Our towns are broke and threats won’t fix that
Municipalities in effect forced to lay on free basic services -- expert
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