GREAT KEI MUNICIPALITY 2014/2017 DRAFT INTER€¦ · Web viewGreat Kei Local Municipality presents...

G R E A T K E I L O C A L M U N I C I P A L I T Y

2 01 2 /2 0 1 3 F INAL ANNU AL R E POR T

INDEXContents Page NoList of Acronyms 3Part 1: Introduction and Overview

A: Mayors ForewordB: Acting Municipal Managers Foreword

5

67

Overview of the Municipality 9Executive Summary 32Part 2: KPA Achievement Report 33Chapter 2: Good Governance and Public Participation: KPA 1

2.1 Overview of S79 Committees and Council functions2.2 Other Governance Structures2.3 Rule of Law2.4 Public Participation and Consultation2.5 Relations with other stakeholders and sector departments2.6 Areas of Intervention2.7 Highlights/Consensus Oriented Municipality2.8 Equity and Inclusiveness2.9 Communication Strategy2.10 Intergovernmental Relations2.11 Legal Matters

34

3435363739393939

4444

Chapter 3: Service Delivery Performance: KPA 2

PART 1: BASIC SERVICE DELIVERY

3.1 Water Services3.2 Electricity Services3.3 Sanitation Services3.4 Roads Construction and Maintenance3.5 Waste Management Services3.6 Public Amenities3.7 Housing and Town Planning3.8 Spatial Planning3.9 Indigent Policy Implementation3.10 Overall Service delivery backlogsPART 2: LOCAL ECONOMIC DEVELOPMENT

3.11 Local Economic Development Strategy3.12 Progress towards achieving LED key objectives3.13 Annual performance as per key performance indicator in LED

45464848505152535454

586061

Chapter 4: Organizational Development Performance (KPA 3)

4.1 Presentation of Organizational Structure4.2 Performance Management System4.3 Capacitating Workforce in 2012/2013 Financial Year 4.3.1 Key statistics per functional area 4.3.2 Annual key performance indicators for 2012/2013 Organizational Development 4.3.3 Major Challenges and remedial actionsChapter 5: Financial Performance (KPA 4)

5.1 Audited Financial Statements

6365666769

71

72152

2012/2013 FINAL ANNUAL REPORT Page 1

5.6 Annual Performance as per Key Performance indicator in financial viability5.7 Audit Committee Functioning5.8 Arrears in property rates and service chargesPART 3: 2012/2013 SERVICE DELIVERY AND BUDGET IMPLEMENTATION REPORTING

a) Summary of 2012/2013 Quarter 1 to Quarter 4 ResultsANNEXURE A: 2012/2013 Detailed Service Delivery and Budget Implementation ReportingAG: Audit ReportAudit Action Plan

152

158168


LIST OF ACRONYMSACRONYMS

DESCRIPTIONS

AG Auditor GeneralADM Amathole District MunicipalityAIDS Acquired Immune Deficiency SyndromeASGISA Accelerated Shared Growth Initiative of South AfricaBSD Basic Service DeliveryCFO Chief Financial OfficerDBSA Development Bank of Southern AfricaDEAT Department of Environmental Affairs and TourismDFA Development Facilitation ActDFID Department for International DevelopmentCOGTA Department of Cooperative Governance & Traditional AffairsADM Amathole District MunicipalityDoHS Department of Human SettlementDoL Department of LabourDoE Department of EnergyDoE Department of EducationDSRAC Department of Sport Recreation Arts and CultureDoH Department of HealthDoMR Department of Minerals ResourcesDTI Department of Trade and IndustryDOS Department of Social Development and Special ProgramsDAFF Department of Agriculture Forestry & FisheriesDoLRD Department of Land Reform & Rural DevelopmentDoARD Department of Agriculture and Rural DevelopmentECDC Eastern Cape Development CorporationEHO Environmental Health OfficesEMP Environmental Management PlanEPWP Expanded Public Works ProgrammeES Equitable ShareFBS Free Basic ServicesFET Further Education and TrainingFV & M Financial Viability and ManagementGG & PP Good Governance and Public ParticipationHH HouseholdsHIV Human Immuno-deficiency VirusHR Human ResourcesIDP Integrated Development PlanID & OT Institutional Development and Organizational TransformationIDPRF Integrated Development Plan Representative Forum


IGR Inter-Governmental RelationsISRDP Integrated Sustainable Rural Development ProgrammeKPA KPI: Key Performance AreaKPI KPI: Key Performance IndicatorLED Local Economic DevelopmentLGSETA Local Government SETAGKLM Great Kei Local MunicipalityLUMS Land Use Management SystemMDG Millennium Development GoalsMIG Municipal Improvement GrantMM Municipal ManagerMSIG Municipal Systems Improvement GrantMPAC Municipal Public Accounts CommitteeNSDP National Spatial Development PerspectiveOHS Occupational Health and SafetyPGDP Provincial Growth and Development PlanPMS Performance Management SystemPMTCT Prevention of Mother to Child TransmissionSAPS South African Police ServicesSEA Strategic Environmental AssessmentSDBIP Service Delivery and Budget Implementation PlanSDF Spatial Development FrameworkSLA Sustainable Livelihood ApproachSMME Small Medium and Micro EnterprisesSTATSSA Statistics South AfricaToR Terms of ReferenceWSA Water Services Authority



PART 1: Introduction and Overview

A. Foreword by the Mayor Great Kei Local Municipality presents its 2012/2013 Annual Report which will provide the municipality’s strategic framework for the past financial year, achievements in line with the framework; challenges and remedial actions.

It is important to indicate that Municipality adopted 2012/2013 in line with the five key performance areas of the Local Government; 12 Government Outcomes Approach; Eastern Cape Growth Development Plan 2014; National Development Plan 2030.

The focus thereof has been in the following strategic goals in line with the municipality’s vision and mission:

- Basic Service Delivery- Good Governance and Public Participation- Financial Viability and Management- Local Economic Development and - Institutional Development and Organizational Transformation

Outcome 5 of Government Outcomes puts an emphasis on skilled and capable workforce to support inclusive growth whilst outcome 9 emphasizes a response and, accountable, effective and efficient Local Government System. This has been an emphasis of Great Kei Local Municipality in 2012/2013 Financial year notwithstanding the quantified targets for growth and development as outlined in the Eastern Cape Growth and Development Strategy for the period 2004-2014.

The targets set in 2012/2013 financial year indeed have contributed to the employment sector; basic service delivery and thus sustainable socio-economic development.

a) Basic Service Delivery

The municipality has utilized the Municipal Infrastructure Grant and Internal Funding to provide basic services to the community such as:

- Roads infrastructure - Public Amenities (Community Halls and Pre-schools)- Electricity - Waste Management Services

The details are as reflected in KPA 2 Performance Report.

b) On Good Governance and Public Participation

Indeed public participation mechanisms have been improved from planning to implementation of the targets set. The municipality has established and resuscitated the following forums and utilized the following platforms to ensure public participation:

- Ward Committee and CDW’s Meetings


- Home Affairs Forum- Roads Forum- Held Local Economic Development Indaba in June 2013- Mayoral/Speaker Imbizos- IDP/Budget PMS Roadshows in November 2012 and April-May 2013

c) On Financial Viability and ManagementThe municipality’s financial viability and sustainability has been the priority for the financial year; hence the revenue enhancement strategy project. The main aim of the project is to bring about additional revenue streams and also increasing revenue within existing revenue streams.

d) On Local Economic DevelopmentSustainable local economic development initiatives is the key priority to Great Kei Municipality Council; hence the support to communal farmers with seedlings; inputs and equipment in the financial year 2012/2013.

e) On Institutional Development and Organizational Transformation

Training and capacity buildings of both councillors and municipal employees has also been a priority for institutional development. KPA 3 Performance report has details of the trainings conducted in 2012/2013 financial year

I want to thank everyone who has contributed every little effort in assisting the municipality to discharge its constitutional obligation of serving our people and to making the year in review the great success it was.


B. The yearly program priorities’ statement by the Acting Municipal Manager The compilation of 2012/2013 Draft Annual Report is informed by the following pieces of legislation and relevant documents:

The Republic of South Africa, Constitution 1996 as amended (Overarching Legislative Framework)

Local Government: Municipal Finance Management Act 56 of 2003 Local Government: Municipal Systems Act, No... National Treasury MFMA Circular No. 63 Local Government Annual Report Guidelines; 2012/2017 Integrated Development Plan; 2012/2013 Budget Documents 2012/2013 Service Delivery and Budget Implementation Plan

The annual report provides summary and detailed results associated with 2012/2017 municipality’s strategic objectives and strategies in line with Powers and Functions engraved in the South African Constitution; and 2012/2013 annual targets that are aligned with the budget activities. Also included are references to supporting documents and the status of 2012/2013 met and unmet targets. Also, included, is 2012/2013 Annual Financial Statements.

Great Kei Municipality commits itself to liquidate all inhibiting factors to clean administration through informed, incisive and grounded strategies and tactics.Hoping that everyone will afford him of her ample time to go through this report.

Thank you.

……………………………………………….J.F.Van DalenActing Municipal Manager Great Kei Municipality


C. Overview of the Municipality

a) EXECUTIVE SUMMARY OF THE SITUATIONAL ANALYSIS

The situational analysis established that Great Kei Municipality occupies 1 421 square kilometers (km²) of the Amathole District Municipality in the Eastern Cape Province. The population is estimated at 338 991 according to Statistics 2011 and some 10 310 households distributed into seven wards.

The GKM is bounded in the East by the Great Kei River and Mnquma Local Municipality, by the coastline between Kwelera and Kei Mouth in the South East, by the Buffalo City Municipality in the West and the Amahlathi Municipality, which is situated to the North.

The population is predominantly female accounting for approximately 53%, male compose only about 47% of the population. The municipality has had a high prevalence of poverty in 2007, where 54 percent of households were below the poverty line, declining employment levels (an average of 2 percent decline per annum) and resultant high unemployment levels (40 percent of the economically active population). (Urban Econ, ‘Local Economic Development Training Workshop’ 13 November 2007).

It is evident that GKM has a relatively high standard of water provision; however water is a key prerequisite for development and is therefore important. The road network within the Great Kei Municipality consists of 729, 55 kilometers of surfaced and unpaved roads.

Social and community services are also not in a satisfactory manner. Health Facilities are also a concern within the municipality jurisdiction; where 58% of people live more than 5 km from medical facilities and only 1, 5% have access to a medical benefit fund (DBSA, 1997).

The economic profile of the municipality is characterized by a small population, low populations density, concentration of employment in agriculture, disinvestment in rural areas, the dominance of one urban centre in the region and the resultant disparity between rural and urban areas.


b) LOCALITYB (1) GEOGRAPHIC PROFILE

The Great Kei Municipality (GKM) is located within the Eastern Cape Province and covers an area of 1 421 square kilometers (km²). The Municipality’s Headquarters are in Komga; and satellite offices in Haga Haga with 5 employees; Kei Mouth with 5 employees and Chintsa with 5 employees. Municipal Services offered in Satellite offices are as follows:

- Refuse Removal- Grass Cutting and Clearing of Bushes- Roads Maintenance services

The GKM is bounded in the East by the Great Kei River and Mnquma Local Municipality, by the coastline between Kwelera and Kei Mouth in the South East, by the Buffalo City Municipality in the West and the Amahlathi Municipality, which is situated to the North. Population of the municipality is distributed into seven wards, which are the amalgamation of previously different communities and municipal entities, including Komga, Kei Mouth, Morgan Bay, Haga-Haga, Chintsa East, Chintsa West, Mooi plaas and Kwelera. Regional access is obtained through the district via the N2 National Route from East London to Butterworth with a provincial main road N6 connection between Komga and Sutterheim and the connection between Komga and King William’s town and Bhisho is via the R63. A graphical representation of the Great Kei Local Municipality is illustrated by in Figure 1. below.

Figure 1- Map of Great Kei Local Municipal Area


c) DEMOGRAPHICS ANALYSISC (1) Population Size

According to the Community Survey of 2011 conducted by Statistics South Africa, the total population of Great Kei Municipality is estimated at 338 991 and some 10 310 households, which is a decline from Census 2001 Statistics that estimated a total population of 444 59 and some 11 365 households. The average household consists of about 3.8 % people.The Figure 2 below illustrates the decline of population and households in 2001 and 2011:

36000370003800039000400004100042000430004400045000

44459

38991

DEMOGRAPHIC PROFILE

2001

2011

SOURCE: STATISTICS 2011i. Population by Density

PopulationDensity people/km²1 Urban Areas 185.52 Great Kei Municipality 28.2

The service centres of Komga and Kei Mouth as well as the coastal settlements of Morgan’s Bay, Haga Haga and Chintsa can be described as urban areas falling within the national definition of "an urban area administered by a local authority or municipality".

The population density within urban areas is estimated at 185 people/km (refer to Table 1 This can be attributed to the diverse economic activity and higher level of social and physical infrastructure services to be found within the centers. Urban centres within the area display a growth rate of around 1, 5% per annum compared to a negative growth rate of –1, 9% for the entire Great Kei Municipal area. This is believed to be the result of the steady exodus of families from farming areas and adjacent rural settlements, causing a population increase within local urban centres. Recent studies in South Africa have found that resettlement to nearby small towns remains an attractive option to dislocated rural families and individuals (particularly women), as opposed to moving to larger urban environments such as Buffalo City, Port Elizabeth and Cape Town (DBSA 2001).


ii. Gender and Age DistributionThe population is dominated by female of approximately 53%, male compose only about 47 % of the population. About 62.0% of the populations fall between 15-64 years, whilst 9.3 % are in the pension group (over 65 years) and only 28.7 % is less than 15 years. This indicates that there is a high dependency ratio of about 61.3 %. This underpins the need to develop social and youth development programmes and proper infrastructural planning, provision of basic services and job creation.Population by Gender

53%

47%FemalesMales

FEMALES VS MALES

SOURCE: STATISTICS 2011

AGE DISTRIBUTION

<15 15-64 65+0

10

20

30

40

50

60

32.6

59.8

7.6

AGE DISTRIBUTION 2001


<15 15-64 65+0

10

20

30

40

50

60

70

28.7

62

9.3

AGE DISTRIBUTION 2011

SOURCE: CENSUS 2011

d) SOCIO- ECONOMIC PROFILED (1) ECONOMY AND POVERTY

The economic profile of the Great Kei Municipality is characterized by a small population, low populations density, concentration of employment in agriculture, disinvestment in rural areas, the dominance of one urban centre in the region and the resultant disparity between rural and urban areas. In addition to this, the GKLM had in 2007 a high prevalence of poverty (54 percent of households below the poverty line), declining employment levels (an average of 2 percent decline per annum) and resultant high unemployment levels (40 percent of the economically active population). (Urban Econ, ‘Local Economic Development Training Workshop’ 13 November 2007).An analysis of the contribution of the various economic sectors to the Great Kei Municipality economy may be summarized as follows:

The government sector (particularly health and education) contributes significantly to the GDP.

Finance and Business Services and the Manufacturing sector also contribute significantly to the GDP

The contribution of Agriculture has declined slightly. There has been a significant decline in the contribution of the Wholesale and

Retail Trade sector, which indicates leakages to other areas, particularly since the population has remained stagnant

The contribution of Community Services and Construction to the GDP has increased over the years

Overall, the Great Kei Local Municipality’s economy registered positive growth during the past decade. The area will, however, have to maintain its economic growth rate in order to significantly improve welfare indicators.


I. D (2) EMPLOYMENT PATTERNS

Over 39% of the GKLM are employed in the formal economy. This is line with the ADM and is significantly higher than the average for the Eastern Cape. Unemployment levels are similar to the provincial average (17%), but the proportion of those that are not economically active (not working, nor looking for work) is lower than the provincial rate of 53%.There has been a gradual increase in the unemployment rate from 1996 which originally stood at 34.4%.Total employment within the Great Kei Local Municipal area is dominated by the agricultural sector comprising 35.58%. Although the level of reliance has been declining in recent years, agriculture remains the dominant sector of employment in the region and contributes just less than a third of total employment. Services, ranging from social and personal to financial and business, have been one of major growth sectors in terms of employment, as too has trade, catering and accommodation (much of this due to the growth in tourism products). Construction has also experienced grown due to the construction of new housing schemes. The manufacturing and government sectors have been consistent contributors to employment.

D (3) EDUCATIONIlliteracy levels are very high within the municipal jurisdiction with only 2.5 % of the total population that has higher level of Education as illustrated in Figure below. Although there is a decline of illiteracy level between 2001 and 2011, percentages of illiteracy are still high

Percentage of people with No schooling= 19.2 % Percentage of people with Higher Education= 2.5 % Percentage of people with Matric= 15 .0% Percentage of Primary Education Enrolment (Ages 6-13)=93.7 %

There are 34 primary schools within the Great Kei municipal area - located at Komga, Mooiplaas (9), Kwelerha, Ocean View, and Icwili and upon Farms (20). There are 8 combined schools - located at Springvale, KwaTuba, Eluphindweni, Kwa-Jongilanga, Mooiplaas (2) and Farms (2). Three (3) secondary schools exist at Mooiplaas, Icwili and Eluqolweni.

Table: Number of Primary and Secondary SchoolsGreat Kei Municipality Primary Schools Secondary

/Combined Schools

Number of schools 34 8Number of Schools/1000 children

2.62 0.19

Table above illustrates the total number of schools and average number of schools per 1 000 children (between the ages of 5 and 19). In the area there is a notable deficiency in secondary schools available (only eight), resulting in this municipality being forced to send their pupils to secondary schools outside the municipal area.


There is a trend that the educational facilities within the urban areas are of better quality and regular maintenance is being undertaken. Most of the population is leaving the municipality to receive further secondary and tertiary education, they do not return to the municipality after completing their education. Table : Adult Literacy Rate

Adult Literacy rate

Defined as the percentage of people' (male and female) age 15 years and over who can, with understanding, both read and write a short simple statement on their everyday life.

Adult Literacy1 Total Gt. Kei (female and male) 74,4%2 National (female and male) 81.8%

Source MDB, 2001The Great Kei Municipal area appears to have a high illiteracy rate (25, 6%) when compared to the rest of the country (refer to Table 9). This fact may be ascribed to a general low provision in higher education facilities within the municipality, a low demand for literacy within the local economic sector and the loss of a portion of the literate population to other work centres outside the municipality.

b.


D (4) HEALTHHeath facilities within the area consist of one community health centre (Komga) and 5 clinics (Komga, Kwelera, Mooiplaas (2), and Icwili). The availability of health facilities is an important determinant of the health status of the sub-region. This refers not only to their existence, but also ease of access to and quality of health facilities. As most health facilities fall within the urban areas, most of the rural population has limited access to these facilities. Some 58% of people live more than 5 km from medical facilities and only 1, 5% have access to a medical benefit fund (DBSA, 1997).Table 20: Hospital Beds

Hospital beds Number of persons per hospital bed.Total population should be divided by number of beds.Great Kei Municipality

Number of beds

1 Com. Health Centre 165 Other (Clinics) 46 Total 205 Number of person/

bed2234

Source Department of Housing & Local Government, 1997According to the Department of Housing and Local Government (1997) the total capacity of hospitals and clinics in the district is 20 beds (refer to Table 7). This amounts to ½ bed / 1 000 people in the district or 2 234 persons/bed. This figure is much lower than that of the central sub region (2, 3 beds per 1 000 people) and 5, 1 beds / 1 000 for South Africa.There is a strong trend towards decentralization in South Africa and tremendous demands are being placed upon the local government sphere. Local government currently does not have the capacity to accept and carry out additional functions.It is in this context that the District Health System is being established. The process of developing such a system will have to take account of current reality and the various processes that will impact on health service delivery. It will be important for people involved in the health sector to:

participate in the Integrated Development Planning process; explore new mechanisms for delivering services; engage with the allocation of health service functions to Municipalities; Continue to improve the rendering of high quality health care in an integrated

manner.e) SPATIAL ANALYSIS

The municipality adopted a Spatial Development Framework in 2005/2006 Financial Year. It is against this background that the SDF is currently reviewed in partnership with Amathole District Municipality, for alignment with 2013/2017 Integrated Development Plan.

The spatial characteristics of the Great Kei Municipal area are largely determined by the influence of the coast, the Great Kei River and the National Road which dissects it in an east/west direction. There are four main nodes which are dominated by the influence of nearby Buffalo City. Komga is the main service centre, with Kei Mouth, Haga Haga, Cintsa and the Glens forming the other nodes.


There are three significant development areas in the area; the two settlement areas of Kwelera and Mooiplaas and the coastal belt. The settlements of Kwelera and Mooiplaas can be classed as model 2 type settlements. Formal planning has been carried out in Kwelera and currently being carried out in certain villages in Mooiplaas. Small scale subsistence farming is practiced in both settlement areas. Densification of these settlements is proposed, with the provision of basic services.

The areas of Kei Mouth and Chintsa East are regarded as major coastal resorts and settlement model type 1. With the upgrading of the main road MR 695/687 to Kei Mouth, tourism has increase significantly. These areas have large amounts of tourism potential but an upgrade in infrastructure is required to support development.Within the municipality itself there are agricultural areas and game/ tourism reserves which offer a wide variety of land uses and opportunity. It is significant to note that the entire municipal area is dissected by roads but the majority of the population is living in areas which are relatively remote from the service centres, the municipal offices and the coastal employment opportunities. Upgrading of the road network, especially the links between Kwetyana (Newlands on the N6) and the junction with the N2 at the Mooiplaas Hotel area and onwards to Kei Mouth, has a significant impact on development and transportation in the area. In addition, it is envisaged that focused development in the vicinity of Mooiplaas junction could see the longer term establishment of a Service Centre which would bring services, commerce and local economic development closer to the communities of Kwelera and Mooiplaas. This is enhanced by the location of the Multi-Purpose Centre and the Sports Complex in closer proximity to rural communities.

Finally, it is noted that from a transportation point of view, this junction is at the central pivotal point in the area where all transport has to pass. This creates an opportunity for travellers fuelling centre, tourism information centre, taxi and bus facility shops, workshops, education, skills training. It is anticipated that private sector investment will occur in all areas of the Municipal area provided an enabling environment of infrastructure and Land Use Management is created. Prime areas for investment are in coastal resorts, eco-tourism, game farming and commercial development.

The Reviewed Spatial development framework will be used by the Great Kei Municipality to guide its land use management procedures in future. With the Spatial Development Framework, the Municipality is able to proceed in carrying out a detailed land use survey of its area and through a consultative process establish a land use management system.

f) LAND AND AGRICULTUREThe Great Kei Municipality covers an area of 1 421 km2. 1 364 km2 of land is used for agricultural production. 96% of the agricultural land is owned by private commercial farmers. 77% of this land is utilized as a grazing land for livestock (Cattle, Sheep, and Goats & Game). The remainder is utilised for Crop production (vegetable), Hydroponics & Dairy. Therefore GKM is predominantly a livestock producing area. Farmers Associations

• Commercial Farmers Association• Emerging/Small Scale Farmers Association• Communal Farmers Association

The table below illustrates the results of the Land Audit commissioned by the municipality.

Land Use Urban Great Kei Municipality

Areas in Km2 Agglomeration


1 Residential 57.00 1,421.001a Formal residential 20.00 20.001b Informal residential 10.00 10.002 Business 1.00 0.503 Agriculture 1.00 1,364.004 Services 3.00 20.005 Transport 1.00 1.006 Other 21.00 4.507 Total 57.00 1,421.008 Conservation area (%) 5.0% 0.4%

Source: D Data (1995) - Existing Land Use / Magisterial district

F (1) CASP Projects 2012/13Project Name

Km fenced Budget Progress/Outputs/Outcomes

Grey Valley Farm

10.4km R 400 000 Grey Valley Farm- Tender process has been used,7 people are employed in the project

Quku Valley Farm

11km R 480 000 Quku Valley Farm- Community fencing has been used, DRDAR has provided fencing material.16 people from Soto community that were trained in fencing

are employed in the project.

F (2) Veterinary Services- 15 dip tanks dipping about 8 836 Cattle in the communal Areas of GKM.- Sheep Scab Campaign (1 952 sheep)- Rabies Vaccination (2 131 dogs)• Ngxingxolo Dip Tank has been finished

F (4) AGRICULTURE

a) Veld ConditionsThe study commissioned by the municipality to University of Forthare identifies Six Veld Conditions with Great Kei LM:- Afromontane forest- Coastal forest- Coastal grassland- Dune thicket- Eastern thorn bushveld- Moist upland grassland and the valley thicket


- Four different sample sites showed a variation of 36% to 78 % in the veld condition score afromontane forest

- Average grazing capacity of the place was found to be 4.9ha/AU

b) Small Holder Development

The Average Hectares is 457.88. When compared with other municipalities the Smallholder development is illustrated as follows

(Source Study Commissioned to University of Forthare).


g) ENVIRONMENTAL ANALYSIS

(G) (1) ENVIRONMENT AND NATURE CONSERVATION

Great Kei Local Municipality adopted an Integrated Environmental Waste Management Plan commissioned by the Department of Environmental Affairs in 2011/2012 financial year, in line with GKLM Waste Management By-Laws.There is a need for vigorous efforts to take these factors into consideration by ensuring adherence to current environmental legislation. The municipality is in a process of licencing one existing landfill site. The municipality is also planning to co-ordinate processes of licencing the existing Transfer Stations. Specific environmental issues affecting the local municipality and requiring attention at present include but not limited:

Recycling is also suggested to deal with the waste as well as add value to the current unemployment levels.

Soil erosion across the area, through a practical rehabilitation plan. Productive land is being lost every year as topsoil is eroded, reducing grazing area and crop production potential.

Invasive plants and noxious weeds need control as they overtake land which could be used for more productive and sustainable purposes.

Blue Gum Black Wattle Acacia Karoo

Funding of Environmental Management Programs by the Department of Environmental Affairs:

The Department of Environmental Affairs dedicated human resources for Great Kei local Municipality

The Department funded Removal of Alien Species Program Cwili and Kei Mouth and 77 job opportunities were created in 2012/2013 financial year

109 Job opportunities were created for Kei Mouth to Chintsa Working for the Coast project funded by the Department of Environmental Affairs.

Cleaning of Great Kei Local Municipality Street Cleaning and Beautification funded by the Department of Environmental Affairs at a total amount of R7, 6 million raised the profile of the town.

In 2013/2014 financial year; the Department has further funded Working For the coast EC- WFTC Fish River to Great Kei Project under the auspices of Expanded Public Works Programme (EPWP) and Adopted Great Kei Expanded Public Works Programme (EPWP) Policy.

Project budget is R12,750 000.00 The Business Zone 852 cc is Appointed as An implementing agent by DEA and is

expected to create at least 35 jobs within GKMProject Deliverables aim at addressing some of the challenges identified above and promote cleanliness and beatification such as:

Coast cleaning and tourism nodes: removal of foreign objects and disposal Daily Sweeps, Litter picking,

Maintenance of the Coastal Infrastructure: Construction of the Board walks and maintenance of existing ones, braai areas, picnic areas.

Creating of access through construction of Hiking Trails and pathways to the Different areas.

Upgrade and Maintenance of Coastal infrastructure : Renovation of the Tidal Pool, Bins installation, Braai facilities, Signage, Educational and Directional

Alien Clearing and planting of trees: clearing and removing of alien plants applying the appropriate methods.


Rehabilitation of Coast Lines: Stabilising Dunes Gabions and vehicles control measures

(G) (2) CLIMATE CHANGEThe Great Kei Municipality Spatial Development Framework proposes that GKM should approach spatial planning with climate change in mind. The following recommendations were proposed to advance the thinking:

Greenhouse gases are thought to contribute to global climate change, and these gases include carbon dioxide, carbon monoxide and methane. Carbon dioxide and carbon monoxide are released form inter alia vehicle tailpipes and during the burning of fuel-wood. Methane is released by domestic livestock and waste disposal sites. However, it is important to note that the subtropical thicket found within the GKM is very efficient at capturing carbon and hence at offsetting the effects of the greenhouse gas emissions.

Therefore the SDF further proposes that the protection of biodiversity is the primary motivation for the protection of the subtropical thicket, it nevertheless has additional value as inter alia a potential means to slow down, or buffer the rate of climate change.

Generally temperature has risen (0.11% / decade) Precipitation has generally declined in the south-eastern part of the Eastern Cape

while it has increased in the northern part of the EC Consecutive dry days (CDD) have increased while Consecutive Wet Days (CWD)

have declined which generally contributed to the decline in precipitation.

Environmental Sensitive Areas have been identified as follows:

- Mountain catchment areas- River systems- Wetlands- Coastal areas - Severely degraded areas - Riparian Zones

G (3) OPEN SPACE SYSTEM (PARKS & RECREATION)

The Department of Environmental Affairs funded the Great Kei Municipality Recreational Park at an amount of R5 Million.

H) NATURAL ENVIRONMENT

H (1) Great Kei Coastal Zone

Since it is particularly the coastal areas that are under pressure for the development in Great Kei, it is therefore important to define the Great Kei Coastal Zone:-

The coastal zone in GKM is considered to extend from the edge of the territorial waters (12 nautical miles) on the seaward side, including the seashore (coastal public property); stretching between the high and low water spring tide marks, and extending inland for 1km from the inland boundary of the coastal public property in areas not zoned as residential, commercial, industrial or multiple-use or within 100m of the high water mark within these zoned areas.

