CDE ROUND Number seven, 2003 CDE Round Table is an occasional publication reflecting discussions held TABLE on key contemporary topics Local government in South Africa: priorities for action A Round Table discussion with the minister of provincial and local government n 8 November 2002 the Centre for In this, the second Round Table on this ODevelopment and Enterprise (CDE) subject, the spotlight fell on the progress hosted a Round Table on local government’s municipalities have made towards achieving development priorities. the government’s goal of ‘developmental This was CDE’s second Round Table on local government’, as well as priorities and local government. The first, entitled Local challenges for future development. government reforms: What’s happening, and The keynote address was delivered by who is in charge? was convened in mid-2000, Sydney Mufamadi, minister for provincial and focused on the municipal demarcation and local government. The department of process, the local government legislative provincial and local government (DPLG) was framework, reforming local governments, represented by two deputy directors-general and local government finances. and other senior officials. It highlighted the undesirability of delimit- These as well as senior provincial and local ing municipalities stretching across provin- government officials, members of parlia- cial boundaries, and the impracticality of the ment, academics, and local government two-tier municipal financing model. Unresol- experts engaged in a frank discussion with ved issues surrounding traditional leadership business people and other private sector and municipal property rates were identified. participants. Finally, serious questions emerged around This publication contains an edited version a perceived lack of effective leadership of the of the day’s discussions. In order to place local government reform process, and a clear them in context, it starts with a review of and coherent framework for structuring that events affecting local government over the process. past few years. ‘The white paper on local government of 1998 clearly recognises the importance of the private sector for service delivery and sustainability. Many independent experts believe this is not adequately reflected in local government legislation and in the DPLG's approach’ LOCAL GOVERNMENT Contents Summary of key points made by participants 4 The restructuring of local government: an overview 8 The Round Table 15 Introduction 15 Progress and challenges – Sydney Mufamadi, minister for provincial and local government 15 Remarks by Ann Bernstein, executive director, CDE 16 The minister’s response 18 The DPLG – achievements and objectives 21 Key municipal finance issues 23 Case studies: views from the coalface 26 What does the private sector need? 31 Round Table discussion 33 Priorities for action – different views 37 CDE’s view 37 The minister’s view 42 Series editor: Ann Bernstein This report was written by Dr Tim Clynick, senior manager at CDE, and Ann Bernstein, CDE’s executive director. Steven Gruzd and Sean Willis, both CDE researchers, helped with drafting and research. This publication was edited and produced by Riaan de Villiers, publishing consultant to CDE. Published by The Centre for Development and Enterprise Pilrig Place, 5 Eton Road, Parktown, Johannesburg, South Africa P O Box 1936, Johannesburg 2000, South Africa Tel 27-11-482-5140, fax 27-11-482-5089 [email protected], www.cde.org.za ISBN 0-9584697-1-7 © The Centre for Development and Enterprise. This publication may not be reproduced, stored, or transmitted without the prior permission of the publisher. Short extracts may be quoted, provided the publisher is fully acknowledged. CDE ROUND TABLE 2 NUMBER SEVEN, 2003 PRIORITIES FOR ACTION Participants in the Round Table Elroy Africa, deputy director-general: Jackie Manche, deputy director-general: governance and development, DPLG. institutional reform and support, DPLG. Kevin Allan, adviser to the minister for Daniel Manyindo, special adviser: local provincial and local government. government transformation, DPLG. Dr Doreen Atkinson, research director, Florence Mashiane, municipal manager, Human Sciences Research Council. Ehlanzeni District Municipality. Colin Batchelor, chief executive officer, Silas Mbedzi, associate director, public Biwater. sector, PricewaterhouseCoopers. Ann Bernstein, executive director, CDE. Prof Jeff McCarthy, university fellow, Lael Bethlehem, director of economic Graduate School of Business, University development, City of Johannesburg. of Durban-Westville. Mohammed Bhabha, MEC: local government Tim Middleton, director, Kagiso Property and traffic, Mpumalanga. Holdings. Thula Bopela, national electrification Thami Madinane, economist: corporate planning manager, ESKOM. planning unit, City of Johannesburg. Andrew Boraine, adviser to the minister for Sydney Mufamadi, minister for provincial provincial and local government. and local government. Gloria Borman, DA member of parliament, Duma Nkosi, executive mayor, Ekurhuleni. member of the portfolio committee on Karin Pearce, general manager, The provincial and local government. Banking Council South Africa. Yunus Carrim, ANC member of parliament, Noviwe Qegu, national urban policy chair of the portfolio committee on manager, DPLG. provincial and local government. Leshabe Rampedi, municipal manager, Vyande Chisiza, managing partner, Scott Polokwane. Wilson SA. Barbara Schreiner, deputy director-general: Dr Tim Clynick, senior manager, CDE. policy & regulation, department of water Zohra Dawood, executive director, Open affairs and forestry. Society Foundation for Southern Africa. Sledge Selesho, chief director: institutional Alan Dawson, secretariat, National capacity-building and support, DPLG. Coalition for Municipal Service Delivery. Smanga Sethene, research officer, KwaZulu- James Dohrman, project manager, Natal Local Government Association. Municipal Infrastructure Investment Unit. Brian Shepherd, chief financial officer, Patrick Flusk, chief executive: local govern- Buffalo City. ment transformation programme, DPLG. Charles Simkins, Helen Suzman professor Steven Gruzd, research co-ordinator, CDE. of political economy, University of the Prof Douglas Irvine, senior associate, CDE. Witwatersrand. Barry Jackson, project manager and policy Moosa Soni, policy director, South African co-ordinator, Development Bank of Local Government Association. Southern Africa. Dr Michael Sutcliffe, municipal manager, Johan Kruger, chief executive officer, Ethekwini. Infrastructure Finance Corporation. Dr Tim Wilson, chief director: facilities A list of acronyms Andrew Layman, director, Pietermaritzburg and planning, department of health. and abbreviations Chamber of Business. Charles Zwane, general manager, used in this Vusi Mahlangu, head: public sector finance, Johannesburg Water Managing publication appears Investec Bank. Company. on page 13. CDE ROUND TABLE 3 NUMBER SEVEN, 2003 LOCAL GOVERNMENT Summary of key points made by participants Progress made; challenges remain to the department's initial plans, are not homogenous but differentiated across the The process of The DPLG has a daunting task. It is managing country’s district and local municipalities, establishing new the largest and most complex set of institu- according to the department's assessment of municipalities is tional changes in the country's history. More- the specific capacities of various municipali- still incomplete, over, many government departments have ties to provide particular municipal services. loaded issues they cannot, or do not wish to, The division of powers between B and C and the local deal with on to the DPLG. Significant progress municipalities is still very complex, and government had been made towards establishing demo- remains contested. system has not cratic and non-racial local government. How- New development challenges been fully ever, major challenges remain, and the stabilised DPLG's performance has been inadequate in Numerous new issues affecting the core important areas. developmental activities of new municipalities have emerged: Outstanding issues Basic services Numerous problems remain from the demar- cation and amalgamation process: local Despite an impressive roll-out of housing and municipalities are often too large, and water programmes, basic services remain include too many weak former municipalities. inadequate. Doubling the conditional grants Overly large district municipalities are expe- and 'equitable share' allocations to munici- riencing severe problems. Municipalities palities over the past three years has made falling across provincial boundaries also little impact. The DPLG must gain greater clar- remain a problem. ity about how municipalities are to provide The process of establishing new munici- basic services, and how these are to be palities is still incomplete, and the local gov- funded. The DPLG must also decide how it will ernment system has not been fully stabilised. help municipalities to make strategic choices A uniform system for rating all property within their financial constraints. needs to be implemented. • The announcement of free basic services There are problems with integrating previ- was mismanaged. Rather than improving ser- ously separate municipal administrations, vice payments by meeting minimum needs staffing them with enough skilled people, over and above which payment would be making new municipalities financially viable, expected, providing free basic services and reducing