Statement by Minister of Local Government, Environmental Affairs and Development

7 December 2016

 Statement by Minister of Local Government, Environmental Affairs and Development Planning, Anton Bredell.

 Provincial intervention in Kannaland Municipality

 The Western Cape Provincial Cabinet today approved steps for the Western Cape Government to intervene in the Kannaland Municipality in terms of Section 139(5) of the Constitution, as well as steps for the Department of Local Government and Provincial Treasury to develop and implement a targeted support package for the Municipality.

 This decision by the Provincial Cabinet follows a request made to the Western Cape Government by the recently-elected Kannaland Municipal Council for:

•          A provincial intervention in terms of Section 139(5) of the Constitution; and
•          A targeted support package to address the immediate governance, operational and technical needs of the Kannaland Municipality.

This request was formulated via a resolution adopted by the Kannaland Municipal Council at a special meeting held on 2 December 2016.

 The provincial intervention in Kannaland Municipality has the full support of the National Department of Cooperative Governance and Traditional Affairs, the Provincial Treasury, as well as the current Kannaland Municipal Council.

 The Provincial Minister of Local Government, Environmental Affairs and Development Planning, Anton Bredell, says the Kannaland Municipality is in a precarious financial position.

 “Immediately following the elections in August this year, the Provincial Department of Local Government was requested by the newly-elected Council to conduct a thorough assessment of the affairs of Kannaland Municipality, including an assessment of the financial affairs of the Municipality. The provincial officials discovered a number of serious financial, technical, operational and governance challenges that the new Council had inherited, including, for example, an unsustainable wage bill and a large amount of debt owed to creditors. Eskom was owed in excess of R14 million.”

 Bredell says the most recent audit finding from the Auditor-General for the financial year ending June 2016 was an adverse finding – the worst possible finding by the Auditor-General. “The facts determined to date, together with the request received from the Kannaland Municipal Council, confirm that the municipality is currently experiencing a serious financial crisis and, as a result of this crisis, is not able to meet its financial obligations.”

 In terms of the decision taken by the Provincial Cabinet today, the Provincial Treasury has been requested to prepare an appropriate financial recovery plan for Kannaland Municipality in terms of s139(5) of the Constitution, read with the relevant provisions of the Municipal Finance Management Act (MFMA).

 This recovery plan will only be imposed by the Provincial Cabinet and approved by the Provincial Minister: Finance once it has been prepared and finalised in accordance with the provisions of the MFMA.

 In addition, the Department of Local Government and Provincial Treasury have been requested by the Provincial Cabinet to develop and implement – with support from all relevant national and provincial stakeholders and subject to available resources – a targeted support package to address the immediate governance, operational and technical needs of Kannaland Municipality. The current Council will remain in place and will provide support to the Western Cape Government in developing and giving effect to the financial recovery plan and targeted support package.

 This is the second intervention by the provincial government in the past two years, following an intervention into Oudtshoorn Municipality that was terminated once the new Council was declared elected subsequent to the local government elections held in August 2016.

 Bredell said, “The provincial intervention and targeted support package are aimed at strengthening and supporting the capacity of Kannaland Municipality to manage its own affairs, perform its functions and exercise its powers.”

 ENDS.