RW BOFFIE STRYDOM: How overregulation hampers service delivery in SA municipalities

SA’s local government system finds itself trapped in a paradoxical web of its own making. While regulations aim to ensure good governance, the mounting regulatory burden has become a primary obstacle to service delivery. One needs to ask whether the plethora of laws and regulations hampers or facilitates the achievement of local government’s developmental needs. Ironically, the laws in place to protect ratepayers are hampering service delivery.

SA municipalities operate within one of the most heavily regulated environments in the developing world. Since the Municipal Systems Act of 2000, local governments must navigate more than 130 different regulations, laws and reporting requirements. Each year brings new compliance demands without removing outdated ones, creating a system where form triumphs over function.

The Municipal Finance Management Act, while laudable in its intentions, has created a bureaucratic apparatus so demanding that smaller municipalities often spend more resources on compliance than on actual service delivery. The Financial & Fiscal Commission’s 2024 municipal capacity assessment found that regulatory compliance now consumes about 38% of municipal administrative capacity, with some smaller municipalities dedicating up to 75% of their limited human resources to regulatory processes rather than operational improvements

The department of co-operative governance & traditional affairs acknowledged in its May 2024 “State of Municipal Performance” report that municipalities with perfect audit outcomes often performed worse in actual service delivery than those with qualified audits.

The obsession with clean audits has created perverse incentives where municipalities prioritise compliance over creativity. Municipal managers, facing personal liability for regulatory breaches, have become risk-averse to the point of paralysis. As one municipal manager put it, “It’s safer to do nothing than to take a chance on improving services if there’s any procedural uncertainty”.

Nowhere is the stranglehold of overregulation more evident than in municipal procurement. The Treasury’s updated 2024 Preferential Procurement Policy Framework has created a procurement system so complex that the average municipal tender now takes 11-15 months to complete.

The Centre for Development & Enterprise’s March 2024 assessment has calculated that regulatory compliance adds about 28%-34% to the cost of municipal infrastructure projects. This regulatory burden is further compounded by high legal fees, as municipalities rely more on consultants to provide legal opinions and test innovative solutions against the complex regulatory framework.

The regulatory regime has fundamentally altered the skills required in local government. A first-quarter 2024 study found that 71% of recent municipal appointments were in regulatory or compliance roles, while critical technical positions remained vacant.

Increasingly, inadequate funding from the national government is affecting service delivery, and municipalities will need to become agile and innovative, which overregulation impedes. Another impact of overregulation is that innovative solutions need to be tested — at the high cost of more legal fees by consultants.

Given endemic corruption and the lack of sufficient qualified personnel in local government, one can understand overregulation to a point. But the emphasis is misdirected — the focus should be on promoting and enforcing ethical leadership, effective governance, the appointment of qualified individuals, growing and developing managers and officials, and instilling a culture of service delivery.

At Weskus district municipality we emphasise that there is no secret weapon or formula for success, but rather the power of strategy, good governance and collaboration. Our exceptional track record of 14 consecutive clean audits while maintaining high service delivery standards demonstrates that good governance and operational effectiveness can coexist with the right systems and leadership.

The Wavemaker Summit has produced a comprehensive framework for regulatory reform that maintains necessary safeguards while removing counterproductive constraints. Our aim was to ensure that the conversations were insightful, the challenges collectively addressed and the solutions practical and sustainable — not just as professional colleagues, but also as co-builders of a better future for our communities.

The need for the private and public sectors to collaborate in a positive way has become a cliché, but one sees little real progress in this regard.

Increasingly, municipalities will need to reach out to private sector leaders, whether it is for investing in the region or collaborating on projects. At the Wavemaker Summit, private sector participation was a cornerstone, recognising that business success is intrinsically linked to municipalities creating environments where community aspirations are satisfied. The summit facilitated numerous partnerships between municipalities and private enterprises aimed at collaborative service delivery improvements.

SA’s municipalities stand at a crossroads. The country can either continue down the path of ever-increasing regulation that strangles local government’s effectiveness, or embrace a new regulatory philosophy that enables rather than impedes service delivery.

Without meaningful reform, the promise of developmental local government will remain unfulfilled, and millions of South Africans will continue to be denied the basic services they deserve. As I emphasised at the Wavemaker Summit, the time has come to acknowledge that sometimes less regulation means more development.

• Strydom is executive mayor of the West Coast District Municipality.