Local economic development is failing as a result of poor collaboration between the private sector and local governments, according to a study by the Centre for Development and Enterprise (CDE) released in Johannesburg on Tuesday.
The CDE said in a statement that the time had come to fundamentally reassess the state of local government outside the metropolitan areas, to acknowledge achievements and to recognise the difficult challenges that remained and had been created by new reforms.
An intensive period of public private engagement around priorities for local government throughout South Africa was urgently required, the report said. ”Frank and honest discussion, however difficult, was essential.”
CDE executive director Ann Bernstein said the situation was worrying.
”Without frank and honest discussion, the necessary partnerships for growth and delivery will not be achieved, and the future of local government outside South Africa’s metro areas, looks bleak.”
The study noted that the private sector is crucial to economic development within South African municipalities, but its potential contribution was being undermined by suspicious officials with an ambivalent attitude towards private enterprise.
”This is potentially disastrous, as some eight percent of economic development within South African municipalities depends on the private sector.”
The study was based on a roundtable discussion hosted by the CDE, which was addressed by Provincial and Local Government Minister Sydney Mufamadi and attended by government officials, the chair of the parliamentary portfolio committee, experts, and private sector participants.
Colin Batchelor, MD of Biwater, the British-based multinational involved in supplying water to Nelspruit and surrounding areas, told the meeting that business people sometimes got the feeling that the government only wanted to talk to the private sector as a last resort.
The report stated that the most important issue facing local governments in South Africa was that of economic development.
”There is a failure to understand the real nature of economic growth and its drivers. Business goes where there is stable local government that welcomes private sector involvement.”
The report said that official attitudes to the private sector were ambiguous, and often hostile, with many senior officials arguing that private sector firms were out to exploit municipal customers.
”Most municipalities have failed to consider public private partnerships as a means of enhancing service provision. They follow Section 78 of the Municipal Systems Act (2000) which prioritises ‘internal solutions’.”
The report said the minister had spoken of a ‘staggering debt situation’ in South Africa’s municipalities.
”Experts argued that far more attention should be paid to municipal revenue rather than expenditure. The announcement of free basic services had been mismanaged, with detrimental effects on municipal creditworthiness.”
Capital expenditure was directed at new infrastructure, while existing infrastructure was being neglected. In many areas, services were declining, and revenues were shrinking.
”Municipalities were expected to assume greater responsibility for a growing range of programmes without receiving additional resources from national or provincial government. ”
‘Unfunded mandates’, the creeping assignment of functions from national to local government was evident in many areas, including health, housing, water, and land reform.
The central government was increasingly making difficult problems the responsibility of local government.
Bernstein said: ”CDE’s work raises an important question: has the DPLG defined its role optimally?
”This department has to interact with other departments about the local implications of their programmes, engage with nine different provinces about their local government responsibilities, provide a support framework to 284 local authorities operating in very different circumstances over a vast geographic area and manage the government’s urban and rural development strategies.”
”Is its task as presently defined a manageable one? Or is it drowning — with great energy and commitment — as it feels itself forced to become the ministry of everything at the local level?” she asked. – Sapa