Parliament, Tuesday, 27 October 2020 – Gauteng's permanent delegates to the National Council of Provinces (NCOP) have suggested that to improve the financial health of municipalities the local government funding model should be reconsidered. The delegation was deliberating following an engagement with the MEC for Cooperative Governance and Traditional Affairs (Cogta) and Provincial Treasury in Gauteng as part of the NCOP’s Provincial Week programme.

The delegates agreed with the South African Local Government Association (Salga) that the financial health of most municipalities remains a concern, with expenditure far outweighing revenue. This places undue pressure on the ability of municipalities to deliver quality services to the people. “The question we must urgently consider is whether the revenue base of municipalities is currently sustainable to ensure the viability of these municipalities? The first phase of improving fortunes of municipalities is ensuring that they are viable,” said the leader of the delegation, Ambassador Mohammed Dangor.

In this regard, the delegation is concerned by municipalities’ low collection rates, which have shown a persistent downward trend. For example, Emfuleni Local Municipality is owed almost R5 billion for water. Households constitute 84.7% of the total amount owed and 93.1% of this debt is more 90 days old, reducing prospects of recoverability.

Secondly, the delegation argued strongly for firm consequence management to deter financial misconduct. Once municipal financial health has been established, the delegation believes that the focus should turn to judicious spending. In this regard, the delegation is concerned by high levels of non-compliance with key governance legislation, political-administrative instability, high vacancy rates in senior positions, and high levels of unauthorised, irregular, fruitless and wasteful expenditure without any consequence management in most municipalities in the province.

The delegation welcomed the establishment of municipal public accounts committees (MPACs) in almost all municipalities, but is concerned that in most cases these MPACs are under capacitated financially and administratively. This hampers good governance and frustrates consequence management.

The delegation welcomed the commitment from the Provincial Department of Cogta, provincial Treasury and Salga to collaborate to reach solutions to some of these challenges. In addition, the committee welcomed the establishment of Government Debt Management Committee and engagements to fast-track payments to municipalities of money owed by national and provincial government departments. This will enhance municipalities’ cash flow.

Furthermore, the delegation welcomes the process of procuring services from skilled professionals to assist the municipalities to conduct an audit and correct the billing data of large power and water users. Additional capacity to ensure accurate billing is key to ensuring that users pay for services.

The delegation will tomorrow, in a virtual sitting, engage the Tshwane Metropolitan Municipality on plans to address its governance challenges.


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