1. The Banking Council South Africa
Proposed amendments to Sections 155 and 156 of Act 108 of 1996
Submission to the Portfolio Committee on Justice
22 September 2001

2. Context Stability / effectiveness / efficiency Financial constraints
Meeting criteria to borrow and attract investment
Intervention in event of financial emergencies
Guidelines for borrowing:
Continuity in obligations
Financial management 1

3. Amendment to section 155 of Act 108 of 1996
The recommended amendment is through the addition of the following sub-section : -
“(8) National legislation may provide for the exercise of executive and legislative authority on behalf of a municipal council to the extent necessary to - 2

4. Continued : Amendment to section 155 of Act 108 of 1996
(a) Govern the Municipality when the council for any reason cannot function; or
(b) To resolve a serious and persistant financial emergency in the Municipality 3

5. Continued : Amendment to section 155 of Act 108 of 1996
Establishment of Municipal Financial Emergency Unit
Certainty and confidence
Municipalities and financial sector
Legislative powers within National Government 4

6. Amendment to section 156 of Act 108 of 1996
It is recommended that this section be amended by adding the following sub-section : -
“(6) The Council of a Municipality may, within a framework prescribed by National Legislation, bind itself and a future Council in the exercise of its Executive and Legislative authority if this is necessary to secure loans or investments for the Municipality” 5

7. Continued : Amendment to section 156 of Act 108 of 1996
Authority to enter into loan and investment transactions
Continuity in obligations
Executive and legislative authority for Councils and future Councils to bind themselves
Within framework prescribed by National Government 6

8. Conclusion Municipal Government transition Demarcation process :
Reduction of municipalities from 843 to 284
Sustainability
Service delivery
Local economic development
Human resource capacity 7

9. Continued : Conclusion
Serious financial stress
Provincial intervention
Lack of certainty
Lack of confidence
Measures needed as part of processes to stability and normalisation of Municipal Government 8

10. Continued : Conclusion
Municipal Finance Management Bill addresses these
Two critical issues
Intervention in situation of financial emergency
Certainty of authority and continuity in obligations 9

11. Continued : Conclusion
Need to address to create basis for normalisation
Failure to address inhibits participation
Proposed amendments critical to address these areas 10

12. Continued : Conclusion
The Banking Council S.A. appeals to the Portfolio Committee to accept the two amendments and add its weight in support of the amendments 11

13. Conclusion : Continued
Finally – we would appeal that there be more substantive engagement between those who draft legislation and those who make decisions allowing funds to flow to Municipalities

14. Continued : Conclusion
More substantive engagement 12