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The problem of failing municipalities

Some spectactular cases, with at least 40% unable to account for their finances properly.

A research report by the Public Affairs Research Institute (Pari) on the financial state of South Africa’s municipalities has received very little attention in the media, despite its damning findings and its importance for residents and ratepayers – especially with voters heading to the polls next year to elect new councillors.

The report found that governance and financial administration at most municipalities in SA is lacking.

Read: From bad to worse

Nearly half of the municipalities got their political councils to approve unfunded budgets in the 2019 financial year, meaning they planned to spend money they did not have and would not get.

Predictably, the result was chaos.

The report quotes figures from the SA Municipal Workers’s Union (Samwu) showing that 30 municipalities are currently unable to pay salaries, and many more that cannot pay suppliers such as Eskom.

Read: SA municipalities face collapse, index shows 

It is common knowledge that Eskom is financially vulnerable. In turn, Eskom says part of its financial problems are that local municipalities are unable to pay their debts to the utility, even in cases where residents have paid their electricity accounts. At the time of the writing of the Pari report, municipalities owed Eskom more than R34 billion.

Finance Minister Tito Mboweni called on Eskom to collect these debts by making it one of the conditions of the recent bail-out by taxpayers.

Pari, a research organisation that studies the effectiveness of state institutions to deliver services and infrastructure, shows in its report how difficult this would be.

‘Difficult’ in a nutshell …

“Infrastructure has fallen into disrepair, particularly infrastructure that is necessary for municipalities to generate revenue,” it states. “It cannot be repaired, since there simply isn’t any money available.”

It notes that 10 municipalities received an adverse opinion from the Auditor-General (AG) for their 2018 financial year (the year preceding the research study). This means there were serious shortcomings in their reports.

Even worse, the financial statements of another 27 municipalities received what the AG calls a disclaimer opinion. In these cases, the auditors could not find enough paperwork to come to any conclusion about the accuracy of the financial statements.

Among the 278 metro, district and local municipalities, 25 were unable to present financial statements by the due date of six months after the end of the financial year. No fewer than 15 of these also received a bad auditing outcome in their previous financial year or did not publish financial statements at all.

Misappropriation of ‘considerable amounts’

Pari says this includes municipalities in which there was a complete breakdown in good governance and municipal management and, in many cases, misappropriation of considerable amounts of public money.

“They indicate a deep-rooted and long-term serious problem that no one seems able or willing to address,” note the researchers in their report.

“These are places where the municipality struggles to deliver even the most basic services, a significant percentage of municipal infrastructure has disintegrated alarmingly and the municipality can barely be considered a going concern.

“Often the causes of these problems can be traced to maladministration, corruption and theft of public assets. In many examples, the municipality has become the central site of political battles and employment and contracts are traded as part of a wider jostling for political influence.

“There is little regard for even the most basic principles of good governance or the needs of the community,” says the report.

The problem in trying to fix the problem …

The Pari research was conducted to try to determine how to fix problematic municipalities and why placing bad municipalities under administration did not seem to work.

It lists several problems with administrators in several municipalities where the research was conducted, two of which seem to stand out:

  • The administrator did not have the right set of skills to tackle or solve the problems; or
  • Things had become so bad that it was too late to fix anything.

In addition, the executive decision-making was still left with the elected councillors or the same ineffective municipal managers. Pari even highlighted a few cases where the administrators were corrupt as well.

Political power trumps expertise

The process of decision-making in municipalities is, at best, questionable. Most decisions need to be ratified by political office bearers. Politicians without experience or training in any particular field can override officials’ decisions, such as the maintenance schedule for roads, water pipes or electrical networks.

There is no minimum requirement for a politician in SA, and voters seem willing to vote for illiterate candidates who cannot even read the documents of items that will be tabled in council meetings.

In some municipalities, competition between councillors of the ruling party for the few full-time positions might create problems too. Around a quarter of councillors occupy full-time positions and chair different committees. They also earn double the amount the part-time councillors earn.

