“SA GOVERNANCE IN TURMOIL”

“SA GOVERNANCE IN TURMOIL”

“SA GOVERNANCE SYNOPSIS” (Includes analysis of the AG, Zondo Commission, SIU Reports and Research)

POLITICAL TUG-WAR

Governance is essentially about the authoritative allocation of resources – who gets what, when and how. This definition helps us to understand and evaluate the contours of how public goods are provided. As renowned governance scholar, Daniel Kaufmann, and his co-authors, note, government effectiveness entails “perceptions of the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government’s commitment to such policies.”

Good governance facilitates the delivery of essential services for citizens and is vital for socio-economic welfare and development. In South Africa, the importance of efficient governance is underscored by the proximity of local government to the people: the epicenter of service delivery. It is where the state engages with citizens primarily and frequently through the provision of services, as legislated by the Constitution and the Municipal Systems Act. Accordingly, citizens should judge local governments based on their ability to deliver central functions such as the provision of water, electricity, and sanitation, as these are tangible indicators of service delivery satisfaction.

Local governance discussions usually focus on public administration, factoring in transparency, accountability, and efficiency. The evidence of this mismanagement is manifest in poor audit outcomes and the exposure of irregular and wasteful expenditure in those audits. There are invariably no material consequences for this malfeasance. The root cause of maladministration is corruption, enabled by the lack of credible accountability structures and individual agency characterized impunity. These issues highlight the challenges faced by many municipalities.

Beyond these dynamics, the dysfunction in many of the country’s municipalities is caused by political instability and contestations that result in the politicisation of bureaucratic processes.

There are three clear elements at play:

First, political infighting at the national level affects local government performance. This intra-party tug of war is evident in the ongoing struggles within the political parties. Opposition coalition-led municipalities have not been immune to such contestations either. For one, these dynamics are demonstrated through the issuing of directives and threats from national leaders of political parties to their councilors concerning issues related to alliances and voting in council.

Second, inter-party contestation often results in drawn-out court cases, interdicts, and some municipalities being placed under administration. In coalition-run metro municipalities, the ambiguity and constantly shifting structures of coalitions leads to the frequent changing of mayors, speakers, members of mayoral committees and municipal managers.

Third, the conflation of roles constitutes a barrier towards more sustainable governance. Some officials have senior political roles within their political parties, and concurrently occupy administrative positions in municipalities run by those parties. For instance, they may be a branch or regional leader within their respective party and then also serve within a governed municipality as a financial officer or manager.

This conflation leads to a situation where municipal officials’ decision-making is based on political alliances and ambition, or the inverse, where the security or insecurity of their tenure is the determining factor, rather than what is best for the municipality. The situation also results in a problem of appointing people who lack critical skills, with insufficient capacity to govern municipalities.

Beyond the local government elections, political actors and administrators must fulfil their responsibilities of good governance and effective service delivery to the electorate. For the problems of politicisation to be remedied, it is important to implement and maintain a strong politico-administrative dividing wall, and unequivocally prevent potential conflicts of interest. In an attempt to remedy the situation, a National Implementation Framework towards the Professionalisation of the Public Service was recently published, which provides practical guidelines to help create competent civil servants with the know-how to sharpen administration and governance.

In short, prioritising efficient local governance can improve service delivery and transform the areas where citizens live. This will go a long way towards tackling deep-seated inequalities and other immediate challenges that define the South African municipal landscape.

DEMOCRATIC CENTRALISM

Democratic centralism is defined as purporting to combine two opposing forms of party leadership: democracy, which allows for free and open discussion, and central control, which ensures party unity and discipline. Lenin declared that the party was not a debating society in which all opinions were tolerated and freely expressed; it was a “vanguard” party whose role as leader of the revolution demanded extreme discipline and a high level of organisation.

Unrestrained discussion, he insisted, would produce intraparty disagreements and factions, and prevent the party from acting effectively. On the other hand, absolute control by a centralised leadership would discourage new ideas from lower-level party members. Therefore, Lenin argued, free discussion within the party should be tolerated and even encouraged up to a point, but, once a vote was taken, all discussion had to end. The decision of the majority should constitute the current party “line” and be binding upon all members.

From ultra-centralism flow a number of errors based on the lack of leadership accountability. For example, substantive political discussion in many parties takes place only at the party’s highest levels. While disagreements may exist in top leadership bodies, they remain unknown to the membership since the minority is forbidden to take its case to the members. As a corollary to this, party congresses, which should be forums for consideration of minority reports, become instead dull, rubber-stamp affairs without political significance.

The party congress becomes effectively subordinated to the leadership, even though in democratic centralist theory it should be the highest party authority, the means through which leaders can be held accountable by the members. This lack of accountability may also explain, in part, why many leaders have retained their posts long after they have lost their effectiveness, often becoming isolated from the membership and from the masses.

This ideology serves the political parties and its leadership, rather than the society at large. The argument is that the debates within the party’s leadership does not represent all the society’s concerns and debates, but rather only the ideas of the selected few.

