Municipal service delivery: it’s time to outsource

Municipal service delivery: it’s time to outsource

Many municipalities should outsource some of their service delivery functions to professional fleet operators, or turn to small to medium business enterprises in this regard. In any event, they should drop taxes and fees for services they fail to deliver, writes UDO RYPSTRA.

Service delivery at municipal level – or the slothful implementation of it, or the total lack of it – has been blamed as the major reason for the spate of popular revolts that has turned South Africa again into the “protest capital of the world” it was before last year’s Soccer World Cup (SWC).

Peter Alexander, professor in Sociology at the University of Johannesburg, has labelled the series of revolts as “The Rebellion of the Poor” in a research document often referred to by other academics and commentators, although some will argue that these protests will use non-service delivery as a coat hanger on which to hang other grievances. More recently, this included unpopular councillors nominated for the recent municipal elections, ongoing tender favouritism if not corruption (especially at provincial and municipal levels), nepotism, factionalism, infighting, personal agendas that play on underlying discontent, and many other factors.

The fact remains that with several municipalities having underspent their budgets by billions again in 2010, there is widespread dissatisfaction with the rate at which municipal services are being delivered. And this dissatisfaction has been on the rise from well before the start of the post-apartheid era right up to the current municipal elections.

South Africa used to have 843 municipalities but many were simply not financially viable as they lacked a sufficient tax base. Accordingly, larger and more equitable entities were created and the number of municipalities reduced to 283 in 2000. These are grouped into six metropolitan municipalities (category A), 230 local municipalities (category B) and 47 district municipalities (category C). The provincial governments, assisted by the National Treasury, are responsible for municipal oversight regarding budget approval and monitoring.

According to Municipal IQ, a research company that records major protests staged against local government (as reported in the media) in its Municipal Hotspots Monitor (MHM), about 6 000 protests were officially recorded during the 2004/05 financial year, an unknown number of protests went unrecorded, and about 1 000 protests were illegally banned. This meant that at least 15 protests were taking place each day in South Africa at this time.

Since then, these public protests have escalated dramatically, with the MHM reporting that “2009 and 2010 together account for about two-thirds of all protests since 2004”. There was a dramatic surge in protests in 2009 shortly after president Jacob Zuma first took office; the number of protests was ten times higher in 2009 than in 2004.

Before the SWC in June 2010, there was a spate of protests in Gauteng and other parts of the country with some frustrated demonstrators even threatening to disrupt the tournament. But those threats did not materialise.

In July last year, Dr Udesh Pillay of the Human Sciences Research Council’s Services’ Delivery Centre, said it appeared protestors had suspended their demonstrations during the SWC and that people were actually celebrating the event with pride and patriotism. But he warned that after the SWC, service delivery issues would resurface.

“Reality will hit home after SWC when I have no doubt that service delivery protests and increased negotiations over better wages and working conditions will resume,” said Pillay. And Pillay was right. In fact, protests escalated and became even more widespread in 2010. According to economist Karen Heese and Kevin Allen, MD of Municipal IQ, protests have now afflicted 40% of local and metropolitan municipalities, with the latter especially badly hit despite “their typically sound delivery records”.

“Arguably, protests in metro municipalities, which account for almost half of all protests we recorded, are not always prompted by an outright failure of delivery, but rather an inability to deliver at a pace that keeps up with urbanisation. To this end, the target announced in the State of the Nation address to formalise informal settlements is important, especially given that about 37% of protests on the Hotspots Monitor take place in informal settlements.”

Whatever the outcome of the municipal elections, it is obvious that all municipalities in South Africa will have to make service delivery their top priority, either by introducing it in places where it does not exist, or by accelerating the pace at which it is delivered. And that means identifying the needs of especially, rebellious communities, launching new projects to address those needs, upgrading or expanding municipal fleets and/or contracting external service providers where their internal skills and mobility are inadequate.

And here lies another snag. To launch new projects requires project engineers and managers of which there is a distinct lack, not only on a national level but at provincial and municipal level as well.

Moodley’s, the credit rating agency, has confirmed this skills shortage. “Central government’s objective to improve services has resulted in increased grant funding to all levels of municipalities. However, capacity problems are a serious obstacle to fulfilling these plans. Grant allocations have consistently been underspent as a result of major skills shortages. In addition, the existing infrastructure system of the country is ageing and its maintenance has been neglected since 1994,” a recent report pointed out.

The skills shortage has also been confirmed recently by Civil Engineering South Africa (CESA). In its annual media briefing, it criticised the huge lack of technical staff and inadequate procurement procedures in government and municipal departments for the trickle of projects that are coming through.

Municipal service delivery: it’s time to outsourceThe association said the number of technical professionals in government and municipalities had shrunk from 5 500 to less than 1 800 over the past 10 years. It also referred to statements by finance minister Pravin Gordhan that many billions had not been spent by the public sector. The reported R12 billion of unspent budget by municipalities equated to a “loss” of 100 000 jobs, “a situation that cannot be tolerated in a country with the highest unemployment and below average growth rate even in Africa”, it said.

