North West’s municipalities from hell: Business interest group asks high court to ring-fence rates

Business interest group Sakeliga has filed an unusual application in the North West High Court, asking a judge to ring-fence municipal rates in two of the North West province’s struggling municipalities and appoint a special master to make payments to Eskom and for water and repair services before giving “what is left” to the municipality.

“This is an application which has one goal in mind, and that is to ensure effective and functional governance within local government in the North West province,” Sakeliga CEO Pieter le Roux stated in his affidavit.

The application cites the provincial MECs for finance; cooperative governance, human settlements and traditional affairs; the national minister of cooperative governance, Nkosazana Dlamini Zuma; finance minister Tito Mboweni; the Ditsobotla local municipality based in Lichtenburg; the Naledi local municipality based in Vryburg; the premier of the North West province, Job Mokgoro; as well as Eskom and the board of Magalies Water.

Le Roux said that in papers being served on two municipalities in the North West, as well as on the minister of finance and others, Sakeliga is asking the court for far-reaching, novel interventions that have never been applied at municipal level.

“What is new about this case is that it moves beyond temporary solutions. It seeks to prevent access by incompetent or corrupt municipal officials to water and electricity payments in the first place, which is what is required for a long-term solution. 

“To this end, Sakeliga is requesting the court to appoint a special master – such as independent auditors – to take control of water and electricity payments. The special master may then make payments directly to Eskom and water suppliers, as well as for maintenance of electricity and water infrastructure. 

“Only a remaining portion will be made available to the municipality and the administration team,” Le Roux said.

He explained in his affidavit that “a mere perusal” of the official document detailing the state of municipalities around the province makes it “apparent that almost every single municipality, and in particular the municipalities mentioned in the application, all experienced or underwent a total collapse of governance over the last 10 years. 

“It seems as if every constitutional duty that has been bestowed upon local government within the North West province has been neglected to such an extent that the community involved cannot rely upon local government to provide them with the most basic municipal services.”

Le Roux added that municipalities were debt-ridden and plagued by corruption. “All fiscal control has been lost.”

He mentioned that communities living in the two municipalities cited in their application had to go to court to protect themselves from having their electricity cut, as municipalities failed to pay Eskom the money it is due.

He added that the two municipalities – Ditsobotla and Naledi – are also no longer in a position to maintain their water reticulation and sanitation services. 

Le Roux said while the provincial government had advised that a recovery plan be implemented in almost all the municipalities in the province, the MEC has failed to recognise the urgency of addressing the situation and that the collapse of the municipalities has gone so far that it is no longer viable to implement a strategy.

He proposed that a special master be appointed by the court to handle the money paid to the municipalities for water and electricity. 

Le Roux said they are suggesting that municipal rates be ring-fenced and that the portion remaining be paid over to the municipalities once Eskom and water service authorities had been paid.

“The purpose of the court case is to save local economies by providing a structural solution. Although we and other organisations are regularly successful with interdicts and other short-term interventions, lasting solutions require control over the flow of money. 

“After years of failure at all levels of government to intervene as they should have, we are now asking the court to order that the special master take control of the most important financial matters – those regarding water and electricity – until such time as National Treasury’s financial recovery plan has been properly implemented.”

Le Roux says Sakeliga is trying to defuse a situation that threatens to destabilise the whole country. 

“The failure at local level is a result of a collapse of management and control at all levels of government, up to the Cabinet. 

“If we were to simply continue obtaining interdicts banning service interruptions by Eskom and water boards, then Eskom and those water boards would collapse financially, taking the whole fiscus with them. 

“On the other hand, if we allow electricity and water to be cut off or interrupted, then it heralds the end of that local economy – property values would fall to zero and whole populations would migrate to the metros, which only shifts the pressure and destabilises the larger centres. 

“A third way is required... services must be rendered and payments for those services must reach the right destinations.”

Papers before court provide damning evidence of the collapse of local government in the province. Auditors’ reports for seven years show that out of 154 reports filed by 22 municipalities during this time, only 16 received unqualified audits.

The Ditsobotla municipality had been “under administration”, but according to an official provincial government report, “serious and damning allegations against key office bearers and councillors are not allowed to be tabled at the council meetings”.

The municipality has an unfunded budget and owes Eskom close to R700-million. A firm of attorneys has been appointed to investigate the loss and alleged embezzlement of integrated national electrification plan funds. 

The municipality has no supply chain manager, no proper IT system and has received three consecutive disclaimers by the Auditor-General. An intervention in the Naledi municipality was withdrawn because the officials had “a good attitude.”

“This is a tale of distress,” Le Roux said, referring to the report.

He said that after Sakeliga brought an application in terms of the Promotion of Access to Information Act against the Ditsobotla municipality, both the application and subsequent summonses served on officials were simply ignored.

“Potholes have basically destroyed what was left of the tourism industry,” he said, adding that most residents have to rely on water tanks as the reticulation system was in a state of collapse, as was the electricity network, the stormwater drains and the sewage system.

Le Roux said the municipality informed residents that they can’t fix sewage problems in the town because they don’t have the money and that business owners must appoint private contractors to do the work. 

He said the Naledi municipality owed R390-million to Eskom and had similar problems to the Ditsobotla municipality.

Le Roux said poor debt collection and a failure to pay rates were at the heart of the problem.

“One of the main reasons why communities distrust the political structures is because they know of their corrupt activities. They know their hard-earned money is maladministered.

“They know that many of the councillors are corrupt… Community members understand that money paid into the hands of such corrupt officials will not find its way to the municipalities’ true creditors,” he added.

No date has been set for a hearing. DM/MC

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