The argument even goes further in terms of separation of party and state, which has led to decision of political parties, which mostly are taken around ideology and intra-political alignment found themselves in parliament, legislators, and state. In simple terms, the decisions for both accountability and oversight are taken by the same leaders who are supposed to held accountable by society in general which causes a huge conflict of interest and lack of accountability using the ideology of democratic centralism “Party lines.” Hence the voting in parliament and legislators will always be around party lines and not for the societal interest and oversight over the executives who are supposed to carry out the policies that addresses our most pressing issues of unemployment, inequality, poverty, crime, and corruption.

This is the root cause of our problems facing the country and it will continue until the system is changed, and in essence we will not be able overcome our challenges until we do things differently, clear lines of state and political parties.

And it can be argued further for political parties to find alternative methods which best suits the modern democratic movements but use political methods and ideas that promotes accountability and transparency.

BRIEF HISTORY OF SOUTH AFRICA

South Africans are from different cultures and racial groups that exist in South Africa. It has been a major challenge for South Africa and any other country to agree on what good governance is. Standards are not the same in respect of certain elements of good government. Over a period of 400 years, these cultures in South Africa established themselves and lived primitive subsistence farming with everyone on their own land.

Conflict between cultural groups is limited to certain areas or border resulted from changes to other territories as groups of people as the “Voortrekkers” known. With the discovery of gold and diamonds were immediately shared interests in certain land areas and have a greater need for formal government raises.

British occupation followed and more recently the formation of the Union of South Africa in 1910. In 1948 we find the regime of Dr. Malan’s National Party which was the beginning of Apartheid. South Africa became a republic in 1961 and British imperialism has ended. South Africa itself has resigned from the British Commonwealth (Van Schoor, 2004:12-18).

There is no denial on how the apartheid government and governance was to ensure that most of the citizens are excluded from the social security for the benefit of the minority, and the democratic government was established in 1994 to form an inclusive government to redress the injustice of the past as stated on the preamble of our constitution.

THE PROTECTION OF THE RIGHT TO ACCESS TO SOCIAL SECURITY

South Africa’s social security system aims to redress past injustices, particularly our legacy of poverty and inequality. This approach is in accordance with the provisions of the Constitution of the Republic of South Africa 108 of 1996.

For the first time in South Africa’s history, the Constitution compels the state to ensure the “progressive realisation” of social security. Section 27 of the Constitution clearly and unambiguously commits the state to develop a comprehensive social security system.

It affirms the universal right to social security, including appropriate social assistance for those unable to support themselves and their dependents, mandating the state to take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of each of these rights.

The social security right has not been fulfilled by government due to continued wastage within the public sector and our people continues to suffer beyond they actually bear and even manage to survive however our leaders are blind to this reality.

ACCOUNTABILITY

The private sector, civil society organisations and decision-makers in a government are accountable to the public (Governance for Sustainable Human Development, 2005). Accountability is the pillar of democracy and good governance.

This forces the state, private sector, and the civil society to focus on results and to monitor and report on performance. Of the three elements the first Accountability has three dimensions, firstly financial accountability, secondly political accountability, and thirdly administrative accountability (Rondinelli & Shabbir Cheeman, 2003:99-100).

The Institute for Democracy in South Africa promotes accountability as an important part of protecting public rights. Their focus is their “Right to Know programs” (IDASA, 2012).

Transparency

?Transparency promotes openness of the democratic process through reporting and feedback (Rondinelli & Shabbir Cheeman, 2003:99-100). “Transparency is built on the free flow of information. Processes, institutions, and information are directly accessible to those concerned with them, and enough information is provided to understand and monitor them” (Governance for Sustainable Human Development, 2005).

These elements provide protection against government errors, wrongful allocation of funds and reduce corruption. Studies show that in poor developing countries, there is a devastating impact on the lives of poor people due to corruption. Bribe to a police officer is paid by a poor household and often means that a family cannot afford school fees.

Corruption not only reduces the income of the poor, but also destroys the development programs that were implemented to achieve their basic needs such as sanitation, education, and poverty reductions programs (Poverty & development, 2007).

Yet there is still corruption on a large scale in South Africa. The allocation and management of government contracts are top of the list of corrupt behaviour (NACF, 2009). The National Anti-Corruption Forum mentioned the “Promotion of Access to Information Act, 2000” as an important tool in stopping corruption and must result to the development of transparency and effective governance (NACF, 2009).

This law aims that any actions or decisions of government authorities that are been made, should be disclosed if someone then asks for inquiry into possible corrupt acts.

Rule of Law

Good governance requires fair legal frameworks that are enforced impartially. It also requires full protection of human rights, particularly those of minorities. Impartial enforcement of laws requires an independent judiciary and an impartial and incorruptible police force” (What is good Governance? 2012). Legal frameworks should be fair and enforced impartially, particularly the laws on human rights (Governance for Sustainable Human Development, 2005).

AUDITOR GENERAL(AG) RESULTS

(GOVERNMENT AND PUBLIC ENTITIES – 2021/22)

Poor overall performance leads to poor service delivery – to the detriment of the people of South Africa and therefore limits the provision of the social security system. Much of this can be attributed to poor planning, insufficient intergovernmental coordination, execution without oversight, and lack of accountability for effective reporting and the achievement of planned service delivery.

