SA’s municipal sector is on the verge of collapse – Afrika Ratings

Ratings Afrika has highlighted the dire state of municipal management in South Africa since it began publishing its Municipal Financial Sustainability Index (MFSI) in 2011. Never a particularly uplifting read, the latest survey of 100 largest municipalities in the country is an ice bath.

“The South African municipal sector [except the Western Cape] is on the verge of financial collapse, and it is time for the government to seriously recognize this and start taking the necessary steps to save the country from disaster,” says the latest MFSI report, covering the fiscal year ending June 2021. .

The days of tinkering around the edges are over. It’s time for massive changes in municipal senior leadership to avert the inevitable calamity, say the authors.

This may be easier said than done, given the financial hole that municipalities have dug themselves at the hands of party cadres. Managers who oppose corruption are sidelined and harassed.

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Residents and businesses suffer from poor service delivery and economic growth is stifled by lack of investment in infrastructure maintenance and development.

It’s a message that began to filter through in the 2021 local elections, where the ANC won less than 50% of the popular vote for the first time since 1994, with the Democratic Alliance securing 20% ​​and the Freedom Fighters economical 10.6%.

The decline in local election turnout from 58% in 2016 to 46% in 2021 indicates accelerating voter apathy.

The MFSI rates municipalities and metros on a scale of 1 to 100, based on six financial components: operational performance, liquidity management, debt governance, budget practices, affordability and infrastructure development.

Top Rated Municipalities

The highest rated municipality in Gauteng is Midvaal (DA) with a score of 75, followed by Saldanha Bay in the Western Cape (DA) with a score of 72.

Senqu (ANC) in the highest rated municipality in the Eastern Cape with a score of 63. KwaDukuza (ANC) is the highest rated municipality in KwaZulu-Natal with a score of 66.

What should worry the National Treasury is that the Free State’s top-scoring municipality (Metsimaholo – Sasolburg) limped home with a score of just 34.

North West fared no better: the top-ranked municipality (JB Marks – Potchefstroom) scored 39.

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At the bottom of the ranking are municipalities with low cash, large operating deficits and deteriorating infrastructure due to low repair and maintenance expenditures.

Lekwa (Standerton) in Mpumalanga hardly made an impression, scoring just seven, followed closely by Matjabeng (Welkom) in the Free State with a score of nine.

Mangaung (Bloemfontein) is the lowest rated metro, with a score of 21.

The Western Cape remains the best managed province, with an average score of 52, followed by KwaZulu-Natal (42).

The Free State and the North West remain the worst managed provinces, with average scores of 20 and 24 respectively.

Of concern is the state of governance at metro level, which overall saw a six-point decline from 48 to 42 between 2017 and 2021. Cape Town is the only metro considered financially viable, with a score of 67, surpassing the rest. by a wide margin.

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“It is clear that the majority of municipal councils have failed miserably in their governance responsibilities by letting them sink into this desperate and unsustainable financial situation,” say the authors.

Source: Africa Ratings

Another sign of deterioration is the debtor collection rate, which has fallen below an average of 80% from 82.3% a year ago – still well below the benchmark of 95% set by the Treasury. national.

This may seem insignificant on the whole, but it shows that residents are unable or unwilling to pay for services, forcing an ever-increasing reliance on state subsidies to cover shortfalls.

It is possible to right this rating ship, but it is going to require drastic changes in management. Nothing else will.

Melissa C. Keyes