On 23 July 2024, President Cyril Ramaphosa assented and signed into law the Public Procurement Act 28 of 2024 (PPA). This article forms part of a series of articles which unpack the key legal and institutional changes introduced by the Act.
Municipal revenue
The problem of non-payment for municipal services, such as water and electricity, and the termination of those services due to non-payment has once again gained the spotlight. In City of Tshwane v Vresthena Pty Ltd, the Supreme Court of Appeal (SCA) had to determine whether a municipality could be interdicted from implementing its credit control by-laws, which provides for the termination of electricity supply in the event of non-payment.
The Municipal Infrastructure Grant (MIG) was introduced in 2004 to address infrastructure backlogs and to improve service delivery in local communities. It is a conditional grant, meaning that it is provided by the national government to municipalities on the condition that the funds are spent on specific infrastructure projects.
Increasing 4.4% to R34.9 billion in 2023/24, the budget of the National Department of Human Settlements serves as the primary means for government to achieve its goal of integrated, sustainable human settlements. The new budget allocates R14.9 billion for the Human Settlements Development Grant (HSDG), while the Urban Settlements Development Grant (USDG) increases to R8.15 billion and the ISUPG to R8.6 billion.
In the space of one week in September, the country’s load shedding status sent any sniff of foreign investors scurrying for cover, and the City of Tshwane narrowly averted being plunged into complete darkness after settling its outstanding debt to Eskom of over R1,6bn. It joined the City of Johannesburg, Ekurhuleni, and a long list of smaller municipalities which continually roll over debt, and default on payment settlement plans until the threat of Doomsday. Pay up, or we throw the big switch.
The Dullah Omar Institute (DOI) is one of 18 international partners of the LoGov project titled ‘Local Government and the Changing Urban-Rural Interplay’. The project seeks to establish an international and intersectoral training and research network to identify, and evaluate best-fit practices for local governments in order to address the changing urban-rural interplay and manage its impacts. It is funded by the European Commission as part of the EU-Rise Horizon 2020 Marie Skłodowska-Curie Actions (MSCA).
The School for Public Leadership at Stellenbosch University in partnership with the Hanns Seidel Foundation conducted a research study on the impact of the Covid-19 pandemic on municipal fiscal sustainability in the Western Cape (WC) province, which was completed in April 2021. The local municipalities in the sample included Stellenbosch, Drakenstein (large municipalities), Bergrivier, Hessequa (medium-sized municipalities) and Swellendam, Kannaland and Laingsburg (small municipalities).
The School for Public Leadership at Stellenbosch University in partnership with the Hanns Seidel Foundation conducted a research study on the impact of the Covid-19 pandemic on municipal fiscal sustainability in the Western Cape (WC) province, which was completed in April 2021.
The School for Public Leadership at Stellenbosch University in partnership with the Hanns Seidel Foundation conducted a research study on the impact of the Covid-19 pandemic on municipal fiscal sustainability in the Western Cape (WC) province, which was completed in April 2021. The district municipalities (DMs) in the sample included Central Karoo, West Coast and Cape Winelands. This article aims to distil the key findings relating to DMs from that study. A previous Local Government Bulletin article dealt with sampled WC local municipalities.
The School for Public Leadership at Stellenbosch University in partnership with the Hanns Seidel Foundation conducted a research study on the impact of the Covid-19 pandemic on municipal fiscal sustainability in the Western Cape (WC) province, which completed in April 2021. The local municipalities (LMs) in the sample included Stellenbosch, Drakenstein (large municipalities), Bergrivier, Hessequa (medium sized municipalities) and Swellendam, Kannaland and Laingsburg (small municipalities). This article aims to distil the key findings from that study.
This article explores long-term trends in the South African municipal operating and financial environment which will have significant impacts on the appropriateness of the current local government fiscal framework, and which necessitate a fundamental review of its structure.
On 29 March 2021, the Dullah Omar Institute convened a webinar on the financial impact of Covid-19 on district and local municipalities. The webinar was attended by close 80 participants, drawn from government, civil society, the private sector and academia. The theme was unpacked with Prof Tania Ajam, professor in Public Policy, Economics and Finance at the Stellenbosch School of Public Leadership and Dr Mkhululi Ncube, Programme Manager of the Local Government Unit at the Financial and Fiscal Commission. The discussion was moderated by Prof Jaap de Visser, Director of the Dullah Omar Institute. What follows is an overview of Prof Ajam’s presentation to the webinar.