The competition for jobs can be even worse in a city council with different political parties in coalition, given that the speaker, mayor and deputy mayor earn even higher salaries.

Such a weak system can – and often does – lead to serious problems, as the Pari report shows. It includes shocking pictures of the state of roads, electrical equipment and water pipes due to the lack of maintenance or implementation of basic law and order. The report can be read here.

Remedy ‘does exist’ (but does not work)

The report states that a remedy does exist in the form of an overriding mechanism to enable provinces and central government to act when municipalities fail. Unfortunately, the report comes to the conclusion that the remedy of putting a municipality under administration does not work in practice.

Section 139 of the Constitution makes provision for intervention in the affairs of municipalities, but only if the municipality has deteriorated to such as extent that there is a failure to deliver basic services. In other words, when it is too late.

“There is a growing sentiment that the legislation is largely useless, something that we turn to when we have been forced to admit defeat on all other fronts, but we still have to make a public display of ‘doing something’,” states the report.

“Many officials voice the sentiment that Section 139 is a nice idea, but essentially has no relevance in the real world of municipal failure,” it adds.

It says the problem is that supporting legislation has never been implemented as intended, and many of its provisions are either routinely ignored or applied incorrectly.

Legislation provides no opportunity for intervention when the first cracks of failure start to show, such as financial difficulty, but only once it has happened. Even then, the process of applying for administration is lengthy and somewhat subjective.

Pari notes an instance where the province refused to place a municipality under administration because “things were not that bad”. Apparently the situation was compared to a nearby town, where protesters carried automatic assault rifles when voicing their concerns.

On the positive side, the Policy Framework for Municipal Borrowing and Financial Emergencies introduced in 2000 rules that national government will not guarantee any municipal debt, placing the onus on municipalities to manage their operations properly to ensure access to financing from suppliers, banks and investors.

Eventually, the responsibility lies with voters to ensure responsible political representation to oversee the management of municipalities.

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SA has come off the rails and complete collapse is imminent!

Only once this train wreck has come to a complete halt can it be righted, sadly it usually takes events like Rwanda to reach this point. (Zim is close, but not quite)

How many of our politicians and affiliates, at all levels(municipal, national, diplomatic, ‘et al’….), can even read our constitution? Let alone know what is contained therein? Yet, they swear to uphold it! Even to God, they swear!

Zombies, hold the power in this country, for they have no soul and therefore, have no remorse or guilt when they enter that church on a Sunday!

The answer is very simple.
Political parties and or the individual’s should be banned from being eleceted where a municipality that they run has reached a score of 75% functionality or below.
This should be amended with:
i) if the municipality has shown an improvement of more than 9% from the previous year, then the political party may again be put on the voters roll.
ii) if the municipality has deteriorated by 5% from the previous year, then the political party and or the individuals will be banned from election.

This way political parties are forced to employee qualified employees.

Funny you mention Rwanda. In 1994 our two countrys were both in dire straights. Hope was a word not used commonly among the people. Look now, 25 years later at how vastly different the prospects for the citizens of each of these two African nations. Scary to see how the ANC have destroyed everything.

Municipalities only fail when the mayor doesn’t get a new Merc every year.

Also when there is no money to fund the juicy tender that keeps key councillors engaged in wanting to attend meetings.

Nothing to do with service delivery, potable water and refuse collection. These are (like the Eskom blackouts) the responsibility of everyone.

A serious problem is that the honest ratepayer has no means of withholding payment to stop the looting.

yesterday i had to pay a private garden refuse remover R1 500 to collect municipality garden refuse and street rubbish at the back of my house in durban area (after a 4 month struggle with parks department to collect it) – the private guy did the work within 90 minutes leaving out the trip time to the official durban dump. What really made me furious was while the work was done by the private collector, the arrogant,lazy and useless parks department 10-ton truck driver drove past, stopped, laughed at the scene and drove off to his 750 meters from the scene. his attitude was: “Another victory for our incompetent parks department to the cost of the ratepayer”.- the same people who do not even understand that a self-driven mower’s gear-ratio is not meant to be used as a transport vehicle from point a to point b on a public road never mind other bylaws.

