes that the OISD, PBO, TAO and LSS will report directly to the Executive Authority.

The APP contains no information with regard to how the performance of these offices will be measured.

This, too, is a perennial concern.

4.4 The Committee notes the various financial constraints the administration has highlighted.
We look forward to the appointment of a Chief Financial Officer to, along with the Treasury Advice Office, develop proposals to Executive Authority on how Parliament’s budget constraints may be addressed.

4.5 The Committee notes the various interventions proposed to develop a more efficient and effective parliamentary service.

4.6 The Committee remains concerned that Parliament must, like national departments, apply to the National Treasury for a share of the national budget.
Parliament is a separate arm of the state and cannot be expected to be subject to National Treasury for its budget allocation.

This reliance has the potential to weaken Parliament’s ability to perform oversight of the Executive.

4.7 The Committee supports all efforts to increase public participation in Parliament’s activities.

Ensuring that more people have access to information about Parliament through television, radio and social media would contribute greatly towards that goal.
4.8 The Committee notes that the regulations referred to under Chapter 9 of the FMPPLA have still not been developed.

These regulations will go a long way towards standardising, amongst others, the institution’s planning and budget processes.

PART D 5.

Recommendations The Executive Authority should respond to the following recommendations within 30 days of the adoption of this report by the NA and the NCOP.
5.1 The Committee recommends that the institution develops its budget process before the consideration of the 2024/25 draft annual performance plan and budget.

The budget process 14 18 would assist as far as ensuring that Parliament is able to support and argue for the granting of the institution’s funding request.

5.2 The Committee recommends that Parliament develops performance indicators measuring the delivery of services under Programme 3.
5.3 The Committee is pleased that engagements between the National Treasury and the Executive Authority to address Parliament’s budget allocation have commenced and appear to be bearing fruit.

The Committee should receive an update on progress made in this regard, as well as on efforts underway to resolve the Parmed liability.
5.4 With regard to the institution’s efforts to build a more effective and efficient parliamentary service, the Committee should be provided with quarterly updates on progress made in terms of each intervention.

5.5 The Committee should be provided with a report on how the performance in relation to the OISD, PBO, TAO and LSS is measured.
5.6 The Committee recommends that every avenue be pursued to ensure that the vast majority of citizens are able to access information about parliamentary committee meetings and plenaries.

Parliamentary meetings should not be aired on pay-to-view channels, but should be broadcasted on the SABC’s free-to-view platform or on the special channel for which the institution is seeking licensing.
The Committee against requests quarterly progress reports on the interventions the Parliamentary Communication Service is working on.

5.7 The Committee recommends that the regulations referred to in Chapter 9 of the FMPPLA be developed and finalised as a matter of urgency and before the end of the 2023/24 financial year.

The Committee should be provided with quarterly updates on progress made in this regard.

Report to be considered.

15 19 2.


Report of the Joint Standing Committee on the Financial Management of Parliament on the Parliament of the Republic of South Africa’s 2022/23 Third Quarter Report, dated 21 April 2023 The Joint Standing Committee on the Financial Management of Parliament having considered the Parliament of the Republic of South Africa’s performance in the third quarter of 2022/23, reports as follows: 1.
1.1 Introduction Section 4 of the Financial Management of Parliament and Provincial Legislatures Act, No.

10 of 2009 (the FMPPLA) provides for the establishment of an oversight mechanism to maintain oversight of the financial management of Parliament.

The Joint Standing Committee on the Financial Management of Parliament (the Committee) was established in terms of the Joint Rules of Parliament.
The Committee has the powers afforded to parliamentary committees under sections 56 and 69 of the Constitution of the Republic of South Africa, 1996 (the Constitution).

1.2 Section 52 of the FMPPLA requires that the accounting officer must, within 30 days of the end of each quarter, report to the Executive Authority on Parliament’s quarterly performance in respect of the implementation of the Annual Performance Plan (APP).
The Executive Authority in turn, and in terms of section 54 of the FMPPLA, must table each quarterly report within five working days of receiving it, for the consideration of the oversight mechanism i.e.

the Joint Standing Committee on the Financial Management of Parliament.

The 2022/23 Third Quarter Report was accordingly tabled on 31 January 2023.
1.3 The senior management team, led by the Speaker of the National Assembly, appeared before the Committee in a meeting held on 3 March 2023 during which the institution’s performance in the period under review was interrogated.

1.4 This report should be read along with Parliament’s Strategic Plan for 2019-2024, the 2022/23 APP and budget, and the Committee’s reports in respect thereof.
1.5 This report comprises four parts: Part A, containing the background to the third quarter performance report; Part B, a summary of the institution’s financial and performance information for the period under review; Part C, the Committee’s observations; and Part D, the Committee’s recommendations.

1 20 Part A 2.
Background 2.1 Mandate 2.1.1 Parliament derives its mandate from: - - - - Chapter 4 of the Constitution; the FMPPLA which regulates the institution’s financial management; the Money Bills Amendment Procedure and Related Matters Act, 2009 No 9 of 2009 which provides procedures to amend money bills; and the Powers, Privileges and Immunities of Parliament and Provincial Legislatures Act No 4 of 2004 which defines and declares the national and provincial legislatures’ powers, privileges and immunities.
2.2 Mission and vision 2.2.1 Parliament has as its vision to be an activist and responsive people’s Parliament that improves the quality of life of South Africans and ensures enduring equality in our society.

Its mission is to represent the people and to ensure government by the people, by fulfilling its constitutional functions of passing laws and overseeing executive action.
To this end, the institution conducts its business in line with the following values: openness, responsiveness, accountability, teamwork, professionalism, and integrity.

2.3 Strategic Priorities 2.3.1 Parliament has identified only two strategic priorities for the Sixth Parliament i.e.

to strengthen oversight, and to enhance public involvement in Parliament’s activities.
2.3.2 In order to achieve the above outcome, the Sixth Parliament will: - improve committee oversight work in relation to the budget cycle in particular, through allowing more time in the parliamentary programme for oversight activities and by encouraging committees to undertake such activities jointly.
- improve the effectiveness of public hearings through greater public participation, expanding public education, better dissemination of information, effective use of broadcasting, technology and social media, the use of more 2 21 official languages, and encouraging committees to undertake joint public hearings.
2.3.3 To aid the above activities, the institution will: - - enhance research and legal support in respect of oversight activities; improve members’ capacity through capacity-building programmes that will empower parliamentarians to be effective and efficient in executing their oversight responsibilities; - improve oversight and accountability through better monitoring, tracking and evaluation in respect of Parliament’s own work, as well as the work of the Executive; - - ensure openness and accessibility through the use of modern technology in respect of social media, tools-of-trade, workflows and automation; and cut costs to allow for operational sustainability.
Part B 3.

Third Quarter Performance 3.1 Overview 3.1.1 As indicated in Table 1 below, Parliament met all 12 performance targets in the period under review.
Indicator Overall Member Satisfaction % Ease of Access % Timeliness % Reliability % Fairness % Usefulness % ICT Services 86,60 Facilities Management Services 80,79 Capacity Building Services 75,08 Research Services 81,68 Content Advice 80,83 Procedural Advice 78,56 Legal Advice 76,01 86,67 79,27 84,56 81,51 86,32 80,00 N/A N/A 87,72 81,92 74,44 75,19 75,47 N/A 74,91 82,14 81,05 78,55 76,86 80,00 80,70 78,11 75,29 81,07 81,07 78,89 75,00 82,55 80,35 78,52 76,08 82,59 80,70 78,46 76,92 3 22 Committee Support Services 84,59 Public Participation Support 76,03 85,26 84,83 83,79 84,91 84,83 76,15 75,69 77,25 75,77 75,00 Table 1: Outcome of Member Satisfaction Survey, Third Quarter 2022/23 (Source: Parliament of the RSA) 3.2 Programme-by-programme summary of performance information Programme 1: Administration 3.2.1 Programme 1 provides strategic leadership, management and corporate services to Parliament, and comprises the following sub-programmes: Executive Authority, Office of the Secretary, and Corporate and Support Services.
3.2.2 As indicated in Table 2 below, all targets under this programme were met.
Parliamentary Service Indicator Q3 target Q3 Performance Variance Status Reasons for 80% % Member satisfaction % Member satisfaction 75% Digital service 86,60% +6,60% Met Facilities management service Table 2: Programme 1 – Administration (Source: Parliament of the RSA) 80,79% +5,79% Met Variance/ Mitigation Useful and reliable services provided Useful and reliable services provided 3.2.3 According to the table above, sub-programmes Digital Services and Facilities Management Service exceeded their targets by 6,6 per cent, and 5,79 per cent respectively.
Key performance trends under this programme are captured in paragraphs 3.2.4 to 3.2.19 below.

Information Communication Technology (ICT) 3.2.4 In the period under review ICT, and broadcasting and audio-visual services were provided to 22 NA sittings, 14 NCOP sittings, 402 committee meetings, the Medium Term Budget Policy Statement (MTBPS) sitting as well as to a special sitting of the NA held on 13 December 2022.
3.2.5 In addition to the above, such services were provided to public hearings on the Housing Consumer Protection Bill, the National Veld & Forest Fire Amendment Bill, and the Railway Safety Bill.

3.2.6 Members of the public, citizen interest groups, parliamentarians, and the administration were able to access the parliamentary website which provides access to parliamentary information.
Content on the website includes parliamentary programmes; order papers; minutes of house 4 23 proceedings; the Announcements, Tabling and Committee reports publication; parliamentary questions; internal question papers; general information about Parliament, office bearers and parliamentarians; press releases.

In the period under review, the website was available 99,47 per cent of the time.

Facilities Management 3.2.7 Employees have returned to the precinct on rotational basis.
However, facilities management services continued to be provided as required.
3.2.8 The various services provided in the period under review included: - - - - - - - - - the daily cleaning of both public and office spaces provided access (to office spaces) was possible; transport to the parliamentary precinct as and when required; refreshments to parliamentary staff, departmental delegations and meetings which allowed the catering section to recover its cost of sales; support to committees and sectoral parliaments on oversight visits; daily building security through patrols, inspections and monitoring facilities; screening, vetting and processing of all short listed candidates as and when required; the provision of images and artwork loans for research purposes when required; the monthly restoration of antique furniture; measures for the return of parliamentarians and employees to the precinct i.e.
the Helpdesk is operational, Parliamentary Protection Service (PPS) staff are stationed at entrances, SHE services have been put in place, the 90 Plein Street cafeteria is operational; and - courier services to support institutional events.

Parliamentary Communications Service 5 24 3.2.9 The Parliamentary Communication Service (PCS) supported ten committees on their oversight work and public hearings by providing, amongst others, media liaison services, branding, social media and television support.
In the period under review 162 articles about committee meeting activities, including public hearings, were posted on Faranani.

Due to digital space constraints in the Outlook environment committee news bulletins were no longer shared via e-mail Info Alert.

3.2.10 PCS supported the parliamentary programme by creating awareness and distributing information about parliamentary activities.
Such supported included communication support in relation to the special physical sitting that took place at the City Hall in Cape Town in December 2022.

3.2.11 PCS also provided communications support to twenty-two public hearings that were held for various bills across several provinces.

The radio broadcast toolkit was used to stream the hearings to twelve community media stations.

Community radio stations broadcast live.

In addition, the hearings were covered by all platforms i.e.
social media, television, photography and design.

Human Resource Management 3.2.12 The Sixth Parliament aims to increase the government’s responsiveness and accountability.

To realise this goal, Parliament’s Human Capital strategy aims to provide reliable capacity and skills to support parliamentarians in the execution of their constitutional mandate.
3.2.13 The succession planning committee recommended six candidates to be placed in the Succession Planning Committee programme for 5 of the 6 identified succession posts.

No suitable candidates were found for the Editing Assistant-post and alternative options were being explored to attract suitable candidates.

3.2.14 The recruitment drive to identify five graduates for internships in the Catering Section was activated in the period under review.
A targeted approach was embarked upon with the Cape Town Hotel School.

Ongoing support and advice was provided to graduates to complete their work.

The following modules were added to their programme: Oversight and Accountability; Parliament and the National Budget, and Public Administration.

The project team met regularly to review successes, track the progress, and address challenges.
3.2.15 The Organisational Realignment Project was in its second phase entailing the micro- analysis and design of business operating models, processes, and positional structures to 6 25 enable a macro-functional design.
The following work in relation to the analysis and design of the remaining functions was completed in the third quarter: - data gathering, service analysis, stakeholder engagements, benchmarking, analysis and design of the operating models and functional design and positional structure options have been completed in respect of Public Participation, Involvement and Education; and Houses and Committees; - data gathering, service analysis, stakeholder engagements, benchmarking and analysis have been completed in respect of Knowledge and Information Services: documentation and records management; library and language services; institutional support services-catering, household, facilities and SHE (Safety, Health and Environment); Protection and Security Services; and - data gathering and service analysis have been completed in respect of Legislative Sector Support (LSS); and Employee Engagement levels.
3.2.16 Three resignations were submitted in the period under review: one from PCS, one from Core Business Support Division (CBSD) and, one from the Constitutional and Legal Services Office (CLSO).

This represents a turnover rate of 0, 23 per cent of the staff establishment which is much lower than the targeted 5 per cent.

3.2.17 Funding was approved by the Culture, Art, Tourism, Hospitality, and Sport Sector Education and Training Authority (Cathsseta).
The first tranche payment of R364 000 was processed in the second quarter, and monitoring meetings were held with the seta in the period under review.
3.2.18 Training interventions were delivered to 124 employees to enhance their expertise and specialist skills in the following areas: behavioural skills; communication and language; computer and information technology; financial and remuneration; human resources; induction to the parliamentary service; knowledge and information management; and safety, health and environment awareness.

3.2.19 The bursary committee awarded bursaries amounting to R532 365 to 30 applicants for various levels of study.
Programme 2: Legislation and Oversight 3.2.20 Programme 2 provides support services for the effective functioning of the NA and the NCOP including procedural, legal and content advice; information services and record keeping; and 7 26 secretarial and support services for the houses and their committees.

The programme covers the core business of Parliament and focusses on the outputs, activities and inputs related to legislation and oversight functions.
3.2.21 The programme comprises the following sub-programmes: National Assembly (House; Committees); National Council of Provinces (House; Committees); Public Participation and External Relations; Shared Services; Sectoral Parliaments; and Joint Business.

3.2.22 According to Table 3 below, all targets under this programme were exceeded.

Key performance trends under this programme are captured in paragraphs 3.2.23 to 3.2.35 below.
Parliamentary Service Indicator Q3 target Q3 Performance Variance Status Reasons for Variance/ Mitigation of Number annual parliamentary frameworks adopted 1 1 0 Met Programming Service Number of NA programmes adopted 1 1 of Number NCOP programmes adopted 1 1 0 0 Met Met Capacity Building Service % Member satisfaction Research Service % Member satisfaction 70% 75,08% +5,08% Met 75% 81,68% +6,68% Met Content Advice Service % Member satisfaction 75% 80,83% +5,83% Met Procedural Advice Service % Member satisfaction Legal Advice Service % Member satisfaction Committee Support Service % Member satisfaction Public Participation Service % Member satisfaction 75% 78,56% +3,56% Met 75% 76,01% +1,01% Met 75% 84,59% +9,59% Met 75% 76,03% +1,03% Met Useful and easy to access services provided Useful and reliable research provided Reliable, fair and access to easy content service provided Fair and services provided reliable Reliable timeous provided and services Fair and services provided reliable Ease of access to services must be improved; Communication on 8 27 public participation needs be to strengthened Table 3: Programme 2 – Legislation and Oversight (Source: Parliament of the RSA) 3.2.23 In respect of Members’ capacity-building activities, the following were achieved in the period under review: - - - preparation of a capacity-building framework considering the locus of all training and capacity-building initiatives; implementation of a client engagement and ticketing model; and preparation of revised capacity-building policy for consultation.
Legislation and Oversight 3.2.24 Research services scored highest on usefulness followed by fairness, ease of access, reliability, and timeliness.

Content advice scored highest on reliability followed by ease of access, equally on timeliness and usefulness, and lastly fairness.

Procedural advice scored highest on reliability followed by ease of access, fairness, usefulness and lastly timeliness.
Legal advice scored highest on the dimension for usefulness followed by ease of access, fairness, timeliness and lastly reliability.

For committee support performed highest on ease of access and fairness, followed equally by usefulness and timeliness, and lastly reliability.

3.2.25 Committee support is focused on supporting the core mandates of Parliament i.e.

law making, oversight, public participation, co-operative government and inter-governmental relations, and international engagement.
To this end the following were delivered in the period under review: House Papers i.e.
53 ATC’s; content, secretariat and logistical support to 19 oversight visits that were undertaken in the period under review; committee reports on bills that were before the NA (12) and NCOP (11) respectively; 384 of 402 sets of minutes were produced within 3 days (95%); 103 of 107 reports were produced within 8 days (95%); 7 legal opinions were completed and provided to committees; 59 legal opinions were completed and provided to the administration; 13 contracts were drafted and completed; 14 private members’ bills were completed; 111 matters relating to pending litigation (worked on pending matters) were attended to; 13 bills were introduced; and 10 Act forms were sent to the President for assent.
3.2.26 Research services were aligned to the programme of Parliament and entailed support to committee oversight visits, committee processes, house proceedings, which included reactive 9 28 and proactive research services and products.

The Research Unit produced 246 research papers which were provided in support of oversight and accountability.

3.2.27 The Multi-Party Women’s Caucus (MPWC) identified the National Strategic Plan (NSP) on Gender Based-Violence and Femicide as a key area of focus.
Gender-based violence is also a key oversight area in the Oversight Plan for the Sixth Parliament.

An oversight toolkit was developed for the National Strategic Plan on Gender-Based Violence and Femicide.

The toolkit is a generic fact-sheet that parliamentarians may use to capture the key areas of focus of the NSP, as well as generic questions for oversight.
As the MPWC engages with each of the pillars, more detailed papers and oversight questions will be prepared by the Parliamentary Research Unit (PRU).

3.2.28 The PRU provided support to the Budgetary Review and Recommendation (BRR) report process through the provision of analyses of all departmental and entity annual reports, including reports of the Auditor-General of South Africa (AGSA).

These were produced to assist parliamentarians with participation in committee meetings dealing with these reports.
The papers were also used in the BRR reports produced by the Committees Section.

During October and November 2022 over 80 analyses were produced by the PRU and distributed to the relevant committees.

3.2.29 An overview of the Capital and Maintenance Infrastructure Projects of the Department of Public Works and Infrastructure (DPWI) and the Property Management Trading Entity (PMTE) was prepared for an oversight meeting of Portfolio Committee on Public Works and Infrastructure.
The paper provided a brief background on the reported capital maintenance changes the DPWI plan to implement, as well as the budget for the PMTE; and a select review of the maintenance allocation reported for the 2022/23 financial year.

3.2.30 A paper on coalition governments in South Africa and comparative examples was prepared for the Chairperson of the NCOP and provided information on the conditions under which coalition governments form, how they work and their challenges.
3.2.31 An overview of the state of water and sanitation infrastructure in South Africa was prepared to assist parliamentarians who took part in the NCOP’s debate on viable water infrastructure for sustainable and reliable water supply to communities.
The paper further discussed the water value chain and the legislative framework; funding for water infrastructure; backlogs in access to water and sanitation infrastructure; government interventions to address backlogs; and planned and current provincial water infrastructure development projects.

10 29 3.2.32 Unrevised Hansard reports were produced within 5 days for 40 sittings of the National Assembly (26) and the NCOP (14).
Interpretation services in both Houses facilitated debate on matters of oversight over the Executive, including questions to the President, Deputy President, and ministers, as well as debates on matters of public importance, and legislation.

3.2.33 Hansard and interpreting support was provided for amongst others questions to Executive, motions, statements, and reports.
These included debates on matters such as the establishment of an ad-hoc committee to investigate matters surrounding Phala game farm theft; the negative impact of heavy-duty trucks on the safety of commuters; and on water infrastructure network for sustainable water supply to communities.
The reports that were considered in the period under review included the report recommending candidates to fill twelve vacancies on South African Broadcasting Corporation (SABC) Board; and the report of Independent Panel established in accordance with Rule 129A-Q to conduct a preliminary enquiry relating to a motion proposing an enquiry in terms of Section 89 of Constitution, 1996.
3.2.34 During the reporting period 222 papers were tabled within a day of receipt, and in terms of the rules and relevant legislation.

Electronic papers were distributed a day before sittings, and physical papers, for hybrid sittings, by 09h00 on the morning of those sittings.

Daily papers were delivered digitally to parliamentarians, parliamentary staff and officials of departments mostly the day before the sitting.
Public Participation 3.2.35 During the period under review the public participation team implemented interventions focusing on mobilising stakeholders, and capitalising on the use of digital and preferred platforms, to improve the delivery of public education and information programmes and empower citizens to participate in parliamentary processes.

A total of 54 unique visitors to Parliament, and a total of 112 participants attended virtual and physical public education workshops.
Programme 3: Associated Services and Transfers 3.2.36 Programme 3 provides for facilities and financial support to political parties including leadership, administrative and constituency support.

It also provides for transfer payments to entities in Parliament.

It comprises the following sub-programmes: Members’ Facilities, Leadership, Administrative and Constituency support to political parties; Transfer to the PBO, 11 30 Legislative Sector Support, and Office Supporting ISDs.
Performance in respect of this programme was not measured.

Members Support Services 3.2.37 Members must be supported in an accessible, effortless, accurate and friendly manner.

To do so, it was critical to adopt the appropriate technology solution to enable workflow automation, real-time process optimisation, process performance measurement, monitoring and tracking and to give parliamentarians multiple simple ways to engage with staff and each other.
With the disruption resulting from the fire in Parliament, the rollout of the online mobile support solution was of even greater priority.

3.2.38 The policies and reports informing members of the facilities that were on offer were continually assessed and reviewed to ensure that facilities were aligned to the needs.

The key service area performed on target for the quarter, with the turnaround for claim processing and reimbursement averaging 1,46 days, an improvement on the 3,47 days reported in Quarter 1.
This improvement was attributed to additional resources being seconded to the unit, and stricter monitoring and control of the submission process.
3.2.39 Matters completed in Quarter 3 included: the funeral policy, and further assessment of insurance options; upgrading of laptops and tablets; submissions prepared for the remuneration task team; amendment to medical aid rules and alignment to 2008 remuneration structure; the final draft of the revised Presiding Officers Handbook; preparation for the piloting of the client engagement and ticketing model; and preparation for consultation of the revised capacity- building policy.
Parliamentary Budget Office 3.2.40 In the period under review, eight outputs related to budget, MTBPS and adjusted budget analysis reports, were achieved.

These included a MTBPS analysis; a pre-MTBPS presentation; a pre-MTBPS brief; and the Division of Revenue presentation to the Standing Committee on Appropriations.

3.2.41 Additionally, nine products related to economic, policy and fiscal briefs were produced and presented to keep parliamentarians abreast of current affairs.
These included: Policy Brief - Performance on the 2019-2024 MTSF, Policy Priority 3- Education, Skills and Health; Policy Brief - Performance on the 2019-2024 MTSF, Priority 4- Consolidating the Social Wage 12 31 through Reliable and Quality Basic Services; and Policy Brief - Performance on the 2019-2024 MTSF, Priority 5- Spatial Integration, Human Settlements and Local Government.
3.2.42 The following papers were delivered to domestic and international fora including the PBO Briefing on Vote 1 Presidency Oversight (November 2022); and presentation by the director of the PBO on the NCOP Legislative Review (November 2022).

Office on Institutions Supporting Democracy 3.2.43 During the period under review two substantive reports were tabled by the AGSA and referred to the relevant committees for processing.
3.2.44 The OISD reported a total of thirteen vacancies: four in the Public Service Commission (PSC); one in the Independent Communications Authority of South Africa (ICASA); six in the Commission on Gender Equality (CGE); one in the Pan South African Language Board (PanSALB); and one in the Independent Electoral Commission (IEC).

4.
4.

Financial Performance 4.1 Overview 4.1.1 According to Table 4 below, Parliament spent 94 per cent or R599,727 million (excluding direct charges) of its allocated third quarter budget of R635, 068 million.

Projections indicate that the annual budget will be spent in full by end of the financial year.

4.1.2 The spending on direct charges stood at R125,748 million or 98 per cent of the third quarter budget of R127,782 million.
It is projected that there will be an overspending of R32,154 million at the end of the financial year.
October – December 2022 Budget Annual Budget Main Division Quarterly Actuals Variance % Annual Actuals Variance % R’000 R’000 R’000 Spent R’000 R’000 R’000 Spent Administration 204 677 185 928 18 749 92 961 821 522 541 439 280 Legislation and Oversight Associated Services 236 955 221 334 15 621 93 875 559 569 912 305 647 193 436 192 465 971 99 755 750 560 970 194 780 Sub-Total 635 068 599 727 35 341 94 2 593 130 1 653 423 939 707 54 65 74 64 13 32 Direct Charges 127 782 125 748 2 034 TOTALS 762 850 725 475 37 375 98 95 471 709 376 081 95 628 3 064 839 2 029 504 1 035 335 80 66 Table 4: Expenditure across programmes (Source: Parliament of the RSA) 4.1.3 Table 5 below details spending across economic classification.
October – December 2022 Budget Annual Budget Quarterly Actuals Variance % Annual Actuals Variance R’000 R’000 R’000 Spent R’000 R’000 R’000 % Spent 127 782 125 748 2 034 98 471 709 376 081 95 628 80 350 602 351 316 (714) 100 1 286 842 906 234 380 608 70 104 721 82 463 22 258 79 617 471 246 762 370 709 40 40 000 41 292 (1 292) 103 130 372 109 409 20 963 84 Economic classification Compensation of Members Compensation of Employees Goods & Services (APP) & Goods Services (Members’ entitlements) Transfers 127 967 127 261 706 99 518 572 381 465 137 107 Capital Expenditure 11 778 (2 605) 14 383 (22) 39 873 9 553 30 320 74 24 TOTALS 762 850 725 475 37 375 95 3 064 839 2 029 504 1 035 335 66 Table 5: Spending across economic classification (Source: Parliament of the RSA) 4.1.4 The spending on compensation of members stood at R125, 748 million or 98 per cent of the third quarter budget of R127, 782 million.
An over-spending of R32,154 million by the end of the financial year is projected.

4.1.5 The spending on compensation of employees stood at 100 per cent or R351, 316 million of the third quarter budget of R350, 602 million.

The slight over-expenditure is attributed to salary increases paid in December 2023.

Indications are that the budget will be spent in full by the end of the financial year.

Included in the available budget is the R17,509 million budget related to vacant posts.
4.1.6 The spending on goods and services relating to the APP, stood at 79 per cent or R82,463 million of the third quarter budget of R104,721 million.

The current underspending was the result of slower than anticipated spending within the institution.

The variance will be spent in the next quarter.

Indications are that, largely driven by spending on the restoration works.

The budget will be spent I full by the end of the financial year.
14 33 4.1.7 The spending on goods and services relating to members’ entitlements, stood at 103 per cent or R41,292 million of the third quarter budget of R40,000.

Indications are that the full annual budget of R 130, 372 million will be spent by the end of the financial year.

4.1.8 Spending on transfer payments relating to transfers to political parties stood at 99 percent or R127,261 million of the budget.
Indications are that the full annual budget of R518,572 million will be spent by the end of the financial year.

4.1.9 The spending on capital expenditure stood at 22 per cent or R2,605 million of the third quarter budget of R11,778 million.

The R14, 383 million variance emanates from audio visual assets corrections during the month of October.

The budget for the restoration works is included in the capital budget.
Indications are that the full annual budget of R39, 873 million will be spent by the end of the financial year.

Part C 5.

Observations 5.1 Filling of critical vacancies 5.1.1 The Committee remains concerned about the long delays in filling critical senior management posts, specifically that of the Chief Financial Officer and Head: Parliamentary Protection Service.
5.2 Organisational re-alignment 5.2.1 Parliament has reported that the organisational re-alignment project was progressing as planned, and that phase two was underway.

The Committee has to date not been briefed in detail on what the project entails or its implementation plan.

5.3 Performance Management 5.3.1 The Committee notes that although the level of participation in the client satisfaction survey was considered statistically significant, it remained low.
It is also noted that relying on the surveys may result in limited performance management across the institution and at all levels.

15 34 Part D 6.

Recommendations The Executive Authority should provide the Committee with a response to the recommendations below within 30 days of the adoption of this report by the NA and the NCOP.

6.1 Filling of Critical Vacancies 6.1.1 The Committee should receive quarterly updates on the filling of all vacancies, and in particular those at senior management level.
6.2 Organisational re-alignment 6.2.1 The Committee is concerned about the apparent slow implementation of the organisational re- alignment project, and should receive a detailed briefing/report on it, as well as reasons for the apparent delay in finalising it.

We have also noted that some vacant posts cannot be filled until this process has been finalised.

This places further urgency on ensuring that the process is finalised before the start of the Seventh Parliament.
6.3 Performance Management 6.3.1 The Committee should receive a detailed briefing on how performance is managed across the institution and at every level.

6.3.2 The institution should find ways of encouraging far greater participation in the client satisfaction surveys that now form the basis of performance management.

In particular, mini satisfaction surveys should be completed for each committee activity in order to ensure that committees receive adequate support.

Report to be considered.


16 35 National Assembly 1.

