A five-year assessment of provincial municipalities in the North West Province has revealed that 13 of the 22 municipalities are in financial dire straits, with service delivery on the brink of collapse.
The analysis of a five-year assessment (2015/2020) of provincial municipalities was presented by Finance MEC Motlalepula Rosho; Head of Department, Ndlela Kunene and Chief Director for the Municipal Support Programme, Linda Nengovhela, as the department kicked off a process of giving feedback to municipalities that are in financial distress.
The feedback analysis of three municipalities, including Dr Ruth Segomotsi Mompati, Naledi and Maquassi Hills, was done via virtual link and was in preparation towards the implementation of chapter 13 of the Municipal Finance Management Act (MFMA) to assist municipalities to resolve their financial problems.
Rosho said the municipal audit outcomes show that over half of municipalities' financial systems and governance and financial information are deficient.
Rosho warned that these widespread weaknesses leave municipalities vulnerable to financial mismanagement, which subsequently turns into a crisis where there are no remedial actions put in place.
"Continued tolerance for chronic and serious financial problems undermines the confidence of the public and of investors alike. It also compromises the ability of the municipality to perform its basic functions and deliver services to residents and firms," Rosho said.
The MEC acknowledged that despite Provincial Treasury doing its best to provide support to municipalities, the support did not yield the desired outcome.
The province has, however, recorded marginal improvement in the financial performance of the supported municipalities, Rosho said.
Among the challenges besetting provincial municipalities include a bloated structure/organogram not being fit for purpose, the appointment of incompetent people; failure to raise and collect own revenue and the adoption of unfunded budgets.
Rosho said employing people who are not skilled and trainable has brought municipalities to untenable situations.
"Municipalities need to have competent and skilled managers, and people who are up to the task, particularly in the Budget and Treasury Office (BTO), which is the bedrock of municipal performance."
Rosho said the technical team presented the feedback of the five-year financial assessment, noting that the picture presented in terms of Section 138 and 140 of the MFMA, leaves much to be desired.
"The culture of planning to spend more resources than available is wrong and cannot be changed by simply adding more resources. Instilling fiscal discipline and consequence management are critical to creating financially viable municipalities.
"This is one area that we have left unattended and we have relegated our responsibilities, and are scared to be unpopular as managers. When you lead, you need to take unpopular decisions as leaders," said Rosho.
Hold failing managers accountable
The MEC condemned the culture of not holding managers, who are failing in their duties accountable.
Political and administrative leadership of municipalities, including South African Local Government Association (SALGA); Cooperative Governance, Human Settlement and Traditional affairs (CoGHSTA) and National Treasury attended the meeting. They made recommendations on what needs to happen going forward, in order to assist municipalities to perform their mandate to communities.
The mayors are expected to table the report to their respective councils within 30 days and provide provincial treasury with council resolution.
The department said the collective agreed that a Financial Recovery Plan needs to be implemented to improve the financial sustainability of distressed municipalities.