Remarks by Minister Dlamini Zuma at the KwaZulu-Natal Local Government Indaba

Theme: Turning the corner in KZN Municipalities: Fostering peaceful and sustainable communities through the delivery of basic services

5 July 2022

Programme Director

Premier of KwaZulu-Natal, Mr. Sihle Zikalala

MEC for COGTA, Mr Sipho Hlomuka

All MECs present today

Chairperson of SALGA

Our host; Mayor of eThekwini Councillor Mxolisi Kaunda;

District and local mayors

Councillors

Traditional leaders

Members of the media

Ladies and gentlemen

Good morning

Thank you for inviting us to this important Local government. This event takes place as the world emerges from a global pandemic whose effects we are going to feel for a long time.

Local government is everybody’s business, all the stakeholders have a stake in what happens in local government.

Local government is also affected by everything that happens in the world. I will start by saying what is happening in the world that has an impact on us.

Economic growth has been sluggish, and that affects Local government. In order to respond adequately to these external influences, we must look at how we gauge economic development and growth in the country. We cannot solely rely on the GDP as the measure of the performance of the country. We need to look at other measures which paint a picture of the overall well-being of the economy, including fair distribution.  Scholars are correctly encouraging nations to begin measuring what matters –  the well-being of a nation. The OECD’s 2018 Beyond GDP Report boldly suggested that:

“While GDP is the most well-known, and most powerful economic indicator, it can’t tell us everything we need to know about the health of countries and societies. In fact, it can’t even tell us everything we need to know about economic performance. We need to develop dashboards of indicators that reveal who is benefitting from growth, whether that growth is environmentally sustainable, how people feel about their lives, what factors contribute to an individual’s or a country’s success”.

With much of the global growth that has occurred alongside persistent inequality and negligible levels of redistribution, the past decade has seen significant growth in support for placing well-being indicators at the heart of how we make, implement, monitor and evaluate public policy.

Ladies and Gentlemen, we often hear the claim that we make good policies but fail at the level of implementation. We should take a moment to think about this. Can a policy ever be considered ‘Good’ before it is implemented? The very lack of implementation should render that policy a bad one. Because it cannot be called a good policy if does not carry within it a cogent implementation, monitoring and evaluation strategy with clear timelines and allocated resources. An unimplemented or unimplementable policy does not qualify as  ‘a good policy’.

We must also learn from the experiences of other countries across the globe. For example, over the past century, the Communist Party of China has led China’s rise from the depths of colonial invasion to the 2nd largest economy in the world. In this era of widespread social and economic insecurity and widening disparities between and within nations, China has been exemplary in nurturing a system of meritocratic governance across its political stratum, the success of which can be seen in the country’s record levels of industrialisation, job creation, peaceful co-existence and the lifting millions of people out of poverty. In their approach, there is no gap between policy and implementation

Under the CPC’s strict adherence to a people-centred development approach,  China has achieved and exceeded the poverty reduction targets set out in the United Nations Agenda 2030, a decade ahead of time. Remarkably, China has recorded this achievement while adhering to a national poverty benchmark that is higher than that applied by the World Bank. In his latest book titled “Has China Won?” Singaporean Scholar Dr Kishore Mahbubani notes that  “under the leadership of the Communist Party of China, the bottom 50% of China’s population have had their best thirty years in 3 000 years”.   

In short, the Chinese experience has shown that we need more, not less of the state. As humankind battles an uncertain future due to growing insecurity and an unprecedented pandemic, there can be no sustainable future if that future is not shared, and the state shall facilitate that shared and just future. In China, inequality is actually narrowing, while the gap continues to widen in most countries including ours.

Secondly, there are lots of lessons we can learn from the Covid-19 Pandemic. Without going into these details, we can agree that the pandemic presents an opportunity to reset policy in order to minimize the impact of future disasters. The New York Times editorial recently carried a message that summarizes what appears to be an acknowledgement of the need for more direct government intervention in this regard:

“Radical reforms- reversing the prevailing policy direction of the last four decades – will need to be put on the table. Governments will have to accept a more active role in the economy. They must see public services as investments rather than liabilities, and look for ways to make labour markets less insecure. Redistribution will again be on the agenda; the privileges of the elderly and wealthy are in question. Policies until recently considered eccentric, such as basic income and wealth taxes, will have to be in the mix”.

