Lack of skills & experience weaken SA’s municipalities

Lack of management experience and skills threaten the financial stability of many municipalities, according to the latest Ratings Afrika Municipal Financial Stability Index released this week.  Ratings Afrika defines financial sustainability as: "The financial ability to deliver services, develop and maintain the infrastructure required by its residents without unplanned increases in rates and taxes or a reduction in the level of services and the capacity to absorb financial shocks caused by natural, economic and other adversities without external financial assistance."

Once again, the Western Cape as well as DA run municipalities scored tops overall, although there is still room for improvement. Surprisingly, the Eastern Cape scored 4^th overall – behind the Western Cape, KZN and the Northern Cape. The lowest scoring province overall was the Free State, with a score of 36 out of 100. This follows a report released but the National Treasury last month that indicated that 66 of the country’s 283 municipalities were in financial distress last June. Political interference in the financial management of municipalities was cited as an issue by the Treasury. “Proper procedures are undermined. The result is that the management of municipal finances deteriorate.” The report cited under spending of capital budgets and overspending of operation budgets as reasons for service delivery deteriorating.

Midvaal, the only DA-governed municipality in Gauteng, was ranked the best municipality in the province by Ratings Afrika. This is the latest in a string of accolades for Midvaal that includes awards for job creation, service delivery and quality of life. Johannesburg was rated the worst-performing metro in the country with a ranking of 26 index points. DA-governed Cape Town, by contrast, was rated the top performing metro with a ranking of 63 index points. The difference between these two metros is like night and day. While Johannesburg falters as a result of billing chaos and inability to collect revenue, Cape Town prospers through sound financial management and the roll-out of services for all.

The worst municipality in the Eastern Cape was Kouga (Jeffrys Bay)with 67,4% of pending on staff costs and only 6% on maintenance. Buffalo City Metro also performed poorly, which is not surprising as the institution has not had a permanent CFO for several years and has a history of under spending on its capital budget.

The picture emerging is becoming crystal clear: DA governments do it better. We do it better because we understand that, by paying attention to financial management, we can deliver services and improve people's lives.