A Wail of Two Cities
“It was the best of times; it was the worst of times…”
You probably recognise the iconic opening line from Charles Dickens’ most famous and successful work, A Tale of Two Cities. Although it was first published in 1859 and concerned events that happened almost a century before that, it’s central themes are still hugely relevant today.
Dickens viewed power as a conduit for corruption. Throughout the novel, he exposes his three central characters as being corrupt individuals who begin abusing their power as time goes on.
“The best of times” refers to the aristocracy living in London and Paris who, in the late 18th Century, enjoyed vast wealth, influence and power. The peasants, however, were living in “the worst of times,” – particularly in France, where they endured extreme poverty, hunger and a lack of basic necessities, and were subjected to oppressive rule by the aristocracy.
Fast forward to today, and there’s definitely a case for “the more things change, the more they stay they same.”
Particularly, it seems, in South Africa.
Auditor-General (AG), Tsakani Maluleke, recently issued a stark warning about the state of our metropolitan municipalities’ service-delivery and financial performance.
In particular, she highlighted two metros – the City of Tshwane and Mangaung – which, she feels, are in danger of soon not being able to operate as going concerns.
Despite having better resources than many other metros, these two cities have, in the last four years, “displayed the same common problems as those with fewer resources,” including “weaknesses in infrastructure, project delivery, and ineffective preventative maintenance,” she said.
In her 2023/24 Integrated Annual Report, Maluleke pointed out that eight metros are responsible for delivering services to 8.9 million households (46% of South Africa’s population) and were responsible for 57% of the estimated local government expenditure budget for 2023/24.
“Metros typically have better capacity and bigger budgets and can more easily attract suitably skilled and competent professionals,” Maluleke said. “Therefore, their audit outcomes are expected to be better, and they should be setting an example to other municipalities.
“However, the overall audit outcomes of metros have continued to regress since 2020/21. They are plagued by poor revenue management, debt collection, and budgeting practices, and financial losses due to poor-quality spending.”
On top of all that, there’s ever-present problem of servicing “significant” loans, and a lack of what Maluleke describes as “credible reporting on performance and finances, [which] weakens municipal accountability processes and affects the councils’ ability to assess municipalities’ performance or make decisions in response to underachievement.”
It all adds up to severe consequences for the communities these metros are supposed to serve.
In the past four years, for example, the AG’s office has notified accounting officers at five metros and three municipal entities of no fewer than 15 material irregularities related to the poor management of wastewater treatment works and landfill sites.
Among many negative outcomes, this has led to highly compromised living conditions and a constant threat to residents’ health from polluted water sources and ill-managed landfill sites.
Unfortunately, I find myself wondering if the dire findings of the AG’s report are actually going to result in any meaningful change.
Only a year ago, the Organisation Undoing Tax Abuse (OUTA) expressed grave concern for the findings of the previous year’s AG’s report.
At the time, Julius Kleynhans, OUTA’s Executive Manager for Local Government, said the report revealed “a continuing decline in financial management, accountability, and service delivery across municipalities.
“The decline in clean audits is a clear indication of systemic failures within our municipalities, weak political oversight and a lack of consequence management. This not only compromises service delivery but also erodes the trust that communities place in their local governments.
“It is unacceptable that so many municipalities continue to fail in their fundamental duty to manage public resources responsibly and provide basic services to the people.”
He went on to say, “Local government is the closest sphere of government to the people, and it is essential that it functions effectively. We cannot allow the continued mismanagement of public funds to go unchecked.”
Unfortunately, it would seem that this is exactly what has happened.
Twelve months on, and the latest AG report could almost be a carbon copy of the previous year’s.
This clearly can’t continue. The findings in the AG’s report are worrying but extremely valuable, pinpointing exactly where the worst of the problems are. Sadly, this insightful information is worth nothing unless people in a position to do so take decisive, remedial action – and soon.
Richard Morrow, from the Brenthurst Foundation, is cautiously optimistic. He believes the failing of our metros and municipalities could be a springboard for change.
“The existing model for local government is broken,” he says, “but adversity breeds innovation; perhaps, then, the moment has come to change how our failing local municipalities operate.”
Although the AG’s report focuses largely on metros, Morrow emphasises the importance of our 205 local municipalities, as this is where over 50% of South Africa’s labour force lives. They also contribute a quarter of its GDP.
There is an urgent need, he believes, for a “hyperlocal” approach that has three key strategies:
- Tap into the insights, expertise and resources of the people living in the local communities.
- Empower local municipalities to operate with greater autonomy.
- Be versatile in the face of economic change and exploit new economic opportunities while continuing to support existing industries
“A hyperlocal approach is not to be mistaken for a silver bullet,” says Morrow, “but it outlays a series of actions that would be fundamental in unlocking economic growth at the local level, and ultimately for the rest of the country.”
Presidency Director of Strategy and Delivery, Saul Musker, agrees. “I think it’s widely understood that the deteriorating performance of local government is a major constraint on growth,” he said.
He outlined 3 priorities to address the challenges:
- Shift to a utility model for water and electricity services, and other “trade services” such as waste management in local government, to ensure financial and operational sustainability.
- Separate financial accounts for the utility so that billing revenue is controlled by the utility, and enough of that revenue is retained to invest in the assets.
- Standardise and professionalise the appointment of senior officials in local government to ensure all municipal managers and CFOs meet minimum competency requirements.
Perhaps, at last, government is cracking the whip.
With local government in a state of crisis, (two thirds of municipalities are in financial distress and 64 out of the 257 are deemed dysfunctional) President Ramaphosa acknowledges drastic action is needed.
“Growth is the is the only way to achieve fiscal sustainability and social progress,” he said. “That is why we will not yield in our efforts to reform this economy, to fundamentally transform it, and to remove the constraints on growth.”
I hope he follows through with this commitment, because right now, when it comes to our metros and municipalities, local is definitely not lekker.