It’s not secret that SA metros have a poor track record of service delivery and financial management. However, a new incentive scheme, reportedly worth R54 billion, will provide performance-linked grants to the best ones.
According to Daily Investor, only SA metros demonstrating “measurable improvements in service delivery and financial performance” will benefit. The plan, known as the SA Metros Trading Services Reform, was outlined by Deputy Finance Minister, David Masondo, at a recent investor conference.
BONUS FOR SA METROS
The deputy minister explains that the major SA metros host the bulk of the nation’s business and job opportunities. However, they’ve been stifled by years of underinvestment, weak management and unreliable electricity, water, sanitation and refuse services.
Moreover, there will be clear accountability standards to avoid any mismanagement of the funds. “These are strictly conditional on council-approved plans. This money is not for promises. Only metros that demonstrate measurable improvements in service delivery, financial performance, and governance will qualify,” elaborated Masondo.
MASSIVE IMPACT
Furthermore, the deputy minister believes the impact of the plan will be significant to SA metros. The Auditor General (AG) has sounded the alarm about financial mismanagement in major metros for some time now. Recent reviews say poor revenue management, debt collection and budgeting practices all contribute to consistent financial losses since 2020.
Likewise, there’s a disparity between municipal budgets in each province. For example, the Western Cape budgets around R18 000 per person, while rural residents in Limpopo only receive an estimated R5 800 of services. As such, a uniform approach to municipal reform would not work across the whole country due to these disparities.
Instead, economists advise that municipalities and major metros should go beyond service delivery and focus on economic development.
