Holding mayors, councillors and senior managers in municipalities personally liable for financial losses, bankruptcy and corruption will bring the turnaround that SA’s chronically collapsing municipalities need.
SA’s regulations to put failing municipalities under administration are fundamentally flawed, as they do not hold councillors and senior managers fully accountable. Neither do they recover the losses personally from incompetent, corrupt and wasteful councillors and senior managers.
Auditor-general Tsakani Maluleke on Tuesday told parliament that about R5.5bn in funds that went to 22 of the worst-run municipalities for the year to end-June 2020 had disappeared. Maluleke was briefing parliament on the outcomes of the auditor-general’s annual audit of the country’s 257 municipalities.
She said “nobody really knows for sure” what happened to the missing funds.
There are provisions in the constitution to put under administration municipalities that are in financial distress and to appoint administrators to run them. However, these provisions in practice have proven to be flawed.
Most municipalities that have been put under administration because of financial, governance and delivery distress have not experienced any significant turnarounds – their financial mismanagement, corruption and service delivery failures in most cases persist after the interventions.
A typical example is the Mangaung metro, which includes Bloemfontein, which was put under administration in 2019 after financial, governance and service delivery failures. Two years after the intervention, Mangaung remains dysfunctional.
Section 139(1), (4) and (5) of the constitution allows a provincial government to step in when a municipality cannot fulfil an obligation in terms of the constitution or municipal legislation. The constitution makes provision for three kinds of municipal interventions.
Most municipalities that have been put under administration because of financial, governance and delivery distress have not experienced any significant turnarounds.
The one is general intervention when a municipality cannot fulfill an executive obligation in terms of the constitution or local government legislation, such as public service delivery. The province can take over the service or dissolve the municipal council and appoint an administrator until a new council is elected.
The province can intervene in the affairs of a failing municipality if the municipality cannot put together a budget or raise revenue to finance a budget. Again, the provincial government has the power in such cases to dissolve the municipal council, appoint an administrator until a new council is elected and approve a temporary budget or revenue-raising measures to provide for the continued functioning of the municipality.
A provincial government can also intervene in a financial emergency, if the “municipality is in serious or persistent material breach of its obligations to provide basic services or to meet its financial commitments because of a crisis in its financial affairs”. The provincial government can insist on a financial recovery plan or dissolve the municipal council.
In many cases the interventions have been applied inconsistently, selectively and with bias. In some cases an ANC-led provincial government wants to dislodge an opposition-led municipality. In other cases, a faction in control of the provincial government wants to oust another faction in control of a municipality.
A case in point is when the Gauteng provincial government placed the Tshwane metro under administration in March 2020
in terms of section 139(1)(c) of the constitution. The city had become dysfunctional for almost two years after the collapse of the DA-EFF coalition. Both the EFF and the ANC appeared to have deliberately tried to bring about the collapse of the metro – to remove the DA from governance.
Administrators were appointed until new council elections to be held within 90 days. The DA then launched a successful court challenge to the action.
The one weakness in the legislative regime for intervening in failing municipalities is that the real reasons for municipal failures are rarely addressed.
In the cases of failing ANC-run municipalities, ANC provincial governments have placed failing municipalities under administration, but without holding new council elections. This is to protect ANC councillors who presided over failed municipalities from losing their jobs in elections.
To use Mangaung as an example again, when it was put under administration in 2019, the metro was operating at a deficit. Conditional grants were underspent and the municipality was beginning to use conditional grants for operations.
Mangaung was put under section 139 (5) (a) and (c) of the constitution. An administrative team of five was appointed to oversee the metro. A financial recovery plan was jointly drafted by the national and provincial treasuries. However, the municipal council was not dissolved.
The one weakness in the legislative regime for intervening in failing municipalities is that the real reasons for municipal failures are rarely addressed. Furthermore, no-one is held accountable.
In municipalities put under administration, the same elected councillors and municipal managers responsible for the failures often remain in their posts after the interventions. It is crucial to remove those councillors and managers .
This means all interventions must include having fresh elections for councillors. It must also see the firing of the municipal managers involved in the failure.
More importantly, councillors and municipal managers must be held personally responsible for financial losses.
The administrators appointed to run municipalities under administration are rarely specialist turnaround strategists with the requisite experience. They are either politicians connected to the ANC or just not turnaround specialists.
In the case of Mangaung, the administrators, 12 months after they were appointed, had not received terms of reference setting out what they must do. Furthermore, the council was never dissolved, neither were the city managers fired or suspended, yet administrators were appointed – which meant there were parallel governing structures in the municipality during the turnaround period.
The administrators appointed to run municipalities under administration are rarely specialist turnaround strategists with the requisite experience.
In January this year, the Eastern Cape government invoked section 139 (5) (a) of the constitution to place the embattled Amathole District Municipality under administration. The municipality had been unable to its employees’ salaries for four months. However, the provincial government did not dissolve the council that had failed to govern properly; neither did it fire the municipal manager.
The Eastern Cape provincial government established a “political workstream” made up of politicians to monitor the implementation of a financial recovery plan.
Financial and service delivery recovery plans implemented under administration almost never deal with the real issues that cause municipal collapse.
Most of the municipalities have bloated staff, but the numbers have never been cut as part of financial or service delivery recovery plans. Municipalities become glorified job-creation schemes and havens for tenderpreneurs. However, dodgy contracts are never cancelled – or money retrieved.
Some municipalities should not operate as municipalities as they have no capacity to raise revenue. Such municipalities should be abolished.
Voters must not vote again for councillors and mayors who have presided over the financial, delivery and corruption collapse of municipalities. In fact, councillors who oversaw the financial collapse of municipalities should be banned for at least a period from entering elected office.
William Gumede is associate professor, School of Governance, University of the Witwatersrand; and author of Restless Nation: Making Sense of Troubled Times.
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