Getting a gauge on which municipalities work

Kevin Allan and Karen Heese
CITIES in industrialised countries have ranked themselves against each other, in much the same way that business schools do, for many years. A strong motivator for this has been the provision of a tool for businesses and the very wealthy wanting to weigh up different tax environments and, if necessary, move to the most attractive locality — “voting with their feet”. But the concept is perhaps even more compelling in developing-country contexts, where residents are less able to vote with their feet or, if they do, face particularly onerous transition periods as new arrivals in large urban conurbations, typically entering pockets of severe urban poverty. The hardship that migrants face, however, can be understood as a calculated risk within the framework of the thinking of developmental economists such as Amartya Sen, who conceptualise poverty not only in terms of access to resources, but also the ability of citizens to access economic opportunity. This is the premise on which Municipal IQ constructed a ranking of the “productivity” of all of SA’s 283 municipalities on a municipal productivity index , facilitated by increasingly useful comparative data.

The index uses selected data as proxies to reflect on just how efficiently economic agents within a municipality can function, given levels of social and economic infrastructure, as well as the extent of poverty and access to basic municipal services (water, sanitation, refuse removal and electricity).

The variables selected suggest the ability of citizens to function productively, and are combined with multiyear trends of individual municipal expenditure ratios that suggest the scale and efficiency of municipal spending.

The findings are intriguing. Cape Town, Johannesburg and Tshwane are ranked in that order as the best cities in which to live; but with very little difference between their scores, meaning that a jostling for positions is likely as data is updated. This is especially likely given that the cities of eThekwini (Durban), Nelson Mandela (Port Elizabeth) and Ekurhuleni are within a close range of the top scorers — the top six cities are separated by only six points.

This also suggests that levels of municipal productivity are very similar in our top cities.

The best local municipalities are Saldanha Bay, Gamagara, Overstrand, Mossel Bay and George. These top five local municipalities also score very closely, separated by only three points.

Western Cape, a province with relatively higher levels of skilled human resources and relatively fewer backlogs in basic infrastructure, dominates the top quintile of the index, with 83% of Western Cape local councils making up the top 20% of municipalities ranked. The more rural, impoverished provinces of KwaZulu-Natal and Eastern Cape, typified by large backlogs and lagging service delivery, make up 45% and 29% of the bottom quintile. So it is not simply economic activity that translates into a better quality of life for residents.

While relatively better socioeconomic circumstances are important in understanding the Western Cape municipalities’ high ratings (especially given that there are dire pockets of poverty in the province that should not be understated), an equally important factor is significant budgetary expenditure.

Municipal IQ’s Municipal Expenditure Monitor, using four years of budgeted and actual expenditure data to identify expenditure patterns and trends, found that large absolute budgets can obscure the impact of municipal spending per person.

In fact, the City of Johannesburg, which has the highest rate of spending per person
of all cities (a great accomplishment given
the city’s perilous financial state a decade ago), spends slightly less per person than the three Western Cape towns of Overstrand, Bitou and Saldanha Bay.

Of course, the scale of spending in Johannesburg, its existing capacity and infrastructure, as well as its potential to crowd-in private sector investment, may imply greater benefits for residents than those in Overstrand, Bitou and Saldanha Bay. But the exercise is revealing, confirming that, for the average resident of a municipality, bigger is not necessarily better.

Even Cape Town, which scores highest on the index over a multiyear period, not only falls behind the Gauteng cities of Johannesburg and Tshwane in spending per person, but also five local municipalities.

It may be some time before South Africans consciously compare variables of productivity before moving towns, but it is certainly a worthwhile exercise in the meantime to consider one’s circumstances in relation to others in the country and engage with council structures on how these can be improved.

• Allan is the MD of Municipal IQ. Heese is Municipal IQ’s economist. Productivity rankings for individual municipalities are available live on the Municipal IQ website: www.municipaliq.co.za