The coastal zone includes estuaries which are defined as that part of a river near mouth which is influenced by tides and in which marine and mixing of marine and fresh waters occur, extending up to the uppermost region of the system which is influenced by the tidal cycle. And includes the terrestrial/riparian area of the estuary up to the 10m contour for wide valleys or the crest of the ridge in deeply incised river valleys.


The coastal area definition is relevant as it is in this zone that coast-dependent activities should receive priority from the planning perspective.

H (2) Temperature and Rainfall

The GKM Spatial Development Framework indicates that the climatic conditions of GKM varies from mild temperature conditions (14 - 23 °C) along the coast to slightly more extreme conditions (5 – 35 °C) in the hinterland, (source: National Botanical Institute, Cape Town).The mean annual rainfall in the municipality amounted to 756.7 mm per annum.The annual temperature amounted to 17.8 °C.The mean maximum temperature of the warmest month of the year amounted to 25.7°C.The mean minimum temperature of the coolest month of the year amounted to 8.1 °C.Potential evapotranspiration amounted to 589mm per annum.The potential evaporation ratio for the area is 0.77, which falls within the hold ridges “humid” humidity province.

G) BASIC SERVICE DELIVERY AND INFRASTRUCTURE DEVELOPMENT

G (a) Water services

a. Water services delivery strategy and main role-players: The ADM is the Water Services Authority and a Water Services Provider, thus the Great Kei Local Municipality participates in the development of Water Services Plan to inform planning and funding requirements. The ADM is planning Construction of Water Reticulation to 1140 erven and Upgrading of bulk water supply for Great Kei Local Municipality.

b. Levels and standards in water services:

An increase in the water services provision is noticed between 2001 and 2011 where in 2001 only 8.4 % households had an access to piped water services whilst in 2011 about 13.7 % households have access to piped water services.

c) Sanitation Services

a) Sanitation services delivery strategy and main role-players

Great Kei local Municipality is not the sanitation service provider but this function is contracted to Amathole District Municipality and with counter funding from MIG. Only 9.4 % of the total population has access to flushed toilet services, which is an increase from 2001, where only 8.9 % of the population had access to the service. (Census 2011)The ADM plans for the financial year 2013/2014 are as follows to reduce the sanitation backlogs:PROJECT NAME BUDGETKomga Commonage Settlement Services R8 578 000New Waste Treatment Works- Morgan’s Bay R700 000

NEW PROJECTS STILL TO BE REGISTERED TO MIGArea Wide Sanitation Projects (Great Kei Phase R10 300 000


1A) All RegionsMorgans Bay WTW Upgrade R100 000Kei Mouth Reticulation R500 000Upgrade Komga WTW R100 000TOTAL R20 278 000

b) Electricity Services According to Statistics 2011, a total population of 80.2 % has access to electricity services; however there is still a need to reach universal access. The Department of Energy funded upgrading of bulk electricity supply. The Bulk Electricity Upgrade Project has been completed in December 2012 and 300 split meter were procured to curb tampering. The municipality further plans to engage ESKOM and the Department of Energy to fund electrification of new households estimated at 3000 that do have access to electricity.It is also important to note that High Masts Lights will be installed, Street Lights to be maintained in the financial year 2013/2014.

c) Public Amenities and Social InfrastructureThe municipality has existing social amenities. Each ward has an existing community hall, such as; Siviwe Community Hall, Komga Town Hall, Komga Great Hall, Kei Mouth, Chintsa Community, Haga-Haga Hall Museum, Morgans Bay Community Hall, Nokhala, Kwelerha, Zozo, Diphini, Nyarha, Ngxingxolo, Makhazi Red Crosss, Mzwini, Mangqukela and Komga Recreation Hall. There is limited budget allocated for sports and recreational facilities maintenance. This is evident on the status of the sports fields in the municipal area. Other funding institutions on sporting and recreational facilities need to be explored as the municipal budget for this purpose is not sufficient.Municipal Infrastructure Grant has been utilized by the municipality in the last three financial years for construction of public amenities such as sport fields, pre-schools and community halls.In 2012/2013 financial year the municipality completed Belekumntwana Community Hall. The plan is to construct Phumelele Crèche, Cefane Community Hall, Lusasa Community Hall, Plangeni/Kwelerha Sport field, Icwili Community Hall, Komga Sport Field, Chintsa East Sport Field, Tuba Community Hall, Eluqolweni Crèche, Gwaba Community Hall, Soto Community Hall and Renovation of Gwaba Art Centre.

H) Human Settlements

H (a) Housing


The Municipality has an existing Housing Sector Plan (2011-2016). The Department of Human Settlement appointed a Service Provider to review the Sector Plan in line with 2013/2017 IDP. The key focus areas of the review are as follows:

a. Situational Analysis Reviewb. Feasibility Studies of all planned projectsc. Development of the Draft Housing Sector Pland. Presentation of the Housing Sector Plan to Stakeholders and Final Adoption.

The project is expected to be completed within seven months from June 2013.

The Great Kei Municipality has a diverse housing need relating to the fact that many families live in traditional dwellings in Mooiplaas and Kwelerha (see bar chart below). The coastal towns of Kei Mouth, Morgan’s Bay, Haga Haga, Crossways, Bulugha, Glen Muir and Chintsa East have a need to provide serviced sites and low cost housing for the workers who would like to live in these centres. There is also potential for development of holiday homes and tourism related accommodation. Currently, we’ve applied to our provincial housing department for the following projects: Komga Zone 10 1200 units, Komga phase 2 400 units, Haga Haga 300 units, Cefane 250 units.

Figure: Housing Type

Source Department of Housing & Local Government, 1997

Table: Housing Type

Traditional Informal Formal Other57% 6% 35% 2%


Most households live in traditional structures (57 percent) with 35 percent of households living in formal structures (refer to Table 14). The total housing need for low-income families in Komga is estimated by the Council at 3 000 houses with serviced sites. The settlements in Kwelera and Mooiplaas also require formalization of tenure and infrastructure. The municipality has to plan for the extension of services inclusive of housing for Chintsa East, Kei Mouth and Komga.

H (b) Formal Housing

Private developers are involved in the provision of most formal housing within the urban areas; however people in the lower income groups have been marginalized by this as they cannot afford the types of housing presently provided. This has led to a high demand for rented accommodation, overcrowding and increased numbers of backyard shacks. A very high demand for serviced sites and housing thus exists.

The Provincial Housing Board subsidy projects have the opportunity of making inroads into the affordable and low cost housing need. However, the over allocation of funding together with the slow rate of delivery places a number of new housing projects on the waiting list.

During the IDP/ Budget Review 2005/ 2006 an allocation of 6000 Units was identified and it was broken down into allocation by Wards that is, 1000 Units per Ward. Due to the problem with the existing housing projects a Directive from the Office of The MEC, Housing, that priority must be given to blocked, stopped, and incomplete projects.

Developments are that, the Icwili Phase I (255) housing project has been unblocked and therefore 84 houses will be built an additional 19 houses will be completed. With regard to Chintsa East housing project, bulk infrastructure is the problem and the Municipality is advised to talk to ADM for temporary provision of these services whilst waiting for the completion of Bulk Water Scheme project.

The Municipality has forged relations with Afesis Corplan and our Provincial Housing Department. Afesis Corplan promotes a concept known to be LAND first in an attempt to discourage expansion of shacks. The approach emphasizes the notion of being pro-active as government of the people by providing surveyed sites to all home seekers, provide basic servicers and guarantee the occupant to be the owner of that piece of land through certificate of ownership. We have identified Kei Mouth –Icwili as a pilot. We have consulted the immediate community and agreed to the program/project. We are now awaiting approval from the office Surveyor General.

The Municipality with the Department of Human Settlement have agreed to work together: The main purpose was for the Department to provide technical support to the municipality by developing business plans for capacity enhancement in performing the housing function including management of housing projects.

Table 15: Current Housing Access

Proposed Housing Development

Morgan’s Bay 200


Kei Mouth (Icwili) 250Chintsa East 500Komga Zone 10 1140Komga Phase 1 96Komga Phase 2 400Haga-Haga 300Cefani 250Taiton 250Municipal wide 6000

Informal Housing

The in-migration of people to urban centres is manifest in informal settlements developing in the periphery of towns and small centres. This leads to an increase in the urban population density through further fragmentation of urban land for housing, including the establishment of backyard shacks.

The number of informal settlements is growing because existing accommodation cannot meet the demand for housing. There is an increasing demand by the lower income groups for land and services for housing.

It is envisaged that the Reviewed Housing Sector Plan will address the following challenges identified:

a) Screening of Beneficiariesb) Land Availability and Land Ownershipc) Bulk Infrastructured) Environmental Studies such as Geotechnical Surveys etc.

1. HEALTH

Heath facilities within the area consist of one community health centre (Komga) and 5 clinics (Komga, Kwelera, Mooiplaas (2), and Icwili). The availability of health facilities is an important determinant of the health status of the sub-region. This refers not only to their existence, but also ease of access to and quality of health facilities. As most health facilities fall within the urban areas, most of the rural population has limited access to these facilities. Some 58% of people live more than 5 km from medical facilities and only 1, 5% have access to a medical benefit fund (DBSA, 1997)

Table 7: Hospital Beds

Hospital beds Number of persons per hospital bed.Total population should be divided by number of beds.Great Kei Municipality

Number of beds

1 Com. Health Centre 165 Other (Clinics) 46 Total 205 Number of person/

bed2234

Source Department of Housing & Local Government, 1997


According to the Department of Housing and Local Government (1997) the total capacity of hospitals and clinics in the district is 20 beds (refer to Table 7). This amounts to ½ bed / 1 000 people in the district or 2 234 persons/bed. This figure is much lower than that of the central sub region (2, 3 beds per 1 000 people) and 5, 1 beds / 1 000 for South Africa.

There is a strong trend towards decentralization in South Africa and tremendous demands are being placed upon the local government sphere. Local government currently does not have the capacity to accept and carry out additional functions.

It is in this context that the District Health System is being established. The process of developing such a system will have to take account of current reality and the various processes that will impact on health service delivery. It will be important for people involved in the health sector to:

participate in the Integrated Development Planning process; explore new mechanisms for delivering services; engage with the allocation of health service functions to Municipalities; Continue to improve the rendering of high quality health care in an integrated

manner.

I (a) Transport Services and Roads Infrastructure

a) Transport ServicesCouncil adopted Terms of Reference and resuscitated Roads Forum in 2012/2013 financial year. It is envisaged that the Forum will sit on quarterly basis effectively from 2013/2014 financial year.It is a known fact that public transportation is very limited in GKLM. A Roads Management Plan would address the above issues and the Amathole District Municipality and Department of Roads and Transport were approached for funding. A Transport Forum is functional and they meet on a quarterly basis. The provision of formal public transport is lacking between the major travel destinations within the area. There are few registered taxi routes and no formal bus routes. Bus Shelters; Landstrip and maritime transport are other existing types of Transport.A backpacker bus runs on request between Kei Mouth and East London but is expensive. The Baz bus (a back packer bus) from Cape Town to Durban stops daily at Buccaneers at Chintsa West.There is a Kei-Rail passenger service running between East London and Umtata passes through Komga. The East London, Amabhele to Umtata Railway which once was an important service to the Transkei has come back in the area. The Provincial Government and Department of Transport has revived this railway to offer commuter and freight transport opportunities.As a result of the current lack of formalized public transport, commuters travelling between Komga and Kwelera must travel via East London.There is a need to establish formal taxi and bus routes within Great Kei to link Kwelera, Mooiplaas, Komga, other coastal towns and East London. Transport routes traversing in an East-West direction should be investigated to link Mooiplaas and Kwelera, currently situated either side of the N2 to the N6.

b) Integrated Spatial Development Framework in terms of transportation

The spatial characteristics of the Great Kei Municipal area are largely determined by the influence of the coast, the Great Kei River and the National Road which dissects it in an east/west direction. There are four main nodes which are dominated by the influence of


nearby Buffalo City. Komga is the main service centre, with Kei Mouth, Haga Haga, Chintsa and the Glens forming the other nodes. There are three significant development areas in the area; the two settlement areas of Kwelera and Mooiplaas and the coastal belt. The settlements of Kwelera and Mooiplaas can be classed as model 2 type settlements. Formal planning has been carried out in Kwelera and currently being carried out in certain villages in Mooiplaas. Small scale subsistence farming is practiced in both settlement areas. Densification of these settlements is proposed, with the provision of basic services.The areas of Kei Mouth and Chintsa East are regarded as major coastal resorts and settlement model type 1. With the upgrading of the main road MR 695/687 to Kei Mouth, tourism has increased significantly. These areas have large amounts of tourism potential but an upgrade in infrastructure is required to support development.Within the municipality itself there are agricultural areas and game/ tourism reserves which offer a wide variety of land uses and opportunity. It is significant to note that the entire municipal area is dissected by roads but the majority of the population is living in areas which are relatively remote from the service centres, the municipal offices and the coastal employment opportunities. Upgrading of the road network, especially the links between Kwetyana (Newlands on the N6) and the junction with the N2 at the Mooiplaas Hotel area and onwards to Kei Mouth, has a significant impact on development and transportation in the area. In addition, it is envisaged that focused development in the vicinity of Mooiplaas junction could see the longer term establishment of a service centre which would bring services, commerce and local economic development closer to the communities of Kwelera and Mooiplaas. This is enhanced by the location of the Multi-Purpose Centre and the Sports Complex in closer proximity to rural communities. Finally, it is noted that from a transportation point of view, this junction is at the central pivotal point in the area where all transport has to pass. This creates an opportunity for travelers fuelling centre, tourism information centre, taxi and bus facility shops, workshops, education, skills training. It is anticipated that private sector investment will occur in all areas of the Municipal area provided an enabling environment of infrastructure and Land Use Management is created. Prime areas for investment are in coastal resorts, eco-tourism, game farming and commercial development.

c) Roads InfrastructureRoad construction and improvement is considered as the prime infrastructural component to the municipality that would assist in bringing about improved access for tourism, health facilities and agricultural developments. Roads leading to coastal areas are usually gravel or in a state of disrepair.The road network within the Great Kei Municipality consists of 729, 55 kilometers of surfaced and unpaved road. Unpaved roads are defined as gravel roads as well as non-gravelled roads and tracks i.e. identified access or minor roads that have not been upgraded in any way. The responsibility for capital expenditure and maintenance rests with various authorities including the Great Kei Municipality.The Table below schedules the various categories of road, the length of road and the authority responsible for capital expenditure and maintenance.Table: Categories of RoadRoad Classification Lengths (km) Responsible Authority

Paved UnpavedNationalTrunkMainMinor

48,9723,454,2732,45

0041,1171,82

South African National Roads AgencyDepartment Of Roads and Public Works


Access 21,300

463,6522,53

Great Kei Municipality

TOTAL 130,44 599,11The Great Kei Municipality is thus directly responsible for 21, 30 kilometers of surfaced and 486, 18 kilometers of unpaved road. Available records indicate that, of the unpaved minor and access roads approximately 258 kilometers have gravel surfacing i.e. some betterment, drainage work and gravelling has taken place previously while approximately 228 kilometers can be classified as non-graveled roads or tracks i.e. no improvement has taken place and roads have only been identified but are in use. It is also important to note that located on the unpaved minor and access roads a total of approximately 41 structures i.e. stream crossings with minor structures and causeways (not pipes) have been identified and a total of approximately 56 stream crossings requiring minor structures have been identified. The status of unpaved minor and access roads in terms of upgrading and structures is given in the table below:Table: Road StatusRoad Classification Roads Status 1. Structure 2.

Non-gravelled/Tracks

Existing

Minor Access 21414

401

TOTAL 258 228 401Structures exclude all pipe culverts.Existing gravel roads and structures have been assessed to determine if the existing infrastructure meets desirable standards and any upgrading required. With the establishment of the Transport Forum, Great Kei Municipality can safely say coordination and management of various activities implemented by responsible authorities such as the Department of Roads and Public Works in regard to both capital and maintenance works on roads under their jurisdiction i.e. trunk and minor roads to ensures a holistic approach. Existing infrastructure as well as infrastructure developed through capital expenditure requires regular and on-going maintenance to preserve the asset created and to prevent premature deterioration.An overall integrated strategy will be achievable which will address issues such as higher order strategies developed by National Departments, Provincial Departments and the District Municipality as well as local issues and requirements such as, road standards, policy. This must also integrate with other initiatives within the Great Kei Municipality e.g. the construction of a clinic, school or sports facility should be preceded by the construction of an access road to ensure a holistic approach to the provision of services.Municipal Infrastructure Grant (MIG) has been utilized by the municipality in the last three financial years for construction of roads. The municipality adopted a three year capital plan which is reviewed each financial year. A capital grant (MIG) of R15 M has been set aside for roads and bridges construction projects in 2013/2014 financial year. The municipality has a functional Project Management Unit, responsible for implementation, reporting and monitoring of capital projects. The following roads infrastructure projects and bridges are planned for the financial year 2013/2014:

PROJECT ALLOCATION

WARD

INTERNAL STREETS OF SLATSHA 1,250,000.00 3REHABILITATE CEFANE BRIDGE 850,000.00 3


SIVIWE ACCESS ROAD 1,500,000.00 7MANXIWENI INTERNAL STREETS/MZWINI EXTENSION 1,500,000.00 4KOMGA INTERNAL STREETS 1,137,100.00 5MORGANS BAY ACCES ROAD 2,000,000.00 6CINTSA EAST TOWNSHIP ROAD 1,320,000.00 6

SOTHO SOCCER PITCH 1,000,000.00 4KEI MOUTH ROADS 1,100,000.00 6

ELUPHINDWENI COMM HALL 1,354,100.00 2TOTALS R13,011,200.

00The municipality plans to develop and implement its own Roads Management Plan in 2013/2014 financial year.

2. Community ServicesA) PROTECTION SERVICES

The GKM has three sections dealing with Protection Services, namely: Traffic, Fire and Disaster Management. Traffic services are the core competency of the Department of Transport, and GKM and the Department of Transport have a formal working relationship guided by a Service Level Agreement (SLA). The GKM has five traffic officers and there is still a need to appoint one officer and an examiner of vehicles.Fire Services and Disaster Management are core functions of ADM. The ADM however renders the services on behalf of the GKM (without a SLA). Disaster Management volunteers have been established in the three (3) towns of Kei Mouth and Morgan’s Bay, Chintsa and Komga. All of them have been trained on basic disaster management principles such as first aid; radio communications, fire fighting, etc. The Fire Services have appointed Fire Fighters and a Station Commander who are working in putting the systems in place. There is a fully Hazmad vehicle and a Fire engine fully equipped stationed at the Fire station at KomgaTraffic By-laws are available. Great Kei Disaster Management Risk Assessment Profile will be developed in partnership with ADM. Peace Officers have been trained, but not yet appointed as such. The Community-based planning initiative identified a major need for crime prevention associated with community based Taverns and alcohol consumption. In an attempt to address such instances of crime by means of a Community Policing Forum, which could undertake nightly neighbourhood watches. The Municipality is represented in the Community Policing Forums. The GKM plans to develop a Liquor Trading By-Law.Protection services are an important function of the municipality because it provides vital emergency services as well as signage, etc. that make the navigation of the towns easy for tourists and potential investors.B) SAFETY

The municipality has Integrated Safety Plan and Existing Community Safety Forum. The municipality works in partnership with SAPS; Moral Regeneration Movement; Community Safety Forums to do awareness campaigns towards combating crime.


D. Executive Summary

In pursuing municipal vision and mission

“To achieve a peaceful and sustainable environment, where all communities enjoy an improved quality of life”The municipality has indeed strengthened public participation in governance issues; has established and revived structures; working towards building and strengthening Intergovernmental Relations. The municipality has also worked with Department of Environmental Affairs in creating job opportunities through EPWP programs such as Municipal Recreation Park; Working for the Coast Project.Strengthening the Policy Environment has been a priority for the financial year 2012/2013; where all Policies were reviewed after identification of gaps. This was done in partnership with PWC appointed by ADM on behalf of Great Kei Local Municipality.It is important to note that though there are strides to improve performance within the municipality; there are still challenges to be addressed such as:

- Low Revenue Base- Infrastructure Backlogs (Roads Infrastructure; Water; Sanitation and Electricity)- Housing Development- Funding of SMME;s/Co-operatives towards sustainability

The report therefore is prepared in line with MFMA Circular 63; MFMA Circular 11 and MSA S46; and MFMA Chapter 12. The outline of the report is as follows:

1) Chapter 1: Overview of the municipality2) Chapter 2: Key Performance Area 1: Good Governance and Public Participation3) Chapter 3: Key Performance Area 2: Service Delivery Performance including

Local Economic Development4) Chapter 4: Key Performance Area 3: Organizational Development Performance5) Chapter 5: Key Performance Area 4: Financial Performance including Draft

2012/2013 Annual Financial Statements6) Part 3: 2012/2013 SDBIP Reporting for each Department



PART 2: KPA

ACHIEVEMENT

REPORT

2.1Overview of the S79 Committees and Council functions and achievementsGreat Kei Municipal Council is a Plenary Type Municipal Council wherein all its decisions are taken by Council. It has established Section 79 Committees in the form of 7 Standing Committees namely: Public Participation and Social Needs Committee, ICT, Finance and Risk Management, Corporate Services, Infrastructure and Community Services, IDP/ LED & Strategic Services, Municipal Public Accounts Committee and the Audit Committee. All these committees have functioned relatively well, they have set as per the Annual Council Schedule, their resolutions or recommendations have been escalated to Council for consideration.In 2012/2013 four Ordinary and Special Council Meetings were held as follows:Date Type of Council Meeting Key Resolutions24th July 2012 Ordinary Council Meeting Standing committees reports29th August 2012 Ordinary Council Meeting 2012/2013 IDP Process Plan and

Delegation of Power Policy30th October 2012 Ordinary Council Meeting 2011/2012 IDP PMS Report23rd January 2013 Ordinary Council Meeting Adoption of January- June 2013

Council Calendar31st March 2013 Ordinary Council Meeting Tabling of 2013/2017 Draft IDP,

2013/2016 Budget; 2013/2014 SDBIP and 2013/2014 Tariffs

31st May 2013 Ordinary Council Meeting Adoption of 2013/2017 Final IDP, 2013/2016 Budget; 2013/2014 SDBIP and 2013/2014 Tariffs IDP, Budget, SDBIP and Tariffs

List of Councillors who attended Council Committees and Council Meetings are as follows:

Name of councillor Capacity

GenderPolitical

Party Ward/ PR

NGENISILE WELLINGTON TEKILE

SPEAKER/MAYOR MALE3

NOLIZO MOLI CHIEF WHIP and Portfolio Head ICT, Finance and Risk Management.

FEMALE1

LONWABO LENNOX BANGANI

Ward councillor MALE1

MOYISILE MZAMO

Ward councillor MALE2

MLULEKI TEMPLETON MALI

Ward councillor and Portfolio Head Technical and Infrastructure/Communi

MALE 3


ty ServicesNONKOSINATHI VEREZAR MEVANA

Ward councillor and Portfolio Head Public Participation and Social Needs Committee

FEMALE4

NTOMBIZANELE PRINCESS MGEMA

Ward councillor FEMALE5

NOSIPHO NGABAYENA

Ward councillor FEMALE6

LULEKA NDABAMBI GAVUMENTE

Ward councillor and Chairperson MPAC Committee

FEMALE7

NOMONDE NOLUTHANDO DYANI

PR and Portfolio Head LED/Strategic Services

FEMALE3

WELILE NDORO

PR and Portfolio Head Corporate Services

MALE4

SHARNE MURIEL JACOBS

PR FEMALE6

JACOB COENRAADLABUSCAGNE

PR MALE6

2.2Other Governance Structures

a) Audit Committee

The Great Kei Municipality has an Audit Committee as prescribed by the Municipal Finance Management Act, Chapter 14, Section 166(1), that serves the purpose of being an independent advisory body to the Council, Political Office Bearers, Accounting Officer, Management and Staff, thereby assisting Council in its oversight role. The role, functions and authority of the Audit Committee are prescribed in terms of Section 166(2) of the Act. Audit Committee Charter is available to guide functioning of the Audit Committee.

Amongst other functions of the Audit Committee, the following are the core functions:

To monitor the integrity of the Council’s financial statements and announcements relating to its financial performance, review significant financial reporting judgments;

To review the reliability and effectiveness of the financial and internal control systems of the municipality.

To monitor the effectiveness of the internal audit function and review its material findings.

The audit committee of Great Kei Municipality consists of three independent members, with experience in the field of Auditing, Local Government and Law. Five Audit Committee Meetings as scheduled sat in 2012/2013 financial year as follows:

a) 10 October 2012


b) 30 November 2012c) 18 January 2013d) 08 March 2013e) 10 May 2013

b) Internal Audit

The municipality has further taken an initiative to appoint Internal Audit Manager who performs amongst other functions the following:

Provide an independent appraisal function to examine and evaluate the Municipality’s activities as a value added service.

Review the adequacy and effectiveness of internal control systems and governance systems.

Compiles Strategic and Operational Risk registers in line with Strategic Objectives and Annual Plan i.e. SDBIP; monitors implementation of Risk Action Plan and Compile Reports.

Assist members of the Municipality in the effective discharge of their duties and responsibilities via its reviews, reporting and recommendations.

Provide analyses, appraisals, recommendations, counsel, and information concerning the activities reviewed.

Promote effective control at reasonable cost.

2.3Rule of Law

It is important to note that the municipality has the following policies adopted by Council and were enforced in 2012/2013 financial year; however they will be reviewed and adopted in financial year 2013/2014.

Policy Brief Description/Purpose of the Policy

- Code of Conduct Policy To ensure adherence to Schedule 1 and 2 of the Municipal Systems Act 32 of 2000

- Recruitment and Selection Policy

Ensure that the Municipality follows best practices in its recruitment and selection processes

To comply with the provisions of Employment Equity Legislation

- Subsistence and Travelling to set out the basis for the payment of subsistence and travel allowance for the purposes of official travelling, either to outlying areas of the Municipality’s area of jurisdiction or beyond.

- Telephone Usage Policy To ensure the effective and efficient use of Municipal telephones;

To curb the abuse of Municipal telephones by employees of the Council;

- Training and Development Policy

To improve productivity in the workplace, the quality of life of Municipal employees, prospects for work opportunities and labour mobility (targeting work-related-career planning and development);


- Leave Encashment Policy To regulate the encashment of leave with due regard to the specific circumstances of employees that may arise from time to time.

- Employment Assistance Policy

To lay a foundation for sustainable, participatory and penetrating Employee Assistance Programmes (EAP) and Employee Wellness Programmes (EWP)

- Acting Allowance Policy To outline procedures for Acting of Municipal Employees and Payments thereof.

- Bereavement Policy To build a caring environment within the Local Municipality community

- Promotion; Demotion and Transfer Policy

To provide directions on the circumstances under which an employee may be demoted; promoted and transferred and the procedure to be followed in connection therewith.

- Policy on Staff Occupying Council Property

To define the policy for staff occupying Great Kei Municipality property and to provide guidelines for the application thereof.

- Employment Equity Policy Creating equal opportunities and fair treatment in the employment through the elimination of unfair discrimination.

- Tariffs Policy and Tariff Schedule

- Credit Control & Debt Collection Policy,

- Indigent Policy,- Investment & Banking Policy,- Asset Management Policy

and GRAP Compliant Asset Register, and

- Supply Chain Management Policy with functional Bid Specification; Bid Evaluation and Bid Adjudication Committees are available

To regulate financial governance; viability and management within Great Kei Municipality.

2.4Public participation and consultationThe Municipality planned Mayor/Speaker Engagement meeting; with Ward Councillors; Community Development Workers and Ward Committees which was held successfully co-ordinated on 30th October 2012 and 23rd April 2013 where ward committees and CDW’s raised Service Delivery issues. All issues raised were circulated to Internal Municipal Departments for implementation. In partnership with Legislature a Public Hearing was held in April 2013; where the municipality sent 14 delegates from 7 wards; representing Non-Governmental Organizations and Community Structure. Amongst others issues discussed was the Amendment of the Health Bill.

Customer satisfaction surveysAfesis Corplan conducted customer satisfaction survey in 2012/2013 financial year on behalf of Great Kei Local Municipality. The first draft of the report was forwarded by the company on 30th October 2013. Final Draft Customer


Satisfaction Report has also been forwarded to Great Kei Municipality. Amongst other key issues and recommendations in the Draft Report are as follows:

a. Participation of community members in Ordinary Council Meetings; only 21% attend the meetings

b. Public Feedback is limited; therefore Afesis Corplan recommended to the municipality to strengthen public awareness/public participation programmes targeting also illiteracy people.

IDP/PMS and Budget Road showsThe municipality adopted IDP/PMS and Budget Process Plan for the financial year 2012/2013; where community members were engaged during review of the 2012/2017 Integrated Development Plan and 2012/2013 Budget. The meetings were publicised and held in all wards of the municipality in October/November 2012 and community members were given an opportunity to raise key development priorities and reflect on the ward situational analysis.In April to May 2013 the Speaker/Mayor led delegation to all wards where he presented the Draft IDP Objectives and Strategies and the Draft 2013/2014 financial year budget to inform communities on the prioritization and what is planned for the financial year 2013/2014. Feedback on some of the issues raised in October/November 2012 was also given by the Speaker/Mayor and the Councillors.