When do you apportion blame to the political party that has put these losers in place and leaves them to destroy the country??? This is the ANC at work. You know the peoples’ party, helping the poor. OR helping make people poor

By their definition any ANC member, particularly those deployed by the party are the poor. The rest of the country are merely serfs to ensure that the poor ANC members are fed.

In my hometown (with a municipal budget exceeding R1b) the executive mayor was a PA in the private sector, before becoming a councilor (an mayor). I’d really like to know how many CEO’s we have in the private sector, managing a R1b business, whose highest position was that of a PA before becoming a director/CEO. It is extremely naive to think that uneducated, inexperienced individuals can suddenly become excellent managers, yet here we are.

Regardless of which political party is in power they pool of artisans to run infrastructure is no longer available in this country. A few municipalities still have some competent people, but at the expense of the platteland. Take a look at small town Free State or Northern Natal for a glimpse of what is coming to even the Western Cape.

They fail because of corruption.So the the ratepayers suffer more.

In 1994 under pressure from the world, who would not be held accountable, we gave the keys of the Rolls Royce to the kids.

Expect nothing less, in churches after the collection is done it is not given to the poor, underprivileged or uneducated to count.

Travelling in this country used to be a pleasure stopping in little dorps that were clean and had nice hotels and corner cafes to have a meal or a cool drink. staying over was fun, nice dinner a walk in the silent street before bed. A peaceful sleep and a nice breakfast before your days drive.

Alas no more……………….thanks ANC.

Liberation before edukashun

And its not just money they cant run. They can run nothing.

Example.

The Beach Hotel on the Durban “Golden Mile” (now ….. Mile) is closing after more than 100 years in business. Talk is it will be turned into student accommodation. What went wrong you might ask.

The PAYING TOURISTS moved elsewhere.

They spend billions trying to attract tourists but in the process chase them away. Now the billions spent will be used for student entertainment and even less tourists will go anywhere near the dump.

Hopefully, they are coming to Cape Town …;-)

Wasn’t it all in the name of “Transformation”, cadre deployment, AA/BEE…?

The same “deep rooted structural problems” that besiege Eskom (and other SOE’s non-profitability) is found in Municipalities, just on a micro level.

But wait….the solution for a turnaround strategy for any municipality will be: “LET’S BREAK IT UP INTO THREE!” 🙂

Imagine all the possibilities of splitting each muni into three:

Along the lines of Land Affairs / Water & Sewerage / Treasury??

err, no..

Sewerage / Electricity / Potholes??

or..

Police / Fire / Ambulance??

or..

Mayor’s office / Municipal Manager’s office / Councillors?

Best still…

Only SOLID WASTE MANAGEMENT is split into three, based on the size-range of the……..? Or split according to smell?

Travelling last weekend I came across an accident. A superlink had gone off the road, spilled its contents. Looked like mielie meal.

One police van, two policemen, no one flagging down traffic.another accident waiting to happen.

To top it the police were watching locals loot.

That gentlemen is the calibre of our police.

The collective falling apart of SA’s municipalities as a result of ANC mismanagement and corruption is one of the key contributors to SA’s falling apart.

….rather, it’s THE MAIN contributing factor (especially people in positions they’re not qualified for / woefully under equipped)

“… voters seem willing to vote for illiterate candidates who cannot even read the documents of items that will be tabled in council meetings.”

The problem with democracy is right there in that quote.

Sell your house and rent. Pay izinyoka to “fix” your electricity box and water meter. Free water and electricity. You think you now upstairs cause you pay rates and own property. You a muppet. This is AfriKa but some of you think you living in Europe.

As your President Mr. Ramapoza said just this week: “You are part of the problem”

As long as the Socialist (Marxist) ANC remains in power the economy cannot achieve its potential. Ideological deployment of uneducated and inexperienced cadres will systemically erode the ability to grow in any meaningful way. The manner in which the ANC evades accountability displays its natural amorality.
And the EFF are worse.
What so many of them will not understand is that neither government nor banks ‘own’ money. It belongs to the taxpayers and depositors.

