# Why we should be concerned about the R20 billion additional funding to municipalities

- Link: https://dearsouthafrica.co.za/2020/08/01/why-we-should-be-concerned-about-the-r20-billion-additional-funding-to-municipalities/
- Published: 2020-08-01T10:24:00+02:00
- Author: dearSA

### Municipalities are to get R20 billion in additional funding to ride them through the Covid-19 crisis, but given their track record of irregular spending, residents and rates payers have a right to be concerned that this money will be properly spent.

![DearSA-municipal-handout](https://cdn.dearsouthafrica.co.za/wp-content/uploads/
2020/08/20191005/DearSA-municipal-handout.jpg "DearSA-municipal-handout")

The cause for concern comes from the Auditor-General’s (AG) 2019 Municipal Report
which suggests 60% of revenue reflected on the books of municipalities will never
be paid. Even before the Covid-19 crisis, there was an alarming pattern of individuals
and businesses showing signs of a diminishing ability to pay for services, or simply
refusing to pay.

This has devastated revenue in many municipalities, reducing their ability to meet
service delivery expectations. The Department of Cooperative Governance is about
to launch a National Responsible Citizenry Campaign across all 257 municipalities
in the hopes of restoring a culture of payment.

But such a campaign sinks or swims on the economic fortunes of households and businesses.
We know from the July 2020 TransUnion Consumer Financial Hardship Study that 80%
of those surveyed reported a negative impact from the Covid-19 crisis. Shockingly,
17% of “impacted consumers” reported losing their jobs compared to 10% in the previous
survey.

South Africans are in dire financial straits. This does not augur well for any campaign
to restore a culture of payment in municipalities. The culture of non-payment was
already well entrenched before Covid-19, but will have severely deepened In the 
last three months of the lockdown.

Quite in addition to this, the AG report points to a shocking culture of financial
mismanagement and corruption in municipalities. Only 8% of the 257 municipalities
received clean audits in the 2017-8 financial year, and half of them had financial
statements deemed “quality”. Irregular expenditure totalled R32 billion and the 
likely financial loss from material irregularities came to R24 billion.

South Africans need to be especially vigilant when an additional R20 billion is 
being directed to already dysfunctional municipalities.

The Parliamentary Monitoring Group (PMG) reports the growing concerns of opposition
parties relating to how this R20 billion will be distributed and what mechanisms
will be put in place to monitor this spending.

There are valid concerns that municipalities will become semi-permanent wards of
National Treasury, which means taxpayers will ultimately be responsible for their
financial survival. The municipal funding models are shattered and an entirely new
model will have to be found over the longer term.

Rate payers are becoming more active and engaged in local governance, and this is
likely to be the most powerful force for establishing a culture of accountability
and service delivery at local government level, says DearSA programme director, 
Rob Hutchinson.

“Municipal governance has been allowed to sink to these appalling levels because
there was no proper oversight. This is changing, but it needs to happen far quicker.
We cannot end up with a completely broken local government sector that relies more
and more on bailouts from central government. We will be keeping a close eye on 
this R20 billion in additional funding for municipalities to see that it is not 
squandered through theft, corruption and maladministration.”

One of the areas of efficiency being explored by the DCoG is improved supply chain
management – for example, “pool financing” for municipalities that have identified
projects on municipal boundaries such as the Lanseria Airport project which lies
on the border of the City of Johannesburg and the City of Tshwane.

Municipalities will be able to apply for licences to distribute electricity as a
way of raising additional revenue. Programmes are being conceived by Treasury and
SA Local Government Association (SALGA) to improve the local government fiscal framework.
Municipalities will be required to report weekly to National Treasury for money 
allocated through the Covid-19 relief scheme.

The DCoG will introduce an Intergovernmental Monitoring, Support and Intervention
Bill to provide further oversight of municipal fiscal management and spending.

The AG will continue to audit these entities and now has more robust powers to bring
municipal thieves to book.

But we are still not satisfied that this will solve the problems mentioned above.
For this reason, DearSA is redoubling its efforts to bring accountability to the
local government sector by running various participative democracy campaigns at 
municipal level.

If there is one thing that terrifies errant municipal officers, it is the voice 
of the public. DearSA is providing that voice.