Business Maverick

BUSINESS MAVERICK OP-ED

Dysfunctional municipalities belie Ramaphosa’s infrastructure promise

Dysfunctional municipalities belie Ramaphosa’s infrastructure promise
The majority of South Africa’s municipalities are in trouble, and the contagion is starting to catch on in other equally important and strategic areas. The tale of woe is paved with maladministration that has a high probability of sparking a debt spiral. (Photo: Supplied)

A new dawn of social infrastructure lies in wait for South Africa, the president promised last week in Parliament. But the terrible state of administrative affairs at municipalities will first have to be addressed before the country embarks on its ambitious and much-needed infrastructure drive.

South Africa has three spheres of government. That is fairly obvious. This brings with it layers of complexity. There are checks and balances galore. But outcomes fall far too short of expectations.

This is apparent at the country’s municipalities. Although municipalities collectively represent the lowest sphere of government, they are arguably the more important tier of administration.

This is where most citizens interface and have a direct link with government services, from refuse collection, street lights, water and electricity to recreational facilities, including parks, beaches and public swimming pools.

There are few areas of our lives that are not touched or affected by municipal services. But there is a fundamental disconnect between how municipalities are supposed to function and how councils conduct their business.   

All the signs are there of a brewing crisis, which – if not addressed – could have far-reaching consequences for the two other tiers of government and some state entities. That extends to residents, who will have to live with whatever fallout comes from consequences. It is no longer a matter of if, but when.

Auditor-General Kimi Makwetu, whose seven-year term of office ends in November, and his team have been sounding the alarm from the onset of his appointment about the deteriorating state of administration at this level of government.

The majority of South Africa’s municipalities are in trouble, and the contagion is starting to catch on in other equally important and strategic areas. The tale of woe is paved with maladministration that has a high probability of sparking a debt spiral.

The most disheartening aspect of this less than stellar state of affairs is that municipal administrative troubles are self-inflicted.

The administrative ailments include unsustainably high debt, which affects councils’ ability to pay for water and electricity, and error-riddled and erratic revenue collection. Residents and ratepayers are already feeling the pinch from the latter.

In addition, sizeable funds are often squandered on unauthorised, irregular, fruitless and wasteful expenditure; and councils have an overreliance on grants and help from the government, according to the data extracted by Makwetu’s team for the 2018-2019 municipal audit assessments.

“The financial statements of a municipality tell the story of how well a municipality is managed,” observed Makwetu in July, when the results of the local government audit came out. Unfortunately, “the safe and clean hands that can be relied upon to look after the public’s finances are few and far between,” Makwetu noted at the time.

Local government continues to regress. Council after council fails to keep an adequate record of its affairs. When the Office of the Auditor-General staff show up to discharge their mandate, they are faced with pushbacks, threats and intimidation.

As Makwetu prepares to vacate the position, an important development has unfolded during his tenure. That is the successful amendment to the Public Audit Act, strengthening the oversight instruments at the Auditor-General’s disposal effective from the beginning of April 2019.

A key new introduction is the concept of material irregularities, which factors fraud, theft and fiduciary duties. This is a step further than irregular expenditure, which hones in on non-compliance with legislative and regulatory prescripts.

Given the emphasis on infrastructure and the quantum of funds that will be allocated to pursue that endeavour, the Office of the Auditor-General highlighted problems in this area in the local government audit that cannot be ignored.

Crucially, the changes to the act empower the Audit-General to refer matters to any body for further investment and enable the Office of the Auditor-General to craft audit reports to include recommendations. Furthermore, the Auditor-General can now take binding remedial action such as issuing certificates of debt to recover funds lost from accounting officers and authorities.

The Auditor-General started implementing reporting on material irregularities on some of the auditees assessed for 2018-2019. The office has also updated its audit methodology.

These changes are designed to leave little room for the recommendations from the Office of the Auditor-General to be ignored. In addition, the Office of the Auditor-General has increased the use of fraud experts because of the heightened risk of its occurrence, while the office also piloted its first social audit in Ekurhuleni.

