As part of the processing the 2020 Division of Revenue Amendment and Adjustment Appropriations Bills, joint meetings of the Standing and Select Committees on Appropriations over the past two days have received briefings from the National Treasury (NT), the Financial and Fiscal Commission (FFC) and the South African Local Government Association (Salga).
The committees are concerned about the state of local government in light of the Auditor-General’s (AG) report, tabled on 1 July 2020. The report revealed that, among other things, municipalities have spent more than R1 billion on consultants, more than R32 billion in irregular expenditure, there is a deficit of R6.2 billion and some municipalities are insolvent.
The committees recognise the important role of local government, especially in response to challenges brought about by the Covid-19 pandemic. While they welcome the additional allocation of R11 billion through the equitable share, both committees are concerned about the mismanagement of funds, inadequate fraud prevention measures and irresponsible (reckless) spending.
The committees are of the view that citizens bear the brunt of the mismanagement of municipal funds and the subsequent reductions in conditional grants. Co-chairperson of the committee, Ms Dikeledi Mahlangu, said the remedial action recommended by the AG is often not implemented, which is a serious concern.
While Salga has resolved to communicate directly with municipal mayors and accounting officers who have transgressed, the committees are of the view that an urgent meeting is needed between the Minister of Finance, Salga and the Minister of Cooperative Governance and Traditional Affairs (Cogta) to address the critical challenges facing local government.
The committees note that the allocations to the Provincial Equitable Share (PES) have not changed, and the subsequent commitment made by provinces to reprioritise R20 billion from the PES to the Covid-19 response. Nonetheless, the committees also note the view of the FFC that the criteria for reprioritising the R20 billion are not clearly determined and this may result in unevenness in provinces’ service delivery.
Throughout the briefings, the committees raised concerns about the reduction of R2.3 billion in the agricultural sector, as stipulated in the Adjustments Appropriations Bill 2020. The committees believe, as was raised by the FFC, that these reductions will have an impact on food security and delay the process of land reform. It will also impact on the support available for emerging farmers and black farmers in particular.
The committees also questioned the reduction in infrastructure grants and the impact of this on rebuilding the economy. Co-chairperson of the committee Mr Sfiso Buthelezi questioned the NT on these reductions, which he said has been one of President Cyril Ramaphosa’s main areas of focus for reigniting the economy. Mr Buthelezi said that the reallocations of grants are clear. What is not clear is the impact these reallocations will have in the areas from which they have been reprioritised.