Mkhize: 87 municipalities 'dysfunctional', require urgent intervention

Cooperative Governance and Traditional Affairs (Cogta) Minister Dr Zweli Mkhize painted a stark picture of the number of municipalities which require urgent aid, during his budget vote speech in Parliament.

Mkhizwe told MPs in the Old Assembly chamber on Tuesday, that his department's various reports have shown that 87, or roughly 31%, of the country's municipalities "remain dysfunctional or distressed".

The number seems to have increased from the 55 municipalities Mkhize cited in the category in March.

"Our major concern right now are the municipalities which are becoming distressed or dysfunctional, including those that are regressing in audit outcomes," Mkhize said.

READ: No performance bonuses for poorly performing municipality officials – KZN Cogta

"There are some that have been performing which had good revenue, which are now eroding their revenue base and eating into their reserves or diverting conditional grants for operational expenditure."

A further 31% of municipalities are "almost dysfunctional", Mkhize continued.

Only the remaining 38% are either "reasonably functional" (31%) or "well-functioning" (7%).

11 municipalities under administration

In the troubled North West, 12 of the 22 municipalities in the province were in the category of serious financial distress, eight of which received disclaimers in audit outcomes.

Nationwide, 11 municipalities are currently under "Section 139" administration by their provinces. Six of those are in KwaZulu-Natal; two in the Free State; and one each for the Eastern Cape and Western Cape.

To find a permanent solution to non-viable municipalities, Mkhize recommended that the next administration conduct a comprehensive review of the wall-to-wall municipalities, focusing on size and structure.

"In addition to the above... distress may be occasioned by mismanagement due to political instability or interference, corruption and incompetence."

The department will thus have to differentiate between problems as a result of human weaknesses, such as incompetence or corruption, and situations where there are genuine structural constraints.

Mkhize also informed MPs that 27 municipalities received disclaimers from the Auditor General of South Africa in 2016/17.

Cogta has signed a memorandum of understanding with National Treasury to support the financially-dysfunctional municipalities, and has also created a joint technical intervention team.

Mkhize will dispatch 14 teams to deal with the pending matters in due course, and will be rolling out a Municipal Specific Revenue Plan, effective immediately.

R23.6bn owed to Eskom, water boards

He also highlighted the problematic issue of defaulting municipalities which are failing to pay their bills to utilities such as Eskom and water boards.

"As at 31 December 2017, the total bulk services owed by municipalities was R23.6bn, R16.2bn for electricity and R7.4bn for water."

The top 10 indebted municipalities owe 70% of the total debt to Eskom.

Nonetheless, they have appealed to Eskom to suspend the interruption of services to these municipalities, while they look at the constitutional issues relating to recovering the money.

 The department's proposed budget allocation for the 2018/19 financial year is R83bn.

"It shall be a hectic year for Cogta as we continue to drive our mission of improving the state of local government while also revitalising and advancing support to the traditional leadership sector.

"We value the support we are getting from stakeholders and communities," he added.

The Standing Committee on Public Accounts will on Wednesday welcome Eskom, Cogta, the South African Local Government Association (Salga) and National Treasury to discuss the issue of defaulting municipalities.

Meanwhile, Cogta portfolio committee chairperson Richard Mdakane said Parliament would undertake to visit the 12 affected North West municipalities during the recess period.

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