The Citizen (KZN)
Minister highlights local government meltdown
The combination of an economy in decline with unemployment, inequality and poverty reaching unprecedented highs since democracy – and pedestrian economic growth for more than a decade – has adversely impacted local government.
That was according to Cooperative Governance and Traditional Affairs Minister Nkosazana Dlamini-Zuma in the National Council of Provinces yesterday.
She said a lack of income had left “many struggling to keep up with payments for services”.
“This resulted in households owing [more than] R127.7 billion to municipalities at the end of the municipal financial year in June,” said Dlamini-Zuma.
“Slowed business activities, tax evasion and inadequate collection systems resulted in a total debt of R181.3 billion, of which R28.9 billion was owed by businesses and R18.1 billion by government in all its spheres at the end of the municipal financial year.”
Dlamini-Zuma noted this weighed on municipal creditors, with municipalities paying them at an average of 180 days, as opposed to the 30-day government policy.
At year-end, the municipalities owed more than R53 billion to creditors of which about R11.3 billion was owed to Eskom and R6.24 billion to water boards.
Dlamini-Zuma said this was compounded by leakages in the system which had cost the state more than R9.9 billion in lost water revenue and R10.2 billion in electricity losses.
“These are partially as a result of little or no budgeting for maintenance, which has been at times accompanied by huge underexpenditure in grants directed at building and augmenting infrastructure,” the minister said.
“The municipalities with the least capacity, [which] tend to be in most need, are the ones that underspend.
“The municipalities that tend to lack on service delivery are also often those that have low revenue streams with many of the citizens living in poverty and with little income.
“We must, therefore, use this year’s local government week to evaluate whether the current funding formula and make-up of our municipalities are appropriate to advance us towards a better life for all.”
Dlamini-Zuma said the auditor-general’s report showed 43% of municipalities received an unqualified audit outcome, with only 11% receiving no findings, 28 municipalities did not submit their reports on time while 91% of municipalities did not comply with legislation.
This pointed to a lapse in oversight and the lack of controls when it came to supply chain management and procurement, the minister said.
“This is also at the core of the mismanagement of resources related to the fight against Covid-19, which has seen the state pay up to five times the value in certain products, especially personal protective equipment,” said Dlamini-Zuma.