Amalgamation will not mend dysfunctional municipalities

What many have been muttering about in corridors and behind closed doors was put out in the open by Deputy Minister of Co-operative Governance and Traditional Affairs Yunus Carrim this week: much of local government is simply not functioning.

The analysis, although frank, is increasingly uncontroversial. At a service-delivery conference last week, the KwaZulu-Natal chairman of the South African Local Government Association, Obed Mlaba, asserted that 15 of the province’s 61 municipalities were not sustainable. These admissions are valuable in trying to put local government on the right path to much-needed delivery in rural areas, notwithstanding sustained attempts to support local government. The issue is how to address the problem.

In its recent annual results, the Development Bank of Southern Africa revealed that through its Siyenza Manje capacity- building programme it had assisted 205 of SA’s 283 municipalities with 2700 projects under way.

Given this assistance, as well as numerous donor projects and the work of Project Consolidate (administered by the former Department of Provincial and Local Government, now the Department of Co-operative Governance and Traditional Affairs), is there any room for further capacity-building to mend struggling municipalities?

Probably not. As Mlaba argued, certain “municipalities are not viable, and have not moved from the establishment phase as envisaged”.

This is a difficult admission, as Carrim has also argued, for those of us who advocated wall-to-wall local government as the optimal delivery agent, given the sphere’s proximity to communities.

Local government has maintained for many years that its financial resources are too limited, especially funding from national government. But this is increasingly untrue. Grant revenue alone is set to rise from R11,6bn in 2003-04 to R47,7bn by 2009-10. So is the issue not more fundamental?

This has led to Carrim and others suggesting that redemarcation may be the solution — presumably by incorporating unviable municipalities into neighbouring municipalities.

There are a number of serious reservations with this as a solution. Municipal IQ research on the ability of municipalities to deliver services suggests that the worstperforming municipalities are clustered in predominantly rural regions that contain the highest levels of poverty in SA and are typified by a lack of access to basic services.

But doing away with one municipality in a poor rural region by collapsing it into a neighbouring municipality, while enabling the dissolution of notorious local councils, is likely to do little to dent entrenched poverty and poor service if it is simply incorporated into a teetering, only marginally viable neighbour.

The reality of deeply entrenched poverty in a region means enlarging municipalities in rural areas will only act to destabilise relatively more prosperous municipalities and ultimately the region as a whole.

In the event of the incorporation of a delinquent municipality into one of our more vibrant municipalities, which may include a city or large town with a decent rates base providing a source of local revenue to the municipality, such realignment may not tip the balance of viability but would certainly add a new layer of responsibility — essentially for delivering services to a poor area with no existing rates base — that would lead to greater pressure on resources and capacity, while also undermining regional prospects.

Realistically, unless national government provides long-term additional grant funding for such incorporated areas (a big ask in fiscally strained times), amalgamation may result in the further marginalisation and neglect of already poor urban, peri-urban and rural communities.

There are further potential unintended repercussions. One is the knock-on effect for the private sector. Although the private sector is unlikely to be interested in investing in any of the “dysfunctional” municipalities up for removal, it may well be interested or already invested in the municipalities into which these would ideally be included (where possible), and this may well alter the risk profile of such municipalities and decrease the viability of the sector as a whole, drying up private sector sources of finance.

To this end, deliberations around any redemarcation need to be handled carefully, especially given experience of the last round of local government redemarcation in 2000, when a lack of clarity on new boundaries resulted in financiers fleeing the sphere in droves.

Another concern is around monitoring and evaluation. Socioeconomic data provided by Statistics SA’s Census 2001 and Community Survey 2007 have provided useful points in time to assess progress in service delivery. These boundaries need to be measured in some form or another to continue to assess progress and trends in delivery, and where necessary, to ensure intervention.

But what form should this intervention take?

There is little doubt that intervention is necessary, and one can sympathise with policy makers considering throwing in the proverbial towel with delinquent municipalities, which seem to remain immune to the best intentions of capacity-building measures and carefully designed transfers to support infrastructure delivery that have amounted to very little in terms of value for either residents or taxpayers.

But structural change is not to be lightly considered, not least because vastly enlarged municipalities linked to more prosperous urban areas, as mooted, may also lead to the marginalisation of outlying rural areas from local government, representing a failure of democracy and betrayal of the constitution.

But it is equally wrong to leave rural residents languishing under the poor governance of a number of incompetent existing municipalities.

Perhaps the solution lies in leaving rural boundaries as they are, for legal, planning and democratic functions, but to roll out delivery on an agency basis, as is essentially proposed by regional electricity distribution infrastructure.

Should water delivery not then take on a similar model, and possibly the highly complex function of revenue collection?

The practicality of these debates will no doubt be expanded by the work of the resurgent Department of Co-operative Governance and Traditional Affairs, as well as the Presidency’s National Planning Commission, headed by mouseover=" displaydata('37910', 'Politics', event); " style="cursor: pointer; color: #b30616; text-decoration: underline" onclick="CompanyLookup('37910', 'Politics', 'Trevor Manuel');" onmouseout="hidedata();">Trevor Manuel .

Now that the emperor’s nudity has been laid bare, it is time to find some functional clothes.