Local governance is falling into a sinkhole of irrelevance

Auditor general Kimi Makwetu found many municipalities were found wanting when it comes to adhering to accounting regulations.
Auditor general Kimi Makwetu found many municipalities were found wanting when it comes to adhering to accounting regulations.

The Auditor General’s report on audit findings for the period 2018/2019, released a few days ago, reflects a systemic deterioration in the governance systems, financial management and technical capabilities at the level of Municipalities. Instead of showing improvements or changes for the better, local government has regressed to the levels last seen in the early 2000s.

For at least three consecutive years now, the AG’s report has painted this incorrigible state of local government. In all the reports for the previous three consecutive years, the underlying problems have always had something to do with administrative inefficiencies, technical incapacities and lack of critical skills.

While this picture continues to unfold before all the stakeholders, we must recognise that there are cause and effect factors at play and their interdependence must be understood clearly to solve this malaise. Local government is known as the third sphere of government together with the Provincial and National spheres but appears to be at the bottom of the invisible pyramid of importance.

The Local Government White Paper of 1998, espouses the vision for Local Government as being developmental sphere “which centres on working with communities to find sustainable ways of meeting their needs.”

It was in this context that the idea of a developmental state came about as one of the ways to make the state responsive to the people; and this was to permeate into all spheres. However, this is proving to be a challenge of skills concentrated at the top of the pyramid (National and Provincial spheres) while the bottom is a revolving door that takes in new individuals who exit as soon as they have gained skills and momentum.  

Local Government now has a taller mountain to climb towards achieving its original purpose. Firstly, local government was given powers to exercise such that it can yield a positive impact on social development and economic growth.

This simply suggests that municipalities must engage in economic activity that enables industry to form and function in a way that facilitates the development of the communities and uplift them from adverse social factors of poverty, unemployment and inequality. Given the current state of affairs, we need not ask how far local government is towards achieving this goal. Economic development functions within municipalities are the least resourced and under capacitated thus economic growth is stunted. The rule of thumb is that low economic activity results in low or no economic growth at all and the converse is true.

 

Secondly, local government was seen as the coordinating force to align all investment from government and the private sector within a municipal area. Yet, we fing ourselves in a situation in which the local economy remained untransformed, and translating into a structurally misaligned state of economy for South Africa.

The lack of technical capability to manage the value chain of the municipality has resulted in destruction of value that municipalities should account for. For municipalities to play the role of coordination and alignment shrewdly, it requires a depth of skills that have a working understanding of both public and the private sectors.

In essence, local government needs a cohort of people who are enterprising but socially conscious. The people must be able to run the municipality like a business to achieve the social imperatives of local government.

The absence of such technical capability has resulted in the dissonance between the enterprise of the municipality that generates revenue and the construction of infrastructure, particularly for economic purposes.

Instead the coffers of the municipalities are supposedly spent on building new infrastructure which is sub-standard while neglecting the maintenance of infrastructure in general. Some of the infrastructure cannot be accounted for physically and financially resulting in finding by the AG.

Thirdly local government was designed to contribute to the cause of building social capital through providing community leadership and vision.

This is the core of the governance framework within municipalities and out of this the legislation that governs this sphere was born. In such a context, a lack strong governance system, accountability became, and is still is, a swear word. This is exemplified by the fact that; reports are never done properly and finances are not used as per the requirement of the Municipal Finance Act. This is one of the concerns expressed by the AG report: “We should be concerned about the number of auditees that are unable to meet their legislated obligation to submit financials”.

 

Finally, local government has been charged with seeking to empower marginalised and excluded groups within the community. As such, the culture of corruption, and a lack of a proper framework of empowerment for service providers based on merit and the developmental goals of local government. The sad practice of channelling resources to a few individuals has gripped the local government system to the disadvantage of enterprising service providers that need to be developed into businesses that employ local people.

On the other hand, the lack of skills is now more evident that ever in the appointments of personnel and service providers alike without merit. This led to a situation in which: 'Annual irregular expenditure increased from R25.2-billion to R32.06-billion. The number of municipalities incurring irregular expenditure increased slightly from 239 to 241. These figures include amounts recorded from financial statements that were received after the submission deadline'. There is a stark reluctance, therefore, to hold people accountable when it comes to the use of public resources. This is only the tip of the ice berg in as far as the lack of financial management capability is concerned.

 

 

The crisis of local government can never be isolated from the rest of government. The failure of local government is the failure of government as a whole and thus government must take responsibility for this current state. Municipalities are at the coalface of service delivery; thus, the impact of maladministration are far-reaching.

The local government sphere has to engender a participatory model of governance upon which, communities can influence the programmes and can hold public officials accountable. Local government must be given due attention by resuscitating capability and capacity building programmes such as Siyenza Manje that was run by the Development Bank of Southern Africa (DBSA) under the auspices of the National Treasury. This programme made available both financial and technical to augment the skills within municipalities that resulted in interventions such as Operation Clean Audit and other measures. Such programmes engendered accountability and a sense of ownership in the stakeholders to do better every time!

 

The decay of local governance has left many competent professionals disheartened and disenchanted with local government structures and the counter-productive environment. As a result, municipalities have experienced skills flight as such professionals look for opportunities in the private sector or at higher levels of government structures; that is, at provincial and national. This has further deepened the technical incapacities of local government structures and lack of accountability.

Local government needs to redeem itself from falling into sinkhole of irrelevance to rebuilding a fabric of professionalism, meritocracy and being a positive force of economic and social development.

We need innovative programmes that will bring local back to its core mandate and create greater economic activity that will lead to economic growth. After all, proper governance, astute financial management coupled with strong technical capabilities of managing the value chain of the municipality are the ingredients of a responsive and developmental local government.

Holeni is Chief Revenue Officer for Ntiyiso Consulting

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