Are you looking for confirmation about what you think you know about the effectiveness of municipalities? While many headlines report on their lack of service delivery, the dysfunction of their operations and financial challenges, the truth really must be determined through facts. This is why the State of Infrastructure Report, produced by the South African Property Owners Association (SAPOA), is such a crucial body of evidence.
The study, undertaken in 2022 and released in March 2023, focused on the state of infrastructure in the country's 15 largest local governments. The revelations may be startling for some, but perhaps not that surprising!
The overall conclusion SAPOA reached, as stated by Neil Gopal, CEO: ‘It has become evident, through the investigation of the various municipalities Integrated Development Planning (IDPs) and annual reports, that the problems relating to the availability of services and capital to upgrade and maintain bulk infrastructure is immensely lacking. This is not due to developers and the private sector lacking on their end to pay the needed bulk contributions, but it is a problem within municipalities that need to be addressed.’
Human rights issue says the President
Gopal makes the point that this conclusion really just confirms the findings of successive Auditor General’s (AG) reports, the latest showing that only 16 of the 257 the AG investigated were in good financial health. “Dig deeper, as the SAPOA Report shows, and the sad reality is that a big percentage of the 84% of local administrations are financially unstable. This is largely due to a misallocation of funds; the need for more qualified and competent officials or some officials that don’t have the right experience and skills in the development space; and that the capabilities that do exist do not specifically respond to infrastructure challenges.”
Infrastructure failure obviously has a massive impact on homeowners and, as was stated by President Ramaphosa in his Human Rights Day speech, ‘the failure to provide adequate services consistently is a human rights issue.' Even if the government does intervene financially or otherwise, the costs to fix the issues will ultimately be borne by taxpayers, who are currently stretched to breaking point, especially homeowners who are attempting to weather the nine consecutive interest rate hikes since November 2021.
But it’s complicated. While it is true that municipalities are constitutionally bound to ensure the provision of effective services, there are so many aspects that need to integrate before they can achieve their mandate. These vary from one municipality to another. Even if administrative functions and financial health can be stabilised, there is concern that these will be temporary given the frequency of leadership changes, such as has been experienced in the City of Johannesburg.
External consultants
Within local government legislative framework, there are, however, essential services that a municipality is supposed to deliver in the context of human rights, and this is one of the major focus points of commentators. If the goal of those specific services is to uplift the life of local people without sacrificing the delivery of quality infrastructure or sustainability, and if it can’t be achieved internally, why aren’t those services being decentralised or privatised?
Well, they are using consultants, but this is where it becomes very murky. As per March 2022 Municipal Skills and Capacity Assessment Study, a gob-smacking R1,26-billion was spent by municipalities on consultants in one year. Much of that, in fact, 62%, went to consultants appointed to finance departments, which really does highlight just how financially stressed or incompetent the local governments are.
“In the Eastern Cape municipalities, a large portion of its expenditure went to consultants, directly attributable to a lack of skills,” says Gopal. “However, this practice can result in irregular and unnecessary expenditure, sometimes over and above salaries being paid to municipal officers.”
Gopal provides an example, as per the AGs 2021 report, which stated that the salary bill for all of the Western Cape municipalities exceeded the equitable share of R11,2-billion received from the national government. “Salary bills in municipalities are exceeding the equity share received from the government, and this competes with the funds provided to pay for service delivery and infrastructure maintenance and upgrading.
“Compounding this challenge is that some local governments do not have adequate systems and processes in place to ensure that infrastructure maintenance can even be undertaken. Often, in the event that maintenance is scheduled and budgeted for, time frames are not adhered to, which down the line has a higher financial impact.”
This situation is made more perilous because funds that are allocated to the upgrading of infrastructure are often paid by developers when their land use developments are approved. “If ring-fencing those funds is not done promptly, these funds could be directed to operational expenses and not the intended use,” says Gopal.
Salga role
So where does South Africa’s Local Government Association (Salga) stand in this? Its role is to analyse numerous elements of local and municipal governments, share those findings and recommendations, support and advise localities, and promote and sustain development in communities. Its stance is that budgets given to municipalities ‘may not be enough’ to address service delivery challenges.
“When you look at equitable share, which is 9% from the total equity share of the country which is allocated to municipalities, it doesn’t enable municipalities to be able to fulfil their mandate or to address the issues of backlog,” said Thami Ntuli the KZ-N Salga chairman to Eyewitness News. He also stressed that the national government must intervene for local government to successfully deliver basic services.
The bad and the not-as-bad
So, let's look at where those interventions are most needed: water, road and power infrastructure. The SAPOA report has graded, as previously mentioned, 15 of the largest municipalities in the country: Buffalo, Cape Town, Ekurhuleni, Tshwane, Johannesburg, Ethekwini, Mangaung, Nelson Mandela Bay, Mbombela, Polokwane, Msunduzi, Emfuleni, Emalahleni, Rustenburg, and Sol Plaatjie.
Water:
- Only Cape Town is considered to be 'world-class in nature', but its grading is only 8%.
- Cape Town (13%) and Ethekwini (2%) are the only municipalities where there is excess capacity that can be utilised for future use.
- Other than Cape Town (66%) and Tshwane (56%), no municipality scores higher than 50% for satisfactory use.
- All municipalities have a risk of failure in the near future, with Polokwane most at risk, followed by Buffalo City, at 62% and 55%, respectively.
- Unfit for purpose (currently), and at various percentage points up to Emfuleni’s 44%, are all municipalities other than Cape Town’s 0%.
Road:
- The highest percentage grading for world-class in nature is Cape Town at 14%.
- Having excess capacity that can be used for future use at 5% is again Cape Town, followed by Tshwane’s 3%. All others have a rating of 0% in this category.
- Cape Town scores highest for current satisfactory use, at 57%, followed by Tshwane at 46%.
- At the highest risk of failure in the near future is Ekurhuleni, at 67%. Not far behind are Ethekwini and Polokwane at 63%. Every municipality in this category has some level of risk in the near future.
- Scoring at 44%, Emfuleni has the most unfit for purpose road infrastructure. All others have a degree of unfitness, with Cape Town scoring the lowest at 5%.
Power:
- No municipality is considered world-class in nature.
- Only two municipalities have excess capacity for use in the future: Cape Town 11%; and Tshwane 3%.
- No municipality scores higher than Cape Town’s 49% for the category ‘satisfactory for present use’. The lowest is Emfuleni at 10%.
- Nelson Mandela Bay, at 73%, is at the highest risk of failure in the near future. In fact, other than Cape Town (27%), all other municipalities score over 50%.
- All municipalities are unfit for purpose ranging from Nelson Mandela Bay and Cape Town's 14% through to Msunduzi's 36%.
Public-private collaboration crucial
It is likely going to take decades of development to get to the levels of effective delivery of these human rights. There may also be long-term impacts affecting the desirability of an area for investment into property. We are already seeing more than 35% of people migrating to the Western Cape. As the SAPOA figures indicate, Cape Town is currently the most efficient in delivery and maintenance of infrastructure.
“Considering all the research, it is evident that the development infrastructure pipeline is decreasing in the municipalities that formed part of the study," says Gopal. "Various challenges have been noted throughout the research, and these have a tremendous impact on future development, as well as the potential to compromise future investment."
There’s really only one way to get municipalities ‘fit’ in Gopal’s mind: “It will be a long journey though, with a process that will only be successful if the public and private sectors collaborate. It is evident that intensive interventions are needed to ensure the development pipeline does not continue to shrink. If so, investors may start to look for alternative areas for investment, and ultimately even less upgrading and maintenance will take place as fewer funds will be available."
Writer: Kerry Dimmer
