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Local Government Indaba: State bank ‘key for turning the corner’

Minister of Co-operative Governance and Traditional Affairs Nkosazana Dlamini Zuma. Picture: Supplied

Minister of Co-operative Governance and Traditional Affairs Nkosazana Dlamini Zuma. Picture: Supplied

Published Jul 6, 2022

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Durban — State-owned banks play a crucial role in the development of a country and if South Africa was not in charge of its finances the country’s planning will always be stunted, said Minister of Co-operative Governance and Traditional Affairs (Cogta) Dr Nkosazana Dlamini Zuma.

She was speaking at the local government Indaba in Durban on Tuesday.

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The Indaba was conceived after Auditor-General Tsakani Maluleke released her report on the state of municipalities.

The theme was “Turning the corner in KwaZulu-Natal Municipalities: Fostering peaceful and sustainable communities through the delivery of basic services”.

KwaZulu-Natal Cogta MEC Sipho Hlomuka said challenges such as the July 2021 unrest, revenue collection and the Covid-19 pandemic must be discussed and a plan developed.

He said the government must also work with amakhosi to fast-track service delivery.

MEC of Cogta in KZN Sipho Hlomuka. Picture supplied

eThekwini mayor Mxolisi Kaunda said the gathering had the potential of helping to build sustainable municipalities because it brought together stakeholders to provide different ideas.

Premier Sihle Zikalala said local government was closest to citizens and the Indaba should not be another talk shop.

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He said the theme was a crucial reminder of the government’s resolve to build a capable developmental state which can tackle the root causes of the multiple challenges emanating from underdevelopment, inequality, poverty, unemployment, and the tragic scourge of gender-based violence.

He said violent protests end up in the destruction of community assets and disruption of services, which was counterproductive and a burden to society.

As reported by the AG, in general, the state of local government is in decline and there is an increase in service delivery challenges, said Zikalala.

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The report revealed that at 59 municipalities (25%), the preference point system was not applied or was applied incorrectly.

In addition, 82 of the 160 municipalities (51%) which were audited on local content did not comply with the regulation on promoting local producers for awards amounting to R790 million.

Zikalala said it was concerning that government officials continued to do work with the state.

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The awards to state officials were at R3.7 billion (116 municipalities) in 2019/20 and R254m (90 municipalities) in 2020/21.

In addition, at 22 municipalities, the awards to close family members were not disclosed in financial statements as required – the value of these undisclosed awards was R13m.

“The report also shows that political instability, inexperienced officials and system-related challenges led to the poor opinions at the three disclaimed municipalities, all of which were under administration,” he said.

Municipalities with disclaimers included Inkosi Langalibalele, uMkhanyakude, Nquthu, Amajuba, and uMzinyathi.

eThekwini obtained an unqualified audit opinion.

KwaZulu-Natal Premier Sihle Zikalala. Picture supplied

Dlamini Zuma said beside local government being the most important sphere, it is also the sphere that is affected by everything that happens provincially, nationally and internationally, as the remnants of these challenges were felt more intensely at local government.

She said South Africa should learn from China and other countries on what they are doing right and how they are succeeding.

She spoke about the digital divide and how schools in the rural areas were closed during Covid-19 while urban children, where there is connectivity, continued schooling. “It can make or break development.”

Dlamini Zuma warned that partnerships with local NGOs were important but people have pretended that they were saints and everything they did was perfect and at the same time are demonising local governments.

“We must reject the notion that only NGOs are safe and better at handling public funds and resources and local government is totally incompetent,” she said.

“What are we learning from the Russia and Ukraine conflict? There is a lesson we are learning: we have seen the crucial role played by state-owned banks in the financial institutions of those countries.

“There can be neither sound development nor security without a state-owned and diversified banking and financial sector that is driven first and foremost by the pursuit and advancement of our national interest,” she said.

“We can plan the whole year but if we are not in charge of finance our planning will always be stunted because after planning you have to go and beg and borrow.

“The Chinese have state banks for almost every sector. State banks are doing well and financing the development we see in China,” she said.

Dlamini Zuma said municipalities are in distress because of the failures in governance.

SA Local Government Association (Salga) deputy chairperson in KZN Ntombifuthi Gumede touched on the problems facing Umkhanyakude District and Mtubatuba municipalities over a lengthy period of time.

She said the political leadership in the province should feel ashamed of themselves.

She said in rural areas the road infrastructure was a shame and councillors were underpaid.

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