Allow me, in the first place, to congratulate Msunduzi Innovation and Development Institute (MIDI) for organising this very important summit on ‘Living the Future’. I think by bringing together the municipality, business and the university in MIDI, our city is already “living the future” And by organising this summit, we are taking another step into the future. How much so, will depend, of course, on what the practical outcomes of this Conference are and how soon they come to be.
I am very pleased and honoured to have been invited to speak at this summit. And let me immediately say how deeply disappointed I am that I can’t be here in person. I have no choice really. I know we’re the “city of choice”, but sometimes even we residents of this city can’t exercise our choice. I am, of course, at the major National Indaba on Local Government, being hosted by our department in Boksburg today and tomorrow. It follows on the meeting between the President and the mayors and municipal managers of all the municipalities held in Khayelitsha yesterday.
At the time I was invited to this summit, the date for the indaba had not been set. The date for the indaba was only settled after the availability of the President was clarified. Up to last week I was still hoping to be here this morning, but unfortunately it has just not been possible for me to come. I am really, really sorry about this! This is, after all, the city in which I was born and live in. And, obviously, this city was the major site of my anti-apartheid political activity, including through the civic movement here, and it is my experiences in this city that have significantly shaped my approach to my current role relating to local government.
May be you’ll be a bit more understanding if I tell you that this is only the third time in the 15 years of being a public representative that I have not attended a meeting that I’ve been invited to address? On both the other occasions I couldn’t make it because I had come down with a severe bout of flu.
Anyway, I would like to make up in some way for not being here today. Perhaps I could meet with MIDI or any other structure of this summit, and see how I can be of help with the work that emerges from this summit? I’m not physically here, but you have Mr Mohammed Bhabha, the Technical Advisor to my office, reading my speech. He will, I am confident, be of much value to you. He had a significant role in shaping the current model of local government both as the chairperson of the National Council on Provinces Select Committee on Local Government and the Mpumalanga MEC for Local Government. He works now in the Development Bank of South Africa as a local government specialist, and has been seconded to my office.
Unfortunately, because of the Local Government Indaba, none of the senior managers in the department are available to present this talk to you. Mr Bhabha however is familiar with our approach to key issues, and will be able to interact with you on your concerns. I will, of course, hear from him what you have to say, and will, if you want, also respond in writing to your questions through MIDI.
I’ve been asked to speak on some of the challenges confronting the current model of local government. I’ve entitled this talk “Local Government: Some Challenges, Some Answers, Some Action”.
Some challenges
The challenges are, in fact, very well captured in the state of local government report in South Africa which we have officially released today at the National Local Government Indaba and which you will shortly find on our website (http://www.dplg.gov.za/).
Local government is, we think, in considerable distress, as the report reveals, and as the persistent community protests suggest. While not absolving municipal councillors and officials from their responsibilities for the failures of local government, we must all take responsibility for the state in which local government is, not least provincial and national government. The failures of local government reflect the failures of the cooperative governance system as a whole in our country. Civil society must take its fair share of blame too. Business has not played its full part to make local government work either. Yet local government is everybody’s business. We all sink or swim with local government. So we simply have to work together to get local government right.
What, then, are some of the challenges? Our department facilitated a comprehensive hands-on assessment of every municipality in the country over a four month period. The MECs for local government and the provincial departments of local government initially put together provincial state of local government reports. These reports were discussed in the provincial executive councils and then sent to our department, which consolidated these provincial reports into a national report.
There were five major areas that were examined; governance, financial management, service delivery, labour relations, and apartheid spatial patterns.
We found that while some municipalities are performing very well, most are not. Some municipalities, indeed, are not even viable. They simply do not have a fiscal base, and are wholly reliant on transfers from national government. These include Aganang and Molemole (in Limpopo), Ndwedwe and Maphumulo (in KwaZulu-Natal), and Mamusa and Molopo (in North West). 57 municipalities receive more than 75 percent of their revenue from national transfers.
A significant number of municipalities are unstable because of conflicts between different factions of the ANC. Relations between mayors, Speakers, chief whips and municipal managers are often strained. There is also a blurring of the distinction between the roles of councillors and administrators. In some council, the municipal managers are senior regional leaders in the ANC who are reluctant to answer to mayors who are ordinary members of the ANC. There are managers who do not have the qualifications or experience to do the jobs to which they are not appointed nor are they prepared to be trained.
The ward committees and the other structures of community participation in local government are not working. More than anything, this is what the community protests convey. It’s clear too that national and provincial government do not support local government effectively, and in some senses, even undermine local government. There is a marked lack of coordination in the local government programmes and projects of the different national and provincial sector departments. And in shaping these programmes and projects, the integrated development plans of municipalities are often ignored.
Most municipalities face huge financial challenges. Among these:
Substantial increases have been made to the transfers, both operational and infrastructure, to local government over the last few years in acknowledgement of its increased service delivery responsibilities. Yet, many municipalities are not in a position to meet their developmental mandate due to an inadequate economic base or high levels of poverty and unemployment. An increasing reliance of municipalities on transfers, equitable share and others, from national government to fund their activities is evident, with government grants at 22.4 percent of total operating revenue in 2007/08 as the second largest source of revenue for municipalities.
