FAITH MUTHAMBI: Private sector is not squeaky clean
Performance of municipalities should be seen in the context of the overall performance of the economy
We must guard against being alarmist while resolving the challenges facing municipalities. The private sector has been a poor performer, yet it is not subjected to the same critique as the government.
In its editorial of March 4, Business Day reported that “economic growth in 2018 came in at a paltry 0.7%. This is far from the level of about 5% that is needed to make inroads into the country’s unemployment crisis.”
The same paper reported 10 days later that the mining industry has taken another knock. It pointed out that “mining production decreased by 3.3% year on year in January, hit by prolonged strikes and slower global growth”.
The private sector cannot assume a holier-than-thou posture concerning leadership
The situation was not that much different from SA manufacturing production, which grew 0.3% on an annualised basis in January, well below the Bloomberg forecast of 1.2%.
The same newspaper calls for the government to come to the rescue of the construction industry. It points out that the “construction industry, traditionally a key driver of employment and economic growth in SA, has been in steady decline since the heady days of the boom ahead of the 2010 Fifa World Cup”.
Business failure is, however, never described in headline-grabbing statements such as “Business leadership is the problem. It is predatory and united in plunder”, as we have seen in descriptions of the performance of municipalities.
In March, Business Day reported “business confidence is as low as it was when SA was downgraded to junk status by S&P and Fitch in 2017”.
Companies such as “sugar producer Tongaat Hulett, tech provider EOH Holdings, Blue Label Telecoms and Aspen Pharmacare have lost billions in value, sending tremors through an SA market still reeling from the shock of retailer Steinhoff International’s more than 90% plunge since December 2017”.
I have deliberately painted the true picture of the current economic performance in the private sector. This is a competitive sector driven by a profit motive. We are told the best talent is located in this sector and the future fortunes of the country depend on this sector.
This dismal performance should be a wake-up call to all of us. When the private sector fails, we find pseudo-analysts barking corruption and looting. They have been trained to find fault with the government.
Yes, we should address poor performance of municipalities, but this needs to be seen in the context of the socioeconomic realities of the country.
One cannot thus look at the performance of municipalities outside the context of the overall performance of the economy. Given this reality, the private sector cannot assume a holier-than-thou posture concerning leadership. The same argument can be made regarding rarely reported corruption in the private sector.
I have also painted this picture to point out that poor economic performance leads to joblessness. This has a knock-on effect on the ability of municipalities to recoup monies for services rendered. The culture of nonpayment is linked to economic performance.
We do need to address the challenges and poor performance as reported by the auditor-general. We should be concerned that “only 7% of the country’s municipalities are classified as well-functioning, with 31% being reasonably functional, 31% almost dysfunctional while the remaining 31% [are] dysfunctional”.
We should be concerned that “irregular expenditure stands at R25bn, wasteful expenditure is a staggering R1.3bn and only 19% of the municipalities could account properly for how they spent their budgets”.
But we should not be alarmist. Irregular expenditure does not necessarily mean municipalities are run corruptly. Corruption must be reported to the law enforcement agencies.
What is to be done? All structures provided for in the municipal structures and systems acts should be established. Municipalities should establish compliance officers to ensure the performance of officials is monitored and evaluated. Reconciliation of performance must be done monthly. Deviations must be addressed urgently. There should be consequence management.
Our approach must be aimed at addressing the back-to-basics objectives of co-operative governance and traditional affairs, as contained in its presentation to black professionals, at governance intervention and management intervention levels.
Regarding the governance intervention level, our development of legal compliance assessment tools will aid in the development of a structured approach to reviewing systemic and structural challenges affecting the full realisation of the developmental local government system. This will ensure that all municipalities implement all the systems required by the Municipal Systems Act.
Developing action plans that are concrete, targeted and sustainable to address chronic areas of poor performance will encourage behavioural change. Addressing issues raised by the auditor-general will help inculcate a new culture of compliance by introducing our legal compliance programme.
Regarding management intervention, systems, processes, tools and instruments critical for creating an enabling environment for improved performance, ethics and technology, procurement and delivery management have to be reviewed.
Capacity and capability have to be built for the management of a sustained programme of support and interventions — that is, change management.
• Muthambi chairs the portfolio committee on co-operative governance and traditional affairs in the National Assembly.