REPORT OF THE PORTFOLIO COMMITTEE ON HIGHER EDUCATION, SCIENCE AND INNOVATION ON THE 2021/22 ANNUAL REPORTS OF THE NATIONAL SKILLS FUND (NSF), SERVICES SECTOR EDUCATION AND TRAINING AUTHORITY (SSETA), INSURANCE SETA (INSETA), CONSTRUCTION EDUCATION AND TRAINING AUTHORITY (CETA), DATED 2 DECEMBER 2022 1.
INTRODUCTION AND MANDATE The Portfolio Committee on Higher Education, Science and Innovation (“Committee”), having considered the 2021/22 Annual Reports of the National Skills Fund (NSF), Services SETA, Insurance SETA (INSETA) and Construction Education and Training Authority (CETA), reports as follows: 1.1.
Mandate of the Committee The Committee derives its mandate from Section 55(2) of the Constitution of the Republic of South Africa, which states that “the National Assembly (NA) must provide for mechanisms (a) to ensure that all executive organs of state in the national sphere of government are accountable to it; and (b) to maintain oversight of (i) national executive authority, including the implementation of the legislation; and (ii) any organ of state.” Rule 227 of the Rules of the National Assembly (9th edition) provides for mechanisms contemplated in section 55(2) of the Constitution.
1.2.

Purpose of the Report The report accounts in accordance with Rule 339 of the Rules of the National Assembly for the work done by the Committee in considering the 2021/22 Annual Reports of NSF, SSETA, INSETA and CETA, which were tabled in accordance with Section 40 (1) of the PFMA; and as referred in terms of the National Assembly Rule 338 by the Speaker of the National Assembly to the Committee for consideration and reporting in terms of Rules 339 and 340, respectively.

1 36 1.3.
1 36 1.3.

Method The Committee considered the 2021/22 Annual Reports of NSF, SSETA, INSETA and CETA.

The Committee had briefing sessions with the Auditor-General South Africa (AGSA) to receive a briefing on the audit outcomes of the entities for the 2021/22 financial year.

The Committee also held briefings with the NSF on 28 October 2022 and with the SSETA, INSETA and CETA on 02 November 2022 to consider their 2021/22 Annual Reports.

2.
2.

OVERVIEW OF THE KEY POLICY FOCUS AREAS RELEVANT FOR THE NSF AND THE SETAs 2.1.Key Government policies 2.1.1.National Development Plan (NDP) Vision 2030 South Africa has set itself goals through the National Development Plan (NDP), to eliminate poverty and to reduce inequality by 2030.
In working towards achieving these goals, Government identified three main priorities, namely: raising employment through faster economic growth, improving the quality of education, skills and innovation; and building the capacity of the state to play a developmental, transformation role The NDP sets out a vision for the country through its Vision 2030.

The NDP identifies skills development and education as critical enablers of economic development.
The NDP states that SETAs should play a more effective role in the production of skills that must meet the immediate needs of the employers.

The NDP sets out the role for SETAs as facilitators of skills development in the following areas: • Skills development for existing businesses; • Unemployed people who wish to obtain employment in the sector and emphasis on internships; and • Training should cover levels of the National Qualifications Framework (NQF) required by the sector.

2.2.
2.2.

The White Paper for Post-School Education and Training (WPPSET) The White Paper articulates a vision for an integrated system of post-school education and training, with all institutions playing their role as part of a coherent but differentiated system.

The White 2 37 Paper sets out strategies to expand the current provision of education and training in South Africa, to improve its quality, to integrate the various strands of the post-school system.
It further sets the interventions for implementation by different sectors of the Post-School Education and Training.

The White Paper sets out policies to guide the Department of Higher Education and Training (DHET) and the institutions for which it is responsible for contributing to building a developmental state with a vibrant democracy and a flourishing economy.
It sets out a vision for: • A post-school system that can assist in building a fair, equitable, non-racial, non-sexist and democratic South Africa; • A single, coordinated post-school education and training system; • Expanded access, improved quality and increased diversity of provision; • A stronger and more cooperative relationship between education and training institutions and the workplace; and • A post-school education and training system that is responsive to the needs of individual citizens and of employers in both public and private sectors, as well as broader societal and developmental objectives.
Furthermore, it is premised on achieving the following: • Expanded access to TVET and university education; • Establishment of community colleges and skills centres to mainstream vocational education and training; • Establishment of a national skills planning mechanism within DHET; • A strengthened National Skills Authority (NSA) to perform a monitoring and evaluation role in the skills system; and • Opening up workplaces to give more youth access to work-integrated learning opportunities.

2.3.
2.3.

Human Resource Development Strategy for South Africa (HRD-SA) 2010 – 2030 3 38 The HRD Strategy for South Africa (2010 – 2030) is a call to action.

Its primary purpose is to mobilise multi-stakeholder participation, and to encourage individuals and organisations to take on the challenge of improving the human resource stock of the nation.

The document sets out collective commitments for sectors of society in skills production.
The different sectors of the post- school education and training will have to ascribe to the goals of the HRD Strategy, which are: to urgently and substantively reduce the scourge of poverty and unemployment in South Africa; to promote justice and social cohesion through improved equity in the provision and outcomes of education and skills development programmes, and to substantively improve national economic growth and development through improved competitiveness of the South African economy.

2.4.
2.4.

National Skills Development Plan (NSDP) The NSDP aims to ensure that South Africa has adequate, appropriate, and high-quality skills that contribute to economic growth, employment creation, and social development.

The NSDP is the key policy, which informs the work of the NSF and the SETAs until 2030 and has been crafted within the policy context of the NDP, and the White Paper.
The SETAs and the NSF will focus on addressing the eight NSDP outcomes as follows: • Outcome 1: Identifying and increasing the production of occupations in high demand; • Outcome 2: Linking education and the workplace; • Outcome 3: Improving the level of skills in the South African workforce; • Outcome 4: Increasing access to occupationally directed programmes; • Outcome 5: Supporting the growth of the public college system; • Outcome 6: Skills development support for entrepreneurship and cooperative development; • Outcome 7: Encouraging and support worker initiated training; and • Outcome 8: Supporting career development services.
2.5.

2019 – 2024 Medium-Term Strategic Framework (MTSF) The 2019 – 2024 MTSF is a five-year strategic plan of Government and forms the second five- year implementation phase of the NDP.

The Department of Higher Education and Training is responsible for contributing to the realisation of the policy priorities as outlined in the MTSF 4 39 Priority 3: Education, Skills and Health.
For the 2020 – 2025 planning period, the Department will focus on these outcomes as follows: • Expanded access to PSET opportunities, which aims to provide a diverse student population with access to a comprehensive and multifaceted range of PSET opportunities; • Improved success and efficiency in the PSET system aims to improve efficiency and success of the PSET system; • Improved quality of PSET provisioning to build the capacity of PSET institutions to provide quality education and training; • A responsive PSET system to provide qualifications programmes and curricula that are responsive to the needs of the world of work, society and students; and • Excellent business operations within DHET to ensure sound service delivery management and effective resource management within the department.
2.6.

Economic Reconstruction and Recovery Plan (ERRP) and ERRP Skills Strategy The impact of COVID-19 in the country has negatively affected an already ailing economy, which deepened the high unemployment rate, poverty and inequality.

In response to the economic challenges resulting from the COVID-19 pandemic, the Government developed an Economic Reconstruction and Recovery Plan.
The Plan sets out a reconstruction and recovery plan for the South African economy that is aimed at stimulating equitable growth.

The Plan identifies priority interventions and enabling areas to grow the economy and create jobs.
The priority interventions are: • • Infrastructure investment and delivery; Industrialisation through localisation; • Energy security; • Gender equality and economic inclusion of women and youth; • Support for the recovery and growth of the tourism, creative and cultural industries; • Green economy interventions; • Mass public employment interventions; • Strengthening agriculture and food security; and 5 40 • Macro-economic policy interventions In contributing towards the realisation of the ERRP goals, the Department developed the ERRP Skills Strategy, which is directed towards both public and private education and training institutions and skills development providers (including workplaces).
The idea is to strengthen partnerships between the public and private sectors to improve efficiency and effectiveness.

The Strategy aligns demand and supply of relevant skills for ERRP and there are eight interventions focused on the provision of targeted education and training programmes as follows: • Intervention 1: Expand the provisioning of short skills programmes (both accredited and non- accredited) to respond to skills gaps identified in the strategy.
• Intervention 2: Enable the provisioning of short skills programmes (both accredited and non- accredited) that respond to skills gaps identified in the strategy.

• Intervention 3: Expand the provisioning of workplace-based learning (WBL) programmes to respond to occupational shortages and skills gaps identified in the strategy.

• Intervention 4: Increase enrolments in qualification-based programmes that respond to the occupational shortages identified in the strategy.
• Intervention 5: Review and revise education and training programmes to respond to occupational shortages and skills gaps identified in the strategy.

• • • • Intervention 6: Update the draft Critical Skills List and associated regulatory mechanisms.

Intervention 7: Strengthen entrepreneurship development programmes.

Intervention 8: Embed skills planning into economic planning processes and vice.

Intervention 9: Facilitate the use of the National Pathway Management Network (PMN) in the PSET system.
• Intervention 10: Strengthen the post school education and training (PSET) system Entities of the Department are required to align their programmes and funding to contribute to the skills interventions aimed at supporting the ERRP.

2.7.

2021 State of the Nation Address (SONA) 6 41 In February 2021, the President, Mr Ramaphosa addressed the South African citizens during his State of the Nation Address.
The President’s SONA focussed on the following: • To defeat the Coronavirus (COVID-19) pandemic; • To accelerate economic recovery; • To implement economic reforms to create sustainable jobs and drive inclusive growth; and • Fight corruption and strengthen the State.

One of the key focus areas of the February 2021 SONA was inclusive growth, which addresses critical priorities for the Higher Education and Training sector.
There has been a steady improvement in the reach of education; although it is acknowledged that it is inadequate.

The continued focus on inclusive growth is about the critical actions that are required to build a capable state and place the economy on the path to recovery.

The Department of Higher Education and Training (DHET) and its entities are required to implement programmes to contribute to the acceleration of economic recovery.

3.
3.

OVERVIEW AND ASSESSMENT OF THE 2021/22 NON-FINANCIAL AND FINANCIAL PERFORMANCE OF THE NSF, SSETA, INSETA AND CETA The NSF was established in 1999 in terms of section 27(1) of the Skills Development Act, 1998 (Act No.

97 of 1998) (SDA).

The NSF is a Schedule 3A public entity, governed by the Public Finance Management Act (PFMA) (No.

1 of 1999, as amended).

The entity’s mandate is derived from the SDA and its subsequent amendments.
The money of the NSF may be used for the primary objectives as defined by the prescripts of the SDA, namely, • To fund projects identified in the national skills development strategy as national priorities (section 28(1) of the SDA); • To fund projects related to the achievement of the purposes of the SDA as the Director-General (of the Department of Higher Education and Training) determines (section 28(1) of the SDA); • To fund any activity undertaken by the Minister (Higher Education, Science and Innovation) to achieve a national standard of good practice in skills development (section 30B of the SDA); and 7 42 • To administer the NSF within the prescribed limit (section 28(3) of the SDA).
Regulations to prescribe the limit for the administration of the NSF at 10% of revenue have been approved and published in Notice No.

R.1030, Government Gazette No.

33740 dated 8 November 2010.

The Sector Education and Training Authorities (SETAs) are established in terms of the Skills Development Act, 1998 (Act no 97 as amended) and listed in terms of the PFMA, as Schedule 4A public entity.

The Skills Development Act mandates the SETAs to promote skills development for education and training sector.
The SETAs are funded through the one per cent levy income paid by employers to the South African Revenue Service (SARS).

Their mandate is derived from the Skills Development Act (No.

97 of 1998) and its subsequent amendments.
Its responsibilities include the following: • Develop a Sector Skills Plan (SSP) within the framework of the NSDS; • Establish and promote learnerships through: • Collect and disburse the skills development levies in its sector; approve workplace skills plans and allocate grants in the prescribed manner to employers, education and training providers and workers; • Fulfil the functions of an Education and Training Quality Assurance (ETQA), as delegated by the Quality Council for Trades and Occupations (QCTO); and • Monitoring education and training in the sector.
3.1.

NATIONAL SKILLS FUND (NSF) 3.1.1.

Overview and assessment of the NSF’s 2021/22 non-financial performance Table 1: The NSF’s Programmes, with their related achievement against performance targets for the 2021/22 financial year Programme APP Targets Achieved Not achieved % Achievement 2021/22 1.

Administration 6 2.

Skills Development Funding 15 1 5 5 10 17% 33% 8 43 3.

PSET Improvement Funding 8 Overall Total 29 1 7 7 22 13% 24% The NSF had three budget programmes for 2021/22.
The budget [programmes contribute to the achievement of the three Outcomes as follows: Organisational sustainability, a skilled and capable workforce for an inclusive growth path and an improved Post-School Education (PSET) and Training System.

The three budget programmes had a total of 29 Annual Performance Plan (APP) targets.

The NSF achieved seven or 24 per cent (23 per cent in 2020/21) of the planned targets.

3.1.2.
3.1.2.

Non-financial performance per programme Programme 1: Administration The programme contributes to the Outcome 1: Organisational Sustainability.

During the year under review, the programme had six targets.

Five or 17 per cent of the targets were achieved.

Targets not achieved • Percentage (100%) of the audit findings addressed (achieved 13 per cent).
• Percentage (100%) of approved standard operating policies (SOPs) and procedures implemented (achieved 50 per cent) • Percentage (100%) of planned policies and procedures developed and revised (achieved 50%).

• Percentage (80%) of the key of Information Communication Technology (ICT) priorities implemented (achieved 50 per cent).

Programme 2: Skills development funding The programme contributes to Outcome 2: A skilled and capable workforce for an inclusive growth path.
The programme had 15 targets, of which five or 33 per cent were achieved.

Selected key achievements • The NSF funded 81 532 learners for education and training 9 44 • The NSF funded 58 761 learners were funded for education and training towards occupations in high demand and 37 188 learners were funded by the NSF education and training • The NSF awarded 55 017 bursaries.

Targets not achieved • Number (35 000) of NSF-funded beneficiaries who completed their education and training (OIHD) (achieved 13 639).
• Number (10 500) of NSF-funded learners who completed their education and training towards occupation in high demand (OIHD) (achieved 4 113) • Number (12 500) of NSF-funded beneficiaries from rural areas who completed their training (achieved 10 800).

• Number (1000) of learners from rural areas funded by the NSF for skills development in response to innovation and digital technologies (achieved 851).
• Number (1000) of small, medium and micro-enterprises (SMMEs) and co-operatives funded by the NSF for skills development (achieved 0) • Number (5 000) of learners funded by the NSF through SMME and co-operative skills development initiatives (achieved 0).

• Number (1 450) of learners NSF-funded who completed their education and training through the SMME and co-operative skills development initiatives (achieved 0).
Programme 3: PSET system improvement funding The programme contributes to Outcome 3: An improved PSET system.

For the year under review, the programme had eights and achieved one or 13 per cent of the planned targets.
Selected targets that were not achieved • Percentage (85%) of NSF-funded projects that are aimed at skills infrastructure development, which achieved more than 60 per cent of envisaged outputs (achieved 33 per cent) • Number (49) of capacity development projects funded as per the approved implementation plan (achieved 27).

10 45 • Percentage (85%) of the NSF-funded projects that are aimed at PSET capacity development, which achieved more than 60 per cent of the envisaged outputs (achieved 41%).
• Percentage (85%) of the NSF-funded projects that are aimed at research projects which achieved more than 60 per cent of the envisaged outputs (achieved 0%).

3.1.3.

Overview and assessment of the NSF’s 2021/22 budget allocation and expenditure The NSF’s total revenue for the 2021/22 financial year amounted to R4,3 billion (R2,9 billion in 2020/21).
The NSF’s revenue comprised R3,9 billion from non-exchange transactions (Skills development levies: R3,8 billion, Income from SETAs: R3,0 million and Transfer from the DHET: R100,0 million) and R427,7 million from exchange transactions (Finance income: R407,2 million and Finance income from advance payments to skills development programmes and projects: R20,4 million).

The total revenue increased by R1,4 billion from the previous financial year.
The increase is attributed to the increase in the skills development levies and the transfer from the DHET to the Presidential Youth Programme.

The NSF had spent R4,6 billion (R1,8 billion in 2020/21), recording an overspending of R337,2 million.

It was reported that the increase in spending was due to the R3,3 billion once-off shortfall funding commitment towards the National Student Financial Aid Scheme (NSFAS) for the 2021 academic year.
Spending on employee-related costs amounted to R92,2 million the expenditure on operating expenses and R43,3 million.

The key cost drivers in terms of the operating expenses include amongst others; DHET Shared Services Charge: R15,1 million (R15,1 million in 2020/21), External Auditor’s remuneration: R7,5 million (R5,0 million in 2020/21), Internal Auditor’s remuneration: R5,1 million (R4,6 million in 2020/21), travel and subsistence: R4,9 million (R1,7 million) and R4,5 million (10,6 million).

3.1.4.
3.1.4.

Irregular, fruitless and wasteful expenditure The NSF incurred irregular expenditure amounting to R1,7 billion, of which R1,3 billion was incurred in 2021/22 and R433,7 million was carried over from the previous years.

The current irregular expenditure was incurred due to the NSF exceeding the approved budget to fund the NSFAS shortfall project.

The prior years’ irregular expenditure was due to the following: 11 46 • R411,414 million: Appointment of TVET College construction contractors.
• R2,404 million: Provision of Hosted Exchange and archiving environment of the electronic mail network for DHET and NSF.

3.1.5.

2021/22 audit outcomes For the 2021/22, the NSF obtained a qualified audit opinion, which was an improvement from a disclaimer opinion obtained 2020/21.
Basis for the qualified opinion • Skills development funding: The AG noted that the NSF did not have adequate systems in place to account for skills development funding in accordance with GRAP 1, Presentation of financial statements, as expenses were not recorded in the correct period.
Consequently, skills development funding expenses reported in the statement of financial performance and note 20 to the financial statements are overstated by R226 million (2020-21: R48,4 million), with a corresponding overstatement in the prior year deferred expenditure related to skills development funding balance reported in the statement of financial position and note 8 to the financial statements.

This also impacts the surplus for the period and on the accumulated surplus.
Additionally, the AG was unable to obtain sufficient appropriate audit evidence that skills development funding for the current and previous years had been properly accounted for, as evidence that the services received could not be provided.

This was due to inadequate project monitoring and expenditure approval processes.

The AG was unable to confirm the skills development funding by alternative means, as the public entity’s systems did not permit this.
Consequently, was unable to determine whether any adjustment was necessary for the skills development funding, stated at R4,5 billion (2020/21: R1,7 billion) in the statements of financial performance and note 20 to the financial statement.

This also impacts deferred expenditure related to skills development funding stated at R904 million (2020-21: R823,9 million) in the statement of financial position and note 8 to the financial statements.
• Accruals from non-exchange transactions: The AG was unable to obtain sufficient appropriate audit evidence that the accruals from non-exchange transactions had been properly 12 47 accounted for, as evidence that the services had been received could not be provided.

This was due to inadequate project monitoring and expenditure approval processes at the public entity.
The AG was unable to confirm accruals from non-exchange transactions by alternative means as the public entity’s systems did not permit this.

Consequently, the AG was unable to determine whether any adjustment was necessary to accruals from non-exchange transactions stated at R1.9 billion (2020-21: R596.3 million) in the statement of financial position, as disclosed in note 12 to the financial statements.
This also impacts deferred expenditure related to skills development funding stated in the statement of financial position and note 8 to the financial statements.

Report on the Audit of the Annual Performance Report • Usefulness and reliability of the reported performance information: The AG has made findings on the usefulness and reliability of reported performance information of Programme 2: Skills Development Funding.
The AG reported that achievements were reported in the annual performance report for five indicators as follows: o Number of learners funded by the NSF for education and training towards occupations in high demand (OIHD) (reported achievement: 58 761) o Number of NSF-funded learners who completed their education and training towards occupations in high demand (OIHD) (reported achievement: 4 113).
o Number of learners from rural areas funded by the NSF for education and training (reported achievement: 37 188) o Number of bursaries funded (reported achievement: 55 017) o Number of learners funded by the NSF for worker education (reported achievement 1 119).

o Number of individuals participating in constituency-based interventions funded (reported achievement: 399).
Compliance with legislation • Annual financial statements: The AG reported that the financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records, as required by section 55(1)(a) and (b) of the PFMA.
13 48 Material misstatements of non-current assets, liabilities and disclosure items identified by the auditors in the submitted financial statements were corrected, but the uncorrected material misstatements and supporting records that could not be provided resulted in the financial statements receiving a qualified opinion.

• Expenditure management: Resources of the National Skills Fund were not utilised economically, as required by section 57(b) of the PFMA.
• Consequence management: The AG was unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred irregular expenditure as required by section 51(1)(e)(iii) of the PFMA.

This was because investigations into irregular expenditure were not performed.

Disciplinary steps were not taken against some officials who had incurred or permitted fruitless and wasteful expenditure, as required by section 51(1)(e)(iii) of the PFMA.
• Internal control deficiencies: Management did not implement adequate internal controls relating to project monitoring and reporting.

This resulted in underlying records not being readily available to support the skills development activities funded by the NSF.

Management did not implement adequate monitoring and preventative controls to ensure compliance with key legislation.
The leadership did not exercise adequate oversight, specifically regarding the reporting of the skills development funding expenditure and performance reporting, resulting in material misstatements identified during the audit.

• Material irregularities (Payments made in respect of duplicate unit standards): The National Skills Fund entered into a project funding agreement with a skills development service provider.
The objective of the project was to benefit 1 000 learners by enrolling them in a Security Officer Learnership programme (NQF level 3).

The National Skills Fund approved and paid for three credits that are already included in the original modules as additional modules.

Which resulted in additional costs with no additional benefit, in contravention of section 57(b) of the PFMA.

The non-compliance is likely to result in a material financial loss if it is not recovered from the supplier.
14 49 The AG initially notified the accounting authority of the material irregularity on 09 July 2021 and 09 August 2021 and invited the accounting officer to make a written submission on the actions taken and that will be taken to address the matter.

The accounting authority has not taken adequate action in response to being notified of the material irregularity.
The AG recommended that the accounting authority take the following actions to address the material irregularity, which should be implemented by 2 December 2022: o Appropriate action should be taken to finalise the investigation into the non-compliance with section 57(b) of the PFMA to determine the circumstances that led to the non- compliance to take appropriate corrective actions and to address control weaknesses; o The financial loss relating to the duplicated modules should be quantified; o Appropriate action should commence recovering the financial loss.
The recovery process should not be unduly delayed; o Effective and appropriate disciplinary steps should be initiated without undue delay against any official whom the investigation found to be responsible, as required by section 51(1)(e) of the PFMA.

3.2.

SERVICES SECTOR EDUCATION AND TRAINING AUTHORITY (SSETA) 3.2.1.
Overview and assessment of the SSETA’s 2021/22 non-financial performance Table 2: The SSETA’s Programmes, with their related achievement against performance targets for the 2021/22 financial year Programme 1.

Administration 2.

Skills Planning 3.

Learning Interventions 4.


Quality Management Overall Total APP 2020/21 7 9 33 2 51 Targets Achieved Not achieved % Achievement 6 9 24 2 41 1 0 9 0 10 85,7% 100% 72,7% 100% 80,4% For the 2021/22 financial year, SSETA had four budget programmes, namely, Administration, Skills Planning, Learning Programmes and Quality Assurance.

For the period under review, the 15 50 four budget programmes had a total of 51 targets.

SSETA achieved 41 or 80 per cent of the planned targets.
The SETA recorded a 40 per cent increase in its performance, from 40 per cent in 2020/21.

3.2.2.

Non-financial performance per programme Programme 1: Administration The enables the delivery of the Services SETA Mandate through the delivery of support services.

For the period under review, the programme had seven targets and achieved six or 85,7 per cent.
Selected key achievements • SSETA implemented 100 per cent of its Recruitment Plan • Eighty-four per cent of the Personal Development Plans were implemented.

• SSETA actioned 100 per cent of the audit ad compliance action plans.

Programme 2: Skills Planning The programme enables the Services SETA and Services Sector to target relevant skills development.
It is responsible for researching skills needs within the Services Sector, issuing the Sector Skills Plans (SSPs), developing strategic and annual performance plans for the Services SETA, monitoring and evaluating organisational performance, and conducting targeted evaluations to strengthen programme improvement in executing its mandate.

The programme had nine targets and achieved 100 per cent.

Selected key achievements • Twenty-five (13 in urban and 12 in rural) career exhibitions were conducted.
• Forty Career Development Practitioners were trained.
• SSETA concluded three research partnerships with the University of Western Cape (Institute for post-school studies) for evaluating Services SETA’s implementation of the NSDSIII and NSDP 2030 thus far as a baseline for NSDP 2030 implementation strategy; Mzabalazo 16 51 Advisory Services for evaluating Services SETA’s implementation of the National Skills Development Strategy (NSDS) III and NSDP 2030 thus far as a baseline for the NSDP 2030 implementation strategy; and the Cape Peninsula University of Technology for research on the Skills Development Forecast Model to inform Services Sector Skills Needs.
• Ten established and emergent cooperative skills needs were identified through the research.

Programme 3: Learning Programmes The delivers the SSETA’s service offering to the target stakeholders to achieve the mandate.

The programme is responsible for the disbursement of Services SETA discretionary grants through special and regular infrastructure development projects, expanding access to skills development in rural and underserviced areas, and pivotal learning interventions.
• SSETA established partnerships with 11 TVET colleges, six higher education institutions and four CET colleges.

• 40 TVET lecturers were exposed to the industry through skills programmes.

• 11 TVET Managers received training in curriculum studies.

• 16 CET college lecturers were awarded skills development programmes.

• SSETA supported seven trade unions and federations.

• Seven rural skills development projects were initiated for learners through personal care- related skills programmes.
• Four centres of specialisation (Majuba TVET, Gert Sibande TVET college, Tshwane South TVET college and Umfolozi TVET college) were supported.

• 652 cooperatives and SMEs were supported with training.

• 5 896 (2 622 unemployed and 3 274) learners entered skills programmes.

Targets not achieved • Number (5 004) of employers (3 345 small firms, 991 medium firms and 668 large firms) submitting WSP/ATR (achieved 4 560).

• Number (8 016) of learnerships completed (achieved 262).
17 52 • Number (1 750) of bursaries entered (achieved 1 627).

• Number (1 818) of Artisans completions (achieved 1 517) • Number (386) of Adult Education and Training completed (achieved 0).

Programme 4: Quality Assurance The programme is responsible for the quality assurance of occupationally directed qualifications in line with the QCTO assessment policy and certification process.

The programme had two targets during 2021/22 and achieved 100 per cent.
SSETA achieved 97 per cent increase in the number receiving certificates.

Ten qualifications were developed or aligned to the priority skills.

3.2.3.

Overview and assessment of the SSETA’s 2021/22 budget allocation and expenditure For the 2021/22 financial year, SSETA’s total revenue amounted to R1,7 billion (R1,08 billion in 2020/21).

SSETA’s revenue increased significantly by R619,1 million from R1,08 billion in 2020/21.
The revenue comprised of R33,8 million of revenue from exchange transactions (R33,2 million from investment revenue and R587 000 from other income) and R1,6 billion from non- exchange transactions (Skills Development Levy Income: R1,6 billion, Skills development levy: Interests and Penalties: R45,4 million and other income: 6,8 million).

Skills development levy income increased significantly by R610,9 million from R1,0 billion in 2020/21.
Of significant to note is the substantial decrease of R11,9 million in revenue from other income.

SSETA spent R932,0 million or 55 per cent of the total revenue, recording a surplus of R775,7 million at the end of the 2021/22 financial year.

Spending on administration expenses amounted to R197,8 million (R173,9 million in 2020/21).

Spending on employer grants and projects amounted to R733,8 million, which was a significant increase compared with R596,9 million in 2020/21.
The key cost drivers in terms of the administration expenses include amongst others; employee- related costs: R87,2 million (R60,4 million in 2020/21), Depreciation, amortisation, and 18 53 impairment – admin-related costs: R19,7 million (R33,4 million in 2020/21), Consulting and professional fees: R15,8 million (R17,1 million in 2020/21), communication costs: R10,1 million (R8,5 million in 2020/21), IT expenses: R10,6 million (R7,7 million in 2020/21) accounting Authority and Audit Committee costs: R9,0 million (R8,8 million in 2020/21), Auditor’s remuneration: R8,0 million (R4,5 million in 2020/21), QCTO: R7,8 million (R11,4 million in 2020/21).
3.2.4.

Irregular, fruitless and wasteful expenditure SSETA’s total irregular expenditure amounted to R2,0 billion, comprising R1,8 billion carried over from the previous financial years and R138,1 million incurred in the 2020/21 financial year.

The 2021/22 irregular expenditure was incurred due to the following: • R93,1 million: Discretionary grant in excess of 7,5 per cent limit.

SSETA reported that the determination report has been concluded and consequence management was being implemented.
• R76 000: Training purchase orders awarded without following the SCM process.

The determination report has been concluded and consequence management was being implemented.

• R906 000: Expenditure incurred in excess of the request for quotation thresholds – SCM process.

The determination report has been concluded and consequence management was being implemented.