2.4.1 Ward committees’ establishment and functionalityThe Municipality has an approved policy on the Establishment and Functionality of Ward Committees, Public Participation and Petitions Policy.

- All the 70 Ward Committees have been elected in all 7 Great Kei Municipal Wards, in electing Ward Committees Great Kei Council resolved on an election criterion which stated that there will elected Voting District Representation, Stakeholder/ Sector representation. All the 70 elected Ward Committees with all the prescribed election adopted by Council.

2.4.2 AVAILABILITY OF MINUTES OF WARD MEETINGS & ATTENDENCE TO COUNCIL MEETINGS;

70 Ward Committees attended Ordinary Council Meetings in 2012/2013 financial year. Ward Committees also attend IDP/PMS and Budget Representative Forum. It is important that amongst other wards who regularly submit monthly reports with minutes is Ward 6. There is still a challenge from other six wards of the municipality. In the engagement meeting with Speaker/Mayor this matter was raised. It is in the municipal plan for the financial year 2013/2014 to train 70 ward committees in report writing; minute taking and presentation.2.4.3 Community Development workers performance monitoringGreat Kei Municipality has 6 Community Development Workers and these are in Ward 2 [2 CDW’s due to the delimitation of Municipal Wards and the second CDW have been deployed to assist in Ward 1], Ward 3, Ward 4, Ward 6 and Ward 7, currently there are only two Wards which do not Community Development Workers.

AVAILABILITY OF CDW MONTHLY REPORTS WHICH ARE SUBMITTED TO THE DEPARTMENT OF LOCAL GOVERNMENT.- All the six [6] CDW are participating in GKM activities like IDP/ Budget

processes, attend Council Meetings and other Local Municipality and District Municipality activities. Memorandum of Understanding has been signed between Great Kei Local Municipality and the Department of Local Government and Traditional Affairs for functioning and reporting of Community Development Workers.

- The Memorandum of Understanding details that reports are to be submitted to both the Office of the Speaker/Mayor and the Department of Local


Government and Traditional Affairs; and this has been done in 2012/2013 financial year.

2.5RELATIONS WITH ALL RELEVANT STAKEHOLDERS & SECTOR DEPARTMENTS

- Relations with Sector Departments are good- Relations within the Wards with Ward Councillors, Ward Committees and

CDW’s have improved in the financial year 2012/2013 since the Speaker/Mayors Engagement meetings with all stakeholders discussing the key service delivery issues and role of each stakeholder.

2.6AREAS OF INTERVENTIONSpeedy intervention is needed with the relocation of the Great Kei SASSA Service Point from Komga to Amahlathi Municipality which will disadvantage more especially people from Kwelerha, Mooiplaas, Kei Mouth, Morgans Bay, Chintsa East and Komga, consultation has never been done with the people to get their views on the relocation of this Service Point.Know Your CDW and Ward Committee Campaign Workshops needed for the communities after the delimitation of Ward Boundaries.

2.7HIGHLIGHTS/CONSENSUS ORIENTED MUNICIPALITYAn improvement in the relations between CDW’s; Ward Committees and Councillors has improved in 2012/2013 financial year.Public participation plan funded programmes such as Community Profiling and Ward Based Planning and Ward Committee Trainings have been implemented in the financial year 2012/2013 and will they will continue in 2013/2014 financial year.The municipality has also established and revived public participation structures such as:

a) Home Affairs Forum meeting where six meetings were held and key resolutions were submitted to Council for implemented such as Service on Wheels Programs conducted by Home Affairs; SASSA; Social Development and SAPS

b) Roads Forum in partnership with Department of Public Works has been resuscitated with its Terms of Reference adopted by Council with the main objective of implementing Roads Maintenance and EPWP Programs.

c) After engagement with SASSA; Great Kei has successfully been serviced by East London and Suttertereim Offices in the last financial year.

2.8 EQUITY AND INCLUSIVENESSThe municipality’s equity and inclusiveness are central within Special Programs Unit. The municipality does not have a fully-fledged Special Programs Unit; however it has implemented programs in 2012/2013 financial year with Special programs Unit focal groups. 2.8.1 Availability of SPU Strategy & its implementationGreat Kei Municipality does not have a Special Programmes Unit Strategy. The functioning of the Special Programmes Unit to date stems from the ADM SPU Strategy, SALGA Guidelines for SPU. Great Kei Municipality has appointed a service provider by the name of Isisaba Consulting. This service provider is tasked with the revival, establishment of non-functioning structures and development of programme of action for each focal group. Implementation of a functional SPU in Great Kei will commence from the 2013-2014 financial year.The role of Isisaba Consulting is central towards the process of developing an SPU Strategy that will ensure that the historically disadvantaged and marginalized are back in the mainstream of activities. On the 3rd June 2013, a working session with the executive


members from all focal groups converged to discuss how these structures should function. Members of the focal groups identified areas in which supported is needed including funding and the development of sustainable programmes. A need for the development of socio economic opportunities was also identified. The role of the Local Economic Development became very clear in this regards. Isisaba Consulting has also identified potential partners to assist these focal groups with their programmes, business plan development etc. Great Kei Municipality set aside an amount of R101 965.52.Special Programs Unit Structures such as Youth Council; Women’s Caucus; Physically Challenged; Moral Regeneration; Children Advisory and Sport Council have been revived.

2.8.1 SPU Focal Groups- Portfolio’s and Names of Persons and Functionality of the Structures:

YOUTHNAME DesignationRose ChairpersonN. Gola SecretaryL. Basela Deputy Chairperson

V. Witbooi TreasurerColina Deputy SecretaryNosicelo Kogina Additional MemberKhangelani Mpe Additional MemberKhaya Ndarana Additional MemberWOMEN

NAME DesignationMrs Tanya ChairpersonMrs Mdingi Deputy ChairpersonMrs. Zinto SecretaryMrs Kuphiso Deputy SecretaryMrs. Dyani TreasurerMrs. N. Tshemese Additional Member

CHILDREN ADVISORY

NAME DesignationN. Pontshi ChairpersonShilla Phuti Deputy ChairpersonFuneka Mbalembi SecretaryShiela Basopu Treasurer

EDERLY COUNCILNAME DESIGNATIONMrs. N. Hela ConvenorMr. Daniso MemberMrs. Booi Member

SPORTNAME DESIGNATIONMbulelo Hange ChairpersonMike Dennison Deputy ChairpersonRangile SecretaryBuziwe NjemdakaZuko Patluko


Sbango

MORAL REGENERATION MOVEMENT

2.8.2 Status Quo Analysis of Each Focal Areaa) Great Kei Youth Council

This structure was established in July 2011. The structure is made of stakeholders drawn from such Youth Political Organisations; Youth in Business, Youth in Churches, Youth in Agriculture, Youth in Sport. The National Youth Development Agency was central in the establishment of this structure and it promised to induct the GKM Youth Council at a later stage. To date this has not happened. Although the structure is not functioning, its members are actively involved in youth development issues in the area. The Youth participate in provincial and national events.

Youth development in Great Kei involves other partners such as NYDA and Restless Development. The municipality supported a Youth Conference held in Tuba Village with an amount of R7 300.00. This conference was organised by Restless Development. The National Youth Development Agency is planning to have 2 Youth Advisory Centres in the Great Kei area. The municipality will provide the necessary logistics. Young people as it is the case elsewhere are always vibrant and energetic; Great Kei Municipality assisted young people to attend the Youth Parliament in the Eastern Cape Legislature and the Provincial Youth E vent held in Umtata in June 2013. The Council has spent an amount of R 9000.00 to transport youth to the Provincial Event.

b) Children’s Advisory Council

The structure was established in April 2011 in conjunction with Amathole District Municipality and the department of Social Development. The executive members are mostly women that are involved in early childhood development. One of the critical weaknesses of this structure is the fact that there are no children serving in the committee. This matter has been discussed in several meetings with ADM and the Department of Social Development.

Great Kei municipality supported the Children’s Advisory Council by providing transport to meetings that the structure has attended.

c) Great Kei Women’s Forum

This structure was established in August 2011. Women that were elected are social activists that have been working in their communities towards the upliftment of socio economic issues and women abuse. The structure was established with the support of ADM and the Department of Social Development. Capacity building workshops have been attended on economic empowerment and they have been exposed in a number of national and provincial activities.

Great Kei municipality has been very consistent in providing information and facilitation of the establishment of businesses and cooperatives run by women. Training


NAME DESIGNATIONRev. M. Noqhayi ChairpersonPastor France Deputy ChairpersonMs. N. Somazembe SecretaryMs. N. Bizani TreasurerMs. Mqhagi Additional MemberMr. Mashiyi Additional Member

programmes have been facilitated and ADM has committed support for these cooperatives.

d) Disability Council

The structure was elected into function in November 2011 with the involvement of the Department of Social Development and Special Programmes. Its executive members are actively involved in the Disabled People of South Africa. Meetings are held on a regular basis. The Council is active on disability issues and it can only get better if they are trained on roles and responsibilities.

e) Elderly or Senior Citizens Council

This structure has not yet been established. Plans are afoot to ensure that it is in place by September 2013. The terms of reference for its operations were developed and will be used.

f) Local Aids Council

The structure was first launched in 2007. Since then there have been challenges on its operations. The new Council as inaugurated in 2011 has committed itself on the revival of this structure. Plans are underway to revive the Local Aids Council.

g) Great Kei Moral Regeneration Movement

The structure is in place and functioning well. Programmes are undertaken however there is room for improvement. The structure was established in 2011. A number of programmes have been undertaken by the Great Kei Moral Regeneration Movement including awareness programme, family values and meetings that have been attended.

h) Great Kei Sports Council

The Structure was established in September 2010. Even though not functioning properly, its members are very active and have been assisting the municipality and the community in improving sport development in the area. There are differences on how the structure should operate and the Department of Sports, Recreation, Arts and Culture have been approached to provide capacity building on how they structure should operate.

Great Kei Municipality has convened a Mayor’s Cup and the Sports Council was central in the process. The event coasted the municipality an amount of about R450 000.00. Welcome Tishini was supported with transport and accommodation to take part in the Gauteng Marathon and Ocean to Ocean in Cape Town. An amount of about R9800.00 was spent in this regard. Through municipal support initiatives, boxers from Komga, Chintsa, Kei Mouth and Kwelerha participated in ECABO tournaments. Mdledle and James competed successfully in the Provincial ECABO tournament. Golf has been introduced as a new sport code. In this year’s Mayor’s Cup 20 emerging golfers participated.

- Focus for 2012/2013 Financial yearThe main focus in 2012/2013 financial year has been the mainstreaming of the Special Programmes to ensure that it focuses on its core mandate. A services provider was appointed during this financial year to assist the SPU with its mandate.- Achievements

Drug Awareness Event in Kei Mouth


Family Values Dialogue in Komga MRM Home visit in Ward 7 and Ward 4 Support to Tigers Rugby Club Support to Mr. Welcome Tishini Transportation of Young people to Youth Parliament Facilitation for development of Cooperative (Youth in Sotho) Great Kei Mayor’s Cup

- Challenges and Proposed Solutions Staff: Only one staff member at the Special Programmes Unit.

Appointment of Coordinators is critical so that this unit can discharge its responsibilities effectively.

Budget: There is limited budget for SPU. There is a need to identify other sources of funding for the sustainability of SPU programmes.

Focal groups depend heavily on the municipality. It is important to ensure that focal groups are able to function independent from the municipality. Focal groups should be empowered so that they are able to convene own meetings and provide reports to the Council.

Some members of Focal Groups no longer attend meetings.

2.9 Communication strategyThe municipality developed Communication Strategy in 2012/2013 financial year and was adopted by Council in July 2012. The following key aspects are covered in the communication:

- Key objectives of the strategy as informed by issues raised by both internal and external stakeholders

- Target Audience- Communication Channels- Key Messengers

2.9.1 Communication ChannelsAn initiative of developing Local Newsletter has been undertaken in 2012/2013 where a budget allocation of R75 000 was set aside. The newsletter is published in Xhosa and English on quarterly basis target the local communities as well as marketing Great Kei Local Municipality.Social Networks such as Facebook is also used as a media channel; and by June 2013 it had 109 followers predominantly between the ages of 18-35. Some of the issues raised are related to service delivery such as housing; water and sanitation. Daily Dispatch is also used as a Provincial Newspaper to advertise vacancies; meetings, public notices etc. Taxi mail is another form of media channel used by Great Kei Local Municipality which is an Inter-Provincial Newspaper covering Eastern Cape; Kwazulu Natal and Western Cape.2.9.2 Internal CommunicationDifferent forms of communication channels are used internally such as :

- Bulk SMS to communicate to employees directly; - Email addresses- Designed and launched local intranet

2.9.3 Human resource available to lead the communication activities;The municipality has one dedicated personnel for all communication activities located in the office of the Municipal Manager i.e. ICT Research Specialist.2.9.4 Infrastructural resource available for communication activities

The municipality installed a Communication tower to link all municipal buildings to one umbrella network; to reduce operational costs and to improve communication internally and externally amongst employees and clients.


2.10 Intergovernmental Relations The Municipality has the following existing and functional forums where issues of mutual interest are discussed:

- IDP/PMS and Budget Representative Forum- SPU Focal Groups Structures

All issues raised in the meetings in 2012/2013 financial year have been reported to relevant standing committees and council for approval and implementation thereof.2.11 Legal matters

2.11.2 Setting up of Legal Units but is subject to council approval

The Legal Services of the municipality have been outsourced to a Service Provider. Litigation Matters are referred to the Service Provider.

2.11.3Management of Legal Risks

Fraud Prevention Policy has been adopted by Council and its main objective is to facilitate the development of controls which will aid in the detection and prevention of fraud against GKLM. It is the intent of GKLM to promote consistent organizational behaviour by providing guidelines and assigning responsibility for the development of controls and conduct of investigations.


PART 1: BASIC SERVICE DELIVEY3.1Water services

a. Water services delivery strategy and main role-players: The ADM is the Water Services Authority and a Water Services Provider, thus the Great Kei Local Municipality participates in the development of Water Services Plan to inform planning and funding requirements.

b. Levels and standards in water services:

An increase in the water services provision is noticed between 2001 and 2011 where in 2001 only 8.4 % households had an access to piped water services whilst in 2011 about 13.7 % households have access to piped water services.c. Annual performance as per key performance indicators in water services

Indicator name

(LIASE WITH ADM)

Total number of HH/customer expected to benefit

Estimated backlogs (actual numbers)

Target set for the FY under review (actual numbers)

Number of HH/customer reached during the FY

Percentage of achievement during the year

1 Percentage of households with access to potable water

11 363 954 492 300 195 40%

2 Percentage of indigent households with access to free basic potable water

740 740 740 0 0%

4 Percentage of clinicswith access to potable water

1 Community health centre and 5 clinics

2 2 2 100%

5 Percentage of schools with access to potable water

11363 2262 300 195 40%

6 Percentage of households using buckets

0 0 0 0 0

d. Major challenges in water services and remedial actions GKM is neither the Water Services Authority nor the Water Services Provider; but the main challenge is that of backlog; where 13.7 % households have access to piped water services.


3.2Electricity services

Electricity services delivery strategy and main role-players

The table below illustrates the main role players and the role in electricity services:

PARTNER ROLE OF THE PARTNER Consultants (Bellenden & Robb Engineers)

Consultants are used for implementing capital projects (Project Management & Quality Assurance)

Eskom Eskom availed professional staff to ensure the success of the project. Eskom staff was involved in the process of planning and they will also play an active role in maintaining the asset for the lifespan of the project.

Department of Energy (National Transferring Officer)

Source of Funding for Bulk Electricity Supply

Great Kei Local Municipality Project Implementers and provision is Electricity in urban areas).

The Department of Human Settlement, Bulk Services Funder for Housing Projects

a) Annual performance as per key performance indicators in Electricity services

Indicator name

Total number of household/customer expected to benefit

Estimated backlogs (actual numbers)$

Target set for the f. year under review (actual numbers)



1 Percentage of households with access to electricity services

11 363 1700 1000 350 35%

2 Percentage of indigent households with access to basic electricity services

9000 1700 1000 350 35%

4 Percentag 0% 0% 0 0 0


e of indigent households with access to free alternative energy sources

b) Major challenges in electricity services and remedial actions

CHALLENGES

- Limited financial resources to reduce electricity backlogs, and thus dependency to the Department of Energy and ESKOM.

- Electricity theft through tempering with electricity meter boxes results in heavy losses.

REMEDIAL MEASURE

- GKM has completed the phase 2 of upgrading of electricity power lines of Komga.

- 350 split meters was procured 100 split meters were installed and will be temper proof of electricity meters which should reduce the loses currently being incurred.


3.3Sanitation

a) Sanitation services delivery strategy and main role-players

Great Kei local Municipality is not the sanitation service provider but this function is contracted to Amathole District Municipality and with counter funding from MIG

3.4Road construction and maintenancea) MIG ROADS PROJECTS COMPLETED WITHIN THE FINANCIAL YEAR

UNDER-REVIEW

Item No

Name of Project MIG BudgetWard No

Kms of Road/ Household to be accommodated/benefit

1.00 Jongilanga Access Road R2, 000,000.00 1 5.1

2.00Rehabilitation of Sithungu Access Road R1,750, 000.00

64

3.00 Tuba Internal Street R 700,000.00 1 14.00 Lusizini Access Road R 650,000.00 3 0.735.00 Cefane Access Road R 2,000,000.00 3 2.5

6.00Morgans Bay Yellowwood Access Road

R 500,000.006

1

7.00 Nokhala Access Road R2 692 880.00 1 58.00 Tuba Access Road R2 520 000.00 1 3.6

b) MIG ROADS PROJECTS UNDER CONSTRUCTIONItem No Name of

ProjectMIG

Budget

Ward NoKms of Road/

households

Progress in

Percentage

1.00 Empolweni Access Road

R1,000,000.00

1 2.6 10%

2.00 Silatsha Bridge R850,000.002 3

30%3.00 Roads to All

Cemeteries – All Villages

R1,200,000.00

1,2,3,4,5,6&7 2 60%

4.00 Manxiweni Internal Streets R1,580,000.0

0

42.5 60%

5.00 Sithungu Internal Streets

R1,030,000.00

6 2.1 85%

c) Road maintenance services delivery strategy and main role-players (partnership with Roads & Public Works)

GKM with the limited resources doing road maintenance but need some support from other sector departments from government .The municipality is in the process of procuring plant that will be utilised in the maintenance of gravel roads. The only funding source available is the Municipal Infrastructure Grant. The Department of Roads and Public Works is responsible for maintenance of the Districts Roads.

It is important as well to mentioned that DBSA was further approached for funding of


the Roads Infrastructure.

The Department of Cooperative Government and Traditional Affairs has afforded GKM the services of an Engineer to help with the implementation of projects and maintenance.

d) Level and standards in road maintenance services

GKM has embarked on a system, through the support from ADM, which will assist to monitor and to track backlogs in terms of maintenance of our road infrastructure.

e) Annual performance as per key performance indicators in road maintenance services

Indicator name



Target set for the f. year under review (Actual numbers)



1 Percentage of households without access to gravel or graded roads

11363 7941 7941 3642Households benefited

32%

2 Percentage of road infrastructure requiring upgrade

11363 3770 3770 2666Households benefited

23%

4 Percentage of new road infrastructure actually constructed

3549 2699 2699 1500 42%

5 Percentage of capital budget reserved for road upgrading and maintenance effectively used.

R 19.9 million R5 M R5 M R9,9M 50%

f) Major challenges in road maintenance services and remedial actionsChallenges


Low revenue base of the municipality to set aside sufficient funding for maintenance of Roads Infrastructure

Most of Access Roads are in a bad state, they need maintainanince Limited capital funding to consider Village Internal roads, the only source of

funding available is MIG. Expertise lost in Technical Services Department due to high staff turnover. The Lead Time in the appointment of contractors and consultants hampers service

delivery. Lack of plant resource for in-house maintenance.

Remedial Measures

Absorbing of expertise within the municipal, this will enhance and also assist in transferring of skills, information and growth within the municipality.

Scaling of remuneration with other municipalities and or/ areas of operation within the industry.

Prioritizing, budget and procurement of Resources for Infrastructure (this will assist in maintenance of roads).

Team-balancing (positions which are on the organogram must be considered)

3.5 Waste management a. Waste management services delivery strategy and main role-players

a) Solid waste

Solid Waste Management within Great Kei is characterised by a predominantly privately managed dump system upon individual sites (i.e. backyards) rural villages and farms. Urban centres and some villages receive a weekly local authority waste collection services.

There are only two refuse removal trucks i.e. one compactor refuse truck and open refuse truck (tipper truck Datnis UD95 Nissan 8 tons). These vehicles are almost five (5) years old with mechanical challenges.

There are no registered solid waste sites in Great Kei Municipality however a number of unlicensed solid waste, sites do exist in the area. The establishment and operation of regional sites is a District Municipality function.

The site in Komga is not operating according to the prescribed requirements. The site is fenced off. The site is becoming a wet land area because of the old quarry cells that were dug to excavate the gravel.

Two (2) transfer stations are under construction in Chintsa and Kei Mouth.The Kei Mouth transfer station is now completed. Waste from Kei Mouth,Morgans Bay and Chintsa will be collected to these transfer stations for sorting of recyclable materials so as to reduce the large volume of waste to be transported to Komga landfill site .Only non-recyclable material will be transported to Komga hence saving on transportation costs and air space. Garden refuse will be accepted in those transfer stations.

b) Level and standards in waste management services.

Great Kei Municipality is rendering once a week refuse collection from businesses and urban settlements. Villages of Great Kei Municipality are not receiving refuse collection because of budgetary constraints. In areas where access by big refuse


compactor truck is not possible a tractor or small bakkie is used to collect refuse in such area.

c) Annual performance as per key performance indicators in waste management services

Indicator name



Target set for the f. year under review

Number of HH/customer reached


1 Percentage of households with access to refuse removal services

8365 2106 2106 4015 48%

d) Major challenges in waste management services and remedial actions.

Challenges in waste management include budgetary constraints and human resources. Because of financial constraints it is not possible to have machine working in our landfill site full time. The absence of waste information system makes it difficult to know exactly the quantities of waste that we are collecting on daily basis. Only two (2) refuse trucks that are used to collect refuse and it becomes a challenge when one truck is in for repairs or service.

In order to address the above it is recommended that:

Additional refuse truck to be purchased Budget to improve on waste management programme Waste information system to be established for Great Kei Municipality. More personnel to be employed so as to improve service delivery.

3.6 Public AmenitiesMIG PROJECTS COMPLETED WITHIN THE FINANCIAL YEAR UNDER-REVIEW-COMMUNITY HALLS

Item No Name of Project MIG Budget

Ward No Household to

be accommodated

1.00 Belekumntwana Community Hall

R1, 150,000.00 1 300

2.00 Phumelele Creche R 750, 000.00

1 300

MIG PROJECTS PLANNED TO BE COMPLETED IN 2013/2014 FINANCIAL YEAR-BUILDINGS /COMMUNITY HALLS

Ite Ward No Progress


m No

Name of Project MIG Budget Household to be accommodated

in percenta

ges

1.00 Icwili Community Hall R 450,000.00

6 570 5%

2.00 Lusasa Community Hall R1,000,000.00

4 250 95%

3.00 Eluqolweni Creche R 400,000.00

6 500 5%

4.00 Cefane Community Hall R1,500,000.00 2 550 15%5.00 Gwaba Community Hall R

400,000.002 660 5%

6.00 Gwaba Art Centre R 200,000.00

2 735 0%

7.00 Soto Community Hall-(Internal Funded)

R1,200,000.00 2 5%

3.7 Housing and Town planning Currently there are only 2 staff members employed by the Municipality to deal with town planning and building control services. One Town planning Clerk and one Building Inspector.

a) Housing and town planning services delivery strategy and main role-players

GKM in conjunction with ADM are responsible for town planning ADM is looking after SDF and then GKM is doing the other town planning and rezoning approvals.

b) Annual performance as per key performance indicators in housing and town planning services

Indicator name


Estimated backlogs (Actual numbers)

Target set for the f. year under review

Number of HH/customer reached


1 Percentage of households living in informal settlements

7035 6386 0 0 0

2 Percentage of informal settlements that have been

5226 4820 0 0 0


provided with basic services

3 Percentage of households in formal housing that conforms to the minimum building standards for residential houses

7035 6386 0 0 0

c. Major challenges in housing and town planning services and remedial actions

- The municipality is sitting with Backlogs of Applications since 2010, due to the fact that the function was previously not performed due to unavailability of the skills and expertise.

- In 2012/2013 financial year the municipality planned to appoint a Town Planner, but currently there’s no Town Planner only 1 clerk and 1 Building Inspector

3.8Spatial planning

a. Preparation and approval process of SDF:

The municipality adopted its Spatial Development Framework and Land Use Management in 2005/2006 Financial Year. A need has been identified to review the existing SDF for its alignment with 2012/2017 IDP Objectives, Strategies and Projects.

It is upon this background that Department of Rural Development and Land Reform is planning to fund GKLM Spatial Development Framework.

Specific reference is made to water services plans, disaster management plans, HIV/Aids programme, etc. Given the capacity, financial and legislative requirements, the Great Kei Municipality is in the process of updating and preparing many of these sector plans and programmes and is subject to the availability of financial and capacity assistance from district and provincial levels.The settlement patterns of Great Kei Municipal Area is characterised by three prominent urban settlements, namely Komga, Kei Mouth, Morgan’s Bay and Chintsa. Komga is the administrative centre of the Great Kei Municipal Area. The agricultural sector employs the highest percentage of people therefore it plays a fairly big economic role. There is however still a high level of unemployment in great Kei Municipal Area.

b. Land use management:

Significantly, land set aside for private commercial agriculture constitutes the bulk (96%) of the municipal available land resource where much of the


agricultural practice in the area (77%) is based on the extensive utilisation of the veld for livestock production (cattle, sheep and goats).Source: D Data (1995) - Existing Land Use / Magisterial district of the 1 421km² municipal areas, some 57km² is taken up by the urban service canters of Komga and Kei Mouth which represents

4% of the total district area (refer to Table 2 and Figure 2). Komga functions as the predominant rural service centre to the surrounding agricultural areas as well as adjacent parts of Mnquma. It also serves as an urban communications link and small commercial centre

The coastal settlements of Kei Mouth, Morgans Bay, Haga Haga and Chintsa, whilst having a small number of permanent residents, have over many years provided a tourism and holiday destination for both local and national visitors who regularly spend their holiday in the area. Approximately 0.5% of the area, mostly within the coastal forest reserve, is protected for environmental conservation purposes. Figure 2: Land Use – District

Land Use - District

- Formal residential Informal residential Business- Agriculture Services Transport Other- Applications received

c) Major challenges in spatial planning services and remedial actionThe 2004 SDF is not aligned to the IDP hence the ADM and the Department of Rural Development and Land Reform appointed the Service Provider on behalf of the GKLM to review the SDF.3.9Indigent policy implementation

a. Preparation and approval process of the indigent policy

The municipality has an approved indigent policy; however a need to review the policy has been identified to ensure alignment with Eastern Cape Provincial Framework and other pieces of Legislation.The objective of the review to ensure effective and efficient implementation as follows:

- Provision of basic services to the community in a sustainable manner within the financial and administrative capacity of the Council;

- The financial sustainability of free basic services through the determination of appropriate tariffs that contribute to such sustainability through cross subsidization;

- Establishment of a framework for the identification and management of indigent households including a socio-economic analysis where necessary and an exit strategy; The provision of procedures and guidelines for the subsidization of basic charges and the provision of free basic energy to indigent households; and Co-operative governance with other spheres of government

3.10 Overall service delivery backlogs

Basic service delivery area

30 June 2012 30 June 2013.

Water backlogs (6KL/month)

Required Budgeted

Actual

required budgeted Actual

Backlogs to be eliminated (n0.


HH not receiving the minimum standard service) ADM is the Water Services Authority and the Water Services

Provider. The funding therefore is determined by the ADM as informed by Great Kei Municipality’s priorities.Backlogs to be

eliminated (%: total HH identified as backlog/total number of HH in the municipalitySpending on new infrastructure to eliminate backlogs (R000)Spending on renewal of existing infrastructure to eliminate backlog (R000)Total spending to eliminate backlogs (R000)Spending on maintenance to ensure no new backlogs (R000)Electricity backlogs (30KWH/month)Backlogs to be eliminated (n0. HH not receiving the minimum standard service)

10M required for a period of five years

2M 2M R10 M R1M R1

Backlogs to be eliminated (%: total HH identified as backlog/total numb of HH in the municipality

3000 Households

333 1% 3000 Households

333 1%

Spending on new infrastructure to eliminate backlogs (R000)

15M

Spending on renewal of existing infrastructure to eliminate backlog (R000)Total spending to eliminate backlogs (R000)Spending on maintenance to


ensure no new backlogs (R000)Sanitation backlogsBacklogs to be eliminated (n0. HH not receiving the minimum standard service)

ADM performs the function on behalf of the GKLM. The funding therefore is determined by the ADM as informed by Great Kei Municipality’s priorities.

