BOUNDARY REDETERMINATION

BOUNDARY

REDETERMINATION

The role of municipal demarcation in service delivery remains a hugely contentious topic, nearly 30 years after the advent of democracy, writes Trevor Crighton

Aluwani Ramagadza

As municipal boundaries are shifted, municipalities assume nancial and service delivery responsibilities for new areas that current residents often do not want to be joined together – often resulting in violent clashes.

Understanding the Challenges

Dr Michelle Maziwisa, postdoctoral research fellow at the Dullah Omar Institute, says that evidence seems to suggest that the Municipal Demarcation Board (MDB) has successfully amalgamated South Africa’s 1 262 racially and economically divided municipalities (in 1994) into 257 municipalities (by 2016) and has also brought in traditional areas that had no municipal administration into a single local government system.

“However, while the MDB can pull together two local communities into one, the reality is that those communities need to have buy-in, otherwise this can severely compromise the amalgamation process. This also lters down to ethnic and linguistic di erences, as well as perceptions of corruption, administrative capacity and service delivery capacity within a particular municipality,” she says.

Aluwani Ramagadza, acting CEO at the MDB, says that despite requiring more nancial resources to establish its regional presence, improving its research capacity and eliminating a number of its HR challenges, the MDB has continued to ensure that its work around municipal boundary redeterminations – inclusive of amalgamations – is e cient. Through its studies, the MDB is aware that amalgamations have not been as successful as was envisaged because the dysfunction in most municipalities has very little or nothing to do with their spatial configuration. “The MDB is not responsible for providing services in municipalities. We are of the view that communities are entitled to receive municipal service, regardless of where they are situated,” says Ramagadza. “Demarcation changes should be considered as a solution when other interventions have not worked.”

FLAWS IN THE PROCESS

In an academic paper entitled “Municipal demarcation process in the establishment of the Collins Chabane Local Municipality and reasons for the eruption of Vuwani, South Africa”, authors Mavis Netswera and Eric Nealer state that there is a gap in the Demarcation Act in terms of its silence on how the MDB should go about ensuring that all demarcation factors are complied with. They state that failure to apply all factors correctly may create municipalities that are unable to fulfil their constitutional mandate.

There are perceptions that public participation in demarcation debates is low, but the MDB says this is not the case. “Public participation cannot be deemed low as the act requires it in four phases of the process before final demarcation. However, due to the lack of understanding of the MDB’s functions and processes, stakeholders and the public show little or no interest until the process is concluded,” says Ramagadza.

He says the MDB has conducted various initiatives to attract interest, raise awareness and educate the public about demarcation processes, and encourage active participation. “That the MDB does not have regional presence in provinces to assist has created challenges. We have requested assistance from municipalities in terms of sharing information and being able to assist communities,” Ramagadza says.

Dr Michelle Maziwisa MEETING THE CHALLENGE

Maziwisa believes that the best solution for solving service delivery issues by altering demarcation lines lies in resolving underlying tensions between linguistic, cultural or ethnic groups seen to be in a dominant role in relation to those seen to be in a nondominant role.

“The Auditor-General has consistently raised concerns about poor municipal nancial management. Without xing this problem, even in good and promising amalgamations, there would still be nancial problems and, as a result, service delivery problems,” she says. “What is needed is increased transparency at local government level and revisiting economic linkages between urban and rural spaces and between a uent and poor spaces, as well as addressing the urban sprawl through city planning – some of which fall outside the Municipal Demarcation Board’s mandate.”

She adds that poor service delivery will often lead to protests, which, in her view, goes beyond the mandate of the MDB. “Whether it is doing su cient due diligence prior to implementing amalgamations, I am not sure,” she concludes. ▪

DIGITISED PAYMENTS MAKE LIFE EASIER

Mastercard’s partnership with Tsogatec is helping South African municipalities to digitise payments

Over the past year, Emalahleni Local Municipality has encouraged customers to start using new digital payment channels to purchase prepaid electricity and obtain account balances via WhatsApp. From 1 July 2022, consumers will experience greater convenience as they will be able to receive their municipal account statements via WhatsApp and securely make payments to the municipality. This service has been extended to over 160 000 ratepayers in

Emalahleni Local Municipality. The digitisation of payments has made life easier for municipal customers who previously had limited payment options and had to go to municipal o ces or retail outlets to pay their accounts. Mastercard and Tsogatec’s digital solution operates on the Mastercard Payment Gateway Services (MPGS) platform. This means that consumers are able to pay their bills with any kind of debit or credit card, irrespective of which bank they are with. Individuals without full banking facilities who, for example, use SASSA cards for payment can now use these cards to purchase prepaid electricity or pay their municipal accounts conveniently and securely on their phones. This increases and extends the nancial inclusion of consumers who can now use their SASSA cards to pay for essential municipal services.

