Transcript Slide 1

www.salga.org.za
A Perspective on Infrastructure Challenges
Facing Local Government and How
These can be Overcome
Mthobeli Kolisa
www.salga.org.za
• Municipalities are the first to agree that in many municipal
areas infrastructure is indeed in a bad state
• This has affected the quality of services
• There are huge backlogs which will make it difficult to
achieve the 2014 gaols
• There is a need to think differently and find solutions to the
constraints that lead to this
• But what are the causes of this situation?
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The problem statement as per the SALGA 2011
National Conference Resolutions
i. Historical legacy
ii. Inadequate funding & Services Pricing policy
iii. Institutional Issues
iv. Bulk Infrastructure
v. Skills
vi. Urban - rural balance in the design of SA
municipalities
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Historical legacy
• On establishment municipalities inherited old infrastructure
some of which was already overdue for replacement
• In a sense municipalities inherited a liability rather an asset
because by taking up these functions, they accepted an
unalienable responsibility of replacing and refurbishing old
infrastructure that was associated with the function.
• This infrastructure had been servicing a minority of the
population largely defined along racial lines with the majority
population not having access to services.
• The new democratic government decided to rather prioritize
extension of services to the un-serviced.
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Historical legacy
• A related challenge is lack of data regarding the state of
infrastructure especially in sectors such as roads and water
services.
• Many water and waste water treatment schemes inherited by
municipalities, from pre-1994 were without documents such
as updated drawing designs (as-is drawings).
• Consequently, in some municipalities, it is not known where
infrastructure such as pipes is laid, the age and the materials
used.
• The increasing use and pressure on these pipes leads to
regular pipe burst and leaks.
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Inadequate funding
Capital expenditure: excluding land and top structure for
housing
120,000
100,000
R millions
80,000
60,000
40,000
20,000
2010
2011
2012
2013
2014
2015
2016
2017
2018
Water Supply
Sanitation
Electricity
Solid Waste
Roads
Public services
Public transport
Public places
Economic infra and buildings
Admin buildings and systems
2019
Budget
Source: Discussion document: Development of a strategy that informs coordinated bulk infrastructure investment and motivates for the establishment of the Bulk
Infrastructure Fund (BIF) June 2011
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Inadequate funding
Capital expenditure: Excluding land and top structure for
housing
140 000
120 000
R millions
100 000
80 000
60 000
40 000
20 000
2010
2011
Rehabilitation
2012
2013
Growth
2014
2015
Upgrading
2016
2017
2018
Backlog eradication
2019
Budget
Source: Discussion document: Development of a strategy that informs coordinated bulk infrastructure investment and motivates for the establishment of the Bulk
Infrastructure Fund (BIF) June 2011
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Inadequate funding
Category A and B1 munics
Category B4 munics
Category B2 and B3 munics
9%
21%
35%
44%
44%
59%
47%
20%
21%
Growth
Growth
Backlog
Rehab
Growth
Backlog
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Rehab
Backlog
Rehab
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Services funding and pricing policy
• Analysis is beginning to suggest that SA is on a trend towards
pricing basic services such as water supply, sanitation services
and electricity supply at a level that will begin to work against
country’s economic competiveness and ability to sustainably
provide services to poor households as they will consume at
levels that are above the ability of the state to subsidise
• This is driven by a policy framework that requires that these
services be financially self-sustainable and therefore recover all
capital and operating costs from user chargers.
• More middle and high income households and SMMEs are
increasingly defaulting on payment leading to inability by
municipalities to pay bulk services providers
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Funding and services pricing
• Electricity income is the only other revenue source, in addition to rates
income, from which municipalities must raise 90% of the revenue they
require to perform the 38 functions assigned to them by the constitution.
• The dire financial circumstances of municipalities force them to milk the
electricity distribution industry and invest less on maintenance and
refurbishment.
• A greater part of most non-metropolitan municipal areas is rural and
government policy requires services to be provided to these areas
• Yet with the exception of prepaid electricity, there are no service charges
or rates levied in these areas.
• Urban rate payers and poor rural households, paid for by the national
fiscus, have to carry the unfair subsidy burden to the rural middle and
high income households, intuitions and businesses.
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Funding and services pricing
• Electricity income is the only other revenue source, in addition to rates
income, from which municipalities must raise 90% of the revenue they
require to perform the 38 functions assigned to them by the constitution.
