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Standing Committee on Public Accounts Engagements 10 September 2019

THABAZIMBI LOCAL MUNICIPALITY. Standing Committee on Public Accounts Engagements 10 September 2019 Old Assembly Building, Parliament. PRESENTATION OUTLINE. Overview of Thabazimbi Local Municipality Geographical location and demographics Governance and Administration Service Delivery

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Standing Committee on Public Accounts Engagements 10 September 2019

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  1. THABAZIMBI LOCALMUNICIPALITY Standing Committee on Public Accounts Engagements 10 September 2019 Old Assembly Building, Parliament

  2. PRESENTATION OUTLINE Overview of Thabazimbi Local Municipality Geographical location and demographics Governance and Administration Service Delivery Financial Management Audit Opinions for the past five years Matters raised by Auditor General Key elements of the Audit Action Plan and anticipated results Progress report on Post Audit Action Plan for 2017/18 Functionality of the Oversight structures Accountability and consequence management Forensic and other Investigations Measures developed to improve Audit Outcome Key challenges and Support requirements

  3. GEOGRAPHICAL LOCATION OF THE MUNICIPALITY The Thabazimbi Local Municipality is located in the South-western part of the Limpopo Province and has Botswana as its international neighbour and is two (2) hours’ drive from Tshwane. Thabazimbi is known as “mountain of iron” which is the Tswana name for this peaceful productive town, referring to the highly lucrative iron ore reef first discovered in the region in 1919. The Municipality has Marakele National Park, which is a subsidiary of the National Parks Board. Iron ore was mined since the 1930’s when iron and steel production started. The town was proclaimed in 1953. Apart from Iron Ore the Thabazimbi Local Municipality is surrounded by Platinum producing areas such as: Northam Platinum mine, Anglo, i.e. Amandelbult and Swartklip mines as well as Siyanda Bakgaltla mine. Other minerals produced in the area include Andalusite, which is mined by Rhino Mine, Chronimet, Afarak SA, and limestone for the production of cement by Mamba and Pretoria Portland Cement (PPC). Boundaries of Thabazimbi Local Municipality include areas such as: Thabazimbi, Northam, Leeupoort, Rooiberg and Dwaalboom. The municipality falls within the Waterberg District Municipal area, a very peaceful place to live in and malaria free. The size of the municipal area is 986 264,85 ha representing roughly 23.8% of the District land area. Agriculture, wildlife and mining are important economic sectors. Thabazimbi is part of Waterberg Bioregional Plan which was gazetted on 4 January 2019.

  4. demographics

  5. Governance and administration • TLM Constitutes of 23 Councillors • All senior managers appointed except for Director Community Services • Corporate calendar approved by Council and Council Committees meets accordingly • Council sitting meets quarterly and Special Council meetings as and when necessary • Oversight structures established and functional (i.e. MPAC, Audit Committee, Financial Misconduct Committee) • Local Labour Forum established and functional • Amongst the powers and functions in terms of schedule 4 & 5, section 156 of the constitution and section 8 and 84 of MSA, TLM is a Water Services Authority • In terms of anti-Corruption - The Municipality is currently utilizing Presidential and Premiers Hotlines. All complaints are then directed to the Municipality for further investigation. A weekly report and progress report is then forwarded to Office of the Premier for consideration.

  6. Service DELIVERY

  7. Service DELIVERY (CONTINUES…) • Capital Projects implemented through National & Provincial conditional grants as well as Social Labour Plans (SLP’s) from the Mining Houses • For the past 3 years the Municipality has been receiving only Equitable Share, EPWP and FMG grants; and Waterberg district Municipality was appointed as the implementing Authority for all conditional grants on behalf of the Municipality. • Demonstration of capacity made by TLM during 2018/2019 financial year afforded the municipality to implement all conditional grants and managing projects internally. • Grants received for 2019/20 financial year are MIG, FMG, EPWP, INEP, WSIG and Distressed Mining Town

  8. FIANACIAL MANAGEMENT • During inauguration of the fifth administration municipal assets were attached and disposed by the sheriff due to litigations against the municipality • The municipality had to run with limited resources and was unable to pay creditors on time • The collection rate is very low making our Revenue Estimates unrealistic. • The Municipality is busy installing the water and electrical smart pre-paid meters which will increase Revenue collection • Strictly Credit Control policies and by-laws implemented to improve revenue • National Treasury is also assisting the Municipality to develop Revenue enhancement plan. • Financial Recovery Plan has been developed and monitored by National Treasury • Eskom debt in Oct 2017 – R 236 526 261.06 to R 192 205 350 as at 31 July 2019 • Magalies Water debt R58 650 400.72 as at 12 July 2019 • Payment Arrangement with Eskom and Magalies Water Board are in place and adhered to by the municipality. • The municipality entered into payment arrangement with other creditors to minimize litigations • Poor Audit outcomes • The municipality appointed a debt collector to reduce the debt book – currently able to collect additional R2.5 million monthly • The municipality was not able to submit AFS on time from 2015/16 to 2017/2018 financial years. However, 2018/19 AFS was submitted on time.