The solution to the problems at municipalities is simple – make all councilor position honorary again, as pre-94, with no pay except costs.

You attract a type of councilor that has life, business and professional experience, who put the interests of the community before their own.

The town gains better management and save much money, that can be used to improve services, by not having to pay councilors.

Nice reporting!

But completely predictable. When the masses voted for the demagogues who bamboozled them with empty promises only to get themselves, their families and friends (F&F) – all incompetent – into positions of power where they could have easy access to the Municipal cheque book.

Should we be surprised … like Dear Cyril?

Since 1912 the ANC has demanded the right to govern this country, and now they have it and it is a total cesspool of incompetence, corruption and mismanagement. I don’t think the NP was wrong to say the ANC will turn this country into just another African basket case. They have achieved this in just 25 years. And if Mandela sat 27 years in jail to put these corrupt clowns in charge, he wasted his time.

I suggest mboweni you view today’s videos of how the JHB metro police officers were set upon by your people who were trying to enforce the law…I suggest you look up anarchy before you mouth more platitudes to the beleaguered capitalist taxpayers of the country your anc has wrecked and who keep your stinking marxist revolution afloat!

…phht, sort you own anc problems out, you made them and your anc are after all the supremist knowitalls!

Watch Mbete’s interview with Aljezera and cringe…I did and so should you!

Your anc party has become the laugh stock of the civilised world!

Political parties AND the people that they endorse to run for office (any office) MUST be held accountable. The Party as a collective / institution and the politicians / councillors in their individual capacity.

The Companies Act, in simple terms, allows that directors can be held accountable in their individual capacity for various flagrant forms of ‘misconduct’. As long as there is no party or individual accountability the problem will remain.

I agree with comments above re the fact that the municipal ‘leaders’ must be educated, etc, etc. But the solution starts equally with having competent people in place WITH full accountability.

I suspect and fear that the approach will be Adoption. Good councils will merge with their neighbors.

In some regards this does make sense, bear with me. Within 75km of me there are more than a dozen councils. It cannot make sense to run billing and IT and ledgers and payroll systems in all of them. Pick one good system and roll that out for all.

There should also be leverage in skills. Do all dozen councils make proper use of those rare engineer skills that two have?

The down-side for those in good councils is that adoption carries the cost of bad apples.

Why would it not happen? Those 278 councils carry not only the burden of their assortedly skilled technocrats, but also 275 x say 12 average politicians. And politicians love their power :/

Nah, we have done that and it didn’t work. Metros were formed and the only success was the fact that new job descriptions followed, leading to a round of job evaluations, which lead to higher pay grades, which led to a higher salary bill. Service delivery didn’t improve. Rates and taxes didn’t come down. You still have a bunch of buffoons running a massive organisation, without know-how. We need people in charge who can actually do the job and SPAP is correct – accountability should also be added to the mix.

When voting for councillors, their qualifications should be displayed on the ballot. We can’t have these politically savvy but financially illiterate shysters running municipalities.

Thinking the public sector will drive grass roots development, integrate sound energy principles and physical labour activity to available technology.

Innovate the environment for the 4th Industrial revolution and full employment even? Think again…

Without a major shift from scarce and competitive primitive thinking to a shared, cooperative and abundant non-partisan vision, the ceiling is capped with corruption, crime and a general lack.

Unlocking variables such as non fossil energy, generating fertility in the earth with programmes such as poo-manure where commercial farmers start buying the waste from townships and settlements instead of polluting our environment with chemicals.

Subsidised corporate support for local upcyclers and recyclers (a form of tax on their polluting operations past and present)are some of the non political social projects required outside of partisan politics that will generate employment and growth onto a sustainable quantum in which the community thrives.

To do so requires disrupting the rhetoric and current political quagmire/ stalemate at local administrator and planning level.

Space is opening for private partnership with significant players in the local “gig” economy…this is the “Green Economy” that needs everybody’s support!

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