On 29 March 2021, the Dullah Omar Institute convened a webinar on the financial impact of Covid-19 on district and local municipalities. The webinar was attended by close to 80 participants, drawn from government, civil society, the private sector and academia. The theme was unpacked with Prof Tania Ajam, professor in Public Policy, Economics and Finance at the Stellenbosch School of Public Leadership and Dr Mkhululi Ncube, Programme Manager of the Local Government Unit at the Financial and Fiscal Commission (FFC). The discussion was moderated by Prof Jaap de Visser, Director of the Dullah Omar Institute. What follows is an overview of Dr Ncube’s presentation to the webinar.
The full impact of the nationwide lockdown under COVID-19 restrictions to the South African economy is yet to be fully understood. However, Statistics South Africa estimates that in the second quarter of 2020, the economy contracted by 51 percent. In anticipation of the socio-economic impact, national government announced a R500 billion stimulus package that included various support measures to Small and Medium Enterprises, the informal sector and to municipalities. But what has been the local government economic response to COVID-19?
The African School on Decentralisation (ASD) is a collaboration between the South African Research Chair in Multilevel Government, Law and Development located at the Dullah Omar Institute (DOI) of the University of the Western Cape and the Centre for Federalism and Governance Studies (CFGS) of Addis Ababa University. The two institutes were to hold the inaugural course of the ASD under the theme ‘Decentralisation and Development in Africa’ from 25 May to 5 June 2020 in Cape Town, South Africa. Regrettably, the rapid spike in the spread of the coronavirus (otherwise known as COVID-19) across the continent witnessed from March 2020 necessitated the postponement of the ASD to 2021.
Since the declaration of the state of national disaster by the Minister of Cooperative Government on 18 March 2020, and the subsequent announcement of a Lockdown by the President on 26 March, municipalities have implemented various measures in response to the COVID-19 pandemic. This article analyses some of the measures taken by eThekwini Metropolitan Municipality (Metro) more than 90 days into the Lockdown. While disaster management is a shared national and provincial government competence, municipalities play a crucial role during disasters in terms of their constitutional functions (listed under Schedule 4B and 5B) and their assigned functions (s99 and 126), such as housing.
Development charges have now received attention in the Municipal Fiscal Powers and Functions Amendment Bill. The Bill contains a new chapter 3A that regulates the power of municipalities to levy development charges from developers in a uniform manner. Part 1 of the series on the Municipal Fiscal Powers and Functions Amendment Bill introduced the Bill and provided a general analysis of its provisions on development charges. In this article (Part 2 of the series), the focus is on the provisions regulating the in-kind payment of development charges, the subsidisation of categories of land development and the permissible uses of revenue from development charges. The article concludes with some reflections on the Bill.
Picture this scenario: Trollkins Consortium (Pty) Ltd submits a land use application to Nkanyezi Local Municipality, with the proposal to undertake the construction of retail stores, restaurants, offices and a casino. This proposal sounds exciting - on one hand, it will offer employment opportunities, economic development and growth, and will result in the movement of goods and people in the municipality. On the other hand, Nkanyezi Local Municipality is concerned that by approving Trollkins’ application, more water, sewerage and electricity infrastructure will be needed. This means the proposed development could have negative financial impacts such as burdening the current municipal infrastructure without value for use. It could thus potentially burden the municipality as it will have to provide infrastructure to accommodate the additional load that the proposed development will place on municipal bulk infrastructure and unduly benefit the developer who might not pay the true cost of the extended infrastructure or not pay at all.
Goldman Sachs economist Jim O’Neill coined the term ‘BRIC’ in 2009 as an abbreviation for a group of four emerging economies that were growing relatively fast- Brazil, Russia, India and China. Although this was initially an acronym for ease of reference, BRIC soon personalised this term. In 2010, after some lobbying from the former President of South Africa, Jacob Zuma, an invitation was extended to South Africa to join the group, which then took the acronym ‘BRICS’ to accommodate South Africa. There were several countries which could have been invited to join the BRIC other than South Africa. However, South Africa was earmarked as a gateway to Africa. As a regional leader that arguably represents African interests in global forums, South Africa was considered strategic to present a united voice of the global South.