  9. AUDIT OPINIONS FOR THE PAST 5 YEARS The Municipality obtained the following audit opinions for the past five (5) years:

  10. MATTERS RAISED BY THE AUDITOR GENERAL

  11. KEY ELEMENTS OF THE ACTION PLAN AND ANTICIPATED RESULTS

  12. PROGRESS ON POST AUDIT ACTION PLAN FOR 2017/18 *NB: The outstanding findings which are not resolved are those which can’t be addressed retrospectively, however adequate internal controls have been put in place to remedy the findings from recurring(Received ag report on 14 June 2019)

  13. FUNCTIONALITY OF OVERSIGHT STRUCTURES

  14. ACCOUNTABILITY AND CONSEQUENCE MANAGEMENT The municipality has the code on conduct and HR policies in place which detail the procedures to be followed for consequence management. All the cases on non-compliance, Allegations of misconduct and Financial Misconducts are reported to the Accounting Officer, the council and MPAC. Each reported matter is investigated separately. The gravity of the matter will determine whether the investigators should be appointed by the Accounting officer, Council or MPAC. Cases of non-compliance/allegations of financial misconduct, if committed by employees, they are reported immediately to the direct supervisor of the employees and escalated to the manager and senior managers who will then report the matter to the AO. The AO will involve the legal department in dealing with the matter depending on the gravity of the matter and either investigate the matter or escalate it to the Council/MPAC to investigate. If the investigators are appointed by the accounting officer, they will report to the accounting officer, if appointed by council they will report to council and if by the MPAC, report to the MPAC. The investigations are monitored by the AO, Council or MPAC. A disciplinary committee is established to deal with each matter that has been reported and investigated.

  15. FORENSIC AND OTHER INVESTIGATIONS • Internal forensic investigation conducted in 2015/16 financial year and recommendations were implemented by Council • SIU conducted investigation and the municipality still awaits the report. (Proclamation NO.R.18 of 2017 Published in No. 40810 Government Gazette 25 April 2017

  16. Measures developed to improve Audit Outcome • The 2018/2019 AFS were submitted to the Auditor General within the prescribed timeframe for the first time in many years. • Many of the audit findings resulting in the disclaimer (AFS not agreeing to general ledger and supporting schedules; AFS not adequately supported) have been addressed with the most recent submission. • Additional information requested by the Auditor General will be submitted in a timely manner which should result in reduced scope limitations. • The 2018/2019 audit will take top priority over the next three months and we will be engaging with the auditors on a regular basis to ensure a smooth audit. • Management and staff are committed in improving the audit outcome and have dedicated priority to the current audit and being as helpful as possible.

  17. KEY CHALLENGES • Availability of land for development • Alarming rate of mushrooming informal settlements • Land invasion on municipal land • Uncontrolled backyard dwellings • Limited budget to deliver services • Lack of cooperation by Mining Houses in implementing SLP Projects • Staff retention (Resignation of two CFO’s and Director Planning within a space of a year) • Inadequate Strategic support (COGHSTA, Treasury etc.) • Outstanding SIU report • Ageing infrastructure • Upgrading of Northam Waste Water Treatment Plant • Government debt for services, rates and taxes • Closing of KUMBA Iron Ore Mine

  18. HIGHLIGHTS ON SECTION 154 SUPPORT Thabazimbi Local Municipality has received several government support packages/interventions dating back to May 2015. This is due to the fact that the Municipality has been experiencing critical challenges relating to financial management and governance issues. These challenges affected the level of service delivery provision in a very negative way. The interventions received by the Municipality included a rapid assessment and interventions in terms of sections 139 (1)(b) and 154 of the Constitution. Previous progress reports on the interventions can be accessed through the Municipal Council Support unit within the Corporate Services Department of the Municipality. The December 2016 report, on the section 154 support, recommended to the Council of TLM, the MEC for Coghsta, and the Minister for Cooperative Governance and Traditional Affairs that: The current support (section 154 support) be continued with a view to strengthening internal capacity for the Municipality to independently and sustainably exercise its powers and perform its mandatory functions; CoGTA and Coghsta intensify the support through mobilisation and deployment of resources to accelerate current positive momentum; Resources be allocated towards the identified strategic projects for the purposes of stabilising the environment and enhancing revenue collection.

  19. HIGHLIGHTS ON SECTION 154 SUPPORT (CONTINUES…) HIGHLIGHTS ON SECTION 154 SUPPORT (CONTINUES…) At the end of January 2017, it was further recommended that: The Section 154 Support be continued with a view to strengthening internal capacity for the Municipality to independently and sustainably exercise its powers and perform its mandatory functions; Funds be secured to rescue the Municipality from its current financial situation; and Priority be given to filling the positions of Senior Managers and other identified critical positions. Support to the Municipality, in terms of section 154, continued through the deployment of the Acting Municipal Manager, Mr T.S. Ngobeni with the availability of resources from National Treasury, Limpopo Provincial Treasury, the National Department of Cooperative Governance, and the provincial Department of Cooperative Governance, Human Settlements and Traditional Affairs (Coghsta). After his resignation Ms M.S. Mabitsela was appointed by Council as the Acting Municipal Manager for a period of three months which was cut short by her resignation, effected at the end of May 2017.

  20. CONCLUSION The Municipality was able to address key issues that were of critical importance, that includes the appointment of the Municipal Manager, Chief Financial Officer, Technical, Planning and Economic Development and Corporate Services Managers. Establishment of PMU office. This will ensure that there is stability in Council and administration.

  21. THABAZIMBI LOCALMUNICIPALITY THANK YOU RE A LEBOGA

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