South Africa has a massive infrastructure problem. Roads, electricity supply and water management are just three areas in which there is mounting evidence of collapse and decay. This is true for big cities like Johannesburg as well as small towns and rural areas.
This is a problem because infrastructure like this has huge economic benefits. Having water and electricity enables firms to run smoothly. Local roads improve mobility and access to markets.
A study by South Africa’s Financial and Fiscal Commission in 2018 showed that infrastructure spending had a statistically significant positive impact on local employment and economic growth.
Responsibility for maintaining these essential services lies with South Africa’s 257 municipalities. Funding comes from two pots: central government allocation; and revenue raised locally through the delivery of services.
The national government has increased its financial transfers to municipalities for infrastructure investment by more than 3.5 times in local currency over the past 14 years. In that period municipalities have received almost R600 billion (US$45,5 billion) from national government.
Why do local governments have little to show for it?
We have been researching South Africa’s public finances and intergovernmental fiscal relations issues for many years. In a recent paper we evaluated how municipalities have managed the delivery of infrastructure.
We found that:
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municipalities have failed to effectively use increased infrastructure allocations
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municipalities have not chosen the right infrastructure projects
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projects have not been implemented cost effectively
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projects have not been completed on time and within budget
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infrastructure was not being operated efficiently
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existing infrastructure was not being maintained.
The failures
We identified the following failures.
People resources: Most of South Africa’s 257 municipalities lack the required capacity for managing infrastructure. Only a few have fully resourced project management units. In addition, there are cumbersome and costly infrastructure planning processes and legislative requirements. For instance, municipalities must conduct a feasibility study and appoint a steering committee for each project. The resources required for this are overwhelming for many and the process simply shifts the limited resources away from the actual infrastructure work.
These problems have persisted despite many years of reforms and increased technical and financial support.
Poor allocation of funds: Most allocations by national government for infrastructure have been in the form of conditional grants. These stipulate conditions for what type of infrastructure the money can be spent on.
However, this hasn’t stopped the grants being allocated to prolonged or abandoned projects. The result is that many municipalities have been using recurring budget allocations to rectify poor workmanship and abandoned projects.
Political interference: Where infrastructure has been built it is not well maintained. This is partly because politicians tend to prefer new infrastructure which comes with opportunities for ribbon cutting ceremonies. But some of this infrastructure doesn’t match the needs of communities, and becomes a white elephant.
Bureaucracy: Municipalities share responsibility with national and provincial governments for some local infrastructure investments. But joint planning and budgeting is lacking. So water and electricity reticulation networks are often installed without sufficient bulk supply from the relevant providers.
Service delays then lead to community protest and infrastructure vandalism.
The role of national government departments also creates problems. They are the custodians of conditional infrastructure grant funding. In this role they often interfere and dictate priorities for municipalities while attaching stringent conditions to funding.
Lack of ownership: Frustrated by the ongoing inability to spend infrastructure funds, national government is increasingly carrying out projects on behalf of municipalities, often using indirect grants. The result is that municipalities have no sense of ownership of the infrastructure and are not keen to maintain it. Some of the landfill sites and sport facilities constructed by the national departments of environmental affairs and sports have been neglected.
We also found that municipalities are battling to keep up with growing populations, rising input costs and the vandalisation of infrastructure.
Our findings are confirmed by reports of the auditor-general which highlight weak municipal infrastructure delivery management.
The 2021–2022 auditor-general’s report found that the average delay in completing infrastructure projects ranged from 17 to 26 months.
It also found that all 257 municipalities had spent only R18 billion (US$1.2 billion) on infrastructure maintenance. This represents 4% of the total value (R450 billion or US$30.6 billion) of municipal assets. This low spend increases the risk of infrastructure breakdown and reduces service level standards.
It also rapidly increases the pace and cost of infrastructure upgrading and replacement.
The solutions
The failure to deliver infrastructure has itself affected the financial stability of municipalities. This is because they can generate their own revenue from selling water and electricity to residents. A collapse of these services means this income is lost.
But debates on municipal infrastructure in South Africa have largely focused on funding shortfalls. This ignores weaknesses or a lack of municipal capacity to manage infrastructure projects. Giving municipalities money for infrastructure does not guarantee quality and long-lasting infrastructure.
Municipalities need to:
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focus on the full life cycle management of infrastructure instead of just rolling out new projects
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plan for relevant infrastructure that responds to local circumstances
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maintain old and new infrastructure
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refurbish infrastructure that is nearing the end of its useful life.
None of this can be achieved without competent and prescient local government leadership.
The Conversation
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