Most of South Africa’s 257 municipalities are in a disastrous financial position. According to the country’s Auditor General, only 33 (13%) are in full compliance with the relevant legal requirements, and produced quality financial statements and performance reports.
The most recent audit report from Auditor General, Kimi Makwetu, shows that nearly a third (31%) of the municipalities indicated that they are not financially viable. In business terms that means they are not going concerns anymore.
According to Makwetu this dire situation can be ascribed to a range of factors. These include a lack of appropriate financial and management skills, political interference and infighting in councils. The failure to fill key personnel positions is also a problem, as is the fact that there’s clearly a lack of political will to ensure accountability.
There are serious consequences to this unacceptable state of affairs. The most important is that municipalities are unable to deliver services such as clean water, sanitation and electricity. It also means there’s a lack of maintenance of infrastructure in towns and cities all over the country. The rise in protests by disgruntled citizens is a clear sign of people’s frustration and the failure of local government to provide basic services.
Local governments are also responsible for providing services such as refuse and sewage removal and disposal, storm water drainage systems as well as municipal roads and street lighting in a sustainable way. The Constitution and the laws of the country make it clear that municipal officials and councillors are accountable to ensure good financial governance, and that there could be disciplinary or criminal proceedings if they fail to do so. For their part, citizens are entitled to receive good services from their respective municipalities.
How can the disastrous situation be turned around? There appears to be a complex set of problems which means that there are no quick fixes. What’s required is a comprehensive approach that deals with various elements of the local government system.
What needs to be done
Firstly, it’s important to understand the role that the other spheres of government have to play to help cure the problems.
Although municipalities have a specific constitutional role to play, they are not expected to do so on their own. Provincial and national governments must support municipalities to perform their functions. They can do this in various ways, such as providing training, technical support and capacity building workshops. Financial governance capacity in key issues such as debt collection, risk management, internal audit and revenue management needs to be strengthened.
The provincial and national governments must also monitor the performance, including the financial performance of municipalities. If they all do this properly, more financial management problems could be identified and dealt with during the course of a financial year.
The Auditor General is also an important part of the support structure. His office is an important constitutional institution that does more than just audit the accounts of all three spheres of government. It also has an important role to play in the accountability chain by identifying key problems and causes. It goes on to make recommendations to help municipalities solve their problems.
At the moment the Auditor General’s office doesn’t have the power to enforce its recommendations. But that’s about to change. Amendments to the Public Audit Act, 2004, being debated in Parliament will give the office more teeth to strengthen accountability. This is a welcome and necessary legislative improvement.
But a great deal of what needs to be done rests with municipalities themselves. Local government finance specialist Deon Van der Westhuizen, states that
one of the cornerstones of successful, continued service delivery is systemic discipline.
This implies effective revenue management, which includes timely debt collection, regular payment of suppliers and a well-structured and managed repairs and maintenance plan for the infrastructure of a municipality.
But to do this effectively and efficiently, appropriate financial management capacity is required. Where municipalities lack this, creative use of shared services between municipalities could be used. And private sector expertise to help improve financial management and audit outcomes should also be part of the solution.
In a worse case scenario, a municipality can be put under administration. This means that for a limited period of time the particular provincial government takes over the running of the municipality in order to solve the critical problems that prevent it from functioning properly. It’s a very drastic measure and should only be used sparingly since it interferes in the constitutional mandate of an elected municipal council. But in cases of serious systemic failure it might be the most appropriate course of action. It should, however, be only for a limited time and should be aimed at getting the municipal administration in a position where it could function on its own again.
Lastly, South Africans across the board need to work harder at ensuring that officials are held accountable. Accountability is one of the fundamental principles of the country’s constitutional democracy. Any person or government institution that does not give effect to accountability contravenes the Constitution. Good quality financial statements and annual reports are necessary to ensure that accountability and transparency are achieved.
The current situation is a national crisis and requires a joint effort across political, geographical and jurisdictional boundaries to get municipalities working properly.