/ 15 January 2019

Allow local councils to do their fiscal duties

At the end of October
At the end of October, the prudential authority applied to court to liquidate VBS. (Antonio Muchave)


The insistence of South African political parties, and the ruling party in particular, on democratic centralism in a constitutionally guaranteed pluralistic democracy is a threat to good governance and the very ethos of democracy.

The current saga following the demise of VBS Mutual Bank and the incessant troubles bedevilling state-owned enterprises (SOEs) are but two among many examples that bear testimony to the danger of boundless central control.

Every government requires some minimum level of political centralisation to enforce law and order and co-ordinate public service and economic activity. But there is a fine line between filtering centrally made operational decisions through hierarchical organisational partly political structures and forcing similar decisions through to democratically elected institutional structures.

READ MORE: VBS scandal: 4 ANC mayors linked to VBS looting sacked

It is commonplace for national party-political structures to interfere in the internal political affairs of subordinate subnational political office bearers and the operational dealings of supposedly independent SOE boards. This meddling is subtle at times, concealed as temporary exercises to avert delivery crises or to ensure adherence to the party line. Municipalities have experienced many such cases in recent history.

In other cases, the intrusion is so blatant and far-reaching that it borders on undermining the institutional architecture and integrity of multilevel governance. Political parties deliberately disregard South Africa’s well-established and internationally admired regulatory framework for mutual co-existence of the “distinctive, interdependent and interrelated” spheres and organs of state as espoused in the Constitution and other legislation.

The furore over municipal funds deposited in the now defunct VBS Mutual Bank reveals an unsettling lack of understanding about multilevel governance accountability protocols, the laxity of central political decision-making, driven by expediency rather than rationality, and the entrenched inability to manage the intricate relationship between political party matters and the state.

Driven by a growing public outcry, the ruling party is under pressure to demonstrate a new sense of political renewal, which is driven by the looming electoral imperatives. In what appears to be an unprecedented national decision, it has instructed provincial political structures to dismiss the mayors of municipalities that unlawfully deposited public funds in VBS.

This action elicited a nationwide ovation because municipalities have become accustomed to a culture of impunity. But municipal delivery failures and financial misconduct have continued unabated, and political parties and local councils have displayed little or no interest in holding the culprits accountable.

To put the scale of this malfeasance into perspective, the minister of co-operative governance and traditional affairs recently announced that 62% of municipalities are either dysfunctional or almost dysfunctional. Startlingly, such an alarming rate of ineptness has not attracted the same level of political attention and rage as the VBS saga.

This is where the problem lies: central party-political structures have bequeathed unto themselves the role of “community” vanguard, answerable only to themselves, with the privileges to decide what is in the interests of citizens and what are the priorities for local accountability, including how accountability is exercised.

But there is no shortage of laws, rules and policies to guide the execution of local accountability. In particular, the Municipal Finance Management Act is one of the most detailed and progressive pieces of legislation that govern the financial affairs of municipalities, the conduct of political office bearers and municipal officials in relation to finances and the relationship between office bearers, officials and other organs of state.

The Act not only embraces the constitutional values of the separation of powers, but also lays out a diligent process that needs to followed when both the political office bearers and officials fail to comply with its provisions. At the centre of the VBS debacle is that municipalities deposited funds into a mutual bank, contravening the provision set out in section 7 (b) of the Act.

There are legitimate reasons for this prohibition, which mainly have to do with financial prudency. What is of concern is that accountability procedures seem to have taken place beyond the realm of local government and the legislative prescripts to be followed when the Act is violated.

In cases of financial misconduct, the local councils involved should carry out an internal investigation and summon the accounting officers to disciplinary hearings, if warranted. When the council fails to discharge its responsibilities, the mayor is obligated to inform the provincial MEC of finance about the transgression, who in turn is expected to notify the treasury.

As can be deduced from this, the original drafters of the municipal accountability framework cherished the principle of multilevel government, multiparty democracy and, importantly, the clarification of the roles and responsibilities in the municipality.

No one could have predicted that the mayors, who are expected to exercise political oversight over the local administration, would themselves have become entangled in financial malfeasance, thus blurring the political-administrative interface and lines of accountability.

As it turns out, mayors seemingly appear to have been directly involved in channelling municipal funds into VBS’s coffers, necessitating an internal political party- driven condemnation and crackdown.

Notwithstanding this stern action, the question remains: Why are the locally elected councils not being allowed to institute accountability proceedings in terms of the Municipal Structures Act and the Municipal Finance Management Act, such as passing motions of no confidence or recouping the financial losses from the responsible individuals?

The VBS financial misconduct case is no different from the ubiquitous incidents of irregular and wasteful expenditure commonly associated with municipalities. In May last year, the auditor general announced that irregular expenditure by local government for the preceding financial year amounted to a staggering R28-billion. But no mayor was fired. The VBS-related interference simply amounts to a motion of no confidence in the body politics of local government and an indictment on internal party-political democracy.

READ MORE: Grassroots democracy begins with open ward committees

Surely, the sudden about-turn in trying to uphold good governance is only to counter internal council political dynamics, which may have retained the mayors for reasons unrelated to their actions. South Africans need no lecture on the drama associated with motions of no confidence.

Local government is too important a sphere of government to be subjected to constant political mudslinging. Governance and accountability failures in the municipal sphere have far-reaching socioeconomic implications and are likely to delay South Africa’s transformation project.

Political parties must resist the urge to interfere directly in local affairs, unless the intervention is guided by law. Their role is to promote responsive local democratic institutions, to insist on due process at all times and to uphold the Constitution’s values of decentralisation both in spirit and application. Most importantly, political expediency should never trump procedural rigour, because the culprits end up walking free.

Eddie Rakabe is an economist, researcher and writer