Lack of accountability behind collapsed Municipalities

This follows Cooperative Governance and Traditional Affairs (CoGTA) Minister Dr Zweli Mkhize’s comments during his budget vote speech in Parliament that a number of municipalities require urgent aid. The department’s proposed budget allocation for the 2018/19 financial year is R83 billion.

“We have seen corruption and maladministration increase annually across most of the municipalities in South Africa, but we have never seen a proper intervention by government, or at least a municipal manager or mayor being charged for misconduct,” says Michael Holenstein, OUTA Local Portfolio Manager. “Municipalities owe R23.6 billion to Eskom and water boards alone, the municipal wage bill will now increase to R94.9 billion, whilst we saw corruption in municipalities soar to claim billions of rand of taxpayers’ money in 2017.”

The Organisation Undoing Tax Abuse (OUTA) is concerned that 87 of the country’s 226 local municipalities “remain dysfunctional or distressed”, according to Minister Mkhize.

“Municipalities don’t become defunct overnight, there are clear policies and regulations that ensure good municipal practice and financial management to serve the people. We haven’t seen the provincial executives, CoGTA or Treasury enforce the law against municipal officials and the only reason we can think why this happened is that politicians are protecting their agents,” says Holenstein.

OUTA maintains that the municipalities under threat should all be in the process of implementing financial recovery plans. “This plan compels the municipal manager and officials to liquidate nonessential assets such as the mayors’ and speakers’ cars. If they do not stick to the plan or use money for other purposes, municipal officials could face jail time,” Holenstein explains.

In the troubled North West, 12 of the 22 municipalities are in the “serious financial distress” category, with eight receiving disclaimers in audit outcomes. On behalf of OUTA, a North West community representative yesterday handed over the letter demanding a Financial Recovery Plan be implemented to Wendy Nelson, Finance MEC for the province, who in turned shared copies with the Inter-Ministerial Task Team (IMTT). The OUTA Local Government Programme has been engaging with North West provincial and municipal officials since March 2018 about the crisis in the province and welcomes the recent formation of the IMTT.

According to Holenstein, the rise in public frustration and tension across the country in the face of deteriorating local government performance has become untenable. “OUTA has been approached by residents, ratepayers’ associations and business bodies in over 50 municipalities, to assist them in rectifying the dire situation. We are currently working with Ditsobotla, Govan Mbeki and Emfuleni residents to take action against their defunct municipalities and we aim to roll out nationally soon.”

OUTA Local Government Programme takes the experience and methodology which OUTA uses to address challenges in national government and applies the same approach to local government authorities. “We will actively tackle maladministration and corruption by holding local municipal leadership and individuals to account,”  says Holenstein.

By drawing on the various laws that apply to local government and finance management along with constitutional rights, we will ensure transparency through scrutinising accounts, the expenditure processes, the Integrated Development Plans (IDPs) and other good governance activities required of municipal management. We will apply pressure on the provincial and national CoGTA departments to demand that they exercise their oversight duties and responsibilities.

This new division within OUTA aims to reduce wasteful and corrupt expenditure as well as improve performance, management and service delivery to all communities within each municipality where we operate.

Read OUTA's submission here.