The dire state of South Africa’s municipal finances may not have the profile and high drama of South Africa’s electricity malaise, but for much of the country it is a crisis of equal significance.
As a governance concern, it emerged well over a decade before South Africans imagined they’d be losing hours every day to power outages. It was raised both by President Cyril Ramaphosa in the State of the Nation Address and by Finance Minister Enoch Godongwana in the Budget speech.
For Godongwana, the failings of municipal finances had to be understood in relation to the financial mess at Eskom. Noting that municipalities owed the utility R56.3-billion (and escalating), he pledged a debt relief programme, though with the rider that this had to be done in a manner that corrected the “underlying” dynamics behind the build-up of debt.
“The culture of non-payment,” the minister said, “not only by municipalities, but by all organs of state and individual household customers, is concerning.”
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The “culture of non-payment” is a phrase that goes back to the founding of democracy, and its endurance is testimony to the intractability of the problem.
Time after time – with various permutations, similar to the interventions described by the minister – government has attempted to barter leniency on existing debt for a new “culture of payment”. (Note that this is not only an issue among households, but exists among businesses and even state institutions too.)
A few weeks ago, Gauteng Premier Panyaza Lesufi promised residents concessions in exchange for a new community approach to their own responsibilities: “We can’t hide behind the poor when you are employed or you run businesses in our township, and that’s the process we must undertake without fear or favour.”
This is a message that has remained remarkably consistent since the 1990s, when the current system was introduced. The Masakhane campaign of the time was often understood as getting residents to pay their municipal bills, though this was intended as part of a broader initiative of building partnerships with communities for their upliftment.
Clearly, not enough has been achieved. If anything, the long-term pathologies afflicting local governance provide a major disincentive to paying for services rendered indifferently or not at all.
Services — the developmental state’s frontline
By design, South Africa’s local government system is the primary vehicle for quality-of-life service provision and accorded a developmental function, something written into the Constitution and the frontline of the “developmental state”. It would seek to engage people where they lived and work to participate in their own upliftment.
The reality is summed up in the introduction to the Auditor General’s latest report on local government, covering the 2020/21 period: “Local government is characterised by accountability and service delivery failures, poor governance, weak institutional capacity and instability.”
Statistics from the Department of Cooperative Governance and Traditional Affairs put this into perspective. It ranks municipalities across various indices along a four-point continuum, reflecting something akin to ideal through to something like dire.
Of the country’s 257 municipalities, only 30 were regarded as “stable”; 54 as “low risk”; 107 as “high risk” and 66 as “dysfunctional”.
In fairness, there have been some improvements – between 2019/20 and 2020/21, the number of stable municipalities increased by 14 – but the general picture is not a positive one. In the Eastern Cape, Free State and Limpopo, there was not a single “stable” municipality. In the Free State and North West, close to half were “dysfunctional”.
Likewise, in this year’s Budget Review, National Treasury noted that according to its indicators, the number of municipalities in “financial distress” had grown almost threefold between 2010/11 and 2021/22, from 66 to 169.
“Revenue management was the most prevalent factor contributing to this financial distress,” the document delicately states.
How this manifests itself is the subject of regular commentary: crumbling infrastructure, scandals around financial mismanagement, even violent intimidation.
Captured local government
All of this describes a very large part of a local government system that never fully established itself as it had been envisaged; was captured by venal interests and now operates as a very unreliable participant in public life and in some instances a downright hindrance to the development it is mandated to drive.
In Lekwa in Mpumalanga – the Standerton area – the decline was so pronounced that Astral Foods had to obtain a court order to draw raw water for its operations. Bring your own infrastructure.
Indeed, if South Africa is now understandably preoccupied with its national load shedding crisis, it should be remembered that in 1994, the incoming government inherited massive backlogs, but even as electrification progressed, communities were hit regularly by outages as a result of system overload, vandalism and so on.
Much the same happened in respect of water. Even as access grew, maintenance and management were neglected. Municipalities across the country now sit with the consequences of this.
The upshot of all this has been to undermine the basis for the social contract that is sought between the state and citizens – as the finance minister and premier indicated – and on which the local government was premised.
‘Patronage and nepotism’
For many South Africans, local government represents a local kakistocracy, playing musical chairs in councils and roulette with public funds in the administrations, while dishing out favours to the favoured.
As a 2009 Cogta report noted: “A culture of patronage and nepotism is now so widespread in many municipalities that the formal municipal accountability system is ineffective and inaccessible to many citizens.”
The problem has not been limited to misgovernance and disillusionment.
Communities and consumers have often been reticent to render their contributions. This of course had its roots in the pre-democracy resistance, where refusal to pay municipal charges was an important strategy.
It was naïve to expect this to be reversed with the advent of democracy. Enforcing credit control – a fundamental part of governance – became a vexed political question that politicians were afraid to touch.
National Treasury figures put total consumer debts in September last year at R290-billion. Of this, only some R49-billion was outstanding for less than 90 days, or as Treasury puts it, “realistically collectable”. The balance might in effect be termed “politically uncollectable”.
Deeply rooted crisis
This is a debilitating issue, widely recognised, and at times even draws some across-the-divide support: when in early 2022 the DA-led administration in Tshwane announced a programme to enforce payment, Gauteng’s then MEC for Human Settlements, Urban Planning, Cooperative Governance and Traditional Affairs, Lebogang Maile, tweeted his support.
Unfortunately, the failings of local government denote a deeply rooted governance crisis. They will not be turned around easily, the appeals of the Gauteng premier notwithstanding.
The Auditor General has framed its response in a language of the need for leadership:
“We are convinced that if municipal leaders at both administrative and political level, supported by their provincial leadership, are fully committed to turn around local government towards the capable, efficient, ethical and development-oriented institutions envisaged by the Constitution, improvements are bound to follow,” its 2019/20 report states.
That is well and good, though what would it mean?
Given the state of local government (and the country as a whole) there are no quick fixes. Getting local government on track will be the work of years, with little to show for it in the short term. Whether it can ultimately be successful will depend on the priorities selected and the vigour with which they are pursued.
Part of this will be to take unpopular decisions on such matters as credit control, a necessary but massively unpopular endeavour, which politicians will be (and often have been) reluctant to undertake.
More to the point, it will mean reversing course on some ideological imperatives that are central to the outlook of the ANC in particular. This would mean the complete abrogation of the politicisation of administrations – “cadre deployment” – and their professionalisation.
Along with this would be the elevation of merit as the defining criteria for appointment, to the exclusion of race-bound policies. South Africa does not have the superfluity of resources of skills that would enable it to be selective about their provenance. This is especially so at local level.
The National Planning Commission said in a report in 2021: “A significant challenge and contradiction that goes against the developmental state aspiration of South Africa identified [sic] is the rejection of meritocracy in the country’s public service.”
Local government will not be turned around and the demands of those frustrated residents met unless some very hard decisions are taken.
This goes beyond restructuring debt – shifting the stubborn “culture of non-payment”, and even more importantly, re-establishing the basis for the social contract between the citizen and the state so that a new culture can emerge.
Some will be hard on an already suffering population and others hard on the ideological conscience of the political class. DM