Representatives from South Africa’s eight metros — the largest cities and economic engines — are set to attend the National Treasury’s launch of the metro trading services reforms in Pretoria on Wednesday.
Finance minister Enoch Godongwana recently rallied behind the reforms, aimed at addressing the deteriorating quality of services in most of the metros, saying they would help improve the local authorities’ financial positions and stop their dependence on grants.
Business Day reported previously that the Treasury was working with the metros on a R54bn performance-based incentive that would help them with cash to fix water, electricity and waste management services on the condition they ring-fence revenue from those services in professionally run utilities that can ensure service delivery.
The reforms introduce a performance-linked incentive under the urban development financing grant to strengthen accountability and improve financial performance and service delivery in metropolitan trading services, according to the Treasury.
“Trading services include water and sanitation, electricity and energy, and solid waste management. The implementation of the reform seeks to stabilise and strengthen the delivery of core basic services in metropolitan municipalities and set foundations for increased investment and economic growth in South Africa’s eight largest cities.”
Godongwana has said that by addressing the main trading services of water, sanitation and electricity it was hoped those reforms would help unlock the economy and improve service delivery.
The implementation of the reform seeks to stabilise and strengthen the delivery of core basic services in metropolitan municipalities and set foundations for increased investment and economic growth in South Africa’s eight largest cities.
— Treasury
The local government sector continues to be dogged by fruitless, wasteful and unauthorised expenditure amounting to billions of rand, fraud and corruption, poor service delivery, and a dearth of competent skilled personnel at decision-making and management levels.
The rot at local government has attracted the attention of Operation Vulindlela, a joint initiative of the Treasury and President Cyril Ramaphosa’s office set up in 2020 to reinvigorate the economy.
The second phase of the initiative would focus on this unit of government, which has drawn sharp criticism from business leaders and citizens for its failure to roll out basic services such as potable water, electricity, clinics and refuse collection.
Ramaphosa has acknowledged the dire financial distress of many municipalities driven by weak revenue collection, poor management and substantial service delivery backlogs.
“Many municipalities are not spending appropriately. For several years, water and electricity revenue has not been invested in infrastructure maintenance or expansion but has been redirected to cover other municipal costs,“ the president said recently.
“Local government finances have to be placed on a more sustainable footing to support the delivery of basic services. Over the medium-term, R19.2bn will be reallocated to the reform of electricity, water, sanitation and solid waste trading services in metros. These allocations will be linked to performance against clear targets.”
Business Leadership South Africa has said the country’s reform agenda remained on a positive trajectory, showing measurable progress across economic, criminal justice and governance streams.
Bheki Stofile, president of the SA Local Government Association, the body representing the country’s 257 municipalities, was not immediately available for comment.
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