URBAN PLANNING & SERVICE DELIVERY
The argument for a
RESOURCE-BASED SERVICE DELIVERY MODEL
H
owever, even with new changes in leadership at municipal level, finding workable solutions to bridging the infrastructure gaps is complex and compounded by a shrinking funding base and rapid urbanisation that manifest as fast-growing informal settlements,” says Burgert Gildenhuys, a consultant specialising in municipal planning, finance, infrastructure investment and urban economies at BC Gildenhuys & Associates. The economic downturn exacerbated by Covid-19 has placed major pressure on all households, which represent the main customer base for municipalities. “However, long before Covid-19, household incomes were in decline, and the trend continues. This has an obvious knock-on effect for municipalities where debtors default, but funds still need to be sourced for infrastructure maintenance and service delivery, including the provision of free basic and/or subsidised services for indigent communities,” he explains. To help fill the financial shortfalls, government subsequently introduced a cross-subsidised system where high-income households and businesses pay for the services of the poor. “The problem is that there are now too few higher-income households to carry such a burden,” says Gildenhuys. “But the service delivery needs keep growing, underscored by the fact that in most municipalities there are currently more households without essential services than in 1996, with electricity being the exception.”
Needs analysis Municipal integrated development plans focus on community participation and the identification of a list of needs. This then supports the implementation strategy, with municipalities budgeting accordingly
The low voter turnout for South Africa's 2021 Local Government Elections may be indicative of a deepening sense of disillusionment in the political landscape. A key motivation for those who did vote is a desire to change the downward course of service delivery, which has been compounded by general municipal underperformance. By Alastair Currie and lobbying for financial support from government and National Treasury. While well intended, this needs-based approach doesn’t factor in the realities of the current financial environment. Plus, all too often, infrastructure projects that are implemented are derailed though poor project execution, corruption and wasteful expenditure. “This presents a sound argument for municipalities to switch from a needs-based to a resource-based approach when planning for essential services,” he continues. “In developing acceptable models, there needs to be a fundamental understanding of the cost of providing services, and what consumers can or should pay for the service. For example, modern-day dry or on-site sanitation solutions can be affordable, hygienic and operate without water. However, on-site systems are often associated with pit latrines, which are politically
not acceptable. Nevertheless, the challenges with on-site sanitation are often related to poor maintenance rather than the type of service.” Government-subsidised homes and free RDP houses usually come with house connections for water and waterborne sanitation. However, the subsidised infrastructure excludes roads, which immediately then becomes a capital and opex burden on the municipality. A further financial burden is presented when these typically poor and/or unemployed households cannot pay for their services. The municipality then has to subsidise the shortfall from its ever-shrinking revenue base.
Capital expenditure framework With the resource approach, the starting point is to determine the available money and then design and implement infrastructure on a priority basis, driven by health considerations. The current approach adopted by CoGTA, based on the Integrated Urban Development Framework (IUDF), is the compilation of a capital expenditure framework. Key inputs include investment demands flowing from population growth, access backlogs and, importantly, addressing fixed asset renewal and maintenance. A critical aspect that drives capital costs is indeed the choice of service levels. However, the inability to cope with the cumulative impact of the operating implications of capital investment leads to cash flow problems. This is the final nail in the financial coffin for many of our municipalities. Optimising municipal revenue streams through smart metering and billing makes sense, but it doesn’t combat non-revenue water and electricity losses or illegal connections. Instead, revenue enhancement usually focuses on financial systems improvement, better billing and credit control practices. The challenge is the number of households,