A NEED FOR A SAFER, MORE CONVENIENT, AND INCLUSIVE PAYMENT SOLUTION

“During the pandemic, we saw unparalleled levels of digital adoption as consumers’ needs for solutions that were touchless, convenient and digital rst, increased. This worked well for big businesses and the nancially included, however, several smaller businesses, government departments, and municipalities were not fully prepared for this sudden change to e-commerce and digital collections,” says Cuthbert Tembedza, Vice President, government engagement, Mastercard, Southern Africa. “Municipalities are experiencing challenges collecting payments from their ratepayers. Cash is still a popular form of payment in South Africa. It comes at a signi cant cost to the ratepayer and also impacts the municipalities’ revenue collection rates. Low-income earners, unfortunately, carry the highest costs of cash, forfeiting 4 per cent of their earnings compared to the national average of 1.1 per cent. A big reason for this is that, in many instances, low-income ratepayers live some distance from their local municipal o ces. They have to take numerous taxis to reach their destination, and when they get there, they often wait in queues for many hours to pay their bills. They need us to help ease this burden. These low-income earners and informal family businesses remain digitally marginalised with inadequate digital payment tools to

For municipalities, the logistics around handling hard cash, including the security aspects, and delays in reconciliation of cash and other payment methods, are challenges that result in up to 60-day billing-to-cash cycles.

interact with municipalities. Mastercard has put together several initiatives, tools, and partnerships to enable government and municipal revenue collections in a convenient, simple, safe, accessible, and affordable environment for government, municipalities, and all citizens. This is what we are solving,” continues Tembedza.

A SOLUTION FOR IMPROVED REVENUE COLLECTION

Municipalities buy electricity in bulk and then resell the power to homes and businesses. These electricity sales are the biggest revenue item for local government contributing 25.8 per cent. Other revenue lines like property rates, water, sewage and refuse collection contribute 34.0 per cent. It has therefore become vital for municipalities to improve collection of this revenue especially in challenging periods like the COVID-19 pandemic. For municipalities, the logistics around handling hard cash, including the security aspects, and delays in reconciliation of cash and other payment methods, are challenges that result in up to 60-day billing-to-cash cycles, leading to reductions in the municipality’s cash ow. With these new solutions, both ratepayers and the municipality bene t from safe payments that add convenience while saving time and money. These new channels also introduce new communication channels that will allow consumers to message municipalities directly for a variety of services and/or interactions to better improve service delivery.

SUCCESS IN A TEST ENVIRONMENT

Emalahleni Local Municipality is located within the Mpumalanga Province and known as the energy mecca of South Africa. This is due to its rich deposits of coal reserves and power stations such as Kendal, Matla, Duvha and Ga-Nala. In addition, the new Kusile power station is located a few kilometres to the east of Phola. With its population of about 455 000 people, it continues to face the deep spatial challenges of the past. Although strides have been made to bring the poor communities closer to the centres of economic activities, easily accessing municipal services to pay bills or query accounts is still di cult for many ratepayers. Municipalities across South Africa face many common challenges. They experience di culties in collecting monies owed, they located throughout their district for all their constituents, and the logistics around handling hard cash is time-consuming. “Emalahleni municipality faces the same challenges as other municipalities across the country, but we have a few additional challenges,” says Lebogang Mofokeng, Communications Manager at Emalahleni Municipality. “Shift work on the mines – a major employer in the district – for example, prevents a number of ratepayers from settling accounts on time during working hours. There was a clear need for a solution that would bring the municipality’s service closer to the customer, giving them greater and more convenient payment options. We also needed to create a solution that would help our team with reconciling accounts and increase safety for our customers and our sta by reducing the amount of cash on the premises,” Mofokeng explains. “It has been exciting to work with Mastercard and Emalahleni Municipality on the development and implementation of the bill payment solution,” says David Gatama, Chief Executive, Tsogatec. “The collaborative e orts have resulted in a solution that resolved a number of challenges for them. There has been good uptake on the prepaid electricity purchasing side, and we are keen to roll out further capabilities on the system in July. We have helped the municipality to reduce the amount of cash it handles and made reconciliation of accounts much easier as les are automatically downloaded from the MPGS platform and uploaded into the municipality’s system.” Anonymised data gleaned from payment transactions and enquiries, combined with Mastercard and Tsogatec’s analytics capabilities, generates insights that help build updated service o erings that will better serve their customers’ needs.

“We have helped the municipality to reduce the amount of cash it handles and made reconciliation of accounts much easier.” – David Gatama

LOOKING TO THE FUTURE

Solutions born from partnerships such as this are important and can be replicated across the country, bringing the citizenry, business, and government closer in an e cient, safe, transparent, and trusted manner. As the system develops greater functionality, consumers will also be able to interact with all departments within the local municipality in their own language, which also helps increase inclusion.

MAXIMISING REVENUE COLLECTION AND ENABLING HASSLE-FREE DISBURSEMENTS

Over the past few years, Mastercard has invested heavily in teams, digital capabilities, and solutions for central and local governments. Mastercard’s solutions focus on maximising government revenue collections across municipalities, ministries and parastatals, enabling hassle-free disbursements from government to citizens. This enhances the country’s tourism capabilities, digital transit and mobility solutions (tolling and electronic fare collection on buses and trains), enablement of e-commerce on eGov platforms, small and medium enterprise formalisation and digital enablement, to name but a few. Mastercard’s Southern African government team is based in

Johannesburg and is ready to have the digital conversation with governments, provincial and municipal authorities. ▪

Tsogatec is a ntech service provider, specialising in secure digital payment solutions using smartphone technology.

➔ Scan this QR code to go directly to the Mastercard website.

For more information:

Cuthbert Tembedza cuthbert.tembedza@mastercard.com www.mastercard.co.za