Legal Briefs.
Do Property Rates Expire After Three Or After Thirty Years?
Levying Property Rates: A New Dispensation.
With the gradual implementation of the Local Government Property Rates Act, the impact of the new constitutional regime in the levying of property rates is slowly filtering through. The latest conflict concerned whether a provision of the old Cape Ordinance requiring the administrators consent for an increase in the rate was constitutionally valid.
The Housing Dilemma: Reviewing Local Governmnt Functions.
An essential part of the current review of government structures is evaluating the success of local government in meetings its constitutional obligations to citizens. Key to the current review of structures is the extent to which powers and functions designated enable it to meet its developmental mandate. This article proposes a model for analysing which functions should be performed by local government and applies this model to housing. It concludes that the location of housing as a national/provincial function competency needs to be revisited.
Municipality's Share of the National Pie: New Grants, More Money in the Fight Against Poverty.
The Division of Revenue Bill 2007, introduced by the Minister of Finance, Trevor Manual, sets out the allocations local government will receive for the 2007/2008 financial year. The Bill not only determines local government's equitable share of revenue raised by the national government, but it also contains a number of innovations. The most important are the new conditional grants- the Neighbourhood Development Partnership grant and the Water Services Bulk Infrastructure grant.
State of the Municipalities: More Money, More Skills
In his 2006 State of the Nation Address on 3 February , President Thabo Mbeki focused on the troubles and goals of local government. While he noted that three quarters of South Africans approve of the government's service delivery efforts, only 45% believe that local government is performing well. The President then set out his plan to rescue local government.
From the Courts: Sewerage Charges Based on Property Value and Usage
At the end of 2005, the Supreme Court of Appeal made a ruling on the question of whether sewerage charges should be based on the value of the property or on the amount of water used. The matter had been brought by the Rates Action Group against a High Court judgment, which ruled that the City of Cape Town was permitted to impose property rates for services in addition to general property rates, in conjunction with a tariff based on water usage.
The Property Rates Act: A Tool For Poverty Alleviation.
Property rates are an important source of revenue for municipalities and this is reflected in the preamble to the Property Rates Act of 2004.There is a need to provide local government with access to a sufficient and buoyant source of revenue necessary to fulfil its developmental objectives. At the same time, however, a municipality's financial health should not be attained at the unjustifiable expense of the poor within its area. The power to impose rates should take into account the imbalances of the past and the burden of rates on the poor.
From the Courts: Powers of Municipalities to Impose Property Rates.
A recent judgment by the Constitutional Court clarifies the powers, duties and status of municipalities and pronounces positively on the powers of municipalities to impose property rates. This case is a significant victory for municipalities in their efforts to value property and levy property rates.
Collecting Service Debts: Constitutional Court Speaks.
A recent judgment by the Constitutional Court confirms that the electricity and water charges owed to a municipality must be paid before a property can be transferred to an new owner. This is a major victory for municipalities in their effort to collecting outstanding service charges.
Counting the Cents: Municipal Budgets and Mayors Responsibilities Under the MFMA.
A new era has dawned in municipal finances with the enactment of the Municipal Finance Management Act 56 of 2003. The main objective of the MFMA is to ensure sound and sustainable financial management. In short the MFMA will pave the way for three year budget planning on capital appropriations.
From the Courts: Suitable Alternative Land Before Evictions.
Section 6(3) (c) of the Prevention of illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 provides that when a court decides whether an eviction order is just and equitable, it needs to consider the availability of suitable alternative land. The main question is what is meant by this term.
The State of Municipal Budgets-Intergovernmental Fiscal Review for 2003.
The Minister of Finance released the 2003 intergovernmental Fiscal Review on 8 April. It provides a wealth of information on municipal budgets for the 2002/03 financial year.
Municipal Debt Comes First.