• R42,3 million: Project expenditure outside contract/commitment terms.

The determination report is at the review stage.


• R1,6 million: the process of appointing Accounting Authority members was non-compliant with the Skills Development Act.

SSETA reported that submission to the National Treasury for condonement was in the process.

In terms of fruitless and wasteful expenditure, SSETA incurred R1,4 million for 2021/22.

It was noted that the fruitless and wasteful expenditure was due to a litigation settlement relating to several providers.
SSETA reported that all matters relating to fruitless and wasteful expenditure have been concluded by the Loss Control Function, and submissions were made to the National Treasury for approval of condonement.

All staff members identified to have been involved in all 19 54 matters are going through consequence management processes.

No element of fraud or any other criminal intent was identified through the Loss Control Function review.

3.2.5.
3.2.5.

2021/22 audit outcomes SSETA received a qualified audit opinion for the fourth consecutive audit cycles.

Basis for the qualification • Discretionary grant commitments: The AG noted that SSETA did not disclose the correct amount of amendments in relation to the discretionary grant commitments in note 26 to the financial statements, as required by GRAP 1, Presentation of financial statements.
There were differences between the amendments on discretionary grant commitments and the underlying supporting evidence.

This was a result of inadequate controls over the accounting records.

Consequently, discretionary grant commitments are understated by R528 562 883.

The AG was unable to obtain sufficient appropriate audit evidence for discretionary grant commitments, as the public entity did not maintain accurate and complete records of the contractual information used to determine the commitments.
Additionally, the public entity did not maintain proper records of reconciliations for commitments.

The AG could not confirm the amounts by alternative means.

Consequently, the AG was unable to determine whether any adjustments were necessary to the following items in the financial statements: • Discretionary grants commitments stated at R2 698 586 000 (2021: R3 463 411 000) in note 26 to the financial statements.
• Irregular expenditure stated at R99 397 000 in the comparative period in note 34 to financial statements.

Material findings • Usefulness and reliability of the reported performance information.

The AG has made findings on the usefulness and reliability of reported performance information of Programme 20 55 3: Learning Programmes.
The AG was unable to obtain sufficient appropriate audit evidence that clearly defined the predetermined evidence or method of calculation to be used when measuring the actual achievement for the indicators.
This was due to insufficient measurement definitions and processes for the following indicators: o Number of learnership completions (target: 8 016) o Number of skills programmes (target: 1 844) o Number of candidacy completed (target: 124) o Number of employers submitting WSP/ART (target: 5 004) The AG further noted that the achievement in the annual performance report differed materially from the supporting evidence provided for the indicators listed below: o Number of skills programmes completed (target: 1 844) o Number of internship placement completion (target: 2 863) o Number of learnership completions (target: 8 016) Compliance with legislation • Annual financial statements: The AG reported that the financial statements were not submitted for auditing within the prescribed period after the end of the financial year, as required by section 55(1)(c)(i) of the PFMA.
The financial statements submitted for audit were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records, as required by section 55(1) (a) and (b) of the PFMA.

Material misstatements identified by the auditors in the submitted financial statements were not adequately corrected and the supporting records could not be subsequently provided, which resulted in the financial statements receiving a qualified opinion.
• Expenditure management: The AG noted that effective steps were not taken to prevent fruitless and wasteful expenditure amounting to R1 495 000, as disclosed in note 33 to the annual financial statements, as required by section 51(1) (b)(ii) of the PFMA.

The majority of the fruitless and wasteful expenditure was caused by interest and other costs on litigation against the entity.
21 56 Furthermore, the AG reported that effective and appropriate steps were not taken to prevent irregular expenditure amounting to R138 142 000, as disclosed in note 34 to the annual financial statements, as required by section51(1) (b)(ii) of the PFMA.

The majority of the irregular expenditures were caused by non-compliance with SETA grant regulations.
• Internal control deficiencies: The AG indicated that the SETA did not prepare accurate and complete financial statements that were supported and evidenced by reliable information.

This is evidenced by material misstatements identified in various financial statement line items.

The record-keeping processes of the public entity were not effective to ensure that information is accessible and readily available to support the financial statements.
It was also reported that the monthly processes for monitoring and reviewing financial information were not adequately implemented, which resulted in financial statements that were not free from material misstatements.

Oversight of responsibility regarding financial reporting and compliance was not adequately exercised, as the controls in place did not prevent or detect internal control deficiencies, resulting in material misstatements and non-compliance.

3.3.
3.3.

INSURANCE SECTOR EDUCATION AND TRAINING AUTHORITY (INSETA) 3.3.1.

Overview and assessment of the INSETA’s 2021/22 non-financial performance Table 1: The INSETA’s Programmes, with their related achievement against performance targets for the 2021/22 financial year Programme APP Targets 2021/22 Achieved Not achieved % Achievement 1.

Administration 2.

Skills Planning 3.

Learning Programmes 4.


Quality Assurance Overall Total 4 7 40 5 56 2 7 34 5 48 2 0 6 0 8 50% 100% 85% 100% 86% During the period under review, INSETA had four budget programmes, namely, Administration, Skills Planning, Learning Programmes and Quality Assurance.
The four programmes contribute 22 57 to the 10 Strategic Outcome-Oriented Goals identified by INSETA to contribute to the achievement of the National Skills Development Plan (NSDP) and the Skills Development Act mandate, and its operational efficiency.

During the year under review, INSETA’s four budget programmes had 56 targets.

The SETA achieved 48 or 86 per cent of the planned targets, which is a significant improvement from the 72 per cent achieved in 2020/21.

3.3.2.
3.3.2.

Non-financial performance per programme Programme 1: Administration The programme contributes to the NSDP Outcome 9: Effective corporate governance maintained.

For the 2021/22 financial year, the programme had four targets.

The programme achieved two or 50 per cent of the targets.

During the year under review, 100 per cent of all INSETA Management Team, specialists and Supply Chain Management (SCM) division personnel received SCM-related training.
INSETA planned to obtain a clean audit opinion for the year under review, but achieved a qualified audit opinion due to errors in the financial and performance reports that led to the qualified audit opinion.

Programme: Skills Planning The programme contributes to NSDP Outcome 1: Identify and increase the production of occupations in high demand.

The programme had seven targets and achieved 100 per cent.
Selected key achievements • The SETA exceeded the targets of 37 per cent of discretionary grants allocated to developing high-level skill through bursary grant funding and 60 per cent of discretionary grant budget allocated at developing intermediate skills through Learnerships, Skills Programmes, Work Experience/Internships and Work-Integrated Learning grant funding (achieved 40 per cent and 79 per cent, respectively).
• INSETA approved 747 Work skills Plans WSPs and Annual Training Reports (ATRs) for small firms, 138 for medium firms and 222 for large firms.

• A sector research agreement for TVET occupationally directed programmes was signed.
23 58 Programme 3: Learning Programmes This programme contributes to seven NSDP Outcomes as follows: • NSDP Outcome2: Linking education and the workplace • NSDP Outcome 3: Improving the level of skills in the South African workforce; • NSDP Outcome 4: Increase access to occupationally directed programmes; • NSDP Outcome 6: Skills development support for entrepreneurship and cooperative development; • NSDP Outcome 7: Encourage and support worker initiated training; • NSDP Outcome 8: Support career development services, and • NSDP Outcome 10: Number of rural development projects initiated.
The programme had 40 Annual Performance Plan targets for 2021/22.

Thirty-four or 85 per cent of the planned targets were achieved.

Selected key achievements • 619 TVET students requiring WIL to complete their qualifications were placed in workplaces.

• 748 unemployed learners enrolled in internships.

• 1 151 unemployed learners enrolled in learnership programmes.

672 unemployed learners enrolled in Skills Programmes.
• 521 unemployed learners completed Learnerships and 610 unemployed learners were certified for Learnerships Programme.

• 975 workers were granted bursaries (new entries).

• 583 workers granted bursaries completed their studies.

• 759 workers enrolled in Learnerships.

• 556 workers were certified for Learnerships programme.

• 844 unemployed learners were granted bursaries (new enrolments).
• Partnerships with four TVET, three higher education institutions, two Community Education and Training colleges and two SETA-Employer partnerships with the Employer Professional Bodies and Trade Association were established.

24 59 • 132 Co-operatives were funded for skills that enhance enterprise growth and development and 359 small and emerging enterprises were trained on sector and national identified priority occupations or skills.
• The SETA held 14 career development events in rural areas on occupations in high demand and trained 11 career development practitioners.

Targets not achieved • Number (420) of TVET students completed their WIL placements (achieved 206).

• Number (150) of workers granted Bursaries (continuing), (achieved 39).

• Number (2 625) of workers completed skills programmes (achieved 914).

• Number (625) of unemployed learners granted Bursaries completed their studies (achieved 93).
• Number (355) of learners placed in employment on completion of Internships and Learnerships (achieved 307).

Programme 4: Quality Assurance This programme contributes to the INSETA’s NSDP Outcome 4 and 5: Increase access to occupationally directed programmes and support the growth of the public college system, respectively.

The programme had five targets and has achieved 100 per cent.
Key selected key achievements • Four TVET colleges were accredited to offer insurance occupationally directed learning programmes addressing occupations in high demand.

• Two INSETA offices were established and maintained in TVET colleges.

• Forty-nine TVET lecturers were exposed to the industry through skills programmes.

• Ten TVET college lecturers were awarded bursaries.

25 60 3.3.3.
25 60 3.3.3.

Overview and assessment of the INSETA’s 2021/22 budget allocation and expenditure For the 2021/22 financial year, INSETA’s total revenue amounted to R606,1 million (R408,8 million in 2020/21).

The revenue increased by R197,2 million from R408,8 million in 2020/21.
The revenue comprised R19,4 million of revenue from exchange transactions (R19,4 million from interest received and R43 000 from other income) and R586,6 million from non-exchange transactions (Skills Development Levy Income: R577,8 million, fines, public contributions and donations: R2,1 million and Skills development levy: Penalties and interest: R6,6 million).

Notably, skills development levy income increased significantly by R203,5 million from R374,2 million in 2020/21.
At the end of the 2021/22 financial year, INSETA had spent R475,9 million or 78,5 per cent of the total revenue, recording a surplus of R130,1 million.

The expenditure on employee-related costs amounted to R35,6 million and administration expenses amounted to R45,0 million.

Notably, spending on administration increased significantly by R14,9 million from R30,1 million in 2020/21.

Spending on discretionary grants amounted to R254,7 million and employer grant expenses amounted to R139,9 million.
There is a notable decrease of R100,3 million from R355,0 million in 2020/21 in the expenditure on discretionary, while there is an increase in the spending on employer grants, which increased by R55,2 million from R84,7 million in 2020/21.
The cost drivers in terms of the administration expenses include amongst others; Consulting and outsourcing: R11,3 million (R3,3 million in 2020/21), IT expenses: R10,1 million (R5,3 million in 2020/21), rental and head office: R6,5 million (R6,5 million in 2020/21), Audit fees: R3,3 million (R2,7 million in 2020/21), other Board expenditure and Board and subcommittee fees: R2,8 million and QCTO: R2,5 million (R3,5 million in 2020/21).

3.3.4.
3.3.4.

Irregular, fruitless and wasteful expenditure The total irregular expenditure amounts to R18,9 million, comprising of R812 000 carried over from the previous financial year and R18,1 million incurred in the 2021/22 financial year.

The 2021/22 irregular expenditure was incurred due to the following: 26 61 • Cancelled head office lease contract.

The lease contract was independently investigated for material non-compliance issues identified.
• Irregular expenditure relating to the 2020 lease contract amounts to R12 892 603.

The investigation relating to the 2020 irregular lease contract further revealed possible irregularities relating to the contract variations which were concluded during the 2018 financial year on the old expired contract.
Management will obtain a legal opinion and comply with the National Treasury Guidelines and Framework on dealing with irregular expenditure with respect to the items relating to the reported possible irregular variations reported on the old expired contract.

• Board members’ fees deemed irregular due to the appointment vetting process conducted after the appointment of the affected board members.
The application for condonement of this irregular expenditure is currently being led by Department of Higher Education and Training on behalf of all SETAs to National Treasury.

Payment relating to this line item amounts to R303 000.

• Communication and data lines contract with Telkom and Nashua, which were deemed irregular due to payments after expiry of contract as follows: Telkom: R1 002 511 and Nashua: R71 074.
• INSETA incurred project admin costs in excess of the 7,5 per cent limit, contravening Grant Regulation 6.9(iii).

R3 906 350 was incurred in contravention of Grant Regulation 6.9(iii).

Fruitless and wasteful expenditure for 2021/22 amounted to R764 000.

The closing balance for fruitless and wasteful expenditure is R768 000, which includes an amount of R4 000 carried over from 2020/21.
Current-year fruitless and wasteful expenditure relates to payments which were made to a fictitious company under discretionary project grants.

INSETA reported that consequence management has already been implemented, whereby officials implicated in the award have been suspended and disciplinary processes were at an advanced stage.

3.3.5.
3.3.5.

2021/22 audit outcomes For the 2021/22 financial year, INSETA obtained a qualified audit opinion, which is a regression from an unqualified audit opinion with findings in 2020/21.
Basis for the qualification • Administration expenses: The AG noted that INSETA did not properly account for administration expenses in accordance with GRAP 1, Presentation of financial statements due 27 62 to inadequate processes and systems, which resulted in invoices for goods and services received in the current financial year not being recognised as expenditure.
The AG was unable to determine the full extent of the understatement of the administration expenses stated at R45 275 000 in note 19 to the financial statements as it was impracticable to do so.

• Payables from non-exchange transactions: The AG noted that INSETA did not account for project creditors in accordance with GRAP 1, Presentation of financial statements.
Payments made to suppliers during the financial year were included in the payables balance at year-end, this was due to inadequate review controls.

The AG was unable to determine whether any adjustments were necessary to payables from non-exchange transactions stated at R32 706 000 in note 9 to the financial statements as it was impracticable to do so.

In addition, INSETA did not perform an assessment of the levies payable as required by GRAP 19, Provisions, contingent liabilities and contingent assets.
As a result, the AG was unable to determine whether the balance for other levies stated at R 3 613 000 in note 9 to the financial statements required any adjustments.

The AG was unable to determine the full extent of the misstatements as it was impracticable to do so.

Material findings • Usefulness and reliability of the reported performance information.

The AG has made findings on the usefulness and reliability of reported performance information of Programme 3: Learning Programmes.
The AG was unable to obtain appropriate audit evidence for the achievement of the number of unemployed learners granted bursaries (continuing) as reported in the Annual Performance Report.

This was due to lack of accurate and complete records.

• Adjustment of material misstatements: The AG identified material misstatements in the annual performance report submitted for auditing.

The material misstatements were in the reported performance information of Programme 3: Learning Programmes.
INSETA Management subsequently corrected only some of the misstatements.

Compliance with legislation • Annual financial statements: The AG reported that the financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework 28 63 and as required by section 55(1)(b) of the PFMA.
Material misstatements of cash and cash equivalents, related parties, project administration expenses, irregular expenditure and fruitless and wasteful expenditure identified by the auditors in the submitted financial statements were corrected, but the uncorrected material misstatements resulted in the financial statements receiving a qualified opinion.
• Expenditure management: The AG noted that effective and appropriate steps were not taken to prevent irregular expenditure amounting to R18 175 000 as disclosed in note 31 to annual financial statements, as required by section 51(1) (b) (ii) of the PFMA.

The majority of the irregular expenditure was caused by non-compliance with supply chain management prescripts.
Effective steps were not taken to prevent fruitless and wasteful expenditure amounting to R768 000, as disclosed in note 30 to the financial statements, as required by section 51(1)(b)(ii) of the PFMA.
• Internal control deficiencies: The AG indicated that the accounting authority did not exercise adequate oversight responsibility regarding financial and performance reporting and compliance, as the controls in place did not prevent or detect internal control deficiencies that resulted in material misstatements in the financial and performance reports as well as non- compliance with applicable laws and regulations.
The public entity developed an audit action plan to address the internal control deficiencies; however, the plan was not adequately monitored to ensure the effective implementation of corrective measures to address these weaknesses and therefore improve the overall audit outcome.

Management did not implement proper recordkeeping to ensure that complete, relevant and accurate information was accessible and available in a timely manner.
Management did not prepare regular, accurate and complete financial and performance reports that were supported and evidenced by reliable information.

This was evidenced by the material misstatements identified, some of which were corrected during the audit.

Additionally, the AG found that the 29 64 controls for the daily and monthly processing and reconciliation of transactions were not effective in preventing and detecting material misstatements.

3.4.
3.4.

Construction Education and Training Authority (CETA) 3.4.1.

Overview and assessment of the CETA’s 2021/22 non-financial performance Table 1: The CETA’s Programmes, with their related achievement against performance targets for the 2021/22 financial year Programme 1.

Administration APP 2021/22 25 2.

Research, Planning & Reporting 5 3.

Learning Programmes and Projects 62 4.


Quality Assurance Overall Total 12 104 Targets Achieved Not achieved % Achievement 22 5 25 12 64 3 0 37 0 40 88,0% 100,0% 40,3% 100,0% 61,5% For the 2021/22 financial year, CETA had four budget programmes, namely, Administration, Skills Planning Research and Reporting, Learning Programmes and Projects and Quality Assurance.
Each programme contributed to the four Outcomes Oriented Goals, namely, • Goal 1: To provide ethical and strategic leadership and management; • Goal 2: To ensure a credible mechanism for skills planning and reporting in the construction sector; • Goal 3: To address skills priorities within the construction sector; and • Goal 4: Implementation of Quality Assurance that will enhance and ensure the provision of quality training.

The four budget programmes had a combined total of 104 targets.
CETA achieved 64 or 61,5 per cent of the planned targets, which is a significant improvement from the 22 per cent recorded in 2020/21.

However, the core programme, Learning Programmes and Projects, has underperformed compared to the other programmes.

3.4.2.

Non-financial performance per programme 30 65 Programme 1: Administration This programme contributes to Outcomes Oriented Goal 1: To provide ethical and strategic leadership and management.

The programme had 25 targets for 2021/22.


The programme achieved 22 or 88,0 per cent of the targets.

Selected key achievements • CETA reduced its vacancy rate to 19 per cent against the target of 25 per cent.

• Ten CETA staff were provided with bursaries.

• Increased participation of women in all learning programmes by 62 per cent against a target of 60 per cent.

• Submitted four quarterly financial reports to the Department of Higher Education and Training.
• CETA approved Delegation of Authority Framework.

• Approved and reviewed the annual risk and compliance plan and the annual risk register and compliance universe.

• Updated the quarterly risk register and compliance universe.

• Conducted two training and awareness campaigns for staff on COVID-19 and consequent safety in the workplace.

Targets not achieved • Creditor payment age as per the Treasury Regulations (30 days).

The actual achievement was 35 days.


CETA attributed the ono-achievement of the target to the delays experienced in the verification of supplier payments and further noted that a new invoice tracking tool was being considered for implementation.

• Number (12) of Functional Governance Committees meeting on a monthly (EXCO) basis to provide oversight on the delivery of the CETA’s mandate and provide guidance.
CETA noted that the target could not be achieved as the entity was still under administration and processes were being refined.

To ensure good governance; EXCO meetings commenced and continued; initially with the Advisory team and Administrator, and later the Acting Executives and Chief Executive Officer.

31 66 • Number (6) of functional governance committees meeting on a monthly (Finance Committee) basis to provide oversight on the delivery of the CETA’s mandate and provide guidance.
It was reported that there was no Finance Committee since the CETA was under Administration.

Programme 2: Research, Planning and Reporting The programme contributes to the Outcome Oriented Goal 2: To ensure a credible mechanism for skills planning and reporting in the construction sector.

The programme had five targets and all were achieved as planned.
During the period under review, 2 410 levy paying members had submitted and approved Work Skills Plans (WSPs) and Annual Training Reports (ATRs) that contribute to the development of the Sector Skills Plan.

CETA conducted nine Skills Development Facilitators (SDF) workshops on the WSP and ATR compilation and submission and submitted four monitoring reports to the DHET.
Programme 3: Learning Programmes and Projects This programme contributes to Outcome Oriented Goal 3: To address skills priorities within the construction sector.

The programme had 62 targets, which constitute 59,6 per cent of the total targets in the 2021/22 Annual Performance Plan.

The programme achieved 25 or 40,3 per cent of the planned targets.

Selected key achievements • CETA allocated 69 per cent of discretionary grant budget at developing intermediate level skills.
• Eighty (unfunded) employed learners entered learnerships.

• 1 672 (unfunded) unemployed learners completed learnerships.

• 5 359 (funded) unemployed learners entered skills programmes.

• 715 (unfunded) unemployed learners completed skills programmes.

• 2 782 (funded) unemployed learners completed artisan programmes Targets not achieved 32 67 • Percentage (20%) of discretionary grant budget allocated at developing high-level skills, (achievement was 19 per cent).
• Percentage (20%) of discretionary grant budget allocated at developing elementary level skills, (achievement was 12 per cent).

• Number (1179) of learners who completed workplace-based learning programmes absorbed into employment or self-employment, (achievement was 0).

• Number (873 funded) of unemployed learners per year entering learnerships, (achievement was 414), • Number (417 unfunded) of unemployed learners per year entering learnerships, (achievement was 53).
• Number (103 funded) of employed learners per year completing learnerships, (achievement was 0).

• Number (75 unfunded) of employed learners per year completing skills programmes, (achievement was 3) • Number (608 unfunded) of unemployed learners per year entering artisan programmes, (achievement was 23).

• Number (45 funded) of employed bursaries learners enrolled (new enrolments), (achievement was 15).
Programme 4: Quality Assurance The programme contributes to Goal 4: Implementation of Quality Assurance that will enhance and ensure the provision of quality training.

During the year under review, the programme had 12 targets and it has achieved 100 per cent.

Selected key achievements.

• Sixty new training providers were accredited for short skills programmes.
• CETA maintained a data-base of accredited training providers and database of Quality Council for Trades and Occupations (QCTO) registered construction qualifications.

• Forty TVET lecturers were trained.

• CETA designed, developed and registered 16 occupational qualifications and curriculum.

• A Monitoring and Evaluation Policy was approved.

• CETA conducted four quarterly site visit audits for all accredited training providers to verify if they are still compliant.

33 68 3.4.3.
33 68 3.4.3.

Overview and assessment of the CETA’s 2021/22 budget allocation and expenditure CETA’s total revenue for the 2021/22 financial year amounted to R632,340 million (R446,707 million in 2020/21).
The revenue comprised R45,058 million of revenue from exchange transactions (R44,964 million from interest received and R94 000 from other income) and R587,282 million from non-exchange transactions (Levies: R571,984 million, fines, penalties, and forfeits: R14,180 million and In-Kind contributions – facilities: R1,438 million).
Notably, revenue from exchange transactions decreased by R13,039 million from R58,097 million in 2020/21, while revenue from non-exchange transactions increased significantly by R198,672 million.

The increase was due to the increase in revenue from skills levies.

CETA had spent R847,296 million or 134 per cent, recording a deficit of R214,956 million.

A significant portion of the deficit was driven by the salaries and costs of forensic investigations.
The expenditure on employee costs amounted to R61,708 million and administration expenses amounted to R90,060 million.

Notably, administration expenses increased significantly from R56,028 million in 2020/21 to R90,060 million in 2021/22.

Spending on discretionary grants amounted to R618,558 million and employers grant expenses amounted to R71,897 million.
The cost drivers in terms of the administration expenses include amongst others; Consulting and outsourcing: R27,461 million (R21,271 million in 2020/21), legal costs: R19,943 million (R6,838 million in 2020/21), admin and general expenses: R7,401 million (R2,589 million in 2020/21), Auditor’s remuneration: R6.644 million (R3,829 million in 2020/21), licenses: R5,636 million (R2,713 million in 2020/21) and rental Expenses: R5,371 million (R3,286 million in 2020/21).

3.4.4.
3.4.4.

Irregular, fruitless and wasteful expenditure CETA’s total irregular expenditure amounted to R771,299 million, comprising R76,020 million for 2021/22 and R695,297 million carried over balance from the previous financial year.
For the year under review, irregular expenditure amounting to R18,261 million was incurred due to unauthorised extension of contracts, R52,197 million due to exceeding 7,5 per cent threshold for project administration and R5,562 million due to irregular appointment of an employee with fraudulent qualifications, who is was dismissed.
34 69 Fruitless and wasteful expenditure amounted to R22,646 million, comprising R5,878 million carried over from the previous financial year and R16,768 million incurred in 2021/22.

The current fruitless and wasteful expenditure was due to SARS interest and penalties (R1,019 million) due to late submission and payments of the EMP201 returns.

CETA committed to conducting an investigation to determine the root cause and responsible persons.
In terms of the R15,749 million, this was due to Data collected, which was not usable for the discretionary grant target.

The data collection, project was charged at a standard rate of R750.

From the actual data collected of 11 575 CETA could not determine the validity of the information, which resulted in fruitless expenditure for all the payments made toward the project.

An investigation will be conducted to determine the root cause and the responsible persons.

3.4.5.
3.4.5.

2021/22 audit outcomes For the 2021/22 financial year, CETA obtained a qualified audit opinion, which is a regression from an unqualified audit opinion with findings in 2020/21.

Audit findings • Commitments: The Auditor-General (AG) was unable to obtain sufficient appropriate audit evidence that commitments for the current year had been properly accounted for, due to the status of the accounting records.

The AG was unable to confirm these commitments by alternative means.
Consequently, the AG was unable to determine whether any adjustments were necessary to commitments, stated at R2,1 billion in note 23 to the financial statements.

• Restatement of corresponding figures: the AG noted that as disclosed in note 33 to the financial statements, the corresponding figures for 31 March 2021 were restated as a result of an error in the financial statements of the public entity at, and for the year ended, 31 March 2022.
• Usefulness and reliability of the reported performance: The AG has made findings on the usefulness and reliability of reported performance information of Programme 3: Learning Programmes and Projects, noting that some supporting evidence provided materially differed from the reported achievements, while in other instances the AG was unable to obtain sufficient appropriate audit evidence to support the achievements reported in Annual Performance Report 35 70 for the following indicators, Number of unemployed learners per year completing learnerships – Funded (reported achievement: 1 672); Number of unemployed learners per year completing learnerships - Unfunded (reported achievement: 566); number of employed learners per year completing learnerships - Unfunded (reported achievement: 96); Number of unemployed learners per year completing artisan programmes – Funded (reported achievement: 2 782); Number of University Student Placement entered per year - Funded (reported achievement 65) and Number of TVET Student Placement completed per year - Funded (reported achievement: 34).
The AG notes that this was due to a lack of accurate and complete records and the AG was unable to confirm the reported achievements by alternative means.

Consequently, the AG was unable to determine whether any further adjustments were required to the above reported achievements.
It is further reported that the AG was unable to obtain sufficient audit evidence that clearly defined the predetermined method of collection to be used when measuring the actual achievement for the following indicators: Percentage of discretionary grant budget allocated to developing high-level skills (reported achievement: 19 per cent), Percentage of discretionary grant budget allocated to developing intermediate level skills (reported achievement: 61 per cent) and Percentage of discretionary grant budget allocated to developing elementary level skills (reported achievement: 16 per cent).
The AG indicated that this was due to insufficient measurement definitions or processes and that the AG was unable to test whether the indicator was well defined by alterative means.

• Adjustments of material misstatements: The AG identified material misstatements in the annual performance report submitted for auditing.

The material misstatements were in the reported performance information of Programme 3: Learning Programmes and Projects.

CETA Management subsequently corrected only some misstatements.
The material findings on compliance with the specific matters in key legislation are as follows: • Financial Statements: The AG reported that the financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and 36 71 supported by full and proper records, as required by section 55(1) (a) and (b) of the PFMA.
Material misstatements of expenditure and disclosure items identified by the auditors in the submitted financial statements were corrected, but the uncorrected material misstatements and supporting records that could not be provided resulted in the financial statements receiving a qualified opinion.
• Expenditure Management: The AG found that effective and appropriate steps were not taken to prevent irregular expenditure amounting to R76 million, as disclosed in note 25 to the financial statements, as required by section 51(1)(b)(ii) of the PFMA.

The majority of the irregular expenditure was caused by procurement irregularities and overspending on the 7,5 per cent threshold of the total discretionary grants expenditure relating to administration expenditure.
• Procurement and Contract Management: Some goods and services with a transaction value above R1 000 000 were procured without inviting competitive bids, as required by treasury regulation 16A6.1 and paragraph 3.3.1 of Instruction Note 02 of 2021/22.

Some invitations for competitive bidding were not advertised for the required minimum period, as required by treasury regulation 16A6.3(c).
Some contracts were awarded to bidders based on pre- qualification criteria that differed from those stipulated in the original invitation for bidding, in contravention of preferential procurement regulations 4(1) and 4(2) of 2017.

Some commodities designated for local content and production were procured from suppliers who did not submit a declaration on local production and content in accordance with paragraph 3.4 of National Treasury Instruction Note 4 of 2015/2016.
Some bid documentation or invitations to tender for the procurement of commodities designated for local content and production did not stipulate the minimum threshold for local production and content, as required by preferential procurement regulation 8(2) of 2017.
• Internal Control Deficiencies: the AG noted that the CETA Management did not implement proper record-keeping in a timely manner to ensure that complete, relevant and accurate information was accessible and available to support financial and performance reporting.

