Backlogs amount to half a trillion rand, and 12 million people require shelter {writer: Piet Coetzer}

As protest actions – which increasingly seem to turn violent – mount across the country, with the next municipal elections just about a year away, local government in the country is facing almost overwhelming challenges to deal with backlogs in the delivery of basic services.

This was the picture that came to the fore from figures supplied by the Minister of Co-operative Governance and Traditional Affairs Sicelo Shiceka at the time of the tabling of his department’s Budget in parliament in April.

Backlogs in delivery of basic services amount to just short of half a trillion rand – far outstripping the department’s R42-billion budget, Shiceka told the media during a briefing before the discussion of his Budget vote in the National Assembly.

He said discussions were under way about establishing a special purpose vehicle (SPV) to manage municipal infrastructure grant spending on roads, water, electricity distribution, sanitation and other areas.

Appeal to ratepayers’ associations

He also appealed to ratepayers’ associations currently withholding payments to municipalities to “come to the party” and help their councils work.

On the very closely related front of low-cost housing, Minister of Human Settlements Tokyo Sexwale, during the discussion of his Budget vote in Parliament, revealed that despite the fact that 219 000 housing units had been built by the government in the last financial year, the housing backlog currently still stood at an estimated 2.1 million units – which implied that about 12 million South Africans were still in need of formal shelter.

He further announced initiatives to deal with the challenge, including a meeting he had held with representatives of the financial sector to discuss ways of increasing funding to the low-cost and affordable housing markets, which could increase the number of houses built by the government and the private sector.

Reporting on the discussions on municipal infrastructure grant spending, Minister Shiceka said that while details had yet to be finalised, this would ensure that even the poorest municipalities were able to provide quality services.

It further would allow for savings through economies of scale, curb corruption bedevilling the procurement of goods and services at local level, and ensure that the grant funding was spent on that for which it was intended.

Currently, the national government has little control over how municipalities spend municipal infrastructure grants once they have been disbursed by National Treasury. Service delivery protests that have flared across the country are in part a response by frustrated communities to the failure of local councils to spend resources properly.

In contrast to larger, better developed municipalities, those that are weaker and smaller lag ever further behind, as funds are either not spent or used for inflated salaries for officials – or even a new car for the mayor – instead of repairing roads or laying water and sanitation pipelines required by communities.

Millions in unspent funds are returned to central government, and backlogs grow.

The R495-billion backlog

Shiceka said the R495bn figure for backlogs had been arrived at “scientifically” after a study conducted by his department. A detailed breakdown would be released in early May.

He said that the SPV was aimed at ensuring “standardisation in the way things are done, not only in terms of cost but also in terms of quality” across all municipalities. It would work in partnerships both for delivery “as well as financing”.

The minister stressed that the motive was financial and not intended to take away powers from municipalities.

“We don’t have the money to deliver these services at the required scale,” he said. It would allow for resources to be drawn from other departments, such as Water Affairs and Energy, and for them to be used in a much more co-ordinated way.

“Some resources are there, but the way they have been utilised has been within a silo mentality,” he said. This meant they did not achieve the maximum impact.

“It doesn’t mean that if a municipality wants to buy tea it will have to approach central government,” he said. “We are not talking about what municipalities do on a day-to-day basis.”

The minister expected discussions to be concluded before the end of the year and if all went well, he hoped the SPV would be up and running by 1 April next year.

Municipalities depend on grants for up to 40% of their spending, while the bulk of their revenue comes from surcharges on electricity sales.

Shiceka is engaged in talks with Minister of Energy Dipuo Peters and National Treasury over shifting municipalities’ dependence on electricity sales to fund their budgets.

Peters has complained that municipalities will not push for energy savings while they depend so heavily on electricity usage for revenue.

On 22 April, Shiceka said that the state of electricity distribution in the country was “a disaster”. The government decided back in 2007 to set up regional electricity distribution networks, but this stalled in the face of municipal opposition.

He added that most of the money generated by electricity distribution was not ploughed back into maintaining and refurbishing the infrastructure used to deliver it.

Troubled relations

On troubled relations between municipal employers and labour, Shiceka said a series of engagements with the South African Local Government Association (Salga) would begin on 23 April.

Part of the problem was that many municipalities did not have proper labour forums.

He also had held talks with ratepayers’ associations whose (mostly middle-class) members have been withholding rates and paying these into trust funds used to pay for service delivery themselves – chlorine for water treatment works, or repairing potholes.

Minister Shiceka understood the concerns raised by communities that were protesting against poor service delivery, but that the withholding of money was equivalent to “anarchy”.

“We understand the concerns raised by communities, whether it is in townships or whether it is in the suburbs,” he said.

“But the issue of gatekeepers, the people who don’t want others to contribute, must come to an end.”

Shiceka said the government was “getting on top of” the service delivery protests. “We have developed a plan and a strategy on these.

“People say this black government in municipalities is not doing well, ‘so we are not participating’. We are saying they must come to the party,” he said.

By 2014, there would be no more violent protests. People would still have a right to protest, but he hoped that relations between communities and government would have improved so that they would be peaceful. An overhaul of the ward committee system, currently seen as an enclave of the ANC, would be part of this.

Participation would be broadened significantly, said the minister.

He added that agreements had been reached with some ratepayers’ associations that they release some of their money.

“Even the Afrikaner communities, the ratepayers’ associations, they are coming to the party and we are engaging with them. We have requested them to come to the party, even in the provision of skilled people who do the work.”

On the front of housing, Minister Sexwale said the government would spend R16bn on the building of new houses and human settlements for the poor in the next financial year.

The bulk of the funding should go to the provision of housing subsidies to the bottom-most end of the market where people earned between R0 and R3 500 per month.

Some 8 000 human settlement projects

There are currently 8 000 human settlement projects under way across the country.

After the meeting with the financial sector, Sexwale’s department and financial institutions agreed to form a joint working team to look into the different aspects of housing finance, particularly on how to generate innovative ideas around the R1-billion government guarantee fund that was being set up to assist the so-called gap market.

“Those who stand to benefit from such a financial platform include nurses, teachers, police officers, prison warders, government officials, certain categories of management, and blue-collar factory workers,” he said.

Sexwale, however, added that “in no way can there be recklessness in lending practices which may lead to flippant calls upon the guarantee fund”.

He further reported that the special investigation unit established in November 2009 to probe the abuse of the Low Income Subsidy scheme had almost completed its investigation.

Some 1 570 officials had been arrested to date, of whom 1 189 had been convicted, and R28 million had been recovered and five lawyers have been struck off the roll – “and more is to follow,” said Minister Sexwale.