The recent judgment in the Transvaal Provincial Division case of Summer Symphony Properties 13 CC and BOE Bank v City of Tshwane Metropolitan Municipality and Others has attracted much attention in the press. This is the second recent judgment to deal with section 118 of the Municipal Systems Act, the first having been handed down in the Natal Provincial Division.
Getting Municipalities Out of the Red
More than a thousands delegates comprising municipal political office bearers and officials, local government MEC's provincial local government heads of department, national politicians and officials and organised local government attended a two-day Municipal Viability indaba at the Sandton Convention Centre on 5 and 6 December 2002.
From the Courts: Legality of Land Rates imposed as Flat Rates by Municipalities before December Elections.
Gerber and others v MEC of the Gauteng Province and Eastern Gauteng Services Council (case no, 303/2001)
From SALGA: Report on the Local Government Laws Amendment Bill
The Portfolio Committee on Provincial and Local Government passed this Bill on 22 October 2002 and the National Assembly passed two days later. The Bill at the time of writing is scheduled to be passed by the National Council of Provinces on 7 November. It should be signed into law by the middle of November.
From the Courts: Municipality Stumbles over a Disconnection Hurdle
Residents of Bon Vista Mansions v Southern Metropolitan Local Council
Electricity Restructuring: Short-Circuting Municpalities?
Important recent developments in the electricity distribution industry (EDI) could have a significant impact on municipalities. A recent court challenge raises the crucial issue of the right of municipalities to supply and distribute electricity.
President's Coordinating Council sets Agenda for Local Government
At a special President's Coordinating Council (PCC) workshop on 14 December 2001, the agenda was set for building a strong and development-oriented local government. The PCC adopted wide-ranging resolutions which chart the way forward in both the short and medium term.
From the Courts: Guarding Against Disruption of Local Government
MEC for Local Government and Planning of the Western Cape v Paarl Poultry Enterprises CC Rosendal Poultry Farm 2002 (2) BCLR 133 (CC)
Tarifs and Debt Collection in the Muncipal Systems Act.
Tariff and debt collection policies are of paramount importance for local government. Local government derives most of its revenue from the levying of rates and tariffs.
From the Courts: Suing for Charges
Eastern Cape Metropolitan Substructure v Peter Klein Investments (Pty) Ltd 2001 (4) BCLR 344 9 (W)
The Policy In The Numbers.
There is more to the 2011 Local Government Budgets and Expenditure Review than numbers. The review tells a story about the policy behind the numbers. It lays down the policy line, sends clear signals about policy shifts on the way, issues warnings, educates us, and sometimes brings out the big stick or applies the brakes.
The National Treasury 2011 Local Government Review.
It is the most rigorous analysis of local government published by government. The 2011 Local Government Budgets and Expenditure Review, released in September, is the National Treasury’s analysis of long-term trends in local government finances and performance. We will have a close look at the wealth of information in this report, in this and forthcoming issues of the Bulletin. We begin with a general introduction to the document, focusing on its purpose and importance as a barometer of local government.
Municipal Property Rates Amendment Bill Update.
The proposals contained in the Local Government: Municipal Property Rates Amendment Bill (see LGB 13(2), July 2011, pp 13–15) have attracted much attention. The media, the public and estate agents have all critiqued the provisions on the rating of residential properties which are not the primary residence of the property owner: for example, investment properties that have been purchased to let, or holiday residences.
Municipal Property Rates Act Out Of Public Comment.
After a lengthy process of public consultation on amendments to the Municipal Property Rates Act of 2004, the Department of Cooperative Governance and Traditional Affairs finally released a Bill on 9 June, giving the public two weeks to comment.
The Withholding of Rates and Taxes in Five Municipalities.
The Community Law Centre, in partnership with the German Agency for Technical Cooperation (GTZ) and SALGA, recently completed a research project on the phenomenon of rates withholding in five South African municipalities. ‘Rates withholding’ is the practice by ratepayers of withholding their property rates and, in some cases, fees for municipal services because they believe that municipalities are not delivering. We argue that this practice, though less visible than service delivery protests, is equally destructive.
Review of the Local Government Fiscal Framework.
