current state of local govt n.
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CURRENT STATE OF LOCAL GOVT. ADDRESS BY: CHRIS NAGOOROO. IMFO CONFERENCE SEPT 2011 CAPE TOWN. INTRODUCTION. Compliance has been described as a “have to” whilst sustainability is a “want to” However, embracing sustainability often starts out with compliance.

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current state of local govt





  • Compliance has been described as a “have to” whilst sustainability is a
  • “want to”
  • However, embracing sustainability often starts out with compliance.
  • We are now 17 years into our democracy and whilst municipalities
  • have played a valuable role in our democracy, it is time to move from
  • compliance to sustainability.
  • Commitment to sustainability begins with awareness of our impact and
  • a sense that making a difference is possible
  • It really means moving away from just doing what is expected to
  • setting higher expectations, and embracing new roles and processes
  • There are several sustainability issues that we need to address

“The quality of a person’s life is in direct proportion to their commitment to excellence, regardless of their chosen field of endeavour” – Vincent Lombardi

key issues service delivery
  • Whilst local government has contributed to the achievement of a
  • number of significant social & economic development advances and
  • the majority of our people have increased access to a wide range of
  • basic services and more opportunities have been created for their
  • participation in the economy, the local government systems are still
  • showing signs of distress.
  • The turnaround strategy for Local Government promised to address
  • many of the issues, but more needs to be done
  • Persisting apartheid spatial segregation patterns require large public
  • subsidies and poor households face disproportionate costs to access
  • opportunities.
  • The current pace of urban population growth is outstripping economic
  • growth.
  • Cities are increasingly becoming home to large populations, living in
  • poverty and conditions of extreme deprivation.
  • Backlogs to secure housing and services are rising.
key issues service delivery1
  • Rapid growth in informal settlements
  • Urban economic growth rate has failed to deliver required jobs.
  • Public transport, land and housing delivery systems are failing.
  • Existing infrastructure and equipment for public transport, community
  • roads, water, sanitation, power, etc. is both inadequate and worn out.
  • Effects of climate change will affect urban poor more than anyone else
  • – flooding of low lying informal settlements, lack of jobs and food
  • security concerns.
  • Priority projects of government is the speeding up the provision of
  • community infrastructure and to accelerate access to water, sanitation
  • and electricity by 2014. Should have decent human settlements and
  • access to these services by all households.
  • The scale of reinvestment required to address these issues is beyond
  • the capacity of the national fiscus alone.
  • Well performing cities are intrinsically linked to successful rural
  • economies – i.e. funding the roll-out of social programmes to towns
  • and rural areas.
major service delivery protests
  • Since 2004 an unprecedented wave of popular and violent protests
  • has flowed across the country
  • These protests have not only been about the provision of services
  • particularly housing, water and ablution facilities, but many of the
  • protests were about the failure of municipalities to engage ordinary
  • people in political processes
  • Protesters explain that they took to the streets because there was no
  • way for them to get to speak to government, let alone to get
  • government to listen:
  • - Service delivery protests increased from 10 in 2004 to 111 in 2010 and to 56 up to August 2011
  • - Socio-economic conditions – poverty, living conditions,
  • attitudes of councillors, corruption, unrealistic expectations and lack of confidence and trust in the system have contributed to these protests
  • - Public participation poor - ward committees not established or functioning, non-attendance by ward councillors, lack of
  • resources
  • The State of Local Government in South Africa Report, 2009

admits that “the national government may have created

expectations that local government cannot fulfill, or place a

burden on municipalities that perhaps only the strongest

amongst them can carry”.