Management did not prepare regular, accurate and complete financial and performance reports that were supported and evidenced by reliable information.
37 72 The AG further noted that Management did not review and monitor compliance with applicable laws and regulations.

CETA Leadership did not implement adequate oversight over financial and performance information, compliance with legislation and related internal controls, as misstatements were identified on the financial statement and the annual performance report.

4.
4.

KEY FINDINGS AND OBSERVATIONS The Committee, having assessed the 2021/22 Annual Reports of the NSF, SSETA, INSETA and CETA, made the following key findings and observations.

4.1.

National Skills Fund 4.1.1.

The performance of the NSF for the year under review is disappointing.

The entity achieved seven (7) out of 29 targets and its spending was not commensurate with its performance.

Compounding the situation is that the entity also overspent its budget by R337 million.
Furthermore, the Committee noted that the failure to achieve the planned targets would delay the achievement of the National Development Plan (NDP) targets, including the achievement of the country’s developmental goals.

4.1.2.

The irregular expenditure amounting to R1.3 billion incurred by the entity during the year under review was noted as a serious concern.
Compounding the situation is that the entity also incurred fruitless and wasteful expenditure amounting to R6.3 million due to duplicate claims and delays in project implementation.

The Committee was concerned with the slow implementation of investigations and consequence management related to poor financial management, which resulted in recurring irregular, fruitless and wasteful expenditure in the entity.

4.1.3.
4.1.3.

The NSF is the biggest contributor in terms of irregular expenditure incurred in the Higher Education and Training (HET) portfolio and it had the worst performance among the DHET entities.

Thus, evidence of poor performance and financial accountability supported the Committee’s sentiments towards the NSF.

4.1.4.
4.1.4.

Although the entity obtained a qualified audit opinion from a disclaimer opinion, the Committee was of the view that this did not symbolise a significant improvement in its financial performance.

The Committee was also concerned with the inadequate 38 73 implementation of the AGSA’s Audit Action Plan by the entity to address the audit findings identified in the prior years, which were recurring.

4.1.5.
4.1.5.

The Nexus Forensic Investigation and the MTT on Strategic Review of the NSF were necessary interventions to assist in turning-around the situation at the entity.

The Committee also indicated that the entity needed to have a clear and specific plan of action aimed at implementing the recommendations emanating from these two important reports.

4.1.6.

The high drop-out rate of learners in the NSF skills interventions remains a serious concern as there was no value for money invested.

4.1.7.
4.1.7.

The Committee was also concerned that the entity did not have proper checks and balances to verify and monitor the implementation of its funded skills programmes.

As a result, service providers who entered into contracts with the NSF could not fully account for the utilisation of the funds allocated for projects for the benefit of young and unemployed beneficiaries.
In certain instances, funds from the NSF to service providers were transferred into unknown bank accounts making it difficult to trace its utilisation.

4.1.8.

The absence of adequate systems in place to account for skills funding of the entity was noted as a serious risk.

The Committee was also seriously concerned about the role of the entity’s internal audit unit and capacity of the financial management unit considering the material findings raised by the AGSA.

4.1.9.
4.1.9.

The delays in the filling of vacant positions in the entity during the year under review was noted as a serious concern.

The entity has been operating without a permanent Chief Executive Officer for over a year, and there were 73 vacancies remaining across the entity’s directorates.
The Committee was also concerned that five officials were implicated in the Nexus forensic report and were on precautionary suspension; thus, possibly affecting the ability of the entity to operate optimally given the possible capacity constraints.

4.1.10.

The entity may struggle in the near future to attract suitably qualified and skilled personnel due to its reputational damage.
Thus, the speedy implementation of the turn- around strategy to improve the operations of the entity remains critical to improve public confidence and its reputation.

4.1.11.

The NSF plays a key role in addressing the skills deficit in the country and contributing to ensuring that young people are provided with the necessary skills to access 39 74 employment opportunities and contribute to economic growth.
However, the misuse of the entity’s funding for activities outside its mandate remains a serious concern.

4.1.12.

The entity is among the few public entities, which have the Director-General (DG) as the sole Accounting Authority (AA) as provided for in terms of section 49(2)(b) of the Public Finance Management Act, 1999 as amended and section 29 of the Skills Development Act, 1998.
Thus, the recommendation for the review of this legislation to enable the establishment of a Board comprising different personnel was welcomed by the Committee.

4.1.13.
4.1.13.

The absence of evidence or supporting documents to support the reported performance information in relation to Programme 2: Skills Development Funding made it very difficult for the Committee to trust the reported achievements, as well as limiting its ability to assess the impact of the entity’s skills development programmes on beneficiaries.

Furthermore, the entity was unable to account on the number of beneficiaries who received employment upon completing the skills development programmes.
4.1.14.

The areas of overlaps and duplications between the entity and SETAs in relation to funding of skills development intervention remain a concern.

Compounding the situation is the absence of integrated management system, which contains data of all beneficiaries of skills programmes in the PSET sector.

4.1.15.

Notwithstanding that the entity was classified as a Schedule 3A public entity, its dependency on the Department for some of its functions such as HR, remains a serious concern.
This has also affected the ability of the entity to speedily fill outstanding vacancies in some key directorates.

4.2.

Services SETA 4.2.1.

The recurring qualified audit opinions received by the entity for the past four years remains a serious concern.

The Committee was seriously concerned that the entity had presented its Audit Action Plan in November 2021 and March 2022, and yet, there was inadequate improvement in the audit outcomes.
The Committee had also made clear recommendations on how the entity could improve its financial management, however, it appears that there was inadequate implementation of the Committee’s advice and inadequate oversight by the Board over management’s performance to turn-around the situation at the entity.

40 75 4.2.2.

A notable improvement in the entity’s performance (80 per cent achievement compared to 40 per cent in 2020/21) was welcomed.
Notwithstanding this significant improvement in performance, the absence of sufficient and appropriate evidence to support the reported achievements was noted as a concern.

4.2.3.

Irregular expenditure amounting to R138 million incurred by the entity during the year under review was concerning, and this was the second highest irregular expenditure in the HET Portfolio.
The Committee was seriously concerned that for the last three financial years, the entity received irregular, wasteful and fruitless expenditure.

This pointed to the slow consequence management by the Board over management, and its failure to act swiftly against senior managers who occupied senior positions without the requisite qualifications.

4.3.4.

The Committee has raised concerns with what appeared to be poor execution of fiduciary duties by the entity’s Board.
Since 2019, the Committee had warned the entity that the presence of some senior managers without the requisite skills and qualifications would impact its turn-around strategy.

It was further noted that the Board has not taken a serious action against the underqualified CFO who has been part of the entity for the past three financial years, which had qualified audit with findings.

4.2.5.
4.2.5.

The AGSA raised recurring material findings regarding the internal control deficiencies in the entity, this is concerning considering that the entity had developed an Audit Action Plan, which was inadequately implemented.

4.2.6.

The non-achievement of targets that were aimed at providing bursaries, internships and skills development interventions meant to empower young people remains a concern.
It was noted that the public demand or need for such programmes in society is ever increasing, however, the entity defaulted in achieving 100 per cent in these targets.

4.2.7.

The fact that 73 per cent of the entity’s beneficiaries of skills development interventions were women was welcomed.

However, the Committee noted that young men should not be left behind and they should be given sufficient opportunities to access the entity’s programmes.

4.3.

Insurance SETA 41 76 4.3.1.


The improvement in the entity’s performance from 72 per cent in 2020/21 to 85 per cent in 2021/22 was welcomed, however, the Committee was concerned that there was insufficient evidence provided to the AGSA to verify the reported achievement in relation to learners granted bursaries.

4.3.2.

The skills interventions of the entity benefitted 13 357 beneficiaries at a cost amounting to R255 million.
Furthermore, the entity’s focus on supporting TVET and CET colleges students and programmes was commended.

4.3.3.

The Board was commended for having nine women members out of its 14 members and having a young and female CEO.

4.3.4.

Concerns were raised in relation to the regression from an unqualified audit opinion in 2020/21 to a qualified audit with findings in 2021/22, including irregular expenditure amounting to R12 million.
The regression pointed to the deficiencies within the internal control systems of the entity, something, which the entity should address to improve its audit outcomes.

4.3.5.

The suspension of the two officials involved in financial irregularities was welcomed.

The Committee has reiterated the need for public entities to act swiftly against financial misconduct.

The Committee also called for the entity to recoup any funding that it may have lost due to the actions of these two employees.

4.3.6.
4.3.6.

Concerns were raised regarding the funding of 63 beneficiaries who were also funded by NSFAS, including 345 learners who participated in multiple skills programmes and the funding of learners who were above 65 years old.

4.3.7.

The delays in the filling of the three senior management positions (Skills Planning & Research, Finance Manager and Education and Training Quality Assurance) were noted as a concern.

4.4.

Construction Education and Training Authority 4.4.1.
The notable improvement in the performance of 64 per cent (23 per cent in 2020/21) during the year under review was welcomed.

However, the absence of sufficient and appropriate evidence to support the reported performance in the entity was noted with concern.

42 77 4.4.2.

The non-achievement of the targets in relation to the skills development interventions meant to empower young people was a cause for concern.

4.4.3.
4.4.3.

Concerns were raised in relation to the over-spending in the budget of the entity amounting to R214 million even though the performance of the entity was 64 per cent.

4.4.4.

The regression from an unqualified audit opinion with findings in 2020/21 to a qualified audit opinion in 2021/22 was noted as a concern.

The Committee further noted with concern the internal control deficiencies and urged that the NSF management should put measures in place to strengthen the weakness identified by the AGSA.
4.4.5.

The disagreements between the entity and the AGSA in relation to its audit outcomes were unfortunate and should be prevented from recurring.

The Committee further noted that the AGSA has a mandate of ensuring that public entities account for the utilisation of public funds in accordance with the relevant legislation.

Thus, the disagreements between the AGSA and public entities hinder public accountability and good governance.

4.4.6.
4.4.6.

It was concerning that some of the service providers appointed by the entity to recruit young people to benefit from its skills development programmes had failed to honour their contractual obligations, thus causing the entity to default on some of its targets.

4.4.7.

Concerns were raised regarding the entity’s due diligence review systems against service providers or companies that render services to it.
The entity had awarded contracts to companies, which had questionable Companies and Intellectual Property Commission (CIPC) registration.

4.4.8.

The capacity of the entity to monitor and verify its funded skills development programmes and the exit opportunities available to its beneficiaries was noted as a concern.

.

4.4.9.
.

4.4.9.

The delays in the filling of the five Board positions were noted as a serious concern given the importance of the role the Board plays over a public entity such as Construction SETA.

4.4.10.

The employment equity statistics of the entity was shocking given that out of the 106 staff complement, there was only one white employee.

5.
5.

SUMMARY 43 78 The assessment of the NSF, Services SETA, INSETA and CETA Annual Reports for the 2021/22 financial year by the Committee was informed by the AGSA’s assessment of the higher education and training portfolio performance for the year under review.

These entities, according to the AGSA’s report, obtained qualified audit opinions with findings on a number of areas, and they also were the top contributors to irregular expenditure amounting to R1.7 billion for the year under review.
Furthermore, the NSF, Services SETA and CETA were also the top contributors to irregular expenditure in the prior year, amounting to R1.9 billion.

Thus, the AGSA had recommended that these entities be closely monitored by the Committee until they can improve their performance and audit outcomes.

The Committee has also agreed to have in-year engagements with these entities to monitor the implementation of the mitigation strategies to improve their audit outcomes.
In relation to the NSF, the entity has been receiving unfavourable audit outcomes over the past five years, with the 2019/20 and 2020/21 financial years being the worst (disclaimer opinions).

The AGSA identified several findings that impacted the performance and expenditure of the NSF, including internal control deficiencies largely due to the high vacancy rate and the absence of fit for purpose systems to enable the entity to operate optimally.
The absence of these systems has resulted in the entity regressing badly on its performance and failing to account and provide sufficient evidence on the funding of skills development programmes to the tune of R5 billion over two financial years.
Consequently, various stakeholders called for an investigation into the affairs of the NSF, and the Minister appointed a Ministerial Task on Strategic Review of the NSF and instituted a forensic investigation to uncover maladministration and corruption in the funding and utilisation of skills development programmes.
Notwithstanding that the NSF moved from a disclaimer opinion in 2020/21 to a qualified opinion in 2021/22, the Committee was still concerned that the entity has not addressed the deficiencies and other material irregularities highlighted by the AGSA in the previous financial years.

This pointed to the inadequate implementation of the Audit Action Plan by the entity and poor oversight by the Accounting Authority in monitoring in-year progress made by the entity.
The Committee welcomed the commitment made by the Accounting Authority to implement a turn-around strategy 44 79 that is aimed at improving the performance of the entity, and indicated that it will closely monitor the progress made towards stabilising the entity.

In relation to the SETAs, the three of them received qualified audit opinions with matters of emphasis highlighted by the AGSA.
The Services SETA, in particular was a serial repeat offender, having also received qualified audit opinions in the past four consecutive financial years.

This pointed to the slow response by the management of the entity in correcting the material irregularities as highlighted by the AGSA.

The Services SETA and CETA were also among the top contributors to irregular expenditure incurred in the past two financial years following the NSF.
The SETAs play an important role in the funding of skills development priorities for their respective sectors, however, the main concern of the Committee is the poor monitoring of these funded projects by SETAs.

The Committee committed to closely monitor the performance of these SETAs and requested them to submit revised Audit Action Plans aimed at improving their audit outcomes.

6.
6.

RECOMMENDATIONS The Committee, having assessed the 2021/22 Annual Reports of the NSF, SSETA, INSETA and CETA, recommends that the Minister of Higher Education, Science and Innovation consider the following: 6.1.

National Skills Fund 6.1.1.

The NSF develops a monitoring strategy to assess the impact of its skills development interventions on its beneficiaries and whether they get employment opportunities post the training programmes.

6.1.2.
6.1.2.

The process of reviewing the Skills Development Act, 1998 to enable the necessary amendments for the NSF to have a Board comprising different members representing the public sector, business and other civil society organisations should be expedited.

6.1.3.

The filling of the 73 vacancies in the entity’s organisational structure needs to be prioritised so that the NSF can improve its capacity and operate optimally.

45 80 6.1.4.
45 80 6.1.4.

The procurement of fit for purpose ICT infrastructure and systems at the NSF should be prioritised to improve record keeping and digitisation of records needed to support reported information.

6.1.5.

The appointment of a capable internal audit unit and strengthening of the financial management unit of the NSF should be prioritised.

6.1.6.
6.1.6.

The disciplinary processes against the five employees implicated in the Nexus forensic report should be expedited and the outcome of the process be submitted to the Committee.

6.1.7.

The entity should account to the Committee quarterly regarding the progress made in the implementation of its Audit Action Plan to address the audit findings.

6.1.8.
6.1.8.

The process of seconding staff from the Department to the NSF to close the constraint HR environment in the NSF needs to be done following proper HR processes and relevant legislation prescripts.

6.1.9.

The setting of targets and planning processes of the NSF needs an urgent review.

6.1.10.

The turn-around strategy to improve performance and the business model of the NSF should be submitted to the Committee 6.2.

Services SETA 6.2.1.


The Board should implement consequence management against officials responsible for the recurring under-performance in the entity as it relates to financial management and supply chain management (SCM) processes.

Furthermore, senior management needs to be held accountable for recurring qualified audit opinions in the entity.

6.2.2.

The entity should provide the Committee with quarterly reports on the progress made in the implementation of its Audit Action Plan.
The Audit Action Plan should have clear timeframes to rectify the material irregularities identified by the AGSA.

6.2.3.

The Board should act swiftly against some senior managers that still occupy positions without the requisite qualifications.

6.2.4.

Management should put proper systems in place to ensure that performance information is supported by credible records.

6.3.

Insurance SETA 46 81 6.3.1.


The filling of vacant posts, especially critical posts (Skills Planning & Research, Finance Manager and Education and Training Quality Assurance) should be expedited to enable the entity to improve its performance and operate optimally.

6.3.2.

INSETA should improve its internal controls environment and implement the Audit Action Plan to improve the audit outcome and prevent the recurrence of irregular expenditure.

6.4.
6.4.

Construction Education and Training Authority 6.4.1.

The filling of the five vacant Board positions should be expedited to improve the capacity of the Board and its oversight function over the entity.

The filling of these posts will also assist the Board in speeding up the implementation of its turn-around strategy to improve the performance of the entity.

6.4.2.
6.4.2.

The entity should implement the Audit Action Plan to improve the audit outcomes and have a closer working relationship with the AGSA so that it can find common ground in what the AGSA expects from it in terms of reporting.

6.4.3.

The service providers who failed to deliver on the contractual agreements with the CETA should be barred from doing any further business with any other SETA.

6.4.4.
6.4.4.

The monitoring and evaluation or project management capacity of the entity needs to be strengthened to enable improved monitoring of funded skills projects and contract delivery by service providers.

6.4.5.

Management should closely monitor the in-year budget spending of the entity so that expenditure does not exceed the approved budget for the financial year.

6.5.

Other recommendations 6.5.1.


The process of having NSFAS taking over the disbursement of bursaries offered by SETAs should be expedited to minimise duplication and related inefficiencies, Additionally, the Department should start a process, which will assist in the review legislation and SETA Regulations to provide for the ring-fencing of funds for bursaries to NSFAS.

47 82 6.5.2.
47 82 6.5.2.

SETAs should undertake impact analysis studies on their skills development interventions to determine the alignment of their programmes to the developmental agenda of the country.

6.5.3.

The Department should conduct closer oversight over SETAs, especially those that received qualified audit outcomes from the AGSA, including the implementation of their Audit Action Plans.

6.5.4.
6.5.4.

The Department should consider the possibility of utilising universities, TVET and CET colleges to deliver the skills development programmes that are mostly allocated to service providers at exorbitant costs and with poor accountability.

6.5.5.

The Department should develop an integrated management information system for SETAs, which will contain data of all skills development programmes offered by these entities, including the details of beneficiaries.
This system will assist in addressing the deficiencies and corruption related to funding and implementation of skills programmes.

Report to be considered.

48 83 2.
REPORT OF THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON THE 2023/24 ANNUAL PERFORMANCE PLANS, STRATEGIC PLANS AND BUDGETS OF THE DEPARTMENTS OF COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS AND THE ENTITIES REPORTING TO THEM, DATED 21 APRIL 2023 Having engaged the Departments of Cooperative Governance and Traditional Affairs, and their associated entities, on their 2023/24 Annual Performance Plans (APPs), Strategic Plans and Budgets, the Portfolio Committee on Cooperative Governance and Traditional Affairs reports as follows: 1.
INTRODUCTION Rule 227 of the National Assembly Rules mandates the Portfolio Committee on Cooperative Governance and Traditional Affairs to oversee the Departments of Cooperative Governance (DCoG) and Traditional Affairs (DTA) - Votes 3 and 15 respectively - and their associated entities.
The associated entities are the Municipal Infrastructure Support Agent (MISA), the Municipal Demarcation Board (MDB), the Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities (CRL Rights Commission) and the South African Local Government Association (SALGA).
The diagram below is a schematic representation of the cooperative governance and traditional affairs portfolio: Between 18 and 19 April 2023, the Portfolio Committee considered the 2023/24 APPs, Strategic Plans and Budgets of the above Departments and entities.

These were duly tabled in Parliament in accordance with the relevant legislative prescripts.
These documents outline the outputs, indicators 84 and targets, which the Departments and entities envisage achieving by 31 March 2024 given the resources made available in the 2023/24 budget.

2.

KEY POLICY AND RESOURCE CONSIDERATIONS FOR 2023/24 Department of Cooperative Governance § Policy overview The Department is primarily responsible for improving cooperative governance across the three government spheres.
As stipulated in Section 154 of the Constitution, it must also support and strengthen municipal capacity to manage their own affairs, exercise their powers, and perform their allocated functions.

One the Department’s key interventions in this financial year relates to reducing audit qualifications and Material Irregularities (MIs) in respect of the Community Work Programme (CWP).
Over the years, the CWP has been the Department’s predominant qualification area and the main source of irregular expenditure, which amounted to half a billion rand in 2023/24.

Over the last decade, the CWP has incurred a cumulative R3.3bn in irregular expenditure.

For several years, the Portfolio Committee has been raising concerns to the effect that the CWP does not seem to be serving its intended purpose, and that its investment return does not justify the billions of rand allocated to it.
In this regard, the Department has, as of 31 March 2023, temporarily taken over the administration of the CWP from the implementing Non-Profit Organisations (NPOs) in bid to address the compendium of previously experienced problems.

The Programme’s budget allocation remains unchanged as to assist with maintaining implementation capacity in the NPOs’ absence.

Part of the budget is also earmarked for the payment of NPO retention fees that have not yet been reconciled.
The Department has also introduced a new programme and organisational structure to address previous problems relating to optimal staff placement, and misalignments in the Strategic Plan.

This is among the performance targets, which the Department had failed to achieve in the past.
Another critical intervention, through the National Disaster Management Centre (NDMC), is to ensure that municipalities have disaster risk management plans in place, as to improve climate protection and reduce loss of human life, livestock and infrastructure.

The Portfolio Committee has previously noted that the NDMC has inadequate disaster response capacity, which is characterised by haphazardness, poor organisation and poor planning.
2 85 Finally, in cognisance of the fact that municipal coalition governments have caused political instability in some of the councils that have been forced to form them, the Department will be working on legislation and stakeholder engagements to address the issue.

The Portfolio Committee has previously welcomed the development of a municipal coalition framework by SALGA and encouraged further deliberation on whether this framework should remain voluntary or become an institutionalised coalition policy.
§ Resource considerations In the context of the recent flooding incidents, which have led to the declaration of a National State of Disaster, the funding reduction to the NDMC from R4.2bn in 2022/23 to R932.2m in 2023/24 is unjustifiable.

The APP notes that the Programme is severely underfunded and that this will significantly affect the Department’s ability to fully execute its mandate in terms of the Disaster Management Act (2022).
However, the Portfolio Committee was assured that National Treasury will avail the funds when the need arises.

The diagram below encapsulates the Department’s resource considerations for the 2023 Medium Term Expenditure Framework (MTEF) period: Source: Department of Cooperative Governance (2023).
Municipal Infrastructure Support Agent § Policy overview MISA is mandated to render technical advice and support to municipalities by undertaking a broad range of functions to optimise municipal infrastructure provisioning.

During the period under consideration, the organisation will be placing more emphasis on utilising the DDM as 3 86 to involve other critical stakeholders in the fulfilment of its mandate.
This is in cognisance of the cross-cutting nature of the organisation’s policy mandate and the limitations of working in isolation.

The Portfolio Committee has previous raised a concern around MISA’s unclear engagement with the problem of ageing infrastructure, especially as it relates to potable water access.
§ Resource considerations In its 2020/21 Preliminary Budgetary Review and Recommendations Report, the Portfolio Committee recommended that MISA must re-examine its funding model to ensure that it is aligned to the responsibilities expected of the organisation.

During the 2021/22 budget vote process, the Portfolio Committee once again observed that the organisation’s funding model was not optimal, given the responsibilities it is expected to fulfil.
In response to the Portfolio Committee’s observation and recommendation, MISA indicated that it had prepared a business case, which estimated that the organisation will require approximately R2.9bn over the MTEF period to implement key initiatives to strengthen the Agent’s role and capacity to support municipalities towards improved delivery of municipal infrastructure and basic services.
However, as the Table below illustrates, MISA’s funding requirements are still far from realisation: Source: Municipal Infrastructure Support Agent (2023).

Department of Traditional Affairs § Policy overview 4 87 As in the previous financial years, the DTA continues emphasizing coordinating the participation of Local House of Traditional and Khoi-San Leaders in the District Development Model (DDM) to ensure that they are afforded a meaningful role in the process.
Based on its oversight findings and engagements with traditional leaders on the ground, the Portfolio Committee has previously identified challenges around the involvement of traditional leaders in the DDM.

The Department’s APP also draws attention to the issue of strained working relations between councillors and traditional leaders, which needs to be addressed.
§ Resource considerations The Portfolio Committee previously noted that funding to the National House of Traditional and Khoi-San Leaders (NHTKL) is insufficient to reaffirm the institution’s role as a key player in cooperative government.

It has also noted provincial inconsistencies and discrepancies in the remuneration of traditional leaders and funding of traditional councils.
However, the DTA’s own budget of R193.1m, from where the allocation to the NHTKL proceeds, is itself constrained from providing the required funding augmentation, as the Table below illustrates: Source: Department of Traditional Affairs (2023).

The Table below illustrates the funding allocation percentage and amount (R24.1m in 2023/24) to the NHTKL, among others, from the DTA’s main budget: Source: Department of Traditional Affairs (2023).
5 88 The funding constraints also prevent the Department from providing tools of trade to local houses of traditional and Khoi-San leaders.

The provision of tools of trade remains a burning question for many traditional leaders, and the Portfolio Committee has observed little traction in this regard despite more than a decade of traditional leadership transformation.
CRL Rights Commission § Policy overview The Commission is statutorily tasked with promoting and protecting cultural, religious and linguistic rights.

In response to the Portfolio Committee’s previous concerns, the Commission will continue striving to enhance its footprint at the local level, particularly in rural areas where its existence remains largely unknown.
An agreement is set to be concluded with SALGA to utilise its municipal offices as the Commission does not have its own local and provincial offices.

The Commission will also prioritise capacitating CRL Community Councils and equipping them to champion CRL Rights issues at the local level.

There are currently approximately 300 Community Councils in existence, which the Commission is working on capacitating, through it public education pro- gramme.
§ Resource considerations On several occasions, the Portfolio Committee has noted that the funding allocation to the Commission is incommensurate with the magnitude of the organisation’s mandate and needs urgent review.

As many of the country’s deep-seated racial problems inevitably revolve around matters of culture, language and religion, there needs to be proper investment in the Commission as the key structure tasked with addressing these problems.
However, the Committee has also noted instances where the Commission has not fully utilised the budget allocated to it.

As tabulated below, the Commission receives a budget of R47m in 2023/24 as a transfer from the DTA: 6 89 Source: CRL Rights Commission (2023).
Municipal Demarcation Board § Policy overview The Board is an independent authority responsible for determining municipal boundaries, declaring District Management Areas (DMAs), delimiting wards for municipal elections, and assessing municipal capacity to perform their constitutional functions.
During the period under consideration, the Board continues striving to improve its public awareness and stakeholder education in relation to the municipal outer boundary determination and ward delimitation processes.
This is in response to the Portfolio Committee’s persistent appeals around these matters, including advising the organisation to invest more of its resources on public participation, as its processes remain little understood and the extent of its consultation with affected communities remains inadequate.

The Board tendered an apology for those instances where the Portfolio Committee’s requests have not been honoured.
All the demarcation proposals currently serving before the Board have been received from outside the organisations.

Since inception, the Board has not made any determination proposals of its own despite being legally empowered to do so.
As already alluded, one of the Municipal Demarcation Board’s key performance areas during the period under discussion relates to the municipal outer boundary determination and re-determination process, where inputs from research studies, pub- lic meetings, and investigation hearings are being considered.

The closing date for these inputs was 31 March 2022.
Valid inputs were classified into four different classes: 7 90 § Class 1 relates to technical and minor boundary re-determinations, which entail small- scale boundary adjustment and alignment with a minor impact on the geographic area, a negligible or no impact on the number of voters, and no impact on the capacity of the affected municipalities.

All Class 1 municipal boundary re-determinations have been considered, and final determinations were published in February 2023.
§ The second re-determination Class pertains to consolidation and annexations and is a medium scale boundary re-determination that may impact on a sizeable geographic area, and number of voters in one or all the affected municipalities.

Although this may affect ward arrangements, it will not materially impact municipal capacity to deliver services.

One hundred and seventy-two proposals were received in respect of Class 2 determina- tions.
§ Class 3 re-determinations relate to amalgamations, which entail major and large-scale municipal boundary re-determination and a significant impact on geographic areas, the number of voters, and municipal capacity.

Twenty-two proposals were received in this regard.

§ The last Class of re-determinations pertains to the categorisation of any new metropoli- tan, district or local municipality with or without boundary changes.

Eight proposals were received in this regard.


The Board last undertook the municipal outer boundary determination and re-determination process in 2018, in preparation for the November 2021 local government elections.

The munic- ipal outer boundary determination and re-determination process for Classes 2 – 4 redetermina- tions is set to be concluded during the current financial year, after which planning for the ward delimitation process will commence.
§ Resource considerations As in the previous years, the Board continues expressing frustration around the limited financial resources allocated to it, and the resultant inability to fully execute the organisational mandate.

The Portfolio Committee has also previously expressed concern around the Board’s projected budget reduction over the medium term, and its negative impact on organisational operational stability, especially in relation to public participation.
The cost element also makes it impossible for the Board to advertise its public notices everywhere, although every effort is made to reach all critical 8 91 stakeholders and ensure that the affected areas are prioritised.

The table below summarises the Board’s resource considerations in the period under review.

Source: MDB (2023) South African Local Government Association § Policy overview SALGA has a constitutional mandate to assist in the transformation of local government.
A critical issue emanating from SALGA’s APP relates to the organisation’s internal diagnostic analysis, which concluded that SALGA’s functional role and influence is inadequate, and thus unable to bring about the necessary change required to improve local government’s image.