…..

Equally important, in our recovery and reconstruction efforts, partnerships with NGOs must not be opportunistically weaponized to challenge the legitimacy of democratically elected local governments. Partnerships are crucial but they should not serve as a conduit to project local governments as incompetent.

Program Director, without delving into the genesis and logic of the war itself, there are crucial lessons coming from the Russia-Ukraine conflict that is of particular relevance to leaders of local government.

We have seen the crucial role played by state-owned banks and financial institutions on both sides. There can neither be sound development nor security without a solid state-owned and diversified banking and a financial sector that is driven, first and foremost, by the pursuit and advancement of our national interests. We can plan all year, if we are not in charge of finance, our planning will always be stunted by the begging or borrowing bowl.

One of the things that the Chines government has done successfully was to develop state banks for every sector of the economy. Nothing will really move without our own state-owned banks, particularly sector-specific and production/industrial-oriented financial institutions measured against the extent to which they foster development at the local level, not shareholder profits.

Europe’s decision to fire up its coal power stations in order to cope with the energy crisis should send some lessons to those of us leading governments in emerging economies. The interests of our people shall, at all material times, come first.

In an era where the legitimacy of local governments is at stake, only a people-centred way forward will cut it. Thomas More’s word rang  ever so true when he said:

“No penalty on earth will stop people from stealing if it is their only way of getting food . . . Instead of inflicting these horrible punishments, it would be far more to the point to provide everyone with some means of livelihood, so that nobody is under the frightful necessity of becoming first a thief and then a corpse.”

Program Director, let me thank the Provincial Government for taking the initiative to organise this indaba which is in line with our program which aims to strengthen effective and efficient local government as envisaged by the constitution and the White Paper on Local Government of 1998.

Local government has a constitutional obligation to play a critical role in promoting social and economic development in terms of section 152 of the Constitution of the Republic of South Africa and the White Paper on Local Government, which clearly entrenches the developmental duties of municipalities. The Constitution and the White Paper encourage municipalities, through Local Economic Development (LED), to play a leading role in as far as creating job opportunities and reducing poverty and inequality.

Despite these clear legal mandates, local governments in South Africa are still failing to successfully promote and implement LED to address the challenges of poverty, unemployment and stagnant local economic growth and development of local communities.

The failure to promote LED limits the municipalities’ ability to provide basic services as expected. The lack of economic development leads to instability in local government. We have seen that some of the municipalities are unstable because of the fights over resources. This happens when local government is seen as either the only source of employment or economic activity. So, people fight to be employed in the municipality and to control the resources of the municipality. As a result, providing services to our people takes a back seat.

We are working with social partners to add value to how the country needs to develop for all. That is why are integrating the Invest Rural Masterplan into our development plans. This plan was developed by traditional leaders as their contribution toward inclusive economic growth.

Program Director, This important platform provides an opportunity to engage and to make inputs into the direction our municipalities should take going forward. As we reflect on the journey of the democratic local government thus far, we must look at whether the sector is functioning optimally, and if or not, we must develop contemporary strategies to ensure that our municipalities play their developmental role.

The local government sphere must be capacitated to perform its function diligently as the sphere closest to the people, it is the first point of interface and experience for our communities.

Since the dawn of democracy, we have been able to provide services to more South Africans who previously did not have access. We must now work to consolidate, expand, and ensure that the growing expectations of the people of this province are realized.

We have come together today because we share a common determination to build a better quality of life for all. Notwithstanding the good work done, we are aware of the challenges in municipalities where many of our people remain in poverty, without economic opportunities and have lost faith in government

Sections 154(1) and 155(6) of the Constitution of the Republic of South Africa, 1996, place an obligation on national and provincial governments (through legislation and other measures) to support and strengthen the capacity of municipalities to manage their own affairs, exercise their powers and perform their functions.

The District Development Model (DDM) which facilitates stronger cooperation and collaboration among the spheres seeks to reinforce the developmental role of local government as anticipated by Section 152 of the Constitution which calls for the provision of democratic and accountable government for local communities, wherein it should, (1) facilitate for service provision in a sustainable manner – water, sanitation, electricity and refuse removal; (2) promote social and Economic Development; (3) promote a safe and healthy environment; and (4) encourage the involvement of communities.

