Municipalities beyond numbers

AUDIT outcomes are one of the most readily interrogated indicators of municipal performance. Each year the auditor-general’s assessment of municipalities’ financial governance is scrutinised and either decried as a sign of general malaise in municipalities or as with the last set of results read as a sign of gradual improvement.

To be sure auditor-general Kimi Makwetu’s opinion is of great significance — how well municipalities can account for their spending reflects not only how well public money is spent but also provides insight into the effectiveness of municipal oversight mechanisms and political leadership.

But aggregated results lose the nuance of the auditor-general’s assessment which provides provincial reports. Performance in the past 10 years on Municipal IQ’s index of audit results shows how the Western Cape KwaZulu-Natal and Gauteng consistently outclass all other provinces.

THE two-tier nature of audit outcomes mitigates the welcome but patchy improvements were seen in the 2013-14 financial year in Limpopo the North West the Free State the Eastern Cape and the Northern Cape. Mpumalanga is the only province with an outright deterioration.

The auditor-general’s results are but one of the indicators of municipal governance. While it is reassuring when a municipality accounts for its spending this is of cold comfort to residents in municipalities in which the rate of delivery remains too slow to meet basic needs. Compliance and performance needs to consider a range of indicators beyond the admittedly challenging task of financial governance.

Consider the case of the consistently clean auditee Steve Tshwete local municipality in Mpumalanga. While the municipality’s track record with the auditor-general is highly commendable it did not table its budget on time last year with the curious reason given to the Treasury that "the council sitting was on that date".

Statistics SA’s nonfinancial census shows that Steve Tshwete did not submit its water services development plan last year and according to data submitted to the Treasury there was a significant deviation between what it planned to spend and what it actually spent in the 2014-15 financial year.

For these reasons the municipality is placed in the third quintile of the 226 local municipalities rated on Municipal IQ’s compliance and governance index. While Steve Tshwete is by no means a poorly run municipality these issues show how governing a municipality extends far beyond the auditor-general’s opinion.

For this reason the focus on "back to basics" reporting in national policy is wholly appropriate. But this sort of reporting is most useful if stakeholders are able to engage with findings and results that track municipal performance.

OF CONCERN is that a number of public proxies for delivery by municipalities — the "blue drop" (water compliance) "green drop" (sanitation) and the "state of local government finances" — have not been updated this year. It would serve Parliament well to ask for these reports to be released so as to better understand the shifts and dynamics in municipal performance.

Municipal compliance is nuanced and shows subtle shifts from year to year requiring data-intensive analysis to best understand what forms of support and intervention may be required. Municipal IQ’s compliance and governance index for example ranks compliance with legislated processes as well as governance outcomes and capacity levels.

In theory all municipalities should be able to comply with basic regulations and should attain a near-perfect score on the compliance and governance index.

Several municipalities in our 2015 results manage this including the iLembe Zululand and West Coast districts; uMhlathuze Witzenberg Overstrand Matzikama Drakenstein Breede Valley Bitou Stellenbosch Saldanha Bay and Mbombela.

Encouragingly this list is longer than last year’s. In the top 20 municipalities there is also more diverse provincial representation to a year ago. Municipalities in KwaZulu-Natal Gauteng Mpumalanga and the Northern Cape join the large number from the Western Cape.

Of concern is a marked deterioration in provincial averages on the compliance and governance index in all provinces except KwaZulu-Natal and Limpopo. This is a result of apparent pressure to realise financial plans and expend conditional grants.

There are probably several factors behind such faltering: a weakened economy; financial instability and revenue loss caused by load shedding and deteriorating payment rates; and institutional stress caused by political jostling.

Of grave concern is how poor performance on the compliance and governance index afflicts provinces in dire need of delivery. Limpopo the North West and the Eastern Cape score worst on the index.

Measured according to a municipal category metros and large urban local municipalities outperform other types which raises the question of whether rural migrants are pulled into these areas or pushed out by rural underperformance.

Municipal IQ’s municipal expenditure monitor shows that spending per resident in former homeland and rural municipalities is depressingly only 17% of that of the average metro. Consider that Johannesburg residents (with population figures adjusted to 2015 estimates) receive individual allocations of just less than R10000 a year while residents in Lephalale benefit from only R340 in spending by their local municipality.

Gauteng and Western Cape municipalities consistently outpace municipalities in other provinces with the average resident in these provinces receiving more than R5000 in municipal spending in the 2014-15 financial year. In contrast typical spending per resident in the North West the Eastern Cape KwaZulu-Natal and Limpopo was at least less than half of this — and in Limpopo less than a third.

THE combination of governance and delivery manifests profoundly on Municipal IQ’s municipal productivity index (MPI) which assesses the ability of South Africans to operate productively in their municipalities.

The index reflects on the depth of a local economy and how well residents can engage with it.

While the MPI does not reflect directly on municipal competence it influences the trajectory of performance and municipalities with larger local economies are able to leverage greater resources than smaller municipalities.

Metros again outperform other municipalities on the MPI in 2015 and large urban municipalities outpace small towns former homelands and rural areas. As a result the lagging performance of Limpopo the Eastern Cape and KwaZulu-Natal municipalities effectively entrenches poverty.

In no other index is the legacy of apartheid spending compounded by the patterns of urban density more apparent than on the MPI. The worrying implication is that relatively stronger urban areas will continue to attract migrants from impoverished rural areas putting strain on these already fast-growing populations.

Local government is also at the forefront of battles against drought and the disruptive effects of load shedding. These pressures inevitably increase the risk of service delivery protests.

As next year’s local government elections approach delivery institutional and compliance pressures are set to become even more pronounced.

Policy analysts stakeholders and researchers should not shy away from interrogating the latest data trends demanding their release and robustly engaging with the development challenges they pose. As the African proverb goes: "Truth is like fire it cannot be hidden under dry leaves."