Mergers will not cure municipal dysfunction

Business Day reported that the ANC national executive committee lekgotla bulletin has mooted a streamlined version of local government to address the sector’s dysfunction (“ANC says there’s an urgent need to shake up local government” February 3).

This apparent solution — the merging of municipalities and consolidation of resources to harness economies of scale — is one that is not uncommonly considered in the face of widespread municipal dysfunction. It nonetheless overlooks some compelling reasons to rather work with and improve the current system especially under the auspices of the district development model which was also mentioned in the bulletin.

The bulletin is quoted as arguing that there is an “urgent need to rationalise the local government system” with national executive committee member and chair of the ANC’s legislature and governance subcommittee Phumulo Masualle elaborating on a planned review of local government structures in the context of the district development model.

This model is intended to co-ordinate an intergovernmental response to poverty inequality and unemployment through 52 geographic points (district and metro municipalities) with a unitary spacialised plan. Even with the model on the cards Masualle was quoted as suggesting that a rationalisation of municipalities may be necessary: “Do we really need all of them [municipalities] as they are? The answer is certainly not.”

The proposal is essentially to merge several floundering municipalities especially grant-dependent smaller municipalities into larger entities pooling revenue and resources. Accordingly the bulletin is argues: “The continuing problems with the allocation of powers and functions fiscal split across the three spheres of government the lack of financial viability of many particularly smaller category B municipalities all suggested the urgent need for the ANC to develop and adopt a framework to rationalise municipalities.”

However recent evidence suggests a number of stumbling blocks to this plan:

• Amalgamating municipalities to pool resources wrongly assumes that financial sustainability is attainable in certain regions for instance in rural Eastern Cape. In truth no matter the size of municipalities those making up smaller municipalities such as those that were merged into the Beyers Naudé municipality will be — for the medium term at least — fundamentally poor and grant reliant. It is a tragic truth that especially poor municipalities tend to cluster together.

This of course does not mean grants should not be efficiently managed but that expectations of pooled revenue will just mean a larger pot of limited means for a larger set of communities. In other words there will be no more available to individual residents. Furthermore the opportunity to extend boundaries of larger municipalities like Mangaung Tshwane and eThekwini have all been fully exercised in past rounds of demarcation and resulted in not inconsiderable challenges for these metro areas that now contain rural communities.

• There is a risk of community disaffection as seen in the Vhembe district before the last round of elections where there is the assumption by residents that local municipalities have become too unwieldy for meaningful local representation. Similar objections were seen in the largely rural Bronkhorstspruit area before it was merged into Tshwane which is now said to have become the third largest municipality in the world as measured by geographical footprint.

• Even where justifiable amalgamated municipalities tend to struggle in the short to medium term facing institutional strain in merging systems and organigrams which can be disruptive to service delivery as was reported in the Rand West municipality after its merger. Ideally if a merger is warranted it should take place in a time of relative financial stability when provincial and national governments can provide acute oversight and assistance with the process. Now would hardly be such a time given severely strained local government coffers stretched provincial governments overseeing multiple interventions and the disruption inflicted by Covid-19.

• Smaller municipalities are not necessarily the ones that are struggling most according to the latest financial data. Some metros and large urban municipalities are likely to be those most compromised by Covid-19’s impact on revenue streams and urbanisation pressures.

Gauteng premier David Makhura argued years ago that amalgamating ill-suited municipalities is like adding minus one to minus one and expecting to get two. The analogy is simple but sage. With little room arguably left for merged entities it is more important that the government looks to reallocating powers and functions — revenue collection for instance or basic service delivery — to larger entities while leaving the machinery of political representation intact.

This aside there is no substitute for robust governance and accountability no matter the size or access to resources of municipalities. Such issues cannot be ignored as a factor in the current failure of a large number of municipalities.