Backlogs to be eliminated (%: total HH identified as backlog/total numb of HH in the municipalitySpending on new infrastructure to eliminate backlogs (R000)Spending on renewal of existing infrastructure to eliminate backlog (R000)Total spending to eliminate backlogs (R000)Spending on maintenance to ensure no new backlogs (R000)Road maintenance backlogsBacklogs to be eliminated (n0. HH not receiving the minimum standard service)

R 11.8 million

R11.8 M R11.8M

R22.7M R14.4M 22.7 including roll-over funding


2671 Households

2671 2101 2241 Households

2241 Households


11.8 % 11.8 % R3.3 M R22.7 M R14.4 M 22.7 including roll-over for 11/12

Spending on renewal of existing infrastructure to

Department of Roads and Public Works budgeted for maintenance of Provincial Roads Infrastructure


eliminate backlog (R000)Total spending to eliminate backlogs (R000)

0 0 0 1M 1M 1M

Spending on maintenance to ensure no new backlogs (R000)

0 0 0 1M 1M 1M

Refuse removalBacklogs to be eliminated (n0. HH not receiving the minimum standard service)

8365 2106 2106 4015 48%


4350 R5M 0 0 0 0


425 000 425 000 425 000 R15M 0 0

Spending on renewal of existing infrastructure to eliminate backlog (R000)

300 000 0 0 R8M 0 0

Total spending to eliminate backlogs (R000)

R7.5 M R7.5 R7M 0 0 0

Spending on maintenance to ensure no new backlogs (R000)

R6.2 M R3,5 M 0 0 0

Housing and town planningBacklogs to be eliminated (n0. HH not receiving the minimum standard service)Backlogs to be eliminated (%: total HH identified as backlog/total numb of HH in the municipalitySpending on new infrastructure to eliminate


backlogs (R000)Spending on renewal of existing infrastructure to eliminate backlog (R000)Total spending to eliminate backlogs (R000)Spending on maintenance to ensure no new backlogs (R000)

PART II OF SERVICE DELIVEY PERFOMANCE: LOCAL ECONOMIC DEVELOPMENT

3.11 LOCAL ECONOMIC DEVELOPMENT

a) Status on developing the LED strategy/Plan:

The Municipality has hosted an LED Indaba in preparation for the development of the LED Strategy that will be completed in September 2013. The LED Indaba was hosted to identify the key role players in the LED within Great Kei Area and also to identify the stakeholders that has an impact in developing the socio economy of Great Kei Municipality.

b) The LED Strategy will address the following Objectives:

To Increasing number of employment opportunities in GKLM by creating enabling environment for a sustainable growing, diversifying economy by 2017.

To Ensure integration of all agricultural stakeholders’ programmes to Great Kei Municipality’s IDP process.

Ensure Enterprise Development within Great Kei Area To Ensure Tourism Development, Heritage, Arts & Culture The development of Small Medium Macro Enterprises through a focused Business

Retention and Expansion Strategy. A clear implementation plan and monitoring mechanisms.

c) Setting up a LED unit;The LED Unit in Great Kei Municipality is only composed of one official responsible for Local Economic Development. The Department has plans to increase the staff in the unit with at least two officials; the posts are a necessary addition due to the fact that the


Economic drivers of the area are Tourism and Agriculture. The Department of Local Government & Traditional Affairs has funded the municipality with a post of an LED Assistant to enhance the Great Kei LED Unit. The Amathole District Municipality will be employing two personnel as Administrators on behalf of Great Kei Local Municipality to run the Visitor Information Centres in Kei Mouth and Chintsa.The LED is structured as follows:

IDP/PMS Manager x1 LED Officer x 1 Departmental Typist/ Clerk

Future vacant positions: Tourism Officer Agricultural Office IDP/PMS Coordinator

The availability of a LED expertise; The Great Kei Local Municipality has employed an LED Officer with an extensive

background in Local Economic Development, Project Management, SMME Management and LED Learner ship Programmes. The trainings and workshops have enhanced the knowledge and Skills of the incumbent. The following expertise are required for an LED Practitioner:

To develop credible action plans To present a conceptual framework of current and future socio economic

development interventions necessary to support core service delivery areas on Agriculture, Tourism, Heritage, Arts & Culture and Rural Development.

To conduct economic comparative and competitiveness research and introduce programmes for prioritised sectors of the economy.

d) LED stakeholder forum functionality The Great Kei local Municipality had in the past years established an LED Forum, which ceased as a result of numerous complaints from stakeholders concerned. The municipality is in the process of reviving the LED Forum and establish LED Technical Committee.An Agricultural Forum has been established and its terms of reference have been adopted by the Counci in May 2013. There are draft terms of reference for the LED Forum and the LED Technical Committee which will be adopted by Council in 2013/2014 financial year. The LED forum will meet once quaterly. The Agricultural Forum will fist meet in September 2013.

e) Funding opportunities of LED activities (indicative figures on Donors/funders and types of program)

The Great Kei Local Municipality is the main funding source of the Local Economic Development, and the Department of Agriculture & Rural Development has contributed in funding of the Agricultural Cooperatives. Community members have complained of the difficulties to attain funding for projects on their own. The Municipality has received funding from the following sources.

Amatole District Municipality

Amatole District Municipality has funded the Summer Festival with an amount of R100 000.00.

Amatole District Municipality also trained of 3 Great Kei Tour Guides. Funding for the 2 Visitor Information Centre Administrators.

Department of Environmental Affairs The Department of Environment Affairs funded 3 projects in Great Kei, only two

were monitored by the LED Officer. The Programme falls under the support of the


Extended Public Works Programme. They funded the Municipal Recreational, Parks Project in Kei Mouth worth R500 000.00 over 1 year ending in January 2013. The other project is a Coast Care Project shared on a 60:40 basis between buffalo City Metro and Great Kei at a cost of R11 000 000.00. The project commenced in 2011 and is expected to run for 2 years.

SEDA provided support by training Cooperatives, the project was on manufacturing of Bricks & Blocks

Department of Rural Development and Agrarian Reform • Maize production costs per ha = R8 800• Farmer contribution =R1 800/ha & DRDAR contribution=R70 00 as a top up on the

farmer contribution.• DRDAR and ECRDA provided mechanisation & Fertilizer= R700 000• No contribution from farmers as the municipality had paid for them.• Oomdraai Farm- fencing & small irrigation R445 000• Khayelitsha CPA- Fencing- R300 000• Melody Farm- Fencing – R200 000• Grey Valley Farm 10.4 km fencing – R 400 000• Quku Valley Farm 11km fencing – R480 000

Great Kei Local Municipality Financial Support R 151 578.00 by Weno Trading Enterprise cc for the Cleaning of 3 Dams namely,

Nokala, Lusizini and Tuba Dam. R 33 792.75 by Komga Seedlings Producers to supply ward 4, 5, 6 & 7 with

agricultural inputs for Cooperatives. The Municipality also funds for transporting of the Cooperative members to attend

to LED related Imbizo’s and other Capacity Building Sessions. The Municipality facilitates trainings and workshops for Cooperatives. LED Indaba funding R45 000.00 100ha planted with maize in GKM= 50ha @ Mtyana & 50ha @ Ngxingxolo Great Kei Municipality assisted the farmers with an amount of R180 000 for seed

& chemicals (Herbicides & Insecticides) for 100ha.

3.12 Progress towards achieving the LED key objectives

a. Improve public and market confidenceSpatial development framework (SDF)/Land use management system (LUMS);

SDF of the municipality identifies the following areas as primary and secondary nodes:

Komga- As the Main Administrative Centre Kei Mouth and Chintsa East- As the Secondary Administrative Centre Morgan’s Bay- As small town a with reliance on seasonal tourism enterprise and

trade for LED Activities Haga-Haga As small town a with reliance on seasonal tourism enterprise and

trade for LED Activities The Glens- Grouping of Small Resorts and related residential Developments Local Mixed Land Use Nodes- Intersection of Schafli Road and Chintsa East Access

Road Potential for the development of mixed land uses Intersection of N2 roadway and the Mooiplaas access road- Potential for the

development of mixed land uses.Red tape reduction: Turn-around time for licensing and other business related applications;

There are Municipal By-laws in place formulated by the Municipality with Trading Regulations for shops operating in and around town. The shops are to complying with the health and safety standards.


There is a fee that is paid for a Trading License.Investments and trading by-laws

• The Great Kei Municipality will be developing its own Business Retention and Expansion Strategy in order to attract potential investors and retain the existing businesses and expansion of the existing markets.

• Further the municipality will be developing Terms of Reference to call for partnership for Investment with potential developers/investors.

Provision and maintenance of quality and reliable infrastructure: Roads; ITC; market places

• In promoting the LED the municipality focuses on providing infrastructure and quality services, to manage spatial policies such as the Spatial Development Framework.

• Manage tariffs policies such as the By-Laws• Marketing of the area for potential investors and marketing Great Kei as a Tourist

Destination.• Manage proper communication systems such as networks, computer accessibility

for local communities.

b. Exploit comparative and competitive advantage for industrial activities• The LED will be developing its LED Strategy in 2013/14 financial year to

extensively exploit the competitive and comparative advantages within the area.

• The Eastern Cape is mainly an agricultural area with tourism potential. • Tourism areas are mainly underdeveloped coastal villages on the wild

coast and sunshine coast. However Great Kei’s main advantage in agriculture is that it is situated on the rain belt with sweet veld therefore having tremendous potential in crop and animal husbandry. It is also the only serviced area along the wild coast.

c. Intensify Enterprise support and business development The LED Unit supports SMME’s with trainings and Workshops. The LED Unit facilitates for SMME’s to attend events such as Tourism

Imbizo’s and Cooperatives Indaba. Financial support in a form of inputs and working tools for Cooperatives Facilitating Funding from Departments such as Agriculture, Department of

Environmental Affairs and Department of Social Development.Public and private partnerships established

Partnership with SEDA for Trainings on various aspects of Business, the University of Fort Hare for Research and Feasibility Studies on Agriculture.

There is no exact number of cooperatives registered we can say about 50% of Cooperatives are registered

Number of new employment opportunities through Expanded Public Works Programs and Public and Private Partnerships

19 Employees from Infrastructure related projects.

d. Support Social investment program• The Municipality has outreach programmes encouraging formation of

Cooperatives as a vehicle to alleviate poverty.• The area has a variety of stakeholders participating in development of

socio economy of Great Kei, i.e. Farmers Association, Tour Guides, Caters, Crafter etc.


• There is a Database of SMME’s in Place.

3.13 Annual performance as per key performance indicators in LEDIndicator name Target set

for the yearAchievement level during the year (absolute figure)

Achievement percentage during the year

1 Percentage of LED Budget spent on LED related activities.

60% 60% 60%

2 Number of LED stakeholder forum held

1 50% 500%

3 Percentage of SMME that have benefited from a SMME support program

80% 80% 80%

4 Number of job opportunities created through EPWP

19 19 40%

5 Number of job opportunities created through PPP

- - -

3.14 Challenges regarding LED strategy implementation

The need form functioning partnerships and strengthen the existing ones. Access to finance, lack of financial Donors for SMME’s There is need for feasibility studies to be conducted to exploit each

economic sector. Provision of proper infrastructure for SMME


4.1 Presentation of the organizational structure (approved organogram)

Great Kei Local Municipality adopted organizational structure for 2012/2013 financial year.

The Constitution of the Republic of South Africa Act 108 of 1996 in S153 directs municipalities to:

a) Structure and manage its administration and budgeting and planning processes to give priority to the basic needs of the community, and to promote the social and economic development of the community.

Thus we maintain that organizational structuring is a constitutional mandate given in order to ensure that the objects which the very constitution sets are met unequivocally. The other important aspect of this undertaking is to ensure that organizations in the post-apartheid era are capable of meeting the transformation challenges facing the country.

It is upon constitutional mandate that the municipality adopted the organogram for 2012/2013 financial year as illustrated below, with 203 approved positions, 143 filled and 60 vacant positions which 27 of them were budgeted for.


Statistics on recruitment are as follows:

4.2Performance Management System

Great Kei Local Municipality adopted Performance Management Framework and PMS Procedure on 31st May 2013. The Framework and Procedure will effectively be implemented in 2013/2014 financial year. However PMS Reviews for S56 and Non S56 were conducted for the Third Quarter in April 2013 and for the Fourth Quarter in July/August 2013.

The PMS Framework further establishes the following reporting mechanisms:A) DEPARTMENT REVIEWS

It is intended that Departments review their performance at least monthly, using their Department SDBIP’s. Decision-makers should be immediately warned of any emerging failures to service delivery such that they can intervene if necessary.

B) TOP MANAGEMENT TEAM REVIEWSDirectors/Departmental Managers / Divisional managers and Staff reporting directly to MM will then need to report on their performance in the service scorecard format to the Municipal Manager and other Directors/Departmental Managers. Additional indicators that occur in the strategic scorecard will also be reviewed. These reviews should at least take place quarterly.

C) STANDING COMMITTEE REVIEWSEach standing committee will be required to review the performance of their respective Departments against their service scorecard, at least quarterly. The standing committee should appraise the performance of the service against committed targets

D) COUNCIL REVIEWS QUARTERLY On a quarterly basis, the council should engage in an intensive review of municipal performance against both the SDBIP scorecards and the strategic scorecard, as reported by the municipal manager.

E) COUNCIL REVIEWS ON SIX MONTHS BASISAt least twice annually, the Council will be required to review municipal performance.

F) PUBLIC REVIEWSThe Municipal Systems Act requires the public to be given the opportunity to review municipal performance.

It is proposed that in addition to the annual report mentioned above, a user-friendly community’s report should be produced for public consumption. The communities’ report should be a simple, easily readable and attractive document that translates the strategic scorecard for public consumption. The below 2012/2013 Annual Performance Report has the details of municipal performance which has been compiled on quarterly basis in partnership with Service Provider 2012/2013 FINAL ANNUAL REPORT Page 64

Year Total Posts Filled Posts Vacant Posts

2010/2011 120 106 142011/2012 134 123 112012/2013 203 143 60

ARMS; reviewed by Internal Audit; submitted to Audit Committee and presented to Council for adoption.4.3 CAPACITATING MUNICIPAL WORKFORCE IN 2012/2013 FINANCIAL

YEAR

Workplace Skills Plan for the financial year 2012/2013 has been developed. Training programs implemented 2012/2013 financial years are as follows:

a) 2012/2013 FINANCIAL YEARTotal Number of People Trained

Designation Course Name Duration

11 Councillors Intermediate Computer Training for Councillors

2 days

1 Councillor Certificate in Public Administration for Community Services

1 Year

1 Mayor/Speaker Diploma in Local Government Law

1 year

1 HR Practitioner Project Kaedu -Strategic Leadership Management Course

2 Weeks

1 Cashier Local Government Accounting Certificate

1 Year

3 Chief Financial OfficerMunicipal Finance InternMunicipal Manager

Municipal Finance Management Programme

1 year

2 Payroll OfficerPersonnel Officer

Payday Training 2 days

13 Project ManagerHuman Resources ManagerICT and Research SpecialistAdministration OfficerSupervisorMunicipal Finance InternCommunity Services ManagerCemetery AttendantSuperintended Solid WasteSupply Chain OfficerChief Financial Officer

SCM Internal Workshop

1 day


DBSA Intern08 Finance Intern

Supply Chain management OfficerChief Financial OfficerHuman Resources managerSuperintended Solid WasteCommunity ClerkIT Officer

BID Committee 2 days

14 General Workers Basic Hygiene Skills 3 days17 General Workers Waste Management

for Genera3 days

2 Councilors Certificate in Advanced Programme and Diploma in Local Government Law and Administration

1 year

7 5X Interns1X Chief Debtors Clerks1X Income Accountant

GRAP 2 days

Implementation of the Work skills Plan is funded through LGSETA and Operational Budget of the municipality. A total cost of R218 334.58 spent in 2012/2013 financial year has been utilized for training and capacity building.

4.3.1 Key HR statistics per functional area

a) Full time staff complement per functional areaMM/Section 57 and Line Managers

Approved positions (e.g. MM-S57 etc...)

Number of approved and budgeted posts per position

Filled posts Vacant posts

1 Municipal Manager 1 1 02 Chief Financial Officer 1 0 13 Director Strategic Services 1 1 04 Director: Corporate

Services1 0 0

5 Director: Technical and Engineering / Community Services

1 1 0

6 Acting Director: Corporate 1 0 1


Services7 Acting Director: Strategic

Services1 0 1

Total 7 7 3

b) Technical Services Staff ComplementApproved positions Number of

approved and budgeted posts per position

Filled posts Vacant posts

1 Director: Technical and Engineering / Community Services

1 1 0

2 Infrastructure Manager 1 1 03 Operations & Maintenance

Control Officer1 1 0

4 Building Control Officer 1 1 05 Town Planner 1 0 16 Town Planner Clerk 1 1 07 Project Manager 1 1 08 Finance & Admin Assistant 1 1 09 Electrician 1 1 010 Assistant Electrician 1 1 011 General Worker (Electricity) 2 1 112 Supervisor Maintenance 1 1 013 Driver – Grader 1 1 014 General Workers - Roads 4 2 2

Total 18 14 4

c) Technical staff registered with professional bodiesTechnical Service (e.g water, electricity etc...)

Total number of technical service Managers

Total number registered in the accredited professional body

Total number pending registration confirmation in the accredited professional body

Total number not yet registered in the accredited professional body

Technical Infrastructure Services Director

1 0 0 0

Infrastructure 1 0 0 0


ManagerProject Manager

1 1 0 0

d) Levels of education and skills

Total number of staff

Number of staff without Grade 12

Number of staff with Senior Certificate only

Number of staff with Tertiary/accredited professionals training

143 57 19 67

e) Trends on total personnel expenditureFinancial Years

Total number of staff

Total approved operating Budget

Personnel expenditure (salary and salary related)

Percentage of expenditure

2010-2011 106 19,011,749. 00

18,873,698. 00 99 %

2011-2012 123 31,172,538. 00

21,401,619. 00 69 %

2012 - 2013

143 33,250,399.00

28,809,678. 65 86.64 %

f) List of pension and medical aids to whom employees belong (please add if necessary)

Names of pension fund Number of members

Names of medical Aids

Number of members

SALA Pension Fund 4 SAMWU Medical Aid 34SAMWU National Provident Fund

70 Bonitas 12

Cape Joint Retirement Fund

28 LA Health 26

4.3.2 Annual performance as per key performance indicators in municipal transformation and organizational development

Indicator name Total number of people

Achievement level during the

Achievement percentage

Comments on the gap


(planned for) during the year under review

year under review

during the year

1 Vacancy rate for all approved and budgeted posts;

203 143 60 % Other positions to be budgeted for in 2013/2014 financial year

2 Percentage of appointment in strategic positions (Municipal Manager and Section 57 Managers)

5 5 100 %

3 Percentage of Section 57 Managers including Municipal Managers who attended at least 1 skill development training course within the FY

2 2 100%

4 Percentage of Managers in Technical Services with a professional qualification

3 3 100 %

5 Percentage of municipalities within the district area that have a fully functional Performance Management System (DM only)

1 Performance Management Framework

and Procedure adopted

1 100%

8 Percentage of staff that have undergone a skills audit (including competency profiles) within the current 5 year term

143 143 100%

9 Percentage of councillors who attended a skill development training within the current 5 year term

13 11 80%

10

Percentage of staff complement with disability

No staff member appointed in 2012/2013 financial year

1 Percentage of female 50 50 100%


1 employees12

Percentage of employees that are aged 35 or younger

41 41 100%

4.3.3 Major challenges and remedial actions in regard to human resource and organizational management

Challenges Remedial ActionSkill gap: Labour relations and Employee wellness

Funding of Labour Relations officer. External Assistance sought for EWP

Audit Queries:Leave and overtime

Improving internal controls: Written Procedures

Improve functionality of HR Module ( Pay Day) External Assistance sought to put leave

proper leave administration in place and clean the current leave information.

Salary Disparities Job Description writing ad bench marking process to be outsourced

Out Standing Labour issues Expediting pre arbitration Seeking assistance from SALGA for skilled

Presiding and prosecuting officials Internal Dispute resolutions mechanisms to

be explored for salary related matters.


4

5.1 AUDITED FINANCIAL STATEMENTS

Great Kei Local MunicipalityFinancial Statements for the year ended 30 June 2013

Statement of Financial Position as at 30 June 2013

Figures in rands notes

Assets

Current AssetsInventories 9 131,330,090 131,330,090Receivables from exchange transactions 10 8,534,415 1,138,761Receivables from non-exchange transactions 11 211,734 5,060,431VAT receivable 12 8,438,490 3,564,364Cash and cash equivalents 13 16,610,896 27,653,994

165,125,625 168,747,640

Non-Current AssetsInvestment property 4 107,486,712 107,486,712Property, plant and equipment 5 315,049,707 317,207,936Intangible assets 6 395,012 250,339Heritage assets 7 7 7

422,931,438 424,944,994

Non-Current Assets 422,931,438 424,944,994Current Assets 165,125,625 168,747,640Total Assets 588,057,063 593,692,634

Liabilities

Current Liabilities


Long term borrowings 16 333,457 293,414Finance lease obligation 14 73,492 89,512Payables from exchange transactions 18 15,205,455 12,565,363Consumer deposits 19 80,503 80,503Retirement benefit obligation 8 576,000 401,000Unspent conditional grants and receipts 15 10,405,409 10,573,330Provisions 17 229,000 189,000

26,903,316 24,192,122

Non-Current LiabilitiesLong term borrowings 16 2,320,713 2,652,693Finance lease obligation 14 223,223 82,718Retirement benefit obligation 8 4,854,000 3,004,000Provisions 17 1,726,478 1,710,720

9,124,414 7,450,131

Non-Current Liabilities 9,124,414 7,450,131Current Liabilities 26,903,316 24,192,122Total Liabilities 36,027,730 31,642,253

Assets 588,057,063 593,692,634Liabilities (36,027,730) (31,642,253)Net Assets 552,029,333 562,050,381

Accumulated surplus 552,029,333 562,050,381


Statement of Financial Performance

Figures in Rand Notes 2013 2012

RevenueRevenue from exchange transactionsService charges 23 6,788,106 8,193,127Rental of facilities and equipment 34 104,333 181,004Licences and permits 2,169,467 2,397,647Commissions received 178,466 236,662Other income 25 2,583,533 988,019Interest received - investment 30 1,491,176 801,399

Total revenue from exchange transactions 13,315,081 12,797,858

Revenue from non-exchange transactions

Taxation revenueProperty rates 22 12,638,208 12,243,249

Transfer revenueGovernment grants & subsidies 24 49,291,921 34,326,625


Fines 28,550 1,650

Total revenue from non-exchange transactions 61,958,679 46,571,524

13,315,081 12,797,85861,958,679 46,571,524

Total revenue 21 75,273,760 59,369,382

ExpenditurePersonnel 27 (27,213,617) (19,318,241)Remuneration of councillors 28 (2,993,552) (2,847,317)Administration (506,861) (172,961)Depreciation and amortisation 31 (18,470,784) (18,949,541)Finance costs 32 (650,933) (501,140)Debt impairment 29 (2,766,946) (4,330,200)Repairs and maintenance (7,106,576) (1,426,945)Bulk purchases 35 (6,643,699) (6,259,354)General Expenses 26 (18,941,840) (15,604,603)

Total expenditure (85,294,808) (69,410,302)

- -Total revenue 75,273,760 59,369,382Total expenditure (85,294,808) (69,410,302)Surplus (deficit) for the year (10,021,048) (10,040,920)


Statement of Changes in Net Assets

Figures in RandAccumulated

surplusTotal net

assets

Balance at 01 July 2011 295,770,506 295,770,506AdjustmentsCorrection of prior period errors (refer to note 39) 276,320,795 276,320,795

Balance at 01 July 2011 as restated 572,091,301 572,091,301Changes in net assetsDeficit for the year (10,040,920) (10,040,920)

Total changes (10,040,920) (10,040,920)

Opening balance as previously reported 295,326,184 295,326,184AdjustmentsCorrection of errors 266,724,197 266,724,197

Balance at 01 July 2012 as restated 562,050,381 562,050,381Changes in net assetsSurplus/(Deficit) for the year (10,021,048) (10,021,048)

Total changes (10,021,048) (10,021,048)

Balance at 30 June 2013 552,029,333 552,029,333

Notes 40



Cash Flow Statement

Figures in Rand Notes 2013 2012

Cash flows from operating activities

ReceiptsSale of goods and services 29,804,565 32,821,541Grants 49,459,842 24,757,057Interest income 1,491,176 801,399Other cash item - 12,777,742

80,755,583 71,157,739

PaymentsEmployee costs (30,207,169) (22,165,558)Suppliers (32,926,242) (23,492,571)Finance costs (650,933) (501,140)

(63,784,344) (46,159,269)

Total receipts 80,755,583 71,157,739Total payments (63,784,344) (46,159,269)Net cash flows from operating activities 36 16,971,239 24,998,470

Cash flows from investing activities

Purchase of property, plant and equipment 5 (27,603,110) (13,351,617)Purchase of intangible assets 6 (243,775) (236,718)

Net cash flows from investing activities (27,846,885) (13,588,335)

Cash flows from financing activities

Repayment of long term liabilities (291,937) (256,911)Movement in finance lease 124,485 172,230

Net cash flows from financing activities (167,452) (84,681)

Net increase/(decrease) in cash and cash equivalents (11,043,098) 11,325,454Cash and cash equivalents at the beginning of the year 27,653,994 16,328,540

Cash and cash equivalents at the end of the year 13 16,610,896 27,653,994


8


Statement of Comparison of Budget and Actual AmountsBudget on Accrual Basis

Adjustments Final Budget Actual amounts Difference Referenceon comparable between final

basis budget andFigures in Rand actual

Statement of Financial Performance

Revenue

Revenue from exchange transactionsService charges 21,031,586 4,059,999 25,091,585 6,788,106 (18,303,479) Refer to note

50Rental of facilities and equipment 229,538 - 229,538 104,333 (125,205)Licences and permits 412,306 - 412,306 2,169,467 1,757,161Commissions received 1,054,000 - 1,054,000 178,466 (875,534)Other income 3,493,113 59,428 3,552,541 2,583,533 (969,008)Interest received - investment 2,882,173 (119,752) 2,762,421 1,491,176 (1,271,245)

Total revenue from exchange transactions

29,102,716 3,999,675 33,102,391 13,315,081 (19,787,310)


Taxation revenueProperty rates 13,401,506 2,313,144 15,714,650 12,638,208 (3,076,442)Government grants & subsidies 49,579,000 11,559,184 61,138,184

49,291,921 (11,846,263)

Transfer revenueFines 56,135 - 56,135 28,550 (27,585)

Total revenue from non-exchange transactions

63,036,641 13,872,328 76,908,969 61,958,679 (14,950,290)

'Total revenue from exchange transactions'

29,102,716 3,999,675 33,102,391 13,315,081 (19,787,310)

'Total revenue from non-exchange transactions'

63,036,641 13,872,328 76,908,96961,958,679 (14,950,290)

Total revenue 92,139,357 17,872,003 110,011,360 75,273,760 (34,737,600)

ExpenditurePersonnel (33,568,349) 3,295,693 (30,272,656) (27,213,617) 3,059,039Remuneration of councillors (3,252,243) 200,000 (3,052,243) (2,993,552) 58,691Administration - - - (506,861) (506,861)Depreciation and amortisation - (15,000,000) (15,000,000)

(18,470,784) (3,470,784)Finance costs (741,090) 70,000 (671,090) (650,933) 20,157Debt impairment (600,274) (3,444,025) (4,044,299) (2,766,946) 1,277,353Repairs and maintenance (7,148,777) (1,919,130) (9,067,907) (7,106,576) 1,961,331Bulk purchases (4,306,698) (3,000,000) (7,306,698) (6,643,699) 662,999Contracted Services (5,594) (2,000) (7,594) - 7,594General Expenses (19,791,622) (3,205,825) (22,997,447) (18,941,840) 4,055,607

Total expenditure (69,414,647) (23,005,287) (92,419,934) (85,294,808) 7,125,126


92,139,357 17,872,003110,011,360

75,273,760(34,737,600)

(69,414,647) (23,005,287) (92,419,934) (85,294,808) 7,125,126Operating deficit 22,724,710 (5,133,284) 17,591,426 (10,021,048) (27,612,474)Gain on disposal of assets and liabilities

210,800 - 210,800 - (210,800)

22,724,710 (5,133,284)17,591,426

(10,021,048) (27,612,474)210,800 - 210,800 - (210,800)


10


Statement of Comparison of Budget and Actual AmountsBudget on Cash Basis

Adjustments Final Budget Actual amounts Difference Referenceon comparable between final

basis budget andFigures in Rand actual

Deficit before taxation 22,935,510 (5,133,284) 17,802,226 (10,021,048) (27,823,274)Surplus before taxation 22,935,510 (5,133,284) 17,802,226

(10,021,048) (27,823,274)Taxation - - - - -Actual Amount on Comparable 22,935,510 (5,133,284) 17,802,226 (10,021,048) (27,823,274)Basis as Presented in the Budget and ActualComparative Statement


Appropriation StatementFigures in Rand Original

budgetBudget

adjustments (i.t.o. s28 and

s31 of the MFMA)

Final Shifting of Virement Final budgetadjustments funds (i.t.o. (i.t.o. council

budget s31 of the approvedMFMA) policy)

Actual Unauthorisedoutcome expenditure

Variance Actual outcome as % of

final budget

Actual outcome as % of original budget


2013

Financial PerformanceProperty rates 13,401,506 2,313,144 15,714,650 - 15,714,650 12,638,208 (3,076,442) 80 % 94 %Service charges 21,031,586 4,059,999 25,091,585 - 25,091,585 6,788,106 (18,303,479) 27 % 32 %Investment revenue 2,882,173 (119,752) 2,762,421 - 2,762,421 1,491,176 (1,271,245) 54 % 52 %Transfers recognised - operational

35,153,000 3,300,000 38,453,000 - 38,453,000 34,598,564 (3,854,436) 90 % 98 %

Other own revenue 5,245,092 59,428 5,304,520 - 5,304,520 5,163,349 (141,171) 97 % 98 %

Total revenue (excluding capital transfers and contributions)

77,713,357 9,612,819 87,326,176 - 87,326,176 60,679,403 (26,646,773) 69 % 78 %

Employee costs (33,568,349) 3,295,693 (30,272,656) - - (30,272,656) (27,213,617) - 3,059,039 90 % 81 %Remuneration of councillors

(3,252,243) 200,000 (3,052,243) - - (3,052,243) (2,993,552) - 58,691 98 % 92 %

Debt impairment (600,274) (3,444,025) (4,044,299) (4,044,299) (2,766,946) - 1,277,353 68 % 461 %Depreciation and asset impairment

- (15,000,000) (15,000,000) (15,000,000) (18,470,784) - (3,470,784) 123 % DIV/0 %

Finance charges (741,090) 70,000 (671,090) - - (671,090) (650,933) - 20,157 97 % 88 %Materials and bulk purchases

(4,306,698) (3,000,000) (7,306,698) - - (7,306,698) (6,643,699) - 662,999 91 % 154 %

Repairs and maintenance (7,148,777) (1,919,130) (9,067,907) - - (9,067,907) (7,106,576) - 1,961,331 78 % 99 %General expenses (19,586,416) (3,207,825) (22,794,241) - - (22,794,241) (19,448,701) - 3,345,540 85 % 99 %

Total expenditure (69,203,847) (23,005,287) (92,209,134) - - (92,209,134) (85,294,808) - 6,914,326 93 % 123 %Total revenue (excluding capital transfers and contributions)

77,713,357 9,612,819 87,326,176 - - 87,326,176 60,679,403 - (26,646,773) 69 % 78 %

Total expenditure (69,203,847) (23,005,287) (92,209,134) - - (92,209,134) (85,294,808) - 6,914,326 93 % 123 %Surplus/(Deficit) 8,509,510 (13,392,468) (4,882,958) - (4,882,958) (24,615,405) (19,732,447) 504 % (289)%


1. Presentation of Financial Statements

The financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.

These financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention unless specified otherwise. They are presented in South African Rand.

A summary of the significant accounting policies, which have been consistently applied, are disclosed below

These accounting policies are consistent with the previous period and GRAP standards, except for the changes set out in note 2 Changes in accounting policy

Those standards of GRAP and interpretations of such standards applicable to the operations of the municipality, are therefore as follows:

Standards Issued and Effective GRAP 1 - Presentation of Financial Statements (as revised in 2010) GRAP 2 - Cash Flow Statements (as revised in 2010) GRAP 3 - Accounting Policies, Changes in Accounting Estimates and Errors (as revised in 2010) GRAP 4 - The Effects of changes in Foreign Exchange Rates (as revised in 2010) GRAP 5 - Borrowing Costs GRAP 9 - Revenue from Exchange Transactions (as revised in 2010) GRAP 10 - Financial Reporting in Hyperinflationary Economies (as revised in 2010) GRAP 11 - Construction Contracts (as revised in 2010) GRAP 12 - Inventories (as revised in 2010) GRAP 13 - Leases (as revised in 2010) GRAP 14 - Events After the Reporting Date (as revised in 2010) GRAP 16 - Investment Property (as revised in 2010) GRAP 17 - Property Plant and Equipment (as revised in 2010) GRAP 19 - Provisions, Contingent Liabilities and Contingent Assets (as revised in 2010) GRAP 21 - Impairment of non-cash-generating assets GRAP 23 - Revenue from Non-exchange Transactions (Taxes and Transfers) GRAP 24 - Presentation of Budget Information in Financial Statements GRAP 26 - Impairment of cash-generating assets GRAP 100 - Non-current Assets held for Sale and Discontinued Operations (as revised in 2010) GRAP 101 - Agriculture GRAP 102 - Intangible Assets GRAP 103 - Heritage Assets GRAP 104 - Financial Instruments

Standards Issued, Future Effective Date - can base accounting policy on, or early adopt GRAP 20 - Related Party Disclosures GRAP 25 - Employee Benefits GRAP 27 - Agriculture (replace GRAP 101) GRAP 31 - Intangible Assets (replace GRAP 102)


Improvements to Standards of GRAP

Standards Issued, no Effective Date - can base accounting policy on, cannot early adopt GRAP 105 - Transfer of functions between entities under common control GRAP 106 - Transfer of functions between entities not under common control GRAP 107 - Mergers

Standards Issued, no Effective Date - cannot use GRAP 18 - Segmental Reporting



Accounting Policies Interpretations IGRAP 1 - Applying the Probability Test on Initial Recognition of Exchange Revenue IGRAP 2 - Changes in Existing Decommissioning Restoration and Similar Liabilities IGRAP 3 - Determining Whether an Arrangement Contains a Lease IGRAP 4 - Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds IGRAP 5 - Applying the Restatement Approach under the Standard of GRAP on Financial Reporting in Hyperinflationary Economies IGRAP 6 - Loyalty Programmes IGRAP 7 -The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction IGRAP 8 - Agreements for the Construction of Assets from Exchange Transactions IGRAP 9 - Distributions of Non-cash Assets to Owners IGRAP 10 - Assets Received from Customers IGRAP 13 - Operating Leases - Incentives IGRAP 14 - Evaluating the Substance of Transactions Involving the Legal Form of a Lease IGRAP 15 - Revenue - Barter Transactions Involving Advertising Services IGRAP 16 - Intangible Assets - Website Costs (effective 1 April 2013)

1.1 Significant judgements and sources of estimation uncertainty

In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts represented in the financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the financial statements. Significant judgements include:

Trade receivables / loans and receivables

The municipality assesses its trade receivables and loans and receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or deficit, the surplus makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

The impairment for trade receivables and loans and receivables is calculated on a portfolio basis, based on historical loss ratios, adjusted for national and industry-specific economic conditions and other indicators present at the reporting date that correlate with defaults on the portfolio. These annual loss ratios are applied to loan balances in the portfolio and scaled to the estimated loss emergence period.

Fair value estimation

The fair value of financial instruments traded in active markets (such as trading and available-for-sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the municipality is the current bid price.

The fair value of financial instruments that are not traded in an active market (for example, over-the counter derivatives) is determined by using valuation techniques. The municipality uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the


remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at the end of the reporting period.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the municipality for similar financial instruments.


Accounting Policies

3 Property, plant and equipment (continued)

Major spare parts and stand by equipment which are expected to be used for more than one period are included in property, plant and equipment. In addition, spare parts and stand by equipment which can only be used in connection with an item of property, plant and equipment are accounted for as property, plant and equipment.

Major inspection costs which are a condition of continuing use of an item of property, plant and equipment and which meet the recognition criteria above are included as a replacement in the cost of the item of property, plant and equipment. Any remaining inspection costs from the previous inspection are derecognised.

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses.

Property, plant and equipment is carried at revalued amount, being the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

Revaluations are made with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period.

When an item of property, plant and equipment is revalued, any accumulated depreciation at the date of the revaluation is restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals its revalued amount.

When an item of property, plant and equipment is revalued, any accumulated depreciation at the date of the revaluation is eliminated against the gross carrying amount of the asset and the net amount restated to the revalued amount of the asset.

Any increase in an asset’s carrying amount, as a result of a revaluation, is credited directly to a revaluation surplus. The increase is recognised in surplus or deficit to the extent that it reverses a revaluation decrease of the same asset previously recognised in surplus or deficit.

Any decrease in an asset’s carrying amount, as a result of a revaluation, is recognised in surplus or deficit in the current period. The decrease is debited directly to a revaluation surplus to the extent of any credit balance existing in the revaluation surplus in respect of that asset.

The revaluation surplus in equity related to a specific item of property, plant and equipment is transferred directly to retained earnings when the asset is derecognised.


The revaluation surplus in equity related to a specific item of property, plant and equipment is transferred directly to retained earnings as the asset is used. The amount transferred is equal to the difference between depreciation based on the revalued carrying amount and depreciation based on the original cost of the asset.

Property, plant and equipment are depreciated on the straight line basis over their expected useful lives to their estimated residual value.

Property, plant and equipment (Access roads, Community assets and moveable asset additions and prior year moveable assets) is carried at cost less accumulated depreciation and any impairment losses.

Property, plant and equipment (Electricity infrastructure, land and buildings and newly found moveable assets) is carried at revalued amount, being the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are made with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period.

Prior movable assets which management does not have supporting documentation is carried at deemed cost.

Any increase in an asset’s carrying amount, as a result of a revaluation, is credited directly to a revaluation surplus. The increase is recognised in surplus or deficit to the extent that it reverses a revaluation decrease of the same asset previously recognised in surplus or deficit.

Any decrease in an asset’s carrying amount, as a result of a revaluation, is recognised in surplus or deficit in the current period. The decrease is debited in revaluation surplus to the extent of any credit balance existing in the revaluation surplus in respect of that asset.

The useful lives of items of property, plant and equipment have been assessed as follows:



Accounting Policies1.7 Financial instruments (continued)

If there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced directly OR through the use of an allowance account. The amount of the loss is recognised in surplus or deficit.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed directly OR by adjusting an allowance account. The reversal does not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in surplus or deficit.

Financial assets measured at cost:

If there is objective evidence that an impairment loss has been incurred on an investment in a residual interest that is not measured at fair value because its fair value cannot be measured reliably, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed.


Accounting Policies


1.7 Financial instruments (continued)The difference between the carrying amount of a financial liability (or part of a financial liability) extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in surplus or deficit. Any liabilities that are waived, forgiven or assumed by another entity by way of a non-exchange transaction are accounted for in accordance with the Standard of GRAP on Revenue from Non-exchange Transactions (Taxes and Transfers).PresentationInterest relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.Dividends or similar distributions relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.Losses and gains relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.Distributions to holders of residual interests are debited by the entity directly to net assets, net of any related income tax benefit [where applicable]. Transaction costs incurred on residual interests is accounted for as a deduction from net assets, net of any related income tax benefit [where applicable].A financial asset and a financial liability are only offset and the net amount presented in the statement of financial position when the entity currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.In accounting for a transfer of a financial asset that does not qualify for derecognition, the entity does not offset the transferred asset and the associated liability.1.8 LeasesA lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.When a lease includes both land and buildings elements, the entity assesses the classification of each element separately. Finance leases - lesseeFinance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.


The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.Minimum lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of on the remaining balance of the liability.Any contingent rents are expensed in the period in which they are incurred.Operating leases - lessorOperating lease revenue is recognised as revenue on a straight-line basis over the lease term.Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease revenue.The aggregate cost of incentives is recognised as a reduction of rental revenue over the lease term on a straight-line basis. The aggregate benefit of incentives is recognised as a reduction of rental expense over the lease term on a straight-line basis. Income for leases is disclosed under revenue in statement of financial performance.


Accounting Policies


1.11 Impairment of non-cash-generating assets (continued)Depreciation (Amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life.Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.Recoverable service amount is the higher of a non-cash-generating asset’s fair value less costs to sell and its value in use.Useful life is either:(a) the period of time over which an asset is expected to be used by the municipality; or(b) the number of production or similar units expected to be obtained from the asset by the municipality.Criteria developed by the municipality to distinguish non-cash-generating assets from cash-generating assets are as follow: [Specify criteria]IdentificationWhen the carrying amount of a non-cash-generating asset exceeds its recoverable service amount, it is impaired.The municipality assesses at each reporting date whether there is any indication that a non-cash-generating asset may be impaired. If any such indication exists, the municipality estimates the recoverable service amount of the asset.Irrespective of whether there is any indication of impairment, the entity also test a non-cash-generating intangible asset with an indefinite useful life or a non-cash-generating intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable service amount. This impairment test is performed at the same time every year. If an intangible asset was initially recognised during the current reporting period, that intangible asset was tested for impairment before the end of the current reporting period.


Accounting Policies


1.11 Impairment of non-cash-generating assets (continued)Value in useValue in use of non-cash-generating assets is the present value of the non-cash-generating assets remaining service potential.The present value of the remaining service potential of a non-cash-generating assets is determined using the following approach:Depreciated replacement cost approachThe present value of the remaining service potential of a non-cash-generating asset is determined as the depreciated replacement cost of the asset. The replacement cost of an asset is the cost to replace the asset’s gross service potential. This cost is depreciated to reflect the asset in its used condition. An asset may be replaced either through reproduction (replication) of the existing asset or through replacement of its gross service potential. The depreciated replacement cost is measured as the reproduction or replacement cost of the asset, whichever is lower, less accumulated depreciation calculated on the basis of such cost, to reflect the already consumed or expired service potential of the asset.The replacement cost and reproduction cost of an asset is determined on an “optimised” basis. The rationale is that the municipality would not replace or reproduce the asset with a like asset if the asset to be replaced or reproduced is an overdesigned or overcapacity asset. Overdesigned assets contain features which are unnecessary for the goods or services the asset provides. Overcapacity assets are assets that have a greater capacity than is necessary to meet the demand for goods or services the asset provides. The determination of the replacement cost or reproduction cost of an asset on an optimised basis thus reflects the service potential required of the asset.Restoration cost approachRestoration cost is the cost of restoring the service potential of an asset to its pre-impaired level. The present value of the remaining service potential of the asset is determined by subtracting the estimated restoration cost of the asset from the current cost of replacing the remaining service potential of the asset before impairment. The latter cost is determined as the depreciated reproduction or replacement cost of the asset, whichever is lower.Service units approachThe present value of the remaining service potential of the asset is determined by reducing the current cost of the remaining service potential of the asset before impairment, to conform to the reduced number of service units expected from the asset in its impaired state. The current cost of replacing the remaining service potential of the asset before impairment is determined as the depreciated reproduction or replacement cost of the asset before impairment, whichever is lower.Recognition and measurement


If the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable service amount. This reduction is an impairment loss.An impairment loss is recognised immediately in surplus or deficit.Any impairment loss of a revalued non-cash-generating asset is treated as a revaluation decrease.When the amount estimated for an impairment loss is greater than the carrying amount of the non-cash-generating asset to which it relates, the municipality recognises a liability only to the extent that is a requirement in the Standards of GRAP.After the recognition of an impairment loss, the depreciation (amortisation) charge for the non-cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.


Accounting Policies2012/2013 FINAL ANNUAL REPORT Page 89

1.11 Impairment of non-cash-generating assets (continued) Reversal of an impairment loss

The municipality assess at each reporting date whether there is any indication that an impairment loss recognised in prior periods for a non-cash-generating asset may no longer exist or may have decreased. If any such indication exists, the municipality estimates the recoverable service amount of that asset.An impairment loss recognised in prior periods for a non-cash-generating asset is reversed if there has been a change in the estimates used to determine the asset’s recoverable service amount since the last impairment loss was recognised. The carrying amount of the asset is increased to its recoverable service amount. The increase is a reversal of an impairment loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised for the asset in prior periods.A reversal of an impairment loss for a non-cash-generating asset is recognised immediately in surplus or deficit. Any reversal of an impairment loss of a revalued non-cash-generating asset is treated as a revaluation increase.After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the non-cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.RedesignationThe redesignation of assets from a cash-generating asset to a non-cash-generating asset or from a non-cash-generating asset to a cash-generating asset only occur when there is clear evidence that such a redesignation is appropriate.1.12 Employee benefitsThis note will be based on IAS 19 to formulate the accounting policy as GRAP 25 has not been adopted. Short-term employee benefitsThe cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted.The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs.The expected cost of surplus sharing and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance.2012/2013 FINAL ANNUAL REPORT Page 90

Defined contribution plansPayments to defined contribution retirement benefit plans are charged as an expense as they fall due.Payments made to industry-managed (or state plans) retirement benefit schemes are dealt with as defined contribution plans where the entity’s obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit plan.


Accounting Policies


1.15 Revenue from non-exchange transactions (continued)Fines are economic benefits or service potential received or receivable by entities, as determined by a court or other law enforcement body, as a consequence of the breach of laws or regulations.Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange transaction, an municipality either receives value from another municipality without directly giving approximately equal value in exchange, or gives value to another municipality without directly receiving approximately equal value in exchange.Restrictions on transferred assets are stipulations that limit or direct the purposes for which a transferred asset may be used, but do not specify that future economic benefits or service potential is required to be returned to the transferor if not deployed as specified.Stipulations on transferred assets are terms in laws or regulation, or a binding arrangement, imposed upon the use of a transferred asset by entities external to the reporting municipality.Tax expenditures are preferential provisions of the tax law that provide certain taxpayers with concessions that are not available to others.The taxable event is the event that the government, legislature or other authority has determined will be subject to taxation.Taxes are economic benefits or service potential compulsorily paid or payable to entities, in accordance with laws and or regulations, established to provide revenue to government. Taxes do not include fines or other penalties imposed for breaches of the law.Transfers are inflows of future economic benefits or service potential from non-exchange transactions, other than taxes. RecognitionAn inflow of resources from a non-exchange transaction recognised as an asset is recognised as revenue, except to the extent that a liability is also recognised in respect of the same inflow.As the municipality satisfies a present obligation recognised as a liability in respect of an inflow of resources from a non-exchange transaction recognised as an asset, it reduces the carrying amount of the liability recognised and recognises an amount of revenue equal to that reduction.MeasurementRevenue from a non-exchange transaction is measured at the amount of the increase in net assets recognised by the municipality.When, as a result of a non-exchange transaction, the municipality recognises an asset, it also recognises revenue equivalent to the amount of the asset measured at its fair value as at the date of acquisition, unless it is also required to recognise a liability. Where a liability is required to be recognised it will be measured as the best estimate of the amount required to settle the obligation at the reporting date, and the amount of the increase in net assets, if any, recognised as revenue. When a liability is subsequently reduced, because the taxable event occurs or a condition is satisfied, the amount of the reduction in the liability is recognised as revenue.


1.15 Revenue from non-exchange transactions (continued) TaxesThe municipality recognises an asset in respect of taxes when the taxable event occurs and the asset recognition criteria are met.Resources arising from taxes satisfy the definition of an asset when the municipality controls the resources as a result of a past event (the taxable event) and expects to receive future economic benefits or service potential from those resources. Resources arising from taxes satisfy the criteria for recognition as an asset when it is probable that the inflow of resources will occur and their fair value can be reliably measured. The degree of probability attached to the inflow of resources is determined on the basis of evidence available at the time of initial recognition, which includes, but is not limited to, disclosure of the taxable event by the taxpayer.The municipality analyses the taxation laws to determine what the taxable events are for the various taxes levied.The taxable event for property tax is the passing of the date on which the tax is levied, or the period for which the tax is levied, if the tax is levied on a periodic basis.Taxation revenue is determined at a gross amount. It is not reduced for expenses paid through the tax system. TransfersApart from Services in kind, which are not recognised, the municipality recognises an asset in respect of transfers when the transferred resources meet the definition of an asset and satisfy the criteria for recognition as an asset.The municipality recognises an asset in respect of transfers when the transferred resources meet the definition of an asset and satisfy the criteria for recognition as an asset.Transferred assets are measured at their fair value as at the date of acquisition. FinesFines are recognised as revenue when the receivable meets the definition of an asset and satisfies the criteria for recognition as an asset.Assets arising from fines are measured at the best estimate of the inflow of resources to the municipality.Where the municipality collects fines in the capacity of an agent, the fine will not be revenue of the collecting entity. Gifts and donations, including goods in-kindGifts and donations, including goods in kind, are recognised as assets and revenue when it is probable that the future economic benefits or service potential will flow to the municipality and the fair value of the assets can be measured reliably.

1.16 Investment incomeInvestment income is recognised on a time-proportion basis using the effective interest method.1.17 Borrowing costs2012/2013 FINAL ANNUAL REPORT Page 93

It is inappropriate to capitalise borrowing costs when, and only when, there is clear evidence that it is difficult to link the borrowing requirements of an entity directly to the nature of the expenditure to be funded i.e. capital or current.Borrowing costs are recognised as an expense in the period in which they are incurred.1.18 Comparative figuresWhere necessary, comparative figures have been reclassified to conform to changes in presentation in the current year.1.19 Unauthorised expenditureUnauthorised expenditure means:


Accounting Policies

1.23 Presentation of currencyThese financial statements are presented in South African Rand.


1.24 OffsettingAssets, liabilities, revenue and expenses have not been offset except when offsetting is required or permitted by a Standard of1.25 Conditional grants and receiptsRevenue received from conditional grants, donations and funding are recognised as revenue to the extent that the municipality has complied with any of the criteria, conditions or obligations embodied in the agreement. To the extent that the criteria, conditions or obligations have not been met a liability is recognised.1.26 Budget informationMunicipality are typically subject to budgetary limits in the form of appropriations or budget authorisations (or equivalent), which is given effect through authorising legislation, appropriation or similar.General purpose financial reporting by municipality shall provide information on whether resources were obtained and used in accordance with the legally adopted budget.The approved budget is prepared on the same basis as of accounting and presented by functional classification linked to performance outcome objectives.The approved budget covers the fiscal period from 01/07/2012 to 30/06/2013.The financial statements and the budget are on the same basis of accounting therefore a comparison with the budgeted amounts for the reporting period have been included in the Statement of comparison of budget and actual amounts.The Statement of comparative and actual information has been included in the financial statements as the recommended disclosure when the financial statements and the budget are on the same basis of accounting as determined by National Treasury.Comparative information is not required. 1.27 Related partiesThe municipality operates in an economic sector currently dominated by entities directly or indirectly owned by the South African Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only entities within the local sphere of government are considered to be related parties.Management are those persons responsible for planning, directing and controlling the activities of the municipality, including those charged with the governance of the municipality in accordance with legislation, in instances where they are required to perform such functions.Close members of the family of a person are considered to be those family members who may be expected to influence, or be influenced by, that management in their dealings with the municipality.Only transactions with related parties not at arm’s length or not in the ordinary course of business are disclosed. 1.28 Commitments


Items are classified as a commitment when the Municipality has committed itself to future transactions that will normally result in an outflow of resources embodying economice benefits or service potential. A commitment is disclosed to the extent that it has not been recognised anywhere else in the financial statements.At the end of each financial period the Municipality determines commitments in respect of capital expenditure that has been approved and contracted for which is then disclosed in the commitement note in the financial statements.


Notes to the Financial StatementsFigures in Rand 2013 2012

2.Changes in accounting policy (continued)Statement of Financial PerformanceRevenue from exchange transactionsPreviously stated

- 59,362,043Reclassification of revenue from property rates to Revenue from non exchange transactions - (12,243,249)Reclassification of revenue from Grants and subsidies to Revenue from non exchange transactions - (34,326,625)Reclassification of revenue from fines to Revenue from non exhange transactions - (1,650)Adjustments -Interest not previously recognised on PotholeProject account. Refer to note 40 - 7,340

127,797,859



Reclassification of property rates to Revenue from non-exchange transactions - 12,243,249Reclassification of revenue from Grants and subsidies to Revenue from non-exchange transactions - 34,326,625Reclassification of revenue from fines to Revenue from non-exchange transactions - 1,650

46,571,524


Notes to the Financial Statements

3. New standards and interpretations (continued)

Segment information is either presented based on service or geographical segments. Service segments relate to a distinguishable component of an entity that provides specific outputs or achieves particular operating objectives that are in line with the municipality’s overall mission. Geographical segments relate to specific outputs generated, or particular objectives achieved, by an entity within a particular region.

This Standard has been approved by the Board but its effective date has not yet been determined by the Minister of Finance. The effective date indicated is a provisional date and could change depending on the decision of the Minister of Finance.

Directive 2 - Transitional provisions for public entities, municipal entities and constitutional institutions, states that no comparative segment information need to be presented on initial adoption of this Standard.

Directive 3 - Transitional provisions for high capacity municipalities states that no comparative segment information need to be presented on initial adoption of the Standard. Where items have no been recognised as a result of transitional provisions under the Standard of GRAP on Property, Plant and Equipment, recognition requirements of this Standard would not apply to such items until the transitional provision in that Standard expires.

Directive 4 – Transitional provisions for medium and low capacity municipalities states that no comparative segment information need to be presented on initial adoption of the Standard. Where items have not been recognised as a result of transitional provisions un the Standard of GRAP on Property, Plant and Equipment and the Standard of GRAP on Agriculture, the recognition requirements of the Standard would not apply to such items until the transitional provision in that standard expires.

The effective date of the standard is for years beginning on or after 01 April 2013.

The municipality does not envisage the adoption of the standard until such time as it becomes applicable to the municipality's operations.

It is unlikely that the standard will have a material impact on the municipality's financial statements.




IGRAP1 (as revised 2012):Applying the probability test on initial recognition of

revenue

Paragraphs .03, .04, .05, .06, .08 and .10, were amended and paragraph .02 was added in the Interpretation of the Standards of GRAP.

This Interpretation of the Standards of GRAP now addresses the manner in which an entity applies the probability test on initial recognition of both:

(a) exchange revenue in accordance with the Standard of GRAP on Revenue from Exchange Transactions and

(b) non-exchange revenue in accordance with the Standard of GRAP on Revenue from Non-exchange Transactions (Taxes and Transfers).

This Interpretation of the Standards of GRAP supersedes the Interpretation of the Standards of GRAP: Applying the Probability Test on Initial Recognition of Exchange Revenue issued in 2009.

The effective date of the amendment is for years beginning on or after 01 April 2013.

The municipality expects to adopt the amendment for the first time in the 2014 financial statements.

It is unlikely that the amendment will have a material impact on the municipality's financial statements.

The aggregate impact of the initial application of the statements and interpretations on the municipality's financial statements is expected to be as follows:

Figures in Rand 2013 2012

4. Investment property 2013 2012


Cost Accumulated carrying Value Cost Accumulated carrying valueDepreciation and accumulate depreciation and accumulated

impairment impairmentInvestment property -107,486,712 - 107,486,712 107,486,712 - 107,486,712 -107,486,712Reconciliation of investment property – 2013 Opening Total balanceInvestment property 107,486,712 107,486,712Reconciliation of investment property – 2012Opening

balance TotalInvestment property 107,486,712 107,486,712A register containing the information required by section 63 of the Municipal Finance Management Act is available for inspection at the registered office of the municipality.

5. Property, plant and equipment2013 2012

Cost Accumulated Carrying value Cost Accumulated Carrying valuedepreciation

depreciation andand accumulated accumulated impairment impairment

Land 139,883,259 - 139,883,259 139,883,259 - 139,883,259Buildings 37,837,294 (13,480,190) 24,357,104 37,837,292 (11,233,490) 26,603,802


Infrastructure 179,577,603 (64,513,317) 115,064,286 171,686,369 (51,557,895) 120,128,474Community 33,388,197 (13,563,864) 19,824,333 30,659,586 (11,302,363) 19,357,223Other property, plant and equipment 6,570,112 (3,130,554) 3,439,558 5,203,976 (2,277,885) 2,926,091Work in progress 11,225,467 - 11,225,467 7,214,696 - 7,214,696Finance lease assets 503,350 (234,955) 268,395 286,650 (184,930) 101,720Landfill site asset 998,037 (10,732) 987,305 998,037 (5,366) 992,671Total 409,983,319 (94,933,612) 315,049,707 393,769,865 (76,561,929) 317,207,936

Reconciliation of property, plant and equipment - 2012Opening Additions Transfers Depreciation Totalbalance

Land 139,883,259 - - - 139,883,259Buildings 28,850,500 - - (2,246,698) 26,603,802Infrastructure 125,310,049 7,715,119 - (12,896,694) 120,128,474Community 21,617,696 - - (2,260,473) 19,357,223Other property, plant and equipment 2,897,811 836,869 - (808,589) 2,926,091Work in progress 9,028,628 4,782,479 (6,596,411) - 7,214,696Finance lease assets 140,756 17,150 - (56,186) 101,720Landfill site asset 998,037 - - (5,366) 992,671

328,726,736 13,351,617 (6,596,411) (18,274,006) 317,207,936

Pledged as securityCarrying value of assets pledged as security:


Land and buildings 2,697,279 2,697,279The property ERF 125 is the municipality's head office. The property is mortgaged toDBSA for a loan advanced to the municipality.

Revaluations

The basis of the revaluation of land and buildings was the Great Kei Valuation Roll of 2009, with final supplementary in 2012 by Clyde Lawrence an Accredited Valuer Registered with the South African Council of Property Valuers of Kula Valuations.A register containing the information required by section 63 of the Municipal Finance Management Act is available for inspection at the registered office of the municipality.

