OPINION PIECE: Poor oversight leaves communities in the dark

Opinion piece by Godfrey Gulston (OUTA CFO).

25/04/2019 06:17:24

Poor oversight leaves communities in the dark

On the eve of the country’s 7th democratic election, only 7% of our country’s municipalities are functional. South Africans need to start asking tough questions about the state of municipalities, as sound financial management practices are not only essential to the long-term sustainability of municipalities, but also to the process of democratic accountability. 

Zweli Mkhize, the Minister of Cooperative Governance and Traditional Affairs (CoGTA), announced in August 2018 that only 7% of municipalities in South Africa are fully functional. Of the remaining 93%, only 31% are “reasonably functional” with 31% “almost dysfunctional” and another 31% completely dysfunctional. In a country riddled with corruption, tax abuse and poor governance, these shocking statistics went unnoticed. Except, of course, by those who personally experience the living conditions of dysfunctional municipalities.

The time has come for us as citizens to say it as it is: there can no longer be any excuses for the collapse and dysfunctionality of municipalities, as several laws set out frameworks and key requirements that should prevent the failure of our municipalities. However, while we agree that the buck finally stops with municipalities, the collapse and dysfunctionality of most local municipalities can be attributed to the lack of oversight and responsibility taken by provincial governments countrywide. Allow me to explain.

Clear guidance on the role and responsibilities of municipalities can be found in the Municipal Finance Management Act (MFMA), the Municipal Structures Act (1998), the Municipal Systems Act (2000), the Municipal Property Rates Act (2004) and the Municipal Fiscal Powers and Functions Act (2007). In addition, section 153 of the Constitution states that municipalities must structure and manage a municipality’s administration, budgeting and planning processes with the basic needs of the community and the promotion of the community’s social and economic development as a priority. Municipalities must also participate in national and provincial development programs, while having its own internal governance and oversight structures.

Legislation provides for several mechanisms for strengthening accountability. This involves separating and clarifying the roles and responsibilities of mayors, executive Councillors, non-executive Councillors and officials. This separation of political and management roles is critical for good governance, yet it is exactly where much of the problems start.

While mayors and executive committees are expected to provide political leadership through proposing policies, guiding the development of budgets and performance targets and overseeing their implementation by monitoring performance, they may not use their position, privileges or confidential information for private gain or to improperly benefit another person. Sadly, the reality in South Africa is often far removed from what the law envisioned.

The municipal manager is the accounting officer of a municipality. This individual holds the primary legal accountability for financial management in terms of the MFMA and - together with other senior managers – he or she is responsible for implementation, outputs and performance of the municipality. They have a legal duty to act with fidelity, honesty and integrity, and in the best interests of the municipality at all times. Sadly, the current situation in the majority of municipalities also does not reflect this.

Non-executive Councillors, as elected representatives of the community, also play an important role. They not only debate and approve the proposed policies and budgets but have a duty to help oversee the performance of the municipality. This means they must hold the executive mayor or committee and all officials accountable for performance on the basis of the quarterly and annual reports.

To further strengthen municipal financial accountability, the Municipal Systems Act provides for the establishing of the Municipal Public Accounts Committee (MPAC) which should review the effectiveness of financial management and the legal and authorized spending of funds. The MSA also clearly guides municipal responsibility and prescribes cooperation, assistance and mutual support between district municipalities and the municipalities within their areas. This includes financial, technical and administrative support services when requested.

With regards to provinces, the Constitution provides for provinces to strengthen the capacity of municipalities to manage their own affairs, to exercise their powers and to perform their functions. Provincial Treasury and CoGTA both legally have to oversee municipalities. According to the MFMA, monthly budget statements must be submitted to Provincial Treasury within ten working days of month end. Should problems be detected, the MFMA clearly outlines the responsibilities of the MEC for Local Government and the MEC for Finance, even listing the types of provincial interventions the MEC for Local Government may undertake in such a case. In addition, municipal mid-year budgets and performance assessments must be submitted to provincial government by January 25th each year, providing provincial government with yet another chance to pick up problems in time. All of this means that provinces can and should have asserted their powers to ensure accountability and the effective performance by municipalities. What were they doing when municipalities started failing?

National government also have a legal duty to ensure the proper financial management of municipalities. Both CoGTA and National Treasury must ensure that municipalities act in the best interest of their communities by delivering quality municipal services, promoting good governance and ensuring sound financial management. Under law, Treasury has the most responsibilities when it comes to overseeing municipal finance. Other national departments are also legally obliged to intervene in municipal management if they become aware of financial irregularities in municipal infrastructure grants (granted for different and specific capital projects) by their respective departments. Where was national government’s intervention to ensure accountability and municipal performance? The Municipal decay we witness today should have and could have been prevented years ago.

Legislation clearly provides for a safety net via a variety of oversight responsibilities assigned to provincial and national government. Variances, deviations and under performance in municipalities should have been picked up sooner. Provincial Treasury and CoGTA should have intervened in these municipalities ages ago, thus preventing the collapse, corruption and maladministration. This would have prevented municipalities from sliding into a state that requires intervention. Not to mention the serious consequences for residents, the unnecessary and unaffordable costs to taxpayers and the many disputable intervention methods.

Sadly, it seems that the ‘political will’ to turn things around is still lacking. The lack of constructive and meaningful public participation has also been lacking, and one cannot but surmise that, this is done deliberately by local governments to avoid being put on the spot by angry communities.

We are witnessing an increasing number of municipalities unable to pay their suppliers and are seriously under-funded and incurring increasing losses which threatens the local economies and the potential or inevitable National Treasury financial bail-out which is not provided for.

It is time for politicians to learn that municipalities do not exist in a vacuum and that they are inter-depended on other interested parties and spheres of government. The effective management and functioning of municipalities should be top priority if we want to take South Africa forward. If this issue is not addressed head on, the failure of our municipalities may determine the fate of the future of our beloved South Africa.

OUTA is a proudly South African civil action organisation, that is purely crowd funded. Our work is supported by ordinary citizens who are passionate about holding government accountable and ensuring our taxes are used to the benefit of all South Africans.