All sectors must be willing to be coordinated and leave the silos so that we can work together

This collaboration is already showing positive results. With regards to the plans to develop the Coastal City, we have reached a major milestone in that the Minister of the Department of Agriculture, Land Reform and Rural Development (DALRRD) promulgated the Eastern Seaboard as a region on Gazette No. 46573 Vol 684 on 20 June 2022. This development edges us closer to realizing the dream of the first “Post Democracy” city, which will truly represent the ideals of the people.

The national and provincial governments must provide support to the respective municipalities in each province in the spirit of cooperative government, and such support must be consistent from one municipality to another.

As you continue to implement the DDM in this province, we want to see more active involvement of all sectors, political and technical champions (sector departments, SOEs, civil society and private sector) and Institutions of Higher Learning to debottleneck implementation challenges. By pulling together all role-players and stakeholders guided by the DDM approach, we will be able to have better local economic development strategies and plans geared to taking the opportunity of the endowments in municipalities.

In the aftermath of both Covid-19 and the Floods, local government as the sphere closest to the people, we directly see first-hand the anguish and suffering that our people had to go through, and some are still subjected because of the floods. The floods frustrated the recovery from Covid-19 that we were working on, hence the need for strong performance, coordination, and partnerships at local level.  

Guided by the DDM, work is continuing to improve integrated planning and service delivery across the three spheres of government with district and metropolitan spaces as focal points of government and private sector investment. Thus far, the DDM has been implemented across the province with eThekwini Metro as one of the DDM pilots and thus playing a key role in sharing critical lessons and good practices. DDM Political and Technical Hubs have been established in all districts and the metro spaces. To date, nine (9) One Plans have been finalised across the province. The remaining One Plans are for Zululand and uMkhanyakude districts. These have been considered by the DDM Technical Hubs and are awaiting endorsement by the relevant DDM Political Heads.

Following the development of ‘One Plans’, we initiated a quality assurance process aimed at assessing the quality of all submitted One Plans. The One Plan Quality Assurance process provided an opportunity to reflect on the One Plan development process and identify challenges and gaps that need to be addressed (process and content) through a structured process. The outcomes of the Quality Assurance process are meant to inform the review and updating of the One Plans across all-district and metro spaces.

Key findings that emerged from the quality assurance process highlighted the need to strengthen the shift towards collaborative, joint planning and co-production of the One Plans and the need to strengthen the involvement of sector departments and State-Owned Entities. The involvement of local municipalities in each district was also highlighted as a challenge.

In relation to progress on the implementation of Municipal support and Intervention Plans (MSIPs) in the province, we are pleased that MSIPs for all the 54 Municipalities in the province have been developed and these consist of commitments from relevant spheres of government departments and entities for real support, achievement of tangible change and performance improvement. The MSPs have been and are being presented at different structures e.g. MANCOs, EXCO and at municipal councils.

Fifty (50) Municipal Councils have adopted MSIPs as of 30 June 2022 with follow-ups being made to obtain dates for council sittings from the four (4) municipalities in this province that have not adopted the MSIPs.

Program Director

I will briefly highlight areas we need to prioritise as we discuss the state of local government.

The Auditor General’s Municipal audit report, confirms the findings of our internal report on the State of Local Government which identified three root causes for distress in local government – “

(1) a municipality that finds itself in distress due to failures in governance, financial management and administration (all of which allow, even facilitates, corruption;

(2) the second one is a municipality that finds itself in distress because it spatially and socio-economically was and always will be a financially non-viable entity and lastly;

(3) a municipality that finds itself in distress as a result of systemic issues around

• powers and functions,
• Rapid urbanization
• Inability to expand infrastructure to fulfil the increasing demand
• inability to grow operational revenue to ensure sufficient maintenance and operation of infrastructure”.

Most of these challenges are due to an unhealthy interface between the Political leadership and the Administration. There must be an interface, but it must be healthy and appropriate. Failure to maintain that balance will lead

In terms of Governance – we welcome progress in implementing Section 106 by some municipalities. There is also a marginal improvement in Audit Outcomes for the 2020/21 financial year.

We commend the work that is being done by the leadership of the province and the municipalities in turning the tide against poor audit findings. The total number of municipalities that obtained unqualified audit opinions has increased slightly over the last five years. We must use lessons we have learned from King Cetshwayo, Okhahlamba and uMhluthuze. King Cetshwayo to improve audit outcomes in other municipalities across the province.

