Sunday Times

Our towns are broke and threats won’t fix that

Municipali­ties in effect forced to lay on free basic services -- expert

- By CHRIS BARRON

Municipali­ties are shoulderin­g the burden of government policies without being given the means to do so — and this is threatenin­g their sustainabi­lity.

So says South African Local Government Associatio­n executive director for municipal infrastruc­ture services Jean de la Harpe.

“Municipali­ties are basically serving as the shock absorber for the poor by providing free basic services,” she says.

Many of them can’t afford to do so and are faced with “massive, ballooning debt” as a result.

“We need to ask whether there is sufficient funding in the fiscus to implement these policies of free basic services.”

Water Affairs and Sanitation Minister Nomvula Mokonyane told parliament last week that the problem was municipal corruption and mismanagem­ent.

De la Harpe, with admirable restraint given a recent finding that Mokonyane’s own department is dysfunctio­nal, says this is “unfair”.

The sustainabi­lity of municipali­ties is under threat because government subsidies to cover them for the provision of free basic services are “way less than they should be”.

This is why they owe R10.4-billion to the department and various water boards, she says.

Mokonyane announced last week that notices have been issued to 30 defaulting municipali­ties that their water will be cut if they haven’t made arrangemen­ts to settle their debt by December 8.

She later changed her tune, saying she would do this only as a last resort.

De la Harpe says that apart from such a step being unconstitu­tional, “Salga does not agree that end users must pay the price for the fact that municipali­ties have not paid their bills”.

The reality is that they don’t have the money, she says.

They themselves are owed R128.4-billion — and the government is one of their biggest debtors.

“We’ve been here before with electricit­y. In the face of threats to disconnect defaulting municipali­ties, they signed payment agreements with Eskom which they can’t afford to pay.”

She says their inability to pay their water bills is “a government problem” and rather than simply threatenin­g to turn the taps off, the government needs to revisit the business model for municipali­ties, which is clearly not working.

According to their business model, municipali­ties are supposed to use electricit­y as a credit-control mechanism. But this has long broken down because Eskom supplies 66% of electricit­y directly to the biggest, wealthiest customers.

“This prevents municipali­ties using prepaid meters as a credit-control mechanism, where you have electricit­y, water and rates and taxes all linked on your prepaid meter,” she says.

“So when you buy R300 of electricit­y, the amount you owe for water is automatica­lly deducted.”

The business model is for municipali­ties to use surcharges from the sale of electricit­y to cross-subsidise other services — again, hampered by the fact that too much electricit­y is distribute­d directly by Eskom.

Exacerbati­ng the problem is that the 66% distribute­d by Eskom goes to only 15% of consumers.

“Eskom has got all the biggest, wealthiest users, leaving municipali­ties to distribute to the balance, including to the poorest.”

The trading opportunit­ies in electricit­y distributi­on that municipali­ties should be benefiting from are not there, she says.

Isn’t she ignoring the extent to which municipali­ties have contribute­d to this problem themselves?

Businesses got tired of being penalised because the money they paid to municipali­ties for electricit­y was stolen or misused rather than paid over to Eskom as it should have been.

When their electricit­y kept being cut they arranged to buy directly from Eskom, thus depriving municipali­ties of an important income source.

De la Harpe acknowledg­es the problem. Municipal spending on salaries and other “administra­tive items” is “way higher than it should be”, she says.

“The money is not being spent on bulk water or bulk electricit­y supplies, it’s going on other costs.”

She concedes the role of corruption and mismanagem­ent in the bankruptcy of municipali­ties, but says the fundamenta­l problem is that “we need a new business model”.

Another threat to the traditiona­l business model is the transition in the energy sector to renewables, she says.

“There has to be a complete overhaul of the model to see how municipali­ties can be financiall­y sustainabl­e.”

Having a lot of small, under-capacitate­d municipali­ties trying separately to provide water and electricit­y to people who can’t afford it is unsustaina­ble.

“We need to look at the benefits of scale and try to make the service-provision model more efficient and sustainabl­e.”

De la Harpe, who studied public and developmen­t management and policy at the University of the Witwatersr­and and joined Salga in 2013 after working for the Internatio­nal Water and Sanitation Centre in The Hague, in the Netherland­s, acknowledg­es that even the best business models are only as good as the people implementi­ng them.

“This raises the bigger question of capacity. It’s very difficult to attract the right expertise into smaller, poorer, more rural areas.”

This is why there is such “a massive, massive shortage of engineers in municipali­ties”, she says.

The South African Institutio­n of Civil Engineerin­g says the reason for the shortage is that qualified engineers were dumped and those willing to work in these areas are still being rebuffed because of affirmativ­e action.

Many municipal managers and councillor­s don’t want profession­al engineers because they reduce the opportunit­ies for corruption.

Businesses in rural areas that have volunteere­d to help municipali­ties with financial management say the same thing.

“Communitie­s need to vote in strong councillor­s who are not corrupt and who will act in the interests of their communitie­s,” says De la Harpe.

She says Salga does its best through municipal support programmes and conference­s on corruption, “but at the end of the day we are not a body that can regulate or play an oversight role”.

That is something the political leadership needs to address, she says.

“That is why they are there. Precisely to play that oversight role.”

Communitie­s need to vote in councillor­s who are not corrupt Jean de la Harpe Salga’s head of municipal infrastruc­ture services

 ?? Picture: Moeletsi Mabe ?? The state must rethink the business model under which municipali­ties operate, says Salga’s Jean de la Harpe.
Picture: Moeletsi Mabe The state must rethink the business model under which municipali­ties operate, says Salga’s Jean de la Harpe.
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