Ineffective governance ‘at centre of municipal dysfunction’

Poor governance lies at the heart of municipalities’ lack of service delivery and President Cyril Ramaphosa also correctly identified governance failure as one of the reasons for the poor performance of the vast majority of South Africa’s municipalities in his State of the Nation Address.

Poor governance could indeed lie at the heart of the failure of service delivery and to turn that around, the right people in leadership positions must be appointed, said Prof Parmi Natesan, CEO of the Institute of Directors in South Africa (IDSA).

“The president indicated that moves are afoot to professionalise the civil service which, if they bear fruit, will go a long way to solve the service delivery crisis we face,” said Natesan.

“The IDSA has been calling for the professionalisation of the civil service for a while and as King IV clarifies, appointing the right calibre of leaders is the first prerequisite for a competent organisation.”

King IV, or the King Report on Corporate Governance, is a voluntary set of principles and recommended practices for South African-based organisations to create an ethical culture, improve performance and increase value, ensure adequate and effective controls, build trust between stakeholders, ensure a good reputation and ensure legitimacy in the organisation.

Natesan said King IV’s supplement for municipalities urges councils to ensure they have access to “professional independent guidance on corporate governance and its legal duties” and that it appoints a competent municipal manager.

“As King IV emphasises, specialised and in-depth governance expertise is required to ensure that any entity’s governance fulfils its primary aim of ensuring the organisation operates ethically and effectively,” she said.

She pointed out that principle 7 of King IV states that the governing body should include the appropriate balance of knowledge, skills, experience, diversity and independence for it to discharge its governance role and responsibilities objectively and effectively.

Last Friday, auditor-general Tsakani Maluleke submitted her material irregularities in local government report to the portfolio committee on the auditor-general in parliament and said that municipalities accrued almost R5.2 billion in material losses due to irregularities, that include noncompliance with financial regulations and suspected fraud.

According to the report, 268 material irregularities were flagged from 170 auditees in the 2021-22 financial year that led to losses, harm to public sector institutions and the public.

Maluleke defines material irregularities as any noncompliance with or contravention of legislation, fraud, theft or a breach of a fiduciary duty identified during an audit that resulted in, or is likely to result in, a material financial loss, the misuse or loss of a material public resource, or substantial harm to a public sector institution or the general public.