6. Intangible assetsReconciliation of intangible assets- 2013

2013 2012

Cost Accumulated Carrying Value Cost Accumulated Carrying Amortisation amortisation value

And and accumulatedAccumulated impairmentimpairment

Computer software, other 541,081 (146,069) 395,012 297,306 (46,967) 250,339





6. Intangible assets (continued)Reconciliation of intangible assets - 2013

Opening Additions Amortisation TotalComputer software, other balance

250,339 243,775 (99,102) 395,012Reconciliation of intangible assets – 2012

Opening Additions Amortisation Total balanceComputer software, other 40,393 236,718 (26,772) 250,3397. Heritage assets

2013 2012Cost Accumulated Carrying Cost Accumulated Carrying Value

valuation impairment value valuation impairment

losses losses

Heritage assets: Other 7 - 7 7 - 7

Reconciliation of heritage assets 2013Opening Total balance


Heritage assets: Other 7 7

Reconciliation of heritage assets 2012Opening Totalbalance

Heritage assets: Other 7 7The following assets were identified as heritage assets: Draaibosch Memorial, Town Library, Intabe'mpethu, Old Jail, Ngxingxolo River, Tyityaba Fort Warden and St Johns Church8. Employee benefit obligations Defined benefit planPost retirement medical aid planThe municipality provides certain post-retirement healthcare benefits by funding the medical aid of qualifying retired members of the municipality. According to the rules of the medical aid funds , with which the municipality is associated, a member (who is on the current conditions of service) is entitled to remain a continued member of such medical aid fund on retirement, in which case the municipality is liable for a certain portion of the medical aid membership fee. The municipality operates an unfunded defined benefit plan for these qualifying employees. No other post retirement benefits are provided to these employees.




8. Employee benefit obligations (continued)


The amounts recognised in the statement of financial position are as follows:Carrying valuePresent value of the defined benefit obligation-wholly unfunded (3,405,000) (2,472,000)Current Service Cost (401,000) (278,000)Interest Cost (270,000) (212,000)Net actuarial gains or (losses) not recognised (1,494,000) (494,000)Benefits Paid 140,000 51,000

(5,430,000) (3,405,000)Non-current liabilities (4,854,000) (3,004,000)Current liabilities (576,000) (401,000)

(5,430,000) (3,405,000)The fair value of plan assets includes:Changes in the present value of the defined benefit obligation are as follows:Opening balance 3,405,000 2,472,000Benefits paid (140,000) (51,000)Net expense recognised in the statement of financial performance 2,165,000 984,000

5,430,000 3,405,000Net expense recognised in the statement of financial performanceCurrent service cost 401,000 278,000Interest cost 270,000 212,000Actuarial (gains) losses 1,494,000 494,000

2,165,000 984,000Calculation of actuarial gains and lossesActuarial (gains) losses – Obligation 1,494,000 494,000Key assumptions usedAssumptions used at the reporting date:2012/2013 FINAL ANNUAL REPORT Page 104

Discount rates used 9.20 % 7.92 %Consumer price inflation 6.20 % 5.74 %Medical aid contribution inflation 8.20 % 7.24 %Net effective discount rate 0.92 % 0.63 %

Other assumptions

The value of the liabilities is particurlaly sensitive to the assumed rate of healthcare cost inflation. The table below sets out the sensitivity of the valuation result to a 1% increase and 1% decrease in the assumed cost inflation assumption.`

1% decrease Base 8.20% 1% increaseR R R

Defined benefit obligation (4,549) (5,431) (6,563) -Service cost ( next financial year) (458) (576) (734) -Interest Cost (next financial year) (433) (519) (631) -





9. Inventories

RDP Houses 131,330,090 131,330,090

10. Receivables from exchange transactions

Trade debtors 25,818,809 23,671,474Debt impairment allowance (18,815,171) (22,791,816)Sundry debtors 558,166 3,715Unallocated receipts 415,420 255,388Salary Suspense Account 557,191 -

8,534,415 1,138,761

Credit quality of trade and other receivables

The credit quality of trade and other receivables that are neither past nor due nor impaired can be assessed by reference to external credit ratings listed below:

Trade receivables

Fair value of trade and other receivables

Trade and other receivables past due but not impaired

Trade and other receivables which are less than 1 month past due are not considered to be impaired. At 30 June 2013, R3,775,576 (2012: R 8,866,065) were past due but not impaired.

The ageing of amounts past due but not impaired is as follows:

1 month past due 1,517,971 5,657,4542 months past due 1,207,627 1,276,2253 months past due 1,049,978 1,932,386

Trade and other receivables impaired

As of 30 June 2013, trade and other receivables of R 47,404,461 (2012: R 49,340,631) were impaired and provided for. The amount of the provision was R

43,628,885 as of 30 June 2013 (2012: R 40,474,566).

Reconciliation of provision for impairment of trade receivables (exchange and non-exchange)


Opening balance 40,474,566 35,538,138Provision for impairment 3,154,319 4,936,428

43,628,885 40,474,566

11. Receivables from non-exchange transactions

Assessment rates 25,025,448 22,743,181Debt impairment (24,813,714) (17,682,750)

211,734 5,060,431


9. InventoriesRDP Houses 131,330,090 131,330,09010. Receivables from exchange transactionsTrade debtors 25,818,809 23,671,474Debt impairment allowance (18,815,171) (22,791,816)Sundry debtors 558,166 3,715Unallocated receipts 415,420 255,388Salary Suspense Account 557,191 -

8,534,415 1,138,761Credit quality of trade and other receivables

The credit quality of trade and other receivables that are neither past nor due nor impaired can be assessed by reference to external credit ratings listed below:Trade receivablesFair value of trade and other receivablesTrade and other receivables past due but not impairedTrade and other receivables which are less than 1 month past due are not considered to be impaired. At 30 June 2013, R


3,775,576 (2012: R 8,866,065) were past due but not impaired.The ageing of amounts past due but not impaired is as follows:1 month past due 1,517,971 5,657,4542 months past due 1,207,627 1,276,2253 months past due 1,049,978 1,932,386Trade and other receivables impaired

As of 30 June 2013, trade and other receivables of R 47,404,461 (2012: R 49,340,631) were impaired and provided for. The amount of the provision was R 43,628,885 as of 30 June 2013 (2012: R 40,474,566).Reconciliation of provision for impairment of trade receivables (exchange and non-exchange)

Opening balance 40,474,566 35,538,138Provision for impairment 3,154,319 4,936,428

43,628,885 40,474,56611. Receivables from non-exchange transactionsAssessment rates 25,025,448 22,743,181Debt impairment (24,813,714) (17,682,750)

211,734 5,060,431



11. Receivables from non-exchange transactions (continued) Credit quality of receivables from non-exchange transactionsThe credit quality of other receivables from non-exchange transactions that are neither past nor due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates:


Receivables from non-exchange transactions Counterparties with external credit ratingA (Government) 46,835,537 42,390,387B (Business) 523,723 2,251,217C (Domestic and other) 45,201 4,699,026

47,404,461 49,340,630A - The debtors are of good credit quality and no default as expected.

B - The debtors are usually good payers but there is a possibility that the debtor may not be able to pay on time.C - These debtors usually pay, but have previously paid late and therefore there is a possibility that these debtors will not be recoverable.Receivables from non-exchange transactions past due but not impairedOther receivables from non-exchange transactions which are less than 3 months past due are not considered to be impaired. At 30 June 2013, R 2,043,016 (2012: R 3,219,199) were past due but not impaired.The ageing of amounts past due but not impaired is as follows:1 month past due 821,395 2,054,1782 months past due 653,464 463,3873 months past due 568,157 701,634Receivables from non-exchange transactions impaired

As of 30 June 2013, other receivables from non-exchange transactions of R 25,651,201 (2012: R 21,556,205) were impaired and provided for.The amount of the provision was R 43,628,885 as of 30 June 2013 (2012: R 40,474,566).Reconciliation of provision for impairment of receivables from non-exchange transactionsOpening balance 17,682,750 -Provision for impairment 7,130,964 17,682,750

24,813,714 17,682,75012. VAT receivableVAT 8,438,490 3,564,364


The municipality is on a cash or payment basis for VAT purposes and is classified as Category C.13. Cash and cash equivalentsCash and cash equivalents consist of bank balances for current accounts and call deposit accounts:



Figures in Rand13. Cash and cash equivalents (continued)Short term deposits 14,364,766 21,408,724


Bank Balances 2,246,130 6,245,27016,610,896 27,653,994

The municipality had the following bank accounts

Account number / description Bank statement balances Cash book balances30 June 2013 30 June 2012 30 June 2011 30 June 2013 30 June 2012 30 June 2011

Standard Bank - 280720963 2,132,454 1,521,256 2,266,721 1,932,174 2,662,790 2,352,841Standard Bank - 285973452 306,064 1,726,925 1,217,122 306,084 1,726,924 1,217,122Standard Bank - 285946110 7,872 1,855,556 1,822,380 7,872 1,855,555 1,822,380Standard Bank Limited -285977334 412,986 1,694,214 1,664,127 412,966 1,694,214 1,664,127

Standard Bank Limited - 1,523 1,509 1,486 1,523 1,509 1,486388520523-402Absa Bank Limited - 10,812 10,801 10,791 10,810 10,800 10,7919079485834Standard Bank Limited - - 1,240,952 398,239 - 1,240,952 398,239388528672-001Standard Bank Limited - 1,108,647 - - 1,108,647 - -388528672-004Standard Bank Limited - 426,294 623,512 603,457 426,294 623,512 603,547388526734-003Standard Bank Limited - 32,380 5,170,181 6,125,201 32,380 5,170,181 6,125,201388527544Standard Bank Limited - 406,987 2,207,478 152,098 406,987 2,207,478 152,09838852386-001Absa Bank Limited - 767,563 740,908 1,229,151 767,563 740,908 1,229,151


9059902802Standard Bank Limited - 11,017,631 8,894,716 2,056 11,017,631 8,894,716 2,056388529768-402Standard Bank Limited - 179,965 824,456 715,958 179,965 824,455 715,958388528672-002Standard Bank Limited - - - 33,543 - - 33,543388528672-003Total 16,811,178 26,512,464 16,242,330 16,610,896 27,653,994 16,328,540



14. Finance lease obligationMinimum lease payments due- within one year 141,049 129,064


- in second to fifth year inclusive 356,521 105,863497,570 234,927

less: future finance charges (200,855) (62,697)Present value of minimum lease payments 296,715 172,230Present value of minimum lease payments due- within one year 73,492 89,512- in second to fifth year inclusive 223,223 82,718

296,715 172,230Non-current liabilities 223,223 82,718Current liabilities 73,492 89,512

296,715 172,230It is municipality policy to lease certain equipment under finance leases.The average lease term was 3 years and the average effective borrowing rate was 30%.

Interest rates are fixed at the contract date. Leases escalate at 10% and 15% p.a and no arrangements have been entered into for contingent rent.The municipality's obligations under finance leases are secured by the lessor's charge over the leased assets.

Market riskThe carrying amounts of finance lease liabilities are denominated in the following currencies:Rand 766,733 800,883 For details of sensitivity of exposures to market risk related to finance lease liabilities, as well as liquidity risk refer to note .The fair value of finance lease liabilities approximates their carrying amounts.15. Unspent conditional grants and receiptsUnspent conditional grants and receipts comprises of:Unspent conditional grants and receipts


Municipal Infrastructure Grant 8,404,973 8,573,330Minerals and Energy Grant 2,000,000 2,000,000Municipal Systems Infrastructure Grant 436 -

10,405,409 10,573,330

The nature and extent of government grants recognised in the financial statements and an indication of other forms of government assistance from which the municipality has directly benefited; andUnfulfilled conditions and other contingencies attaching to government assistance that has been recognised. See note 24 for reconciliation of grants from National/Provincial Government.These amounts are invested in a ring-fenced investment until utilised.



Figures in Rands 2013 2012

16. Long term liabilities


At amortised costLong term borrowings 2,654,170 2,946,107DBSA Loan bears interest at 13% and is redeemable on 31 March 2019.

Non-current liabilitiesAt amortised cost 2,320,713 2,652,693

Current liabilitiesAt amortised cost 333,457 293,414





17. Provisions

Reconciliation of provisions - 2013

Opening Balance

Additions Utilised during the

year

Interest cost Total

Environmental rehabilitation 1,006,720 - - 8,758 1,015,478Long service bonus 893,000 221,000 (174,000) - 940,000

1,899,720 221,000 (174,000) 8,758 1,955,478

Reconciliation of provisions - 2012

Opening Balance

Additions Utilised during the

year

Interest cost Total

Environmental rehabilitation 998,037 - - 8,683 1,006,720Long service bonus 697,000 286,000 (90,000) - 893,000

1,695,037 286,000 (90,000) 8,683 1,899,720

Non-current liabilities 1,726,478 1,710,720Current liabilities 229,000 189,000

1,955,478 1,899,720

Environmental rehabilitation provision

The provision for the rehabilitation of the landfill sites relate to the obligation to rehabilitate the landfill site used for waste disposal. It is calculated as the present value of the future obligation, discounted at 8,5%, over an average period of 187 years.

Employee benefit cost provision

The municipality operates an undefined benefit plan for all its employees under the plan, a long service award is payable after 5 years (2011: 5 years) of continuous service, and every 5 years thereafter, to 25 years (2011: 25 years) of continuous service.The provision is an estimate of the long service based on historical staff turnover.

The principal assumptions used for the purpose of the actuarial valuation were as follows:

Discount rate 7.50%

Consumer price inflation 6.20%


Normal salary increase rate 8.20%

Net effective discount rate -0.65%

Changes in the present value of the defined benefit obligation are as follows:Present value of the defined benefit obligation 940,000 893,000

Changes in the present value of the defined benefit obligation are as followsOpening balance 893,000 697,000Benefits paid (174,000) (90,000)Net expense recognised in the statement of financial performance 221,000 286,000

940,000 893,000

Net expense recognised in the statement of financial performanceCurrent service cost 189,000 138,000Interest cost 75,000 65,000




17. Provisions (continued)Actuarial (gains) losses (43,000) 83,000

221,000 286,000

18. Payables from exchange transactions

Trade payables 8,241,488 5,802,125Payments received in advance 4,877,414 2,768,821Accrued leave pay 1,445,095 1,125,476Accrued bonuses 617,105 548,443Deposits received 27,369 13,690Other payables - 535,661Other creditors (3,016) 1,771,147

15,205,455 12,565,363

19. Consumer deposits

Electricity 80,503 80,503

20. Financial instruments disclosure

Categories of financial instruments

2013

Financial assets

At amortised Totalcost

Receivables from exchange transactions 8,534,415 8,534,415Receivables from non-exchange transactions 211,734 211,734Cash and cash equivalents 16,641,430 16,641,430

25,387,579 25,387,579


Financial liabilities


Payables from exchange transactions 15,235,982 15,235,982Unspent conditional grants and receipts 10,405,409 10,405,409Finance lease obligation 296,715 296,715Long term borrowings 2,654,170 2,654,170

28,592,276 28,592,276




2012

Financial assets


Receivables from exchange transactions 1,138,761 1,138,761Receivables from non-exchange transactions 5,060,431 5,060,431Cash and cash equivalents 27,653,994 27,653,994

33,853,186 33,853,186

Financial liabilities


Payables from exchange transactions 12,565,363 12,565,363Unspent conditional grants and receipts 10,573,330 10,573,330Long term borrowings 2,946,107 2,946,107Finance leases obligation 172,230 172,230

26,257,030 26,257,030

21. Revenue

Service charges 6,788,106 8,193,127Rental of facilities and equipment 104,333 181,004Licences and permits 2,169,467 2,397,647Commissions received 178,466 236,662Other income 2,583,533 988,019Interest received - investment 1,491,176 801,399Property rates 12,638,208 12,243,249Government grants & subsidies 49,291,921 34,326,625Fines 28,550 1,650

75,273,760 59,369,382


The amount included in revenue arising from exchanges of goods or services are as follows:Service charges 6,788,106 8,193,127Rental of facilities and equipment 104,333 181,004Licences and permits 2,169,467 2,397,647Commissions received 178,466 236,662Other income 2,583,533 988,019Interest received - investment 1,491,176 801,399

13,315,081 12,797,858

The amount included in revenue arising from non-exchange transactions is as follows:Taxation revenueProperty rates 12,638,208 12,243,249Transfer revenueGovernment grants & subsidies 49,291,921 34,326,625Fines 28,550 1,650

61,958,679 46,571,524





22. Property rates

Rates received

Property rates 12,638,208 12,243,249

Valuations

Residential 3,245,236,194 2,168,368,228Commercial 134,314,600 140,357,600State 120,243,409 116,488,535Municipal 291,811,412 123,044,612Small holdings and farms 844,564,343 997,164,657Place of Worship 6,246,500 -

4,642,416,458 3,545,423,632

General valuations on land and buildings are performed every 4 years and supplementary valuations are performed annually. The last general valuation came into effect on 1 July 2009. Interim valuations are processed on an annual basis to take into account changes in individual property values due to alterations and subdivisions.

Rates are levied on a monthly basis.

The new general valuation will be implemented on 01 July 2014.

23. Service charges

Sale of electricity 3,264,132 4,366,836Refuse removal 3,523,974 3,826,291

6,788,106 8,193,127




24. Government grants and subsidies

Operating grantsEquitable share 31,398,000 27,660,000Municipal Systems Improvement Grant 799,564 1,438,256Financial Management Grant 1,500,000 1,855,606DBSA Grant 1,000,000 54,093

34,697,564 31,007,955Capital grantsMunicipal Infrastructure Grant (capital) 14,594,357 3,318,670

14,594,357 3,318,670

49,291,921 34,326,625

Conditional and Unconditional

Included in above are the following grants and subsidies received:

Conditional grants received 17,893,921 6,666,625Unconditional grants received 31,398,000 27,660,000

49,291,921 34,326,625

Municipal Infrastructure Grant

Balance unspent at beginning of year 8,573,330 -Current-year receipts 14,426,000 11,892,000Conditions met - transferred to revenue (14,594,357) (3,318,670)

8,404,973 8,573,330

Conditions still to be met - remain liabilities (see note 15).

The grant is allocated for the construction of infrastructure as part of the upgrading of poor households, micro enterprises and social institutions; to provide for new, rehabilitation and upgrading of municipal infrastructure.


Minerals and Energy Grant

Balance unspent at beginning of year 2,000,000 1,003,762Current-year receipts - 4,344,193Conditions met - transferred to revenue - (3,347,955)

2,000,000 2,000,000


Municipal Systems Infrastructure Grant

Current-year receipts 800,000 -Conditions met - transferred to revenue (799,564) -

436 -


Provide explanations of conditions still to be met and other relevant information.

Financial Management Grant

Current-year receipts 1,500,000 -




24. Government grants and subsidies (continued)Conditions met - transferred to revenue (1,500,000) -

- -


DBSA Grant

Current-year receipts 1,000,000 -Conditions met - transferred to revenue (1,000,000) -

- -


Changes in level of government grants

Based on the allocations set out in the Division of Revenue Act, no significant changes in the level of government grant funding are expected over the forthcoming 3 financial years.

25. Other income

Other income 2,256,465 538,597Building plan fees 186,601 320,035LG SETA training allowance 124,770 62,806Clearance fees 15,697 66,581

2,583,533 988,019




26. General expenses

Advertising 917,001 553,240Auditors remuneration 2,232,648 1,720,255Bank charges 154,277 144,160Cleaning 43,224 17,406Consulting and professional fees 1,728,377 2,110,812Entertainment 200,158 121,618Insurance 91,349 181,447Conferences and seminars 82,478 25,249Lease rentals on operating lease 520,159 781,857Promotions and sponsorships 30,441 109,196Magazines, books and periodicals 26,358 -Motor vehicle expenses 56,704 6,086Legal expenses 687,103 747,427Fuel and oil 724,828 503,825Postage and courier 209,357 155,172Protective clothing 127,766 88,294Project maintenance costs 733,752 592,713Security (Guarding of municipal property) 6,160 7,219Software expenses 378,515 180,454Subscription and publication 400,000 200,000Telephone and fax 1,527,198 1,031,898Training 252,846 52,993Travel - local 332,880 123,454Refuse 77,110 60,364Electricity 126,877 135,506Water 1,037,490 906,438Free basic electricity 132,580 156,021Valuation costs 1,522,835 544,307Life saving services 349,184 196,080Finance Management Grant 1,091,061 1,859,111Ward Committee expense 100,507 37,142Ward council expenses 736,356 -LED Projects 699,560 264,615Membership fees 173,507 118,145Other expenses 1,431,194 1,872,099

18,941,840 15,604,603





27. Employee related costs

Basic 18,338,428 13,496,036Bonus 1,222,371 671,919Medical aid - company contributions 940,234 839,709UIF 160,660 120,765SDL 244,187 154,279Other payroll levies 11,305 6,038Post-employment benefits - Pension 1,752,000 1,150,761Travel, motor car, accommodation, subsistence and other allowances 1,524,471 806,375Overtime payments 362,549 333,476Long-service awards 15,000 -Acting allowances 59,940 243,066Housing benefits and allowances 417,472 225,817Post employment benefit expense - Defined benefit 2,165,000 1,270,000

27,213,617 19,318,241

Included in compensation for employees above is remuneration of senior management disclosed per individual portfolios below :

Remuneration of Municipal Manager - CM Mbekela

Annual Remuneration 535,319 517,172Travel, motor car, accommodation, subsistence and other allowances 233,399 70,605Contributions to UIF, Medical and Pension Funds 138,513 998Acting allowance - 6,855Backpay 9,208 176,015

916,439 771,645

Remuneration of Chief Finance Officer - SP Gwana

Annual Remuneration 415,595 379,364Travel, motor car, accommodation, subsistence and other allowances 383,443 202,869Contributions to UIF, Medical and Pension Funds 45,736 1,497Backpay 6,979 75,790

851,753 659,520

Remuneration of Director: Corporate Services - JM Mashiya (February to April 2013)

Annual Remuneration 105,116 -Car Allowance 69,631 -


Contributions to UIF, Medical and Pension Funds 2,148 -

176,895 -

Remuneration of Director: Strategic Services - DM Mbizeni (July 2011 - October 2011)

Annual Remuneration - 79,000Travel, motor car, accommodation, subsistence and other allowances - 80,000Contributions to UIF, Bargaining Council and Skills Development - 1,842

- 160,842

Remuneration of Director : Corporate Services - NM Mkhohlakali (July 2011 - January 2012)

Annual Remuneration - 131,061Travel, motor car, accommodation, subsistence and other allowances - 148,677Contributions to UIF, Bargaining Council and Skills Development - 4,129





27. Employee related costs (continued)Backpay - 75,790

- 359,657

Remuneration of Director : Technical Services - JF Van Dalen

Annual Remuneration 416,125 -Travel, motor car, accommodation, subsistence and other allowances 281,322 -Backpay 6,067 -Contributions to UIF, Medical and Pension Funds 8,456 -

711,970 -

Remuneration of Director: Strategic Services - L Nonyongo (February - June 2013)

Annual Remuneration 175,193 -Travel, motor car, accommodation, subsistence and other allowances 117,458 -Contributions to UIF, Medical and Pension Funds 3,587 -

296,238 -

Remuneration of Director: Corporate Services - M Augustine (March - May 2012)

Annual Remuneration - 109,567Contributions to UIF, Medical and Pension Funds - 1,345

- 110,912

28. Remuneration of Councillors

Major/Speaker 659,105 600,321Chief Whip 193,734 185,034Councillors 1,505,094 1,443,661Councillors pension contribution 22,122 48,799Councillors allowances 576,268 521,987Councillors medical aid 37,229 47,515

2,993,552 2,847,317

In-kind benefits

The Mayor/Speaker and Chief Whip are full-time. Each is provided with an office and secretarial support at the cost of the Council.




The Mayor/Speaker is entitled to stay at the mayoral residence owned by Council at no cost. The Mayor/Speaker has use of a Council owned vehicle for official duties.

The Mayor holds the position of the speaker as well.

A breakdown of the above remuneration of councilors is attached


29. Debt impairment

Debt impairment 2,766,946 4,330,200

30. Investment revenue

Interest revenueInterest from investments 1,482,037 801,385Bank 9,139 14

1,491,176 801,399- -

1,491,176 801,399

31. Depreciation and amortisation

Property, plant and equipment 18,371,682 19,021,871Intangible assets 99,102 (72,330)

18,470,784 18,949,541

32. Finance costs

Non-current borrowings 371,847 405,576Other interest paid 279,086 95,564

650,933 501,140

33. Auditors' remuneration

Fees 2,232,648 1,720,255

34. Rental of facilities and equipment


PremisesPremises 22,432 52,339

Facilities and equipmentRental of facilities 81,901 128,665Premises 22,432 52,339Garages and parking - -Facilities and equipment 81,901 128,665

104,333 181,004

35. Bulk purchases

Electricity 6,643,699 6,115,575Water - 143,779

6,643,699 6,259,354





38. Contingencies

Contingent liabilitiesMr N M Mkhohlakali - Labour dispute. 100,000 100,000The matter was finalised in August 2013.Mr RF Butler - Labour matter 30,000 30,000Mr X Nkathazo, Mr M Phangindawo, Mr D Gwabeni and Ms N Sopotela - These are incapacity hearings and investigations and hearings.

100,000 100,000

The matter is in the process of finalisation.Ms NS Nose-Nemutandani - 30,000Ms M Siko, Mr JJF Vermeulen,Ms S Ncoko, and Mr N Dokwana - Labour matters dealing with the suspension of these officials.

50,000 50,000

Negotiations are in progress.Great Kei Delegation - 30,000East coast ratepayers and residence forum - The matter deals with the proposed agreement with the East Coast ratepayers and residents forum.

50,000 30,000

W Kavie - Medical incapacity investigation. 15,000 -The matter is being finalised.Ms N Blom 100,000 -Jet Vest/ Great Kei Municipality - High court application to set aside deed of sale 1,000,000 -Ms M Kema - Collection of costs 5,000 -Ms OS Ngqele - Claim for severance packages 30,000 -

1,480,000 370,000

There is uncertainty relating to the timing or amount of these contingent liabilities.

Offences, Penalties and Forfeiture of the Environment Conservation Act 1989

The municipality does not have a permit for the landfill site. This is in contravention to the above mentioned Act, the municipality may be liable for a fine not exceeding R100,000.

Contingent assets

Pending litigations and claimsRevenue Collection - Outstanding rates and taxes Forwarding letters of demand to debtors

250,000 -

Lion of Africa - Claim in favour of the municipality 5,000 -255,000 -

There is uncertainty relating to the timing or amount of these contingent assets.




39. Related parties

RelationshipsAccounting Officer Refer to accounting officer's reportMembers of key management Key management of the municipality have

relationships with businesses as indicated below:Chris Mbekela Member in CMM Mind PowerPuleng Gwana Member in Blackbird Trading 17Nicholson Malawana Mkhohlakali Member in Siya Carrier CollegeCouncillors Refer to the list of councillors disclosed under general

information. Councillors of the municipality have relationships with businesses as indicated below:

Sharne Muriel Swart Member in Frankies Coffee HouseNgenisile Wellington Tekile Member in MC Tek ConstructionJacob Coenraad Labuschagne Member in SweeptecNosipho Ngabayena Member in Thugab TradingSupply Chain Management officials Supply Chain Management officials have

relationships with businesses as indicated below:Phindile Patrick Ludidi Member in Milani Mahlubi TradingOther officials Other municipal officials have relationships with

businesses as indicated below:Khanyisa Simthembile Botha Member in Magqab’akadliwa General TradingZipho Buso Member in Goldenspot Trading 205Booi Hinga Member in Mzwini Trading Co-operative LimitedSusan Merle Homes Member in Bestdev Project Management, member in

Ncedani Abantu ConsultantsVuyisiwe Princess Kota Member in Ayolwa Trading EnterprisePhiliswa Glenrose Kwetani Blaze of Glory TradingBandile Macingwane Member in Badz Driving School, member in Badz

Towing and Removals, member in Buffalo City. Driving Academy, member in Jalamba Tours, member in Manqoba Restaurant

Unathi Macingwane Member in Cimisbana Trading and ProjectsLizeka Matilda Gxaba Member in Amyoli Communication and Printing

Services, director in Senate Guest House,Zelick Mpumelelo Mbulawa Member of Zwelitsha HotelSazi Mnqeta Member in Mseke InvestmentsPakamisa Mvandaba Member in Imvusa Trading 90, member in Liberty


Moon Trading 82, member in Mvandaba Ndobo. Security Services, member in Sicwenza Trading, member in Superlane 136,

Velisile Comet Ntswabu Member in Dawn Comet TradingSiviwe Piti Member in Mthatha Transport and Licensing

ConsultantsNkululeko Morris Solo Director in Butsha Bethu ConstructionMncedisi Justice Vimbani Member in Izivuno Construction and Transport Co-

operative Limited, member in Mzwini Trading Cooperative LimitedHoliday Wana Member in Mzwini Trading Co-operative LimitedVimbani M J Member in Emonti Security SuppliersMacingwana B Siyakheka Trading Enterprise

Related party transactions




Figures in rands 2013 2012

40. Prior period errors

Property, Plant and Equipment

A large bulk of the infrastructure assets, namely, electricity and roads assets were constructed at much earlier periods and inherited by Great Kei LM and to date the municipality does not have the original supporting invoice evidence to attach the cost for those assets. The non-existence of original cost information required the municipality to fair value these assets. Some of the other road assets, access roads, have been included in the municipality’s financials at cost. These assets were constructed in the relevant years as disclosed in the access roads schedule.

