Cape Town - Municipalities have made inroads in delivering key services, increasing their institutional capacity and revenues and were beginning to post improved audit outcomes, but they still faced significant challenges.
This is according to Finance Minister Pravin Gordhan, who was speaking at the release of the third Local Government Budget and Expenditure Review today.
The review, which tracks spending and budgets for all 283 municipalities for the period 2006/2007 to 2012/2013, revealed that between 2008 and 2009, 7% more households had access to basic water, 7.6% more had access to basic sanitation and 6.2% more had access to free basic electricity.
Added to this, 1.7 million more households in 2009, compared with 2008, received refuse removal services.
"Clearly what this report shows is that overall, we are making progress and that the institutions of local government are beginning to settle ... Increasingly, institutional capacity is growing, although we have to admit that in smaller, particularly rural municipalities, there are still significant challenges," Gordhan said.
He said although government had increased service delivery, it hadn't yet reached the 100% mark, which was why there were still sporadic protests against service delivery.
The report revealed that challenges included demographic ones such as HIV and Aids, as well as rapid urbanisation - which led to skilled people leaving municipal areas - revenue challenges and decreasing trust by communities in local governments.
Municipalities also spent too little on repairs and maintenance and were often under-pricing services as they weren't following the Systems Act principles for tariff setting.
Other challenges included municipalities not focusing enough on economic development, spending too much on non-essential services or goods, poor management of revenue, badly managed procurement processes, poor management of assets and continued underspending on capital budgets.
Gordhan said municipal leaders needed to focus more on getting the basics right, such as planning, budgeting, better links to communities and streamlined bureaucracy, if services to communities are to improve.
He said the report also revealed that there was a low level of trust between officials at local government and communities, and pointed out that councillors and mayors needed to work harder to explain what they do and be more present in communities.
Municipalities also needed to focus on delivering quality services, not just quantity services, he said.
"What this means is that municipalities need to focus on delivering services, building their capacity, building economic infrastructure and investing the right amount in capital expenditure - both maintenance of infrastructure and developing new infrastructure - and forget the frills, whether those frills are brand new Mercedes Benzes or something else like that.
"That will make a significant contribution to enabling municipalities themselves to enable the national fiscus to cope with some of the stresses and strains of a very uncertain economic environment, which we are living in at this point in time," he said.
National government continues to provide municipalities with significant support, including financial support - largely through conditional grants and the fiscus - and R3 billion in capacity building by seconding officials from 2007 to 2010 through the Siyenza Manje hands-on support.
Gordhan suggested a shared service approach needed to be adopted, so that smaller municipalities could also access better services from other municipalities in their respective district municipality.
He said better procurement processes were also needed to ensure money wasn't wasted and that municipalities needed to take more advantage of public works programmes.
Municipalities' own contribution to financing their capital expenditure had also slipped below 50% of total capital spending.
However, he said many municipalities do have the capability to borrow, but perhaps aren't borrowing enough, on a sustainable basis.
On top of this, the 2008-2009 recession had impacted on municipalities. In December last year, municipalities were owed R62.3 billion - a 10.8% debt increase for the same month in 2009.
Much of this debt was 90 or more days outstanding and the National Treasury would be working with the South African Local Government Association (Salga) to see if can get more assertive debt collection, while also writing off older debt.
Gordhan said more consumers were refusing to pay rates, and that this was "totally unacceptable."
The National Treasury wanted to engage with Salga and the Department of Cooperative Governance and Traditional Affairs over the issue. - BuaNews
