The Institute of Directors South Africa (IoDSA) is urging voters to turn out in their numbers for Monday’s local government elections.
The Institute’s CEO Parmi Natesan said many municipalities were either failing or close to a state of complete collapse.
“Poor service delivery has a direct impact on jobs and sustained growth and it’s only through the ballot box that people can make their dissatisfaction heard and to effect change where necessary.
“From a governance perspective, the voters are, after all, key stakeholders in these entities and thus need to hold the leadership to account,” she said.
According to the Auditor-General of South Africa, less than 40 of the country’s 278 municipalities are on sound financial footing.
“Should this trend continue, the risk to investment will continue unabated which in turn puts increased strain on the national fiscus and South Africa’s sovereign risk,” stressed Natesan.
IoDSA’s governance specialist Fay Mukaddam said the country had reached another growth and development crossroad.
“Failure to get local government moving in the right direction will have negative consequences for years to come. And it’s at this level where the crisis is most pronounced,” said Mukaddam.
If a municipality is unable to effectively offer the most basic of services, there is an immediate negative sentiment created and this has a rapid knock-on effect on the creation of new jobs.
Failed municipalities lead to business failure
“A case in point was the recent case of dairy company Clover’s decision to relocate its cheese factory from the town of Lichtenburg in the Ditsobotla Local Municipality due to poor service delivery for a number of years,” said IoDSA.
In that case, over 400 – permanent and temporary – jobs were lost.
“Those jobs could have been saved had there been more attention focused on basic issues like garbage disposal and road maintenance,” said the IoDSA.
If businesses remain focussed and competitive, they must have a constant symbiotic and trusting relationship with the local government.
The local government’s mandate is to ensure there is a sustainable operating environment for businesses and livelihoods all year round.
Mukaddam says while the Clover example was high-profile and well-documented, there are many other businesses in South Africa that are experiencing similar frustrations.
“Monday’s election can be a time for businesses to send a clear and unambiguous message to failing municipalities that they have run out of runway,” said Mukaddam.
The IoDSA also acknowledged that poor service delivery and inefficient municipalities could not be fixed overnight and that current problems are in many cases historical.
Stellenbosch University’s Bureau for Economic Research (BER) said the problem lay with managers and staff who often lacked technical insight and in the way tender specifications were drawn up.
“An additional problem is that many smaller and poorer municipalities do not have a proper tax base,” said the BER.
“We acknowledge that while change might occur at a political level, that doesn’t mean that problems like this will disappear immediately,” said Natesan.
“But here is also a vital need for functional and effective change at the governance and administrative level and Monday’s polls are the starting point.”
Compiled by Narissa Subramoney