The verification undertaken in FY12/13 was undertaken using various cadastre maps and geospatial data in order to identify all roads under the ownership of GKLM, this data was compared to other sources such as the provincial roads and public works database.The number of roads and electrical components identified during the verification was vastly different to the number of items disclosed in last year’s books. Also, for the FY12/13 the input costs and assumptions used for the fair valuation of these assets (electrical and roads) were not available. With the support of our specialist engineers we were able to split the road and electrical asset components (i.e. road furniture items, culverts, roads etc.). Various infrastructure guidelines and the CPI index were used to gather the input costs per square meter for each related road and electrical asset component. A detailed report detailing all assumptions made on infrastructure assets and land and buildings was provided to the Municipality and can be found as one of the annexures of this document

RDP houses were incorrectly classified as property, plant and equipment instead of inventory.


Intangible assetsAmortisation on intangible asset was incorrectly calculated.

Finance leaseFinance leases for office equipment were treated as operating leases in prior years and the lease payments expensed. Property plant and equipment has been adjusted to reflect the leased assets and the related liability has been recognised.

Post employment medical benefit liabilityLiabilities for post employment medical benefits were not recognised in the prior year, retrospective adjustment has been done to correct opening balances and raise the liability.

Long service awards provisionThe long service awards provision was understated in the prior year and the value has been adjusted to reflect the actuarial valuation for the prior year.

The correction of the errors results in adjustments as follows:

VATWas was not recognised on debt impairment in the prior year, thus the VAT was adjusted for as a prior period error.

Provision for bad debtThe provision for bad debt in the prior year was not calculated using the recommended Treasury template, the provision was recalculated using the template and amended as a prior period error.


Great Kei Local MunicipalityFinancial statements for the ended 30 June 2013Notes to the Financial StatementsFigures in rands 2013 2012

40. Prior period errors (continued)

Statement of financial positionProperty, plant and equipmentBalance as previously reported - 175,675,274Work in progress previously disclosed separately - 7,214,696Finance leased assets not previously recognised - 101,720Reclassification of RDP houses to inventory previously treated as buildings - (131,330,090)Accumulated depreciation adjustment - 42,466,078Revaluation adjustment on infrastructure - (34,095,098)Reversal of accumulated depreciation on infrastructure - 79,846,891Land and buildings ommitted in prior year - 139,883,259Buildings - 37,837,292Accumulated depreciation on buildings ommitted in the prior year - (11,233,490)Correction of revaluation - community assets - 20,870,567Accumulated depreciation - Community Assets - (9,988,097)Accumulated Depreciation Adjustment - Other Assets - (41,066)

- 317,207,936

Intangible assetsBalance as previously reported - 178,009Amortisation previously overstated - 72,330

- 250,339

Heritage assetBalance as previously reported - -Adjustment - 7

- 7

Provision for bad debts


As previously reported - 39,532,115Adjustment to trade debtors impairment - 942,451

- 40,474,566

Cash and cash equivalentsBalance as previously reported - 27,646,654Interest not previously recognised on Pothole Project account - 7,340

- 27,653,994

Finance lease obligationBalance as previously reported - -Finance lease liability not previously recognised - 172,230

- 172,230

Long service provisionsBalance as previously reported - 138,000Recognition of liability not previously recognised - 755,000

- 893,000

Post employment benefit obligationBalance as previously reported - -Recognition of liability not previously recognised - 3,405,000

- 3,405,000






Accumulated surplus 2013 2012Balance as previously reported - 295,770,506Long service awards liability not previously recognised - (559,000)Post employment liability not previously recognised - (2,472,000)Reversal of payments for finance leases previously recognised as operating leases in - 224,5102012Recognition of interest for finance leases previously recognised as operating leases pre - (167,621)2012Recognition of depreciation on finance leases previously recognised as operating leases pre 2012

- (128,743)

Accumulated Depreciation - Other Assets - (41,066)Correction of revaluation of Community Assets - 20,870,567Accumulated Depreciation -Community Assets - (9,988,097)Reversal of accumulated depreciation on RDP houses - 42,466,078Reversal of accumulated depreciation on infrastructure - 79,846,891Revaluation of infrastructure - (34,095,098)Adjustments of land and buildings ommitted - 173,188,252Recognising heritage asset not previously recognised - 7Reversal of accumulated depreciation on RDP houses now treated as inventory - (2,620,502)Adjustment to Work In Progress - 5,432,284Adjustment of VAT on debt impairment - 4,364,333

- 572,091,301

VAT payableBalance as previously reported - (1,406,197)VAT on debt impairment - 4,970,561

- 3,564,364

InventoryReclassification of RDP houses to inventory previously treated as buildings - 131,330,090






Statement of Financial PerformanceImpairment on intangible assetsBalance as previously reported - 99,101Adjustment to impairment - (72,329)

- 26,772

Finance costsBalance as previously reported - 443,236Interest on finance lease liability - 249,375

- 692,611

Employee related costsBalance as previously reported - 18,189,105Defined benefit expense - 933,136Long service award - 196,000

- 19,318,241

Lease rentals on operating leaseBalance as previously reported - 897,427Lease rental adjustment - (115,570)

- 781,857

Bad debtsBalance as previously reported - 3,993,977VAT on debt impairment - (606,228)Correction of movement in current year - 942,451

- 4,330,200

Interest received - investmentsPreviously stated - 794,059Interest not previously recognised on Pothole Project account - 7,340

- 801,399

41. Comparative figures

Certain comparative figures have been reclassified.

The effects of the reclassification are as follows:




41. Comparative figures (continued)

Capital work in progress was presented separately in the prior year and has been reclassified and presented under property, plant and equipment in the current year.Property, plant and equipment - 1,060,943Work in progress - (1,060,943)Property rates receivables were classified as receivables from exchange transactions and have been reclassified to receivables from non exchange transactions.Receivables from exchange transactions - (13,924,193)Receivables from non exchange transactions - 13,924,193 Other financial liabilities and accruals were separately presented in thestatement of financial performance in the prior year and have been included aspart of trade and other payables in the current year.Trade and other payables from exchange transactions - 3,300,691Other current financial liabilities - (1,626,772)Accruals - (1,673,919)Cash and cash equivalents - Other financial assets were previously included in cash and cash equivalents and has been reclassified and presented separately in the current year.Cash and cash equivalents - (20,399,982)Other f inanc ia l assets -20 ,399,982 Trade and o ther rece ivab les was presented separa te ly in the p r ior year and has been rec lass i f ied and presented as receivables f rom non-exchange t ransac t ions and receivab les f rom exchange t ransact ions respect ive lyTrade and other receivables - (6,983,579)Receivables from non-exchange transactions - 2,700,000Receivables from exchange transactions - 4,283,579Accruals were separately in the prior year and have been reclassified and presented as accrued leave pay and accrued bonus respectivelyAccruals - (1,563,517)Accrued leave pay - 1,125,476Accrued bonus - 548,443Other income previously included commission received in the prior year. This has been reclassified and presented separately in the current yearOther income - (236,662)Commission received - 236,662Other creditors previously included deposits, under/ over banking and sundry receipts. This has been classified to non-exchange transactions and receivables in the current year.


Other creditors - (144,374)Deposits received - (13,690)Non-exchange transactions and receivables - 158,064

42. Risk management Financial risk management

The municipality’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.

The municipality’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the municipality’s financial performance. The municipality uses derivative financial instruments to hedge certain risk exposures. Risk management is carried out by a central treasury department (entity treasury) under policies approved by the . Municipality treasury identifies, evaluates and hedges financial risks in close co-operation with the municipality’s operating units. The provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.


42. Risk management (continued)

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, municipality treasury maintains flexibility in funding by maintaining availability under committed credit lines.

The municipality’s risk to liquidity is a result of the funds available to cover future commitments. The municipality manages liquidity risk through an ongoing review of future commitments and credit facilities.

Cash flow forecasts are prepared and adequate utilised borrowing facilities are monitored.

Credit risk

Credit risk is managed on a group basis.

Credit risk consists mainly of cash deposits, cash equivalents, derivative financial instruments and trade debtors. The municipality only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party.


Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to customers on an ongoing basis. If customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The utilisation of credit limits is regularly monitored. Sales to retail customers are settled in cash or using major credit cards. Credit guarantee insurance is purchased when deemed appropriate.

Financial assets exposed to credit risk at year end were as follows:

Financial instrument 2013 2012Cash and cash equivalents 16,641,430 27,653,994

43. Events after the reporting date

No events having a financial implication and requiring disclosure in the annual financial statements occurred subsequent to 30 June 2013.

44. Unauthorised expenditure

Opening balance 6,943,240 1,459,362Unauthorised expenditure - current year - 5,483,878

6,943,240 6,943,240

Incident - this is mainly due to inadequate budgeting and monitoring of expenditure.

Measures to address - the expenditure was reported to Council on 28 August 2013. A Council committee was appointed to investigate the causes of the expenditure and recoverability thereof.

45. Fruitless and wasteful expenditure

Opening balance 6,020,322 5,424,102Fruitless and wasteful expenditure incurred during the current year 541,958 596,220

6,562,280 6,020,322

Incident - this is mainly due to interest and penalties charged because of late payment of suppliers.

A measure to address - the expenditure was reported to Council on 28 August 2013. A Council committee was appointed to investigate the causes of the expenditure and recoverability thereof.




46. Irregular expenditure

Opening balance 113,626,051

111,527,720Add: Irregular Expenditure - incurred during the year 888,106 2,052,925Add: Ex-councillors remuneration overpaid 1,146,737 -

115,660,894 113,580,645

Analysis of expenditure awaiting condonation per age classification

Current year 2,034,843 2,052,925Prior years 113,626,051 111,527,720

115,660,894 113,580,645


888,106

1,146,737

2,034,843

Details of irregular expenditure – current yearGoods not procured in terms of supply chain The expenditure was reported to Council on 28management prescripts. August 2013. A Council committee was appointed to

investigate the causes of the expenditure and recoverability thereof.Ex-councilors were overpaid on the remuneration The expenditure was reported to Council on 28 August 2013. A Council committee was appointed to investigate

the causes of the expenditure and recoverability thereof.

46. Additional disclosure in terms of Municipal Finance Management Act

Contributions to organised local government

Current year subscription / fee 400,000 200,000Amount paid - current year (400,000) (200,000)

- -

Audit fees

Opening balance 1,220,255 -Current year subscription / fee 2,232,648 1,720,255Amount paid - current year (2,122,031) (500,000)

1,330,872 1,220,255

PAYE and UIF

Opening balance 183,603 -Current year subscription / fee 3,533,122 2,670,542Amount paid - current year (3,716,725) (2,486,939)

- 183,603

Pension and Medical Aid Deductions

Opening balance 222,383 -Current year subscription / fee 3,555,122 2,548,330Amount paid - current year (3,777,505) (2,325,947)

- 222,383




Figures in Rands 2013 2012

47.Additional disclosure in terms of Municipal Finance Management Act

VAT receivable 8,438,490 3,564,364

Councillors' arrear consumer accounts

30 June 2013No councillors had arrear accounts outstanding for more than 90 days at 30 June 2013.

30 June 2012 Outstandingless than 90

days R

Outstanding more than 90

days R

T o t a l R

Councillor Gavumente - Ndabambi Luleka 290 2,648 2,938Councillor Labuschagne Jacob Coenraardx 2,028 24,072 26,100

2,318 26,720 29,038

During the 2012 financial year the following Councillors’ had arrear accounts outstanding for more than 90 days. Supply chain management regulations

In terms of section 36 of the Municipal Supply Chain Management Regulations any deviation from the Supply Chain Management Policy needs to be approved/condoned by the City Manager and noted by Council. The expenses incurred as listed hereunder have been condoned.

48. Deviation from supply chain management regulations

Paragraph 12(1)(d)(i) of Government gazette No. 27636 issued on 30 May 2005 states that a supply chain management policy must provide for the procurement of goods and services by way of a competitive bidding process.

Paragraph 36 of the same gazette states that the accounting officer may dispense with the official procurement process in certain circumstances, provided that he records the reasons for any deviations and reports them to the next meeting of the and includes a note to the financial statements.


49.Material losses

The municipality made a material loss of R1,949,847 (KW 2,293,938) that amounts to 29% ( 2012: 28%) on its electricity bulk purchases.

50.Budget differences

Material differences between budget and actual amounts



Notes to the Financial StatementsFigures in rands 2013 2012

Revenue from exchange transactions

1. period.2. Rental of facilities and equipment is R125,205 below budget due to the lower than anticipated use of the Municipality’s facilities during the period.3. Licenses and permits are R1,757,161 above budget due to inaccurate budgeting by the Municipality.4. Commission received is R875,534 below budget, due to lower that anticipated motor vehicle registrations during the period, affecting the commission received from the Department of Transport..5. Other income is below budget by R969,008 due to the revenue item not being appropriately budgeted for.6. Interest received – investment is over budget by R1,271,245 due to the fact that the Municipality reinvested higher than expected surplus funds.


1. Property rates are R3,076,442 below budget due to the budget based on the inaccurate valuation and tariff information.2. Government grants are R11,846,263 below budget, variance relates to the fact that revenue is recognized is based on grant expenditure for where conditions are met. The budget is largely based on actual grants received.3. Fines is R27,585 below budget due to the fact that the nature of the revenue item makes it difficult to predict the likelihood of the event, as the Municipality has little control over the fines collected.

Expenditure

1. Personnel costs are R3,059,039 below budget due to the higher than expected variance rate during the period. Also there were vacancies in the Senior Manager positions during the period.2. Remuneration of Councilors is R58,691 is below budget, but the variance is considered as immaterial.3. Administration is R506,861 above budget, as there was no amount budgeted for these costs.4. Depreciation and amortization is R3,470,784, above budget, this is due to assets that were not recognised by the Municipality in the prior year that were added to the fixed asset register. The budget was thus based on low cost base.5. Finance costs is R20,157 below budget, the difference is considered as immaterial.6. Debt impairment is R1,277,353 below budget due to VAT levied on debt impairment.7. Repairs and maintenance is R1,961,331 below budget, this is due to the unpredictable nature of the expense making it difficult to budget for.8. Bulk purchases are R662, 999 below budget, this is due to the lower than expected usage of electricity during the period.9. Contracted services are R7,594 below budget, this amount is considered as immaterial.10. General expenses are R4,055,607 below budget, due to the lower than expected spending during the period.

Capital Expenditure

1. Capital expenditure was R9,244,914 below budget due to delays in the completion of capital projects.


Great Kei Municipality

This report presents 2012/13 performance results for Great Kei Local Municipality. The report includes results for all four quarters and areas

of improvement on the compilation of the SDBIP and control weaknesses within the performance management processes as per the scope letter and agreed

project plan.

The need for the establishment, monitoring and evaluation of a performance management system is

in line with requirements for municipalities to comply with the Municipal Systems Act No. 32 of 2000

and other legislation governing Performance Management within

Local Government.

Section 38 of the Municipal Systems Act requires that: A municipality must—

(a) establish a performance management system that is—(i) commensurate with its resources;(ii) best suited to its circumstances; and(iii) in line with the priorities, objectives. indicators and targets contained in its integrated development plan;


PART 3: 2012/2013

SDBIP REPORTING

QUARTER 1-QUARTER 4

SDBIP 2012/2013: Departmental SDBIP Report

(b) promote a culture of performance management among its political structures, political office bearers and councillors and in its administration, and;

(c) administer its affairs in an economical, effective, efficient and accountable manner.

Section 40 of the Municipal Systems Act requires that:

A municipality must establish mechanisms to monitor and review its performance management system. The Municipality developed the 2012/13 Service Delivery and Budget Implementation Plan (SDBIP) in terms of the Municipal Finance Management Act.

To comply with PMS legislation, GKLM adopted a PMS Framework that describes the performance management processes for monitoring performance information and put measures in place to monitor and report on performance quarterly and annually as required.

The SDBIP serves as a contract between the administration, council and the community and giving expression to the goals and objectives of the Integrated Development Plan of GKLM.

Great Kei Municipality has five departments namely the Office of the Municipal Manager’s Office, Corporate Services, Technical Services, Strategic Services and the Budget and Treasury Office,

GKM’S KEY PERFORMANCE AREASSO 1: Good Governance and Public ParticipationSO 2: Municipal Transformation and Organisational DevelopmentSO 3: Municipal Financial ViabilitySO 4: Basic Service Delivery and InfrastructureSO 5: Local Economic Development

COMMENT ON GKLM 2012/2013 PERFOMANCE RESULTS

GKLM’s overall performance for 2012/13 financial year is 61% compared to 51% which was the overall performance for 2011/12 financial year. This indicates a slight improvement of 10%. The major contributing factor affecting the performance of GKLM is the shortage of key staff.

During the first half of the 2012/13 FY, Strategic Services and Corporate Services Departments were operating without directors. In the third quarter the Municipality filled in the Strategic Services and Corporate Services Director positions but the Director for Corporate Services resigned in April 2013.


At the time of compilation and analysis of performance information Budget and Treasury Operations was functioning without the Chief Financial Officer who also left the municipality in July 2013. The Infrastructure Division under Technical Services is also understaffed, operating without project managers. This has negatively impacted on capital expenditure spending. Notwithstanding the challenges faced by GKLM, the municipality has put measures in place to ensure that management are aware of the importance of compiling credible performance information. To date two departments; Strategic Services and Community Services have improved in providing the portfolio of evidence and reporting on performance information. The Portfolio of Evidence for the current year is now being compiled on a monthly basis and the files are now kept under the custody of the Acting Director Strategic Services to improve record keeping and management.Performance reviews have been conducted for managers reporting to the Municipal Manager and managers on performance contracts.

AREAS OF IMPROVEMENT

1. Key positions; Director Corporate Services, Chief Financial Officer, Infrastructure Manager and Project Managers should be prioritised to improve the municipality’s performance.

2. The reinforcing of controls on monthly reporting and proper record keeping for performance information.


PERFORMANCE RATING SCALERA

TIN

G S

CALE

5 Outstanding performance

Performance far exceeds the standard expected of an employee at this level. The appraisal indicates that the Employee has achieved above fully effective results against all performance criteria and indicators as specified in the PA and performance plan and maintained this in all areas of responsibility throughout the year.

4

Performancesignificantlyaboveexpectations

Performance is significantly higher than the standard expected in the job. The appraisal indicates that the employee has achieved above fully effective results against more than half of the performance criteria and indicators and fully achieved all others throughout the year.

3 Fully effectivePerformance fully meets the standards expected in all areas of the job. The appraisal indicates that the employee has fully achieved effective results against all significant performance criteria and indicators as specified in the PA and performance plan.

2Performancenot fullyeffective

Performance is below the standard required for the job in key areas. Performance meets some of the standards expected for the job. The review/assessment indicates that the employee has achieved below fully effective results against more than half the key performance criteria and indicators as specified in the PA and performance plan.

1 Unacceptableperformance

Performance does not meet the standard expected for the job. The review/assessment indicates that the employee has achieved below fully effective results against almost all of the performance criteria and indicators as specified in the PA and performance plan. The employee has failed to demonstrate the commitment or ability to bring performance up to the level expected in the job despite management efforts to encourage improvement.


SUMMARY OF 2012/13 Q1-Q4 GKM PERFORMANCE RESULTS

Priority Area Total KPIs KPIs Extremel

y Well Met

KPIs Well Met

KPIs Met KPIs Almost Met

KPIs Not Met

Achieved Results

Rating

Municipal Manager’s Office

8 0 0 3 4 1 87%%

Corporate Services

15 0 0 2 4 9 40%

Strategic Services

17 3 2 3 3 6 65%

Technical and Infrastructure/Community Services

35 2 0 10 9 14 60%

Budget and Treasury

14 0 1 2 6 5 64%

TOTAL 89 5 3 20 26 35 61%


2012/2013 GREAT KEI AUDIT REPORT BY AUDITOR GENERAL

REPORT OF THE AUDITOR-GENERAL TO THE EASTERN CAPE PROVINCIALLEGISLATURE AND THE COUNCIL ON THE GREAT KEI LOCAL MUNICIPALITYREPORT ON THE FINANCIAL STATEMENTSIntroduction1. I have audited the financial statements of the Great Kei Local Municipality set out onpages … to …, which comprise the statement of financial position as at 30 June 2013, thestatement of financial performance, statement of changes in net assets, statement ofcomparison of budget and actual amounts and cash flow statement for the year thenended, and the notes, comprising a summary of significant accounting policies and otherexplanatory information.

Accounting officer’s responsibility for the financial statements2. The accounting officer is responsible for the preparation and fair presentation of thesefinancial statements in accordance with South African Standards of Generally RecognisedAccounting Practice (GRAP) and the requirements of the Municipal Finance ManagementAct of South Africa, 2003 (Act No. 56 of 2003) (MFMA) and the Division of Revenue Act ofSouth Africa, 2012 (Act No. 5 of 2012) (DoRA), and for such internal control as theaccounting officer determines is necessary to enable the preparation of financial statementsthat are free from material misstatement, whether due to fraud or error.

Auditor-general’s responsibility3. My responsibility is to express an opinion on these financial statements based on my audit.I conducted my audit in accordance with the Public Audit Act of South Africa, 2004 (ActNo. 25 of 2004) (PAA), the general notice issued in terms thereof and InternationalStandards on Auditing. Those standards require that I comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether the financialstatements are free from material misstatement.4. An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor’sjudgement, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the entity’s preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity’s internal control. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of accounting estimates made by management, aswell as evaluating the overall presentation of the financial statements.5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide abasis for my adverse audit opinion.

Basis for adverse audit opinion Property, plant and equipment6. The municipality did not have adequate processes to ensure that all property, plant andequipment as disclosed in note 5 to the financial statements was recorded and valuedcorrectly. As a result, assets meeting the definition of property, plant and equipment wereincorrectly disclosed as inventory in both the current and prior year. Furthermore, items ofproperty, plant and equipment identified during the audit were not included in the assetregister and land was included in the asset register at the incorrect values due to anincorrect valuation of the land. Due to the above, depreciation was also incorrectlycalculated. Consequently, property, plant and equipment is understated by R37,1 million(2011-12: R42,6 million), inventory is overstated by R106 million (2011-12: R106 million),accumulated surplus is understated by R68,9 million (2011-12: R63,4 million), depreciationis understated by R2,1 million and the accumulated depreciation is understated byR39,1 million (2011-12: R37 million).


Investment property7. The municipality did not have adequate processes to ensure that all investment property asdisclosed in note 4 to the financial statements was recorded, recognised and valuedcorrectly. As a result, properties not meeting the definition of investment property asrequired by GRAP 16 Investment property were incorrectly disclosed as investmentproperty. Furthermore, investment properties were included in the investment propertyregister at the incorrect amounts. Investment property is therefore understated byR12,9 million (2011-12: R12,9 million). The accumulated surplus is overstated by the sameamount.

Accumulated surplus8. A restatement of prior year balances of R276,3 million (2011-12: R3,7 million) during thecurrent year was disclosed in the statement of changes in net assets. The accumulatedsurplus and prior period errors as disclosed in note 40 are understated by R92,9 million(2011-12: R87,5 million), investment property is understated by R12,9 million (2011-12:R12,9 million), property, plant and equipment is overstated by R68,9 million (2011-12:R63,4 million), the opening balance of accumulated depreciation is understated byR37 million, as a result of the following:Property, plant and equipment being reflected at incorrect values and assets notincluded in the asset register.Accumulated depreciation relating to reclassified property, plant and equipment notrecognised.Investment property register values were incorrect and a title deed was not in the nameof the municipality.

Receivables from exchange transactions9. During the current and prior year, the municipality did not maintain an updated debtorsledger, as debtors accounts were duplicated on the system. Debtors had debit and creditbalance accounts that were not netted off against each other, resulting in the overstatementof trade receivables and payments received in advance by R898 984.10. Interest was also not charged on overdue accounts, as required by section 64(2)(g) of theMFMA. In addition, unauthorised withdrawals from the bank account were raised as adebtor with an uncertainty as to the recoverability of this amount. Due to the nature of thesefindings, it was impracticable to determine the full extent to which receivables fromexchange transactions are misstated.11. Furthermore, details as disclosed in note 9 to the financial statements did not reconcile tothe amounts per the age analysis. Consequently, it was not possible to determine whetherany further adjustments were necessary to the amount disclosed for receivables fromexchange transactions of R8,5 million (2011-12: R1,1 million) as disclosed in the statementof financial position to the financial statements.

VAT receivable12. VAT reconciliations between the amount receivable from the South African RevenueService and the amount per the general ledger were not performed for the current and prioryear. I was unable to confirm the balance for either year by alternative means.Consequently, I was unable to determine whether any further adjustments to the VATreceivable as disclosed in note 12 were necessary.

Provisions13. The municipality did not have an accounting policy for the provision of long servicebonuses disclosed in note 16 to the financial statements amounting to R940 000(2011-12: R893 000). This amount was incorrectly disclosed as a provision instead of along-term employee benefit. Furthermore, the provision for environmental rehabilitationwas incorrectly calculated by the municipality resulting in an overstatement of R792 602(2011-12: R791 859).14. As a result, provisions as disclosed in note 16 are overstated by R1,7 million (2011-12:R1,7 million), the employee benefit obligation as disclosed in note 8 is understated by


R940 000 (2011-12: R893 000) and property, plant and equipment as disclosed in note 5 isoverstated by 792 602 (2011-12: R791 859).

Payables from exchange transactions15. During 2011-12, enough appropriate audit evidence was not available for paymentsreceived in advance as disclosed in note 18 to the financial statements, and I was unableto confirm the balance by alternative means. I was unable to determine whether anyadjustments to payments received in advance were necessary. My opinion on the currentperiod’s financial statements is also modified because of the possible effect of this matteron the comparability of the current period’s figures.

Other current financial liabilities16. During 2011-12, enough appropriate audit evidence was not available for other currentliabilities of R1,6 million as disclosed in the statement of financial position and note 18 tothe financial statements, and I was unable to confirm the balance by alternative means. Iwas unable to determine whether any adjustments to other current financial liabilities werenecessary. My opinion on the current period’s financial statements is also modifiedbecause of the possible effect of this matter on the comparability of the current period’sfigures.

Accruals17. During 2011-12, the municipality did not have an adequate system to maintain leaverecords, and not all leave forms were submitted for audit purposes. Furthermore,employees were not all included on the schedule for the accrued leave pay. I was unableto confirm the balance by alternative means. Consequently, I was unable to determinewhether any further adjustments to the accrued leave pay of R1,4 million as disclosed innote 18 to the financial statements were necessary. My opinion on the current period’sfinancial statements is also modified because of the possible effect of this matter on thecomparability of the current period’s figures.

Revenue from exchange transactions18. The municipality did not measure all revenue as per GRAP 9 Revenue from exchangetransactions at the fair value of the consideration received or receivable as required by thestandard. Service charges revenue is understated by R1,4 million and trade receivables areunderstated by the same amount, as a result of the following:Differences between customer units purchased and used for basic electricity andelectricity billed by R1,3 million.Refuse revenue is understated by R92 158.19. During 2011-12, the output VAT on cash sales for prepaid electricity and sundry revenueswas incorrectly recorded as revenue, resulting in revenue being overstated by R249 277and the VAT payable being understated by the same amount. Furthermore, meter readingswere incorrectly captured on the billing system. I was unable to confirm the revenue byalternative means. My audit opinion on the financial statements for the period ended30 June 2012 was modified accordingly. My opinion on the current period’s financialstatements is also modified because of the possible effect of this matter on thecomparability of the current period’s figures.

Revenue from non-exchange transactions20. During 2011-12, properties per the valuation roll were not included in the debtors systemand the property valuations per the valuation roll were not reconciled with the debtorssystem, resulting in assessment rates not being billed or being billed incorrectly. I wasunable to confirm the revenue from non-exchange transactions by alternative means. Myaudit opinion on the financial statements for the period ended 30 June 2012 was modifiedaccordingly. My opinion on the current period’s financial statements is also modifiedbecause of the possible effect of this matter on the comparability of the current period’sfigures.


Expenditure21. During 2011-12, the municipality did not have adequate controls over the processing oftransactions in the general ledger. VAT was incorrectly processed in the accounting systemand expenditure was captured in the incorrect period, resulting in expenditure beingoverstated by R738 607, the VAT payable being overstated by R539 687, the accumulatedsurplus being overstated by R204 887, and trade payables from exchange transactionsbeing understated by R5 967.22. In addition, the municipality did not classify lease agreements as finance leases wheresubstantially all risks and rewards incidental to ownership were transferred to themunicipality, in accordance with GRAP 13 Leases. The municipality is party to a number oflease agreements that constitute finance leases, which have been accounted for asoperating leases. Furthermore, lease payments were disclosed in the incorrect periods.23. My audit opinion on the financial statements for the period ended 30 June 2012 wasmodified accordingly. My opinion on the current period’s financial statements is alsomodified because of the possible effect of these matters on the comparability of the currentperiod’s figures.

Employee related costs24. Allowances paid to employees were incorrectly calculated, resulting in an overstatement ofnote 27 to the financial statements by R297 168. Municipal contributions to employees’medical aid schemes exceeded the industry norm by R26 432. Furthermore, the number ofleave days paid out to employees exceeded the number stipulated in the municipality’sleave encashment policy and resulted in an overstatement of R67 936. The related debtorsin respect of these misstatements were not raised at year-end, resulting in anunderstatement of receivables from exchange transactions as disclosed in note 10 to thefinancial statements.25. Adequate supporting documentation was not provided for audit purposes during the currentand two preceding years for basic salaries, allowances and evidence to support therequired adjustment to salaries, as required by the categorisation and wage curvescollective agreement. It was therefore not possible, even through alternative procedures, toconfirm the amount of R27,2 million as disclosed in note 27 to the financial statements.