  • Whilst sufficient steps were taken to address backlogs further

improvement is required due to population and economic growth


  • Majority of municipalities face economic and human resource capacity


  • 2 main obstacles to accelerating basic services – lack of critical

infrastructure (rural) and increasing informal settlements (urban)

  • Factors contributing to delays in service delivery rollout:
  • - inherited backlogs
  • - insufficient capacity
  • - funding restraints
  • Factors contributing to delays in service delivery rollout (cont):
  • - economic migrants
  • - poor credit control and debt collection
  • - unrealistic promises
  • Backlogs statistics from data sources often vary e.g. households
  • receiving below a basic level of service for water services: 10.3%
  • (DWEA) and 19.3% (Municipal source)
  • Backlogs statistics per COGTA Overview Report: National State of Local Government Assessment (2009) are disclosed hereunder:
  • Water
  • 1 069 152 out of 12 996 300 households receive below a basic level of
  • service
  • 213 830 households need to be served per annum to eradicate
  • backlogs by 2014. Does not take into account growth, new households
  • and infrastructure failures.
  • Sanitation
  • 3 002 152 out of 12 996 300 households receive below a basic level of
  • service
  • 600 452 households need to be served with sanitation facilities to
  • eradicate backlogs by 2014. Does not take into account growth, new
  • households and infrastructure failures.
  • Electricity
  • Limited availability of energy is a serious challenge
  • ESKOM does not have generation capacity to meet rising demand.
  • 9 010 056 (72.8%) of households are connected to the electricity grid.
  • 3 365 644 (27.2%) of households are below a basic level of service
  • (using wood, coal, gas, paraffin).
  • Refuse Removal
  • 7 478 334 (60%) of households have adequate services
  • 4 988 787 (40%) receive below a basic level of service (use communal
  • or own refuse dump and no rubbish facility)
  • There are still numerous landfill sites that are not registered or don’t
  • comply with permit conditions
  • Housing
  • Many municipalities have made significant progress in addressing
  • historical backlogs in basic infrastructure.
  • However, shifting patterns of demand and migration to urban areas is
  • outstripping investment capacity of municipalities and posing serious
  • problems.
  • While housing is a provincial function some Metro’s have undertaken
  • this function on their behalf.
  • Long delays can be experienced when plans are submitted to Province
  • for approval and funding, resulting in delays in project implementation.
  • Political instability at some municipalities delayed housing projects.
  • Some of the unfinished houses are vandalized.
  • Housing (contd)
  • Fast growing informal settlements - added pressure on municipalities
  • Over 2 700 informal settlements were identified during 2008.
  • Roads and Public Transport
  • Whilst a number of metro’s invest their own funding on road
  • infrastructure, a number of the 283 municipalities rely on conditional
  • grants e.g. PTIS, EPWP and USDG
  • FFC researched the impact of under-investment on road management
  • and maintenance, and identified these concerns:
  • - State of roads has an impact on economic development of the
  • municipal area. Untarred roads lead to where the majority of the
  • population is located.
  • - Lack of maintenance on gravel roads and high cost to maintain the
  • roads
  • - Non maintenance of access roads impacts negatively on the
  • provision of services
  • - Roads constructed in the 1970’s and 1980’s without storm water
  • drainage system required urgent upgrading
financial state of local govt
  • MFMA requires municipalities to “take reasonable steps to ensure that
  • the resources of the municipality are used effectively, efficiently and
  • economically”.
  • Corruption, financial mismanagement and non-compliance with
  • financial legislation are common in many municipalities. Consequently,
  • this results in poor performance and delivery of services is
  • compromised
  • In his 2003/04 report for Local Government financing published in
  • March 2004 the Auditor-General of South Africa noted that:
  • - “the basis of income generation might not provide sufficient funds for
  • delivering the services expected of municipalities. This means that
  • sustainability of service provision by local government has to be called
  • into question”
  • The financial viability of the impoverished municipalities needs some
  • consideration. These municipalities cannot perform their functions due
  • to fiscal distress. These municipalities don’t have extensive powers to
  • raise their own revenues through property and business taxes and to
  • impose fees for services.
financial state of local govt1
  • Municipalities with weak revenue bases cannot survive on the current
  • municipal infrastructure grant and equitable share funding allocations
  • to fulfill their mandate.
  • Such allocations are insufficient to ensure universal access to
  • adequate services and will not enable poor and small municipalities to
  • eradicate backlogs.
  • Municipalities with financial limitations cannot translate their IDP’s to
  • workable socio-economic programmes.
  • Many municipalities find it difficult to leverage funds for even moderate
  • municipal functions.
  • Strategies to address backlogs causing significant cost pressures
  • Compliance with financial management system and processes as per
  • MFMA is a constant challenge
  • Poor audit reports for over half the municipalities
financial state of local govt2
  • Service charges still main source of revenue
  • Challenges experience withdebt collection, increased aged debtors,
  • high level of indigents and culture of non-payment
  • Further losses in respect of illegal connections for water and electricity
  • – municipalities unable to upgrade / maintain infrastructure
  • June 2009 – 56 local and 8 district municipalities were on National
  • Treasury financial distress list
  • Investment not optimised due to political tensions and instability
  • Municipalities with a weak revenue base cannot raise the required
  • funds for their proper functioning
  • Debt collection systems not updated and not reconcilable to financial
  • management systems
  • Inefficient expenditure management
fiscal gap
  • City governments face a significant fiscal gap between their
  • expenditure responsibilities and revenue resources
  • - the nature of the gap varies
  • - In the cities and some other municipalities much of the gap relates to the requirement to provide infrastructure and services for economic growth and development; and specifically public transport infrastructure and operations.
    • - for many other municipalities the gap still consists largely of a basic service standards backlog.
  • A detailed study of infrastructure needed for the eight metropolitan
  • areas suggests approximately R450 billion over the coming decade
  • together with substantial new operational demands.
  • With a further R310 billion required for other municipalities
fiscal gap1
  • Approximately one third (33%) of this amount is required for
  • infrastructure refurbishment and a further 50% for growth and
  • development.
  • Detailed assessments of the fiscal and debt-carrying capacity of the
  • Metro governments suggest that they will at best be in a position to
  • finance 50% to 75% of the capital amounts required (depending on the
  • city concerned).
  • However, more seriously, the associated operational and maintenance
  • costs of the expanded services would not be sustainable.
  • Municipalities themselves are first of all responsible for closing this gap
  • by improving their performance through a variety of measures,
  • including expenditure efficiencies, billing completeness & accuracy,
  • collections efficiency, debtors minimisation and management, and real
  • tax and tariff increases for existing revenue sources.
fiscal gap2
  • Nevertheless, even allowing for substantial (though realistic)
  • improvements on these aspects, a fiscal gap of the order of R200
  • billion will remain on the capital side, together with substantial
  • operating costs.
  • This substantial amount implies an increasing inability of city
  • governments to provide the services required, with significantly
  • adverse effects on a Metro business environment generally, including
  • city efficiency, economic development and job creation.

