President Cyril Ramaphosa has announced that the government of national unity (GNU) will invest heavily in the local government sphere to accelerate service delivery and ensure that municipalities are fit for purpose.
At the heart of the turn-around strategy, according to Ramaphosa, was the reviewing of the funding models of various municipalities to increase efficiency.
The head of state was delivering his maiden State of the Nation Address for the 7th political administration under the banner of the GNU.
Basic services and infrastructure
“A capable state must start where people live and work. In many cities and towns across the country, roads are not maintained, water and electricity supply is often disrupted, refuse is not collected and sewage runs in the streets.
“In part, this has happened because many municipalities lack the technical skills and resources required to meet people’s needs. Many municipalities have not reinvested the revenue they earn from these services into the upkeep of infrastructure,” Ramaphosa said.
He also stated that commencing this year, government will work various municipalities to establish professionally managed, ring-fenced utilities for water and electricity services to ensure that there is adequate investment and maintenance.
Design of local government systems
“Many of the challenges in municipalities arise from the design of our local government system. We will therefore undertake extensive consultation to develop an updated White Paper on Local Government. This will aim to outline a modern and fit-for-purpose local government system. We will review the funding model for municipalities as many of them do not have a viable and sustainable revenue base,” he said.
For years municipalities, especially those in the rural areas had lamented the funding models. These had contributed in the dire financial state of municipalities. The South African Local Government Association (Salga) had been pushing vociferously for the changes.
“The current funding model allocates funds based on the size of the municipality. It does not take into consideration the needs of that particular municipality. Exacerbating the situation, only 9% of the fiscal budget is allocated to local government.
Municipal funding model
Velenkosini Hlabisa, the Minister of Cooperative Governance and Traditional Affairs, said the changes in the municipal funding model were meant to level the playing field.
“If you want to make South Africa work, you must make local government work. The proposal being mooted will make municipalities viable. This speaks to the reconfiguration of municipalities so as to improve the revenue base of municipalities. Most municipalities rely on grants to survive, and this is unsustainable. The changes in the funding model aims to change that,” explained Hlabisa.