The organisation intends enhancing its operating model to better serve its members, ensure value for money and improve its image, and that of local government as a whole.
Political factors outside SALGA’s locus of control and the inadequate national fiscal allocation to local government are some of the key constraints to the fulfilment of the organisation’s constitutional mandate.

The inability of many households to pay for municipal services negates the assumption that local government can rely on raising its own revenue.

SALGA’s capacity building initiatives also continuously experience high attrition, as 7 out of 10 trained councillors do not return after an election.
Consequently, the organisation must start from the beginning after every five years.

This does not assist the effective execution of SALGA’s capacity building initiatives.

9 92 On the political front, the organisation has identified, among other things, the need to regulate municipal coalition governments as to abolish the prevailing coalition bargaining practice.
Political parties are also enjoined to put forward candidates of the right calibre to ensure that there are quality people making the right decisions.

The organisation strives to partner and collaborate with the other role players in the local government space as to avoid duplication of efforts.

The APP is a product of a far and wide consultation with these role-players.

§ Resource considerations SALGA indicated to the Portfolio Committee that it is not requesting new financial resources.
Being cognisant of the risk associated with relying predominantly on municipal levies for the organisation’s sustenance, SALGA is exploring alternative revenue generating opportunities.

Tabulated below is SALGA’s resource considerations, reflecting the continued reliance on membership levies: Source: SALGA (2023).

3.
3.

IMPLEMENTATION OF 2022/23 BUDGETARY REVIEW RECOMMENDATIONS Recommendation Implementation progress The Auditor-General (AG) and DCoG should strive to find The Department has, as of 31 March common ground regarding the potential irregularities 2023, temporarily taken over the identified in the process of appointing the latest cohort of administration of the CWP from the Implementing Agents.
In the next BRRR report cycle, both implementing NPOs, which obviates the AG and DCoG should update the Portfolio Committee the point of contention with the AG.

on how this matter has been resolved.

10 93 The Portfolio Committee should, at the earliest The workshop is scheduled for 05 convenience, convene a workshop with DCoG to discuss May 2023. the CWP in more detail.

The DTA should furnish the Portfolio Committee with a The report is still outstanding.
report on the killing of traditional leaders, particularly in KwaZulu-Natal where the problem has become systemic.

The Portfolio Committee should, at the earliest The engagement is still outstanding.

convenience, engage SALGA on the role it ought to play in the constitutional intervention process in municipalities.

4.

COMMITTEE OBSERVATIONS 4.1.

Department of Cooperative Governance.

The Department has provided no clear sense as to the consequences that would follow should targets not be achieved.
More details on the Department’s revised organisational structure are needed as to enable Committee members to know exactly who to contact in relation to a particular municipality.

As noted previously, the Department’s capacity to intervene in the problems of local government leave much to be desired.

The indicator relating to the number of municipalities earmarked for future disaster intervention is not reliable as it is not possible to know in advance which municipalities will be affected.
The Department has issued no formal communication regarding its moratorium on the contracting of CWP implementing NPOs.

This has generated much uncertainty, speculation and confusion.

The DDM results are not yet perceptible, and there is little indication as to how the Model is being implemented.

4.2.

Municipal Infrastructure Support Agent.

MISA cannot adequately address the problem of aging infrastructure single-handedly.
It needs support and collaborative interaction with other relevant stakeholders.

4.3.

Department of Traditional Affairs.

Despite more than ten years of traditional leadership transformation, no adequate tools of trade have been provided to traditional leaders.

The Department has earmarked only 23 NHTKL members for tools of trade provision and omitted provincial and local houses.
The Department has also not attended sufficiently to the Spatial Land Use Management Act, 2013 (SPLUMA), which is spewing conflict between traditional leaders and municipalities.

Traditional leaders’ non-representation in the tribunals provided in the legislation is among the chief causative factors.

11 94 4.4.

South African Local Government Association.

The organisation is failing to deliver on its constitutional mandate to assist in the transformation of local government.
SALGA’s own internal diagnostic analysis concluded that the organisation’s functional role and influence is inadequate, and thus unable to bring about the necessary change required to improve local government’s image.

SALGA continues to be unresponsive to matters of nepotism and sexual abuse in the labour Bargaining Council where the organisation is also represented.
More activity around the organisation’s plans, beyond just presenting them to the Portfolio Committee, is likely to bring the requisite change.

So far, the same questions have been raised and the same responses have been provided, which has brought a sense of futility to the whole exercise.

SALGA’s presentation is disconnected from the lived reality of municipalities.

4.5.

CRL Rights Commission.

The Commission’s APP does not have a programme addressing the history of languages.

4.6.
4.6.

Municipal Demarcation Board.

The Board has been unresponsive to the demarcation matter previously raised with it in relation to Ward 52 in the City of eThekwini.

Instead of convening a consultative meeting with the affected residents, the Board has opted to alert the security cluster about possible community unrests.
The reliance on policing is a disproportionate response as communities are often satisfied to see a government functionary coming to address them, even if their issue is not well-argued.

Some of the publication platforms the Board currently uses to publish Section 26 notices do not meet the relevant public notice criteria.

Certain published demarcation maps are inaccessible or entirely missing from the Board’s website.

5.

COMMITTEE RECOMMENDATIONS 5.1.

Department of Cooperative Governance.


The Department’s revised organisational structure should be furnished to the Portfolio Committee immediately.

The Department should further furnish the Committee with a Memorandum relating to the employment and remuneration of the personnel replacing the CWP Implementing Agents.

5.2.

Department of Traditional Affairs.


The Department should, as soon as possible, furnish the Portfolio Committee with the details of the traditional leadership disputes and claims currently underway and those serving before it.

The Department should also furnish the outstanding report requested in the 2022 BRRR process in connection with the killing of 12 95 traditional leaders, particularly in KwaZulu-Natal where the problem has become systemic.

5.3.

Municipal Demarcation Board.


The Portfolio Committee should consider undertaking oversight visits to the areas proposed for demarcation, as to better understand the proposals’ rationale.

The Board should, at a convenient time, brief the Portfolio Committee in more detail on the demarcation proposals that could trigger community unrest in the run-up to the 2026 local government elections.
The Board should also attend to demarcation matter previously raised with it in relation to Ward 52 in the City of eThekwini.

The Board should further pay more careful attention to the media platforms used for publication of critical public notices.

5.4.

CRL Rights Commission.

The Commission should consider including in its APP a deliverable relating to the history of languages.

5.5.

South Africa Local Government Association.


The Portfolio Committee should follow- up on its 2022 BRRR recommendation regarding engaging SALGA on the role it ought to play in the constitutional intervention process in municipalities.

SALGA should further furnish the Portfolio Committee with an update on the matter raised in relation to wrong- doing in the labour Bargaining Council.

The organisation must also infuse more activity on its plans rather than just present them to the Portfolio Committee.
5.6.

Municipal Infrastructure Support Agent.

Within the next 14 days, MISA should furnish the Portfolio Committee with the list of municipalities prioritised for intervention in relation to Municipal Infrastructure Grant (MIG) expenditure, and water and sanitation provision.

Report to be considered.

13 96 3.


REPORT OF THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON OVERSIGHT VISIT TO LEKWA LOCAL MUNICIPALITY 12 -13 OCTOBER 2022, DATED 21 APRIL 2023 Having conducted a two-day oversight visit to the Lekwa Local Municipality under the Gert Sibande District, from 12- 13 October 2022, the Portfolio Committee on Cooperative Governance and Traditional Affairs reports as follows: Delegation: Hon.

F. Xasa (Chairperson, ANC); Hon.

D. Direko (ANC); Hon.


G. Mpumza (ANC); Hon B. Hadebe (ANC), Hon X. Msimango (ANC), Hon I. Groenewald (FF Plus) Hon C. Brink (DA), Hon.

E. Spies (DA), and Hon H. Mkhaliphi (EFF).

Committee Support Staff: Ms. S. Cassiem (Committee Secretary); Mr. A. Sokomani (Content Advisor); Mr. M. Dumezweni (Committee Assistant); Ms F. Ndenze (Communication Officer).

1.

INTRODUCTION 1.1.


The Portfolio Committee on Cooperative Governance and Traditional Affairs has resolved that over its current term of office in Parliament (2019-2024) it will intensify oversight over all the organs of state relevant to its mandate, in line with the intent of Parliament’s 2019 -2024 Strategic Plan.
This approach is the Committee’s strategy to confront the deteriorating state of local government in the country, encourage public participation in the affairs of local government as envisaged in Section 152(1)(e) of the Constitution.

1.2.

The 2020/21 Municipal Finance Management Act (MFMA) audit outcomes have highlighted several municipalities that have received consecutive disclaimed audit opinions despite being under constitutional intervention.
A disclaimed audit opinion is the worst opinion a municipality can obtain.

These municipalities are also subject to investigation by the Auditor-General regarding material irregularities identified in the course of audit.

Not surprisingly, these municipalities are also among the 64 municipalities that have been identified as dysfunctional by the Department of Cooperative Governance’s State of Local Government Report to Cabinet.
These municipalities are: 97 • Northwest: Kgetlengriver, Madibeng, Naledi, Ditsobotla and Ramotshere Moiloa.

• Northern Cape: Phokwane and Renosterberg.

• Mpumalanga: Lekwa • KwaZulu-Natal: Nquthu and Ilanga Libalele • Eastern Cape: Makana 1.3.

The Portfolio Committee has resolved to conduct intensive oversight to these municipalities, with Lekwa being the subject of this report.

2.
DAY ONE: ENGAGEMENT WITH THE LEKWA LOCAL MUNICIPALITY AND THE OVERSIGHT STRUCTURES RESPONSIBLE FOR OVERSEEING IT The first day of the Portfolio Committee’s oversight visit to the Lekwa Local Municipality involved deliberations with the National Department of Cooperative Governance (DCoG); the Mpumalanga Department of Cooperative Governance, Human Settlements and Traditional Affairs, Treasury, Auditor-General, South African Local Government Association; the Gert Sibande District Municipality and the Lekwa Local Municipality.
Concluding the day’s deliberations was a site visit to Phase 6 of the Rooikoppen sewer project.

• National Department of Cooperative Governance The National Department of Cooperative Governance (DCoG) noted the remarkable progress made in the municipality since the inauguration of the new Council in December 2021, following the local government elections of 01 November 2021.

A brief background to the municipality’s current state was provided.
DCoG had, in April 2021, put the municipality under intervention in terms of Section 139(7) of the Constitution, following a Gauteng High Court order in a court case instituted by Astral Foods.

An administrator was appointed following the dissolution of Council.

However, the intervention lapsed with the election of the new council in December 2021.

The administrator’s role consequently changed to that of the National Cabinet Representative (NCR).
Initially, there were tensions between the NCR and the Council, but these have since been resolved.

Upon the NCR’s appointment as the City of Tshwane’s municipal manager, following the expiry of his contract, the Department has been of the view that the Municipal 2 98 Council should be afforded the opportunity to run itself, concurrently with the support that has been provided by Treasury, the leader of the 2018 Section 139(5)(a) intervention in the municipality.
There is now also stability at the governance level.

Out of the 18 municipal governance coalitions around the country, Lekwa’s is one of the few that can sit and discuss service delivery plans, as opposed to fixating on the allocation of positions.

Although the municipality’s financial problems remain deep-seated, some inroad has been made in the payment of the municipality’s largest creditors, including Eskom.

Monthly Eskom repayments have increased from R500 000 to R7m.
DCoG, in partnership with the South African Local Government Association (SALGA) and Treasury, has developed a comprehensive support package for the municipality.

Lekwa is the first municipality, which has been subjected to intervention in terms of Section 139(7) of the Constitution, and therefore a learning experience for the Department.
However, the experience with Lekwa has enabled the Department to galvanise support for similar interventions in Mangaung Metropolitan municipality and Enoch Mgijima Local Municipality.

• Mpumalanga Department of Cooperative Governance and Traditional Affairs The provincial Department’s presentation highlighted challenges relating to water, electricity, and sanitation backlogs.

Some areas had been without access to water since the dawn of democracy.
The demand for water, electricity, and sanitation is above infrastructure capacity.

The municipal council, which is led by a coalition, is stable.

Municipal Infrastructure Grant (MIG) expenditure has not been at the desired level.

District Development Model (DDM) Councils have been established and DDM plans have been adopted, endorsed and submitted to DCOG.

DDM governance structures are also functional.

Tourism and Infrastructure Projects implemented under the DDM banner were highlighted.
Among the lessons learnt in the DDM implementation process so far is that there is minimal participation of the private sector and State Owned Enterprises (SOE).

The DDM’s functionality depends significantly on political support, and constant monitoring of DDM One Plans.

Regarding support from the Municipal Infrastructure Agent (MISA), mention was made of assistance provided in terms of grant expenditure and waste management.
MISA funded projects in the Gert Sibande District, including Lekwa, were highlighted.

3 99 • Provincial Treasury The Department indicated that it was not proud to report to the Portfolio Committee that the financial intervention instituted in line with Section 139(5)(a) of the Constitution has not yielded the desired results.

Debt owed to municipal creditors has seen massive growth.

As at end September 2022, Eskom debt stood at R1.7bn.
The Department has facilitated agreement on credible Eskom repayment plans, which the municipality can honour.

However, the municipality has a cash flow crisis, which needs urgent intervention.

It is one of the eight municipalities in the province that had adopted unfunded budgets.

For Lekwa, the unfunded budget is increasing exponentially each year.

In the current financial year, it amounted to R1bn and is projected to amount to R2.5bn in the next financial year.
The municipality’s revenue collection targets are unrealistic, which has contributed to poor revenue collection.

There has been an increase in consumer debtors and irrecoverable debt has not been written off.

Processes have been introduced to clean up the billing system, starting with the valuation roll.

These initiatives, such as the installation of meters on unmetered properties, have encountered community resistance.
More intervention from both the political leadership and the municipal administration is needed in terms of credit control.

The municipality is also taking a long time to fill critical vacancies.

Treasury support is as good as the existence of people that make use of it.

The municipality is in dire need of capable people in the right positions.

Lack of capacity in the municipal Budget and Treasury Office (BTO) has contributed to the municipality’s consecutive disclaimed audit opinions.
Treasury is finding it challenging to reduce the municipality’s UIFW, which has escalated from R1bn to R2.3bn due to assurance providers not playing their roles adequately.

The Department, together with SALGA and DCoG, has conducted assurance providing workshops, but various gaps remain in terms of impact.

The municipality also remains a litigious environment.

There are also severe electricity distribution losses both at the technical and non-technical levels.
It is envisaged that the project on unmetered properties will mitigate this problem.

• Auditor-General of South Africa The Auditor-General’s (AG) presentation focused on the municipality’s audit outcomes for the 2020-21 financial year.

The municipality’s disclaimed audit opinions over the last three last financial years were highlighted, including the areas of qualifications.
Due to the disclaimed 4 100 opinion, the AG has been unable to perform analyses of the municipality’s individual financial viability indicators.

Regarding performance information, half of the municipality’s planned targets relating to key projects were not achieved.

Material irregularities (MIs) were identified in respect of the municipality’s failure to discharge its service delivery mandate resulting in substantial harm to the community.
The MIs specifically relate to lack of full and proper record keeping and SARS penalties and interest.

The MIs were first identified in 2019/20 when the municipality’s first disclaimed audit opinion was issued.

Non-compliance with legislation was highlighted as another area of audit concern, including the passing of an unfunded budget, which has contributed to the continuing increase in UIFW.
The municipality’s Internal Audit Unit was reportedly not fully capacitated to identify internal control deficiencies, due to vacancies in the Unit.

The Audit Committee also did not ensure that these weaknesses in the Unit are addressed.

The Municipal Public Accounts Committee (MPAC) did not investigate any UIFW during the 2020-21 financial year due to the dissolution of the municipal council, among other things.

The AG expressed confidence in the municipality’s Financial Recovery Plan.
During the previous auditing cycle, it was not possible to assess the effectiveness of the FRP’s implementation.

However, the current audit will be assessing progress with the FRP’s implementation, especially considering that information has now been submitted to the auditors, unlike in the previous financial years where information has not been forthcoming, leading to disclaimers.
As part of its recommendations, the AG proposed that the municipal council should interrogate the budget more to ensure that no unfunded budget is passed; monitor the implementation of the approved Financial Recovery Plan; improve the recording, reviewing, and reporting processes and controls relating to financial statement and performance reporting; more vigorous monitoring of the Post Audit Action Plan by Senior Management; reviewing and monitoring of compliance with all applicable legislation by all levels lf management; and investigation and instituting of consequence management in relation to UIFW.
• South African Local Government Association SALGA briefed the Portfolio Committee on the support rendered to improve the state of municipalities in the province, including the Lekwa Local Municipality.
This support encompassed matters relating to municipal performance and development systems; adoption of 5 101 municipal service charters; municipal human resources capability optimisation; integrated councillor induction programme; training for members of the Local Labour Forum (LLF); support on conducting disciplinary hearings; municipal by-law enforcement; disaster management, fire and emergency services; community safety training; revenue enhancement diagnostic assessment survey; municipal audit support and revenue enhancement; non- collection of property rates from revenue from certain Eskom power plants; Supply Chain Management (SCM) professionalization; green drop corrective plans; just energy transition; and climate change response.
• Gert Sibande District While most municipalities under the District’s jurisdiction meet minimum infrastructure capacity requirements, the Lekwa Local Municipality does not meet these.

Water and sanitation infrastructure is the most under-capacitated.

A maximum capacity of nine mega-litres can be provided against a daily demand of nearly 20 mega-litres.

Consequently, the reticulation system has been overloaded, causing burst pipes and sewer spillages.
With load shedding, the problem is becoming worse because without a 24-hour electricity supply, sewer cannot be pumped out efficiently.

Although back-up generators have been procured to mitigate the problem, the running costs are prohibitive.

Communities also need to be educated regarding the material that should not end up in the Waste Water Treatment Works.

Most of the blockages experienced relate to this factor.
In partnership with the Department of Water and Sanitation, the municipality has embarked on a six-phased project to address the sewer spillages, including the construction of emergency ponds to contain the sewer before it spills over to the Vaal River.

The ultimate objective is to remove sewage from households and direct it to the Waste Water Treatment Works.
The District provided detailed progress regarding the project budget, expenditure to date, the percentage of work done thus far, and the estimated completion timelines.

The percentage of completed work surpassed budget spending percentages because payments only followed after work had been done.

The DWS is also considering awarding the District a Water Services Authority (WSA) status as none of the local municipalities are fully capable of fulfilling this function.
Waste management is another area of concern in Lekwa.

While the landfill site in Standerton complies with environmental regulations, the other site is non-compliant and must be closed down.

The municipality’s by-law on waste must be reviewed to make it enforceable.

It is impossible to tackle the waste management problems without enforceable by-laws.

There is a 6 102 plan to establish a provincial multi-sectoral intervention task team to assist with waste management challenges.
The District supports the implementation of a service charter to deal with waste management.

On disaster management, the District has conducted disaster awareness campaigns and oversaw the establishment of local Disaster Management Centres, their management, and staffing.

The provision of modern Information Communication Technology (ICT) equipment to the Disaster Management Centres remains a major drawback.
The District has dedicated three officials to assist its local municipalities with financial management issues.

Financial management support to Lekwa has not been provided as that space had already been taken up by COGTA and Treasury, which led the implementation of the municipality’s Financial Recovery Plan.

The District itself is financially stable, having incurred no UIFW over the last eight years and having over R200m in cash reserves.
Politically and administratively, the District is also stable and has a good working relationship with Lekwa’s Executive Mayor.

However, the District does not support the municipality’s bid stop it from spending the Water Services Infrastructure Grant (WSIG) on the municipality’s behalf, as this would risk misappropriation of funds.
• Lekwa Local Municipality The municipality highlighted five key challenges facing it, namely dilapidated and inadequate roads; inadequate access to safe, drinkable water; insufficient water supply due to low pressure, informal connections, Eskom load shedding and aged water infrastructure; inadequate electricity supply, theft and vandalism and aged electricity infrastructure; and limitations to WSIG funding for provision of interim provisions of water and sanitation supply since the municipality’s WSIG is administered by the DWS through the Gert Sibande District Municipality.
The areas of Palama and Crossroads have been without water since 2007.

There used to be water supply to these areas but unscrupulous people removed valves or covered them with concrete.

This was so that water tankers could be purchased to supply water and therefore benefit some people financially.

The municipality also reflected on the disclaimed audit outcomes received over the last three financial years, and the implementation of the Post Audit Action Plan to address the unfavourable audit findings.
The municipality has resolved 81 percent of findings in respect of the 2020-21 financial year.

The Executive Mayor stressed that it was unfair for the Portfolio Committee to blame the current administration on the disclaimers received over the last three 7 103 years, as it was not running the municipality at the time.

Had Parliament conducted its oversight timeously, the municipality is unlikely to have found itself where it is currently.
The oversight session should serve as an opportunity for the National Assembly to reflect on its work.

The municipality also provided a break-down of expenditure relating to COVID-19, and presented revenue collection figures for the period December 2020 – March 2022.

A break- down of the UIFW expenditure was also provided, starting from 2012 to 2021.
For this nine- year period the unauthorised expenditure amounted to R1.3b; fruitless and wasteful expenditure amounted to R461.9m and is deemed irrecoverable; and irregular expenditure amounted to R502m and is due to be approved and regularised.

The disciplinary cases and other labour relation matters under the municipality’s consideration were presented.

Most of the disciplinary cases have not yet been finalised.
Update was also provided on institutional capacity, such as the filling of positions for Section 54 and 56 Managers in terms of the Municipal Systems Act (2000).

All these positions have been filled, except that of the Executive Manager for Corporate Services.

However, the municipality’s overall vacancy rate is 50 percent, meaning that half of the positions are not filled.

The audit committee is functional.


The Municipal Public Accounts Committee (MPAC) is also functional and has thus far convened five meetings relating to investigations of UIFW expenditure, the 2020/21 Annual Report and other ad hoc matters referred to it by Council.

In conclusion, the municipality recommended that the WSIG be changed from Schedule 6B to 5B.

Currently, the District administers the Grant on the municipality’s behalf.
The Executive Mayor also found it inconsistent for municipalities to be expected to approve cash-backed budgets while the whole country was running on a budget deficit.

Council has adopted the Financial Recovery Plan and is overseeing its implementation.

The high vacancy rate at senior management level has been addressed.

The municipality is paying Eskom debt monthly, with the last payment amounting to R22m.
Eskom is reluctant to agree on a mutually beneficial repayment plan as the current arrangement of top slicing 15 percent of the municipality’s Equitable Share grant suits it better.

Monies owing to SARS have reduced by more than R70m.

The municipality retains a highly politicised workforce, which is resistant to skills audits.

Numerous letters requesting assistance from COGTA have been written to no avail.

Consequently, the municipality is considering the use of external service providers.
8 104 • Site visit to Rooikoppen Waste Water Treatment Plant The Portfolio Committee concluded the day’s deliberation by conducting a site visit to the Rooikoppen Phase 6 sewer project, which is one of the infrastructure projects spearheaded by the District municipality.

The total budget allocated to this project amounts to R148m.

Project work commenced in November 2021.


Through this project, a 2.5km pipeline of between 110mm – 630mm diameter was constructed to redirect the sewer that used to engulf the surrounding community.

There are still remaining challenges relating to restaurants depositing raw animal blood and fat in the sewer reticulation system.

Strict enforcement of by-laws in this regard is needed.

The problem of waste water treatment capacity that is far below the demand also remains fundamentally unresolved.
Having successfully redirected the sewer away from places of residence, the next process was the construction of an access road to the pump station.

The project was 50 percent complete and 32 percent of the allocated budget was spent.

The expected completion date is November 2023 although the municipality plans to complete it by June 2023.

The next project phase is expected to start in November 2022 at a cost of R150m.

3.
3.

STAKEHOLDER ENGAGEMENTS Day 2 of the Portfolio Committee’s oversight visit was dedicated to receiving inputs from local stakeholders.

Oral submissions were received from the representatives of NAFCOC, the South African National Civics Organisation (SANCO), Sakhile Youth Empowerment Centre, Generation Change International Church, Women in Business, residents from Extension 7 and Ward 9, the Congress of South African Trade Unions (COSATU) and the Lekwa Black Business Forum.
A written submission was also received from Astral Foods.

3.1.

NAFCOC.

Mr Sizwe Dlamini, NAFCOC’s provincial Treasurer lamented the dissolution of the Lekwa Local Municipality by the then Finance Minister, Mr Tito Mboweni.

The appointment of Mr Mettler as the administrator destroyed Standerton.

The administrator was a thief, and was inaccessible as he always surrounded himself with SAPS protection personnel.

The municipality’s failure was due to the administration, not the politicians.
Therefore, councillors should be left alone to complete the term.

Mr Dlamini expressed frustration with the municipality’s administration including its failure to monitor projects.

9 105 The Rooikoppen project for example constitutes monitoring failure as it has long passed its completion due date.

Mr Dlamini also voiced his suspicions around a 1.5km road that cost R15m.
In conclusion, he urged the Portfolio Committee to take a closer look at Astral Foods, the private company responsible for instituting the process that culminated in a court order compelling the national Department of Cooperative Governance to intervene in the municipality in accordance with Section 139(7) of the Constitution.

3.2.

SANCO.

The SANCO representative felt that the municipality deliberately refrained from publicising the stakeholders’ meeting because it had much to hide.
He characterised the municipality as a chaotic and restless place.

Potholes were the first thing encountered by visitors to the municipality.

Electricity provision is unreliable, both in Eskom and municipal supply areas.

Access to water is a problem.

Businesses are consequently leaving the area.

The District’s intervention in Hlongwane Drive and Rooikoppen has made significant difference.

However, serious intervention is also needed from Parliament’s side.

3.3.

Sakhile Youth Empowerment Centre.


The Centre’s representative submitted that the provincial government failed to intervene in Lekwa on four occasions.

Parliament has discussed Lekwa issues countless times.

A major problem in the municipality is the rift between politicians and the administration, and the latter is not accountable.

3.4.

Generation Change International Church.


The Church’s Pastor bemoaned the failure of municipal staff to take personal responsibility in executing their obligations to the public.

The staff has been seen relaxing and enjoying meals while people stand in queues waiting for service.

It is nearly a year since the Council has been elected and yet there are still no by-laws to regulate stray dogs, illegal dumping of rubbish and human waste, and public consumption of alcohol.
Consequences of this lack of by-laws were narrated in detail, including lack of police action on reported public nuisance incidents.

3.5.

Women in Business.

The Business representative hailed the municipality’s dissolution as a good development.

The Portfolio Committee however should scrutinise the administrator’s role who is a suspected gangster from KwaZulu-Natal.

Following his appointment, the municipality’s security bill skyrocketed and it is not clear who is footing it.
The electricity problems experienced in the municipality, including the dark and non- navigable streets at night, result from the administrator’s lack of proper handover and failure to insource electricians.

Municipal by-laws exist, but are implemented poorly.

10 106 3.6.

Extension 7 resident.

The resident complained that the RDP house allocation process has by-passed her.
Despite being registered in the list of beneficiaries, she has seen underage people, foreign nationals and people with proper jobs obtaining RDP houses ahead of her.

3.7.

Ward 9 resident.

The resident complained about sewer problems, which councillors seemed to be ignoring.

Residents in Extension 8 had been without water for four weeks.

The responsible MMC has refused to respond to the community’s call for intervention.

The MMCs are generally ineffective.


The councillors are unknown to the people, and the resident last heard from them in November 2021 when they just got elected.

3.8.

COSATU.

The COSATU representative expressed disappointment at the poor meeting turnout.

She found it surprising that the Portfolio Committee did not postpone the meeting to secure better attendance as the Department of Water and Sanitation delegation had done.
The poor attendance attested to the fact that the municipality operates in isolation from the community.

The Speaker’s Office is expected to advocate for community participation.

The meeting should have been convened at the Sakhile Stadium to ensure maximum attendance.

Coming to the Town Hall cost R15, which not everyone can afford.

The municipality has hosted many delegations in the past, but the situation is getting worse rather than better.
The most pressing problem in the municipality is access to water and electricity.

The electricity crisis not only relates to Eskom load shedding but also to the municipality’s own supply.

Clinics have been functioning without running water.

The culture of accountability in the municipality is non-existent.

There is no action on Hawks investigations and Section 106 reports.

The municipality only exists in name.


In conclusion, the representative expressed the hope that meeting will yield value and that no other delegation will come, with the community having to repeat itself.

3.9.

Lekwa Black Business Forum.

The side-lining of women-owned black businesses by the municipality was a major source of concern for the Forum.

Tenders were not forthcoming.

The municipality tended to appoint the same clique of businesses repeatedly.
Other problems relate to access to water, uncollected garbage, lack of school for the disabled, problems with police vehicles, late arrival of ambulances and dilapidated roads.

The Forum representative re-iterated the sentiment that the meeting should have convened at the Sakhile Stadium.

3.10.

Astral Foods.

The company submitted a written presentation as it was unable to attend physically due to late receipt of meeting venue confirmation.
In the company’s view, the administrator addressed all the low hanging fruit.

However, it remains concerned as to 11 107 whether the necessary human resources are in place to manage the vast impact of the challenges faced.

The company, through its local businesses (Goldi and Meadow), continues to provide technical backup to manage the breakdowns in the municipality’s water and electricity infrastructure.

The company carries out these repairs at its own financial costs.
The fact that the breakdowns are recurring points to lack of general and planned maintenance and a budget dedicated to this.

