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REPUBLIC OF ZAMBIA REPORT OF THE COMMITTEE ON LOCAL GOVERNANCE, HOUSING AND CHIEFS’AFFAIRS ON THE REPORT OF THE AUDITOR GENERAL ON THE REVIEW OF OPERATIONS FOR THE FINANCIAL YEARS ENDED 31ST DECEMBER, 2013, 2014 AND 2015 OF LOCAL AUTHORITIES FOR THE FIRST SESSION OF THE TWELFTH NATIONAL ASSEMBLY APPOINTED ON WEDNESDAY, 5TH OCTOBER 2016 Printed by the National Assembly of Zambia 1 REPORT OF THE COMMITTEE ON LOCAL GOVERNANCE, HOUSING AND CHIEFS’AFFAIRS ON THE REPORT OF THE AUDITOR GENERAL ON THE REVIEW OF OPERATIONS FOR THE FINANCIAL YEARS ENDED 31ST DECEMBER, 2013, 2014 AND 2015 FOR THE FIRST SESSION OF THE TWELFTH NATIONAL ASSEMBLY APPOINTED ON WEDNESDAY, 5TH OCTOBER 2016 2 TABLE OF CONTENTS Paragraph Page No 1. Membership 1 2. Functions of the Committee 1 3. Meetings of the Committee 2 4. Procedure adopted by the Committee 2 PART I Submission by the Secretary to the Treasury 5. Preamble 4 6. Executive Summary 7 7. Introduction 8 8. Scope 9 9. Internal Control 10 10. Institutions that have not submitted audited financial statements 10 11. Administration 11 12. Background 11 13. Sources of Funds 12 Submissions by Principal Officers 3 14. Chibombo District Council 12 15. Chilanga District Council 12 16. Chinsali Municipal Council 25 17. Chipata Municipal Council 32 18. Chirundu District Council 36 19. Kabwe Municipal Council 40 20. Kafue District Council 44 21. Kasama Municipal Council 52 22. Katete District Council 57 i 23. Livingstone City Council 63 24. Lusaka City Council 73 25. Mongu Municipal Council 77 26. Mungwi District Council 80 27. Samfya District Council 84 28. Senanga District Council 87 29. Sioma District Council 102 30. Solwezi Municipal Council 107 4 PART II Submission by the Controlling Officer – Ministry of Local Government 1. HEAD: 29 Ministry of Local Government and Housing - Grants to Local Authorities 114 2. HEAD: 29 Ministry of Local Government and Housing - CDF 121 Overall Recommendation 165 PART III Foreign Tour Report 167 Conclusion 173 ii REPORT OF THE COMMITTEE ON LOCAL GOVERNANCE, HOUSING AND CHIEFS’ AFFAIRS ON THE REPORT OF THE AUDITOR GENERAL ON THE REVIEW OF OPERATIONS OF LOCAL AUTHORITIES FOR THE FINANCIAL YEARS ENDED 31ST DECEMBER, 2013, 2014 AND 2015 FOR THE FIRST SESSION OF THE TWELFTH NATIONAL ASSEMBLY APPOINTED ON 5 TH OCTOBER 2016 Consisting of: Mr M Kabanda, MP (Chairperson); Mr E Musonda MP; Mr L Kaziya, MP; Mr K Mukosa, MP; Mr N Samakayi, MP; Mrs S Mulyata, MP; Mr M Chikote, MP; and G Chiyalika, MP. 5 The membership of your Committee changed following the appointment of Mr L Kaziya, MP as Minister of Water Development, Sanitation and Environmental Protection who was replaced by Mr E I Chibanda, MP. The Honourable Mr Speaker National Assembly Parliament Buildings LUSAKA Sir, Your Committee has the honour to present its Report on the Report of the Auditor General on the Review of Operations of Local Authorities for the Financial Years Ended 31 st December 2013, 2014 and 2015 for the First Session of the Twelfth National Assembly. Functions of the Committee In accordance with the National Assembly Standing Orders, the functions of your Committee are to: (i) study, report and make recommendations to the Government through the House on the mandate, Management and operations of the Ministry of Local Government, the Ministry of Housing and Infrastructure Development (Department of Housing only) and the Ministry of Chiefs and Traditional Affairs, departments and/or agencies under their portfolios; (ii) carry out detailed scrutiny of certain activities being undertaken by the Ministries, departments and/or agencies under their portfolios and make appropriate recommendations to the House for ultimate consideration by the Government; (iii) make, if considered necessary, recommendations to the Government on the need to review certain policies and/or certain existing legislation; (iv) examine annual reports of Government ministries and departments under their portfolios in the context of the autonomy and departments and determine whether the affairs of the said bodies are being managed according to relevant Acts of Parliament, established regulations, rules and general orders. (v) consider any bills that may be referred to it by the House (vi) consider International Agreements and Treaties in accordance with Articles 63 of the Constitution; (vii) consider special audit reports referred to them by the Speaker or an order of the House; (viii) where appropriate, hold public hearings on a matter under their consideration; and (ix) consider any matter referred to them by the Speaker or an order of the House. 