Africa-Press – South-Africa. National Treasury’s Operation Vulindlela (OV) task force has shifted its attention to the country’s ailing municipalities, looking to drive reform in local governance and implement Performance Improvement Action Plans for metros.
This has the aim of improving the delivery of basic services and infrastructure by restructuring current delivery models.
The task force is, in effect, trying to reverse decades of mismanagement and deteriorating service delivery, which has begun to impact national finances.
Municipalities are increasingly turning to the National Treasury for financial support, as they lack the funds necessary to invest in infrastructure maintenance and development.
The OV task force found that municipalities spend a disproportionate amount of their funds on salaries and consumption, rather than investment.
This has led to deteriorating infrastructure across the country, which has become an increasing concern for Eskom and has even begun impacting insurance coverage.
The deterioration in municipal distribution infrastructure is leading to increased power outages at a local level as substations and transmission lines are overloaded.
Insurers, on the other hand, are increasingly unwilling to cover some areas of the country where infrastructure has deteriorated to the point where it exacerbates the impact of natural disasters.
To rectify the situation, OV has widened its scope in Phase 2 of its implementation to look at how local government can be reformed to drive better outcomes.
So far, it has established a performance-based financing mechanism to incentivise the implementation of institutional and financing reforms.
This includes the ring-fencing of trading services such as electricity and water, to prevent revenue collected in these areas from being used to fund consumption and salaries.
In addition, a minimum threshold has been introduced to ensure that at least 56% of Urban Settlements Development Grant funding is invested in trading services such as electricity and water.
So far, six metros have submitted Performance Improvement Action Plans for their electricity and water provision turnarounds, outlining a clear pathway to ring-fence revenue from these services.
Progress against these action plans will determine access to the performance-based incentive to turn around Metro Trading Services.
The City of Johannesburg and Ekurhuleni have commenced implementation of the reform to arrest financial and service delivery decline, with the transfer of billing-related functions to the entities as the first step to enable better revenue collection.
Challenges remain
Deputy Finance Minister David Masondo, the head of Operation Vulindlela
Despite the progress being made, the OV task force said that much more needed to be done in the sphere of local government.
To drive better outcomes, more reform will be needed and, crucially, implementation of action plans will have to be closely monitored.
Its dashboard showed that for local government, around a quarter of all reform has been met with significant challenges and further intervention is required.
One of these areas is the effort to standardise and professionalise the appointment of senior officials in local government.
A further quarter is classified as having no data, or the reform is yet to start. Only 25% of all reforms in the local government sector are on track.
This makes it the second-most difficult area of reform behind spatial integration that the OV is currently working on.
The task team said that a review of the White Paper on Local Government has been launched, with a discussion paper published for public comment.
This review aims to create a fit-for-purpose local government system and is expected to result in a revised White Paper by March 2026.
A separate review of the Local Government Fiscal Framework has been initiated by the National Treasury to address fiscal leakages, revenue generation, and ensure better financial management.
The National Treasury is also seeking to increase the role it plays in the appointment of Chief Financial Officers and accounting officers at municipalities to enhance competency and skills.
While these reviews are ongoing, the OV task team is pushing for the actions plans at six metros to be tabled for council approval to ensure they are implemented.
It will also closely monitor and assess these action plans to determine the eligibility of municipalities for the performance-based financing incentive.
For More News And Analysis About South-Africa Follow Africa-Press
