Expert: Municipal-owned entities weakened by internal inefficiencies

Organisations such as Johannesburg’s City Power and Rand Water are meant to not only provide services to residents but are also historically cash injectors in municipal coffers.

FILE: Municipalities have been buckling under pressure with more and more South Africans unable to foot their service bills due to the continued decline of the economy. Picture: Supplied.

JOHANNESBURG - A municipal finances expert has raised the alarm about the continued decline of municipal-owned entities in local government.

Organisations such as Johannesburg’s City Power and Rand Water are meant to not only provide services to residents but are also historically cash injectors in municipal coffers.

However, this has not been the case in recent years.

Ntiyiso consulting’s Miyelani Holeni said evidence was pointing to a worrying trend where internal inefficiencies among other challenges had led to weakened municipality-owned entities.

“If you were to track the income that they used to make and the surpluses that they used to make, there has been a decline in both. That means that they are not contributing as they should be to the municipal coffers and the reason why you would have municipal-owned entities, is you would like to make things a lot more efficient.”

Municipalities have been buckling under pressure with more and more South Africans unable to foot their service bills due to the continued decline of the economy.

Holeni said had entities been well managed and run, they would have been in a position to cushion the impact.

As South Africans continue to struggle to pay their municipal bills, Holeni said the sphere of government was missing out on opportunities to increase its revenues through investment.

He said local economic development agencies were limping - with little focus on its capacitation, while it could be the way out of depressed economies for municipalities.

When they were established, the country’s local economic development agencies were meant to be structures for the advancement of socio-economic development in local government after municipalities failed to lead local economic development.

However, Holeni said these were under-capacitated and were on average not performing as well as they should be with evidence of joblessness and businesses shutting down pointing to this fact.

“They’ve also been used in some places as a dumping ground for people who are deemed not to be performing in some places, and I am making very broad general statements. In some of the places where there is some semblance of understanding, it is not properly resourced from a budgeting point of view.”

Holeni said government should focus on rebuilding these agencies if socio-economic conditions were to change.