The local municipality does not have the financial resources to upgrade the failing electricity, water and road infrastructure, and there is a question as to whether national or provincial government will provide the needed financial resources.

The fall-out between the municipality and Eskom around the debt owed to the latter is of great concern to the company.
Eskom’s Notice of Maximum Demand (NMD) restriction will throttle the town’s economic growth if it remains in force.

Finally, the company has received no feedback regarding the condition of the municipality’s road infrastructure, which remains a major obstacle.

4.
4.

COMMITTEE OBSERVATIONS Having listened to inputs by the oversight structures supporting the Lekwa Local Municipality, the municipal stakeholders and the municipality itself, and having undertaken a site visit to a critical infrastructure project in Lekwa, the Portfolio Committee noted the following: 4.1.

The progress made on Rooikoppen Phase 6 project is impressive and is one of the rare projects that are completed before the projected date.
Also worth applauding is the fact that ten local sub-contractors were hired, thus stimulating local economic development and providing jobs for 55 people from Ward 4 where the work is taking place.

4.2.

None of the local municipalities in the District has registered a decrease in debt.

This points to a general failure to implement revenue enhancement strategies.

Consequently, the unfunded budget in Lekwa is no surprise.
However, a funded budget is a legal requirement and the municipal political leadership is effectively committing gross dishonesty when it approves an unfunded budget.

The Portfolio Committee found it unacceptable for the Executive Mayor to rationalise the unfunded budget by comparing it to the national deficit.

National government can borrow money from creditors to meet its obligations.

The Lekwa Local Municipality cannot do this as it is not creditworthy.

4.3.
4.3.

Spending on contracted services in the municipality is above the Treasury norm.

Spending on maintenance on the other hand is below the Treasury norm, and the clear decay in the 12 108 municipality manifests this.

Lekwa is among the non-compliant municipalities in terms of the green drop directive by the Department of Water and Sanitation.

4.4.
4.4.

None of the presentations delivered to the Portfolio Committee provided an assessment regarding the implementation of the municipality’s Financial Recovery Plan.

The municipality’s financial situation seems to have deteriorated despite having in place a financial recovery plan.

Eskom debt is getting worse.

The exact role of Treasury in the implementation of the FRP was not clearly articulated.

4.5.
4.5.

The municipality seemed to have its priorities in the wrong order as evidenced by the unnecessary expenditure on expensive decoration for the meeting venue.

The Portfolio Committee is not impressed by this extravagant gesture, as priority must be given to critical service delivery matters such as the patching of potholes.

4.6.
4.6.

It is all well and good for the municipality to have addressed 81 percent of audit findings, but the real question is whether this action has changed the lives of Lekwa residents for the better.

4.7.

It cannot be correct that there are areas that have been without water for months.

The new council has been in office for approximately a year, and seems to be perpetuating the legacy of ineptitude from the previous council.
There is so much happening in the municipality in terms of intervention, but there is little change in ordinary people’s lives.

4.8.

None of the presenters outlined a clear action plan in relation to the municipality’s UIFW.

4.9.

SALGA’s input was not indicative of an appetite by the organisation to intervene in the municipality.

No detail was provided regarding the organisation’s role in the intervention process.

4.10.

The state of municipal roads is a disaster that needs immediate attention.
It is not a good advertisement of the municipality as a desirable tourist destination.

It is not acceptable for the council to have done nothing to fix the bad state of municipal roads nearly one year in office.

4.11.

The Portfolio Committee welcomes and finds comfort in the Municipal Manager’s tone to the effect that the municipality has reached rock bottom and cannot sink any further.

The only way is up and this is the only trajectory for the municipality to take under the MMs watch.

13 109 4.12.
13 109 4.12.

The Portfolio Committee does not endorse the narrative by some community members to the effect that the problems in Lekwa started with the administrator.

4.13.

The issue of the disjuncture between the municipality’s political leadership and the administration was raised on more than one occasion, and the Portfolio Committee takes note of it.

The Committee encourages citizens to lay formal complaints against municipal staff who are failing to execute their responsibilities.
The political leadership also needs to act against these officials.

4.14.

It is inexplicable that the municipality did not publicise the stakeholders meeting.

It is does not augur well for a meeting of Parliament to be hidden from the community.

The local Executive Mayor’s non-attendance of the stakeholders meeting also leaves much to be desired.

5.

COMMITTEE RECOMMENDATIONS 5.1.


The Department of Cooperative Governance should furnish the Portfolio Committee with explanation as to why it has been unresponsive to the Lekwa Local Municipality’s letters requesting the Department’s assistance with the municipality’s skills audit exercise.

5.2.

The Gert Sibande District municipality should furnish the Portfolio Committee with regular reports regarding progress on the various phases of the Rooikoppen sanitation project.

5.3.
5.3.

The Lekwa Local Municipality should deal with its water and electricity challenges as a matter of crisis and communicate its medium to long term solutions to the people.

The municipality should also forward in writing the details of 81 percent of audit findings that have been addressed.

5.4.

The Lekwa Local Municipality should further reactivate its public participation mechanisms, including ensuring active ward committee meetings.
The Speaker’s Office in the municipality should improve its role in this regard.

5.5.

The Portfolio Committee should engage the Department of Cooperative in more detail around the Section 139(7) intervention in Lekwa Local Municipality in order to clarify some confusion around processes.

The Department should also furnish the Portfolio Committee with a report on the outcome of the intervention in the municipality.

Once received, the Portfolio Committee should ensure that this report is made public.
14 110 5.6.

The Ministers of Finance and Cooperative Governance and Traditional Affairs should account to the Portfolio Committee on why the Lekwa Local Municipality has not shown any tangible results despite being under constitutional intervention for four years.

5.7.

The Portfolio Committee should refer the details of the citizen who has allegedly been by- passed by the RDP housing allocation process to the Department of Human Settlements.

Report to be considered.

15 111 4.


REPORT OF THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON OVERSIGHT VISIT TO KANNALAND LOCAL MUNICIPALITY, 31 JANUARY – 03 FEBRUARY 2023, DATED 21 APRIL 2023 Having conducted an oversight visit to the Kannaland Local Municipality under the Garden Route District in the Western Cape, from 31 January – 03 February 2023, the Portfolio Committee on Cooperative Governance and Traditional Affairs reports as follows: Delegation: NAME Hon F.D.
Xasa (Chairperson) Hon D. Direko Hon X. Msimango Hon G.G.

Mpumza Hon E. Spies Hon D. America (Chair of Local Government Portfolio Committee in the Western Cape Provincial Parliament) Hon H. Mkhaliphi POLITICAL PARTY African National Congress Democratic Alliance Economic Freedom Fighters Support Staff: NAME Ms. Shereen Cassiem Mr. M Dumezweni Mr. Andile Sokomani Ms Faith Ndenze 1.
INTRODUCTION DESIGNATION Committee Secretary Committee Assistant Content Advisor Communication Officer The Portfolio Committee on Cooperative Governance and Traditional Affairs has resolved that over its current term of office in Parliament (2019-2024) it will intensify oversight over all the organs of state relevant to its mandate, in line with the intent of Parliament’s 2019 -2024 Strategic Plan.
This approach is the Committee’s strategy to confront the deteriorating state of local government in the country, and encourage public participation in the affairs of local government as envisaged in Section 152(1)(e) of the Constitution.

112 The 2020/21 Municipal Finance Management Act (MFMA) audit outcomes have highlighted several municipalities that have received consecutive disclaimed audit opinions despite being under constitutional intervention.
A disclaimed audit opinion is the worst opinion a municipality can obtain.

These municipalities are also subject to investigation by the Auditor-General regarding material irregularities identified in the course of audit.

Not surprisingly, these municipalities are also among the 64 municipalities that have been identified as dysfunctional by the Department of Cooperative Governance’s State of Local Government Report to Cabinet.
These municipalities are: • Northwest: Kgetlengriver, Madibeng, Naledi, Ditsobotla and Ramotshere Moiloa.

• Northern Cape: Phokwane and Renosterberg.

• Mpumalanga: Lekwa • KwaZulu-Natal: Nquthu and Ilanga Libalele • Eastern Cape: Makana • Western Cape: Kannaland The Portfolio Committee has resolved to conduct intensive oversight visits to these municipalities, with Makana, Lekwa and the listed municipalities in the North-West having been thus far visited.
While the Kannaland Local Municipality, the subject of this report, has so far been free from consecutive disclaimed audit opinions, it has also attained the dysfunctional status due to chronic political instability.

The Committee’s oversight visit to Kannaland is a follow-up on the virtual engagements held with the municipality on 23 November 2022 and 01 September 2020.

2.
2.

DAY 1: ENGAGEMENT WITH THE KANNALAND LOCAL MUNICPALITY • Site visit to the Ladismith landfill site The Portfolio Committee commenced its oversight programme by visiting a landfill site located in Ladismith, a few blocks away from the municipal headquarters.

The site functions as a regional waste disposal hub for the whole Kannaland municipal area, which comprises the four towns of Ladismith, Zoar, Calitzdorp and Van Wyksdorp.
Several deficiencies hampering the site’s effective functioning were identified, including the lack of the requisite yellow plant equipment to manage the waste, which renders the site a health hazard.

A councillor highlighted the logistical challenges and the related transportation problems around the site’s location in Ladismith, which is approximately 50 kilometres away from a town such as Van Wyksdorp.
2 113 The recommendation proposed to address this challenge was that the municipality should consider rehabilitating the existing disposal site in Van Wyksdorp rather than closing it down.

The consumption of animals that feed on the Ladismith landfill site is another critical health hazard for the communities that live around the area.

The provincial government has been involved in advising the municipality on waste management best practice around the site.
The municipality is reportedly in the process of procuring the necessary equipment and introducing mitigation measures such as scales to weigh and cost the waste delivered by private dumpers, as well as improving the site staff complement.

A by-law to prevent illegal dumping and other related matters is in the process of development.

The next tranche of Municipal Infrastructure Grant (MIG) funding will assist the municipality to purchase a compactor truck.
A Public Private Partnership (PPP) is being explored in relation to recycling.

However, most of the assistance promised to the municipality by various government actors (going as far back as 2011) has not yet materialised.

The post-2016 municipal political environment has seen a serious deterioration, which has discouraged many relevant actors from coming forward to assist the municipality.
• Site visit to a Ladismith stadium facility In this facility the Portfolio Committee noted signs of poor maintenance, which the municipality attributed to inadequate funding and insufficient security measures to counter vandalism.

The municipality is in the process of improving the facility’s security.

The facility is not a municipality initiated project but was inherited form the pre-democratic period.
The municipality only started receiving MIG funding for the facility’s upgrading seven years ago to the value of R250 000, which is a share of a R1m allocated to the municipality’s four towns.

To achieve better impact, the municipality is considering dedicating future allocations of the R1m in whole to each town on a rotational basis, as opposed splitting it in quadrants.

A detailed written project report on the facility will be furnished to the Portfolio Committee.
• Presentation by Kannaland Local Municipality The Acting Municipal Manager (MM) provided an overview of the municipality in terms of councillor composition, the four towns that constitute it, the municipality’s executive mayoral political system and the municipality’s grading, which is classified as Grade 2.

The political instability in the municipality, which has been a subject of much debate, was characterised as a product of the constant change in the governing coalition parties.
Instability at the administrative level was attributed to vacant positions resulting in many officials being employed in acting capacity.

As part of addressing this, the municipality is at an advanced stage of recruiting for the critical positions of MM and Chief Financial Officer (CFO).

The municipality has just introduced changes in the composition of the Municipal Public Accounts Committee (MPAC) including the appointment of a new chairperson.
3 114 An Audit Committee has been established but still needs to undergo training.

The Section 139 intervention process in the municipality, its subsequent termination, and the development of a Financial Recovery Plan (FRP) were outlined.

There has been no correlation between the municipality’s audit outcomes and the ruling municipal government of the day.

As far as the municipality is concerned, none of the staff appointments it has made are unlawful.
The municipality is willing and ready to deal with all instances of unlawful staff appointment should conclusive evidence be presented to it.

The Acting CFO, who at the time of the Portfolio Committee’s visit had been in the acting position for just ten days, confirmed that the municipality has been operating on unfunded budgets for many years.

The Provincial Treasury is assisting the municipality with a plan to address this problem, but the plan has not been implemented satisfactorily.
However, the Acting CFO is confident that the 2023/24 budget will be fully funded.

The municipality’s revenue collection rate currently amounts to 80 percent, and the municipality is working towards improving this to 85 percent, which will be a great achievement should this be realised.

This will involve improving the accuracy of the billing system.

The municipality’s organisational structure, which is one of the largest contributors to the institution’s expenses, is being reviewed.
This is expected to address the municipality’s unsustainable salary budget, which is currently above the Treasury norm.

The municipality’s current financial system has several shortcomings, which have contributed to the disclaimed audit opinion obtained in 2021/22.

This audit outcome is a disgrace and disappointing to the municipality.
In the next two financial years (which is a more realistic timeframe) the municipality will be doing its utmost to work itself out of the disclaimer and will implement long-lasting internal control systems.

Underspending on conditional grants remains a serious challenge, which the municipality will address by holding the responsible officials accountable.

Treasury withheld R6m of the municipality’s Equitable Share due to unspent conditional grants, which has affected municipal service delivery negatively.
To fast-track conditional grant expenditure, the municipality will work more closely with its Project Management Unit.

The municipality has not yet formalised a Local Economic Development and Youth Development Plan.

Each of the municipality’s four towns has its own water supply system.

One of the major problems affecting these is aging infrastructure, including crumbling asbestos pipes, which contributes to high non-revenue water losses.
The daily demand in the Ladismith and Zoar Water Treatment Works exceeds the plants’ design capacity.

There is no additional raw water storage capacity, but funding has been received to address water storage capacity problems in Zoar.

Similarly, in Van Wyksdorp, the storage capacity is limited.

The Calitzdorp water supply system is also experiencing problems following the flooding experienced in December 2022.
However, most of these problems have been resolved although there are intermittent water supply disruptions.

4 115 Similar problems also affect the municipality’s sanitation network, with aging infrastructure particularly problematic in Ladismith and Calitzdorp.

The Wastewater Treatment Works in both towns, and in Zoar, have exceeded their design capacity.

The load shedding crisis has exacerbated the problem as the municipality does not have sufficient back up power.
Additional challenges facing the municipality relate to bulk infrastructure, eradication of the housing backlog and upgrading of gravel roads.

In response to inputs by committee members, the Mayor did not agree with the assessment that the current municipal council is dysfunctional.
He agreed with the problems identified but these were attributed to seven years of Democratic Alliance (DA) and African National Congress (ANC) governance, and the illegal constitutional intervention terminated by a court order in October 2021.

The current executive has been in power for only three months and needs to be given space to work.

However, the municipality also wants to solve these problems.
One of the root causes of the municipality’s difficulties relates to the proliferation of acting positions, which the municipality is moving towards abolishing.

The disclaimed audit opinion also came as a shock to the Mayor.

The municipality’s Eskom debt needs to be reviewed, as the amounts allegedly owed are disputable.

The municipality continues negotiating with Eskom as to reach a mutually satisfactory agreement.
The Mayor is uncomfortable with the diagnostic reports compiled from outside the municipality, which the institution is then expected to implement despite having little understanding of the contents.
• Inputs by structures responsible for supporting Kannaland A few months prior to the oversight visit to the municipality, the Portfolio Committee received extensive briefings from the structures responsible for supporting the Kannaland local municipality in terms of Section 154 of the Constitution, including the Provincial Treasury, the Western Cape chapter of the South African Local Government Association (SALGA) and the Provincial Department of Local Government.
Having been again given opportunity to make additional comments, the institutional representatives summarised as follows: Provincial Treasury.

Numerous plans have been presented and the content of these is similar.

The solutions are simple: revenue must be collected fully and management problems should be resolved.

Kannaland has much potential to generate its own revenue to supplement the equitable share.

The real question is the municipality’s willingness to implement these simple solutions.
Provincial SALGA.

Multiple interventions have been instituted to assist Kannaland.

These interventions however should go beyond the technocratic space and permeate the political space.

SALGA is open and willing to assist the municipal political leadership in this regard.

5 116 Provincial Local Government Department.

The Department clarified the legal process it had initiated in relation to the unlawful appointment of an Acting MM whose contract has since been terminated.
The Department’s commitment to supporting the municipality was reaffirmed.

3.

DAY 2: STAKEHOLDER ENGAGEMENTS On the second day of the oversight visit the Portfolio Committee convened a meeting with the Kannaland Local Municipality stakeholders.

Inputs were received from representatives of various local organisations as well as from non-affiliated community members.

Below is a summary of these inputs: Calitzdorp Business Chamber.
The Chamber emphasized the importance of creating an enabling municipal environment for business to thrive, and how this is essential for job creation in Kannaland.

The high crime rate, poor road conditions and increase in the number of street children are not conducive to business growth, especially tourism.

The municipality has been allocating millions of rand to the construction of sports facilities but there is not much evidence on the ground to justify this expenditure.
Zoar Community Property Association.

Speaking on the CPA Chairperson’s behalf, Ms Johnson’s input focused on the Amalienstein farm that is held in trust on the Zoar community’s behalf.

The farm is currently managed by Casidra, a state owned entity, pending the finalisation of a suitable exit strategy for direct state involvement.

The CPA’s main concern is that it is not afforded sufficient opportunity to make inputs on critical decisions regarding the farm.
For example, the farm’s subdivision has been gazetted without any public participation.

The Portfolio Committee was scheduled to visit the farm, but this could not be done due to time constraints.

Griqua Traditional Community.

Chief Jantjies, the community’s representative, emphasized that theirs is an agricultural oriented community.

He lamented the proliferation of crime, increasing school dropout rate, and water problems in Zoar.
Children are not safe, and the small size of state housing is not only a problem in Zoar but the whole of Kannaland.

The community is keen to work with the municipality to advance job creation.

The full potential of the available tourism infrastructure has been underutilised.

Kannaland Business Chamber.

Appreciating the time afforded to engage the municipality, the Chamber noted that approximately 2000 people have left Kannaland due to lack of the requisite infrastructure.
The municipality must urgently look into this matter.

The municipality should also do away with the practice of employing unsuitable people in critical positions.

The Chamber has been enquiring about the municipal organogram for at least two years but has received no favourable response thus far.

The problem that caused a three-day power outage in Calitzdorp, where business lost much money, had been known since 2019 but little was done to avert it.
The sewerage problems in Van Wyksdorp, Calitzdorp and Ladismith were attributed to 6 117 lack of qualified personnel in relation to the installation and maintenance of the electrical infrastructure.

Reliable water supply in Ladismith is essential to preventing the three big factories from leaving the town, which is a real possibility that will have detrimental consequences as the current unemployment rate is already 53 percent.

Van Wyksdorp Rate Payers Association.


Speaking on the Association’s behalf, Mr Strydom indicated that meetings of this nature have previously taken place but the municipality has been unresponsive.

As far back as 2004, the municipality was presented with a report that had a set of recommendations, which the municipality has to date not implemented.
There is an existing waste disposal site in Van Wyksdorp, which the municipality can refurbish and therefore relieve residents from having to travel 50 kilometres to Ladismith to dump waste.

Similarly, there is no reason why the satellite police station in the town cannot be upgraded to a fully-fledged station so that it will not be necessary to travel all the way to Ladismith.

The municipality has provided no feedback on these matters.

South African Police Service Neighbourhood Watch.


Among the issues raised by the SAPS Colonel was the need for funding support to the Neighbourhood Watch and the need for fencing around sewerage works to prevent children from drowning.

The municipality has virtually no traffic services resulting in the police having to do the work of traffic officers.

Road signs are almost non-existent and potholes are a serious problem.
There are no safe houses to accommodate victims of gender-based violence, and the social services department needs to be engaged to resolve this matter.

The lack of recreation facilities has driven the youth to substance abuse and to having drug dealers as their role models.

The Neighbourhood Watch is open to partnerships to address these challenges.
Partnership with the municipality is particularly critical but the political instability and the resulting constant change in political leadership has not been conducive to building a good working relationship with the municipality.

Korana Royal House.

From the House’ viewpoint, the basic maladies afflicting Kannaland are corruption and nepotism.

The municipality has a high resources potential and had it managed this effectively, it is unlikely that the unemployment rate would reach 53 percent.
The water challenges experienced in Kannaland are not new.

They are an old problem which no one is bold enough to address.

The discharging of raw sewerage into fresh water sources is a health risk and a ticking time bomb.

The political leadership is failing Kannaland’s people.

• Inputs from non-affiliated community members First speaker.

The most pressing priority in Zoar is water provision.

Zoar councillors have a tendency to disappear after elections.
They are mainly interested in themselves and their families.

There is a case of a contractor whom the municipality has awarded a new contract despite having failed to complete previous projects and absconding with municipality’s advance payments.

The speaker hoped that the new council will listen to the people’s concerns.

7 118 Second speaker.

Hailing from Ladismith, the speaker informed the meeting that as residents they are subjected to both water shedding and load shedding.
A question was raised around the municipality’s recruitment practices, particularly the status of Director: Community Services and Director: Technical Services.

An update regarding the Acting MM’s implication in a R300m fraud court case was requested.

The speaker alleged nepotism in the appointment of the Acting CFO as the latter was allegedly related to the Speaker of Council.
Kannaland has a bank balance of only R852 000 due to imprudent financial practices such as the renting of a honey sucker from the Oudtshoorn municipality for the exorbitant amount of R400 000 and payment of salaries backdated to five months.

The extent of fuel usage by the municipal vehicle fleet was also queried.

Third speaker.

The speaker’s business in Calitzdorp employs more than 20 people.

The water supply in the town is in crisis and the available water is not fit for human use.
This affects the sustainability of business negatively.

Calitzdorp often functions without power up to three hours after load shedding.

No one wants to stop in Calitzdorp due to its bad road conditions.

Kannaland is not business friendly and not much is being done to attract investors.

The municipality needs to develop a plan to support business.

The previous administrations have been engaged on this.
Foreigners are trading illegally as 32 of their shops operate in areas that have not been zoned for commerce.

The municipality is not engaging business adequately, and business cannot function without the municipality’s cooperation.

No helping hand was extended to business during the December Calitzdorp flood crisis.

With business, infrastructure and the social fabric collapsing, Kannaland is on its last breath.

All must sit down together and devise a workable solution.

Fourth speaker.
Fourth speaker.

The speaker’s main concern was lack of access to land and water for agricultural purposes.

Storage tanks are needed to collect water during high rainfall periods and more land needs to be availed for farming.

Farming is the life blood of many of those born in the area.

Fifth speaker.
Fifth speaker.

Identifying himself as an ANC member, the speaker demanded a stop to the suspension of municipal officials, appointment of unqualified people, payment of salaries despite work not being done, and payment of excessive allowances.

Sixth speaker.

Employed as a supervisor in the Community Work Programme (CWP), the speaker felt disturbed by the allegation that Expanded Public Works Programme (EPWP) workers are lazy and do not want to work.
The speaker is happy to be a CWP worker, loves to work and wants to work with the municipality.

The municipality’s housing policy is inconsistent because in Zoar those who cannot afford houses cannot erect shacks, while this is allowed in the other towns.

8 119 Seventh speaker.

As part of the Griqua people, the speaker was concerned that the land question in the Little Karoo has never been settled.
Furthermore, there are many dams and yet many people are experiencing water shortages because the dams are privately owned.

Eighth speaker.

The speaker noted that the community is never given feedback after sessions like these.

There are various community channels that can be used for this purpose including Non-Governmental Organisations (NGOs).

Agriculture was once again emphasized as a critical source of the community’s livelihood.
While there are many programmes targeted at assisting small scale farmers, these do not often reach the intended beneficiaries.

Commercial farmers sometimes receive funding meant for small scale farmers.

The speaker would welcome feedback and the proposed way forward on the issues raised.

Ninth speaker.

The municipal leadership cannot do its work, and this should be clear to the national and provincial governments.

The leadership’s interest is not the community.


The speaker appealed to the national Department of Cooperative Governance to dissolve the current leadership.

Tenth speaker.

The speaker mainly lamented the fact that people have to come from outside to debate Zoar’s issues as opposed to allowing the locals to solve their own problems.
• Municipality’s responses to stakeholders’ inputs The Speaker protested that the stakeholders were not representative of the Kannaland community and appealed to the Portfolio Committee to look into this.

The political instability in the municipality is a local problem that needs a local solution.

External policies should give way to internal interventions.

The Mayor once again pleaded ignorance regarding the former Acting MM’s history of financial misconduct.
On the allegation that that his girlfriend benefitted from a R150 000 pay out, the Mayor indicated that he had a wife and a marriage certificate and not a girlfriend certificate.

The Mayor acknowledged that community members made good inputs and has listened to these.

A number of issues have come to his attention.

He has been in the mayoral seat numerous times but has never once finished a term except during the 2011-2016 local government term.

The importance of a stable council was therefore stressed.
The Mayor visits Calitzdorp every Wednesday to deal with the critical issues affecting the town.

People from Ladismith and Zoar visit the Mayor’s office almost every day.

Though in government for only three months, the Mayor has made great strides in terms of finding common ground with the police and the Khoi-San community.

Cultural factors need to be factored in decision making.

He is also resolved to start personal interactions with the Business Chambers.
The major problem he has identified in Zoar relates to water supply and he will be coming back to the community to deal with this matter.

The Mayor will not retaliate 9 120 against those who spoke against him but will go back to the drawing board.

His motto has always been to stand, plan and work with and for the people.

The Mayor expressed gratitude for the Portfolio Committee’s oversight visit and affirmed their determination to have a stable government for the full term.
The Mayor also thanked the community stakeholders for their participation in the meeting and acknowledging their critical importance in resolving Kannaland’s problems.

4.

DAY 3: SITE VISITS The Portfolio Committee concluded its oversight programme by visiting the following additional sites: Upgrading and refurbishment of Van Wyksdorp Waste Water Treatment Works.
This project is aimed at enabling the municipality to comply with the Green Drop requirements for the Wastewater Treatment Works by bringing the works to a fully functional state.

In this state, the works will be able to accommodate the current and future predicted flows to relieve the bottlenecks in the plant system, which prevent the discharge of good quality effluent.
The project scope includes installation of new flow meters at the works’ inlet and outlet; construction of an adequately sized and designed overflow system; construction of a bypass weir next to the inlet channel to divert flows exceeding a particular limit to the overflow system to avoid overtopping of the inlet channel; installation of an additional train/module, inclusive of septic tank, bio-reactor, clarifier/humus tanks and disinfection tanks to accommodate projected flows; inspection and replacement of missing fittings for all tanks; installation of pipes for emptying the bio-reactor to prevent bulging; installation of two new pumps to pump wastewater from the septic tanks to the bio-reactor tanks; replacement of the faulty generator at the plant; installation of roofs above the tanks to protect them from sunlight; installation of lights around the site and the building of office and storeroom facilities.
MIG contribution to the first phase of the project, which is due for completion by 30 June 2023, amounts to R1 033 087.00.

This phase is expected to have commenced by 01 March 2023.

No expenditure had yet been incurred at the time of the oversight visit.

On the other side of the works, the Portfolio Committee observed a food garden project run by a private non-profit organisation (NPO) known as the Van Wyksdorp Development Institute.
The Committee was concerned by the indication that the municipality is not involved in this project, and encouraged the Mayor to follow up on this matter.

Informal settlement in Van Wyksdorp.

Seven years ago, the Mayor had acceded to the use of the land for informal settlement.

To the Mayor’s surprise, some residents are now keeping large pigsties right next to the informal houses.

This was deemed unacceptable and a disgrace to the Mayor and the municipality.
People must as soon as possible decide who, between them and the pigs, should move.

None of the houses in the settlement have access to any sanitation and 10 121 ablution facilities.

The municipality is not coming forth with funding to address the matter.

The fact that the area has not been formally proclaimed as a township presents serious constraints in terms of attracting government funding.
The municipality’s Spatial Development Framework (SDF) has not been updated since 2011 due to lack of expertise.

This is due to the fact that the municipality has no town planner.

Ladismith Wastewater Treatment Works.

The Business Plan for the works’ upgrading was approved in 2016.

The upgrading is needed because the works’ current load exceeds its design capacity.

Funding to the amount of R15m from the Division of Revenue Act (DORA) has been promised, but this has not yet materialised.
The municipality has a balance of only R400 000 earmarked for the project and has so far sent out requests for quotations (RFQs).

The network around the works also needs upgrading, but only the main plant has been approved.

Zoar Wastewater Treatment Works.

The works is currently discharging into the river and is up for upgrade to the value of R12m.

The funding source is the MIG and the money will be disbursed in two tranches of R6m in 2022/23 and in 2023/24.
Project implementation for the 2022/23 financial year is set to commence on 01 March 2023 and the first tranche will be spent by 30 June 2023.

The Municipal Infrastructure Support Agent (MISA) is assisting the municipality with the project’s technical specifications.

Nineteen temporary employment opportunities are envisaged.

The municipality has applied deviation in terms of its Supply Chain Management Policy as to fast-track project processes.

Calitzdorp Water Treatment Works.


This was the last project visited by the Portfolio Committee.

Calitzdorp had experienced water supply problems in December 2022 due to flooding.

The works, which is the second biggest after the Ladismith Water Treatment Works, experienced line blockages and was not equipped to handle the overflow.

