By Professor Owen Skae, Associate Professor and Director of Rhodes Business School

 

On 1 June the Auditor General (AG) of South Africa, Kimi Makwetu, published the municipal audit results for the 2014-15 financial year. His opening line was that there has been “an encouraging, five-year improvement” in the audit results, with ‘clean audits’ increasing from 13 to 72 in the current period.

Let’s give credit where due, but the let down came soon after, when the AG rated the financial health of 92% of the municipalities as “concerning” or “requiring intervention”. He pointed out that 26% of municipalities (10 more than in the 2010-11 period) were in “a particularly poor financial position by the end of 2014-15, with material uncertainty with regard to their ability to continue operating in the foreseeable future.”

The AG added that the audit area with the lowest improvement rate was ‘compliance with key legislation that governs municipal operations’. This has decreased from 95% to 78% since the 2010-11 period. Irregular expenditure has more than doubled over the past five years to R14.74-billion, and is incurred by an increasing number of municipalities.

The provinces with the highest clean audits were the Western Cape (73%), Gauteng (33%) and KwaZulu-Natal (30%). The AG commended the leadership in these provinces and singled out the following disciplines and practices as major contributors to clean audits:

• Political, municipal and provincial leadership delivered on commitments to fill key positions with competent people, stabilised the administration (i.e. low turnover in key positions) and provided officials the opportunity to meet the minimum competency requirements.
• Leadership showed courage in dealing with transgressions and poor performance and insisted on credible in-year reporting by officials, which in turn resulted in improved year-end processes and enabled improved decision-making.
• Leadership supported and participated in initiatives to improve audit outcomes, such as operation clean audit, and used forums and working relationships between municipalities and provincial government to strengthen the administration of municipalities.

In all three of the above paragraphs, the key word is Leadership.

In South Africa’s general political landscape, the most repeated word is Leadership – with countless discussions about the enormous political leadership and performance that South Africa requires to defuse civil society’s mounting volatility at a national, provincial and local level.

The country’s lack of leadership and performance in key areas, notably basic needs and personal safety, surfaced yet again in the Social Progress Index (SPI), launched globally on the 29th June 2016.

In the build up to the launch, I had an interview with Michael Green, the CEO of the Social Progress Imperative, which developed the SPI as a measure of how well countries perform, not solely in terms of GPD per capita, but also in terms of social and environmental indicators. These include basic needs such as education, employment and improved livelihoods, clean water and sanitation, food security, healthcare, personal freedom and personal safety.

The rationale is that a high GDP per capita does not necessarily equate with a decent quality of life and provision of basic needs for all citizens. In pursuit of a more representative portrait of progress and success, the SPI studies 133 countries in the world and evaluates their social and environmental index, in addition to-, and relative to their GDP. For example, the United States ranks second on GDP per capita but 16th on Social Progress; New Zealand, on the other hand, ranks first on Social Progress but 25th on GDP per capita.

South Africa ranks 65th on GDP per capita and 59th on Social Progress. It scores highly on the ‘opportunity’ indicators such as personal freedom, but significantly worse on basic needs, improved livelihoods and personal safety.

In Green’s opinion, these are solvable issues, and the lack of social progress in this regard has the potential to undermine the key areas where we score highly, such as personal freedom.

The elections will hopefully vote in candidates that South Africa believes have the leadership skills to sort out our rampant municipal problems. But the country’s leadership is going to need to bring together the public and private sector on a more cohesive, national development platform if we hope to rectify our social progress failures. In the absence of this, there will be more violence and an increase in lawfare where citizens collectively take municipalities to the court for lack of performance.

A recent example was reported by Carmel Rickard. The ratepayers of Kenton, Bushman’s River, and Natures Landing successfully won their case against their local municipal managers. They took them to the high court in Grahamstown for:

• Failing to sort out the local sewerage works, which led to raw sewage flowing into the Bushman’s River estuary and into the sea;
• Failing to establish a new waste dumpsite; and
• Failing to respond to ratepayers’ considerable correspondence on these issues from November 2011 to September 2014.

It’s an important precedent for all citizens, and we will see more of this. However, the problem with lawfare, or the Stalingrad defence that Judge Dennis Davis talks about, is that instead of the state proactively improving our basic needs and personal security, it is increasingly using public resources to defend its inaction and lack of performance. If we don’t do something about this, it will continue until the money runs out.

For more information about the Social Progress Index

http://www.socialprogressimperative.org/global-index/

This article appeared in Leadership, Edition 373, August, 2016. It is reproduced with their permission.