SA’s ratepayers, not corruption, blamed for poor municipal service delivery

Finance Minister Enoch Godongwana plans to pump R28.9 billion into the country’s local municipalities, which is likely to make very little difference in the plight of underserved ratepayers who are being made the scapegoats for poor service delivery, rather than rampant mismanagement and corruption.

Godongwana admitted that 175 of the country’s 257 councils are in financial distress.

While Godongwana did not name and shame any of these financially distressed municipalities in his budget speech on Wednesday, his budget review states that a number of municipalities have failed to deliver services due to poor governance, financial mismanagement, and insufficient capacity.

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According to indicators used by the National Treasury, the number of municipalities in financial distress had grown from 86 in the 2013-14 financial year to 175 in the 2019-20 year. 123 municipalities passed unfunded budgets.

But while citizens hope Godongwana’s budgeted funds will make a difference in their lives, experts say this is unlikely as long as corruption and mismanagement in municipalities continue to be ignored, and residents are being blamed for the dire economic situation.

SALGA blames residents’ outstanding accounts

The South African Local Government Association (SALGA) admits that the macroeconomy has been stagnant over the past 12 years, but says this was due to municipalities’ revenues depending on user-pay principles to remain sustainable.

About 81.31% of the total of their own revenue is expected to fund the bulk of recurring municipal expenditure, however, rural-based municipalities have a limited revenue base which means they are unable to generate the projected 19.89% of property rates, said SALGA spokesperson Sivuyile Mbambato.

He said that since Eskom directly supplies electricity to such areas, it renders these municipalities unable to generate a surcharge on electricity to fund other non-billable services, an issue which SALGA has taken to court to ensure municipalities provide services in a sustainable manner.

And to solve the financial distress, Mbambato said residents need only pay their rates and taxes.

“The nature of the services that municipalities provide is protected by the Bill of Rights in the Constitution, that is, right to access water, and this makes it difficult for municipalities to execute draconian credit control strategies.”

“The immediate and most obvious measure to address the financial crisis in municipalities is for households to pay for services that have been consumed. In December 2021, SALGA instituted legal action at court seeking a declaratory order for municipal areas where Eskom distributes electricity directly to households… The assumptions on the White Paper on Local Government is also premised on the understanding that municipalities shall derive own revenue from the distribution of electricity to households,” said Mbambato.

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This kind of response, which makes no mention of the role of financial mismanagement, is unsurprising, as SALGA is an association appointed under the national department of cooperative governance and traditional affairs according to legislation, said Corruption Watch senior researcher Melusi Ncala.

“Municipalities generally serve the most vulnerable people. It’s not the middle-class and upper-class. Majority of South Africans are poor and I believe this is why they have challenges in terms of meeting obligations in terms of payments. I don’t think people don’t want to pay. If your decision and priority is to buy bread or maize, you are not going to prioritise things like paying someone to come and collect your waste,” he told The Citizen.

Poor governance and corruption the core of destitute municipalities

In his budget review, Godongwana stated that the revenue collection in municipalities has increased over time, implying that there was the likelihood of high costs of key inputs or poor spending management as the reason for financial distress.

“Municipalities are accountable for these results. Nonetheless, national and provincial government, and supporting institutions play a role in supporting municipaliteis to achieve their mandates effectively,” he said in the budget review.

But municipalities appear to have the intention to address corruption and poor leadership issues, which are the main cause of failing municipalities, said Ncala. He said Corruption Watch received over 30 000 reports on corruption involving municipalities.

“Incompetencies, mismanagement, and corruption is generally what happens when it comes to our municipalities. That is what I think is mainly the problem. One thing leads to another. You have a corrupt official who appoints someone without qualification or expertise to do the job.”

Money down the drain

Ncala believes throwing money at financially distressed municipalities is not the solution.

“This money is a waste… If this money is going to be used to actually alleviate some of these distresses felt by residents, then it is money well-served and put to good use. But that does not take away from the fact that municipalities appear to not have intentions to actually address corruption issues,” he said.

This was echoed by senior lecturer of public administration at University of Mpumalanga Dr John Molepo, who said that corruption plays a fundamental role in poor service delivery.

“The only thing we need to do now is accept that corruption has played a fundamental role in our municipalities, and some don’t see service delivery as a priority, but see municipalities as a cash-cow. It sends a strong message to us that perhaps the current system of governance we are using needs to be relooked at.

“Why would a municipality end up in deep ends of a financial crisis? It simply means that we have people who are not qualified for particular positions or there is a high number of corruption,” he said.

Hung municipalities a blessing in disguise

Following last year’s local government elections, 66 of the country’s councils were hung, which was a good sign of accountability as there was no sole centre of power, said Molepo.

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“No party can do as they please, due to accountability. The problem comes when it’s time to pass the budget which could lead to infighting. Then it will have an adverse effect on citizens in terms of service delivery. But municipalities are in a dire situation.

“Financial experts are predicting retrenchments in local municipalities. The real issue is that municipalities are deeply entrenched in corruption,” he said.

Godongwana urged municipalities to use the allocated R28.9 billion for the purpose it is meant for, and said they were on standby to work with Parliament and oversight bodies to hold municipalities accountable for delivering services.

“At the same time, our municipalities and other institutions cannot survive if they don’t receive payment from those who consume their services. We urge our people and government departments to pay their municipal bills. Municipalities are also required to improve their service delivery mechanisms and to ensure that billing systems are fair and efficient,” said the finance Minister.

Too broke to even pay staff

Godongwana’s budget review states that a number of municipalities have failed to deliver services due to poor governance, financial mismanagement, and insufficient capacity. And as if to prove his point, a number of local municipalities have been making headlines for their financial crises and woes in recent weeks.

These includes North West municipalities such as Ditsobotla, Maquassi Hill, Moses Kotane, and Mamusa local municipalities.

Earlier this month, the North West legislature’s portfolio committee on cooperative governance resolved to direct the MEC of local government to probe possibilities of interdicting the usage of the municipal’s bank account in Schweizer-Reneke, following allegations of rampant fraud and corruption.

Amahlathi Local Municipality in the Eastern Cape is another example, which earlier this month arranged for its mayor, councillors, senior officials, and 295 staff to queue at Pick n Pay to get food on credit. This was the result of the municipality being too broke to pay salaries until June.

Also Read: Cash-strapped Eastern Cape municipality pays workers

The municipality was running on a bank balance of R1 million while its monthly salary bill was R11 million, leaving them unable to pay staff salaries in January.

Some workers received their salaries in February, after the municipality was boosted by a R5 million VAT refund from the SA Revenue Service.

Metros not doing much better

The Governance Performance Index by Good Governance Africa which was launched late last year ahead of the local government elections to rank the performance of municipalities in the country, scored four metro municipalities – Mangaung, Buffalo City, City of Ekurhuleni and eThekwini – among the lowest.

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“These metros scored lowest due to their performance in administration category. In the case of eThekwini and Ekurhuleni, this was due to them running substantial budget deficits in the 2018-19 and 2019-20 fiscal years while Buffalo City and Mangaung were adversely scored due to their lack of an unqualified audit in each of the fiscal years (from 2017 to 2020),” the report said.

The worst performing local municipalities were Msinga Local Municipality in KwaZulu-Natal, followed by Ingquza Hill Local Municipality in the Eastern Cape, and Tokologo Local Municipality in the Free State.

rorisangk@citizen.co.za