- David Masondo said recovery was undermined by metros' internal supply chain management processes, which were lengthy and tedious.
- He said metro contracts were targeted by criminal elements under the disguise of 30% requirements of the Preferential Procurement Policy Framework Act.
- Masondo said metros need to create a conducive business environment "through more efficient internal business processes for the private sector".
South Africa has little hope of making a meaningful economic recovery in the short term if it cannot get its metropolitan municipalities to run more efficiently and transparently, Deputy Finance Minister David Masondo has said.
Masondo was speaking at a Metropolitan Municipalities Roadshow on the Economic Reconstruction and Recovery Plan in Pretoria on Thursday.
Among other factors contributing to poorly run metros, he flagged cumbersome bureaucratic processes and abuse of legislation intended to drive economic transformation.
While the story of mismanagement and financial challenges has been pervasive for years among South Africa's local and district municipalities, financial and governance challenges at the country's eight metros have recently come under the spotlight as well.
Last week, Auditor General Tsakani Maluleke announced that the country's municipalities racked up R26 billion in irregular expenditure.
Earlier this week sovereign credit ratings agency Moody's downgraded Pretoria's Tshwane Metropolitan Municipality over serious liquidity concerns.
Criminal elements 'mushroomed'
With local government elections approaching later this year, the state of municipalities is expected to come under scrutiny.
Masondo said National Treasury's engagements with the management of local government identified "two major constraints on metro performance".
"Firstly, it is the metro internal supply chain management processes, which are lengthy and tedious. Secondly, it is owing to the criminal elements which have mushroomed under the disguise of 30% requirements of the Preferential Procurement Policy Framework Act," said Masondo.
Masondo said as government continues to engage with local government challenges, it needed to understand whether the root cause of these problems was policy or a criminal issue.
"It is only through listening that we will be able to develop solutions that are befitting to the problem. Part of the problem regarding the slow pace of capital spend, is a lack of a project pipeline in some metros," Masondo said.
Better business environment
Regarding the need to fast-track procedures for business, Masondo said the metros need to create a conducive business environment "through streamlining and ensuring more efficient internal business processes for the private sector".
"Such business processes relate to supply chain management, issuing of business permits, responding to customer complaints, issuing of rates and services accounts, development approval processes, issuing of construction permits and rates clearance certificates and ensuring electricity connections," he said.
Masondo said metropolitan municipalities were expected to play a central role in South Africa's economic recovery, hence the Economic Reconstruction and Recovery Plan envisaged large investments in infrastructure for public services and private investment.
"This infrastructure investment needs to be of an adequate scale, appropriately located and effectively executed if it is to contribute to improved national economic performance and poverty reduction," Masondo said.
Masondo decried "governance and institutional" challenges which negatively impact on the cities including deteriorating financial positions, a failure to keep track of spending and less-than-desirable outcomes from the office of the Auditor-General.