There are various reasons why local government does not deliver on their service delivery responsibilities. One such reason is insufficient funds to carry out the municipality’s required functions.
Local government receives two kinds of incomes: an allocation from national government and revenue the municipality should generate on its own through property rate taxes and service charges. The first type of revenue is guaranteed whereas the latter is dependent on the ability and/or willingness of consumers to make payment. What happens when municipalities cannot generate sufficient revenue (also called municipal consumer debt)? The Financial and Fiscal Commission states that this “poses a serious threat to the financial health of municipalities in South Africa”, directly translating to service delivery being negatively affected.
According to National Treasury (2008) “municipalities make an important contribution to poverty alleviation and economic development, through providing free basic services to poor households and investing in infrastructure and associated services that are critical for economic activity”. Kagiso Trust actively seeks to overcome poverty and through its capacity building entity, Kagiso Trust Consultancy (KTC), local government is afforded support that ensures effective data management and improved revenue collection.
KTC’s Paul Smith explains that the burden of revenue collection can place municipalities in a complex situation. “Essentially, municipalities have to ensure that their paying customers are able to cover costs by subsidising indigent customers, who are unable to afford services,” he explains. Although this model works well in theory, matters are more complicated in reality, with South Africa’s culture of non-payment for municipal rates and taxes creating a situation where debt hampers the ability to provide those essential services.
“Although municipalities have to operate and function as a business, they dwell in a space characterised by blurred boundaries. After all, their role is to provide the services – water, electricity and rubbish removal – which make our societies functional, so they have a social obligation, too” Paul observes. To ensure effective service delivery, municipalities depend on a number of pillars.
- Capacity: in the form of a skilled and hard-working human resources pool, is key
- Efficient data saving systems are also a must
- It’s essential to manage credit effectively
- Reliable data, pertaining to all residents and businesses operating in the area. This is perhaps the most crucial of all
This is where KTC is able to help, Paul informs. “Our approach can be summarised in three words: it’s cost-effective, long-term and customer-centric.” Guided by these principles, KTC partners with local municipalities to provide financial management systems, as well as customer and credit control management systems, which ensure correct billing – and, naturally, lead to better service delivery.
This is all made possible through KTC’s data tool, K’DOS (Kagiso Data Optimization Service); a web-enabled system which rehabilitates maintains and updates data. “K’DOS makes it possible for municipalities to perform optimally – and this makes life more pleasant for South Africans,” Paul concludes.