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How The ANC Is Leading Municipalities To Financial Ruin


ANC

A new survey shows that a majority of the 100 largest municipalities in South Africa are financially unsustainable – and it’s largely due to a failure by political leaders, to govern.

A Municipal Financial Stability Index, published by Ratings Afrika, found that only two provinces in South Africa managed to score higher than 50% for financial sustainability in 2015.

The Western Cape was ranked as the most financially stable province in the country, at 60%, followed by KwaZulu Natal at 59%.

All other provinces scored below 50%, with the worst being the Free State and North West, which scraped only 25% and 26%, respectively.

Ratings Afrika’s index evaluates the operating performance, management of liabilities, budget practices and liquidity position of municipalities, and scores each component out of 100.

Of the 100 municipalities analysed by the group, 60 scored an average under 50% – 42 of which scored under 35%.

The country had an average score of only 43% – a position it has maintained over the past five years, indicating inadequate financial management practices and discipline, which the ratings group pins squarely on the ANC.

SA provincial financial sustainability score (out of 100) – 5 year review

Province 2011 2012 2013 2014 2015
Western Cape 50 46 50 54 60
KwaZulu Natal 54 58 61 59 59
Northern Cape 41 50 45 49 49
Limpopo 46 47 44 50 43
Eastern Cape 53 49 42 38 41
Mpumalanga 32 33 30 27 30
Gauteng 29 28 35 34 30
North West 30 30 33 29 26
Free State 31 25 27 27 25
South Africa 43 42 43 43 43

“The political leaders of the municipalities in South Africa, whose responsibility it is to govern, have failed in the majority of municipalities, as reflected by their weak financial sustainability,” the group said.

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“The same thread is visible in many state-owned entities such as Eskom, SAA, Post Office, SABC, etc, where financial weakness is largely caused by weak financial governance on behalf of the political leaders and management in charge of these entities.”

“The sad reality is that this weak financial governance is also prevalent in Central Government, which is now threatened with sovereign rating downgrades by the world’s leading rating agencies,” Rating Afrika said.

According to the report, of all South Africa’s major metros, the City of cape Town is the most financially sustainable, with a score of 75%. This is followed by Buffalo City (Eastern Cape) with 73%, and Ekurhuleni (Gauteng) at 70%.

Ironically, Tshwane and City of Joburg (Gauteng) are the worst-run metros, despite being the wealthiest – managing a score of only 24% and 37%, respectively.

“This reflects severe deficiencies in their budgeting practices and financial discipline,” the group said.

SA metros financial sustainability score (out of 100)

Metro 2011 2012 2013 2014 2015
Cape Town 64 63 62 61 75
Buffalo City 50 57 77 78 73
Ekurhuleni 43 64 62 67 70
Nelson Mandela Bay 25 33 48 59 58
eThekwini 49 52 59 52 50
Manguang 30 34 57 62 38
Johannesburg 26 36 52 49 37
Tshwane 32 31 32 26 24
Average 40 46 56 57 53

According to Rating Afrika, the expectation is that service delivery and quality of living will deteriorate in the country over the short and medium term.

“The current political leadership in control of the majority of municipalities (the ANC) has demonstrated over the last five years, and more, to not being capable of sound governance.”‘

“This is the main cause of their low financial sustainability,” the group said.

Source: Business Tech

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