Most of the problems have since been resolved, but load shedding presents a serious challenge as it has increased the costs of back-up power.

5.
5.

COMMITTEE OBSERVATIONS Having listened to inputs by Kannaland’s political and administrative leadership and the municipal stakeholders, and having undertaken site visits to critical infrastructure projects around the municipality, the Portfolio Committee noted the following: 5.1.

The lack of female representation in the political executive, and to some extent the administrative leadership, of Kannaland is a cause for concern, as both structures are entirely male-dominated.

5.2.
5.2.

The appointment of an Acting Municipal Manager without due regard to his implication in serious fraudulent conduct raises doubt as to the municipality’s genuine commitment 11 122 to fight malfeasance.

Had there been ethical leadership, the Acting MM would have stepped aside until his name was cleared.

5.3.
5.3.

The municipality is financially constrained, as evident in the adoption of unfunded budgets and the disclaimed audit opinion, and yet it persists with the employment of excess staff in the political offices.

5.4.

The absence of Local Economic Development and Youth Development policies and plans in the municipality is unacceptable as these are critical pillars to the economic and social development of Kannaland.

5.5.
5.5.

The municipality is at risk of going back to constitutional intervention if nothing is urgently done to reverse the current downward trajectory.

5.6.

The municipality’s organogram has been under review for the past three years with no definite indication as to when this process will be finalised.

5.7.

The municipality’s repayment plan for Eskom debt has had no effect as the amounts owed to the entity have kept increasing.

5.8.
5.8.

Up to a year ago, the Ladismith landfill site was not compliant with environmental regulations and it is surprising that the site has now suddenly become compliant.

5.9.

There is a communication gap between the municipality and the community.

The Speaker is by law expected to ensure full community participation in the municipality’s day-to- day affairs.

It was therefore ill-advised of him to question the community stakeholders’ representativeness.

5.10.
5.10.

The Speaker and the Mayor did not respond adequately to the issues raised by the community stakeholders.

They allowed a junior municipal employee to engage in politicking.

The responsible Director also did nothing to stop him.

6.

COMMITTEE RECOMMENDATIONS 6.1.
Within fourteen days of the adoption of this report, the Kannaland Local Municipality should furnish the Portfolio Committee with: - A report on the qualifications, and the corresponding salary scale, of each municipal staff member; - A detailed project report relating to the Ladismith Sports facility, including project scope, funding and project timeframes; - Proof that the Ladismith waste disposal site is a licensed facility; 12 123 - The quantum of the litigation costs incurred due to political infighting among councillors; - Outcome of the promised investigation into alleged irregular payment of bonuses in November 2022; - A clear plan of what the municipality will do to address the situation in the Van Wyksdorp informal settlement; - A copy of the Master/Business Plan for the upgrading of the Ladismith Wastewater Treatment Works 6.2.
The Portfolio Committee should follow up with the Portfolio Committee on Agriculture, Land Reform and Rural Development regarding Casidra’s apparent failure to involve the Zoar Community Property Association on critical decisions relating to the Amalienstein farm.

6.3.

The municipality must attend to the traffic law enforcement issue as raised by the representative from the South African Police Service.

6.4.
6.4.

The Portfolio Committee and the Department of Cooperative Governance should follow- up on all the commitments made by the Kannaland Mayor, as well as investigate the allegations levelled against him.

6.5.

The MEC for Local Government in the Western Cape should consider instituting an investigation into the Kannaland local municipality in terms of Section 106 of the Municipal Systems Act (2002).

6.6.
6.6.

The municipality should prioritise the official proclamation of the Van Wyksdorp informal settlement area as a township.

Report to be considered 13 124 5.
REPORT OF THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON OVERSIGHT VISIT TO SOL PLAATJE AND PHOKWANE LOCAL MUNICIPALITIES 28 MARCH – 01 APRIL 2023, DATED 21 APRIL 2023 Having conducted an oversight visit to the Sol Plaatje and Phokwane Local Municipalities under the Frances Baard District in the Northern Cape, from 28 March to 01 April 2023, the Portfolio Committee on Cooperative Governance and Traditional Affairs reports as follows: Delegation: NAME Hon F.D.
Xasa (Chairperson) Hon D. Direko Hon X. Msimango Hon G.G.

Mpumza Hon B. Hadebe Hon P. Xaba-Ntshaba Hon E. Spies Hon G. Opperman Hon H. Mkhaliphi Hon Shadrak Tlaule (Provincial Legislature Member) POLITICAL PARTY African National Congress Democratic Alliance Economic Freedom Fighters Support Staff: NAME Ms. Shereen Cassiem Mr. M Dumezweni Mr. Andile Sokomani 1.
INTRODUCTION DESIGNATION Committee Secretary Committee Assistant Content Advisor The Portfolio Committee on Cooperative Governance and Traditional Affairs has resolved that over its current term of office in Parliament (2019-2024) it will intensify oversight over all the organs of state relevant to its mandate, in line with the intent of Parliament’s 2019 -2024 Strategic Plan.
This approach is the Committee’s strategy to confront the deteriorating state of local government in the country, and encourage public participation in the affairs of local government as envisaged in Section 152(1)(e) of the Constitution.

125 The 2020/21 Municipal Finance Management Act (MFMA) audit outcomes have highlighted several municipalities that have received consecutive disclaimed audit opinions despite being under constitutional intervention.
A disclaimed audit opinion is the worst opinion a municipality can obtain.

These municipalities are also subject to investigation by the Auditor-General regarding material irregularities identified in the course of audit.

Not surprisingly, these municipalities are also among the 64 municipalities that have been identified as dysfunctional by the Department of Cooperative Governance’s 2021 State of Local Government Report to Cabinet.
These municipalities are: • Northwest: Kgetlengriver, Madibeng, Naledi, Ditsobotla and Ramotshere Moiloa.

• Northern Cape: Phokwane, Sol Plaatje, and Renosterberg.
• Mpumalanga: Lekwa • KwaZulu-Natal: Nquthu and Ilanga Libalele • Eastern Cape: Makana • Western Cape: Kannaland • Limpopo: Lepelle-Nkumpi The Portfolio Committee has resolved to conduct intensive oversight visits to these municipalities, with Makana, Lekwa, Kannaland, Lepelle-Nkumpi, and the listed municipalities in the North-West having been thus far visited or engaged virtually.
The Phokwane and Sol Plaatje Local Municipalities, which are the subject of this report, have also attained a dysfunctional status due to chronic political instability.

The Committee’s oversight visit to these municipalities is a follow-up on the virtual engagements held on 16 March 2021.

2.
DAY 1: ENGAGEMENT WITH STRUCTURES RESPONSIBLE FOR SUPPORTING PHOKWANE AND SOL PLAATJE LOCAL MUNICIPALITIES • Joint presentation by Provincial COGHSTA and Treasury The Portfolio Committee received a briefing from the Northern Cape Department of Cooperative Governance, Human Settlements and Traditional Affairs (COGHSTA), focusing on the state of performance by Sol Plaatje and Phokwane Local Municipalities, compliance with legislation, progress with implementation of Financial Recovery Plans (FRPs), and support provided in terms of Section 154 of the Constitution.
The Department confirmed that both municipalities were still classified as dysfunctional as at 31 January 2023.

However, efforts are underway to move Sol Plaatje out of the dysfunctional category following the recent 2 126 improvements witnessed.
In bid to move the province’s 16 municipalities out of the dysfunctional status, the Department – in partnership with Treasury and the South African Local Government Association (SALGA) – has developed Municipal Support and Intervention Plans (MSIPs), which have been tabled and approved in the Councils.
Regarding the state of performance, the Department compared the status quo in June 2021 when the State of Local Government Report was released vis-à-vis the status quo as at 28 February 2023, with emphasis on the political, governance, administrative, financial management and service delivery performance pillars.
The following milestone were highlighted: Sol Plaatje: Politically, the municipality is now more stable and relations with labour unions have improved, although the employment of contract workers remains a sore point.

In terms of governance, the Department noted that the Chief Financial Officer (CFO) and the Municipal Manager (MM) who were previously put on precautionary suspension in connection with a Section 106 Report, have since been reinstated following a court ruling which set the report aside.
Council is now exercising oversight and a consequence management policy is in place.

Ward Committees have been inducted.

Performance agreements with senior managers have been concluded, although performance evaluation remains a challenge.

On the administrative front, the relevant policies and procedures are in place, which is indicative of compliance with legislation.

A new MM assumed duty on 01 August 2022.

Key vacant positions have been advertised.


In terms of financial management, the municipality now has a funded budget although it remains unsustainable due to low revenue collection.

Work is underway to assist the municipality with revenue enhancement.

The municipality remains stagnated on qualified audit outcomes since the 2017/18 financial year.
to the frequent sewer spillages), The municipality’s service delivery performance has been constrained and hampered by aging illegal electricity infrastructure (which contributes connections, unspent conditional grants, poor roads maintenance, and vandalism of infrastructure especially electrical cables at pump stations.
Assistance with implementation of key projects to resolve the issues bedevilling the municipality is being received from the Municipal Infrastructure Support Agent (MISA), the Department of Water and Sanitation, and Public Works.

Consequently, the severity of sewer spillages has been abating.

A substantial amount of work in terms of Section 154 of the Constitution has been recorded, including support from SALGA in the area of non-revenue water.
Phokwane: Politically, the municipality remains under intervention in terms of Section 139(5) of the Constitution.

In terms of governance, the municipality remains affected by senior management vacancies, which have resulted in the proliferation of acting appointments.

All vacant senior management positions have been advertised.

Council committees are meeting and ward committees have been established and inducted.
Administratively, there has been a 3 127 regression following the Administrator’s exist after the lapsing of the Section 139(1)(c) intervention.

In relation to financial management, Treasury has deployed a municipal finance advisor and the Municipal Public Accounts Committee (MPAC) has been trained on dealing with Unauthorised, Irregular, Fruitless and Wasteful Expenditure (UIFWE).

A UIFW reduction strategy is in place and council routinely takes action on the MPAC’s recommendations.
The municipality has adopted a budget funding plan and the implementation of the FRP is ongoing.

A CFO is envisaged to be appointed by 01 July 2023.

The municipality’s debt collection remains below the accepted norm and this has had a ripple effect on the municipality’s ability to repay its Eskom debt.

In terms of service delivery, an improvement in conditional grant expenditure has been noted.
The DWS has released some funding for the rehabilitation of pump stations to address the municipality’s sewer spillage crisis.

The Community Work Programme in the municipality is active.

• Presentation by Auditor General’s (AG) Office Sol Plaatje: Representatives from the AG’s office briefed the Portfolio Committee on the municipality’s audit context before the appointment of the current MM.

The municipality’s stagnation on qualified audit opinions over the last five years was re-emphasized.
The municipality’s cash flow difficulties, and the consequent negative impact on service delivery, were highlighted.

The municipality’s audit finding paragraphs have been increasing, from four paragraphs five years ago to 15 paragraphs recently.

With regard to the latest audit outcome available (2021/22), the municipality’s indicators were found to be not well-defined and did not meet the measurability criteria.
Over the last five years, irregular, wasteful and fruitless expenditure has been growing exponentially.

The AG’s office has identified a Material Irregularity (MI) in respect of the municipality’s Eskom debt.

Phokwane: The municipality was noted for its persistent late submission of Annual Financial Statements (AFS) to the AG for auditing.

This presents difficulties with regard to holding the municipality into account for its financial and non-financial performance.
A material irregularity has been issued in respect of the late submission of AFS.

In the last year in which the municipality was audited (2020/21), it had improved from a disclaimed to a qualified audit opinion as the number of qualification areas have reduced.

Notwithstanding this improvement, the internal control environment remains ineffective and this affects the addressing of prior year findings.
Due to lack of the requisite skills, the municipality remains over-reliant on consultants for the preparation of AFS.

In this regard, in 2020/21 R1.8m was paid to consultants for the preparation of AFS.

The municipality has also not always been compliant with the legislative requirements for the submission of Annual Reports.

There is no reliable system in place to report on performance indicators.
Consequence management in respect of transgressions relating to 4 128 fruitless and wasteful expenditure is lacking.

The disclosed figures on UIFW are unreliable as they are likely to be understated.

Investigation is not always conducted to determine liability for the UIFW.

The municipality’s financial health is a concern as its expenditure exceeds its revenue.
• Presentation by the National Department of Cooperative Governance and the Municipal Infrastructure Agent (MISA) The Department briefed the Portfolio Committee on progress in the implementation of the District Development Model (DDM) in the Northern Cape province and in the Frances Baard District.

Failures to submit the DDM One Plans and lack of common understanding around the DDM concept were highlighted as major areas of concern.
MISA’s input focused on the project implementation support offered to Sol Plaatje and Phokwane, which ranged from green and blue drop interventions, electricity cost of supply to Municipal Infrastructure Grant (MIG) projects.
• Presentation by the National House of Traditional and Khoi-San Leaders Having appreciated the Portfolio Committee’s invitation, Kgosi Mabe from the National House of Traditional and Khoi-San Leaders highlighted the House’ interest in the work of municipalities throughout the country and how it is performed.

The importance of including traditional leaders in the development of the municipality’s Integrated Development Plan (IDP) was emphasized.
Municipalities were failing because they were not being actively held into account at grassroots level.

An appeal was made for the provincial government to ensure that traditional leaders are capacitated to engage municipalities fruitfully.

Legislation should be crafted in such a way that synergy between contributions by traditional leaders and municipalities is encouraged.
• Presentation by the Northern Cape Provincial House of Traditional and Khoi-San Leaders The Chairperson of the Provincial House of Traditional and Khoi-San Leaders informed the Portfolio Committee that there is full participation by traditional leaders in municipal councils and that the leaders are also included in the IDP process.

There were no major areas of concern from the Provincial House.
• Presentation by SALGA The Association highlighted the support provided to Sol Plaatje and Phokwane around communication, capacity-building, records management training, holistic review of applicable legislation, municipal profiling, and professionalization of the local government sector.

The Association is also working in partnership with the Public Affairs Research Institute (PARI) in 5 129 relation to a four-year project to support Sol Plaatje.

The inception date for this project was January 2022.
The presenter was not available to answer questions and left the Committee meeting without tendering an apology.

The Committee took exception to this behaviour.

• Presentation by the Frances Baard District The District is unable to provide meaningful support to Sol Plaatje as its budget is much smaller than that of the local municipality.

Most of the District initiatives are therefore channelled towards the much weaker local municipalities of Magareng, Phokwane and Dikgatlong.
In terms of governance, the District’s council committees are functional.

Administratively, the filling of vacant positions has been a struggle for the District, although the position of the MM has since been filled.

A level of political instability in Phokwane, including motions of no confidence against the Mayor and Speaker, was noted.

The District welcomes the political stability seen in Sol Plaatje.
Two of the District’s core functions, namely environmental health services and disaster management, were outlined.

The District took over the health services function, which was previously performed by the local municipalities.

However, Sol Plaatje continues to execute this function as the District cannot compete with the remuneration offered to the health officers owing to the local municipality’s higher grading and District’s grant dependence.
The District’s other core function, disaster management, involves the administration of a contingency fund across the four local municipalities under its jurisdiction.

However, this fund gets depleted frequently.

As part of its support, the District has bought skips and trucks for Sol Plaatje.

Pothole problems, in respect of both Sol Plaatje and Phokwane, were highlighted.
• Presentation by the Sol Plaatje Local Municipality The municipality’s input focused on institutional capacity, political composition, functionality of Section 79 and 80 Committees in terms of the Municipal Structures Act, post-audit action plan implementation, revenue collection, consequence management, states of municipal health services and disaster management, and key highlights in terms of current projects.
The municipality had just concluded a strategic planning session whose resolution was to, among other things, prioritise service delivery.

A strategy to curb the high unemployment rate, particularly the 52 percent youth unemployment rate in the municipality, will be devised.

The municipality’s supply chain management processes have improved due to the introduction of better internal controls, including the establishment of a financial misconduct committee.
The new MM has already sanctioned three municipality officials in connection with procurement irregularities.

The municipal council is functioning optimally as meetings are taking place.

Section 79 and 80 Committees have been established and are functional.

The tensions between the municipality and its communities have subsided following the execution of the IDP consultation process in 6 130 all the 33 wards.

While most ward committees are functional, there are still those that do not work as expected.
Since appointment of the new MM, the municipality has experienced no major labour unrest.

A post-audit action plan in respect of the 2021/22 audit report has been developed and submitted to National Treasury.

The root causes for the stagnation in qualified audits, and the disclaimer on predetermined objectives, have been identified and a remedial action plan has been developed.

One of the major recurring audit issues relates to asset management.
Part of the remedial action plan included the appointment of an IDP Manager in January 2023 to address some of the issues around inadequate portfolio of evidence.

The position has been vacant for seven years but it took the new MM only a few months to fill it.

The municipality has also requested the AG to introduce a pre-audit trial run as to address identified problem areas timeously.
An audit action plan committee has been established and meets weekly to deal with the audit matters raised in the previous financial year.

An internal audit unit and an audit committee have been established.

With regard to revenue collection, the municipality is supposed to collect at least R10m a day, but there are days when R4m is barely collected.

This is indicative of a serious cash flow problem, which has rendered the municipality technically bankrupt.
Approximately 16 000 households are not in the municipality’s billing system, which significantly contributes to the revenue collection problem.

The municipality has an indigence policy in place and continues to encourage qualifying people to register as indigents to ensure that the right households are billed.

The national load shedding has also reduced the municipality’s income by eight percent.

Thus the municipality is far short of the Treasury revenue collection norm of 95 percent.
While water losses have been reduced from 65 percent to 50 percent, this remain a critical issue for the municipality especially the widespread water metre theft, which exacerbates the problem.

Electricity losses also remain high and work to address this problem is under way.

Although the municipality’s budget is funded, National Treasury has deemed it ‘artificial’ while Provincial Treasury has advised that it is unsustainable.
The payment of Eskom’s current account has improved and negotiations will soon commence regarding the writing off of some of the historical debt.

The priority, however, is to manage the current account optimally.

The previous default occurred when the municipality had to prioritise the payment of performance bonuses in December 2022.

The municipality is also enforcing credit control by switching off non-paying customers including government departments, and even the provincial legislature.
The 2023 Budget Speech announced an allocation of R2.5bn to be disbursed to the municipality over a four-year period to address some of its key service delivery challenges.

This is expected to yield at least 1000 jobs.

The grant comes with strict conditions and there is a risk that it may be returned to the national fiscus if not managed and implemented properly.
The fact that the municipality has never been in charge of such a large budget before, coupled with the dismal management of projects over the last five years, renders the risk of this implementation 7 131 challenge very real.

The municipality has noted the Portfolio Committee’s concern around senior management vacancies and has a plan to fill all vacant positions.
The Executive Mayor also expressed his commitment to implementing consequence management and his wish to distinguish himself as the country’s youngest incumbent do so.

While the people observed loitering in the municipal passages were not municipal employees but community members coming to consult with their councillors, the Executive Mayor agreed that the municipality has an employee discipline problem, which was flagged as a major issue of strategic concern during the recent strategic planning session.
The review of the municipality’s organogram to deal with the bloated organisational structure is also central to the municipality’s current priorities and the Portfolio Committee’s concern in this regard was noted.

Contributing to the problem was the absorption of some contract workers in the municipality’s organogram at the unions’ insistence.
While the municipality’s salary bill is 35 percent of the total operating budget, and therefore within the Treasury norm of 40 percent, it is still high when benchmarked against similar secondary cities such as the George Local Municipality whose salary bill is 25 percent of the total operating budget.

The Executive Mayor further acknowledged the municipality’s high unemployment rate, and its correlation with the high rate of crime within its jurisdiction.
The municipality needs to be turned around and this exercise will not be easy and will require a bit of madness as opposed to the business as usual approach.

• Responses to inputs by Portfolio Committee members The MEC for COGSHTA in the Province, Mr Bentley Vass, noted that the Department has sound relations with traditional leaders despite the burning challenge of ‘tools of trade’, which is being discussed in various fora.
Invitations are always extended to traditional leaders to be part of these discussions.

Scarcity of financial resources is constraining the Department from responding to this challenge optimally, as the Equitable Share allocation is currently not biased towards the Northern Cape.

However, the Department would not want to hide behind this.

Much has been done to ensure that all traditional leaders have access to tools of trade.
State housing has been allocated to the Chairperson and Deputy Chairperson of the Provincial House of Traditional and Khoi-San Leaders.

Work around the accommodation of Khoi-San leaders and communities in the country’s institution of traditional leadership is underway.

This is a critical task as approximately 80 percent of the country’s Khoi-San are located in the Northern Cape.
The Department has on many previous occasions responded to the matter of R500m allocation to Sol Plaatje by the Office of the Premier.

The R500m was not a cash transfer but an indirect allocation to fund various projects of this total value, not just potholes.

A detailed breakdown of how the money was spent was provided to the provincial Legislature.

The Department will also provide this breakdown to the Portfolio Committee.
The Portfolio Committee’s concern around the high vacancy rate in senior management positions was noted and supported.

The 8 132 Department has also been emphasizing this matter and has set the end of May 2023 as the deadline by which all vacant senior management positions in municipalities in the province must be filled.

The appointment rate is currently sitting at 64 percent and there are several positions being advertised on newspapers.
The Department is confident that the matter of non-compliance with the legislated deadline for the submission of AFS will not repeat.

Eskom debt is also a matter of serious concern for the Department Regarding unemployment, the MEC for Provincial Treasury observed that the Northern Cape’s 22.1 percent unemployment rate is the lowest in the country, when compared to other provinces.
Nevertheless, job creation remains a serious consideration for the province, which is in the process of unlocking several catalytic projects that are expected to yield over 40 000 job opportunities over the next few years.

Provincial Treasury is prepared to furnish the Portfolio Committee with a detailed report in this regard.

Sol Plaatje’s unsustainable budget relates to the challenges around revenue collection.
The province takes the issue of municipal Eskom debt seriously, with the Premier leading the efforts to resolve the problem.

This remains a difficult problem for the province to resolve.

Regarding the province’s litigious environment, the MEC clarified that municipalities are most often the initiators of the court action against provincial government.
On the Sol Plaatje Section 106 Report which the court set aside, it was indicated that the provincial government did not comply with the requirement to make the process public and swear in witnesses, as envisaged in the Commission’s Act of 1947.

The technical demands for implementing Section 106 of the Municipal Systems Act are becoming more exacting such that adhering to these stringently will require replicating the procedure followed by the Zondo Commission of Inquiry into State Capture.
On the salary disparities between middle and senior managers in the Frances Baard District where the former earn more than the latter thus making it difficult to attract senior managers, it was indicated that a remuneration committee has been established to resolve this matter.
The District Mayor lamented what she perceived to be a lack of correlation between the national fiscal allocations to local government and the realities municipalities face, as to accommodate the fact that the functions of other departments interface with local government.

3.
3.

DAY 2: ENGAGEMENT WITH SOL PLAATJE COMMUNITY STAKEHOLDERS AND SITE VISITS • Stakeholder engagement The Portfolio Committee received inputs from the Chief Executive Officer (CEO) of Beef Master, an association of beef exporting companies; a former ward councillor and community member from Ward 23; a representative from the Frances Baard Business Forum; a community 9 133 member from Ward 4; the CEO of the Northern Cape Chamber of Commerce; and a representative from the Sol Plaatje Ratepayers’ Union.
Beef Master.

The company CEO, Mr Louw van Reenen, expressed his gratitude for the opportunity to address the Portfolio Committee.

He described Beef Master as a small group of South African companies that produce and export beef internationally.

In Kimberly alone the business employs approximately 700 people.

While the business primarily competes in the international beef export market, it also sells to retail stores domestically and serves both high income and low income areas equally.
The business is making a significant contribution to the country’s urban and township economies and does so without any political motivation.

It has supported the whole spectrum of community groupings within the Sol Plaatje locality and the meat business has made it easy to do so.

The world market, however, dictates the business’ main experience.
In this regard it is becoming increasingly difficult for the business to compete against peer countries such as Brazil’s beef export industry, which, through the aid of government subsidies, is currently the world leader in the market.

The South African government provides no similar incentives for the local beef producers and exporters.

Beef Master is keen to work cooperatively with the municipality but is also cognisant of its dire financial straits.
From a business point of view, it is difficult to see how an institution that owes R800m to its creditors can survive.

Kimberly cannot attract new business as it is currently the most expensive city to do business due to the high electricity costs.

The first death knell for business was sounded in 2012 when the National Energy Regulator of South Africa (NERSA) approved a 50 percent electricity tariff increase for Sol Plaatje.
Beef Master’s key motivation is to make a positive contribution in Sol Plaatje but has observed a tendency to ascribe political motivation to business’ legitimate concerns.

As part of its efforts to make a positive contribution, Beef Master has previously entered into a deal with the municipality to address the public relations disaster following media coverage of blood-tinged sewer spillage.
The company bought the necessary equipment to bring the dysfunctional sewage plant back to its functional state, but the municipality did not pay back.

The municipality’s central problem is financial and a strong committee is needed to run the municipality’s financials.

While the new MM is excellent, the municipal financial environment poses a major constraint to his efforts to bring positive change.

Parliament’s intervention in this regard is much needed.

Ward 23 community member.


The community member introduced himself as Phillip Vorster and a former ward councillor.

The resident lamented the lack of political will to fix the municipality’s sewage problem.

The Sol Plaatje community has not derived much benefit from the R145m upgrade to city’s main Waste Water Treatment Works, as this facility has never 10 134 managed more than two years of uninterrupted functionality.
Pumps and cables are routinely stolen and the facility has been beleaguered by staffing problems.

Municipal employees are 40 percent too many and employment is merely for the sake of getting people jobs rather than advancing service delivery.

The five-member leak fixing team, for instance, would not proceed to work if one of the members calls in sick.

Businesses are leaving Kimberly as they are not getting any joy from the municipality.
The deal with Beef Master to fix the sewage crisis was never tabled in council.

At the root of the municipality’s financial woes is mismanagement of funds.

Not even two percent of the municipality’s capital budget is spent on maintenance and repairs, thus far below the Treasury norm of eight percent.

Frances Baard Business Forum.


Having welcomed the opportunity afforded by Parliament, the Forum’s representative lamented the lack of public participation and community involvement in the municipality’s affairs.

The lack or non-enforcement of by-laws relating to the operation of informal businesses by non-South Africans was raised as a major concern.

Locals could not benefit from the COVID-19 relief fund as the space had been taken over by foreign nationals.
While locals plough the profits back to the community, it is not known where the foreign nationals invest their money.

Engagements with the MM on this matter have been dismal.

The municipality does not give preference to local businesses, opting instead to award a large share of its procurement budget to companies from outside the province.

The lack of a stakeholder engagement policy makes it difficult for local business to have a meaningful working relationship with the municipality.
The municipality’s Local Economic Development (LED) component is also not serving the interest of local business.

Ward 4 community member.

The resident informed the Portfolio Committee that she had been waiting since her child was in primary school to obtain residence and to have her own residential address.

Her child has since grown and graduated from high school and she is still without formal residence.

The resident appealed to the Portfolio Committee to intervene on her behalf.
Northern Cape Chamber of Commerce: Led by the CEO, Ms Sharon Steyn, the Chamber expressed gratitude for the opportunity to express its distress with the Sol Plaatje municipal state of affairs.

The Chamber represents over 400 businesses in Kimberly but receives no support and service delivery from the municipality.

Some businesses do not pay rates and the municipality needs to deal with these.
The municipality does not support local business as 80 to 90 percent of the tenders are awarded to companies from outside the province.

Local business takes the second or third place and tender nepotism is rife.

At 36 to 37 percent, the municipality’s unemployment’s rate is a serious cause for concern.

The municipality’s pothole and sewerage problems are a disgrace.

Questions remain around whether the Treasury allocation to address the water and sewerage problems will be used correctly.
11 135 The unexplained nightly water shutdowns provide no incentive for business to come to Kimberly.

The municipality has nothing to offer business.

A one-on-one discussion between the municipality and business on these matters is needed.

However, it is impossible to initiate such a discussion when the municipality’s phone system does not accept incoming calls.

There is much work to be done to return Kimberly to its former state.

Sol Plaatje Ratepayers Union.


The Union representative noted that the challenges in Sol Plaatje are not new and have been in existence for many years.

The challenges are numerous and narrating all of them would take a larger part of the day.

Many of these challenges have their distinct origin from the 2011/12 financial year.

The municipality is worth R2.6bn on paper, but in practice it is far less than that.

Electricity losses are in excess of R100m as lights are not fixed.
The majority of the city’s electricity users are prepaid customers, and this should make it possible for the municipality to be up to date with Eskom debt repayment.

The municipality’s repayment difficulties suggest that it is prioritising payment of salaries over Eskom debt.

The people responsible for the municipality’s chaotic state are no longer in charge and the new leadership is capable of bringing positive change.

Parliament needs to step in urgently and provide the necessary support.
• Response by the municipality On the municipality’s allegedly high electricity costs, it was indicated that Sol Plaatje was the only municipality in the country that did not implement the 7.5 percent tariff increase and opted instead for 4.5 percent.

This has cost the municipality R20m in lost revenue.

Sol Plaatje was also the only municipality that did not increase water tariffs.

The Beef Master matter came to council’s attention after the work had already been concluded.
The deal with the company therefore happened without council decision and the matter is currently serving before the MPAC.

The municipality is also considering a forensic investigation into the matter.