There is an acute lack of financial management skills, even of the most basic kind. There is a scarcity of professionals with financial skills. There is a lack of internal controls and poor governance. Most of the audit committees in municipalities do not function effectively. There are onerous, complex and costly financial reporting requirements, placing a major administrative burden on municipalities.
According to the Financial and Fiscal Commission (FCC) submission for the division of revenue for 2009/10, 225 questionnaires from national organs of state were distributed to municipalities within one year. Many of them seek similar data. This is not to mention requests from provincial government departments. The analysis of this data is seldom shared with municipalities, says South African Local Government Association (SALGA). Municipalities are also required to conform to Guard Recruiting Assistance Programme (GRAP) accounting standards by 30 June 2010, irrespective of their fiscal and financial capacity. At 30 June 2008, according to SALGA, at least one third of the municipalities had still to convert to the new standards.
Municipalities have poor debt collection records. Municipalities are owed over R53 billion. According to our department, in June last year 85 municipalities had debtor levels higher than 50 percent of their own revenue. Of course, a significant part of this debt to municipalities is owed by government departments and the private sector. The grants allocated from national government are not coordinated. Last year, according to SALGA, there were about 17 different grants administered and managed by different national sector departments.
In several cases, municipal infrastructure grants and other conditional grants are spent on operational activities. There are uncertainties about the financial implications of the restructuring of the electricity distribution industry.
Assets are managed badly.
There are high levels of fraud and corruption.
While there has been significant service delivery by municipalities over the years, this is still far from adequate. Municipalities have not managed the relationship between planning, budgeting and service delivery well. Service delivery backlogs are a major challenge. For example in respect of water, one million out of 13 million households in the country are receiving below a basic level of service. In respect of sanitation, three million out of 13 million households are receiving below a basic level of service.
Most municipalities have poor labour relations. There is a lack of trust between management and organised labour. The Local Labour Forums barely function. Apartheid spatial patterns persist unduly. In most municipalities there is inadequate spatial planning, land use management and development control. The subsidised housing programme has entrenched apartheid spatial patterns by locating the poor from the town and city centres.
Some answers
The challenges just mentioned may seem daunting. They are. But not all the challenges apply to all municipalities, and where they apply, it’s to different degrees and in different forms. And the list of challenges is presented in a crude, short hand way, without proper contextualisation, in view of limitations of time. These challenges, moreover, are inter-related and addressing some of them can, if approached properly, serve to address others. None of these challenges is insuperable. In any case we have to tackle them. We have no choice. We need the will and we’ll find the way! And with the global economic crisis having reached our shores, we are under more pressure than ever to find the way.
Some at least of the challenges are related to the current local government model. Changes to the model are necessary. In seeking to change the model, however, we should be careful not to throw the baby out with the bathwater. We need to carefully consider the model and clearly identify what is working and what isn’t, and why. What aspects of the model are not working because they are not being implemented effectively and what aspects are just cannot be implemented? We need a huge debate about this, involving all stakeholders and the public
Local government is a distinct sphere of government with, unusually, original powers and functions set out in the Constitution. Local government is also simultaneously inter-related with the provincial and national government spheres. While retaining local government as a distinct sphere, we need to consider allowing provincial and national government more power to actively intervene in municipalities that are not performing. We also need to clarify the respective powers and functions of the three spheres of government. In particular, there is a lack of clarity on the distinct powers and functions of provincial and local government.
Given that municipalities differ substantially in their capacities, consideration might have to be given to allocating different powers and functions to municipalities. We shaped a two-tier model of local and district municipalities, with a complex distribution of powers and functions between them. But this model is not working well. We need to consider whether we make changes to the two-tier model or phase it out over time.
Unlike in national and provincial government, there is not a clear distinction between executive and legislative functions in local government. Municipal councils cannot serve as both legislative and executive organs. This undermines oversight of executive decisions. This needs to be attended to. The respective roles of the mayor, Speaker and chief whip in municipalities needs to be clarified. Clearly too, the respective roles of the councillors and administrators have to be clarified and adhered to.
Ward committees have to be strengthened, allocated more power and funded properly. We need to consider including community policing forums (CPF), school governing bodies (SGB) and other statutory community structures as part of the ward committees. Consideration also needs to be given to attaching a community development worker to each ward committee.
There has to be better overall governance in municipalities to ensure better financial management. A key consideration in shaping changes to the current model of local government and the entire cooperative governance system has to be the funding model of local government and the financial management challenges. We need to ensure that changes made provide that local government is able to get the funds necessary to implement its constitutional mandate and manage its finances more effectively.
The financial management model needs to be simplified yet effective. Certain core requirements should apply to all municipalities, but other requirements should differ according to the fiscal and financial capacity of municipalities. There is a need for a reasonable differentiated approach. The Municipal Demarcation Board needs to give serious attention to the re-drawing of the boundaries of municipalities that are not financially viable.
