Kumaran Nair writes:

To the Residents of Potchefstroom, Ikageng, Promosa, Mohadin, and Ventersdorp.

The constitutional mandate and instructions to the current Executive Mayor, the majority coalition ANC, the Municipal Manager, and Chief Financial Officer, are to enhance and strengthen institutional and infrastructure service delivery to the citizens. However, the current situation reflects a level of distress that continues to shape the daily reality within the JB Marks Local Municipality.

It is imperative to note that this is not an isolated political and administrative challenge.

It is a revealing case study of the political, management, and structural risks, threats, and weaknesses that are deeply embedded in South Africa’s local government system, and the JB Marks Local Municipality is a clear example.

The JB Marks Local Municipality, which was gazetted as a pilot municipality to test the implementation, management, and institutionalisation of the Municipal Finance Management Act and its supporting reforms under the new local government dispensation in January 2002, is today faced with institutional, governance, financial, economic, social, and management challenges.

During the last five years, the statutory publications of the Auditor-General of South Africa and the National Treasury have pointed to persistent financial distress, governance concerns, and organisational capacity constraints within the JB Marks Local Municipality under the current leadership.

The primary reasons for the continued 5-year permanent stay within the Publication titled – Financially Distressed Municipalities are due primarily that the current Executive Mayor with the majority coalition ANC within the J B Municipal Council, the Municipal Manager, Chief Financial Officer and Senior Management are unable and finding it impossible to protect and safeguard the current, medium and long term financial health and sustainability of the J B Marks Local Municipality.      

In addition, these statutory publications provide insight into broader challenges experienced by national and provincial organs of state in fulfilling their oversight responsibilities in relation to local government.

It should be acknowledged that the question is no longer whether municipalities are experiencing serious challenges, but rather what the root causes are, and how accountability and effective oversight can be strengthened in line with constitutional mandates.

The current, medium, and long-term financial health and sustainability of the JB Marks Local Municipality raise serious concerns regarding the ability to fund recurrent and capital expenditure while maintaining acceptable standards in the implementation and management of service delivery.

In addition, recurring issues relating to the municipal budget process, revenue collection, and increasing municipal debt obligations suggest that the municipality is under sustained financial pressure, with growing debt accumulation and deficits from year to year.

The National Treasury has continued to include the JB Marks Local Municipality in its publication on financially distressed municipalities over several financial years.

The primary reasons for this continued classification appear to be linked to challenges in maintaining financial sustainability and protecting the municipality’s long-term financial position.

The implications are that citizens and businesses within Potchefstroom, Ikageng, Promosa, and surrounding areas are living with increasing uncertainty regarding the municipality’s financial stability and service delivery capacity.

It must be acknowledged that while the current Executive Mayor, together with the majority coalition ANC, the Municipal Manager, Chief Financial Officer, and Senior Management have presided over a period of significant decline within the JB Marks Local Municipality, the response from successive North West Premiers, MECs for Finance, MECs for CoGTA, and members of the Provincial Legislature has raised concerns. It appears that these oversight structures have not exercised sufficient accountability and custodianship, as required by their constitutional mandates, in addressing the challenges facing the municipality.

The statutory publications of the Auditor General and the National Treasury provide the empirical evidence and confirmation by numbers, percentages, trends, and comparative analysis that, unlike political narratives, doomsday political ideologies, and conspiracy theories, the financial and budget data do not deliver lies, untruths, distortions, or misrepresentations against the true reality.

In terms of Section 52 of the MFMA, the current Executive Mayor is mandated to lead and direct the political supervision of the municipal budget process in coordination with council and administration.

An analysis of municipal budget documentation, together with findings from statutory reports, raises concerns about the alignment between budget planning, revenue collection, and long-term financial sustainability.

JB Marks Municipality spent approximately R55m for the contracting of Management Consultants for the 2023/24 Municipal Financial Year.
During the 2022/23 Municipal Financial year, an amount of approximately R12m was spent on the MFMA Work Outputs.

The truth and reality are that there is absolutely no sequential alignment and correlation between the Clean and Unqualified audit opinion and the state of Finance and Financial Management, including the prerequisite requirement for institutional, governance, financial, economic, social, and management functionality, capability, and sustainability of the municipality as an institutional and infrastructure service delivery institution.   

The municipality’s own revenue collection rate, which remains below optimal levels, continues to impact the ability to fund operations and maintain service delivery standards.

Expenditure on contracted services, including management consultants, also raises questions about cost-effectiveness and long-term value in relation to municipal capacity building.

The broader concern remains that there appears to be limited alignment between audit outcomes and the lived reality of financial and service delivery challenges experienced within the municipality.

The consideration of structural reforms, including the possible de-amalgamation of the current JB Marks Local Municipality, may form part of a broader discussion on improving governance and service delivery outcomes.