TURNAROUND STRATEGY, IMPLICATIONS FOR MUNICIPALITIES

 

The purpose of this article is to highlight challenges facing municipalities and to explore strategies aimed at addressing them. Discussions herein are largely informed by the recently approved Local Government Turnaround Strategy. Whilst the turnaround strategy is welcome, the challenge is not in its design but in its implementation vis-à-vis governance and administrations, finance, human resources and communications. In getting a perspective on these issues, telephonic interviews were held with an administrator, municipal managers and counsellors to establish how municipalities are turning the tide on service delivery.

BY: Nimrod Mbele, Regenesys Management

Introduction

Over the past months South Africa woke up to increased service delivery protests which were marred by violence. Communities in Mpumalanga and Gauteng took to the streets demanding a wide range of services. Notwithstanding the legitimate concerns of the residents, some of the demands fell outside the legislative mandate of the sphere of local government for example housing. The situation demanded an urgent response as municipalities are at the coalface of delivery. In response to flaring tensions Government, through the Ministry of Local Government and Traditional Affairs among others commissioned a national study on the state of Local Government. This assessment culminated in the Local Government Indaba in October 2009 wherein a draft strategy was unveiled and subsequently approved by Cabinet in December 2009. This strategy is expected to migrate to a Local Government level where municipal specific turn-around strategies will be developed between January and March 2010. The expectation is that all strategies will be implemented from March 2010.

The approved strategy recognizes that a ‘one size fits all’ approach is neither realistic nor desirable. This acknowledgement suggests that the worst performing municipalities, particularly those which are under provincial administration require support to successfully develop and implement their turnaround strategies. In obtaining a perspective from such municipality, telephonic interviews were conducted with four municipal managers. The interviews touched on salient points such as reporting frameworks, governance, administration and communication.   

Reporting Framework

One municipal manager expressed concerns regarding the conversion of reporting frameworks. Municipalities were using what is referred to as the Generally Accepted Municipal Accounting Practice (GAMAP). In terms of section 216 (1) of the Constitution, Treasury as part of its mandate introduced the Generally Recognized Accounting Practice (GRAP). Eventually, GRAP will be the only standard applicable in municipalities and the target date for this was 2009. However its implementation has necessitated a number of changes not only in terms of policy but interpretation, reporting and the presentation of the annual financial statements of municipalities.

Although the application of the new financial and reporting model recognises differences in terms of institutional capacities of municipalities, grave challenges remain. One municipal official indicated that whilst training has been conducted on GRAP, confusion continues unabated. When asked about typical challenges he declared “Our policies are noble but they continue on a one size fits all approach – the new system requires a dedicated financial support in terms of identifying and recording the value of all assets including underground water pipes. The general views among the municipal managers interviewed is that time constraints and lack of resources constitute the biggest challenge. To that effect one said “You need specialist asset management companies for this type of work and most municipalities do not have resources. To illustrate this point a municipal manager declared that “It took 8 years for the private sector to switch to the new reporting system  for companies (e.g GAAP) but Local Government is expected to do it in 3 years”. Another manager buttressed this point by saying “Come audit time by the end of the current financial year, I can tell you most municipalities are going to fail on this one”. This clearly suggests that timelines for conversion to the new system will not be accomplished especially by poorer municipalities. Based on this, it can be argued that own municipal turnaround strategies would have serious financial implications unless such issues are addressed.

Institutional capacity

A turnaround strategy has resource implications which, if not adequately addressed, the ideals of flagship campaigns such as clean audits cannot be realized. The majority of municipalities have a high vacancy rate and inadequate in-house training on strategic areas such as finance and governance. In buttressing this point the municipal manager indicated that “Skills retention in our municipalities is still a challenge and it takes time to fill vacant posts”. The biggest challenge is that municipal officials cannot divorce party politics from administration. He argued that tensions flair, particularly when it comes to senior positions (director). Under normal circumstance it takes two months to appoint a director but due to interferences the process can take up to six months. Where appointments are finally made it was argued that in most instances the incumbent does not meet the grade. One municipal manager said “Most administrative officials in senior positions were classroom teachers – teachers see the Local Government as a platform for greener pastures”. In a similar vein one of the municipal manager said political deployment is destroying municipalities. When asked to elaborate, he said in his municipality about 70 percent of appointments do not meet the grade, due to political deployment. The process is fraught with corruption as even mayor wants to be consulted outside his scope of influence. Consequently institutional capacity becomes compromised as skills and competencies to design and implement programmes are virtually nonexistent.

