London - The clamour in liberal democracies continues to be for greater decentralisation where local governments and municipalities, it is deemed, are in a better position to spend resources and attract investment to meet the basic needs of businesses and communities.
This is to support sustainable job creation, efficient and affordable services delivery, and to help lift people out of poverty and improve their life chances and well-being.
The South African reality suggests that the current state of our municipalities is arguably the single-most evident reversal of the country’s fortunes since the onset of democracy in 1994.
The data of desperation and dysfunction in delivery is clear. The latest State of Local Government Report identifies that of the 257 municipalities, 175 are in financial distress.
This compared with 66 municipalities in 2010/2011 ‒ a tripling of municipalities in financial distress. Similarly, 43 municipalities are currently facing financial and service delivery crises, and another 112 municipalities have adopted budgets this year which they cannot fund.
The National Treasury has identified unfunded budgets as the primary catalyst for financial distress. Over 150 municipalities are bankrupt or insolvent, unable to pay creditors, or even to service pensions.
Several have insufficient funding to invest in the maintenance and upgrades of local infrastructure to ensure service delivery. Most disconcertingly, according to the Auditor-General, over a quarter of them “are at significant risk of not being able to continue operating as going concerns”.
On aggregate, says the Treasury, municipalities spent 64.7%, or R342 billion, of the total adjusted expenditure budget of R529bn at March 31, 2022 (Q3 results for FY2021/22).
In respect of revenue, aggregate billing and other revenue amounted to 72.3%, or R377.4bn, of the total adjusted revenue budget of R521.9bn.
One can excuse an exasperated Finance Minister Enoch Godongwana, speaking at the Chris Hani District Municipality economic development and investment summit in Komani last week, for yet again reading the riot act to his stunned comrades in the Eastern Cape. “The truth is,” he lamented, “despite the powerful democratic movement that toppled apartheid and gave birth to progressive legislation, and a constitutional framework that foregrounds socio-economic rights, poverty and inequality in recent years have deepened. This reversal is perhaps most evident in the state of our municipalities.”
Godongwana warns about the regular street protests demanding basic services and opportunities, factories and SMEs closing shop and retrenching workers because they cannot rely on the timely provision of electricity and water, roads falling into disrepair because councils have misspent budgets and lack the technical skills to maintain critical infrastructure, the crumbling rule of law and falling standards of quality of life, and under-resourced police stations and hospitals stretched to breaking point.
This situation has been festering for two decades of ANC rule. It screams out for a new approach transcending a cross-party dispensation. That would require a change of mindset which puts the interests of local communities above those of parties and ideology.
Where extreme governance and oversight dysfunction persists, the municipality could be put on special measures, or a team of proven technocrats appointed to sort out the mess.
Whether the ANC and its allies like it or not, the DA-ruled administration in the Western Cape and the Cape Town City Council are by far the best-performing provincial and local municipalities in the country. This does not mean that this “success” can be easily or successfully translated to other parts of South Africa.
DA rule is not a panacea and the party’s grassroots national base is woefully small, tempered by the perception, rightly or wrongly, that it is largely vested in the socio-economic interests of the white population.
The national performance of the DA, the official opposition, in last November’s local elections was disastrous. Its popular vote declined to 21.84% in 2021 from a peak of 26.9% in 2016.
The time the ANC can take their supporters for granted is long gone. Its electoral support at local government level is steadily eroding. Its share of the popular vote in the last five local elections hovered between 59.39% in 2000, 64.82% in 2006, 61.95% in 2011, 53.91% in 2016, and 46.04% in 2021 when it dipped below the 50% threshold for the first time.
ANC ministers are adept in the rhetoric of aspiration, often juxtapositioned by an admission of delivery deficits, usually blamed on the apartheid legacy and more recently on endemic corruption and state capture, notwithstanding external factors such as disruptions caused by Covid-19, the Ukraine conflict, and the resultant global shocks.
As the former economic and reconstruction policy czar of the ANC, Godongwana rightly warns about “people losing faith in the promises of democracy”.
Municipality dysfunction has worsened in the last five years in tandem with a dramatic slowdown of GDP growth. Perhaps in a dig at his ANC comrades including his president, Godongwana rued that “there is, sadly, a growing lack of political will to adhere to both the letter and principle of fiscal architecture that governs local financial management and promotes transparency and rationality. It also means adhering to higher levels of governance and budgeting standards: spending money efficiently and in the interests of sustainable and inclusive growth. To restore that faith in democracy, we need our municipalities to work.”
Attracting investment, forging industrial and digitisation innovation, building capacity, as he contends, is not enough. The challenge is much more fundamental which has deserted the ANC since the departure of Madiba. That of governance and oversight – institutional, organisational, administrative, fiscal, operational, enforcement and management ethics.
A key lost opportunity post-Madiba’s rule was an over-reliance on cadre deployment instead of building up the requisite non-political pool of qualified public administration officials.
The IMF’s June Financial Sector Assessment Programme on South Africa warns that “the financial condition of some municipalities is causing continued deterioration in service delivery and needs to be remedied”.
The National Treasury is quick to trumpet South Africa’s second position after Georgia and just ahead of New Zealand, in the Open Budget Index and Survey 2021 of the International Budget Partnership (IBP). The survey, published in July and conducted among 120 countries, measures budget transparency, participation, and oversight.
Short of flattering both Georgia and South Africa, the survey’s methodology is subjective to a certain extent, but is a valuable contribution to budget inclusion advocacy, which can yield democratic and equality dividends in today’s time of uncertainties, need, scarce resources and disruption.
In 2017, this very IBP published “A Guide to Local Government Budget Advocacy” for South Africa. One wonders what would be IBP’s take on the current state of local government budget transparency and oversight.
Parker is an economist and writer based in London
Cape Times