Mthatha in dire straits

The Eastern Cape’s third-largest local municipality is bogged down by political paralysis and a financial crisis that has it on the verge of collapse, a local government report has revealed.

Presented to the province’s Local Government and Traditional Affairs Minister Sam Kwelita in August, the report, titled Progress on the Implementation of the Municipal Recovery Plan, paints a grim picture of the King Sabata Dalindyebo (KSD) municipality. The report was compiled by members of the local council in the hopes that Kwelita would intervene at the crisis-ridden municipality.

“The KSD municipality has experienced myriad institutional challenges since its inception. The challenges were, to a great extent, a result of the political instability that characterised [its] early existence,” says the report.

The municipality was formed shortly before the 2000 local government elections, when the Mqanduli and Mthatha (formerly Umtata) transitional councils were merged by the ANC, which controlled the councils.

In 2000, the United Democratic Movement won control of KSD and the municipality has been a political battleground for the two parties ever since. With infighting the order of the day, service delivery ground to a halt.

In his 2000 local elections rally address in Mthatha, UDM president Bantu Holomisa blamed the ANC for the financial crisis faced by the local municipality.

“The ANC moved the capital and all government departments to Bisho for the sole purpose of strangulating Transkei economy,” he said. The ANC regained control of the municipality after by-elections in 2004.

Today Mthatha, the once thriving capital of the nominally independent Transkei homeland, is still in a “state of collapse”.

“The urban core of the municipality remains littered with rubbish, the gaping potholes have not been attended to and the electricity outages remain the order of the day,” the report says, highlighting the lack of a maintenance budget for infrastructure, as well as a litany of bad management.

It says the debt-ridden KSD—which is owed about R250-million by residents in unpaid service fees—counts among its creditors the South African Revenue Service (to which it owes R18-million), the Public Investment Commission (R84-million), the national water affairs and forestry department (R46million) and the Development Bank of Southern Africa (R13million).

According to the report, Sars issued a stop order in January this year, effectively freezing the municipality’s bank accounts in an attempt to recover its money. After a payment agreement was reached—KSD will repay the debt at R1,1-million per month—the municipality’s accounts were unfrozen.

The report points out that huge staff turnover at senior management level and poor financial management practices resulted in the “erosion of all operational cash reserves in the municipality”.

The Mail & Guardian understands that, when the municipality asked permission from Kwelita to create a deputy mayor position and two other portfolio positions in the mayoral committee, the minister refused because there was no money for remuneration.

The report confirms this, saying there is a “continuous threat” over the municipality’s “inability to meet monthly payroll obligations” to employees. “The percentage levels of expenditure on employee-related costs to total budget stand at 60%.”

An ANC party source in OR Tambo, the district municipality of which KSD forms a part, told the M&G last week that the ANC has realised that “its strategies to frustrate the UDM when it was in power” were “not premised to benefit the poor. Political infightings between the UDM and the ANC were so polarised that they would render any political party in power [ANC or UDM] incapable of governing,” said the source.

The municipality’s principals concur.

Kaya Gashi, chief financial officer at KSD, says the municipality is developing a long-term development strategy to “turn around” the bad situation.

“We have realised that the municipality had not been properly established since the amalgamation of Mthatha and Mqanduli. Now we need to find mechanisms and develop economic strategies that will increase the revenue base of the municipality,” he said, adding that despite its rural-based nature “the municipality needs to attain sustainability and stop depending entirely on external grants”.

In March, the municipality met with OR Tambo municipality mayor Zoleka Capa-Langa to “expedite” the possibility of conferring the KSD with water and sanitation service provider status in order to improve its income revenue. The OR Tambo municipality took over the provision of water from the then UDM-led local municipality in 2003, a move that, at the time, was seen by the party as an attempt to undermine it and “starve” the municipality of funds so that it could not deliver services to residents.

The municipal recovery plan, which was passed in July, included a number of financial management interventions, including the “aggressive implementation of the credit control and debt collection by-laws”.

The plan, which would cost the municipality R9,4-million to implement, also included the development of service level agreements.

“Service level agreements in primary healthcare, municipal health, library, firefighting and disaster management services [are] likely to yield R20-million in revenue streams of the KSD municipality,” says the plan.

Although passed by all parties in the council, some opposition party members are doubtful whether the plan will succeed without a financial injection into the cash-strapped municipality.

Mthatha UDM leader Wandile Tsipa told the M&G that Mthatha is facing a “severe financial crisis”, but that the ANC is “living in a state of denial”.

“The whole town is going to the dogs. There is no service delivery. Refuse is not collected because there are no trucks. Sewage is overflowing in some areas because the pipes burst almost every week,” he said.

Tsipa has accused the ANC of lacking the “political will” to solve the people of KSD’s problems, despite the fact that the council passed the municipal recovery plan.

“The plan does not address the root causes of the financial crisis. It is only about belt-tightening and writing off some of the debts, but it doesn’t talk of any financial injection.”

Looking back, looking forward

  • Mthatha was the former capital of the Transkei homeland, which became a nominally independent sate in 1976 and was ruled mainly by Chief Kaizer Daliwonga Matanzima.
  • In 1987, Bantu Holomisa, the United Democratic Movement president, led a coup, which ousted the homeland’s first female prime minister Stella Sigcau. Sigcau died last year.
  • After the 1994 general elections, Transkei was incorporated into the Eastern Cape provincial government and Mthatha and Mqanduli transitional local councils were ruled by the ANC.
  • Shortly before the 2000 local elections, the two councils were merged to form the King Sabata Dalindyebo (KSD) local municipality.
  • The ANC lost control of KSD to the UDM during the 2000 elections, but regained control of the municipality in June 2004 after local by-elections.

Today, the municipality is owed R250-million in unpaid service fees.

  1. It owes the South African Revenue Service R18-million, the Public Investment Corporation R84-million, the national department of water affairs and forestry R46-million and the Development Bank of Southern Africa R13-million.
  2. KSD is one of the seven municipalities that comprise the OR Tambo district municipality, which caters to 1,8-million people.
  3. According to the provincial government, 77% of OR Tambo’s economically active people are unemployed and 88% of households live below the poverty line.
  4. According to OR Tambo mayor Zoleka Capa-Langa, 72% of OR Tambo’s revenue comes from external grants; 51% of households do not have water; and 58% do not have sanitation.
  5. The municipality requires R1,7billion to reverse the current water and sanitation backlog, which is lagging close to 10 years behind national targets.

New developments under way and others on the pipeline provide a gleam of hope for the crisis-ridden municipality:

  • A R130-million shopping complex is being developed at the former site of the Independence stadium, previously home to the former Premier Soccer League side Bush Bucks.
  • A R15-million airport development that will see land around the Mthatha airport transformed into fresh produce fields.
  • The construction of a R35-million, 50-bed, three-star hotel and conference facility, and a 65 000seat stadium is also in the pipeline in preparation for the 2010 Soccer World Cup.
  • One of the major projects in the pipeline is the R500-million development of land along the N2 to East London near Nkululekweni (Mthatha) for a shopping complex, motor showrooms, office parks and residential townhouses.

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