SA municipalities failure

SOME municipalities have been floundering for years in a financial state of flux, yet not one solution proposed to fix the problem has been implemented successfully.

An analysis document compiled by the Treasury found that 86 of SA’s 278 municipalities were in financial distress. Governance shortcomings abound, including the underspending of operational budgets and the failure to appoint skilled, permanent staff to administrative positions.

Soon after his appointment this year, Co-operative Governance and Traditional Affairs Minister Pravin Gordhan unveiled a “Back to Basics” plan to improve municipal services as protests raged in townships and rural towns.

The Treasury says that municipalities in provinces with higher per capita expenditure and a higher proportion of “affluent households” tend to have the lowest service delivery backlogs.

In the 2013-14 financial year, 90 municipalities underspent their operational budgets, 25 of them underspending by more than 25%, the Treasury says.

South African Local Government Association (Salga) programme director for municipal audit support Mohammed Lorgat says the Treasury’s figures are “indicators, and not confirmation, of financial distress”.

“Our diagnosis indicates that there are two causes for this: billing, and the recoverability of debts. When municipalities cannot bill accurately and completely for services provided, they will not be able to generate appropriate income to cover the expenses incurred for providing these services.

“In addition to this, municipalities face an additional challenge with regard to the recoverability of billings. This worsens the income challenge, which in turn affects the ability of municipalities to pay their creditors and to continue providing services.”

Mr Lorgat says the Treasury acknowledges that proposed interventions have had a minimal effect; it does not suggest that they have not worked. “Salga is firmly of the view that appropriate interventions in the form of support and capacity building will go a long way in assisting municipalities to improve their financial management and governance,” he says.

The African National Congress (ANC) national executive committee decided in September that ward committees would be given the task of analysing the performance of municipalities in areas the ANC governs, to better understand the motivation for protests.

ANC spokesman Zizi Kodwa says that while the party “does not believe in micro-managing local or national government”, it takes action when political challenges on the ground undermine service delivery in a municipality.

“The ANC is able to take decisions against its own to correct itself. Where municipalities have been found to be dysfunctional for whatever reason, we intervene. We cannot compromise on serving the people,” he says.

The Treasury says that political interference and municipalities that are “top heavy” with politicians, rather than skilled officials, impede revenue collection.

Mr Kodwa says ANC regional office bearers cannot hold technical and administrative positions such as municipal managers and chief financial officers.

In April, 99% of all municipalities sought special exemption from the competency level requirement for officials in key positions and were given five years to comply.

Democratic Alliance spokesman for co-operative governance and traditional affairs Kevin Mileham says while the Treasury believes that minimum standard requirements will improve financial management, the measures were proposed before and never implemented.

He says the funding model for municipalities, through national government allocations, needs to be re-examined. “Demands on municipalities are greater than their financial resources. Local government gets 9% of national revenue and the rest goes to provincial and national government.”

Mr Mileham says the skills deficit has forced many municipalities to appoint acting chief financial officers and acting municipal managers, as those with qualifications and talents are continuously poached by metro councils.

South African Municipal Workers Union national spokesman Papikie Mohale says because municipalities are at the coalface of service delivery, they should get a larger portion of allocations from national government than the provincial governments.

http://www.bdlive.co.za/national/2014/12/11/municipalities-prove-impervious-to-intervention

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