The Department of Cooperative Governance and Traditional Affairs (CoGTA) yesterday briefed the Portfolio Committee on Cooperative Governance and Traditional Affairs on the effect of the pandemic on municipalities, and how the additional R20 billion stimulus package announced by President Cyril Ramaphosa recently to cushion the municipalities, would be dispensed to ensure that they carry on with their mandates under these difficult conditions of the protracted lockdown.
Briefing the committee, the Deputy Minister of Cooperative Governance and Traditional Affairs, Mr Parks Tau, said the impact of the lockdown on municipalities has resulted in a situation in which many municipalities can’t meet their financial commitments, such as with Eskom and Water Boards.
He said: “This fly in the face of increasing demands for municipalities to meet the increasing demands of water and sanitation, and to cater for the most vulnerable people, some of which are homeless. Most significantly, this has affected the credit rate of the municipalities and has affected the cost of borrowing for them from the banks.”
According to Mr Tau, the South African Local Government Association (Salga) has decried the fact that municipalities are currently using their limited resources to intervene in arresting the impact of the pandemic on their communities. As such, he said, the stimulus package will go a long way in assisting municipalities to cope in this distressful period.
What this means, he said, is that “municipal expenditure patterns have been shifted. The reality is that municipalities are currently struggling with revenue collection, which impacts on cash flows and negatively impact on the sustainability of many municipalities”.
Mr Tau told the committee that the department’s presentation to the committee was a draft document about ideas put in place for the purpose of discussion on how best to manage the stimulus package. He said the department will continue to consul the National Treasury and other stakeholders to ensure that the R20 billion stimulus package is put to good use.
He also singled out the critical role that Members of Parliament could play in this regard. He said the ideas the department will get on the use of the stimulus package will help towards the implementation of the stimulus package.
Members of the committee were roundly disappointed that the department did not share much with them about how it intends to spend the R20 billion funding. Most members of the committee wanted to know what strategies are in place to counter the long-standing record of financial mismanagement, ineptness and rampant corruption in many municipalities to ensure that the R20 billion serves its intended purpose?
In response, Mr Tau said: “We are considering the dispensing of the money to be done monthly and this is a means to try to introduce controls and to immediately counter any mismanagement of the money by municipalities.”
Furthermore, the committee wanted to know what relief measures the department has in place to assist families that cannot afford water rates, electricity and other related payment obligations due to the lockdown.
He said the repurposing of municipal grants is intended to address areas of liquidity and cash flows of municipalities and to respond to the challenges of unaffordability created by the pandemic.
The committee asked why it must wait until August for the approval of the stimulus package – and wait when it’s business unusual. The committee asked the department why is the use of this funding not treated with the urgency it deserves?
The officials from the National Treasury, who were in the meeting, told the committee that the R20 billion stimulus package has to be done through the Division of Revenue Bill which is still before Parliament, a process, they said, which would allow for the review of the budgets of municipalities, in order to allocate the stimulus package.
The committee asked the department to explain its turnaround strategy for the use of the R20 billion stimulus package, given the poor track record of certain municipalities on expenditure. In response to that, Mr Tau said the department will use a vulnerability index in accordance with the financial pressures that municipalities are faced with. He said when it comes to municipalities that lack capacity, the money will be channelled through a different process of disbursement.
The Chairperson of the committee, Ms Faith Muthambi, said: “We are asking all these questions because we want to make sure that this money will be used for its intended purposes and not for other purposes.”
Ms Muthambi told the committee that in due course the department will afford the committee with a plan on how the R20 billion would be utilised. “We want this plan because it will inform our oversight over this money,” emphasised Ms Muthambi.
By Abel Mputing
1 May 2020