Provincial governments are not intervening when they are supposed to: The Case study of Emalahleni Local Municipality

The latest municipal audit results (2017-18) released by the Auditor-General (AG), Kimi Makwetu, found amongst others that a third of municipalities are not in a financial position to pay their creditors. The financial woes of municipalities weigh heavily on municipal creditors, in particular, bulk services suppliers, such as Eskom and water boards. As of June 2018, municipalities owed Eskom R18,26 billion with arrears amounting to R9,12 billion while debt to Water Boards stood at R 9,05 billion with arrears at R5,85 billion, respectively.

Yet despite the high level of municipal indebtedness, recent practice has shown that provincial governments are refusing or at times failing to intervene timeously in municipalities that are in a financial crisis. The Mpumalanga Provincial Executive in 2017, for example, refused to intervene in the Emalahleni Local Municipality despite its constitutional and statutory obligations to intervene.

Discretionary & Mandatory interventions

The Constitution distinguishes between discretionary and mandatory interventions. As far as a discretionary intervention is concerned, section 139(1) of the Constitution provides that a provincial executive may take any appropriate steps if a municipality cannot or does not fulfil an executive obligation in terms of the Constitution or legislation. These steps include a) issuing of directives; b) assumption of the relevant obligation; or c) dissolving the municipal council.

Apart from section 139(1) intervention, the Constitution provides for two forms of mandatory interventions, namely a) an intervention where a municipal council fails to approve a municipal budget or revenue-raising measures to give effect to the budget, section 139(4); and (b) an intervention where a municipality has a crises in its financial affairs, section 139(5).

Financial Crisis: Intervention Requirements

If a municipality, as a result of a crises in its financial affairs, is in serious or persistent material breach of its obligations to provide basic services or financial commitments, section 139(5) of the Constitution read with section 139(1) of the Municipal Finance Management Act (MFMA) prescribes that the relevant provincial executive ‘must promptly’ intervene. The same applies if a municipality admits that it cannot comply with these obligations. Therefore, to intervene in terms of section 139(5), the provincial executive must establish the following:

  1. a) Firstly, the municipality must be ‘in serious or persistent material breach of its obligations to provide basic services or its financial obligations
  2. b) Secondly, there must be a link between the financial crisis and the breaches.

All relevant facts must be considered to establish whether the conditions for a mandatory intervention have been met, especially those listed in section 140 (MFMA). As soon as the jurisdictional facts have been established, the provincial executive has no option but to promptly intervene in the municipality by imposing a financial recovery plan. This plan, which is binding on the municipality, seeks to secure the municipality’s ability to meet its obligations to provide basic services or its financial obligations. The provincial executive has the power to dissolve the municipal council and appoint an administrator if a municipal council fails to adopt a budget or revenue-raising measures to give effect to the recovery plan. If the provincial executive cannot or fails to adequately exercise its intervention powers, the national executive must intervene.

Failure to Intervene

It is beyond dispute, that the Emalahleni municipality as found by the Gauteng High Court in Coetzee and Others v Premier, Mpumalanga Province and Others has a crisis in its financial affairs. The Auditor-General, recently revealed that the Emalahleni Municipality, as from June 2018 owed Eskom R1.89 billion and accordingly, is ranked amongst the top three defaulting municipalities. The bulk electricity supply to the municipality was interrupted by Eskom due to non-payment. The impact of these interruptions on the well-being of local citizens and businesses manifested itself in service delivery protests.

Despite being made aware of the municipality’s financial position, the provincial executive denied that there was a crisis and thus refused to intervene.  A group from the local community, known as the ‘Save Emalahleni Action Group’ approached the High Court to compel the Mpumalanga Provincial Executive to intervene promptly in the municipality. The court accordingly granted an order compelling and directing the Provincial Executive to intervene in the municipality in terms of section 139(5). The court order further directed the Provincial Executive to request the Municipal Financial Recovery Service Unit, a division in Treasury, to develop a recovery plan. The Provincial Executive was instructed to intervene within 3 days from the date on which the court order was granted. It is disheartening to note that while the court order was granted on the 9 October 2018, the Provincial Executive failed to intervene promptly within the required 3 days.

 

Comment

If the latest assessments and municipal audit results are anything to go by, it confirms the already known fact that South Africa's local government sphere is in a crisis. While municipalities themselves are largely responsible for this crisis, it would be unfair to portion blame solely on them. Provincial and national executives are also failing to execute their constitutional duty to intervene in municipalities, especially those in a financial crisis. It would appear that the reluctance to intervene in failing municipalities is mainly influenced by political factors as opposed to legal imperatives. The Emalahleni case study is a case on point insofar as the Mpumalanga Provincial Executive preferred to address the municipality’s financial challenges within the structures of the ANC to avoid the reputational damage attached to interventions for politicians and political parties. Whatever the reasons, it clear that the failure to intervene timeously within municipalities when there is an obligation or reasonable grounds to do so seriously undercuts the ability of municipalities to live up to their service delivery mandate.

The enforceable nature of mandatory interventions means that provincial and national executives can be held accountable if they fail to exercise their mandatory intervention powers. The usage of court orders as a mechanism to enforce mandatory interventions must be welcomed. This, however, is not ideal insofar as many local communities do not have the financial resources to approach a court of law to enforce a mandatory intervention. These facts lead one to question the overall effectiveness of mandatory interventions as a restorative instrument envisaged in the Constitution.

 

By Curtly Stevens

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