Kwazulu-Natal Legislature Pietermaritzburg: Thursday, 19 August 2010
There is a very close relationship between
improved financial management and fiscal governance on the one hand,
and effective service delivery and development on the other. Unless
we improve financial management and fiscal governance in
municipalities, we will not be able to significantly improve service
delivery and development. Indeed, it may well be that if we
improve service delivery and development, we will, also, in turn,
improve financial management of municipalities.
The financial mismanagement in municipalities is
due to a variety of technical failures, including lack of skills,
resources and knowledge of the applicable legislation. But partly
the financial mismanagement is a reflection of corruption. There is
a general perception that there are high levels of fraud and
corruption in municipalities. The better municipalities manage their
finances and fiscal governance, the more fraud and corruption will
be reduced, and the less the fraud and corruption, the better will
municipalities manage their finances and fiscal governance.
The fundamental question is to what extent are the
many current financial and financial management challenges in
municipalities linked directly to the complex funding model we have?
How by changing the model would we be better able to cope with the
financial and financial management challenges being faced by
Should the boundaries of municipalities without a
minimum fiscal base be re-drawn? Uncertainty about this is
compounding the problem and the national government should come
clean about the fate of many non-viable municipalities as soon as
Is the two-tier system of District and Local
municipalities working? Do we need to improve the system or abolish
it? The recent municipal hearings have shown that district
municipalities are generally performing better than their local
counterparts and this should perhaps form the basis for their
How do we ensure greater national and provincial
government support for local government? As much as we appreciate
the role of the current cost-cutting measures in reducing the budget
deficit, we feel that some areas of government policy such as the
Municipal Support Programme should be treated as critical on a par
with the filling of critical posts.
Do we need to more clearly separate the
legislative and executive functions of local government as we do in
the case of provincial and national government? The newly
established Municipal Public Accounts Committee in eThekwini Metro
shows that an oversight role can be played at municipal level and we
wish it all the best as it begins its work.
How can we ensure that IDPs are productively
linked with provincial and national development plans?
Unfortunately, even some of the MECs who sit in this House are known
for making promises during their visits to municipalities which they
then expect those municipalities to deliver on – out of line with
How can we ensure effective capacity-building of
municipal councillors and officials? It is clear that endless
workshops and conferences have yielded little by way of tangible
results. At least as far as officials are concerned, we need
stringent performance assessments.
The recent municipal hearing also revealed that
there is an acute lack of financial management skills, even of the
most basic kind. There is a scarcity of professionals with financial
skills. But also: in far too many cases the people appointed to
financial positions in municipalities do not have the necessary
skills. Sometimes they are political appointments – people appointed
because of their political leverage, not their technical skills.
Even where financially skilled people are appointed, they are not
retained – there is too high a turn-over of financial staff.
Clearly, there has to be better municipalities to
ensure better financial management. Changes to the current model of
local government will have to provide for more effective governance
Aspects of this would, for example, include
greater clarity on the respective roles of politicians and
administrators in the financial management of municipalities; a
clearer separation of the legislative and executive functions of
municipalities; and more effective oversight by councillors of
I thank you.
Contact: Dr Lionel Mtshali, 078 302 0929