NEWS & ANALYSIS

The crumbling of local government

William Saunderson-Meyer says many of our towns and cities are being run by rogues

JAUNDICED EYE

Local government isn’t sexy. Which is unfortunate, since it sure as hell is important.

Media scrutiny of municipal processes is virtually non-existent. For local government matters to register in the public discourse requires drama – a celebrity mayor squabbling with her party bosses, service delivery protests closing a national highway, and the like.

Despite local government being a key driver of national development, in terms of African National Congress policy, in reality it is mostly ignored. This is one of those Cabinet portfolios that, with the recent brief exception of Pravin Gordhan, is a safe place to park party idiots, confident that their incompetence will largely escape scrutiny.

Yet this is where citizens interact most with government. Water, sewage, roads, rubbish removal and, often, electricity, all come to us through the municipal pipeline.

And what a ramshackle pipeline that is, bunged up where it is not seeping. By the government’s own estimate, a third of our municipal entities are dysfunctional, with another third teetering on the edge. 

This week the Auditor-General’s annual report put some numbers on the shambles. Irregular spending by municipalities is expanding exponentially. In the 2014/15 financial year it grew 50% to R16bn on the previous financial year. In 2016/17, it ballooned by a further 75% on last year, to R28.4bn.

By way of sobering comparison, this comfortably exceeds the additional amount of R23bn that the controversial VAT increase is expected to bring in, to help fill a projected national budget shortfall of R50bn. Solve the local government problem, the national budget deficit vanishes.

Two-thirds of this irregular municipal expenditure is results from not complying with procurement process regulations. The other third is because they simply didn’t even bother with a procurement process in the first place.

The AG audited South Africa’s 257 municipalities and 21 of the 60-70 municipal entities that exist. Only 33 received clean audits, with not one of those being in North West, Free State and Limpopo – provinces that themselves have collapsed or are on the brink of doing so. 

Gauteng and Northern Cape managed only one clean audit each, two in the Eastern Cape, six in KwaZulu-Natal and 21 in Western Cape. None of this should come as a surprise, given that 170 of the chief financial officers in local government do not have the necessary academic qualifications. 

Andrew Siddle, a University of Cape Town fundi in local government, tells me in an interview that this is problem that has consistently been shied away from. “Long before state capture became a buzzword for what was happening at a national level, the very same thing was happening everywhere at a municipal level, unremarked upon.”

“Elite capture, where the politically connected divert municipal resources to benefit themselves, their family and their friends, has being going on for decades. It is now entrenched, with these vested interests having zero interest in delivery.”

This is reflected in what the municipalities spend ratepayer money on. An analysis Statistics SA found that in 2014/15 salaries took up at least 26% of the budget, rising on occasion as high as 66%. Administrative expenditure came to 30% and contractors 5%.

That leaves, at best, around a third of the budget for services, of which 22% was spent on keeping the lights on –  although maybe not, since Eskom debt has doubled from R6bn to R13.5bn in the past year. On average, a mere 5% was spent on water. 

Almost a third of municipalities (31%), with combined budgetary deficits of R5.6bn, are “vulnerable” and may not be able to continue operating, says the AG’s report. Separately, the Treasury last week identified 17 district municipalities experiencing “financial distress” and 64 with negative cash balances at the end of June last year.

Finance Minister Nhlanle Nene said at a seminar last week, without naming them, that “a number” of SA’s biggest cities are on the brink of financial collapse. “They cannot be allowed to fail”.

Nene is right. The consequences would be appalling if cities, with high concentrations of already angry, politicised poor people were to fail. But nor is there money in the fiscus to increase the support that national government already pumps into these entities.

The only hope is to fix local government. In practical terms, however, it may already be too late to do anything but try to patch the worst and politically most critical ones. 

The problem is not only one of resources, but political will. The AG, Kimi Makwetu, and Siddle agree on the root cause of the failure: a lack of decisive leadership at the very top. 

Makwetu bemoans in his report the fact that, despite years of warnings by his office, there are still no consequences for corruption and incompetence. Siddle says that for the past decade, the Zuma years, SA has had a “distracted national leadership”, unable to ensure basic governance.

This is an invitation for brazen behaviour lower down the food chain. 

The AG says that the environment in which his audit teams had to work have become more hostile. Teams are being threatened and pressured, with “increased contestation and pushbacks, [where] their audit processes and motives were questioned”. 

Siddle says that the future is bleak and that there is no end in sight to the collapse, just more of the same. For President Cyril Ramaphosa to try to tackle these fiefdoms would, at this stage, be political suicide.

“It could only be done at huge political cost. There just isn’t the oomph or the will to do so.”

Siddle goes on to point out that municipal failure is part of a much wider malaise. “The AG has identified similar problems at a national level, and the picture is no prettier at a provincial level. Of the nine provinces, only the Western Cape and, perhaps, Gauteng, are exceptions.”

The only immediate hope is that voters, especially outside the urban areas, discover the power of the ballot box. “But the sad truth is that the people most terribly affected by non-existent service delivery persist, each election, in voting into control of their lives, the same set of rogues.”

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