National Council of Provinces (NCOP) Chairperson Amos Masondo has urged delegates at the Local Government Week (LGW2020) to take some responsibility for the state municipalities are in.
“We cannot claim innocence, when the Auditor-General makes the critical observation that over the past three years there have been serious weaknesses in the financial management of local government,” Masondo said.
Masondo made this call at the opening of the four-day virtual LGW2020 held in partnership with the South African Local Government Association (SALGA).
LGW2020 kicked off on Tuesday under the theme “Ensuring Capable and Financially Sound Municipalities”.
The event which got underway on Tuesday is attended by members from Department of Cooperative Governance and Traditional Affairs (COGTA), Department of Finance, and the South African Auditor-General.
Masondo said the hosting of the Local Government Week gives effect to the constitutional mandate of the NCOP, which ensures that provincial interests are taken into account in the national sphere of government.
“As the NCOP we are also charged with the task of making sure that, through organised local government, space is provided for the participation of local government representatives in our proceedings,” Masondo said.
He also emphasised that given the NCOP’s character and design, the House is better placed to facilitate co-operative government in a manner that allows local government to receive the necessary support in order to be able to perform its functions effectively.
COVID-19 cripples local government
Addressing the session on the challenges and opportunities of local government in advancing the fundamental tenets of a developmental state, Cooperative Governance and Traditional Affairs (CoGTA) Minister Dr Nkosazana Dlamini-Zuma said COVID-19 is amongst the challenges that are putting more pressure and crippling the local government sector further.
Dlamini-Zuma noted that the virus reached South African shores when the economy was in decline with unemployment, inequality, and poverty reaching unprecedented highs since democracy.
“The pedestrian growth we have registered over the past decade simply was not enough to ensure employment and income for a majority of our people. This, in turn, had an adverse impact on the local sphere of governance with many households struggling to keep up with payments for services.
“This resulted in households owing over R127.7 billion to municipalities at the end of the municipal financial year in June. Slowed business activities, tax evasion and inadequate collection systems resulted in a total debt of R181.3 billion of which R28.9 billion was owed by businesses and R18.1 billion by government in all its spheres at the end of the Municipal Financial Year,” the Minister said.
State of municipal finances
Dlamini-Zuma also told participants that the financial woes and the mismanagement of some of the municipalities have led to the deteriorating state of municipal finances.
The Auditor General’s report shows that 43% of municipalities received an unqualified audit outcome, with only 11% of them receiving no findings, while 28 municipalities did not submit their reports on time.
The report also noted that 91% of municipalities did not comply with legislation, pointing to a lapse in oversight and the lack of controls, particularly as it relates to supply chain management and procurement.
“This historical matter is at the core of the mismanagement of resources related to the fight against COVID-19 which has seen the state pay up to five times the value in certain products especially the Personal Protective Equipment,” Dlamini-Zuma said.
These matters of mismanagement, highlight long-standing challenges that have not been addressed in the local sphere, she added.
South African Local Government Association (SALGA) President Thembisile Nkadimeng said that the local government sector hopes that discussions will provide an opportunity to propose lasting, practical and sustainable solutions to address challenges facing the municipalities.
While it is true that a number of serious and complex challenges persist in some municipalities, by and large, Nkadimeng said local government has delivered quality services and a better life for the majority of our people.
“Official statistics show that tremendous progress has been made particularly in historically neglected areas like former homelands, despite the reality that municipalities are continually chasing a moving target due to our population growth and in-migration rapidly giving rise to new settlements,” Nkadimeng said.
Unfunded budgets contribute to financial distress
Deputy Finance Minister, Dr David Masondo, said the interventions on issues facing local government can be grouped into three areas, including the administrative, structural and political/people challenges.
He said the approval of unfunded budgets is one of the main contributing factors to the financial distress faced by the municipalities.
“Many municipalities approve budgets that are not credible and not based on realistically anticipated revenue and expenditure. By so doing, they effectively begin their financial years through failure,” Masondo said.