In 2009, SALGA recommended to the Local Government Budget Forum that there should be a review of many aspects of fiscal policies in relation to municipal finances. This year SALGA proposed a comprehensive review of the local government fiscal framework (LGFF). While there have been some ad hoc policy changes over the past few years, many remain incomplete or unattended to. In SALGA’s view, the review of the LGFF should address the fundamental structural challenges, rather than introducing minor ad hoc adjustments, if it is to improve operational efficiency in the short and long term.
From the Courts: Power to terminate services for unpaid rates.
Body Corporate Croftdene Mall v eThekwini Municipality (16977/2009) [2010] ZAKZDHC 20 (1 May 2010)
Conflict of Interest in Property Valuation: Keeping It Above Board.
How do conflicts of interest affect the implementation of the Municipal Property Rates Act (MPRA) and what can municipalities do to lessen their impact?
The Budget Vote for Local Government.
On 22 April 2010, the Minister for CooperativeGovernance and Traditional Affairs, Sicelo Shiceka, presented Parliament with his department’s budget vote for the 2010/11 financial year. The significance of this particular budget vote is that it is the first for CoGTA since the launch of the Local Government Turnaround Strategy (LGTAS) in December 2009.
Property Rates Latest Development.
Property rates, as a form of tax imposed on the market value of land and buildings, are the key source of revenue for municipalities. The framework for the imposition of property rates is carefully regulated by the Municipal Property Rates Act (Act 6 of 2004) (MPRA), which provides municipalities with a measure of discretion in determining and levying property rates in a localised context. The imposition of property rates is, however, subject to national limits or maximums. This article discusses some recent developments with regard to these maximums (ratios), as well as the suggested amendments to the MPRA.
Municipal Rates Policies and the Urban Poor.
In urban areas, the poor continue to struggle to access well-located land. Secondary residential property markets are also constrained from functioning effectively in black townships. Recent research supported by the South African Cities Network (SACN) and Urban Landmark hasinvestigated how municipal property rates policies are, or could be, used to promote access by the poor to urban land markets.
From the Courts: Setting Tarrifs, The Duty to Consult.
The introduction of new rates tariffs by a municipality is rarely ever greeted without public debate – or, in some instances, even conflict. In this case, the Stellenbosch Ratepayers’ Association applied for the invalidation of a rate tariff which had been introduced by the municipality.
The Municipal Imperative.
Much, if not most, of our country’s problems – particularly poverty and unemployment – stem from our under-resourced and underperforming local government system. So much so, that it is now imperative that municipalities become the focus of government activity.
Coping With Crunch Time: What the Recession Means For Local Government.
Municipalities have already passed their budgets for the 2009/10 municipal financial year, and are beginnin g to finalise financial statements for 2008/09. Both of these processes are driving home to managers and councillors the impact of the global economic crisis on their own operations.
Withholding Rates: A New Culture of Non-Payment.
Rates boycotts, alongside other forms of community protest, were historically linked to the grassroots struggles of communities against the apartheid government. Protest action in various forms – such as rates boycotts, bus boycotts, student protests and community riots – were among the few effective tools available to disempowered communities to voice their dissatisfaction. Those forms of protests – sometimes destructive and violent – conjure up images that are reminiscent of apartheid era activism. Rates withholding is an emerging form of protest that is being utilised increasingly by communities across South Africa.
From the Courts: Prosecution by a Local Authority- Central Transitional Metropolitan Council v Winchester 1997 (3) BCLR 312 (N)
Durban Central Transitional Metropolitan Council (DCTMC) prosecuted Mr Winchester for failing to obtain licenses for his dogs. The DCTMC had acquired this power to prosecute by delegation from the Attorney-General through section 8 of the Criminal Procedure Act 51 of 1977.
Section 139 Intervention
Section 139 of the Constitution authorises the provincial executive to intervene in a municipality when it does not fulfil its executive obligation in terms of legislation. This article seeks to introduce the rules and principles that can be derived from the Constitution.
Intervening into Warrenton
On 17 February 1999, the provincial executive of the Northern Cape Province intervened into the Warrenton municipality On 16 March, the matter was reported to the chairperson of the NCOP and three days later, the NCOP process got off to a start. This article will examine the circumstances that gave rise to the intervention, the handling of the intervention by all concerned and any lessons that may be learnt from it.