• The dire financial circumstances of municipalities force them to milk the
electricity distribution industry and invest less on maintenance and
refurbishment.
• A greater part of most non-metropolitan municipal areas is rural and
government policy requires services to be provided to these areas
• Yet with the exception of prepaid electricity, there are no service charges
or rates levied in these areas.
• Urban rate payers and poor rural households, paid for by the national
fiscus, have to carry the unfair subsidy burden to the rural middle and
high income households, intuitions and businesses.
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Institutional issues
• Section 77 of the MSA enables municipalities to utilize various
institutional options through which municipal services can be delivered.
• While there are examples of excellence, especially in the cities, this is
one of the cases in which decision making is hands of municipal councils
and where many municipalities have not done well.
• Many municipalities continued with whatever institutional mechanisms
they inherited rather than considering other alternatives or where they
did, such preferred alternatives were never fully implemented if at all
implemented.
• Led to unsustainable institutional arrangements for services delivery in
sectors such as water services and solid waste management.
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Institutional issues
• In many cases, especially in smaller municipalities, the approach has
been to keep very limited in-house technical capacity (response to
operating revenue constraint)
• These municipalities depend entirely on external service providers for
the design and implementation of infrastructure projects; even small
projects such as sealing of roads or repairing of pot holes.
• In many cases there is even no capacity to manage the quality of work of
these external services providers leading to situations where consultants
have unfettered roles in municipal infrastructure development.
• Consultants design development projects and have disproportionate
influence in the procurement of EIA consultants and contractors leading
to abuse of municipal procurement between consultants and contractors.
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Bulk Infrastructure Services
• The issue of bulk infrastructure for municipal services tends to be
discussed as if it is a one dimensional singular problem; the
funding of bulk infrastructure and how this lack of funding
constrains development.
• This has then led to a discussion, within government, about the
need to introduce a bulk infrastructure grant.
• Funding of bulk infrastructure is indeed an issue and a
sustainable funding model for bulk infrastructure in required.
• However the other dimension to the bulk infrastructure constraint
to development is institutional and this institutional dimension
has municipal infrastructure services sector nuances.
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Skills
• There is a serious skills shortage across municipal
infrastructure services sectors.
• The problem has, among others, the following facets:
– There are few qualified engineers and technicians vs. the
need
– The few qualified engineers and technicians are getting
older and will soon retire
– There are fewer than required new entrants
– Due to few qualified engineers and technicians and
technicians there is very limited capacity to supervise
artisans into qualified engineers and technicians
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Skills
– Most of the qualified engineers and technicians find
government service, especially municipalities, unattractive
for employment and as soon as they get the required
qualification and experience they move to the private
sector
• Municipalities take a lot of criticism for the above even
though skills development is a national competency for
which the Department Higher Education and Training was
established.
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Urban - rural balance in the design and P &F of
municipalities
• The construct of SA LG is urban biased, even though it also has
problems with respect to urban spaces e.g. some built environment
functions allocated to provinces
• Powers and functions essential about managing built environments
than scattered rural settlements of primarily agricultural production
(rural being turned into residential ghettos)
• Fiscal powers result in dependence on urban spaces
• Opposite of rural skills allowance in LG
• Few municipalities have rural development strategies and
appropriate institutional capacity
• In urban spaces, cities do have adequate control over powers and
functions that key to managing built
environments
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Problem Statement
• The state of municipal infrastructure in terms of:
– Extent of the gap between infrastructure delivery and
service need (backlogs)
– Condition of the existing infrastructure
• Is a consequence/ result, not the cause
• Need to focus on the cause in formulating a solution
– There is a need to fix the fundamental structural
deficiencies (medium to long term)
– There are many municipalities that need hands-on support
but this is a short to medium term issue which should be
resolved once the fundamentals are resolved
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Tradeoffs
• Between:
– Capacity to manage projects and capacity to
manage O&M?
– New infrastructure and maintenance?
– Service levels and extending services?
– Urban and rural etc?
