Auditor-General Kimi Makwetu
Auditor-General Kimi Makwetu

Municipalities told to collect revenue and curb graft

By SIYABONGA MKHWANAZI Time of article published Jan 10, 2020

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Cape Town - The National Treasury says municipalities can raise more money from various sources of revenue to increase their budgets.

This followed concerns raised over the small share of the funds allocated by the Treasury to municipalities against the larger budgets given to national and provincial departments.

For years municipalities have been getting 9% of the total Budget from the National Treasury.

In a written reply to the joint committee on finance recently, the Treasury said municipalities were on a better footing to raise more funds and added that municipalities were getting revenue from water, electricity and refuse removal.

“If all of the revenues collected by each sphere are accounted for and taken into account, then local government’s share of total revenue raised is about 25%,”the Treasury said.

“The intergovernmental fiscal system acknowledges that the revenue base is very unequally distributed across municipalities with high revenue potential in areas with strong economic activity, and much weaker revenue potential in most rural areas.

“This is why the division of revenue is structured to allocate more than twice as much per household to rural municipalities than it allocates to urban municipalities through the local government equitable share,” it said.

“These allocations are calculated to fund the cost of delivering a package of free basic services to all households with an income of less than two old-age pensions,” the Treasury said.

In the Budget review, the Treasury pointed out that local government gets a small piece of the cake because of its powers to raise its revenue.

“Any changes to the structure of the division of revenue would have implications for functions in all spheres of government,” the review states. It warned that municipalities raise 70% of their own revenue but they can increase this amount if they improve their revenue collection.

It said in the 2017/18 financial year about half of the municipalities collected only 80% of their revenue.

The review also noted that some of the municipalities were in financial distress. Releasing outcomes of his investigations, Auditor-General Kimi Makwetu had also found a deterioration in the finances of municipalities.

A new law has given Makwetu powers to clamp down on corruption in the municipalities.

This would reduce irregular expenditure which has been surging over the years, and running into billions of rands. The AG said recently that corruption was rife in some municipalities in supply chain management.

Officials from his office were threatened at some municipalities, according to Makwetu.

Political Bureau

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