Zombi municipalities pose a major fiscal risk in South Africa

Issued by Alf Lees MP – DA Shadow Deputy Minister of Finance
13 Nov 2018 in News

The Medium-Term Budget Policy Statement clearly warns that the growth of unpaid bills and accruals within provincial and local governments constitutes a serious fiscal risk.

These risks are referred to in the MTBPS as “hidden costs” that are NOT included in the Budget.

National Treasury estimates, in other words their considered thumb suck, that the unpaid bills in provinces amount to R25 billion with a further estimate of R80 billion contingent liability risks of medical malpractice claims.

For municipalities the estimate amounts to R23.4 billion for outstanding bills.

None of these provincial and municipal liabilities are included in the determination of the Division of Revenue allocations to provinces and municipalities.

What we do know about municipalities is that 113 municipalities adopted unfunded budgets for 2018/19, i.e. 41% of the 278 municipalities, openly and without caring about where the money will come from, voted to enter into long-term contracts and to spend more than the revenue available to them.

What this means is that municipalities simply spend billions of rands excessively on vanity projects and other wasteful expenditure and land up not having the money:

  • To pay suppliers such as Eskom;
  • To provide water to millions of South Africans who have to make do with water from rivers, dams or sporadic tanker deliveries;
  • To provide refuse services;
  • To fix potholes;
  • To stop raw sewerage from flowing into our rivers.

These zombie ANC-run municipalities are knowingly bankrupting themselves and the poor who are unfortunate enough to live under their financial tyranny. Ultimately, if unchecked, they will bankrupt South Africa.

It is not a shortage of equitable share that has brought municipalities to their knees. It is simply incompetent and corrupt ANC councilors and cadre appointed officials.

It seems that contrary to the popular refrain of top down, the ANC is rotten from the bottom up!