SONA: A history of empty promises for local government reform

Multiple interventions into failing municipalities have achieved poor results despite repeated commitments at successive State of the Nation Addresses (SONAs), a review by the Organisation for Undoing Tax Abuse (OUTA) has found.

Since the 2009 SONA, Presidents Jacob Zuma and Cyril Ramaphosa have promised to turn around local government.

The reality is that the opposite has occurred. Municipalities continue to deteriorate at an increasingly rapid rate. Many are less fiscally prudent, more susceptible to tender corruption, and hamstrung by intra- and inter-party political disputes, resulting in reduced maintenance, failed service delivery and ongoing social unrest, says Julius Kleynhans, OUTA Operations Executive.

“An increasing number of municipalities are facing collapse. In several well-documented cases, municipalities have been unable to pay their own staff, have had assets seized and essential services paralysed. Makana Local Municipality was dissolved due to civil action brought by disgruntled civil society groups but instead of addressing the collapse of that municipality, the Eastern Cape government sits back and watches while the council fights their removal with public money. It is clear that neither the President of South Africa nor national, provincial or local government leaders have an understanding of the seriousness of the situation. Following more than a decade of promises to address the decline of local government performance, we find ourselves in a worse position than ever,”  says Kleynhans.

He called on President Ramaphosa to initiate significant reforms in the local government space and ensure that municipal leaders and officials accused of involvement in corrupt relationships  are investigated with urgency.

The Local Government Turnaround Strategy (LGTS) was adopted in 2009 and highlighted in President Zuma’s SONA 2010 and SONA 2011, but has had no effect.

The strategy listed 39 achievable milestones to be reached by 2011 and 2014.

"Nearly every milestone was missed and six years later these have still not been achieved. The problems highlighted in that report still persist today," says Michael Holenstein, Manager for Local Government at OUTA.

The milestones included making sure political parties did not destabilise municipalities, electing office bearers and appointing officials fit for purpose with the required skills, implementing performance management of councillors, implementing transparent supply chain management systems, holding a single election (national, provincial and local), eradicating informal settlements, making cities cleaner through effective waste management, eliminating violent service delivery protests and making sure all provinces and municipalities have clean audits.

The 2009 turnaround strategy was largely based on the 2009 State of Local Government Report (SLGR), undertaken by the Department of Cooperative Governance and Traditional Affairs (Cogta). Subsequent local government reports completed in 2011, 2012, 2013, 2014, 2016, 2017 and 2018 were handled by National Treasury.

One of the key measurements used in the SLGR is whether a municipality is “financial distressed”, a term deliberately used by Treasury to warn that a municipality is approaching financial crisis status, as envisioned in section 139 of the Constitution and section 139 of the Municipal Finance Management Act, which requires an intervention.

The financial distress evaluation is based on: cash as a percentage of operating expenditure; persistence of negative cash balances; over-spending of original operating budgets; under-spending of original capital budgets; debtors as a percentage of own revenue; year-on-year growth in debtors; and creditors as a percentage of cash and investments.

“Over the last decade the number of municipalities in financial distress has nearly doubled from 64 (22.6%) to 125 (48.6%), while the number of municipalities disestablished in the same period is 26, reducing municipalities from 283 to 257. Of concern is that 56 of the 64 municipalities deemed distressed in 2009 have been classified as distressed on more than one occasion, with eDumbe in KZN, Emalahleni in Mpumalanga, and Maluti-a-Phofung in the Free State having reappeared seven times on the list,”  says Holenstein.

Between the 2009 and 2018 SLGR, 261 municipalities have been deemed financially distressed with 190 of those being deemed as such more than once.

Holenstein says it appears that the greatest period of growth in financially distressed municipalities occurs shortly after a local government election.

After the 2011 election the number rose from 66 to 94 and never substantially reduced while in 2016 the number rose from 87 to 128 in 2017, reducing to 125 in 2018.

He says the poor state of local governance was further highlighted in a January 2020 statement by data analytics firm Municipal IQ, that found service delivery protests against municipalities had doubled from 107 in 2009 to 218 in 2019.

In October 2019 a report by the Public Affairs Research Institute, which researches the effectiveness of state institutions in the delivery of services and infrastructure, revealed 140 municipalities had been placed under administration since 1998, in terms of section 139 of the Constitution, with the bulk of these over the last decade.

Holenstein says the number of complaints received by OUTA concerning poorly performing municipalities has increased with key complaints being around the provision of water, sewerage systems, waste collection and a lack of focus on repairs and maintenance.

“The data coming out of government, the private sector and civil society organisations all paints a deeply concerning picture for the future of local government. The sad reality is that the oversight role that is meant to be exercised by provincial and national government structures has failed and, even worse, when society turns to the courts to intervene, the provincial structures do little to enforce these orders but instead appeal these judgments, wasting time and making matters worse for the residents," says Holenstein.

"Unless we see focused action, we expect that more municipalities will collapse. The resulting failures of essential services like water and sanitation leave millions of citizens at the mercy of indifferent officials and are a significant factor in locking people into lives of misery, encouraging social unrest and damaging the economy."