Gauteng Municipal Debt Grows by R1,6 bn

Debt owed to Gauteng Municipalities increased by R1,6 billion in the quarter from January to end March 2011. This is only debt older than 90 days. This was revealed in the latest consolidated municipal statements published in the Gauteng Provincial Government Gazette (27 June 2011).

Total debt owed to municipalities for longer than 90 days increased from R 20,588bn at end December 2010 to R22,212bn at end of March 2011. The municipalities in Gauteng are owed as follows (note all amounts are for 90 days plus).

• Johannesburg: R 8,389bn
• Ekurhuleni: R 7,198bn
• Tshwane: R 2,759bn
• Emfuleni: R 1,869bn
• Mogale City: R 558,635m
• Merafong: R 490,813m
• Kungwini: R336,440m (now disestablished, amount should be added to Tshwane Metro)
• Randfontein: R 209,799m
• Lesedi: R 129,594m
• Nokeng tsa Taemane: R123,876m (now disestablished, amount should be added to Tshwane Metro)
• Westonaria: R 94,077m
• Midvaal: R 54,661m
• West Rand District: R 3,980m
• Sedibeng District: R1,768m
• Metsweding District: R nil (now disestablished, amount should be added to Tshwane Metro)

The seriousness of the growth in debtors owing for more than 90 days cannot be underestimated as the bulk of these debts are usually not recovered. R 22bn can make a huge difference in the cash flow and liquidity of Gauteng municipalities and improve their ability to deliver services in Gauteng.

An encouraging sign is the reduction in the debt owed to municipalities between 31 and 60 days which could be an indication of improved collection rates among Gauteng municipalities.

Disconcerting, however, is the reduction in current debt owed to municipalities which could indicate a lack of growth in income among these municipalities. Also of concern seems to be the conversion of debt older than 60 days to 90 days plus which becomes very difficult to recover.

However, if municipalities continue to improve their collection rates before the 60 day period has expired, the 90 days plus debt should grow much slower in future. This once again highlights the importance that should be placed on improved financial management at municipalities and how crucial it is to appoint suitably qualified people in financial management positions.

DA Calls for Scrapping of CDW Programme

In the Gauteng Provincial Legislature during this week’s budget debate on local government and housing, I called for the Community Development Worker programme (CDW) to be scrapped in its entirety and the R86 million spent on this programme to be allocated to more important local government priorities.

The Department of Local Government and Housing was given R4.568 billion for the 2011/12 financial year to address housing and local government. It is shocking  that local government has only been allocated 5,5% of the department’s budget or 0,37% (R208 million) of Gauteng’s overall budget. I question the province’s commitment to rectifying what is wrong with local government. It stands to reason that when a limited budget has been allocated to a programme, it should be very skillfully prioritised in order to ensure that it is used to maximum effect.

When the Local Governance budget is evaluated it becomes clear that the Gauteng Department of Local Government and Housing’s priorities are as follows.

1. Community development workers (42%);
2. Municipal finance (26%)
3. Capacity and development (12%)
4. Municipal administration (6%)

Firstly the problem within this programme is with the significant expenditure on community development workers. When one analyses the priorities set out by the Local Government Turnaround Strategy there is no real function for community development workers. The strategy focuses on improved financial management, service delivery, capacity building, efficient planning and accountability.

Secondly, a study undertaken on behalf of the department by the Community Agency for Social Enquiry (CASE) last year found that community
development workers had very little impact in Gauteng. Only 12% of Gauteng’s residents were aware of CDW’s in their areas and only 43% of these respondents knew what a CDW does. This means only 5% of the total sample knew what a CDW does. In addition less than 3% of those surveyed ever received assistance from a CDW. Taking into consideration that there was a CDW in almost every municipal ward in Gauteng during the period under review, this impact is extremely low.

Lastly, CDW’s are accountable to provincial government while dealing with local government and national government issues. Although CDW’s have assisted a very small percentage of residents to gain access to basic services, the bulk of their time is used to assist with obtaining grants, important documents like ID’s, accessing skills training opportunities and receiving assistance with community development projects.

CDW’s can merely report problems to municipalities but do not have the backing or capacity to drive those complaints to a conclusion. CDW’s are thus accountable to a sphere of government it does not represent while addressing issues from residents in a sphere where they have no influence.

The DA would like to see the CDW programme scrapped in its entirety and the R 86 million spent on this programme rather allocated to more important priorities within the local governance sub-programme. In order to solve the problems faced by municipalities in Gauteng three things must happen:

1. Municipal finance management must be improved considerably including addressing the issue of financial sustainability as identified as a risk by the Auditor General in his latest report on municipal finances in Gauteng.
2. Human resource capacity must be restored by appointing suitably qualified and fit for purpose career officials in key management positions in municipalities.
3. Mayors must be left to be mayors and held accountable for their decisions and not for those decisions prescribed to them
   by an outside political body.

Sedibeng Regional Authority Has No Place in Law

The announcement by Sedibeng mayor Simon Mofokeng that his district municipality intends establishing a Regional Authority is illegal. There is no provision for such a structure in South African municipal law and the district should rather focus on executing its current obligations to the advantage of the whole Sedibeng region in south Gauteng.

Such a structure will have no legal status or powers and would constitute a waste of precious local government resources. If the district adhered to its current legal obligations it would be more effective than a regional authority would be.

The Sedibeng mayor’s announcement that he wants to turn the district municipality into a metro follows a similar announcement by the West Rand District Municipality mayor earlier this week. A metro should not be established in any of these two districts as it would remove local government further from those it should serve, its residents. Smaller municipalities are more viable as Midvaal has proven. All that is needed is good political leadership and officials that can do the job.

Although the Gauteng government has indicated a preference for establishing metros all over the province, it should rather contemplate disestablishing the remaining district municipalities to free up more resources for local municipalities.

The DA in Gauteng will oppose any attempt to move municipal government further away from residents. Any such move should be supported by viability studies rather than be based on the whim of a district mayor.