Governance structure

The conflict between the office of the mayor, the speaker and the municipal manager are well documented. The recent municipal assessment report by the Department of Cooperative Governance and Traditional Affairs (Cogta) points to political infighting and conflicts between senior management and councilors and human resources issues. Similarly, President Zuma alluded to the debilitating effects of such conflicts. One of the municipal managers pronounced that councilors cannot differentiate between “Interference and intervention” – they had mistaken interference for intervention. During the interviews it emerged that the municipality requires a blue print document to clarify the roles and responsibilities of the three offices. In the absence of such it was reported from time to time that municipal managers are forced to seek “fresh” mandates before taking action on what is typically an administrative function. Moving forward it was suggested that as part of a turnaround strategy such frameworks are desirable as they would clarify a wide range of issues such as delegation of authority in relation to the mayor’s office, the office of the speaker and office of the municipal manager.

This suggests that any turnaround strategy must address the causes and not the symptoms of such conflicts. In response to what constitutes the governance and administrative challenges, one manager made reference to a lack of alignment and a proper accountability framework. When asked to elaborate this view he said “rules of engagement regarding appointment of staff and allocation of resources are blatantly ignored”. As a result it becomes difficult not to succumb to the politics of patronage as they define the order of the day.

Legislative framework

The sphere of local government is not without legislative frameworks to guide service delivery. For example section 152 of the Constitution is clear on the role of Local Government. Similarly the Municipal Systems Act provides guidelines and yet challenges pointing to the framework continue unabated.

The current legislative framework on the separation of powers between administration and executive is said to be problematic in that the boundaries are not clearly defined as in other spheres of Government. The view of the administrator is that “In the absence of a clear division of labour between the mayor’s office, the office of the speaker and the office of the municipal manager tensions and interference abound”. Challenges promote a culture of non- performance as officials abdicate responsibilities by hiding behind politics. This matter is reflective of the President’s assertion during his meeting with cabinet ministers and the municipal managers. In that meeting President Zuma indicated a need to review the legislative frameworks along the national and provincial lines. This issue has implications for municipality’s own turnaround strategies as political interferences mal-administration and corruption has been linked to the weaknesses in the legislative framework. The process of the business re-engineering of municipalities must reflect on leadership to warrant authentic change.  

Leadership challenge

It is widely documented that many South African municipalities lack adequate capacity to plan strategically, to translate strategic plans into budgets, to engage civil society effectively in the strategic planning process, and to manage the implementation of strategic plans. The said technical challenges are exacerbated by political interference. The view shared by the municipal administrator is that “There is a lack of vision by the political principal couple with blurring lines particularly between the Mayor’s office and the administration”. In the context of a turnaround strategy, the implication is that a leadership challenges must be resolved, as continuation will further compromise delivery.  In practical terms, part of the business re-engineering process must include role definition between the mayor’s office, the speaker’s office and the municipal manager’s office.  Tensions at this level are being attributed to a lack of clear definition of role and responsibilities. 

Communications

Section 152 of the Constitution encourages the involvement of communities and community organisations in matters of Local Government. The recent spate of violence is indicative of the fact that dialogues in some communities are either not taking place as they should or they are simply not yielding results. In illustrating this point one municipal manager pointed out that communication is considered an additional activity of the council and not an integral part of the system. When asked to elaborate he was quick to argue that because of the politicized nature of the administration individuals appointed at this level have neither the qualification nor the experience to articulate the position of the council’s resolutions. In supporting this argument, another municipal manager indicated that weak municipalities do not have a coherent communication strategy. For example there is no help desk for communities to channel their grievances. There is also no system of capturing and reporting on municipal activities, and as a result communities feel marginalized. In the final analysis effective communication hinges on functional organizations, but municipalities are dysfunctional given the political infighting, corruption and incidences of maladministration – no amount of communication can convince the community to otherwise.  Communication should be about how the municipality generates income, plans to upgrade infrastructure, provisioning of services such as water, refuse removal and costs for such projects. It was reported that if municipalities communicate these issues, public confidence can be restored.

Conclusion

The legislative configuration in respect of the separation of powers between governance and administration has created a fertile ground for the politicization of administration. Clear guidelines on the delegation of authority must be reviewed to address gaps so that administration and its associated powers are articulated. It is difficult to design effective performance management system in the absence of a tight delegation framework. The issues raised and the recent spate of protests signals systemic and structural challenges. The pronouncement of their own municipal turnaround strategies without addressing systemic issues can only lead to compliance without material differences – service delivery is about ensuring material difference in the lives of the communities.

It can also be argued that any strategy has resource implications and therefore the impending municipal turnarounds are no exception. For the strategies to be effective municipalities must implement measures aimed at boosting income. Financial viability cannot be divorced from vigorous revenue in the form of rates. 

Published by:

Management Today

Volume 28

No 1

February 2010

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