Africa-Press – South-Africa. Knysna is on the edge of collapse, with the municipality suffering from service delivery failures, leadership instability, and a lack of capacity.
The town, which has long attracted wealthy South Africans due to its location, is now feeling the effects of a lack of investment in maintaining and upgrading infrastructure over the past 15 years.
Instead, much of the municipality’s increased spending has gone towards consumption in the form of wage increases.
The situation in the town deteriorated so significantly that the Western Cape Provincial Government dissolved its administration as the Knysna municipality was failing to perform its duties outlined in the Constitution.
Sewage spills, prolonged water shortages, and inconsistent refuse removal were pointed to as signs of the complete collapse in governance.
“At the moment, Knysna is struggling to deliver its basic services. The municipal dump is overflowing, and sewage is flowing into the estuary and polluting it,” The Accountability Group’s (TAG) Robert Winn told BizNews.
Winn explained that the town’s issue with burst pipes and water wastage has been addressed, but only because of the help from the Western Cape government.
“That has made a huge difference and helped reduce our water consumption. The thing is, without the province’s help, we are struggling,” Winn said.
The challenges are not only confined to the municipality’s failure to deliver services, but its finances are increasingly coming under pressure as well.
Winn explained that the municipality’s finances have collapsed, with its budget surplus falling from a R234 million surplus to R14.4 million in the adjusted budget.
When environmental fines are included, the surplus swings to a R15 million deficit, as the municipality has racked up R30 million in fines due to pollution.
“Infrastructure failures at numerous pump stations have resulted in sewage flooding the estuary, resulting in the town violating environmental regulations,” Winn explained.
“Some sources place the fines at around R200 million in total. When you take those into consideration, the R14 million surplus means nothing.”
The municipality is also technically insolvent, with it having more liabilities than assets on its balance sheet. TAG estimates that the town has R0.82 worth of assets for every R1 in liabilities.
This has created a liquidity crunch and put the municipality in financial distress, which is only expected to get worse as suppliers are not being paid timeously.
Currently, the municipality is paying its bills an average of 82 days after they are invoiced.
Salaries trump infrastructure investment
Knysna Executive Mayor Thando Matika
The key issue that underpins all of Knysna’s challenges is that the municipality’s budget has increasingly been taken up by salary payments and not investment in infrastructure.
While it is far from the only municipality to be in this situation in South Africa, Knysna is operating at the extreme, where supplier payments are neglected in favour of salaries.
“The suppliers are not being paid. It is as simple as that. The money is going straight through to salaries,” TAG’s Eric de Jager said.
This also means there are insufficient funds to invest in infrastructure, leading to water shortages, pump station failures, and deteriorating road conditions.
“Infrastructure suffers immensely in this situation. There is no money for infrastructure. We estimate that infrastructure investment should be R194 million a year when it is only R40 million to R50 million,” De Jager said.
As a result, the municipality’s infrastructure backlog has ballooned in recent years, with TAG estimating that clearing the backlog now would cost R500 million.
In contrast to its infrastructure spending, Knysna is spending around R400 million to pay its civil servants, which is nearly half of the municipality’s budget.
“Staff costs continue to escalate, and they are becoming unmanageable, with it crowding out infrastructure spending and putting us in the situation we are,” De Jager said.
On top of these wages are the municipality’s outsourcing costs, where it pays private companies to do what it should be doing. TAG estimates that Knysna spends R173 million on outsourcing every year.
This is a much more expensive operating model for a municipality, and it can save tens of millions of rands by insourcing these functions and upskilling its own staff.
The failure to invest in infrastructure in the past is now coming back to bite Knysna, as it fails to deliver basic services to its residents.
“Water-shedding is the new load-shedding, and we are experiencing that. We have had certain locations, such as Brenton-on-Sea, go without water for four days,” Winn said.
This results in travellers from South Africa and abroad cancelling their trips to Knysna as their hotels and Airbnbs do not have water, crushing the local economy.
“If you look at the finances and the way that they are presented, everything looks great. This is not being experienced on the ground,” Winn said.
“We have had water leaks running for months before being repaired, and 8,000 meters that are not being billed because they do not work. These have not been replaced.”
Winn explained that the municipality is struggling to perform basic functions and has even resorted to painting roads with a thin layer of bitumen instead of tar when repairing potholes or burst pipes.
“If you have a fully-funded budget, why do you have things like that? That is the question we are asking,” Winn said.
The answer lies in a lack of capacity at the municipality, with around 111 critical positions being unfilled, and it has had 19 different Municipal Managers in the past four years.
“We do not have the staff to do what is required from the municipality, and it has not been budgeted for. It is not spending what needs to be spent,” Winn said.
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