The outcome of SA’s local government elections, which have resulted in an unprecedented number of hung councils, comes as parlous municipal finances are deemed a clear risk to service delivery.
Academics have warned of the difficult road ahead for service delivery in local government, where, even before Covid-19 hit, 163 of SA’s 257 municipalities were deemed to be in financial distress, including four of its metros — Buffalo City, Mangaung, Tshwane and Ekurhuleni.
This number has increased as the pandemic worsened existing managerial weakness, the Treasury said in the recent medium-term budget policy statement, though it is still due to release its latest update on municipal finances with updated numbers.
A total of 112 municipalities adopted budgets that are not fully funded in 2021/2022. They will thus be unable to meet all their financial obligations, with money owed to the SA Revenue Service (Sars), and bulk suppliers such as Eskom and water boards, “mostly ignored and neglected”, according to the Treasury.
Overdue payments owed by local government reached R73.7bn in 2020/2021, while uncollected revenues amounted to R232.8bn.
Despite these fault lines running through municipalities, they must make towns and cities work after the recent elections yielded 70 hung councils, with no outright winner. This is the case in five of SA’s eight metros, with the exceptions of Cape Town, Buffalo City and Mangaung.
The appointment of mayors in hung metros — marked by political flip-flopping, one-upmanship and disruptions of council sittings — does not augur well for residents, as governance and decision-making is now subject to contestation and shifting political alliances and coalitions.
About power
“There is the risk of political governance failure as the result of instability which has been identified as one of the primary factors hindering service delivery in municipalities,” the Treasury said.
“Unfortunately the behaviour of the politicians and the elected councillors during their first days in office suggest that they do not have the residents of the different municipalities at heart and that everything is about power, control and money,” said Johann Kirsten, director of Stellenbosch University’s Bureau for Economic Research (BER).
“The danger is that budgets and contracts are not likely to be passed, resulting in more service delivery backlogs. There is likely to be increasing levels of interventions in the tasks of the officials and a lot of pressure on municipal managers and the CFO to award contracts to friends.”
A BER report released in October reflected a cocktail of problems damaging service delivery at local government level, starting with urbanisation patterns. This has left 42% of SA’s population living in its metros, straining these cities’ resources, while it is stripping smaller municipalities of their tax base.
Poor financial performance is another feature, including abysmal capital investment and spending on repairs and maintenance.
The BER found that none of SA’s municipalities are meeting the necessary spending requirements to prevent supply interruptions and breakdown of infrastructure, with even the large metros only managing to spend half the recommended amounts.
Merit-based appointments
Other problems contributing to the crisis include debilitating supply chain management, poor revenue and debtors’ collection management, as well as a lack of in-house capacity and skills, made worse by cadre deployment, according to the BER.
“The main focus of mayors and councillors should be on efforts to strengthen municipal finances and investment, with merit-based appointments and good municipal governance as a prerequisite,” said Kirsten.
“Political contestation at the council level takes energy and focus away from these critical oversight duties resulting in more bad outcomes.”
According to Kagiso Pooe, a senior lecturer at the Wits School of Governance, once the institutional plans of the past five years an end, every major decision such as passing budgets, developing the service delivery and budget implementation plan and integrated development plans will become sites of contestation or negotiations.
“What this will mean will depend on the level of mistrust or co-operation among the noncoalition agreement parties in the various municipalities,” he told Business Day.
A “big unknown”, said Pooe, was the outlook for financially distressed municipalities such as Emfuleni local municipality and countless others in places such as the North West.
The Treasury has said that 43 municipalities have been classified as “in financial and service delivery crisis” and are beyond the regular support measures offered by the government.
Pooe said that “if coalitions hold and services, revenue collection and the business environment is allowed to thrive and employment improves, this will be a welcomed development.”
But he warned, “If coalitions become uncontrollable and disruptive elements, it will be hard to see how good financial management takes root.”
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