Local government after Polokwane

While South Africa holds its breath to see what the outcomes of the ANC’s December Conference, to be held in Polokwane, yield in terms of leadership of not only the ANC, but also the South African government, local government needs to continue with its day-to-day running. Where then do the challenges lie, as revealed by the past year, and what might the possible policy shifts be for the sphere under new, most likely more left-wing leadership?
Local government continues to consolidate its progress as an autonomous and crucial sphere of delivery, but at the same time challenges remain for a significant number of underperformers. This is evident when assessing budgeted against actual expenditure, revealing that the two are largely in line with each other in more municipalities than not. On aggregate therefore, it can be assumed that municipalities are improving the accuracy of their financial planning. This suggests, encouragingly, increased levels of capacity around financial planning and more stable outcomes from budgeting.
In addition, at a national level, expenditure has risen steadily and well. In fact, actual expenditure nearly doubled from R63.1 billion in 2001/02 to R114.4 billion in 2005/06; increasing at a dramatic average annual rate of 16%. These leaps demonstrate local government’s expansion and growth after an extended period of transformation and consolidation from 1995 to 2001. The significant gains in the past five years are a consequence of greater stability in financial management, as well as considerably increased fiscal transfers. It is noteworthy that rising expenditure continues in 2006/07 and is set to continue further in 2007/08, but peak in 2008/09 at R160.5 billion, tapering-off at R156.5 billion the following year.
Increasing expenditure over the medium term (2007/08 – 2009/10) is due in part to the dramatic increases in capital expenditure around the 2010 World Cup (from R23.9 billion in 2005/06 to R39.7 billion in 2007/08), but it is also due to the steady increases in operating expenditure as local government continues to increase spending on, among other things, the provision of services.
Of course, the aggregate increases in expenditure and revenue mask problems in delivery at the level of the individual municipality. Continuing protests in a growing number of localities, especially urban areas, call into question the value of local government in terms of its ability to carry out its key mandate, that is, basic service delivery. Since the launch of Municipal IQ in October, the list of service delivery protests on Municipal IQ’s Hotspot Monitor continues to grow, especially protests occurring in South Africa’s metropolitan areas. Since October, when protests in metropolitan areas were equal to those in non-metropolitan areas, city dwellers have now overtaken other citizens in the country in staging protests, with Gauteng registering 29% of protests, followed by the Free State (23%).
Municipal IQ’s analysis of socio-economic conditions has suggested that these protests do not necessarily occur in the worst performing municipalities in the country, but where there is a sense of relative rather than absolute deprivation, neglect or seeming indifference to the concerns of the urban poor. In this context, what might the implications of a Zuma presidency be for local government?
Patchiness and inequality in service delivery is likely to be raised at the ANC Conference, with the somewhat questionable research of the South African Institute of Race Relations’ poverty analysis being bandied about to highlight the very real issue of widening income inequality. It is therefore important to note that a lobby for more left-aligned policy and programmes lies at the heart of the Jacob Zuma lobby and support base. In response, the likelihood of a greater representation of left-aligned candidates in Cabinet could possibly have a number of policy outcomes for local government in pushing generally for even further accelerated service delivery to impoverished communities, and possibly for a greater emphasis on expanding the delivery of free basic services (FBS).
But municipalities’ ability to gear up their FBS capacity to significantly increase delivery is questionable. Municipal IQ’s Municipal Productivity Index™ and Poverty Gap Index™ make clear that the worst poverty typically afflicts the least capacitated municipalities; municipalities already struggling to deliver FBS. Solving this problem will take a number of years of capacity-building and development in municipalities themselves. It is likely then that even if there were a policy imperative to significantly increase FBS, it would, in any case, take a number of years to implement to reach those who need it most.
A further prospect is increasing centralising of control over local government. Many in local government already argue that strong oversight is already apparent, especially with the increasing standardisation of strategic reporting and planning being required of municipalities via the Municipal Financial Management Act (MFMA). But there is some reason to think that this may be taken even further given likely commitments to service delivery to the poor and working class, reducing local government to a lesser sphere of government than the Constitutionally-envisaged sphere. It is, however, unlikely that this level of detail has been thought through by the Zuma camp or that such far-reaching changes would be made lightly in the short or medium term.
The risk of these deliberations and a possible movement to assert more central control over local government, more likely to be seen in a policy shift than an imminent Constitutional threat, is that local government has only just started to bed down many of the reforms that it has been required to carry out, often with little support. Questioning its current structure and ability to deliver without acknowledging the complexities of reform and transformation, either as a consequence of a policy review or a change in leadership, as well as overlooking significant expenditure and revenue success, essentially represents a quick fix solution and over-simplification of the true challenge – addressing a vast on-going service delivery backlog and providing free basic services within limited means. It is unclear how any other sphere of government would perform better, especially given the recent vast improvement in service delivery by municipalities.
It is unlikely though that any leadership or policy changes decided on at the Polokwane Conference will have any significant impact on local government in the short to medium term. Not only will the current national and local leadership ride out its current term, but it will also be critical that the 2010 World Cup takes place in an environment of stability – an emphasis that all in the ANC agree on.
But fortunately, for once local government’s relative policy neglect before the imperatives of national and even provincial issues will serve it well in allowing for the day-to-day functioning of municipalities in the short to medium term, before any undue tinkering takes place under new national leadership. During this time it can only be hoped that municipalities will further strengthen their recent admirable performance to prove the drafters of the Constitution correct in entrusting the sphere with significantly decentralised power.
© Municipal IQ. This is a summarised exert from Municipal IQ’s Annual Review of Local Government. Kevin Allan is the Managing Director of Municipal IQ and Karen Heese is Municipal IQ’s Economist.