Municipalities collapse all over South Africa

South Africa’s municipal and provincial governments have been in a downward spiral of mismanagement of funds, mounting debt, poor service delivery and corruption, and local communities are suffering as a result.

Parmi Natesan, CEO of the Institute of Directors in South Africa, said mismanagement of public funds, failure to deliver basic services, and a lack of effective leadership indicate a deeper governance crisis.

Although clear guidelines exist, such as the King IV, which covers governance best practices, a failure to apply its principles has presumably contributed to these challenges.

“Corruption at Rustenburg Local Municipality reportedly surrounds the leasing of land and unauthorised connections to municipal services, costing millions of rands,” she said.

“These actions have not only undermined the financial stability of the municipality but have also left the community vulnerable.”

“Similarly, a questionable payment of R2 million by Joe Gqabi Municipality, meant for VIP toilets, reportedly disappeared after a contractor provided no services.”

Natesan said the reported involvement of a municipal official in the company that received these funds points to severe gaps in governance controls and accountability.

“Governance shortcomings at the provincial level have been just as concerning, with recent reports revealing that the Gauteng Legislature has struggled to recover irregularly pocketed funds by MPLs and staff,” she said.

“Furthermore, in Mpumalanga, delays in providing learning materials to under-resourced schools have reportedly left students unprepared for final exams.”

“Across the country, municipalities in the North West, Free State, and Eastern Cape reportedly owe water boards over R11 billion, and essential municipal infrastructure grants have apparently been returned to the National Treasury due to underperformance.”

Recently, the Department of Water and Sanitation has warned that two of South Africa’s seven water boards are on the brink of bankruptcy due to mounting municipal debts.

“Then, the eThekwini metro municipality has faced a prolonged water crisis, with contradictory figures being cited for the cost of repairs,” Natesan added.

“At different points, the metro claimed it required R110 billion, R130 billion, and most recently, R44 billion to address infrastructure backlogs. Naturally, this raises questions about the competence and financial acumen of those in charge.”

Boards and Audit Committees play a critical role in maintaining accountability and oversight, Natesan explained.

“Audit Committees are specifically mandated to oversee financial reporting. Municipalities’ reported financial mismanagement and irregularities indicate that these structures have not adequately fulfilled their oversight duties.”

“The Auditor-General’s recent consolidated report on local government audit outcomes again highlighted significant shortcomings across municipalities.”

The findings indicate that “local government is losing billions of rand each year because of poor decisions, neglect or inefficiencies”.

Natesan said fruitless and wasteful expenditures increased to R7,41 billion, with municipalities disclosing R27.59 billion worth of irregular expenditures.

The report lists Audit Committees as key role players in the accountability ecosystem for “providing an independent view of the effectiveness of municipal controls and processes”.

In addition, the report notes that the Council also plays a significant role in “investigating and dealing with unauthorised, irregular, and fruitless and wasteful expenditure; fraud and corruption; and any transgressions and non-performance”.

A significant governance concern contributing to these challenges is the practice of cadre deployment.

“Reports indicate that politically connected individuals are often appointed to leadership positions in the public sector, prioritising loyalty over competence and ethics.”

As Feriel Haffajee recently noted, “cadre deployment is a key factor crashing Johannesburg’s water supply,” raising serious concerns about individuals’ capacity in critical positions.

She further questioned the skills and experience of the “bloated board” overseeing Joburg Water and highlighted how politically motivated appointments have led to operational inefficiencies.

“While cadre deployment is often defended to ensure political alignment, it has reportedly undermined professionalism and weakened institutional capacity in local and provincial governments.”

“This issue has been extensively scrutinised, with the State Capture Commission finding that cadre deployment is both unconstitutional and illegal, as it compromises merit-based appointments and erodes accountability.”

King IV advocates for merit, integrity, and competence-based leadership appointments. Appointing leaders with the necessary skills and commitment to public service is critical for ensuring accountability and driving effective governance.

While challenges remain, Natesan said that adopting King IV can drive better governance, improve service delivery, and rebuild public trust, ultimately promoting socio-economic development and fair access to essential services.

King IV provides a clear guide to tackle governance challenges in South Africa’s local and provincial governments. By applying its principles, these entities can enhance control, accountability, and service delivery.

The framework emphasises leadership rooted in integrity, fairness, and transparency.

It also stresses the importance of appointing leaders based on merit, integrity, and competence to ensure accountability and effective governance – which is crucial since skilled and committed leaders are essential for improving public service delivery.

Strong internal controls ensure proper financial oversight, helping public funds be used effectively, Natesan explained.

Boards and audit committees must take an active role in enforcing controls and reviewing governance practices to prevent mismanagement.

“Ultimately, South Africa’s future depends on the ability of its government entities to be governed effectively,” Natesan warned.