Kimberly’s main Waste Water Treatment Works has not been operational over the last four years and the municipality has fixed this.

The allegation that key Plant personnel do not have the requisite skills and competencies is incorrect.
Cable theft has been a serious problem in the past but the municipality has since addressed the matter.

The municipality agreed that its staff complement is excessive.

The organogram will be reviewed and positions that do not contribute substantively to the organisation’s mission will be eschewed.

On the awarding of tenders to companies from outside the province, the municipality indicated that everyone in Sol Plaatje is afforded an opportunity to bid.
The 2021 pothole patching project, for example, was managed and run by locals from within the province.

The municipality has also finalised a new procurement policy, which requires that a certain percentage of a tender should give preference to local business, women, youth and people with disabilities.

12 136 There are currently six teams dedicated to fixing potholes and the municipality is on course to close every single pothole in the city.

The recent rains have exacerbated the pothole problem.
The municipality has Peace Officers and by-laws to regulate the operation of informal businesses to ensure compliance with legislation.

The nightly water shutdowns were meant to ensure that water is safe to drink following the overflow of the Vaal River due to the recent heavy rains.

The municipality will soon provide comprehensive feedback to the Northern Cape Chamber of Commerce on this matter.
The municipality has a public participation policy in place, and the IDP reviews conducted in the 33 wards between November 2022 and January 2023 gave practical expression to the policy.

The matter of the Ward 4 resident who has been waiting for years to have her own residential address will be addressed and a report will be furnished to the Portfolio Committee.

With regard to supporting the township economy, the municipality has established a mobile laboratory in the Galeshewe township.
This is a project started by the World Bank and supported by the Science and Technology and the provincial Economic Development Departments.

The project’s principal focus is on transferring technology to Small, Medium and Micro Enterprises (SMMEs) with emphasis on applications development, coding and robotics and the Fourth Industrial Revolution in general.

The initiative is still at the infant stage as the Premier only launched it in 2021.

It is true that calls to the municipality often do not connect.
The municipality has received funding to the value of R45m to enhance its call centre.

The centre is operational and has improved but is not yet where it should be.

A municipal electrical engineer will be sourced to rectify the issue of street lights that burn throughout the day.

The R2.6bn grant from Treasury will solve many of the municipality’s problems especially those relating to aged infrastructure.
• Site visits Following the engagement with the Sol Plaatje municipal stakeholders, the Portfolio Committee undertook a site visit to the Homevalle Waste Water Treatment Works, Kimberly’s main sewerage plant, and the Gogga Pump Station which serves the facility.

Homevalle Waste Water Treatment Works.

The facility, which had come to a standstill in 2018 due to a community shutdown, has been upgraded from 33 to 48 mega litres.

The upgrade involved replacing stolen electricity cables.
The work on the additional 15 mega litre capacity was completed in 2017 and the facility has been fully operational since 2022.

Plant security remains critical and the municipality is looking at securing all the pump stations.

Currently, only access control is fully secured.

Improving the skillset of plant operators is the municipality’s other priority area.

The Portfolio Committee was informed that there was no untreated outflow from the facility.
However, on further probing it emerged that there was untreated waste water flowing into the Vaal River.

13 137 The facility was therefore contributing to the Vaal’s sewage contamination.

Furthermore, not all of the facility’s specifications meet the Department of Water and Sanitation (DWS) standards.

The municipality undertook to comply with all DWS requirements within three months of the visit by the Committee.

Gogga Pump Station.
Gogga Pump Station.

The pump station serves the main facility and is currently under repairs, which are envisaged to be completed within six weeks.

There was not much engagement on this site as most of the Portfolio Committee members did not listen to the briefing.

Some of them expressed dissatisfaction with the kind of sites being visited.

Only the Portfolio Committee Chairperson and one other member received the briefing on this site.

4.
DAY 3: MEETING WITH PHOKWANE LOCAL MUNICIPALTY AND MUNICIPAL STAKEHOLDERS The MEC for COGSHTA in the province, Mr Vass, provided an overview of the challenges facing the Phokwane Local Municipality, including the challenges around revenue collection; the municipality’s categorisation as dysfunctional; late submission of AFS; vacant senior management positions; the bloated salary bill; outstanding debt to Eskom, Water Boards and the AG; and challenges relating to service delivery, water and electricity provision.
The provincial government is working hard to address these matters and hopes that after the engagement with the Portfolio Committee, things will change for the better in the municipality.

• Presentation by the Phokwane Local Municipality The Executive Mayor welcomed the Portfolio Committee’s presence in the municipality and expressed the hope that the visit will push the institution in the right direction.
In his political overview, the Executive Mayor highlighted that Phokwane had a hung council and this presented certain challenges such as the presence of two Speakers.

These challenges, however, have not affected municipal operations.

Compared to its previous state shortly after the 2021 local government elections, the municipal council is now fairly stable.

Both section 70 and 80 committees are functional.

Administratively, serious challenges remain around the filling of senior management positions.
However, the municipality is in the process of making appointments.

The Acting MM, who has been seconded to the municipality by the provincial government, delivered the rest of the municipality’s report.

Among the issues highlighted was that the municipality’s revenue collection rate had improved to 53.4 percent, which is still far from the Treasury norm of 95 percent.

The municipality’s credit control policy, including switching off non-paying customers, is in force.
Those who qualify as indigents are encouraged to come forward and register.

However, the municipality is unable to enforce credit control in Eskom supply areas such as Pampierstad and Vaspan.

The municipality has been seized with numerous legal matters relating to electricity disconnections due to misunderstandings with communities 14 138 around cutting off of services and the issue of indigents.

The Vaalharts District Agricultural Union is being engaged to pay back the monies owed to the municipality.
Debt owed to the municipality by government departments, business and households amounts to R941m.

The current national load shedding is negatively affecting the municipality’s ability to provide water.

The municipality’s water reticulation infrastructure has aged, leading to frequent sewer pipe bursts.

MISA is providing technical assistance to address this matter.
A business case has been submitted to the DWS in respect of Pampierstad where communities have built on top of sewer lines, leading to frequent pipe bursts which are nearly impossible to fix as the houses are standing in the way.

Illegal connections also contribute to water and electricity losses.

The municipality currently does not have the capacity to quantify and distinguish between technical and non-technical losses.
A recent metre audit revealed that approximately 3000 households were not paying for electricity.

The Acting MM has managed to move the municipality from a disclaimer to a qualified audit opinion.

However, the record-keeping problems that led to the disclaimer have not yet been fully resolved.

The outstanding 2020/21 and 2021/22 AFS have been submitted to the AG for auditing.

The municipality’s Internal Audit Unit has been resuscitated and a Chief Audit Executive has been appointed.
A post audit action plan in respect of the 2020/21 audit findings has been tabled in council.

The number of audit findings has reduced from 138 in 2019/20 to 72 in 2020/21.

The municipality’s salary bill is still within the Treasury norm, although the municipality’s organisational structure is bloated at the lower levels.

All positions are funded and the municipality is able to pay salaries every month.

The municipality does not owe any third parties.


However, the municipality’s budget remains unfunded but a Standing Committee has been established to deal with this matter.

Debt to the municipality’s three main creditors – Eskom, Bloem Water and Vaalharts Water – also remains outstanding.

There is currently no repayment agreement with Eskom, which is owed R270m.

Three meetings with Eskom have been convened but a repayment agreement that is satisfactory to both parties could not be concluded.
Another meeting with Eskom is scheduled for 05 April 2023.

A repayment arrangement in respect of the R81m owed to Vaalharts Water has been concluded.

Bloem Water is owed R120m but the municipality no longer has a contractual agreement with the Water Board and only transacts on a month-to-month basis.

At over R1bn, the municipality’s UIFW is very high.

The long absence of an MPAC and a Financial Disciplinary Board has contributed to this.
The MPAC and the Disciplinary Board are now functional, and the former is currently investigating the UIFW, dating back from 2010.

Consequence management will be effect as soon as the MPAC concludes its investigation.

A UIFW reduction strategy is in place.

The municipality has embarked on cost saving measures such as reduction in overtime and kilometres travelled, reducing catering expenses to water, and freezing non-critical posts.
The FRP has been institutionalised and all are involved in its 15 139 implementation.

Progress on the FRP’s implementation is reported to council and provincial Treasury on a monthly basis.

Financial constraints prevent the municipality from implementing the MISP to move it out of the dysfunctional category.

Disaster management funding has enabled the municipality to commence with capital projects such as the fixing of the Mangope Road, a project which the Portfolio Committee also visited.
The municipality has also received funding from the District to assist with repair and maintenance of pump stations.

The DWS has contributed R15.7m towards bulk water supply.

Other capital projects funded through the Water Services Infrastructure Grant (WSIG), INEP and the MIG were highlighted.

The municipality’s Standing Rules of Order have been revised to accommodate Khoi-San leaders although there are currently no traditional and Khoi-San leaders within the municipality’s jurisdiction.
• Responses to inputs by Portfolio Committee members The Executive Mayor re-affirmed his assertion to the effect that the municipality is currently stable.

He re-iterated that political and administrative instability did persist in the wake of the 2021 local government elections when the first council meeting was disrupted.

The matters that had caused the instability went to court.

This is when the municipality had started advertising senior management vacancies.
The court ruled that the municipality should put all major decisions on hold.

This moratorium was lifted after three months, and by then, the advert timelines had lapsed and the municipality had to re-advertise.

This negatively affected the timely submission of AFS.

Following this experience, councillors sat down and took a decision to work across party lines.

In this way, political stability returned.

Consequently, all section 79 and 80 committees are now functional.
The municipality is meeting and engaging communities and has a plan to resolve the key problems they are facing.

The Acting MM indicated that a Task Team has been appointed to assist the MPAC in its UIFW investigation to ensure that there are no unjustifiable write-offs.

The municipality has paid R1.3m to consultants in relation to the preparation of AFS for the 2020/21 financial year.

The Acting MM is finding it strenuous to work without senior management.
All the relevant staff have signed performance agreements with the Department of Cooperative Governance and are held accountable.

The challenges experienced when the municipality was under administration were mainly labour related.

Workers were not consulted on important decisions and the Local Labour Forum (LLF) was not functional.

These matters have since been resolved and no labour unrest has been witnessed since the inauguration of the new administration.
Proper consumer profiling and data cleansing to ensure correct billing are underway.

The Acting MM admitted to the municipality’s high unemployment rate.

The Hartswater landfill site is licenced but there are challenges around compliance with operation specifications.

Part of the municipality’s revenue enhancement strategy was the installation of prepaid meters.
Following the approval of LED funding policy by council, the municipality has 16 140 allocated R3m to LED and the upskilling of SMMEs within its jurisdiction.

The training will focus on the preparation of AFS.

The unregistered technician in the municipality is in the process of being registered.

MISA has assisted the municipality on its green drop master plan.

The plan is still a draft.

The provincial COGSHTA has provided yellow and other municipal fleet.
A mechanic will be appointed to respond to any mechanical issues that may arise.

On the appointment of the administrator, the province believes that it had made the right decision and that he was the right person for the job.

The challenges around coalition municipal governments should be addressed through amendments to the Municipal Structures Act.

Coalition arrangements should benefit municipalities and improve service delivery.

The MEC’s office will monitor the municipality’s post audit action plan.
The province will also be working with municipalities with regard to the filling of vacant senior management posts.

The Speaker noted that the municipality has had three ordinary council meetings since the inauguration of the new administration.

The Acting MM promised to engage the AG regarding the discrepancy in the consultant fee amount disclosed in the municipality’s AFS vis-à-vis the figures used by the AG.
Parliament’s amendments to the Municipal Systems Act, as to separate politics from administration, were welcomed and appreciated.
• Stakeholder engagement The Portfolio Committee received submissions from the South African National Civics Organisation (SANCO), a Business Forum, the Vaalharts Agricultural Union, a Ward 5 resident, a Ganspan resident, a Youth Non-Profit Organisation (NPO), a former municipal employee from Ward 4, the Taxpayers Association, the Taxi Association of Hartswater, a Ward 7 resident, AfriForum, and the Frances Baard Economic Forum in Phokwane.

South African National Civics Organisation (SANCO).
The SANCO Phokwane sub-region Spokesperson, Mr Modise, delivered an oral submission and also furnished the Portfolio Committee with a written statement.

Mr Modise brought to attention the gap between the municipality and its communities, and its failure to fulfil its promises to the people.

The IDP is currently a council boardroom activity.

There are many community protests in the municipality due to perceived local government failure to engage ordinary people in the political process.
Mass mobilisation and the implementation of a communication strategy should be at the top of the municipality’s agenda.

The need to develop partnerships with established business as to empower local SMMEs and increase employment opportunities was emphasized.

The scourge of corruption, greed and elitism was decried.

Phokwane councillors were criticised for demonstrating no commitment to serve the people.
Mr Modise appealed for assistance with office space, furniture, computers, and telephones as to be in a better position to build a meaningful relationship with the municipality.

17 141 Business Forum.

The Business Forum representative decried the relocation of tourist attractions from Phokwane to Potchefstroom.

The pan that used to attract tourists to Phokwane is now a white elephant.

The apartheid government invested extensively on tourism and the municipality can learn a lesson from this.
Valhaarts Agricultural Union.

The Union’s Managing Director highlighted agriculture as a major contributor to Phokwane’s economy.

The Union represents 36 000 hectares of farmland and 362 farmers in the area.

It has made extensive contributions to Phokwane including ensuring drinking water safety, keeping the roads navigable, providing fire and other emergency services, cleaning of towns, and contributing to 34 percent of the municipal coffers through property tax.
The Union has ploughed approximately R4bn back to the community.

Farmworkers are trained regularly.

Despite these contributions, the Union is still not regarded as a critical municipal stakeholder and was not invited to the meeting with the Portfolio Committee.

The Union expects a functional municipality.

Over the last four years, the institution has gone through five MMs and three CFOs but is still not functioning satisfactorily.
The traffic department is a major problem as there no funds available to employ traffic officers after hours when drunk driving is at its height.

The Union will also furnish a written submission to the Portfolio Committee.

Ward 5 resident.
Ward 5 resident.

The resident highlighted the plight of vulnerable people who do not have access to drinking water in their yards or dwellings; the exceedingly high unemployment rate in the municipal area; councillors who, after election, do not return to the community to provide feedback; and the peddling of drugs without any consequences.

Ganspan resident.

The resident brought to the Portfolio Committee’s attention problems around RDP house provision in Ganspan.
The problem of unfinished projects in the municipality, including construction on a sports facility that has been ongoing since 1994, was also highlighted.

Youth NPO.

The NPO’s founder noted that life was very difficult for the youth in Phokwane due to lack of recreation facilities.

Consequently, young people resort to alcohol.

Government does not care and the municipality and Parliament provide no support.
There are no leadership summits for young people in Phokwane and therefore the youth are not being trained to be leaders.

For the youth to access anything, they must go through long procedures, for which they have no patience.

The Youth NPO founder appealed for the plight of young people to be taken seriously.

A former municipal employee from Ward 4.

The resident mainly spoke in the vernacular but the municipality explained that he is a former municipal employee who seeks to be reinstated.
However, his matter was dismissed by the CCMA.

18 142 Taxpayers Association.

The representative from the association did not appreciate being not invited by the municipality to be part of the meeting.

He appealed for the municipality to sort out the issue of UIFW as the amounts involved could provide everything the municipality needs.

Municipal accounts are frequently not sent out to people, and when they are, they are usually incorrect.

People will not pay if the accounts are incorrect.


There is no reason to pay if the municipality does not fulfil its obligations.

Parliament needs to monitor this issue.

Taxi Association of Hartswater.

The representative felt that life was better when he worked for white people, as he has not benefited from the fruits of democracy and the promise of a better life for all.

His vote has not delivered the expected gain.

Ward 7 resident.
Ward 7 resident.

The resident lamented the lack of councillor representation in the meeting.

He advised that the R1.2bn in UIFW is corruption and should not be couched in acceptable language.

The municipality has had no proper administration as it has been run through an administrator and a seconded MM.

AfriForum.
AfriForum.

The Forum’s District Coordinator, Ms Lize-Mari van der Linden, indicated that the Forum’s Vaalharts branch was not invited to the meeting and was only alerted to it ten minutes before its start.

Ms van der Linden submitted that the municipality’s landfill site is unlicensed and used to score 4 out of 25.

It has deteriorated further and now scores 1 out of 25.

The municipal water quality has been tested and found unfit for human consumption.
Street lights are not working, giving rise to murder and rape cases.

The municipality ignores the public notwithstanding its tax contributions.

Frances Baard Economic Forum in Phokwane.

The Forum’s representative pointed out that it is always the community that suffers whenever there is political instability.

He appealed for councillors to set political differences aside and focus on serving the communities that had voted them into power.
The municipality’s vacant senior management positions and poor service delivery were highlighted as major issues of concern.

The representative acknowledged that the acting MM has proved herself in the short time of her secondment to the municipality.

• Response by the municipality The Executive Mayor extended an apology to the Vaalharts Agricultural Union for not having invited it to the stakeholder engagement.

The Union is indeed the biggest contributor in terms of property rates.
There have admittedly been inaccuracies in the municipality’s billing system since 2013, and the municipality’s revenue manager is working on resolving the issue.

The municipality must also look into the matter of 150 000 hectares of farmland that was purchased for R57 in the 1990s.

The traffic department is being revamped to improve its functionality.

The municipality’s approved LED policy will address the issues raised by the Business Forum and the Youth NPO founder.
Young people are always encouraged to apply for funding 19 143 opportunities but the municipality also wants to fund sustainable entrepreneurship.

On the sports facility in Ganspan, the municipality has engaged the Sports, Arts and Culture Department to resuscitate the stadium.

The need for recreational facilities for young people was acknowledged.

The RDP housing problem in Ganspan is related to the miniscule budget baseline for the Northern Cape province.
The R354m baseline allocation to the province is inadequate and needs to be reviewed.

The process to fill vacant senior management positions is at an advanced stage.

The municipality is busy providing electrification to unconnected areas.

Several roads have been repaired and the work is ongoing.

The municipality encourages community stakeholders to come and introduce themselves, and thus forge good working relations going forward.
Environmental compliance directives have been issued against the municipality by various institutions including the South African Human Rights Commission.

The municipality is attending to these directives.

The Portfolio Committee is invited to return to the municipality to determine whether the promises made have been fulfilled.

5.
5.

DAY 4: SITE VISITS IN THE PHOKWANE MUNICIPAL AREA The Portfolio Committee devoted the day, and concluded the oversight, by undertaking site visits to critical service delivery projects in the Phokwane municipal area.
These sites comprised the resealing of the Mangope Avenue in Pampierstad; refurbishment of pump station D in Sakhile township; sewer spillages due to houses built on top of sewer pipelines; replacement of asbestos with PVC pipes; electrification project in Jan Kempdorp; and Ganspan Water Reservoir.

• Resealing of the Mangope Avenue The municipality obtained R3m through a disaster grant to fix 800 metres of the road.

The amount is not enough to resurface the whole road as this costs R7m per kilometre.
At the time of the Portfolio Committee’s visit, the road had just been compacted and will thereafter be tarred.

MISA is not involved in the project and the Portfolio Committee noted that MISA’s involvement could assist with the running costs.

The project has yielded approximately ten job opportunities.

However, no local contractor has benefitted from the project despite the existence of a preferential procurement policy that allows 30 percent of the tender to benefit locals.
The municipality explained that a Grade 8 contractor was required for the project but no contractor in the Northern Cape possessed this level of competency.

However, in other projects, local sub- contractors are involved.

• Pump station D This is one of the four pump stations that has been refurbished following damage due to vandalism.

Funding from the DWS has enabled the municipality to install a concrete roof, 20 144 electric fence and a telemetric system.
The project is complete although the completion date was two months behind schedule due to Eskom related problems.

Portfolio Committee members indicated that they were happy with the project and the facility’s security.

• Sewer spillages due to houses built on top of sewer pipelines In this area of Pampierstad, the Portfolio Committee encountered a stream of sewerage running through the mud streets.

The sewerage stream source emanated from two houses whose drains had been overflowing for some time.
The municipality is unable to fix the problem because the houses are built on top of the sewer pipeline that must be repaired to resolve issue.

The whole line is constructed from asbestos pipes that need to be replaced.

The municipality could not furnish the Portfolio Committee with a satisfactory plan on how the problem will be addressed, except to indicate that it had submitted a business plan to the DWS to assist with the required funding.
While inspecting the sewer spillage, the Portfolio Committee was approached by two elderly gentlemen who led it to an abandoned project site a few blocks away.

The Executive Mayor launched the project on 11 May 2022 and its aim was to re-gravel Kolong Street to make it driveable following severe flood damage.

The allocated funding of R900 000 was not enough to see the project to completion.
Consequently, the mounds of gravel meant to be used in the project are sitting unutilised, blocking access to the road and nearby houses.

The community has had six meetings with the Executive Mayor who promised to raise the funding shortfall, but no feedback has been received to date.

Documentation is available to prove the community’s numerous interaction with municipal officials.

The Portfolio Committee instructed the municipality to address the matter and report back to it within seven days.
• Replacement of asbestos with PVC pipes The Portfolio Committee proceeded to a site in Pampierstad where the municipality is busy decommissioning the old asbestos pipe network and replacing it with PVC pipes, of which 98 percent has been laid.

The rest will be completed by end June 2023.

The project has benefitted 2700 community members in Pampierstad including 12 SMMEs.
The contractor undertook to fix the re-gravelling problem in Kolong street as to afford people access to their houses at the very least.

• Electrification project in Jan Kempdorp The project is funded through the INEP grant and 600 stands were earmarked for electrification.

The major challenge encountered related to unoccupied stands, but this has been resolved as almost 100 percent of the stands are now occupied.

The project has been completed and switching on will soon commence.
Beneficiary registration with the municipality is the main outstanding issue.

Portfolio Committee members requested to be shown the interior of a stand 21 145 that has been completed.

The request was acceded to and the Committee was led to a stand occupied by a gentleman hailing from Queenstown in the Eastern Cape.

The occupant indicated that he was happy with the electricity provided.
The Portfolio Committee observed that following the electrification there are likely to be more demands for better housing and related services, and the municipality should be prepared for this.

• Ganspan Water Reservoir The Reservoir was the last site visited by the Portfolio Committee at the insistence of the SANCO representative.

There are 5000 people in the Ganspan voters’ roll but the Reservoir was servicing far more than this number due to the mushrooming of informal settlements.
The Reservoir is thus stretched beyond design capacity rendering drinking water a health hazard.

The municipality indicated that it is in the process of formalising the informal settlements in Ganspan.

Currently, an Environmental Impact Assessment (EIA) process is underway.

In winding up the oversight, the Portfolio Committee Chairperson noted that the municipality has potential to change, the pressure of resources notwithstanding.
The Executive Mayor invited the Portfolio Committee to return at a later date as this will put pressure on the officials to deliver services.

The Portfolio Committee’s oversight visit was appreciated as it gave the municipality a push in the right direction.

6.
6.

COMMITTEE OBSERVATIONS Having listened to inputs from the Sol Plaatje and Phokwane local municipalities, the structures supporting these municipalities and the community stakeholders in both municipalities, and having undertaken site visits to critical service delivery projects in both municipalities, the Portfolio Committee observed as follows: 6.1.

Both Phokwane and Sol Plaatje have high vacancy rates at senior management level and yet the organograms are bloated and the salary bills are very high.
A way should be found to reduce the salary bills.

6.2.

The province does not seem to be addressing the root cause of the vacancies and the proliferation acting personnel.

The acting personnel, however, should be equal to the task as they meet the minimum requirements for the acting positions.

6.3.

The funded but unsustainable and artificial budget of Sol Plaatje nullifies the advantage of having a funded budget.

The factors that make the funded budget unsustainable and artificial should be unpacked.
6.4.

The provincial COGSHTA’s reference to DDM cadres rather than DDM champions is not helpful and will not assist the cause of this development model.

22 146 6.5.

The impending move to re-categorise Sol Plaatje from a dysfunctional to a medium risk municipality is not justified, as the municipality has stagnated on qualified audit opinions over the last five years.

6.6.

At the root of the tensions between communities and municipalities is lack of service delivery.
In appreciating this reality, the Portfolio Committee’s oversight visit should not be a once-off but a regular occurrence.

6.7.

The Frances Baard District’s six consecutive unqualified audits, and its clear presentation on its Local Economic Development strategy and revenue enhancement plan, deserve to be congratulated.

6.8.

SALGA did not clearly explain its assistance to Sol Plaatje and Phokwane and how it measures the impact of its capacity building measures.

6.9.
6.9.

The reported functionality of Sol Plaatje’s public participation processes and the resolution of the sewer spillage problem contradicts what the Portfolio Committee has heard from municipal stakeholders.

6.10.

It should be possible for Sol Plaatje to give preference to local business and build local capacity without flouting supply chain management processes.

6.11.

The vote of no confidence against the Mayor and Speaker in Phokwane is akin to swimming in the mud.
From a service delivery point of view, no good can be expected from it.

6.12.

Governments departments owing Phokwane are adding to the municipality’s struggles.

The municipality’s financial position would improve significantly if the monies owed were paid.

There needs to be a definite credit control plan that targets these government departments.

6.13.

The involvement of MISA in the road sealing project in Pampierstad, Phokwane, could have assisted with managing the project’s running costs.
Capacitation of local contractors to achieve the required level of competency for projects of this nature should be prioritised.

7.

COMMITTEE RECOMMENDATIONS 7.1.

The Northern Cape Department of Cooperative Governance, Human Settlements and Traditional Affairs should furnish the Portfolio Committee with a report providing a detailed break-down of the R500m disbursed to the Sol Plaatje Local Municipality by the Premier’s Office in 2019.
The report should be furnished within 14 days of the Committee’s meeting with the MEC.

23 147 7.2.

The COGSHTA Department should furnish the Portfolio Committee with the close out report on the Section 139(1)(c) intervention in the Phokwane Local Municipality within 14 days of the Committee’s meeting with the MEC.

7.3.
7.3.

The Portfolio Committee should follow up with the Sol Plaatje Local Municipality on the matter of the Ward 4 resident who has been waiting for years to have her own residence and residential address.

7.4.
7.4.

The Sol Plaatje Local Municipality should furnish the Portfolio Committee with its plan to fix the potholes in the city; a report on the cost of the 2018 shutdown in relation to Homevalle Waste Water Treatment Works and the kind of security needed to ensure that the facility is fully secured; and a report on the facility’s current staff complement.

The information should reach the Committee within 14 days of its meeting with the municipality.

7.5.
7.5.

The Sol Plaatje Local Municipality should, within 14 days of the meeting, also forward to the Portfolio Committee the Court Order relating to the setting aside of the Section 106 investigation report, and share the lessons learned in this regard.

7.6.

The Portfolio Committee should reconsider its approach to municipal stakeholder invitations to ensure that all the relevant interest groups are represented.
The Sol Plaatje Speaker should also establish a stakeholders’ forum to provide a platform for all the relevant stakeholders to air their views.

7.7.

The Phokwane Local Municipality should establish a Steering Committee to guide the municipality towards having a funded budget.

7.8.

Two months after the Portfolio Committee’s oversight visit, the Phokwane Local Municipality should furnish the Committee with a progress report on the critical matters raised.

7.9.
7.9.

The Phokwane Local Municipality should furnish the Portfolio Committee with a plan on how it will fix the sewer problem in Pampierstad.

Report to be considered.

24 148 6.


Report of the Portfolio Committee on Cooperative Governance and Traditional Affairs on the Local Government: Traditional Affairs General Amendment Bill [B16-2022] (National Assembly – sec 76), dated 21 April 2023: The National Assembly referred the Traditional Affairs General Amendment Bill (National Assembly – Section 76) (hereinafter referred to as the Bill) to Portfolio Committee on Cooperative Governance and Traditional affairs.
Subject of the Amendment Bill The primary aim of the Traditional Affairs General Laws Amendment Bill (National Assembly – Section 76), introduces minor technical amendments to Section 81 of the Local Government: Municipal Structures Act, 1998 (Act.

No.

117 of 1998) (the Structures Act) and to Section 16 of the Traditional Leadership and Khoi-San Act 2009, (Act No.

3 of 2019) (TKLA).
3 of 2019) (TKLA).

The amendment to the Structures Act is to correct certain references to the Code of Conduct, as the Code has been removed from Schedule 1 of the Local Government: Municipal Systems Act, 2000 (Act No.32 of 2000) (Systems Act) and inserted into Schedule 7 of the Structures Act, as amended by the Local Government: Municipal Structures Act, 2021 (Act No.

3 of 2021).
3 of 2021).

Enquiry into the subject of the Amendment Bill • The Committee interacted on the content of the Bill with the Department of Traditional Affairs on 23 August and 10 October 2022.

• A call for submissions on the Bill was opened from 13 February 2023 to 10 March 2023 in line with Rule 275(a) of the National Assembly Rules, which dictates that the Committee must give interested persons and institutions a period of at least three weeks to comment on the proposed legislation.
• Two submissions were received but they were not related to the Bill’s subject matter.

Consideration of the Amendment Bill The Portfolio Committee on Cooperative Governance and Traditional Affairs having deliberated on and considered the subject of the Traditional Affairs General Amendment Bill (National Assembly – Section 76), referred to it, and classified by the Joint Tagging Mechanism as a section 76 Bill, reports that it has agreed to the Bill.

Report to be considered.

149