We are equally concerned about the 13 municipalities which adopted unfunded budgets. Therefore, we must ensure that the funding plans in place are implemented to address this. The Umziwabantu Local Municipality failed to adopt a budget by 31 May due to the instability of the council. Some municipalities still have challenges of low cash coverage, which is far less than the norm of 1 to 3 months, therefore they are not in a healthy financial situation. Ethekwini also finds itself in an unhealthy financial position, mainly due to floods which left a tale of destruction that requires the Metro to spend on unplanned repairs and even beyond their allocated budget.

Honourable Premier, we must work closely with the province and all relevant departments to urgently develop support packages for Umkhanyakude, Nquthu and Inkosi Langalibalele as the municipalities which obtained disclaimer audit opinions.

Ladies and gentlemen

As previously indicated, the state of our local governments requires all to work together and pull in the same direction if we are to see the change that will benefit our people. We firstly have to deal with distress due to failures in governance, financial management and administration.

This will require us to:

1. Strengthen Intergovernmental relations – Through the DDM, we must Improve the IGR framework while maintaining chains of interdependency within and between government spheres. Communication and information flow must be improved, including channels for interaction, symmetrical reporting mechanisms and simpler reporting mechanisms, with a greater emphasis on outcomes as opposed to compliance.

2. Strengthen Oversight – This is because as per the Constitution of South Africa, the national and provincial governments, by legislative and other measures, must support and strengthen the capacity of local government to manage their own affairs, exercise their powers and perform their functions.
3. Collaborative Local Government Support and Interventions management – We are working on finalizing the Intergovernmental Monitoring, Support and Interventions (IMSI) Bill. This will assist national and provincial governments to comply with their constitutional obligations to support, supervise and build the capacity of the local sphere for the latter to competently execute its statutory functions.

4. Strengthening Financial Management – We must work together in paying special attention to the design of the different ‘hands-on’ support programmes; the management and design of the capacity building of conditional grants; We must explore the feasibility of National Treasury developing and rolling out a Financial Management System across all municipalities.

5. Building Institutional Capabilities – We have to urgently build capacity in local government to reduce the over-reliance on consultants.

6. Fighting Corruption – We must work together to rigorously root out all forms of corruption including, tender rigging, fraud, bribery and nepotism.

7. Working with Communities – The Constitution and Municipal Systems Act of 2000 clearly sees the community as forming an integral part of the municipality and requires inclusive governance, working closely with communities. We must strengthen our cooperation and work as a unit with Traditional Leaders because we are serve the same community

8. Managing Partnerships with the private sector – Despite the success of the PPP model in South Africa, the number of new project transactions has declined over the years. We must increase the PPP project pipeline in order to increase the pool of funds available and to lower project costs.

Program Director, there has been considerable harm to the image of local government. If we are to succeed in developing local economic development plans, we must ensure that we restore the confidence of the communities and investors by focusing on improving governance and administration in every one of our municipalities.

As we engage through this Indaba, let us also find solutions for dealing with municipalities in distress due to spatial and socio-economical unviability. We must; amongst other things,

• strengthen the IGR system with regard to Integrated Spatial and development Planning,
• stabilize municipal boundaries,
• strengthen the role of Districts,
• create enabling environments for Local Economic Development to enable Radical socio-economic transformation,
• implement the Integrated Urban Development Framework,
• define a role for traditional leaders and lastly
• revolutionize agriculture because, in all its aspects, it is one of the most important aspects of the economy. This sector fuels the human capital needed to run the economy; no economy can survive without food security.

Let me conclude by quoting President Nelson Mandela at the National Summit for Local Government in 1996, he said:

“You have the task of doing whatever is necessary to ensure that our new local government system serves the needs of our communities. You have the responsibility to make their voice heard and to provide an effective instrument for them to improve their lives.”

His words ring as true today as they were then.

I look forward to working with all of you to make local government work for our people. We must use our mandate and legislative obligations to ensure our localities are indeed vibrant, resilient, sustainable, prosperous, connected, cohesive, non-sexist and climate-smart communities.

Thank you once again for inviting us to this session as we join hands to contribute toward making South Africa a better place for all.

I thank you.

Issued by CoGTA, 5 July 2022