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How structural flaws contribute to the crisis in South Africa’s municipalities

- Marius Pieterse

The dire state of municipal governance in South Africa has been in the news for much of this year.

Recent events in Emfuleni Local Municipality, an urban municipality with more than 700 000 residents in Gauteng, the country’s economic hub, show the extent of the problem.

The municipality, located to the south of Johannesburg, has been unable to settle water and electricity debts owing to the utilities Rand Water and Eskom. This has led to services to residents being reduced or cut. Lack of infrastructure maintenance has further bedevilled the delivery of water and electricity, as well as rubbish removal.

Sewage spills have plagued suburbs and severely polluted the Vaal River - the main source of drinking water in the province that is also crucial to its tourism and agriculture. The municipality’s entire basic vehicle fleet was recently repossessed by creditors.

In June, the Gauteng Provincial government placed the municipality under financial administration.

Emfuleni is not alone. The national minister responsible for municipalities recently said 31% of the country’s municipalities are “dysfunctional”, and another 31% “almost dysfunctional”. He went on to say that many South African municipalities are battling with financial management as well as good governance and administration.

Given its extensive infrastructure and a large tax base, Emfuleni is the kind of municipality that has little excuse not to function well. If it is failing, how could less developed municipalities thrive?

Who is to blame?

It’s tempting to blame the government for the municipality’s troubles.

According to the National Treasury’s municipal finance data website, Emfuleni had a healthy cash balance in 2015. But it then fell by over a third in 2016, before collapsing in 2017. While the municipality did have problems with wasteful expenditure and budget overspending before, things got much worse after the local government elections in August 2016.

The municipality has also been experiencing political turmoil. The previous mayor resigned in 2017 amid a sex scandal and rumours of financial mismanagement. Opposition parties and civil society organisations blame the council and mayor, who are from the governing African National Congress, for the municipality’s problems.

But it’s also necessary to look beyond people and politics, and consider whether structural factors have contributed to the crisis. Emfuleni’s problems perhaps point to flaws in the way in which local government in South Africa is structured and financed.

Raising revenue

Emfuleni’s cash shortage has partly been blamed on poor collection of revenue from service charges. This highlights the extent to which South African towns depend on income from service delivery. Municipal finance data show that Emfuleni generated about 85% of its own income in the 2016/2017 financial year. (The rest came from its equitable share of national tax revenue and grants from national government). Most of its self-raised revenue came from service charges.

A budget that depends on recovering service debt means that the ability to run the municipality depends on how much residents can consume and pay for. This is neither stable nor sustainable.

A number of factors affect these revenue streams. The first is that a culture of non-payment is pervasive among residents. Secondly, service revenue is also often affected by supply side constraints, such as water scarcity or power cuts. And lastly, a revenue stream based on consumption also assumes that most residents can afford services. This isn’t always the case.

Emfuleni has gone through tough economic times in recent years. Unemployment has risen sharply and some better off residents have moved away. This does not bode well for service demand, or the ability to pay for what has been consumed.

The problem won’t go away unless municipalities find less volatile ways of balancing the books. A greater allocation from national government would be one route. So would raising money through loans and imposing taxes or development levies on businesses.

But the problem goes beyond money.

Unclear lines of accountability

At least some of the crisis in Emfuleni has been down to mismanagement. This calls into question how municipalities are run.

According to the Constitution, local governments have both legislative and executive functions. This means that there isn’t a clear separation of powers between municipal executive leaders (mayors) and the councils to which they report.

On top of this, municipal powers are closely tied to administrative functions, meaning that there is an overlap between political and bureaucratic structures in municipalities.

The close connection between different functions makes sense. But it makes lines of accountability unclear. This isn’t helped by the fact that municipalities can chose from different governance models. This means that accountability works differently in almost every municipality.

This may well have added to Emfuleni’s woes. The municipality has an elected municipal council and an executive mayor system. It is further part of the Sedibeng District Municipality, with which it shares responsibility for many of its functions.

There are concerns that executive mayor systems give too much power to mayors and not enough to councils. There is also insufficient accountability, and flows of information, between local and regional municipalities.

South African municipal governance is also bedevilled by the influence of political parties over councils, mayors and the administration. In Emfuleni, for instance, the mayor initially resigned when the council was put under administration, but then withdrew his resignation after the ANC intervened.

What needs to happen

South Africa may have to consider reducing the governance options available to municipalities, to ensure more uniformity and easier oversight. It also needs to devise uniform, simple and clear, internal accountability structures for local government. And it should seriously consider legally regulating the line between political parties and the civil service.

Finally, provincial intervention in local government affairs is not ideal, and should only happen in extreme cases – as has been the case in Emfuleni. But it would be better if this was triggered by an event - such as a municipality falling into arrears with the water or electricity supplier – rather than waiting for political discretion to be exercised.The Conversation

Marius Pieterse, Professor of Law, University of the Witwatersrand. This article was originally published on The Conversation. Read the original article.