“We are in a race between cooperation and catastrophe, and the threat is outrunning our response” – Sam Nunn

key strategic issues
  • Address the fiscal Gap:

- Business Tax

- Development Levies

- Equitable Share increase

- Accessing Job Creation Fund

  • Transport issues
  • Land issues
  • Housing accreditation
  • Densification
  • Unfunded mandates
  • Asset management
  • Energy and green issues

“Do your little bit of good where you are; it’s those little bits of good put together that overwhelm the world” – Bishop Desmond Tutu

role of imfo
  • Capacity building initiatives
  • Practical workshops on implementation of legislation /


  • Professionalisation of local government practitioners
  • Advising financially stressed local authorities
  • Undertaking research on critical issues affecting local government
  • Providing a forum for CFO’s to debate strategic financial and

operational issues

  • Cooperative governance – Close co-operation with SALGA, COGTA,

National Treasury, ASB, SAICA

“The children who sleep in the streets, reduced to begging to make a living, are testimony to an unfinished job” – Nelson Mandela

  • The current intergovernmental fiscal system and the equitable share
  • distribution of the national revenue should significantly consider the
  • differing challenges, among other things, the relation to rural and urban
  • environments, availability of human resource capacity, degree of
  • economic activity and overall institutional strength.
  • Rethinking fiscal allocations holds great promise for improving the
  • socio-economic conditions.
  • Building capacities of municipal officials becomes essential in order for
  • municipalities to fulfill and optimally achieve their obligations.
  • Skills development is critical as it lays the basis for more people-
  • oriented local government system, able to meet the demands of the
  • people for democracy, reconstruction and development.
  • Need for investment in capacity building initiatives of councillors and
  • officials
the end