Pali Lehohla
Pali Lehohla
THE REAL NUMBERS
THE REAL NUMBERS

JOHANNESBURG - Multidimensional poverty is a window through which the basket of services - the so-called social wage - South Africa provides especially for the poor.

Money metric measures show how deprived of money or purchasing power people are, but measures based on provision and access to services give a picture on how poverty is impacted. These services range from water and electricity, to social grants among others.

This article is about the level of expenditure incurred by municipalities to provide services to the population. These are not entirely free across the population, but are free in the case where the indigent are targeted.

Turn on a tap. Switch on a light. Use the microwave. Take the bus to get to work.

Your daily life is filled with hundreds of small instances where you depend, in some form or another, on services your city or town provides, be it running water, electricity or public transport.

Service provision is the primary mandate of South Africa’s 278 municipalities. According to Stats SA’s latest financial census of municipalities report, total spending by municipalities amounted to R310 billion in 2016.

That’s R5584 per person if we consider South Africa’s population of 55.6 million, as it was in 2016. 

THE REAL NUMBERS

Two distinct groupings occur in the data when we take a look at per capita spending across metropolitan and local municipalities, represented in the graph above.

The first distinct cluster are the eight metropolitan municipalities, clustered together in the higher end (to the left) of the spending range. Four metros spent between R8035 and R8446 per resident, with Tshwane the top spender, followed by Ekurhuleni, Johannesburg and Mangaung.

The coastal metros find themselves a little lower down, with Cape Town, eThekwini, Nelson Mandela Bay and Buffalo City falling between R7708 and R6742 per resident.

The relative dominance of the metros is not surprising. In 2016, the metros were home to 40percent of South Africa’s population but were responsible for 56percent of total municipal spending.

What about local municipalities?

The Municipal Infrastructure Investment Framework (MIIF) provides a useful classification of local municipalities, dividing them into four distinct groups. These are: secondary cities, municipalities with a large town as its core, municipalities with small towns, and municipalities that are predominantly rural.

The second distinct pattern that emerges is related to predominantly rural municipalities.

These cluster at the lower end (to the right) of the per capita curve. In sharp contrast to metros, rural municipalities were home to 24percent of the national population in 2016, but they spent just 6percent of the total municipal budget.

Located mostly in KwaZulu-Natal, Eastern Cape and Limpopo, rural municipalities exhibit one striking difference in terms of how they spend their money: they devote very little to purchasing electricity.

Urban municipalities can spend up to a quarter of total expenditure buying electricity from Eskom, which they then resell to residential, business and industrial customers.

This process generates a financial surplus that they use to fund other activities.

Many rural municipalities, however, do not take part in the electricity trade. Eskom provides power directly to customers in rural areas without the municipality taking on the middle-man role.

As a group, rural municipalities spent only 6percent of their budgets on purchasing electricity in 2016, far lower than the national municipal average of 23percent.

With Eskom fully responsible for electricity distribution, rural municipalities are not burdened with the high costs associated with infrastructure development and maintenance.

The same applies to water and sanitation. District municipalities have taken over the responsibility for supplying water and sanitation in many rural areas in Eastern Cape, KwaZulu-Natal and Limpopo.

The major disadvantage of this is that rural municipalities miss out on generating their own revenue. Whereas metros and towns rely on revenue generated from selling services, rural municipalities depend heavily on grants from the national government to supplement their income. Rural municipalities might be spending less, but compared with towns and cities, they produce far less income.

Find out more about daily life and the country in which you live by exploring more articles here.

Dr Pali Lehohla is the Statistician-General of South Africa and head of Statistics South Africa