South African municipalities face severe challenges at the best of times. According to Auditor-General Kimi Makwetu’s 2017/2018 financial audit of municipalities, released in 2019, one-third of them spend more than they earn, with irregular and wasteful expenditure reaching R122 billion. Of the 257 audited municipalities, just 18 received clean audits. Performance reports by 65% of municipalities were dubious and close to unusable.

The fact that municipalities have not been delivering on their mandates is evident from ongoing service delivery protests, of which there were 218 in 2019. While the inclination has been to point fingers at corrupt individuals, some of the failures are due to weak governance, poor financial management, overburdened infrastructure, and a lack of human and institutional capacity. Where business has partnered with government to overcome some of these challenges, significant progress has been made. It is therefore clear why building capacity at local government level is considered a key factor in social development.

On 12 June 2020, responsible business consultancy Trialogue hosted a webinar on supporting local government, with panellists Paul Smith (head of local government support at Kagiso Trust) and John Lomberg (stakeholder relations manager at Santam) providing insight into how donors and companies can support municipalities during a crisis as well as under more normal circumstances.

Watch the webinar:

[Click here to download the presentation]

Building capacity at Makana Municipality

Makana Municipality in the Eastern Cape is no stranger to controversy, with a ruling earlier this year declaring the council should be dissolved and placed under administration. However, Kagiso Trust believes that this distressed municipality should be supported due to the pivotal economic role it plays in the Eastern Cape. The Trust was originally contracted to support the municipality with revenue management. This work highlighted the decline of the municipal tax base (unemployment in the region stands at 50%), so it was critical to prioritise job creation and economic growth. Kagiso’s board agreed to expand the Trust’s remit to include support for the municipality in three areas: indigent management, local economic development, and community engagement. The intended output of this project is to develop a model that can assist other municipalities in dealing with development and service delivery.

Makana Municipality agreed to this new approach in 2019, as it was under new management – administrators had been unable to provide consistency or continuity for some years prior to that, which had affected both morale and performance.

The Trust’s view was that stakeholder collaboration, and collective ownership of interventions, would drive positive change, ultimately allowing local communities to prosper. This involved the complex task of building stakeholder cohesion. A stakeholder forum comprised of representatives from government, non-government organisations and civil society, known as the Makana Circle of Unity, is currently advancing development in the region, focusing on fixing issues on the ground as well as bringing new skills to the table. The Trust has also supported the municipality with its local economic development strategy, which was last reviewed in 2009.

Key challenges during the pandemic

With the municipality threatened with dissolution, it has been important to continue with work on the ground to deliver to communities – particularly during a pandemic. Smith supports the democratic process and holding government to account but says that setting aside differences is crucial at this time, particularly as the fight over water and service delivery continues. He pointed out that it took a year to develop a relatively mature stakeholder platform, but that this process is ongoing, as it involves dealing with apartheid geography and building bridges between diverse communities. Stepping aside is not an option. “It’s all about building relationships and starting to have relevant, authentic discussions about the future we desire, and how we plan to get there,” he explained. “One way to start is identifying people with influence who are open to change and convincing them. The momentum will grow, but it is a time-consuming process.”

Building greater cohesion between stakeholders and the municipality can drive broad based and organic accountability – and it is in strengthening broad-based governance that we can weed out corruption and nepotism. He said the importance of cohesion has been emphasised during the pandemic, with food security, education and fundraising driven and supported by the Makana Circle of Unity, in conjunction with the municipality. “When people put aside their differences – social, economic, racial, religious – and get their hands dirty working together, it’s amazing how exponential impact grows,” he concluded.

Supporting disaster management before, during, and after a pandemic

Santam has long partnered with municipalities to improve risk resilience, as municipalities are at the forefront of disaster management. However, many are under-resourced and ill-equipped, as we have seen during the Covid-19 pandemic.

As a risk carrier, Santam is invested in building a more resilient society, and its target is to eventually build resilience in all 257 South African municipalities, working with partners across sectors and disciplines. “Our success will be informed by collaboration,” Lomberg said. The non-life insurer has supported 53 municipalities since 2010 and has developed best practice guidelines based on the strength of its learnings to help other businesses to appreciate protocol, avoid taking a paternalistic approach, and co-create workable solutions.

Santam’s work around fire, drought and flood risk management has been driven by a shared value approach, since it has not only reduced the company’s risk exposure (insurance losses in St Francis Bay were reduced from R400 million in 2012 to just R18 million in 2017), but also significantly reduced loss of life and assets in vulnerable communities. Installing smoke detectors in informal settlements is just one such successful measure.

The pandemic has driven Santam to adapt its programmes at national, provincial and district level, and has seen it providing personal protective equipment to government employees at national and provincial level, Red Cross staff and volunteers, and firefighters. It has also rolled out video laryngoscopes to all hospitals in South Africa to enable medical professionals to examine patients without risk of infection. However, Lomberg indicated that it is likely to return to its original programming once the crisis is over. Its aim is to empower municipalities and communities so that, once programmes come to an end, stakeholders can work together to close the risk protection gap themselves.

A good example is the initiative to remove alien invasive vegetation in St Francis (this vegetation makes the area more vulnerable to fires). The initiative was sponsored by Santam and generated income for community members, who took ownership of the project.

Advice on how to work with and design programmes for local government

  • If you are a non-profit keen on working with local government, begin by engaging with mayors, municipal managers, and even other members of civil society. Build up these relationships and see where common value can be created.
  • Do not work with a dysfunctional municipality, as the commitment is lacking, and projects are unlikely to come to fruition. Choose a functional municipality that requires support to get to the next level.
  • Ascertain the root causes of lack of capacity rather than simply addressing symptoms.
  • Companies should ensure that the programme is aligned with their core business and contribute skills and expertise accordingly. If they do this, the programmes are much more likely to be sustainable.
  • Ensure that, if a Memorandum of Understanding has been signed, the municipality is fully committed for the duration of the programme.
  • Make it clear that you are offering support rather than attempting to take over the functions of a municipality. A high-minded approach will not work as well as a humble one. Put forward the idea of co-creating solutions, rather than imposing solutions that you think will work best. Respect the processes and protocols of municipalities.
  • Identify centres of excellence in municipalities and focus on creating a compact with people who are truly committed to their work. Building trust takes time.
  • Government’s District Development Model, a new integrated planning model for Cooperative Governance, makes it possible to support a few municipalities within a district, amplifying impact. Develop partnerships to increase the scale and impact of a programme and seek our different partners who have expertise in various sectors.
  • Improve municipal capacity by supporting skills transfer, systems development, processes and plans that promote stability and improved opportunities for economic development.
  • Share lessons widely, to be used as evidence by system stakeholders.

[Click here to download the presentation]