Lockdown affects delivery

Ratings agencies have raised doubts about the viability of Finance Minister Tito Mboweni’s supplementary budget.

When auditor-general Kimi Makwetu gives his report on the state of municipalities today, he will paint a grim picture. In fact, the situation worse than he can show. These audits are snapshots of past periods, not up-to-the-minute reports. Today’s briefing won’t reflect all recent revenue shortfalls in towns and cities during lockdown. With so many people out of work or on reduced income, residents struggle to pay municipal accounts.

Johannesburg has already under-collected about R3.5 billion. This is widespread. Business Day said: “Some municipalities are already reporting that they cannot afford to pay salaries.”

The timing is unfortunate if you join other dots, not only the contentious local government wage increases.

Moody’s ratings agency has downgraded two South African finance institutions, the Development Bank of Southern Africa and the Industrial Development Corporation.

The reasoning is significant. Moody’s is not convinced the government will bail out stateowned entities. The agency referred to “the risk that support may not be timely or of the magnitude required”. The decision also took into account the government’s denial of a funding request from South African Airways in April and a debt default by the Land Bank.

So, agencies think government can’t be relied on to meet commitments. The same government is relied on by ailing municipalities. As lockdown continues, there simply are not enough resources to sustain some towns and cities.

Municipalities, including Johannesburg, are not self-sufficient. In addition to revenue collection, topped up with loans, bond issues, is etc, they ultimately rely on government grants.

Yet Moody’s, the most lenient big ratings agency, has indicated a lack of faith in government. Indeed, how much will government give to assist municipalities? Right now it’s not clear how and when the R20 billion supposedly allocated to local government for Covid-19 relief will be distributed, or where it’s coming from.

Ratings agencies have raised doubts about the viability of Finance Minister Tito Mboweni’s supplementary budget, which includes R230 billion in spending cuts – in addition to a R160 billion reduction in the public sector wage bill. These have yet to be politically supported.

Amid this uncertainty, municipalities are having difficulty balancing budgets.

We are in a vortex of crises: economic, fiscal, and sovereign debt, tainted by Covid-19.

The rubber hits the road at local government level (and gets punctured). Despite herculean efforts by dedicated officials and councillors, there’s a lot that is not being done because of the twin handicaps of budget and Covid-19.

Depots, offices, clinics, libraries and customer centres close, open, and then close again in erratic patterns of virus detection and sanitisation.

At one point this week, eight of the Joburg Water’s 10 depots were closed but there was no let-up in the number of outages, leaks and pipe bursts. The plethora of potholes and long-unattended road excavations is due in part to a combination of lockdown and a cash crunch.

Residents rightfully demand a high-level of service, no matter what.

This column is a plea for some understanding of how and why municipalities are struggling to deliver during lockdown.

We shall prevail.