6 Meetings of the Committee During the period under review, your Committee held eight meetings. Programme of Work Your Committee considered and adopted the following programme of work for the First Session of the Twelfth National Assembly: i) consideration of the Action-Taken Report on the Committee’s Report for the Fifth Session of the Eleventh National Assembly; ii) consideration of the Report of the Auditor General on the Review of Operations of Local Authorities for the Financial Years Ended 31st December, 2013, 2014 and 2015; iii) consideration of the Topical Issue - “The Housing Situation in Zambia”; iv) local tour to Lusaka, North Western and Copperbelt Provinces of Zambia to inspect some selected housing projects in these provinces; and v) foreign tour to Uganda in order to benchmark with the Committee on Local Governance and Public Service as well as the Committee on Local Government Accounts on best practices. Procedure Adopted by the Committee With technical guidance from the Auditor General and the Ministry of Local Government, your Committee considered both oral and written submissions from the Presiding Officers of the seventeen local authorities which were cited in the Report of the Auditor General on the Review of Operations of Local Authorities for the Financial Years Ended 31st December 2013, 2014 and 2015. Additionally, the Permanent Secretary and the Secretary to the Treasury were both requested to comment on all the seventeen institutions. This Report contains the observations and recommendations of your Committee and includes, in some cases, proposed remedial measures to correct identified irregularities. Your Committee also undertook a foreign tour to the Parliament of Uganda in order to benchmark with the Committee on Local Governance and Public Service and the Committee on Local Government Accounts on best practices. Your Committee’s Report is, therefore, in three parts. Part I is on the Report of the Auditor General on the Review of Operations of Local Authorities for the Financial years Ended 31 st December, 2013, 2014 and 2015, Part II is on Grants to Local Authorities and Constituency 7 Development Funds (CDF) for the financial year ended 31st December 2015, while Part III presents the findings, observations and recommendations of your Committee during its foreign tour. 8 PART I Auditor General’s Preamble Local authorities are public institutions established by an Act of Parliament under Section 3 of the Local Government Act, Chapter 281 of the Laws of Zambia and are Government institutions. The main objective of establishing councils is to provide services on behalf of the Central Government to residents within their areas of jurisdictions. Currently, there are 105 councils in the country. In this regard, Local Authorities were a key factor in socio-economic development because their operations were directly linked to community activities. An effective monitoring 9 of their operations was, therefore, inevitable in ensuring sustainable economic and environmental development in the country. The Constitution of Zambia, as amended by Act No. 2 of 2016 devolves powers to the local authorities in the quest to decentralise the operations of the Government as all the Government departments and institutions would now be managed at the Local Authority level. This, therefore, entailed that there should be greater accountability on the part of the local authorities as they would now be responsible for a lot of Government resources for onward service delivery to the general citizenry. In this regard, Article 250 (1) (i) of the Constitution of Zambia, as amended by Act No. 2 of 2016, mandates the Office of the Auditor General (OAG) to audit the accounts of the Local Authorities. The audits ensure that there was transparency and accountability in the Management of resources in Local Authorities. In preparation to undertake these audits, the Office conducted a survey of forty-three Councils in Zambia to establish the status of accounting, auditing and reporting between April and June 2016, and the survey revealed various weaknesses to which the Secretary to the Treasury responded as set out below. Submission by the Secretary to the Treasury - Ministry of Finance The Secretary to the Treasury informed your Committee that the comments in the Report of the Auditor General on the Review of Operations of Local Authorities for the Financial Years Ended December 2013, 2014 and 2015, were appreciated. The process of interacting and communicating with the Council Secretary and the Presiding Officers of local authorities whose accounts were audited was acknowledged as it provided an opportunity for them to clarify and take corrective action on the audit findings so that matters were resolved during the process of the audit. The set out below are submissions on the said accounts: i. Liquidity Problems The Secretary to the Treasury submitted that he had continued to monitor the liquidity position of councils by evaluating their revenue and cost structures in order to develop the right strategies to address the matter by way of allowing councils to come up with innovative solutions to raise funds. Committee’s Observations and Recommendations Your Committee notes the Secretary to the Treasury’s response, but urges him to ensure that the matter relating to local authorities’ liquidity should be treated with the urgency it deserves. Your Committee laments that most local authorities are currently failing to 10 meet even their statutory obligations and other staff related costs which may result in serious loss of public funds through litigation.
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