The auditor-general’s 2017/2018 financial audit of municipalities, released in 2019, revealed a severe lack of due diligence in project planning, improper financial management, and a significant decline in service delivery. The causes are varied, but can mainly be traced back to lack of accountability, poor governance, and capacity challenges.
The auditor-general’s municipal audit report found that accumulated, unauthorised, irregular and wasteful expenditure at municipalities had reached R122bn in 2017/2018. Performance reports by 65% of municipalities were dubious and close to unusable, with just 18 of the 257 audited municipalities (7%) managing to produce compliant financial statements and performance reports to receive clean audits — a comparative decline from the 33 (13%) clean audits produced in 2016/2017.
Businesses affected by municipal service delivery failures include poultry producer Astral in Mpumalanga, which has reported a lack of water and electricity; Pioneer Foods has experienced limited access to electricity in its operations in the Eastern Cape and the Free State; and in KwaZulu-Natal, Island Hotel sued the eThekwini municipality for failing to adequately manage the stormwater infrastructure that caused damage when the area flooded three years ago.
How businesses can support municipalities
1. Partnering for risk resilience
According to state-owned, short-term insurer Sasria, municipal insurance claims related to service delivery protests increased from R800m in 2017/2018 to more than R1.7bn in 2018/2019. The company has partnered with Santam and the SA Logcal Government Association (Salga) on the partnership for risk and resilience (P4RR) programme.
The National Disaster Management Centre categorises municipalities into three groups according to their disaster management capabilities: well-functioning; functioning but vulnerable; or dysfunctional. Drawing from this data, the P4RR programme targets 53 municipalities in the second category.
The programme has five focus areas: to drive community risk awareness; to build and increase the capacity for disaster response and relief; data mapping; exploring and providing alternative energy sources; and identifying fire hot-spots. Not all focus areas are implemented in all municipalities.
A key priority of this programme is to be inclusive, multi-stakeholder and community driven. To achieve this, all disaster risk-reduction projects are designed around the needs and priorities of communities, often as articulated in their Integrated Development Plans, creating conducive environments for strategic cross-sector partnerships that draw on the expertise of local government disaster response units, non-profit organisations and intermediaries.
2. Improving municipal capacity
Anglo American Platinum and the Development Bank of Southern Africa (DBSA) partnered on the Municipal Capacity Development Programme in 2014 to improve the functionality of 11 municipalities in mining communities across five provinces, by supporting skills transfer, systems development, processes and plans that promote stability, and improved opportunities for economic development in municipalities.
The mining company invested R120m in the programme over a three-year period, during which time, according to DBSA, there was improvement in the provision of electricity and water in four municipalities and an overall improvement in revenue collection.
During the three-year period, 2 506 water meters and 407 electricity meters were replaced; 26 infrastructure plans were completed; 500 municipal officials were trained in areas such as water and electricity meter replacements, pothole repairs, meter physical verification, operations and maintenance, budgeting and planning, as well as call centre management; and 205 working opportunities were created. A total of 58 small businesses are estimated to have benefited from the programme.
3. Unlocking community talent and creating employment opportunities
Kagiso Trust is on an ambitious mission to change communities ‘from the bottom up’. The trust recently launched capacity building projects in six municipalities across the country, emphasising the need for local municipalities to collaborate with their communities while taking ownership of existing issues to find practical and sustainable solutions. Through a civil society approach, these interventions aim to create better results in education, entrepreneurship and skills building, while shifting the economic climate of unemployment.
The programme includes municipal internships that provide opportunities for local youth to gain practical experience and technical skills, as well as procurement strategies that grow and improve local buying power. By tapping into local skills, facilitating in-depth training that fosters proper management, and ensuring communication between the community and municipal leadership, these interventions have the capacity to decrease corruption and unlock the full potential of local municipalities.
4. Enhancing citizen engagement
Active and engaged citizenry is critical for compelling municipal improvement. Corporate interventions can include public education programmes that inform communities about their residential rights and empower them to access, monitor and report local government services. Companies can also support local government to run community consultation and feedback sessions as ongoing communication platforms that provide distinct alternatives to service delivery protests.
In 2016 the Department of Cooperative Governance and Traditional Affairs introduced the GovChat website through which citizens can communicate with their local government and, in 2018, a WhatsApp version of the platform was also introduced.
The Johannesburg Roads Agency (JRA) launched the Find and Fix mobile application in 2014 to improve its reachability and customer service. The app enables road users to photograph, register the location and notify the JRA of potholes, missing manhole covers, defective traffic signals and other related infrastructural faults.
In 2017 National Treasury initiated Municipal Money – a website to keep citizens informed about local
government’s financial performance and health, holding municipalities accountable by fostering greater transparency. The tool also allows municipalities to be compared to one another. Companies – particularly in the business of ICT – can play a key role in helping government to ensure innovative stakeholder communication and monitoring solutions such as these.
Aside from ensuring a functioning environment in which companies can operate, strengthening municipalities can have significant social benefits. Ensuring access to reliable service delivery and job opportunities where people live will help to address rapid urbanisation and facilitate more equitable growth of urban, peri-urban and rural communities.
• Ntoane is a writer for corporate responsibility consultancy Trialogue. This article was first published in the Trialogue Business in Society Handbook 2019.
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