Poorly managed finances quickly lead to dysfunctional municipalities and, failure to provide essential services but as Basikopo Makamu writes, Limpopo is proving to be a role-model for other provinces.
It is a known fact that South African municipalities have and continue to struggle with financial management.
To put it bluntly, some in society would even go as far as saying that local and district municipalities across our great nation are tone-deaf when it comes to being financially sound.
On account of those who would surprisingly peg this otherwise widely shared analysis as cynical, allow me to mildly take you through the recent numbers to paint you a picture of the current state of local government finances. 64% of municipalities are in financial distress with an increase of 15% in the 2019/20 financial year, 41% have passed unfunded budgets in the same year, 33% obtained qualified audit opinions in the 2018/19 financial year, 44% received an unqualified audit opinion in the same year. These are not simply percentages on pages.
The ramifications of financial distress, unfunded budgets, adverse findings, and disclaimer audit opinions bear heavily on South Africans. These figures portray a sad reality that in some parts of our country, where municipalities are in financial disarray, our people are doubly marginalized by remnants of the apartheid era and their democratic state.
Inpact of negative audits
Perhaps for us to fully grasp the impact of negative audit outcomes at municipal level, we would have to comprehend the significance of having this sphere of government at the coalface of service delivery to each and every South African across the length and breadth of our land.
It is literally the government arm closest to communities, aimed at working with residents to improve their quality of life. It is the peg that holds governance at community level together. It's summarised mandate is to make communities livable, comfortable and convenient.
Poorly managed finances quickly lead to dysfunctional municipalities and, inevitably, failure to provide essential services to people as required by the Constitution. In simple terms, the municipality slowly grinds down to a halt. The people suffer. Services such as the maintenance of road infrastructure, sanitation, housing, the provision of electricity and water become compromised. The results? An unhappy community that, at most times, takes to the streets.
One would argue that this dysfunction is mirrored on all spheres of government. That government departments and State-Owned Entities are struggling altogether. While this may be true despite the efforts being implemented to rescue the situation, the revolutionary District Development Model as launched by President Cyril Ramaphosa in his 2019 Budget speech has the capacity to steer the other spheres of government in the right direction.
Much rests on this model as it is expected to coordinate all the three spheres and correct the lack of coherence in the planning and implementing of programmes and projects.
In the long run, if followed to the tee, this model has the potential of dealing a visible dent in the triple challenges of poverty, unemployment and inequality in South Africa.
If you think about it, among the three spheres, municipalities could be considered the foundation. And a weak foundation will almost certainly cause the building to collapse. Inadequate financial management on the municipal level can compromise the entire plan and shortchange the district development model and its vision.
It is a no brainer; municipalities must work for government to thrive. But it's not all doom and gloom.
Hope from the north
Contrary to this disheartening reality, there is tangible hope rising from the north.
According to the Auditor General's 2019/2020 Municipal Finance Audits, Limpopo, which has the highest number of individuals living below the poverty line at 72,2%, has emerged as the only province with the most notable improvements Audit Outcomes are concerned.
In summary, of its 27 municipalities, none have regressed. There are no adverse findings whatsoever. A leapfrog improvement is unprecedented on any vernacular. The municipalities have moved from six unqualified Audits to 15. Subsequently, the number of municipalities that have climbed out of the Qualified Audit list has dropped from 21 to just 10. Noteworthy among these improvements is that Modimolle-Mookgopong Local Municipality has jumped from an Adverse finding to a Qualified Audit Opinion. Capricorn District Municipality has continued to glow as it retained its clean audit, while Mogalakwena Local Municipality's status has remained unchanged with an adverse finding. The secret is not a secret.
It is collaborative efforts from all parties, political and administrative, playing a role. A great example is how mayors are now required to attend every municipal audit steering committee meeting, that assessment of audit remedial plans to verify whether the planned actions will adequately address the route cause of the audit findings is done, and that municipalities are assigned Municipal Finance Support staff, among other interventions.
Stability
The clear and close step by step monitoring that audit remedial recommendations from the previous year are executed is also a big part of the answer. In addition, there has been stability provided by the Department of Co-operative Governance, Human Settlements and Traditional Affairs to the level of municipalities as far as reducing the high staff and management turn-over.
It is common sense that continuously chopping a plant at the bud will not help it grow. But the mere knowledge of these comes to not without execution. The fact that this has been executed this well in Limpopo is a clear demonstration of effective and efficient leadership at a political and administrative level of our municipalities. Its political leaders are providing on-hand leadership and administrative management and staff applying themselves ceremoniously.
It is everyone in the conveyer belt doing as they are employed, deployed and expected to. Sound political leadership is critical in this equation; however, political leadership is only one bolt in this daunting machinery. Administrative managers, director generals, deputy directors, municipal managers and chief financial officers are indispensable to the success of this hub functioning effectively.
One dormant limb will inescapably be visible in the outcomes.
In a country that is daily growing despondent to notion of the state's financial accountability, these developments are worth putting on a pedestal.
In some small way, this should encourage South Africans to play their part in participating in the coming local government elections and use their democratic right to make their choice.
I wish that other provinces can take a leaf out of this poor dusty giant in the north that local government can work.
- Basikopo Makamu is the MEC responsible for Cooperative Governance, Human Settlement and Traditional Affairs in Limpopo.
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