CESA said that, fundamental in terms of a framework or roadmap for the way forward, was the need to professionalise the public service, remove political “deployees” from technical positions where they were not qualified, and employ skilled officials who could develop careers in the public service.

While the South African government has built more than 2,5 million houses since 1994, it has been unable to keep up with the urbanisation of rural communities and refugees from neighbouring countries in search of employment and a better life.

This has led to the establishment of numerous informal settlements in and around major cities and towns where people live in shacks with no access to municipal services like sanitation, water and electricity.

The Department of Trade and Industry recently launched a televised campaign to recruit project engineers and managers to return out of retirement and place their names on a human resources list. But it will take time to put back the skills into municipal project departments, thus the only alternative is for municipalities to outsource these services to existing service providers, depending on the services required, and to promote the establishment of SMMEs to provide the same functions.

Metropolitan and local municipalities have localised, defined powers and functions that include the responsibility to deliver basic services and municipal infrastructure such as water provision, electricity distribution, refuse removal, sanitation, storm water management, municipal roads, cemeteries, fire-fighting, and municipal health. District municipalities’ primary role is to facilitate, fund and execute infrastructure development at the local municipalities within their jurisdictions. Other services vary and can include water provision, fire-fighting, safety, security and economic development.

Many South African municipal authorities own and directly operate their own utility fleets via city departments such as Johannesburg’s City Power, City Water and Metrobus. However, a number of services have already been outsourced or have simply been taken over by private enterprises that have seen gaps in service delivery at municipal level.

An obvious example is the phenomenal rise of South Africa’s minibus taxi industry that not only competes with municipal bus services but also expands public transport to black townships and informal settlements. Another example is the numerous private security firms that have taken over street patrolling duties in municipalities – actually a state function – from SA Police Services.

So far, most municipalities have held onto their traditional city fire and ambulance departments, but here one sees inroads also being made by the likes of Netcare and ER24, which have mushroomed nationwide to provide provincial and municipal ambulance and other medical rescue services.

The same applies to refuse collection. Pikitup is owned by the City of Johannesburg and when employees went on strike recently, also affecting surrounding suburbs, black entrepreneurs with bakkies and trailers were soon doing the rounds to collect and remove the stinking piles of garbage – at a price, of course.

In 1979, a small group of entrepreneurs saw a similar opportunity in Gauteng for private door-to-door waste collection and disposal. This led to the formation of Wade Refuse in 1984, the first private company to offer door-to-door domestic waste collection contracts in townships such as KwaThema, Tsakane and Soweto in Gauteng, also at a time when operational conditions were extremely challenging. Wade Refuse prospered and expanded into industrial waste management to become the fully BEEE-compliant, JSE-listed Enviroserv conglomerate it is today.

The (underspent) money is there and so are the vehicles and specialised equipment that need to be bought to provide these essential services.

South Africa is serviced by a number of First World vehicle and materials handling equipment manufacturers. They employ sales consultants fully trained in offering customised solutions to service delivery issues, even if that means adapting products to local conditions.

A typical example is Mercedes-Benz Commercial Vehicles which, along with other materials handing equipment suppliers, was instrumental in the success of Enviroserv by supplying customised vehicles. It also came up with a customised solution for the Ethekwini Municipality whose Durban Solid Waste (DSW) department some time ago required special waste compactors to remove more than 600 000 tons of refuse from 650 000 households and industry every year. This from a 3 500 km² area bounded by Cato Ridge in the west, Tongaat in the north, and Umkomaas in the south.

DSW, already a Mercedes-Benz customer, required a 10 m³ instead of the usual 19 m³ waste compactor to negotiate narrow roads and steep hills using the Mercedes-Benz Atego 1517 chassis cab, which it already had but with a legal payload of 6 000 kg on the back axle to prevent overloading on the rear axle. This was achieved after input from Daimler Germany; MBSA altered the wheelbase and rear suspension, fitting an Allison automatic gearbox and TFM coming up with a light TM 150 compaction body. So impressed were City Fleet officials that they ordered 28 units in a R30 million deal.

The Durban officials have also come up with their own solutions and are not shy to share their knowledge of vehicle specification and procurement with other municipalities. The second Ethekwini Truck Applications show about a year ago demonstrated how to put service delivery into practice. The Isuzu Truck-sponsored show had more than 53 units on display with specialised truck-body and material handling equipment applications – using cranes, tippers, waste skips, elevated platforms, including modified chassis cabs that could carry a loadbed for construction materials one day and water tanks the next. The units all followed the theme of how much work a truck can do with cargo body and equipment designed to suit tasks that in many cases offer a dual purpose capability.

The Ethekwini approach has been to design multi-purpose hook-lift truck bodies for fitment to one chassis cab to satisfy a variety of municipal service needs.

The municipality has offered other municipalities without the necessary procurement skills assistance up to the point where they can purchase vehicles or larger discounts than what they would have qualified for otherwise.

In conclusion, people pay taxes and fees for services they expect to be delivered. Having to pay for services not delivered – or twice for refuse collection – will raise more than a stink.

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