All eyes will be on Finance Minister Enoch Godongwana on how his Medium-Term Budget Policy Statement (MTBPS) will address the current financial crisis facing some municipalities. There are more than 100 municipalities that have adopted budgets that they cannot fund.
Local governments across the country have seen a significant drop in sources of revenue. Non-payment of rates and other services are among many reasons that contribute to a lack of funds at local government.
Poor skills and corruption have also crippled the proper functioning of many municipalities. Despite numerous red flags raised by the Auditor-General, the list of municipalities that are failing to fulfill their constitutional mandate is growing.
South Africans continue to endure poor service delivery, which often triggers protests, in various communities around the country. In May, former Finance Minister Tito Mboweni described the state of municipal finances as a moment of truth.
“Currently there are 163 municipalities which are classified as being in financial distress, 163 municipalities in a financial and service delivery crisis, and 102 municipalities who have adopted budgets this year which they cannot fund, in other words, unfunded budgets, so we’re facing difficulties.”
With the 2021 Medium Term Budget Policy Statement on the cards, the focus will now shift to the current Finance Minister Enoch Godongwana. There are concerns that the National Treasury is starting to run out of options to improve service delivery at local government level. With the ruling party having lost some municipalities this could dislocate the country’s national priorities.
Another challenge is the emergence of competing political interests that could weaken efforts by the National Treasury to address some of the challenges. Inability to spend money by some municipalities has seen the municipal budget being cut, leaving communities without adequate service delivery.
“Most of the challenges municipalities face are financial in nature leading to some municipalities not able to fulfill their obligations such as employees salaries, not being able to pay their service providers but most importantly municipalities are not able to deliver the services to the residents,” says South African Municipal Workers’ Union Secretary-General Dumisane Magagula.
Issues expected to be addressed by the Finance Minister Enoch Godongwana:
The South African Institute of Government Auditors (SAIGA) says the Medium-Term Budget Policy Statement should focus on upskilling key decision-makers in municipalities.
SAIGA CEO Russel Morena says this is because these leaders are responsible for setting the tone.
“We are concerned about the spending especially on unnecessary items that are not adding value to source and improve service delivery at local government.”
And with new administrations that will likely require more political collaboration, some are hoping that there will be renewed vigor in the delivery of services and the handling of public finances.
CORRECTION: Note that this article has been modified to reflect the correct organisation which is SAIGA. It was incorrectly stated that it was SAICA and not SAIGA.