Broke Amathole District Municipality blames Eastern Cape Cogta for its mess, Parliament hears

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Chair of the portfolio committee MP Faith Muthambi (GCIS)
Chair of the portfolio committee MP Faith Muthambi (GCIS)
  • Amathole District Municipality and Eastern Cape Cogta laid into each other during Parliament's Portfolio Committee of Cogta on Thursday over the municipality's financial mess.
  • Chair of the portfolio committee MP Faith Muthambi heard from ADM that Cogta was not supporting the ailing municipality financially at all. 
  • Cogta Eastern Cape told Muthambi that it warned ADM years back to reverse its unlawful recategorisation of the Grade 6 authority to a Grade 7, which allowed municipal manager, senior managers, and employees to earn way more than they deserved. 

At the centre of the problems of the financially crippled Amathole District Municipality (ADM), is a fractured relationship between the municipality and the provincial department of cooperative governance and traditional affairs (Cogta) overseeing the local authority.

This was noted by the Parliament's Portfolio Committee on Cogta at a meeting attended by Eastern Cape Cogta and ADM on Thursday.

The two organs of state were hauled before the Faith Muthambi-chaired portfolio committee to address the municipality's financial crisis, which resulted in it being placed under administration in January.

This after the municipality announced that it could not afford its R65 million monthly salary bill and that it had not paid its 1 670 workers, councillors, and traditional leaders for four months. The announcement prompted the provincial government to invoke section 139 of the Constitution and placed the embattled council under administration.

READ | No pay for workers for 4 months, says bankrupt Eastern Cape municipality

Municipal manager Thandekile Mnyimba is on record saying the financial crisis was caused by the previous administration which approved recategorisation of the municipality from Grade 6 to Grade 7.

This paved the way for payment of the municipal manager and section 56 managers in excess of the gazetted upper limits, as well as remunerating employees at the level of Grade 7 instead of 6.  

After watching ADM and Eastern Cape Cogta officials blaming each other over the mess, portfolio committee chairperson Faith Muthambi remarked: "There is a deeper inter-governmental relations problem (IGR) here."  

The committee heard that the municipality had a tendency of adopting an unfunded budget and that, inadvertently, resulted in a situation where the equitable share would be less than the salary bill.

Recently, according to Mnyimba, the equitable share was R400 million and the salary bill was R800 million, per annum, the committee heard.

READ | Broke Amathole District Municipality hired 900 employees who were 'not needed'

The municipality told the committee that the financial quagmire it is currently experiencing arises from the decision its previous council took regarding incorrect grading, and that the current municipal council had rescinded that incorrect grading decision, although its consequences were not reversed.

The committee said the ADM officials also reported that it does not receive support from the provincial and national departments of Cooperative Governance and Traditional Affairs to address its unaffordable organisational structure.

The Eastern Cape provincial department of Cogta disputed this.

It told the committee that its ability to assist the municipality was diminished by the problem of incorrect grading and it said it had told the municipality to rescind the decision a long time ago.

Parliament's Portfolio Committee on Cogta said: "Noting that the problem was deeper than the committee expected, as the provincial department of Cogta and the municipality were accusing each other on a number of issues, the committee said it will create enough time soon to convene another meeting where there will be enough time to engage on [sic] the problems."

Furthermore, the committee said the district municipality received a disclaimed audit opinion in respect of the 2018/19 financial year.

The Auditor-General (AG) had painted a bad picture about the Amathole District Municipality and the municipalities under its control.

ALSO READ | LIST | These are the govt departments and state organs owing the broke Amathole municipality R34m

With the exception of Mbashe Local Municipality which received an unqualified audit report for the 2018/19 financial year, and Mnquma Local Municipality improved, all the other local municipalities in the district regressed. The problems for regression the AG highlighted included; non-adherence to legislation, poor-quality financial statements, and no preventive internal controls to prevent irregular and unauthorised expenditure. According to the AG's report, the poor audit report at Amathole District Municipality also arose from the problems that included bloated organisational structure and remuneration of staff done outside the law.

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