Local may be lekker for Gordhan
Newly appointed Co-operative Governance and Traditional Affairs Minister Pravin Gordhan cut a solitary figure on Monday when he and other ministerial appointees met for the swearing-in ceremony at the presidential guesthouse in Pretoria.
Always approachable, he arrived early and took up his seat in the auditorium, empty of almost all except the media, instead of joining the hurly-burly of the refreshment room where his colleagues had gathered.
After the mandatory official photographs, Gordhan left quietly. In an interview he revealed that he was fully aware of the challenge awaiting him, saying he and his deputies “have our work cut out for us”.
He has handed over the finance ministry baton to his former deputy, Nhlanhla Nene, now the country’s first black African finance minister. Gordhan’s move to the new ministry came as a surprise to some; his performance as finance minister since 2009 has won the approval of the markets.
Nene plans to carry on the three-year growth plan put in place by Gordhan, saying his appointment will ensure there is continuity.
With municipal elections looming in 2016, many believe Gordhan is well equipped to deal with local government’s shortcomings and to help the 278 municipalities in achieving some of the aims of the National Development Plan (NDP), a key policy intended to drive South Africa’s economic growth.
As head of finance for five years, he was kept abreast of the treasury’s quarterly reviews on local government as well as the programmes set up to sort out deficiencies in state activities.
Many commentators have said that much of the NDP’s success will lie in its ability to get fundamentals right at local government level.
Increasing municipal service delivery protests are discouraging investors and creating a perception of instability, they say.
Gordhan, who has a reputation for supporting a frugal outlook, plans to focus on improving spending outcomes at municipalities, improving delivery and accountability through more efficient management, and rooting out corruption and waste.
“Service delivery is a broad concept,” he said. “Municipalities need to stay in tune and communicate their needs. You need good people to lead this. There cannot be a person in a financial role, for example, who does not understand finance.”
Municipalities need to have national and provincial capabilities “and get closer to the people on the ground”.
Gordhan said municipalities should make taxpayers feel as if they are getting value for the money they spend. He also believes there are unexplored opportunities for municipalities, and metros in particular, to drive job creation.
“Some municipalities are good and some are in poor shape. In some cases, strong action is going to be needed.”
A report by former auditor general Terence Nombembe, released in August last year, revealed the extent of the crisis in local government. It found that none of the eight metros had clean audits. Nombembe said there had been improvements in some municipalities that had previously experienced problems, whereas others that had scored well had deteriorated.
The 2011-2012 local government audit outcomes report showed irregular expenditure at R9.82-billion and wasteful expenditure at R586-million – double that of the previous financial year.
Nombembe said initiatives by the state and oversight bodies to clean up administration and get to the root of many problems identified by the government were not seen in the audit outcomes.
He found that 73% of the municipalities and government entities reviewed had vacancies in key positions, and key officials without the minimum competencies and skills. At least 71% were making use of consultants.
Georgina Alexander, who conducted research for the South African Institute of Race Relations on the performance of municipalities, said Gordhan had her sympathy. “He has been lumped with a sector with a lot of problems.”
Last year the treasury noted that, for a municipal budget to be passed, the body has to show that it has sufficient revenue to cover expenditure.
The treasury said that most municipalities inflate revenue projections to push budgets through – “hence, revenue estimates are seldom underpinned by realistic or realisable revenue assumptions, resulting in municipalities not being able to collect this revenue and therefore finding themselves in cash-flow difficulties”.