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Some issues specific to various
infrastructure subsectors
• Electricity supply:
– This industry continues to face structural deficiencies
– The areas with highest levels of electricity access backlogs are
predominantly areas where Eskom is a service provider
• Water services:
– The areas with highest levels of water supply backlogs, are rural
areas where there is a combination of lack of bulk water services
and weak municipalities who cannot be stretched to perform the bulk
water services function
• Roads
– The funding of rural municipal roads – completely dependent on
fiscal allocation for basic levels of service limited to new
infrastructure to the exclusion of maintenance – no funding provision
for maintenance of rural roads in the LG fiscal framework
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Some issues specific to various
infrastructure subsectors
• Solid waste management
– Service levels standards and norms for waste management,
which will inform funding, are currently in the process of being
finalized. The next strategic task will be to align funding (at
national and local levels) and organizational capacity at local
level to meet the service levels standards and norms
– Just like in rural roads, funding of waste management in rural
municipal areas is completely dependent on the fiscal
allocation for basic levels of service because households in
rural areas do not pay property rates.
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Recommendations
• Support the process of establishing a bulk
infrastructure fund
• However, need an intervention that seeks to ensure
that there are appropriate institutional
arrangements for managing investments and O&M
in both bulk and connector infrastructure
• Establishment of a national municipal infrastructure
refurbishment fund that will to provide for the
rehabilitation of municipal infrastructure at the
required scale (R32 billion for electricity distribution
alone).
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Recommendations
• Establishment of national GIS based databases and
national programmes to collect data and manage
information on an ongoing basis on the state of
municipal infrastructure starting with priority sectors
such as roads, water services and electricity.
• A review of the municipal services pricing policy
• More urgency in the establishment of an independent
and effective economic regulator in the water sector.
• The implementation of rural rates and service charges
• More urgency in the review of the local government
fiscal framework
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Recommendations
• During the first year of this 5 year council term, all
municipalities that never formally considered alternative
institutional options for services delivery must do so for at
least the water services and solid waste management
sectors.
• In the Year 2, all council decisions in respect of preferred
institutional options must be implemented.
• There must be a minimum benchmark organogram
requirement for each category of municipalities based on the
functions of that category of municipalities and the S
component of the Equitable Share for municipalities must
seek to fund this capacity requirement for poor households
in the municipal area.
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Recommendations
• The powers and functions of municipalities (schedules of the
constitution) be reviewed to:
– take in account the difference in the localities that are
responsibilities of various municipalities
– Clarify the strategic roles of municipalities vs. provinces
• Fiscal powers of municipalities be reviewed to adequately
support theirs functions
• Cities be given greater control over built environment
functions such as housing, transport and land usemanagement
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Recommendations
• The Department Higher Education and Training,
SALGA, the relevant sector Departments, relevant
SETAs, Eskom, Water Boards and CoGTA establish a
national skills development partnership whose focus will
be to improve the technical fields skills output of further
education, training and tertiary institutions and
experiential learning of new graduates and artisans
• Lobby national government to subsidize rural skills
incentive in Government
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MISA in the context of the above
• “national and provincial government are responsible for
creating an enabling policy, financial and institutional
(support) environment for municipal infrastructure,
municipalities are responsible for planning and implementing
municipal infrastructure”. (pp 14 of the MISA Institutional
Framework)
• It is the prerogative of the Provincial and national spheres of
government to determine the best in institutional
arrangements for their responsibilities
• It “appears” that provincial and national government
departments have decided to delegate some of their
responsibilities in respect of LG hands-on support to MISA
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Proposed underlying principles
• The ultimate objective should remain that of building and
strengthening a decentralised form of government - the
country has not lost faith in a decentralised system of
government and in the role of sub-national spheres of
government.
• There is a dialectical relationship between capacity and
responsibility; both work to condition and define the other absence of responsibility diminishes the force to build
capacity and vice versa
• Therefore the support provided by the MISA should not
take away responsibility for service delivery from the
municipalities and for supporting LG from provinces
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Proposed underlying principles
• The purpose of MISA should be that of being an institutional
mechanism to manage and coordinate hands-on support and it
should not be conflated with intervention in terms of the
Constitution (there are existing legal provisions for that)
• Therefore, within a municipality, the hands-on support through
the MISA should be under the authority of the municipal council
and in terms of the IDP and SDBIP
• Coordinating and managing hands-on support is a fraction of the
totality of the required support and enabling measures
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Conclusion
• Need a two pronged approach:
– Hands on support as a short to medium term
intervention
– Fixing the fundamentals
• Local government wishes to partner with the
Provincial and national spheres in dealing with
these matters
• Propose that conference should consider if and
how will MISA contribute to resolving these?
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THANK YOU