Unauthorised expenditure26. Enough appropriate audit evidence was not submitted to calculate the extent ofunauthorised expenditure per vote, as required by sections 1 and 125(2)(d)(i) of the MFMA.Consequently, I was unable to determine whether any further adjustments were necessaryto the unauthorised expenditure disclosed in note 44 to the financial statements at anamount of R6,9 million (2011-12: R6,9 million).

Irregular expenditure27. The municipality did not have adequate systems to identify and disclose all irregularexpenditure incurred during the year and to ensure that all irregular expenditure incurredwas in terms of the definition, as required by section 125(2)(d)(i) of the MFMA. The irregularexpenditure disclosed in note 46 to the financial statements is understated by R6,7 million(2011-12: R3,1 million), relating to irregular expenditure incurred during the year andidentified during the audit process, while the opening balance for 2011-12 is also overstatedby R771 856 in this regard. Due to the inadequate systems in place and non-availability ofenough appropriate audit evidence for all awards it was impracticable to determine the fullextent of the understatement of irregular expenditure disclosed in note 46 at R115,6 million(2011-12: R113,6 million). Consequently, I was unable to determine whether any furtheradjustments were necessary to the irregular expenditure disclosure note.

Commitments28. The municipality did not have an accounting policy for commitments disclosed. Differencesof R4,2 million (2011-12: R431 377) were identified between the contract values and thecommitments disclosed in note 37 to the financial statements.29. Furthermore, the municipality did not maintain a contracts and commitments register


throughout the year. As a result, certain contracts that were in place during the year werenot included in the register submitted for auditing. I was unable to confirm the disclosure byalternative means. Consequently, I was unable to determine whether any furtheradjustments were necessary to capital and current commitments of R24,6 million asdisclosed in note 37 to the financial statements.

Cash flow statement30. GRAP 2 Cash flow statements require the presentation of a cash flow statement,summarising the entity’s operating, investing and financing activities. The municipality didnot provide enough appropriate audit evidence in support of the amounts disclosed in the

cash flow statement.Budget information31. GRAP 24 Presentation of budget information in financial statements requires thepresentation of a comparison between the budget and actual amounts. The budgetcomparison can be presented either as a separate additional financial statement or byincluding additional budget columns in the financial statements. The budget comparisonmust be accompanied by explanations of material differences between the budget andactual amounts as well as explanations of changes from the approved budget to the finalbudget. The statement of comparison of budget and actual could not be verified due to alack of enough appropriate audit evidence supporting the budget comparison. The budgetcomparison could not be verified by alternative means.

Aggregation of immaterial uncorrected misstatements32. The financial statements as a whole are materially misstated due to the cumulative effect ofindividually immaterial uncorrected misstatements in the following elements making up thenotes to the financial statements:Fruitless and wasteful expenditure reflected as R6,5 million in note 45 is understated byR494 098.Operating leases reflected as R779 281 in note 37 are overstated by R779 281.

Adverse opinion33. In my opinion, because of the significance of the matters described in the basis for adverseopinion paragraphs, the financial statements do not present fairly the financial position ofthe Great Kei Local Municipality as at 30 June 2013 and its financial performance and cashflows for the year then ended in accordance with GRAP and the requirements of the MFMAand DoRA.

Emphasis of matter34. I draw attention to the matter below. My opinion is not modified in respect of this matter.

Material losses35. As disclosed in note 49 to the financial statements, the municipality suffered significantelectricity losses of R1,9 million (2,3 million kilowatts) (29%).

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS36. In accordance with the PAA and the general notice issued in terms thereof, I report thefollowing findings relevant to performance against predetermined objectives, compliancewith laws and regulations and internal control, but not for the purpose of expressing anopinion.

Predetermined objectives37. I performed procedures to obtain evidence about the usefulness and reliability of theinformation in the annual performance report as set out on pages … to … of the annualreport.38. The reported performance against predetermined objectives was evaluated against theoverall criteria of usefulness and reliability.


39. The usefulness of information in the annual performance report relates to whether it ispresented in accordance with the National Treasury’s annual reporting principles andwhether the reported performance is consistent with the planned objectives. The usefulnessof information further relates to whether indicators and targets are measurable (i.e. welldefined, verifiable, specific, measurable and time bound) and relevant as required by theNational Treasury’s Framework for managing programme performance information(FMPPI).40. The reliability of the information in respect of the selected objectives is assessed todetermine whether it adequately reflects the facts (i.e. whether it is valid, accurate andcomplete).

41. The material findings are as follows:Usefulness of information PresentationMeasures taken to improve performance not disclosed42. Measures to improve performance where planned targets were not achieved were notdisclosed in the performance report, as required by section 46 of the Municipal Systems Actof South Africa, 2000 (Act No. 32 of 2000) (MSA). A total of 22% of the indicators relevantto the selected key priority areas were not well defined in the annual performance report.This was due to management not properly reviewing the performance report to ensure thatthe report was in line with the required legislation.Measures taken to improve performance not supported by enough appropriate auditevidence43. Section 46 of the MSA requires disclosure in the annual performance report of measurestaken to improve performance where planned targets were not achieved. Adequate andreliable corroborating evidence could not be provided for 67% of the measures taken toimprove performance as disclosed in the annual performance report. This was due toinadequate, or a lack of, documentation. Consequently, I did not obtain enough appropriateaudit evidence to satisfy myself as to the reliability of the measures taken to improveperformance.

Measurability44. The FMPPI requires that performance should be specific in clearly identifying the natureand required level of performance. A total of 58% of the material planned targets selectedfor auditing were not specific in clearly identifying the nature and required level ofperformance. This was due to management not properly reviewing the performance targetsand ensuring that they were in line with the requirements of the FMPPI.45. The FMPPI requires that performance should be measurable by enabling performance tobe measured. A total of 50% of the material planned targets selected for auditing were notmeasurable. This was due to management not properly reviewing the performance targetsand ensuring that they were in line with the requirements of the FMPPI.46. The FMPPI requires that the time period or deadline for delivery should be specified fortargets. A total of 58% of the material planned targets selected for auditing were not timebound as the time period or deadline for delivery was not specified. This was due tomanagement not properly reviewing the performance targets and ensuring that they were inline with the requirements of the FMPPI.

Reliability of information Development priorities: Electricity, solid waste management as well as transport and roads services47. The FMPPI requires institutions to have appropriate systems to collect, collate, verify andstore performance information to ensure valid, accurate and complete reporting of actualachievements against planned objectives, indicators and targets. I was unable to obtain theinformation and explanations I considered necessary to satisfy myself as to the validity,accuracy and completeness of the actual performance reported for the developmentpriorities of electricity, solid waste management as well as transport and road services. Thiswas due to limitations placed on the scope of my work due to the absence of informationsystems and lack of appropriate capacity within the municipality.


Compliance with laws and regulations48. I performed procedures to obtain evidence that the entity has complied with applicable lawsand regulations regarding financial matters, financial management and other relatedmatters. My findings on material non-compliance with specific matters in key applicablelaws and regulations as set out in the general notice issued in terms of the PAA are asfollows:

Strategic and planning process49. The IDP adopted by the municipality does not reflect and identify the key performanceindicators and targets, as required by sections 26 and 41 of the MSA.50. The municipality did not afford the local community at least 21 days to comment on the finaldraft of its integrated development plan (IDP) before the plan was submitted to council foradoption, as required by the municipal planning and performance managementregulation 15(3).51. The performance management system of the municipality did not clarify the roles andresponsibilities of each role-player in the functioning of the system and did not provide forprocedures by which the system is linked to the municipality's integrated developmentplanning processes, as required by municipal planning and performance managementregulation 7(2)(g).52. The performance management system of the municipality did not provide for the monitoringof performance and for the measuring and review of performance at least once per year,with regard to each of those development priorities and objectives and against the keyperformance indicators and targets set, as required by section 41 of the MSA.53. The performance management system of the municipality did not provide for taking steps toimprove performance with regard to those development priorities and objectives whereperformance targets are not met, as required by section 41(1)(d) of the MSA.54. The municipality did not set key performance indicators, including input indicators, outputindicators and outcome indicators, in respect of each of the development priorities andobjectives set out in the IDP, as required by section 41(1)(a) of the MSA and the municipalplanning and performance management regulation 1 and 9(1)(a).

Effective, efficient and transparent system and internal controls55. The municipality did not have and maintain effective, efficient and transparent systems offinancial and risk management and internal controls as required by section 62(1)(c)(i) of theMFMA.

Budgets56. Expenditure was incurred in excess of the limits of the amounts provided for in the votes ofthe approved budget, in contravention of section 15 of the MFMA.57. Quarterly reports were not submitted to the council on the implementation of the budget andfinancial state of affairs of the municipality within 30 days after the end of each quarter, asrequired by section 52(d) of the MFMA.

Annual financial statements, performance report and annual report58. The financial statements submitted for auditing were not prepared in all material respects inaccordance with the requirements of section 122 of the MFMA. Material misstatements ofnon-current assets, current assets, liabilities, revenue, expenditure and disclosure itemsidentified by the auditors in the submitted financial statements were subsequently correctedand the supporting records provided, but the uncorrected material misstatements andsupporting records that could not be provided resulted in the financial statements receivingan adverse audit opinion.59. The 2011-12 annual report was not tabled in the municipal council within seven monthsafter the end of the financial year, as required by section 127(2) of the MFMA.60. A written explanation was not submitted to the council setting out the reasons for the delayin the tabling of the 2011-12 annual report in the council, as required by sections 127(3)and 133(1)(a) of the MFMA.


61. The council's oversight report on the 2011-12 annual report was not made public withinseven days of its adoption, as required by section 129(3) of the MFMA.

Expenditure management62. An effective system of expenditure control was not in place, including procedures for thewithdrawal of funds, as required by section 65(2)(a) of the MFMA.63. An adequate management, accounting and information system was not in place to accountfor creditors, as required by section 65(2)(b) of the MFMA.64. Reasonable steps were not taken to prevent unauthorised, irregular as well as fruitless andwasteful expenditure, as required by section 62(1)(d) of the MFMA.

Conditional grants received65. The municipality did not submit project implementation plans to the national department(CoGTA), as required by the Division of Revenue Grant Framework issued in GazetteNo. 35399.66. The municipality did not submit, within 10 days after the end of each month, its monthlyexpenditure reports to the national department (CoGTA), as required by the Division ofRevenue Grant Framework issued in Gazette No. 35399.

Revenue management67. A credit control and debt collection policy was not implemented, as required bysection 96(b) of the MSA and section 62(1)(f)(iii) of the MFMA.68. An adequate management, accounting and information system was not in place to accountfor revenue, debtors and receipts of revenue, as required by section 64(2)(e) of the MFMA.69. An effective system of internal control for debtors and revenue was not in place, as requiredby section 64(2)(f) of the MFMA.70. Interest was not charged on all accounts in arrears, as required by section 64(2)(g) of theMFMA.

Asset management71. An effective system of internal control for assets (including an asset register) was not inplace, as required by section 63(2)(c) of the MFMA.

Liability management72. An adequate management, accounting and information system was not in place to accountfor liabilities, as required by section 63(2)(a) of the MFMA.73. An effective system of internal control for liabilities (including a liability register) was not inplace, as required by section 63(2)(c) of the MFMA.

Consequence management74. Irregular as well as fruitless and wasteful expenditure incurred by the municipality was notinvestigated to determine if any person is liable for the expenditure, in accordance with therequirements of section 32(2) of the MFMA.75. Irregular as well as fruitless and wasteful expenditure was not always recovered from theliable person, as required by section 32(2) of the MFMA.

Human resource management76. The municipality did not develop and adopt appropriate systems and procedures to monitor,measure and evaluate the performance of staff, in contravention of section 67(d) of theMSA.77. Enough appropriate audit evidence could not be obtained that the municipal manager andsenior managers directly accountable to the municipal manager had signed performanceagreements, as required by section 57(2)(a) of the MSA.78. Enough appropriate audit evidence could not be obtained, that newly appointed managersdirectly accountable to the municipal manager had disclosed their financial interests prior toappointment, as per the requirements of regulation 4 of GNR 805.


79. Enough appropriate audit evidence was not obtained to substantiate that the accountingofficer, chief financial officer, some senior managers and finance officials met theprescribed competency areas, as required by section 83 of the MFMA and regulations 2 to7 of the Municipal Regulations on Minimum Competency (MRMC) Levels, as theirpersonnel files were not submitted for audit purposes.80. Enough appropriate audit evidence was not obtained to substantiate that the chief financialofficer and some senior managers did have the higher education qualification as requiredby regulations 4 and 5 of the MRMC Levels.81. Finance officials at middle management did not have the higher education qualification asrequired by regulations 8 and 9 of the MRMC Levels.

Procurement and contract management82. Enough appropriate audit evidence could not be obtained that invitations for competitivebidding were advertised for a required minimum period of days, as required by SCMregulation 22(1) and 22(2).83. Awards were made to bidders based on points given for criteria that differed from thosestipulated in the original invitation for quotations, in contravention of SCM Regulations 21(b)and 28(1)(a) and the Preferential Procurement Regulations.84. The performance of contractors or providers was not monitored on a monthly basis, asrequired by section 116(2)(b) of the MFMA.85. The contract performance and monitoring measures and methods were insufficient toensure effective contract management, as required by section 116(2)(c) of the MFMA.86. A list of accredited prospective providers was not in place for procuring goods and servicesthrough quotations as required by SCM regulation 14(1)(a).87. Enough appropriate audit evidence could not be obtained that some contracts andquotations were awarded in accordance with the legislative requirements and aprocurement process which is fair, equitable, transparent and competitive, as themunicipality did not have adequate controls over document management and recordkeeping in place. Furthermore, deviations from award processes made by the accountingofficer were not communicated/ documented with the SCM officials.

Internal control88. I considered internal control relevant to my audit of the financial statements, annualperformance report and compliance with laws and regulations. The matters reported belowunder the fundamentals of internal control are limited to the significant deficiencies thatresulted in the basis for the adverse opinion, the findings on the annual performance reportand the findings on compliance with laws and regulations included in this report.

Leadership89. The lack of accountability and vacancies in critical positions resulted in action plans toaddress audit findings relating to misstatements in the financial statements, compliancewith laws and regulations and performance against predetermined objectives not beingimplemented adequately. Furthermore, the high reliance on consultants and not all staffbeing aware of their roles and responsibilities hampered responsibility and accountability forcritical municipal operational functions.

Financial and performance management90. Management did not adequately manage transactions upon recording, which resulted in thefindings included in the paragraphs on the basis for the adverse opinion, predeterminedobjectives and compliance with laws and regulations.91. Key daily and monthly processes, including reconciling accounts, maintaining registers andclearing suspense accounts, were not performed throughout the financial year.

Governance92. There was no effective oversight review over financial information, compliance with lawsand regulations and reporting on predetermined objectives, as recurring findings in theseareas were identified during the year. This is a critical area for all oversight bodies to


address going forward.

OTHER REPORTSInvestigations93. An investigation was conducted by an independent consulting firm on request of themunicipality to identify the validity and accuracy of ex-councillors’ debt. This investigationwas inconclusive.94. An investigation is being conducted to probe unlawful withdrawals from the municipality’sbank account and allegations of fraud by specific suppliers. The investigation was stillongoing at the reporting date.

East London30 November 201


AUDIT ACTION PLAN

Summary of the Auditor General’s finding (Numbers as per Audit

report)

Interventions Responsible Person/s Time Frame

Property, plant and equipment

6.Assets meeting the definition of property, plant and equipment were incorrectly disclosed as inventory in both the current and prior year.

Items of property, plant and equipment identified during the audit were not included in the asset register and lend was included in the asset register at the incorrect values due to an incorrect valuation of the land.

Physical asset verification will be performed before year end to identify and record all assets and the direction of verification will be from floor to asset register and also from asset register to floor.

The definition and recognition criteria of Property plant and equipment will be used to classify items. Classification of items in Venus System will be verified against applicable GRAP Standard.

Expert will be used in valuation of land so that land and building can be included at correct value in asset register.

A reconciliation of Fixed Asset Register with Venus System will be performed as soon as asset verification is complete.

F Van Dalen (Director Technical Services)

30-Jun-14

Investment property


7. Properties not meeting the definition of investment property as required by GRAP 18 Investment property were incorrectly disclosed as investment property.

Furthermore, investment properties were included in the investment property register at the incorrect amounts,

Request a list of all properties that are in the name of Municipality from Deeds Office. Identify and compile a list of investment property from confirmation received from Deeds Office.

The definition and recognition criteria of Investment Property(IP) will used to classify items.

Expert will be used in valuation of investment property so that the IP can be included at correct amounts in investment register.

Investment Property Register will be reconciled with Venus System.

F Van Dalen (Director Technical Services)

30-Jun-14

Accumulated surplus8• Property, plant and equipment being reflected at incorrect values and assets not included in the asset register.• Accumulated depreciation relating to reclassified property, plant and equipment not recognised.• Investment property register values were incorrect and a title deed was not in the name of the municipality.

Refer to Intervention for finding 6 and 7 F Van Dalen (Director Technical Services)

T Sotshaka (Senior Accountant)

30-Jun-14

Receivables from exchange transactions9. During the current and prior year, the municipality did not maintain an updated debtors ledger, as debtors accounts were duplicated on the system.

Review debtors accounts in Venus and identify duplicated accounts. Remove duplicate accounts on Venus and maintain a file of removed accounts.

Match payments received from bank statement with reference quoted and

L Matshoba (Senior Revenue Accountant)

30-Jun-14


update debtor ledger.Debtors had debit and credit balance accounts that were not netted off against each other, resulting in the overstatement of trade receivables and payments received in advance by R898,984.

Obtain a list of debtors and identify debtors with credit balance. Investigate reason for credit balance and confirm that the customer does not have same account number with debit balance through analysis of debtor ledger.


30-Jun-14

Receivables from exchange transactions10. Interest was also not charged on overdue accounts, as required by section 64(2)(g) of the MFMA.

Review debtors accounts monthly and identify overdue accounts .

The function of interest will be activated on Venus System and interest will be then be charged to overdue accounts.

T Sontshaka (Senior Accountant)

30-Jun-14

Receivables from exchange transactionsunauthorised withdrawals from the bank account were raised as a debtor with an uncertainty as to the recoverability of this amount.

Obtain monthly bank statements and identify unathorised withdrawals. Determine the validity of withdrawals and raise debtors where unauthorised withdrawal is identified.


30-Jun-14

Receivables from exchange transactions11.Details as disclosed in note 9 to the financial statements did not reconcile to the amounts per the age analysis.

The receivable from exchange transaction will be reconciled with age analysis Monthly as from 28 February 2014.Appropriate disclosure will made on caseware at year end.


30-Jun-14

VAT receivable12. VAT reconciliations between the amount receivable from the South African Revenue Service and the amount per the general ledger were not performed for the current and prior year.

An external VAT confirmation will be sought from SARS for the prior year and current year VAT balances. A reconciliation will be performed between VAT per 201's and VAT recorded in the municipality's General Ledger. Perform an


30-Jun-14


overall VAT reasonability.Provisions13. The municipality did not have an accounting policy for the provision of long service bonuses disclosed in note 16 to the financial statements amounting to R940 000 (2011-12: R893 000).

This amount was incorrectly disclosed as a provision instead of a long-term employee benefit. The provision for environmental rehabilitation was incorrectly calculated by the municipality resulting in an overstatement of R792 602.

Accounting policy long service bonus will be developed and be included in Annual Financial statements.The Municipality will adopt GRAP25 (Employee benefits) for disclosure of long service bonus for the year end 2013/2014 .Previously long service bonus were accounted in terms of GRAP 19 (Provision)

The provision for environmental rehabilitation will be reviewed for accuracy and also the assumption used will be evaluated for reasonability.


30-Jun-14

14.As a result provisions as disclosed in note 16 are overstated by R1,7 million (2011-12: R1,7 million), the employee benefit obligation as disclosed in note 8 is understated by R940 000 (2011-12: 8893 000) and property, plant and equipment as disclosed in note 5 is overstated by 792 602 (2011-12: 8791 859).

The disclosure note for provision and employee benefit obligation will be revised and long service bonus will be disclosed in terms of GRAP 25.


30-Jun-14

Payables from exchange transactions15. During 2011-12, enough appropriate audit evidence was not available for payments received in advance as disclosed in note 18 to the financial statements, and I was unable to confirm the balance by alternative means.

Compile a list of all payments received in advance. Supporting documents will be obtained and filed.


30-Jun-14

Other current financial liabilities


16. During 2011-12, enough appropriate audit evidence was not available for other current liabilities of R1,6 million as disclosed in the statement of financial position and note 18 to the financial statements, and I was unable to confirm the balance by alternative means.

Compile a list of all other current liabilities. Supporting documents used to compile the list will be filed.


30-Jun-14

Accruals17. During 2011-12, the municipality did not have an adequate system to maintain leave records, and not all leave forms were submitted for audit purposes.

Leave forms to completed and approved by relevant manager before it is taken. Leave forms to be file per department for easy retrieval of forms.

A reconciliation of leave database with leave forms will be done monthly.

P Dumalisile (Human Resource Manager)

30-Jun-14

17. During 2011-12, Furthermore, employees were not all included on the schedule for the accrued leave pay.

A list of employees will be compiled monthly. Accrued leave pay will be calculated based on updated employees list.


30-Jun-14

Revenue from exchange transactions18. The municipality did not measure all revenue as per GRAP 9 Revenue from exchange transactions at the fair value of the consideration received or receivable as required by the standard.Service charges revenue is understated by R1,4 million and trade receivables are understated by the same amount, as a result of the following:• Differences between customer units purchased and used for basic electricity and electricity billed by R1,3 million.• Refuse revenue is understated by R92 158.

Fair value for to be used in measurement of revenue will be consumption/usage or used units for electricity. Correct readings of units will be taken on houses and businesses by official. These units will be uploaded on Venus system then consumption will be determined.


30-Jun-14

Revenue from exchange transactions


19.During 2011-12, the output VAT on cash sales for prepaid electricity and sundry revenues was incorrectly recorded as revenue, meter readings were incorrectly captured on the billing system, I was unable to confirm the revenue by alternative means. My audit opinion on the financial statements for the period ended 30 June 2012 was modified accordingly.

The meter readings captured on billing system will be verified by supervisor to confirm accuracy of readings captured on system. The verification will be two way .i.e from billing system to meter reading and from meter reading to billing system.


30-Jun-14

Revenue from non-exchange transaction20. During 2011-12, properties per the valuation roll were not included in the debtors system and the property valuations per the valuation roll were not reconciled with the debtors system, resulting in assessment rates not being billed or being billed incorrectly.

Obtain valuation roll and identify all Properties on it.Update Venus with properties on valuation roll.Property valuation per valuation roll will be reconciled with the debtor system.


30-Jun-14

Expenditure21.VAT was incorrectly processed in the accounting system and expenditure was captured in the incorrect period, resulting in expenditure being overstated by R738 607, the VAT payable being overstated by R539 687, the accumulated surplus being overstated by 8204 887, and trade payables from exchange transactions being understated by R5 967.

Review expenditure invoices/payment receipts and identify input Vat.

Review dates on expenditure invoices/payments receipts to determine whether it relates to the relevant accounting period and recognise the expenditure in correct period.

Review input Vat processed on accounting system to determine whether it has been processed properly or not.


30-Jun-14

Expenditure


22. In addition, the municipality did not classify lease agreements as finance leases where substantially all risks and rewards incidental to ownership were transferred to the municipality, in accordance with CRAP 13 Leases. The municipality is party to a number of lease agreements that constitute finance leases, which have been accounted for asoperating leases. Furthermore, lease payments were disclosed in the incorrect periods.

Determine whether lease agreements exist for all leases. Obtain lease agreements and compile a lease register.

Scrutinise the terms and conditions of lease agreements to classify leases into finance or operating lease in terms of GRAP13 criteria.

Identify leases payments and verify that they have been disclosed in correct accounting period.


30-Jun-14

Employee related costs


24.Allowances paid to employees were incorrectly calculated, resulting in an overstatement of note 27 to the financial statements by 8297 168.

Municipal contributions to employees' medical aid schemes exceeded the industry norm by R26 432.

Furthermore, the number of leave days paid out to employees exceeded the number stipulated in the municipality's leave encashment policy and resulted in an overstatement of R67 936. The related debtors in respect of these misstatements were not raised at year-end, resulting in an understatement of receivables from exchange transactions as disclosed in note 10 to the financial statements.

Identify employees that were paid allowances. Review calculation for allowance and raise a debtor where there was an overpayment.

Identify all employee where municipal is making contribution to medical aid.Re-calculate contribution that should have be paid and raise a debtor for extra money that was paid incorrectly

Identify all employees that have leave days paid out.Re-calculate the leave pay that should have been paid in terms of encashment policy. Raise debtor for the excess leave paid.


30-Jun-14

Employee related costs


25. Adequate supporting documentation was not provided for audit purposes during the current and two preceding years for basic salaries, allowances and evidence to support the required adjustment to salaries, as required by the categorisation and wage curves collective agreement. It was therefore not possible, even through alternative procedures, to confirm the amount of R27,2 million as disclosed in note 27 to the financial statements.

Obtain Wage curves collective agreement and identify required documents

Filed the required documents to support current year adjustment and prior years.


30-Jun-14

Unauthorised expenditure26. Enough appropriate audit evidence was not submitted to calculate the extent of unauthorised expenditure per vote, as required by sections 1 and 125(2)(d)(i) of the MFMA. Consequently, I was unable to determine whether any further adjustments were necessary to the unauthorised expenditure disclosed in note 44 to the financial statements at an amount of R6,9 million (2011-12: R6,9 million).

Compile a list of unauthorised expenditure. Document particulars of unauthorised expenditure that occurred during the current year and prior year.


30-Jun-14

Irregular expenditure27. The municipality did not have Policy will be developed and implented for T Sontshaka (Senior 30-Jun-14


adequate systems to identify and disclose all irregular expenditure incurred during the year and to ensure that all irregular expenditure incurred was in terms of the definition, as required by section 125(2)(d)(i) of the MFMA. The irregular expenditure disclosed in note 46 to the financial statements is understated by R6,7 million (2011-12: R3,1 million), relating to irregular expenditure incurred during the year and identified during the audit process, while the opening balance for 2011-12 is also overstated by 8771 856 in this regard. Due to the inadequate systems in place and non-availability of enough appropriate audit evidence for all awards it was impracticable to determine the full extent of the understatement of irregular expenditure disclosed in note 46 at 8115,6 million (2011-12: 8113,6 million). Consequently, I was unable to determine whether any further adjustments were necessary to the irregular expenditure disclosure note.

identification of irregular expenditure.

The expenditure incurred for the current and prior year to be reviewed to identify irregular expenditure.

Irregular expenditure identified by Auditors will be confirmed and appropriate disclosure will be made in Financial Statements for the year 2013/2014.

Check list for payments of expenditure will be developed and implemented as from 1 February 2014.

Accountant)

Commitments28. The municipality did not have an accounting policy for commitments disclosed. Differences of R4,2 million (2011-12: 8431 377) were identified between the contract values and the commitments disclosed in note 37 to the financial statements.

Accounting policy for commitments will be developed and implemented.

The contract values and commitments register will be reconciled monthly as from 28 February 2014.A list of contract entered by Municipality will be obtained and status on contract will be examined.


30-Jun-14

Commitments


29.the municipality did not maintain a contracts and commitments register throughout the year. As a result, certain contracts that were in place during the year were not included in the register submitted for auditing. I was unable to confirm the disclosure by alternative means. Consequently, I was unable to determine whether any further adjustments were necessary to capital and current commitments of R24,6 million as disclosed in note 37 to the financial statements

Obtain a list of tenders issued during the current year and prior year. Compile a contract value register from the above list.

Contract value register will be reconciled with commitment register monthly.


30-Jun-14

Cash flow statement30. GRAP 2 Cash flow statements require the presentation of a cash flow statement, summarising the entity's operating, investing and financing activities. The municipality did not provide enough appropriate audit evidence in support of the amounts disclosed in the cash flow statement.

Identify items that affect cash flow statement.Obtain supporting documents for those items. File the supporting documents.


30-Jun-14

Budget information


31. GRAP 24 Presentation of budget information in financial statements requires the presentation of a comparison between the budget and actual amounts. The budget comparison can be presented either as a separate additional financial statement or by including additional budget columns in the financial statements. The budget comparison must be accompanied by explanations of material differences between the budget and actual amounts as well as explanations of changes from the approved budget to the final budget. The statement of comparison of budget and actual could not be verified due to a lack of enough appropriate audit evidence supporting the budget comparison. The budget comparison could not be verified by alternative means.

Approved budget and adjustment will be file for evidence purposes. When Section 71 reports are prepared actual revenue and expenditure will be supported by appropriate audit evidence and also will include explanation of material variances as from February 2014.

N Sana (Budget Officer) 30-Jun-14


GREAT KEI MUNICIPALITY 2014/2017 DRAFT INTER€¦ · Web viewGreat Kei Local Municipality presents...

Documents

Transcript of GREAT KEI MUNICIPALITY 2014/2017 DRAFT INTER€¦ · Web viewGreat Kei Local Municipality presents...