Plans for South Africa’s most dysfunctional municipalities

While South Africa is at a point of great uncertainty, the country is also at a moment of great opportunity which will require tough decisions to be made, says finance minister, Enoch Godongwana.

The minister made the clarion call while delivering his first Budget Vote in Parliament on Wednesday (18 May).

In his address, Godongwana said: “The moment demands that we stick to the policy course of balancing support for the most vulnerable households, with the careful rehabilitation of our public finances”.

Over the next year, he said the National Treasury will continue to support the government’s ability to “ensure stable, sustainable growth and equitable and efficient allocation of public resources”.

He said the department will continue to pursue a balanced and prudent fiscal strategy in order to stabilise the public finances.

“Although public finances remain under some strain, the fiscal position has improved somewhat in comparison to this time last year. We cannot let our guard down as we remain on course to restoring the health of public finances.

“To this end, the recommendations arising out of the spending reviews will be implemented to improve expenditure efficiency and programme delivery impact over the medium term. National Treasury is responsive to our changing environment and continuously considers improvements to the budget process to deliver on our national priorities and foresee future needs,” he said.

He said work is being done on climate tagging as well as climate budget tagging, which is a tool for monitoring and tracking of climate-related expenditures in the national budget system.

It provides comprehensive data on climate-relevant spending, enabling the government to make informed decisions and prioritize climate investments.

Local government

While national economic growth is anchored in strong local economies which are reliant on an effective local government, he said the country is struggling with the formidable challenge of an increasing number of dysfunctional and financially distressed municipalities.

To turn the tide, he said the National Treasury, in partnership with the Department of Cooperative Governance (DCOG), is harnessing local government support mechanisms to intensify targeting interventions for increased impact from extensive capacity building under the accountant general.

This will include programmes to improve municipal audit outcomes with a specific target on those with the highest levels of irregular, fruitless and wasteful expenditure to direct intervention in terms of Section 139(7) of the Constitution.

“There are 43 municipalities that meet the criteria to be placed under mandatory intervention. I have already written to the Premiers of all provinces in October last year identifying these municipalities and that the mandatory intervention process must begin in earnest,” he said.

Nursing municipalities back to financial health would boost the quality of life of residents, encourage economic activity and investment, as well as encourage tax and rate payment, he said.

Advancing inclusive growth and realising transformation

During the 2022/23 financial year, the National Treasury, in partnership with local government, would implement five township economic development strategies as well as identify and approve 20 catalytic projects in spatially targeted areas within metropolitan cities.

Secondly, he said the strategies would be implemented in cities and rural towns to provide technical support to strengthen infrastructure planning, delivery capacity and to support spatial transformation and inclusive developments.

Renewing trust in public entities

The minister said that the government will during the financial year continue to finance the gross borrowing requirement while minimising refinancing risk, currency risk and overall borrowing costs.

To reduce their continuing demands on South Africa’s public resources, Godogwana said the National Treasury will outline criteria for government funding of SOCs.

“Eskom is faced with a large amount of debt that remains a challenge to service without assistance. The National Treasury is working on a sustainable solution to deal with Eskom’s debt in a manner that is equitable and fair to all stakeholders. The work on the review of governance systems of several high-risk state-owned entities is underway,” he said.

Reinforcing our commitment to ethical government

The minister said strengthening transparency, efficiency, effectiveness and impact of public procurement remains a “priority” for National Treasury.

This, he said, will be achieved by introducing the long-awaited Public Procurement Bill, strengthening procurement decision-making responsibility and management at all public departments and institutions, and most importantly, modernising the procurement system.

This would strengthen data collection, and enhance analysis allowing for better reporting and subsequently increasing monitoring both by the government and the public parties.

“We received over 4,000 submissions on the revised Public Procurement Bill and these have all been considered along with the recommendations by the several recent Commissions of Enquiries,” he said.

In this regard, consultations with Nedlac commenced on 6 May 2022 as the bill progresses towards tabling in Parliament this financial year.

“Work is continuing at a pace on the PFMA and MFMA reforms and support measures as well as accelerating the implementation of the government’s integrated financial management system with rollout of modules both in pilot departments and provinces this year.

“In addition to strengthening legislative frameworks, capacity, capabilities, systems and processes of financial governance and management National Treasury will continue to play our role in fighting corruption and maladministration by conducting forensic audits, special performance audits and review of internal controls,” he said.


Read: 5 reasons why South Africa’s economy is struggling right now

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Plans for South Africa’s most dysfunctional municipalities