It is also encouraging to see from the Office of the Auditor-General’s 2020 integrated annual report, that there are concerted efforts to work on an early warning mechanism.

Although the focus is on local government, it is worth noting that the picture is not that rosy either for national and provincial government, as well as public sector entities.

In fact, as the Office of the Auditor-General implemented material irregularities reporting, the Passenger Rail Agency of South Africa and the Department of Human Settlements in the Free State recorded the most cases, at 10 and nine respectively. Based on recent news events, we now know why.

President Cyril Ramaphosa’s economic recovery plan identifies infrastructure as an important pillar. 

“Our infrastructure build programme will focus on social infrastructure such as schools, water, sanitation and housing for the benefit of our people,” Ramaphosa told a joint sitting of Parliament last Thursday.

Given the emphasis on infrastructure and the quantum of funds that will be allocated to pursue that endeavour, the Office of the Auditor-General highlighted problems in this area in the local government audit that cannot be ignored.

“The audits identified shortcomings in the development and maintenance of infrastructure. Infrastructure development projects displayed widespread underspending of budgets, delays in project completion, non-compliance with supply chain management legislation, and irregular expenditure,” noted Makwetu in July.

The most damning observation is the lack of attention paid to water and sanitation infrastructure.

“The condition of water and/or sanitation infrastructure was not assessed at over a third of the responsible municipalities; and 41% of the municipalities did not have policies for maintenance,” according to the Auditor-General.

But this does not have to be the case. “We can safely conclude that local government does have sufficient money and assets to fulfil most of the basic needs and aspirations of its citizens. But a lot of work is needed to make sure that this is realised,” the Auditor-General said.

Therein lies the rub: the administrative and political will is swayed one way. Perhaps now that the Auditor-General has new powers, that bears the promise of the pendulum swinging in the opposite direction of maladministration and the squandering of public resources. DM/BM

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  • Jane Crankshaw says:

    Well said – this journalist has hit the nail on the head! Until communities demand results from their Municipalities, nothing will change. To be honest…I can predict that communities with resources will be forced to take control of their own backyards…resulting in massive job loses in the Municipalities. Those communities that can’t afford to take control will just become like the rest of Africa – unless they make a plan of their own for the betterment of all.

  • André van Niekerk says:

    I get really frustrated with this kind of article. Well written, well intended. But the unfortunate reality is that very few people really understand how local government works. Symptoms are managed, causes of problems are not. This article correctly states that here are 3 spheres of government, but then refers to local government as the lowest tier. That is a primary cause of problems – everyone thinks there are tiers in government. The spheres are supposed to be equal. National, provincial and local government are supposed to work together, as equals, in a cooperative government mode.
    So municipalities are broke. But National allocates the budget. How is that equal? Municipalities are not allowed to determine their own fate. Municipalities need to spend money, not only on new infrastructure, but in operating and maintaining existing infrastructure. Yet, the AG makes it more and more difficult for municipalities to operate. The new norm is not service delivery, it is an unhealthy focus on achieving so-called clean audits. It is easy to get a clean audit – just do nothing.
    Yes, corruption in some parts of the country is rife. So act against the corrupt. But via more and more stringent rules applied to ALL municipalities, those who try to deliver are hampered in their delivery. The Western Cape municipalities are clamped down by rules made to stop corruption in the rest of the country.
    Supply Chain Rules aid poor spending. If a tender for some off-the-shelf product comes in ridiculously high, it can only be bought at that high level. An official cannot go to the local shop and buy the best deal. That would be irregular and “corrupt”.
    Pardon my rambling – what needs to be said cannot be done in a comments column.
    My point – just like prohibition in America did not stop the sale of alcohol; just as lock-down did not stop the sale of cigarettes; so stricter and stricter legislation and more rules will not stop corruption and poor performance. Allow professionals to do their job, then things may turn around.

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