AG’s report shows we should be worried local government is getting worse
Despite local government, in terms of ANC policy, being a key driver of development, it is mostly ignored. It’s one of those cabinet portfolios that, with the recent brief exception of Pravin Gordhan, is a place to park idiots, confident that their incompetence will mostly escape scrutiny.
Yet this is where people interact most with government. Water, sewage, roads, rubbish removal and, often, electricity, all come to us through the municipal pipeline.
And what a ramshackle pipeline that is, bunged up where it is not seeping. By government’s own estimate, a third of our municipal entities are dysfunctional, with another third teetering on the edge.
This week, the Auditor-General’s annual report put some numbers to the shambles. Irregular spending by municipalities is expanding exponentially. In the 2014/15 financial year it had grown by 50% to R16billion. In this past financial year, it ballooned by 75% to R28.4bn.
By way of chilling comparison, this is more than the additional amount of R23bn that the controversial VAT increase is expected to bring in, to help fill a projected national budget shortfall of R50bn.
Two-thirds of the irregular municipal expenditure is because of not complying with the procurement process regulations. The other third is because they simply didn’t even bother with a tender.
The AG audited the 257 municipalities and 21 of the 60-70 municipal entities that exist, only 33 received clean audits, with not one of those being in North West, Free State and Limpopo - provinces that themselves have collapsed or are on the brink of doing so.
Gauteng and Northern Cape managed only one clean audit each, two in the Eastern Cape, six in KwaZulu-Natal and 21 in the Western Cape.
Not a surprise, given that 170 of the chief financial officers in local government are not qualified to hold the post.
Andrew Siddle, a UCT fundi in local government, says it is a problem that everyone has shied away from. “Long before state capture became a buzzword for what was happening at a national level, the very same thing was happening everywhere, unremarked upon, at a local level.
“Elite capture, where the politically connected divert municipal resources to benefit themselves, their family and their friends, has being going on for decades. This is now entrenched, with these vested interests having zero interest in delivery.”
This is reflected in what the municipalities spend money on. Statistics South Africa’s analysis shows that in 2014/15 salaries took up at least 26% of budget, rising occasionally to as much as 66%. Administrative costs came to 30% and contractors 5%.
When it came to services, 22% was spent to keep the lights on, although Eskom debt doubled from R6bn to R13.5bn in the past year. On average, 5% was spent on water.
Almost a third of municipalities (31%), with combined budgetary deficits of R5.6bn, are “vulnerable” and may not be able to continue operating, says the AG’s report. Separately, the Treasury last week identified 17 district municipalities experiencing “financial distress” and 64 with negative cash balances at the end of June last year.
Finance Minister Nhlanhla Nene said at a seminar last week, without naming them, that “a number” of South Africa’s biggest cities are on the brink of financial collapse. They “cannot be allowed to fail”.
AG Kimi Makwetu and Siddle agree on the root cause: a lack of decisive leadership at the very top. Makwetu bemoans the fact that there are no consequences for corruption and incompetence. Siddle says that for the past decade, the Zuma years, South Africa has had a “distracted national leadership”, unable to ensure basic governance.
This invites brazen behaviour lower down the food chain.
The AG says the environment in which his audit teams had to work have become more hostile. Teams are being threatened and pressured, with “increased contestation and pushbacks, (where) their audit processes and motives were questioned”.
Siddle says the future is bleak and that there is no end in sight to the collapse, only more of the same. For President Cyril Ramaphosa to try to tackle these fiefdoms would, at this stage, be political suicide.
“It could only be done at huge political cost.
“There just isn’t the oomph or the will to do so.”
The only immediate hope is that voters, especially outside the urban areas, discover the power of the ballot box.
“But the sad truth is that the people most terribly affected by non-existent service delivery persist, each election, in voting in the same set of rogues.”
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** The views expressed here are not necessarily those of Independent Media.