President Cyril Ramaphosa pinpointed South Africa’s ailing local government as a target for growth. He said this in his opening address of the Government of National Unity’s (GNU) opening of parliament speech on Thursday night.
“To achieve rapid, inclusive growth, we need to fix our struggling municipalities. Growth happens at a local level, where people live and work,” Ramaphosa said.
Growing concern over poor governance
Ramaphosa’s pronouncement on municipalities comes in the shadow of growing concern over the poor governance and financial viability of most local government entities nationally.
The State of Local Government Finances report of 2022 painted a worrying picture. It found that 169 municipalities nationally were in financial distress at the end of the 2021/22 financial year.
A day before the president’s speech, newly appointed Minister of Cooperative Governance and Traditional Affairs (Cogta), Velenkosini Hlabisa, gave his budget vote speech. He revealed that “the department will continue to monitor the 32 Section 139(1) interventions in municipalities. This as invoked by provinces and 3 Section 139 (7) invoked by the National Executive…”
A majority of municipalities have been dogged by poor governance. Also failure to adhere to financial management legislation. This resulted in adverse audit findings and endemic corruption.
Hlabisa further noted that Cogta’s allocated budget for the medium term is R395.7-billion. With a significant portion of 95.9% (R379.61-billion) designated for transfers to municipalities and affiliated entities.
Planned expenditure reductions
He revealed, however, that there are planned reductions in total expenditure. They will decrease by R3.7-billion in 2024/25 and R4.5-billion in 2025/26. An additional reduction of R5-billion in 2026/27, at an average annual rate of 3.2%.
“Despite the reductions, overall expenditure is expected to increase at an average annual rate of 4.6%. From R125.3-billion in 2024/25 to R137-billion in 2027/28.
“Transfers to provinces and municipalities account for an estimated 95.9% (R379.6-billion) of Cogta’s total budget. This over the Medium-Term Expenditure Framework (MTEF) period. It is primarily for the local government equitable share, disaster relief grant and the municipal infrastructure grant,” he said.
Ramaphosa identified municipalities as central points for economic growth.
“Our municipalities must become both the providers of social services and facilitators of inclusive economic growth. They must work to attract investment,” Ramaphosa said.
Approach could stimulate business growth
He said this approach can encourage businesses to expand and create more jobs in municipal areas. Investors are attracted to areas with reliable and modern infrastructure.
“Simplifying and speeding up planning and regulatory processes. This can make it easier for businesses to invest and operate in a municipality, thus creating more jobs. As the national government, we have both a constitutional responsibility and a clear electoral mandate. That is… to assist municipalities in the effective exercise of their powers and functions,” he said.
“We will ensure that the institutional structure and funding model for local government is fit-for-purpose. And that municipalities are financially and operationally sustainable.
“We will put in place systems to ensure that capable and qualified people are appointed to senior positions in municipalities. And ensure independent regulation and oversight of the appointment process. As an immediate priority, we will bring stability to governance in our metros. And restore the delivery of services,” he said.
