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SALGA welcomes budget proposals for the fiscal year 2017/2018 and initiatives aimed at strengthening financial management in municipalities

Posted: 23 February 2017


The South African Local Government Association (SALGA) welcomes the Budget proposals for the fiscal year 2017/2018 as presented by the Minister of Finance, Honourable Pravin Gordhan on Wednesday, 22 February 2017, Cape Town, Parliament. SALGA appreciates the context and challenges facing the country, and the local government sphere in particular, against which the budget was presented. We join other voices and organisations across the country who see hope in the budget presented and wish to acknowledge upfront that as the sphere we will contribute positively in ensuring that the budget allocated to us is used to attain the transformation objectives well -articulated by the Minister.

The slow global economic growth has catapulted local government into the forefront of initiatives to leverage budget spend, infrastructure development, and economic facilitation to ensure sustainably cities and economies broadly. Various resolutions taken in platforms such as the United Cities and Local Government Africa (UCLGA), the Addis Ababa Accord on Urban Development Financing and others resonate well with the thrust of the budget presented today. Properly leveraged, it could spur various initiatives that could go a long way in addressing the challenges of unemployment, inequality, poverty and underdevelopment. In the context of increasing government debt, which stands at 49% of the GDP, slow economic growth, reduced revenues and borrowing constraints, local government understands the need to be frugal, innovative and creative in spending the limited resources allocated to the sphere.

We have noted with appreciation that the main thrust of the budget, as articulated by the Minister, is on local government spending. We equally appreciate the increased role and urgency given to the State Owned Enterprises in ensuring local investment and infrastructure spend. Nonetheless, we can’t say the same with the 9.1% allocation to local government (which has remained constant over the past MTEF), we will continue engaging with Treasury for a better fiscal dispensation for municipalities. Suffice to say, within these arrangements we note the pragmatic approach of increased allocations to rural municipalities. This is alongside the increased progressive spending on health and education which remain some of the key challenges facing our communities and the poor.

We do agree with the identified initiatives that focus on the strengthening of financial management in municipalities. The identified interventions include:

  • Building capacity for the implementation of the Municipal Standard Chart of Accounts (mSCOA) which is coming into effect on 1 July 2017
  • Supply Chain Management reforms which will ensure value for money, return on procurement spend and better management of limited resources
  • Enhanced revenue management, revenue collection and improved billing systems
  • These resonate with some of the resolutions we took at our conference held in December 2016 which among others include:
  • Urgent need to decisively deal with the escalating debt owed to municipalities
  • Ongoing engagement with municipal creditors such as Eskom to find viable and sustainable solutions
  • Finding innovative instruments to generate more local revenues to fund development and service delivery
  • Building professionalism and managerial capacity in the sector, and others.

We particularly welcome the budget support and pronouncement on municipal initiatives such as:

  • R18.4 billion over the MTEF allocated to Regional Bulk Infrastructure Grant and the R12.5 billion allocated to the Water Services Infrastructure Grant. These are meant to benefit 27 most impoverished district municipalities
  • The R1 billion allocated to the LG Equitable Share for infrastructure maintenance and on account of increasing household numbers

The support given by the budget to the metros to continue their work of spatial transformation and investment in high density development corridors. In this regard, the budget highlights the following work:

  • In eThekwini, the Cornubia mixed development node will yield 25000 housing units, while over R13 billion in private sector investment in the nearby Dube Trade Port has been identified. A R30 billion inner city regeneration program is under way
  • In Ekurhuleni, development along the corridor linking Thembisa to Kempton Park has been prioritised
  • Cape Town has adopted a transit-oriented development strategy including mixed-use development of the Bellville Transport Interchange, upgrade of the Phillip East Station Precinct and the redevelopment of the Athlone Power Station
  • In Mangaung, the airport development node is under construction and 8500 affordable housing units will be built in and around the inner city of Bloemfont3in
  • In Johannesburg, there is further progress with the “corridors of freedom” linking Soweto, Alexander, Sandton and the CBD. This include the new bridges that can be seen along the M1
  • 190 project have been completed through the neighbourhood development grants while a further 55 are in construction
  • In the Joubertina/Alabama Hub in Matlosana, for example, an NDP investment in transport and health facilities has been accompanied by commercial investments of about R155 million
  • IN the Solomon Mahlangu node in Tshwane, which serves over 500 000 people, a R1 billion public investment in roads, parks and trading facilities is expected to leverage R4 billion in private investment.

All these represent just a sample of some of the great developmental and spatial transformation initiatives taken by municipalities. SALGA notes that the budget gives impetus and reinforces this good work.

We will continue working with the National and Provincial spheres of government in various intergovernmental platforms to ensure that the transformation agenda materialises. We will equally continue engaging and advocating for a better dispensation for the sector so that developmental objectives enshrined in the NDP and IDPs are realised.

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