The Division of Revenue Act has to be reviewed to ensure a more equitable and differentiated support to municipalities. The formula for the equitable share also has to be reviewed, partly to ensure that it is more redistributive and provides more support to financially weaker municipalities. There needs to be a review of all grants to local government to ensure coordination of the grants and their more effective use.
There is a need for a massive anti-corruption campaign. The supply change management process also has to be reviewed and the procurement process must be tightened to reduce the prospects of fraud and corruption. With the phasing out of the regional services council (RSC) levies, the need for an appropriate temperate, sensible business tax for municipalities. We need a debate about the feasibility of this with all the stakeholders, not least the private sector.
We need effective audit committees. We should also establish municipal public accounts committees. We need too to actively implement the Operation Clean Audit 2014 programme of our department that seeks to ensure that all municipalities will have unqualified audits by 2014.
There are far too many local government capacity building programmes by too many different organisations with differing orientations. This is costly, wasteful, confusing, and unproductive. And it must come to an end. We need coordination among the capacity building organisations and stakeholders and a clear, consensual and focused approach. Our department is very keen on this and we are engaging with others to get agreement on this, but even more important, united action on this. We need a new, massive a training programme for councillors and officials to be developed through the concerted cooperation of all the stakeholders, including Institution of Municipal Finance Officers (IMFO), SALGA, National Treasury, Cooperative Governance and Traditional Affairs, Development Bank South Africa (DBSA), the private sector, tertiary education institutions.
There is also a need to review the relationship between political party structures and municipal structures. From the mid-90s until the ANC’s Polokwane conference it could be argued that the state structures increasingly took over the responsibilities of the party. That was wrong! But we must also guard against the opposite extreme: the party assuming the responsibilities of the state. Of course, the party must provide the framework for restructuring the state and for the policies of government. But the party should not substitute for the state, any more than the state should substitute for the party.
In many municipalities, there is an inappropriate relationship between the ANC regional executive committees (RECs) (and, to a lesser extent branch executive committees) and municipal structures. Power struggles within the party are translated to municipalities and serve to undermine good governance and service delivery in municipalities. But, also, power struggles within municipalities get transferred to party structures and serve to weaken the party. There is a need to develop a relationship between party structures and municipalities that recognise both the inter-relatedness and distinctiveness of these respective structures and that serves to ensure a mutually reinforcing relationship that strengthens these respective structures.
The party decides on the election manifesto and other policies. It also chooses the candidates for election to councils. The party must, of course, provide political and strategic oversight over the councillors. Obviously, councillors must be accountable to their political parties. And given the tendency of some councillors to be lax or errant, it’s important that the party monitors councillors.
But it’s not for the party structures to micro-manage councillors – especially as this has sometimes less to do with ensuring that councillors perform effectively and more to do with influencing tenders and narrowly interfering in appointment of staff. Why should party structures nominate councillors to serve in municipalities if they do not have confidence in them? If a councillor undermines the principles, values or policies of a party, or fails to perform, or is in other ways errant, the party should recall the councillor. Municipal structures should not be treated almost like sub-committees of party structures.
Of course, what I am saying here is somewhat condensed and crude. But I think we need to debate this matter of the relationship between the party and municipal structures and more broadly the state. But it’s reasonable to suggest that no matter how good a model of local government we shape, unless the party structures are strong and effective, and develop an appropriate relationship to municipal structures, the model will not succeed. We need a discussion on this.
Some action
At the National Local Government Indaba we are to begin shaping a major national local government turnaround strategy based on our consideration of the state of local government in South Africa report. This strategy will be discussed with stakeholders over the next few weeks. We hope to take a consensual national local government turnaround strategy to Cabinet by the end of the year. Between January and March next year the strategy will be taken to the municipalities.
We hope that all municipalities will develop their own turnaround strategies within the framework of the national strategy. The strategy will have two phases; for the period up till the 2011 local government elections and then from the 2011 elections until 2014. Ideally, the implementation of the strategy should be the responsibility of a broad range of stakeholders, including the private sector, the trade unions and community organisations.
Clearly, in developing a programme of action from this summit you need to take this proposed national local government turnaround strategy into account. You also need to contribute to shaping it. Your decisions here should also feed into any turnaround strategy developed by Msunduzi in terms of the national strategy.
At this stage, it’s not clear whether Msunduzi will be a metro in 2011. The Municipal Demarcation Board has, of course, called for submissions in this regard. It is hoped that this major issue will be dealt with reasonably soon in an adequate manner. But whatever category municipality Msunduzi is, it’s clear that this city has enormous potential and that this potential needs to be fully developed expeditiously. It is towards this end that, I know, this summit is directed and I sincerely hope that it achieves its goals. Please accept my very good wishes, and please feel free to draw on my services any time.
Issued by: Department of Cooperative Governance and Traditional Affairs
21 October 2009
Source: Department of Cooperative Governance and Traditional Affairs (http://www.dplg.gov.za/)
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