- SALGA CFO Nceba Mqoqi says the decrease in equitable share was alarming amid the increasing number of poor households due to the effects of Covid-19.
- Own revenue by municipalities declined during lockdown and the extra R20 billion Covid-19 relief did not match revenues collected.
- Mqoqi says the increase of 7.3% in conditional grants will not ease the escalating pressure of infrastructure backlogs.
The South African Local Government Association (SALGA) warned Parliament’s Standing Committee on Appropriations that the proposals in Finance Minister Tito Mboweni’s 2021 Budget speech regarding the reduction in the already-stretched equitable share would put municipalities around the country in a precarious financial position.
Reduced allocations at a time when local government may have been expecting increases in allocations due to the pandemic compound effective relief grant decreases, municipalities’ struggles to collect bills from ratepayers, and irregular, unauthorised as well as fruitless and wasteful expenditure – all while service delivery continues to worsen.
According to the 2021 Budget Review from the Budget Speech that Mboweni tabled in Parliament last week, municipal equitable share stood at R78 billion. The equitable share is expected to decline by 0.4% over the medium term.
The Budget Review said an additional R8 billion will be allocated to provincial health departments through the provincial equitable share in 2021/22 to enable the healthcare sector to sustain these activities and respond to waves of Covid-19 infection after allocating R20 billion last year.
SALGA CFO Nceba Mqoqi said the association was concerned with the proposed decrease in equitable share of R6.5 billion from last year to this year and reducing amid the increasing number of poor households due to the effects of Covid-19.
“Further, the reduction in the local government equitable share does not serve our communities well in view of the prevailing economic climate, increased unemployment figures per Stats SA and the negative impact of Covid-19 on municipal revenue collections,” said Mqoqi.
Mqoqi said the marginal increase of 7.3% in conditional grants will not ease the escalating pressure on local government to address the growing infrastructure backlogs caused by the migration of people into large cities.
“Own revenue by municipalities declined during lockdown and the extra R20 billion Covid-19 relief did not match revenues collected in the previous year, according to a survey conducted by the Department of Planning, Monitoring and Evaluation.
“Municipalities collected 20% of the billed revenue in the period April to June 2020 and the collection rate in the corresponding period in 2019 was 93%. The survey reflected that in the case of four metro municipalities, the own revenue collected was around R4.3 billion less,” Mqoqi said.
He said the expenditure requirements of local government shifted towards Covid-19-related needs of the communities while expenditure on goods and services increased due to extra demands from municipalities to cater for Covid-19-related preventative measures.
The Budget Review said over the Medium-term Expenditure Framework period, the social grants budget is reduced by 2.2%. The Budget Review said all grant values will increase by less than inflation, while the number of beneficiaries is expected to increase by 300 000 people.
The Budget Review said total social grants were reduced by R5.8 billion in the 2021/22, R10.7 billion in the 2022/23 financial year and R19.5 billion in the 2023/24 financial year.