Deputy Finance Minister, David Masondo, has committed the National Treasury to help stabilise financially-struggling municipalities deliver basic services, by strengthening the regulations and oversight for appointing competent administrators at municipal level.
Masondo said the first task will be to stabilise the performance of local government in addressing the immediate challenges in delivering electricity, water, and other basic services as part of the second phase of Operation Vulindlela.
Speaking at the Old Mutual Leaders Forum, Masondo said without these services at municipal level, businesses cannot function and investors cannot invest.
In the long term, he said, the institutional structure and funding model for local government will be reviewed to ensure that municipalities are financially and operationally sustainable.
“The ultimate objective should be to balance the need for truly local government that is responsive to the needs of a community, with the need for economies of scale in the delivery of services such as water and electricity,” Masondo said.
“However, none of the challenges facing local government will be addressed, if we do not ensure that capable and qualified people are appointed to municipal administrations. The number of people employed in local government has significantly grown since 2006, without a corresponding improvement in outcomes.
“Instances of corruption and patronage in the appointment of senior managers, as well as political interference, have contributed to instability and a loss of technical skills.
“To rebuild capability in local government, we will strengthen the regulation and oversight of the appointment process for senior managers and protect the administration from undue political interference.”
Operation Vulindlela is a joint initiative of the Presidency and National Treasury to accelerate the implementation of structural reforms and support economic recovery, by modernising and transforming network industries, including electricity, water, transport and digital communications.
As the first phase focused primarily on modernizing network industries, President Cyril Ramaphosa - in his Opening of Parliament Address last month - outlined several new areas of reform that Operation Vulindlela will be pursuing in its second phase.
Masondo said the second new frontier of reform in Operation Vulindlela was to address spatial inequality through housing, transport, and urban policy that turn cities into dynamic centres of economic activity, and deal with spatial structure that reflects the legacy of apartheid.
To promote spatial integration, Masondo said the government will use housing programmes to enable people to live closer to areas of economic opportunity, rather than building houses on the urban periphery.
However, this will require the release of well-located public land for social housing, as well as a review of regulations to unlock investment in low-income housing in cities.
“In addition, we must shift our expenditure on housing from a supply-driven model, through which the government constructs fully complete houses and hands them over to beneficiaries, to a more demand-driven model that provides people with the means to find housing in areas where they want to live. This will also allow us to leverage private sector capital beyond our fiscal resources,” he said.
“Finally, we will work to restore the passenger rail system to operation and invest in integrated public transport systems that are affordable, reliable, and safe.”
According to Masondo, the last new area of reform that Operation Vulindlela will prioritise over the coming years is digital transformation.
South Africa is seen as lagging behind many peer countries, including India, Brazil, that have invested significantly in digital public infrastructure such as digital identity and digital payments to promote economic growth while at the same time enhancing the delivery of public services.
To address this, Masondo said Operation Vulindlela will work closely with the responsible departments to put in place a comprehensive roadmap for digital transformation focused on digital payments, system inter-operability, and data integration, as the basis for the digitization of services.
“This roadmap will support innovation, bring millions of South Africans into the digital economy, and improve access to services. These reforms, in addition to those already completed or underway, will fundamentally transform South Africa’s economy,” he said.
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