Finance Minister Nhlanhla Nene has revealed an alarming list of unfunded budgets and anaemic municipal coffers, say the writers. Picture: MOELETSI MABE
Finance Minister Nhlanhla Nene has revealed an alarming list of unfunded budgets and anaemic municipal coffers, say the writers. Picture: MOELETSI MABE

Local government is in deep trouble. Protests against the poor state of municipal service delivery are being staged across the country, Finance Minister Nhlanhla Nene has revealed an alarming list of unfunded budgets and anaemic municipal coffers, and more than a dozen municipalities face an imminent revenue crisis after investing in the apparently insolvent VBS Mutual Bank.

Daily news and traffic reports show how service delivery protests have accelerated over recent months, especially in the North West, Northern Cape and Free State, with protesters appearing to jostle for attention by staging increasingly violent and disruptive protests.

Figures on Municipal IQ’s Municipal Hotspots Monitor confirm an uptick in service delivery protests recorded in 2018. At the end of April, the year looks likely to at least match previous annual protest records. Even more worrying, 94% of them were violent, compared to 76% of all service delivery protests we have recorded since 2004.

The increasingly popular modus operandi of blocking major roads has become something of an arms race to secure a place in news headlines, and presumably politicians’ priority lists, causing major disruptions to commuters and people living in protest-afflicted communities, especially school pupils and frequently targeted foreign-owned business owners.

It’s a high-risk gamble, with opportunistic criminality often taking place and infrastructure collateral damage typically going unrepaired (consider Vuwani schools, for example). Residents are also arguably becoming vulnerable to unrepresentative groups within communities who take advantage of the ensuing anarchy.

The clamour for housing and land are a major theme of protests in 2018 as the issue occupies the national political agenda, but so too are simple service delivery demands — for potable water and accountable municipal leadership.

The North West provides compelling evidence of the legitimacy of such grievances. While analysts speculate as to the potentially centralist implications of the move to place the North West government under administration, and the practical implications for local governance are not entirely clear, the need for intervention is more than abundantly obvious.

So far 12 of the North West’s 22 municipalities are said to be earmarked for intervention by the Department of Co-operative Governance and Traditional Affairs. While it is unlikely they will be put under administration, as suggested by some commentators, keener provincial (and, for now, effectively national) oversight in working on turnaround plans has been suggested by Co-operative Governance Minister Zweli Mkhize. This approach is more feasible — constitutionally and logistically.

Whatever form, closer oversight and accountability is desperately needed. For the ANC, the North West is a site of haemorrhaging endorsement, with a rapid erosion in support between 2014 provincial and 2016 local polls (although these are not directly comparable). At 11.5%, this loss was greater than the national average in the same statistically dramatic period.

More recently, in April there was a spike in particularly violent service delivery protests in the North West, with Mahikeng as its epicentre. Protesters indicated that they were not only unhappy with the provincial leadership, but also with the performance of municipalities.

As a result, there was a significant rise in service delivery protests in the North West in April. As of the end of March, North West service delivery protests accounted for 7% of protests for the year (a similar proportion to its population). But this figure doubled by the end of April to 14% of protests (for the year so far).

Are these protests factional, as some have suggested, or are they at least in part founded on residents’ unhappiness with poor governance?

A review of indicators on Municipal IQ’s Compliance and Governance Index suggests that North West municipalities are especially poorly managed.

They together score the worst of all nine provinces on the index, with noteworthy failures in the areas of auditor-general audit outcomes, measurements of leadership culture and oversight responsibility, as well as on their ability to expend conditional grants and pass budgets on time.

According to Nene’s list of municipalities with unfunded budgets, 64% of the North West’s 22 municipalities have unfunded budgets (again, worse than the already worrying national score of 44%).

This is not just a reflection of poor planning but of imminent cash crunches. In Madibeng, Tswaing, Mahikeng, Ditsobotla, Naledi, Mamusa, Maquassi Hills and Lekwa-Teemane, second-quarter 2017-18 Section 71 Municipal Finance Management Act reports reflect that creditors are owed more than municipal coffers have in cash and cash equivalents. Residents there are facing the very real prospect of service throttling.

This compounds concerns about backlogs, underspending and faltering support for the indigent, which are flagged on our Municipal ICU Unit.

A quarter of the municipalities in the unit are in North West (Tswaing, Mahikeng and Greater Taung), with spending per resident in North West municipalities only slightly ahead of SA’s most impoverished provinces — Limpopo, the Eastern Cape and KwaZulu-Natal.

In addition, the spending that takes place is highly questionable. Calculating unauthorised, irregular, fruitless and wasteful expenditure as a portion of municipal budgets, North West municipalities come out worst of all provinces, with these items being almost 44% of budgets.

Clearly, many North West municipalities are not only broke but also underspending, and where spending takes place, it is often irregular.

Several North West municipalities have also been ensnared in the unfolding VBS Mutual Bank solvency crisis, including Madibeng, Mahikeng, Moretele and Dr Ruth Segomotsi Mompati District, perhaps unsurprisingly given Premier Supra Mahumapelo’s endorsement of the bank in 2017.

To rescue these ailing municipalities, the decision to intervene on a dramatic scale in the North West is warranted. Does it signal the start of a new era of greater control from Pretoria, even if this is through more tightly managed provinces?

There is likely to be a flurry of opinion on the constitutionality of such measures, but judging from performance indicators of North West municipalities, the province is clearly a case of failing local government and there are clear grounds for ensuring that delivery is sped up for languishing residents.

Perhaps what is surprising is that there have not been more protests up until now.

For administrators and technocrats dispatched to the province, their hands are likely to be extremely full, untangling and diagnosing ill-governance to put in place much-needed remedial action.

• Heese is Municipal IQ’s economist, Allan its MD.

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