Is this the way to rebuild SA’s municipalities?
Municipalities are among the most neglected and corrupt parts of government. But a proposal to give ratepayers and local businesses an advisory role could force a turnaround
With almost two-thirds of SA’s municipalities either distressed or dysfunctional, the appointment of nearly 100 technical experts to struggling municipalities last week is a welcome intervention. But unless the municipal culture of impunity changes to a culture of accountability, nothing will really get better.
Last week, co-operative governance & traditional affairs minister Zweli Mkhize deployed 81 engineers and town planners to 55 struggling municipalities across the country.
The aim is to build permanent technical capacity in these municipalities so that they can spend their infrastructure budgets.
Over the past five years, R3.4bn in infrastructure grants has been shifted from underspending municipalities to those better able to use the money. This is not ideal, as it penalises weaker municipalities and punishes poorer communities, said Mkhize in a speech welcoming the new cadre of technicians. He warned them that they could expect to find "serious problems" in these municipalities due to ageing, badly built and poorly maintained infrastructure.
This is particularly the case in predominantly black residential areas, where people suffer from constant electricity blackouts, lengthy water outages due to broken pipes, and sewage spills and blockages, he said.
In 2015, a study by Allyson Lawless of the SA Institution of Civil Engineering found that the number of registered engineering staff across SA’s municipalities had fallen from 455 to 294 over the previous decade. The average age of municipal engineering staff fell from 46 to 38 over the same period.
SA has a severe shortage of engineering skills, with just one engineer to service 3,166 people, compared with 1:227 in Brazil and 1:543 in Malaysia.
Historically, about 70% of SA’s professional engineers were employed in the public service, where they played a dominant role in planning infrastructure projects. Now only 55 municipalities out of 278 (20%) have engineers leading their technical divisions. Mayors, councillors and financial officials have increasingly taken over the technical decisionmaking.
Lawless warned at the time: "I think a lot of infrastructure is being put in that is simply not suitable, and equipment is deteriorating much faster than it should because it’s not being maintained.
"We are rapidly destroying a valuable asset by putting the money in the wrong places."
In total, Mkhize has budgeted for 150 additional technical experts — roughly three new technicians for each of the targeted municipalities. This should help; but the Organisation Undoing Tax Abuse (Outa) is not impressed. It warns that infrastructural decay is a symptom of deeper systemic problems in local government that cannot be fixed by engineers and town planners.
"We are concerned that the plans do not go to the core of the problems, so will not be sustainable," says former ANC MP Makhosi Khoza, now head of local government programmes at Outa.
"How do you send engineers into a municipality that doesn’t have any leadership or management?" she asks. "They can fix a pipe, but three months later you’ll be back to square one."
Khoza says municipal collapse is due to a lack of leadership because of unsuitable appointments; poor oversight by provincial and national authorities; a lack of consequences for wrongdoing (even for those officials caught red-handed in corruption); and a lack of transparency that discourages ratepayers, local businesses and other communities from being involved in finding solutions.
In May, Khoza resigned from her seat in parliament and left the ANC because "corruption had become institutionalised in government".
"If we were to prosecute all known corrupt cases, including those implicated in the Gupta e-mails, almost 80% or 90% of the ANC leadership at all levels of government would have to replace their shiny tailored suits and pretty dresses with orange overalls," she said at the time.
Mkhize stressed in his speech that the deployment of the 81 technical experts forms part of a larger programme, with the National Treasury, to send in technical support teams, which include governance and financial-management experts, to strengthen municipalities.
In addition to infrastructure and service delivery, these teams are to tackle governance and administration issues, financial management, poor revenue collection, political instability and leadership, he said.
But this kind of intervention has been taking place for years and, judging from the audit reports of auditor-general (AG) Kimi Makwetu, it simply isn’t working. The problem appears to be endemic corruption.
Releasing the 2016/2017 local government audit results in May, Makwetu said that despite his insistent caution since 2013 about glaring governance, leadership and oversight lapses at municipalities, his counsel had largely been ignored.
"It is now five years later, and we are still faced with the same accountability and governance challenges we flagged throughout these years," the AG lamented. "There has been no significant, positive change towards credible results; instead, we are witnessing a reversal in audit outcomes."
Not only did the number of unqualified audit opinions decrease from 68% to 61%, but the quality of municipal financial statements was even worse than in the previous year. Only 22% of municipalities could provide financial statements without material misstatements.
The AG identified three main reasons for this regression: municipalities’ slow response to improving internal controls and addressing risk areas; inadequate consequences for poor performance and transgressions; and inappropriate appointments or vacancies in important positions.
Of most concern to Makwetu is that his calls for follow-up investigations and stricter consequences for wrongdoing have not been heeded. In 2016/2017 he reported possible fraud or improper conduct at 145 municipalities. Nearly all of these municipalities had received the same caution the previous year, but 61% had failed to investigate these cases.
The auditing environment is also becoming increasingly hostile. In some cases, audit teams had their motives and processes questioned, or were pressured to change their conclusions to avoid negative disclosures.
Makwetu’s report came a few weeks after finance minister Nhlanhla Nene told parliament that 112 municipalities did not have the funds to carry out service delivery plans for the current financial year.
Despite this, Makwetu still believes municipalities can be turned around with the support of provincial government if the basic principles of accountability, built around strong internal controls and good governance, are in place.
Outa’s view is that ratepayers and local businesses – the main sources of municipal funds — should be invited to play a far greater role in rehabilitating dysfunctional municipalities.
Khoza points out that when a province invokes section 139 of the constitution to put a municipality under administration it is supposed to dissolve the council, but this seldom happens. "That’s why their interventions never work," she says. "Six months later the municipality is back to square one, or even worse than before, because the same people that caused the problem are advising the new administrator."
Outa is proposing that when a province intervenes it should form an advisory committee on which ratepayers and local businesses form the majority.
They should have the leading voice in identifying the problems and setting priorities – whether it is to pay Eskom or Rand Water, or to clear outstanding debt.
Khoza says the financial viability of municipalities depends on ratepayers and local businesses, as nearly all municipal income comes from electricity charges and property rates.
However, these groups are not even represented on most ward committees.
If they decide to pay Eskom directly, or go on a tax revolt, or take care of their own roads and waste collection inside gated communities — as increasingly happens — it will financially devastate municipalities, she says. "Then there will be no money to deliver services to poor communities. The poor will suffer the most."
In short, Outa wants government to understand that communities are the lifeblood of municipalities and that it must bring them on board if it hopes to devise a sustainable financial model for local government.
Last week, Khoza met National Treasury officials and Gauteng premier David Makhura to explain Outa’s proposed new model. She says both meetings were "extremely positive".
Her only frustration is that Outa has been trying unsuccessfully since April to secure a meeting with Mkhize.
"He simply doesn’t have time for us," she says. "That’s disappointing."