COMMENTS ON THE MUNICIPAL SYSTEMS BILL (Draft dated 20 March 2000 to be discussed at the public hearings of the Provincial and Local Government Portfolio Committee)
The Development Bank of Southern Africa welcomes the opportunity to comment on the Municipal Systems Bill that forms important part of the legislative framework for local government in South Africa. As a development finance institution with the majority of our client base in the municipal sector we have a direct interest in the matters addressed by the Bill. The DBSA views the transformation of local government as a critical factor in ensuring the success of sustainable development. One of our main objectives is further to ensure that the municipal sector becomes increasingly attractive for investment by the private sector and we welcome the introduction of legislation that will facilitate this objective.
2.1. FINANCIAL ISSUES
Local government institutions form the DBSA’s main client base and as a development institution the Bank is committed to enhancing the financial sustainability and therefore bankability of this sector. The Bill goes some way in addressing critical issues in this regard. These include the provisions dealing with "unfunded mandate", credit control and debt collection (Chapter 9), which will assist in minimising the lending risk to the sector and attracting private sector funding.
The Bill should be in line with the Constitution of South Africa (Act 108 of 1996) which recognises local government as a sphere of government in a framework of co-operative governance. Particular attention should be given to potential conflict with sections 139 and 151 of the Constitution. Furthermore the provisions of the Municipal Structures Act 117 of 1998 may also be potentially conflicting, particularly sections 34, 35 and 93(1) and (2).
Whilst recognising the right of national and provincial government to intervene in the affairs of local government when it is in the national interest and for the sake of co-operative governance, such intervention should only occur on the basis of generally accepted principles. Such principles should include, but not be limited to the following:
The Bill does not expressly identify the principles on which intervention is to take place. In many cases the Bill does not comply with the principles set out above with the result that on key issues it is vague, ambiguous and even confusing. Chapter 10 (Provincial and National monitoring and standard setting) is an example of this. The conditions set out in Sections 97 and 98 are vague and create uncertainty. What exactly is meant by the term "reason to believe" and how is such a state of affairs determined? When is there "maladministration" and which one of the plethora of the municipality’s obligations should not be met for such a situation to arise? Will audited financial statements be used and if so what of the delays in obtaining such statements which sometimes take years?
The provisions of the Bill concerning municipal services (Chapter 8) and in particular the separation between the roles of "service authority" and "service provider", widen the scope of involving more effective service providers and service delivery mechanisms. The mechanisms outlined in the Bill will also allow for more innovative financing methods and a greater involvement of the private sector in service delivery vehicles. The work of the Municipal Infrastructure Investment Unit (MIIU) is particularly relevant in this regard.
The concept of community participation in the affairs of municipalities is strongly supported by the DBSA. This principle is embedded in the process for planning, drafting and review of integrated development plans (Sections 7,8,9 and 25). Although provision is made for the capacity building of communities to participate meaningfully, it must be borne in mind that not all municipalities have the capacity to give effect to these provisions. Collaborative relationships with the private sector and education institutions may be one of the ways of building civic capacity and awareness.
2.5.1.The Bill goes a long way towards supplying directives for improved strategic, financial and performance management. Due cognisance should, however, be taken of the capacity constraints of local government as borne out by the delays in submitting IDPs and financial reports and the lack of implementation capacity of these IDPs. Careful consideration needs to be given to support mechanisms for municipalities, and indeed provincial authorities, to enable them to fulfil their obligations in terms of this Bill. Local government is facing enormous challenges due to the transformation process, such as demarcation, amalgamation and financial constraints. The stakeholders including government, development institutions, and the private sector should seek to co-ordinate their efforts in providing the necessary support and assistance to the local government sector to achieve the objectives of the Bill and the Local Government White Paper. We would recommend that there be a mechanism developed at the national level, which is specifically dedicated to supporting local government to facilitating the transformation of local authorities, from bureaucratically inclined institutions, to catalytic institutions that create an enabling environment for development to occur. Experiences from other countries that have gone through the route we envisage, show that supporting mechanisms that for instance assist local authorities to set up systems for determining data requirements for performance management, develop benchmarks, and structure incentive systems to facilitate the introduction of the new ways of doing things could be beneficial.
In addition to public reporting, which the Bill makes provision for through for instance the publication of annual reports in Chapter 6 on performance management, other mechanisms that could improve service delivery include introducing systematic quality management and citizens’ charters that would set out quality standards.
The DBSA appreciates the opportunity to participate in the drafting of this legislation and we look forward to co-operating with you in the implementation thereof.