Municipalities make an important contribution to poverty alleviation

0
208
Residents of the Tsitsiratsisi informal settlement in Vredenburg, 135km north of Cape Town on the West Coast, might benefit from a long-delayed housing project. Picture: Ashraf Hendricks/GroundUp

Water Services Authorities (WSAs) face lots of challenges which render them ineffective in discharging their service delivery requirements. Municipalities experiencing service delivery problems and community uprising are characterised by among others, governance and administration instability and huge municipal debt including poor financial management (and performance).

As the country celebrates the National Water Month (NWM) culminating to a National Water Week (NWW) from 18 – 24 March 2019, a lot needs to be done to up the stake in service delivery stakes. More so, municipalities are also gear-locked by the non-payment of debts for services by communities.

Also, lack of capacity to plan, deliver, operate and maintain infrastructure coupled with Service delivery backlogs often results in poor quality of infrastructure. Chief among this is poor infrastructure carrying capacity. It is important to note that The Inter-Ministerial Committee on Basic Service Delivery has been involved in a process to integrate more properly the state of service delivery in the country. 

This has included assessing, at a local governmental level, what initiatives have been undertaken by government to address infrastructure and services related to water, sanitation, electricity, roads, storm-water, transport, sports facilities, health facilities and educational facilities.

Resolutions have been adopted by the Cabinet Lekgotla and Presidential Coordinating Council endorsing the focus towards monitoring the whole of government service delivery with a view to improving the alignment of governmental delivery and the integration of such delivery into Integrated Development Plans  (IDPs) and similar. 

This includes also addressing challenges where possible. There are lots of issues that pose lots of risks for municipalities to overcome if they want to be successful in their service delivery operations. Electricity infrastructure is old: needs rehabilitation and maintenance. Non-revenue water loses are costing municipalities almost R10 billion in revenue annually.

A 2013 study of 1179 water schemes showed 9% dysfunctional, 48% needed refurbishment and only 43% in functional state.  A total of 38% of water treatment works required attention and pose a 20%: high failure risk. In 2014 about 57% of waste water treatment plants were in high and critical risk categories with effluent being discharged into rivers.

Municipalities that do not pay their water bills have run up a whopping R13.1-billion debt – an amount just R2-billion short of the entire annual budget of the Department of Water and Sanitation (DWS). The department has told the portfolio committee on water and sanitation on recently that despite interventions since last November, the problem was getting worse. Between March and September municipal water debt increased by R1.7-billion.

Members of Parliament (MPs) were told that the consequences of the big water debt were serious as DWS and the country’s water boards did not have enough money for the necessary refurbishment of water infrastructure, including dam infrastructure, and to deal with important issues such as water pollution. The department told MPs that of the R13.1-billion debt, municipalities, owed water boards R8.6-billion and the water boards in turn owed the department R4.5-billion.

The debt owed to some water boards was a threat to their financial sustainability. This critical issue needs to be addressed more aggressively by all stakeholders. Water debt is also linked to electricity debt. It was not only municipalities at fault. Government and provincial departments also owe a portion of the R13.1-billion debt.

An inter-ministerial task team, established in December 2017 to deal with municipalities’ non-payment for electricity, had been extended to include non-payment of water bills. It was decided that an advisory panel of water experts be set up, and the task team was in the process of identifying experts and establishing terms of reference for the advisory panel.

Because of deep-rooted problems in municipalities it is no surprise that those that owe Eskom are the same municipalities that owe water boards. Over the last year the water department had issued 63 summonses to municipalities, and had taken seven to court, where the department won the cases.

A representative of one of the water boards told MPs that many municipalities had “settled into thinking that water should be free.” Mr Lulu Johnson, portfolio chairperson, stressed that the problem of municipal water debt “just goes on and on”. He fingered the Department of Cooperative Governance and Traditional Affairs (Cogta) for not taking action in this regard.

It is indeed true. Making municipalities accountable, once again Cogta comes into the picture. Clearly Cogta is not taking a keen interest in these matters, which are quite serious. But Cogta has to take full responsibility; Johnson was quote when expressing his frustration on the saga.

In the final analysis, evidence across government suggests we need to prioritise stronger intergovernmental cooperation to build sustainable LG (planning, partnerships, and managing budgets for joint investments). The spatial form of Local Government (LG) is still perpetuating spatial injustice: how do we better interrogate these issues when we redesign aspects of the system of LG?   

Should we set up new forms of technical services authorities to relieve the stress on local governments to deliver services when they suffer from fiscal constraints, skills and capacity shortages? More analysis needed of  District Municipalities (DM) expenditure patterns in terms of  how funds for functions are actually utilized, if support to Local Municipalities (LMs) is paid for by LMs, extent of monies owed by other entities, or if DM services rendered are reimbursed; role of provincial treasuries?

Municipalities make an important contribution to poverty alleviation and economic development, through providing free basic services (FBS) to poor households and investing in infrastructure and associated services that are critical for economic activity (National Treasury, 2008). To deliver these services effectively, municipalities rely on two important sources of revenue.

One is from the national sphere (local government equitable share allocation (LES) and conditional grants), while the other is the municipality’s own revenue, which is composed mainly of property rate taxes and charges for providing water, electricity, refuse removal, sanitation and other services. However, one critical question is what happens when the ability of municipalities to generate adequate levels of own revenue is constrained. To this end, the issue of non-payment, also referred to as municipal consumer debt, poses a serious threat to the financial health of municipalities in South Africa.

In South Africa, municipal consumer debt refers to the non-payment of property rates, fees/charges for services provided by municipalities (for example water, sanitation, electricity and refuse removal) and various other financial obligations to municipalities (which include for example, traffic fines and rental housing payments). Municipal consumer debt encompasses late payments for property rates, service and other municipal charges, as well as amounts that are deemed irrecoverable.

Municipal consumer debt has a number of potential impacts. For example, it can cripple the cash position of municipalities and, therefore, their ability to fulfill constitutionally mandated responsibilities. Municipal consumer debt can also reduce the finance available for the delivery of basic services, infrastructure, maintenance and upgrading.

In addition, it can prompt the need for greater cross-subsidisation from richer households/businesses, potentially overburdening the existing tax base. Outstanding payments also represent foregone resources that could be used to improve the living conditions of the poor. Possible reasons as to why this type of debt arises are various. 

Poor performance by municipalities, such as inaccurate billing, weak credit control measures and customer service mechanisms may serve to reinforce non-payment, as those consumers able to pay become unwilling to pay. On the other hand, consumers may be unable to pay as a result of unemployment and poverty.

 

IIke Motsapi is a senior experienced journalist with more than 44 years of experience. He is also a media liaison and content developer for the Department of Water and Sanitation (DWS).