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City ill-equipped to transform

The Witness 21 Jul 2017

Themba Dlamini CA (SA).

FOLLOWING the 2017 ANC policy conference recently held in Johannesburg where the increasingly popular term of "radical economic transformation" topped the agenda, closer to home, the question begs: is KZN, in particular the capital (Msunduzi), in a position to implement radical economic transformation? Let us take a look at the facts. The first question is: what is radical economic transformation? Essentially, it is about fundamentally changing the structure of South Africa's economy by ensuring an increased participation of historically disadvantaged individuals (HDI) in the higher echelons of the economy. Current leadership states that radical economic transformation must have a "mass character", meaning it must not benefit an elect few and must not result in "black monopoly capital".

During policy discussions, the ANC stated that "the clear objective of radical economic transformation must be to reduce racial, gender and class inequalities in SA through ensuring more equity with regards to incomes, ownership of assets and access to economic opportunities. An effective democratic developmental state, and efficiently run public services and public companies are necessary instruments for widening the reach of radical economic transformation, enabling the process to touch the lives of ordinary people." The majority economic sentiment agrees that the building of new and maintenance of existing infrastructure is essential for the province's and Msunduzi's economic transformation agenda.

The Msunduzi Municipality continues to be plagued by power cuts and water shortages in predominantly HDI areas such as Sweetwaters, Sobantu, Imbali, Vulindlela and other parts of the capital. This is largely due to the ageing infrastructure that has been responsible for major water losses worth R119,72 million (21 million kilolitres) in 2016. Worryingly, due to capacity constraints, the municipality underspent on the public transportation infrastructure grant and the integrated national electrification grant by R37,90 million and R25,34 million last year. In light of current challenges, Msunduzi can ill afford to underspend on infrastructure, and more still, cannot afford increasingly high levels of corruption marked by high levels of irregular expenditure. Ultimately, this does not augur well for the municipality's readiness to take the lead in championing the radical economic transformation agenda.

Msunduzi has slumped two levels from a clean audit in 2015 to a qualified audit opinion with findings in 2016. With Msunduzi being the legislative capital of KZN, one would expect exemplary political leadership in terms of policing bad financial management practices, in line with legislation.

The auditor general, in his 2016 report, noted with concern that oversight over key internal controls was not adequate. He further stated that municipal leadership did not act swiftly in ensuring that commitments in the action plans were monitored on a regular basis, and that key vacancies in key positions were not filled in good time to promote a sound control environment.

It is my considered view that increased noncompliance in specific focus areas, such as procurement and contract management, has been as a direct result of blatant disregard for legislation on the part of transgressors.

Among some of the noncompliance findings raised by the auditor general in the 2016 report were goods and services procured without inviting competitive bids. Invitations for competitive bidding were not always advertised for the required minimum period, resulting in systematic exclusion of other potential bid participants. In addition, employees of the Msunduzi Municipality were awarded contracts by the municipality.

It is clear that reasonable steps were not taken by the City to prevent irregular expenditure. Msunduzi incurred irregular expenditure of R217 million, which is a whopping 70% increase from the previous year and remains significantly above the national and provincial averages.

Msunduzi is inefficiently run, resulting in rapid deterioration in service delivery, and is disappointingly hemorrhaging state resources. Consequently, this has the effect of reducing the finances available for radical economic transformation. Sadly, if this continues, the concept will remain a pipe dream.

While the use of the HDI is set to increase across government, an ongoing challenge is that HDI groups tend to rely on sourcing capacity such as materials, skills and finance from established white businesses or importers, thus transferring the empowerment away from themselves. This is often executed at inflated prices with no real commensurate benefit to the state and the HDIs. This inevitably results in the citizen being the ultimate loser. Msunduzi will need to be proactive in ensuring that this does not transpire.