President Cyril Ramaphosa’s Coordinating Council (PCC) has endorsed a new district-based model for development.
The model – which will first be piloted in the OR Tambo District Municipality in the Eastern Cape – will allow for more specific service delivery and budget considerations ‘at a district-level’.
“Across the 44 districts and eight metros in the country, all developmental initiatives will be viewed through a district-level lens,” the presidency said in a statement.
“Development will be pursued through single, integrated plans per district – one district, one plan – that will outline the role of each sphere of government as well as the role of communities and civil society sectors in each district.”
The PCC said that the new model will require that national budgets and programmes are spatially referenced across the 44 districts and eight metros from the 2020/21 Budget cycle.
A similar realignment of provincial government budgets and programmes will take place.
“This shift in planning is expected to narrow the distance between citizens and engender active participation by citizens in development, and enable long-term planning as well as responses to immediate ‘burning’ issues,” the PCC said.
Municipalities in trouble
The announcement follows a recent National Treasury report on the state of local government finances, which provides an overview of the financial position of all 257 of the country’s municipalities.
The report found that while most municipalities are in reasonably good shape about 125 municipalities are in varying degrees of financial distress, and remain a cause for concern.
Some of the main areas of concern include:
Municipalities continue to have insufficient cash coverage to fund their operations
A total of 121 non-metropolitan municipalities and three metropolitan municipalities reported cash coverage data, which failed to meet prudent standards in 2017/18.
Only 55 local municipalities and 15 district municipalities had cash coverage of more than three months of operational expenditure.
This indicates that municipalities continue to struggle to understand and action the critical concept that budgeting for surpluses is necessary to avoid cash and liquidity problems.
Overspending of operating budgets has decreased
The total number of municipalities that overspent their adjusted operational budgets decreased from 155 in 2016/17 to 131 in 2017/18.
In total 25 municipalities overspent their operational budgets by more than 25%.
These municipalities include two secondary cities, 21 local municipalities and two district municipalities.
Underspending of capital budgets continues to be a challenge
Municipalities underspent their capital budgets by R16.3 billion (or 22.9% of R71.1 billion adjustment budget).
Metropolitan municipalities accounted for 13.2%of all capital budget underspending followed by local municipalities at 8.1%, and on average metros failed to spend 20.6% of their capital budgets.
The total number of municipalities that have underspent on their capital budget by more than 30% have increased from 67 in 2016/17 to 92 in 2017/18.