Piet le Roux, CEO of Sakeliga, which represents more than 12,000 businesses in towns across the country, says it has been forced by years of inaction in the face of collapsing municipalities to take the government to court.
"We're litigating against the municipalities, against the minister of finance and the minister of co-operative governance & traditional affairs [Cogta]," he says.
The group, which describes itself as an independent business community, launched its case in the Mahikeng high court in North West shortly before Clover announced it was closing the country's largest cheese-making business in Lichtenburg, also in North West, because of service delivery failures by the Ditsobotla municipality.
"More than 10 years of collapsing local government have caused many businesses to leave towns across South Africa, or close down," Le Roux says. "More importantly, new businesses have not been starting."
Businesses that have hung on have begun to shift their operations to metropolitan areas to diversify their geographical exposure. They've stopped investing, he says.
87
The number of municipalities, out of 278, that are dysfunctional
The impact on hundreds of towns and local communities across the country has been devastating.
"Towns have not just been stagnating, they've been declining. It's been a long story of decline."
Sakeliga's papers to the court describe "years of neglect and dereliction of duty at all levels of government regarding municipal management and intervention", he says.
The nonprofit is relying on provisions of the constitution and the Public Finance Management Act that allow the national government to intervene in administration at a local level, and on jurisprudence developed by the Constitutional Court to deal with the South African Social Security Agency emergency three years ago.
In that case the court found there was such neglect and urgency that pending proper intervention by the government it was incumbent on the court to provide interim relief.
"The court appointed a special master, which is a concept we're asking the high court to apply here," Le Roux says.
Sakeliga wants a special master who will receive in a special municipal bank account the electricity and water fees paid by residents and businesses, and use that money to pay Eskom and the water boards and for any emergency upkeep of critical infrastructure related to water and sanitation. Whatever is left will go to the municipality.
It wants this arrangement to be in force in dysfunctional municipalities until the municipal finance recovery unit of the National Treasury has developed and implemented a recovery plan for these municipalities.
If not we will see a
— Piet le Roux
fiscal collapse in this
country and we will
not see a recovery at
a municipal or local
government level
Le Roux says the government, because of its inaction, must be held accountable for the collapse of municipalities.
"We're asking the court for findings against the ministers of finance and of Cogta because they have neglected their responsibilities over a long time. So we're asking the court to give an order and these respondents are all implicated in these orders.
"We believe it is incumbent on the ministers of finance and Cogta to act on the findings of the special master. If they don't we will probably find ways to initiate prosecution and lay charges because all of this is their responsibility.
"If there is no action from the side of the government then we will take further action."
Of 278 municipalities in the country, 87 are dysfunctional and many more are in serious financial distress. The majority have had adverse findings made against them by the auditor-general for years.
"Adverse findings have become the norm," Le Roux says.
What Sakeliga is seeking goes way beyond what Astral Foods achieved in a recent court victory that resulted in the Lekwa municipality in Mpumalanga being put under an administrator appointed by the National Treasury.
"We're not passing the ball back to government to implement a new level of administration. We're asking the court to provide durable interim relief until such time as there is actual national government intervention and order is restored."
Bodies such as the Financial & Fiscal Commission and South African Local Government Association argue that a lack of adequate government funding is to blame for municipal service delivery failures.
"One thing I would not recommend is giving more money to municipalities and the structures currently in place," says Le Roux. "It's guaranteed to be wasted."
Sakeliga says in its court papers that many municipalities don't even have proper basic financial systems in place.
As the AG's office has pointed out, its reports on corruption and fruitless and wasteful expenditure are based on numbers received from the municipalities. But records to verify these numbers don't exist, and the AG's office cautions that its reports are almost certainly an underestimation.
"The amount of fruitless and wasteful expenditure is simply staggering in these municipalities," says Le Roux. "That is the source of the problems. Not a lack of funds but a lack of accountable expenditure."
Sakeliga has been getting interdicts to prevent electricity and water being cut off because of nonpayment by municipalities.
Three weeks ago it asked the Mahikeng high court for an urgent interdict to prevent Sedibeng Water in North West carrying out a threat to cut water supplies to nonpaying municipalities, which would have affected 10 towns.
"That's like pulling the trigger for the implosion of businesses," he says. "Cutting water leads to the very quick collapse of a town."
Sedibeng Water withdrew its threat on the eve of the court case.
"They admitted it was a drastic action but said they needed to be paid and there'd been no response to letters they'd sent to local, provincial and national government."
Getting these interdicts is "all very well but we need something more to solve the problem. An interdict is only putting a finger in the dyke.
"We need to get the funds to the providers. If we do not we will see a fiscal collapse in this country and we will not see a recovery at a municipal or local government level."
In addition to a special master, Sakeliga also wants the court to list all instances of corruption and fruitless and wasteful expenditure and compile evidence so that those responsible can be held accountable and removed from the system.
He admits it's a tall order, "but we're in a crisis . If you don't remove those who are corrupt and incompetent from the system, nothing will change."
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