Finance Minister, Enoch Godongwana, says the sustainability and development of municipalities is the foundation upon which we must build a bigger and more inclusive national economy.
“That we must restore the economies of our municipalities to transform the lives of our people and nourish the ground for them to move from poverty to prosperity, is as true now as it was in 1994. The specific challenges may have changed, but the objective remains the same,” Godongwana said.
Addressing the Chris Hani District Municipality Economic Development and Investment Summit held at Komani, Eastern Cape, on Thursday, Godongwana said, to attract investment that support sustainable job creation, municipalities should seek to understand the factors that influence the decisions by firms about where to locate their operations.
“Though there is a temptation to design and offer complex incentive systems, it is important to understand that any such interventions would be undermined by poor delivery of basic services,” Godongwana said.
Despite the powerful democratic movement that toppled apartheid and gave birth to progressive legislation, and a constitutional framework that foregrounds socio-economic rights, the Minister said poverty and inequality in recent years have deepened, and this reversal is most evident in the state of municipalities.
“You see it in the regular protests where people pour out into the streets to demand basic services and opportunities to claim a better life for themselves and their children. You see it in factories, plants and small businesses closing shop and retrenching workers, because they cannot rely on the timely provision of electricity and water.
“You see it in roads falling into disrepair, because councils have misspent their budgets and lack the technical skills to maintain critical infrastructure. You see it in the crumbling of the rule of law and in falling standards of quality of life, as police stations are understaffed and under resourced, while hospitals that cannot afford to hire nurses and doctors are stretched to breaking point,” the Minister said.
He added that to restore faith in democracy, municipalities need to work and be the sites of economic growth, investment and industrial innovation that is rich in jobs and high on efficiency.
For this to happen, he said, municipalities and provinces must conduct themselves in a way that attracts investment.
“That means meeting the basic needs of the communities they serve. At a financial level, it means adhering to elevated levels of governance and budgeting standards: spending money efficiently and in the interests of sustainable and inclusive growth,” Godongwana said.
At a provincial level, the focus must be on health, education, roads and agriculture.
Improving and maintaining infrastructure
The Minister also emphasised that municipalities must focus on achieving a much higher level of bulk infrastructure delivery, including electricity and water, and basic services such as refuse removal.
The Minister said one way to overcome the challenges to delivering basic services and unlocking potential for high-growth activities, is for municipalities to improve and maintain their infrastructure. However, he said that municipalities are underspending on infrastructure.
The Chris Hani District Municipality he said, has underspent on infrastructure grants, and returned money to the national revenue fund in the last half a decade.
According to the Minister, in 2016/17, an amount of R38.9 million went unspent by the municipality and had to be returned to the National Treasury, and again in 2017/18, R65 million was returned to the National Revenue Fund.
“In 2018/19, nearly R240 million was unspent. That figure was R97 million in 2019/20….the trend is clear and troubling. It is unfathomable that a municipality in a province like the Eastern Cape, where poverty, inequality, unemployment indicators are consistently higher than the national average, could fail to spend money on providing key services.
“Municipalities are clearly struggling and we need to understand what the challenges are so that we can find effective solutions,” Godongwana said. – SAnews.gov.za