Over the past few years, AG highlighted the internal control deficiencies that led to government not deriving value from its spending because of inefficient and ineffective infrastructure delivery. Infrastructure continues to deteriorate because it is not properly maintained and protected against vandalism. This slows down service delivery and results in funds being wasted, which places further pressure on the fiscus. Auditees have not heeded the call to address these deficiencies, and infrastructure projects continue to face the same delivery challenges.

AG highlights, Non-compliance with legislation remains high, resulting in unfair and uncompetitive procurement processes and payments for goods and services not received. These are also the areas where the risk of fraud is highest, hence it is necessary for a culture of compliance and respect for the law to be re-enforced.

Government has been unable to offer much needed social security such as alleviating poverty, providing access to clean water and sanitation, improving the life expectancy of the people of South Africa, enhancing the quality of teaching, and learning through providing education infrastructure, enabling decent employment, and encouraging economic growth.

As indicated in the AG report, Government provided financial guarantees of over R420 billion, with several state-owned enterprises at risk of defaulting on their debts, which would put additional strain on the fiscus, this includes the failing and failed state-owned enterprises I.e., SAA, Mango airlines, Denel, Eskom etc.

Financial difficulties at these entities also disrupted the delivery of essential services to citizens, such as the payment of social relief grants, rail infrastructure and water supplies.

Infrastructure projects that are not effectively implemented lead to delays in project completion, increases in project costs and financial losses, defects in building quality, and completed infrastructure not being commissioned or being underused. This may lead to the expected return on investment not being realised, placing further pressure on the fiscus.

Government launched multiple programmes and initiatives to improve the lived reality of South Africans and address their concerns. These include the Economic Reconstruction and Recovery Plan, the professionalisation of the public service, and commitments to implement the recommendations to combat corruption and unethical behaviour included in the reports issued by the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector including Organs of State (Zondo Commission). However, plans only have an impact if successfully implemented. If the current weaknesses in financial, performance and infrastructure management are not addressed, it will also hamper the implementation of these programmes and initiatives.

Overall, the audit outcomes of both departments and public entities have improved from 2018-19. Based on the completed audits of 160 departments, forty-seven departments had improved and 12 had regressed – a net improvement of 35 (22%).

Similarly, of the 238 public entities with completed audits, sixty-seven had improved and 34 had regressed – a net improvement of 33 (14%).

The number of clean audits increases every year due to significant effort and commitment by the leadership, officials, and governance structures of these auditees. However, the 128 auditees (56 departments and seventy-two public entities) with a clean audit status represent only 6% of the R2,58 trillion expenditure budget managed by national and provincial government.

The number of clean audits increases every year due to significant effort and commitment by the leadership, officials, and governance structures of these auditees. However, the 128 auditees (56 departments and seventy-two public entities) with a clean audit status represent only 6% of the R2,58 trillion expenditure budget managed by national and provincial government.

By 31 August 2022, AG had identified 179 MIs. estimate the total financial loss of these MIs to be R12 billion and this at various stages of the process, which could have went to a much-needed services and social security services of the country.

State-owned enterprises should not rely on government bailouts as they are expected to implement sustainable turnaround plans that will ensure the creation of public value. Government provided financial guarantees of over R420 billion over several years to these entities. The total government exposure relating to these guarantees is over R328 billion (exposure means that the entities have used the guarantees to obtain loans from lenders). Eskom is the single biggest fiscal risk to the National Revenue Fund, accounting for over 80% of government guarantees to state-owned enterprises. However, several states of owned enterprises have not submitted financial statements I.e., Denel (Not submitted for 2 years), Mango airlines (Not submitted for 4 years), SAA (Not submitted for 3 years).

“The irregular expenditure disclosed in 2021-22 was R51, twenty-two billion. It is significantly less than the R136,67 billion disclosed in the previous year, but the R77,49 billion irregular expenditure incurred by the National Student Financial Aid Scheme in that year”.

“In total, R40,16 billion of the R51,22 billion was expenditure incurred in 2021-22 (representing 2% of the R2,58 trillion expenditure budget) and R11,06 billion was prior year expenditure that was only identified and disclosed in 2021-22”

“The total irregular expenditure could be even higher, as 25% of auditees did not report all irregular expenditure that should have been reported in their financial statements. In some cases, the amount of irregular expenditure reported was incorrect. AG could not audit contracts worth R2,53 billion because of missing or incomplete information”.

“The balances of unauthorised, irregular, and fruitless and wasteful expenditure remain high at R461,05 billion due to the slow pace of investigations. Taking irregular expenditure as an example, by the end of the 2021-22 financial year very little had been done about the previous year’s closing balance of R408,52 billion”.

AUDITOR GENERAL(AG) RESULTS (MUNICIPALITIES – 2020/21

Overall, said the AG, only 61 municipalities out of the total of 257 had a better audit outcome in 2020-21 than in 2016-17, with 56 showing a worse audit outcome. Some municipalities had managed to improve their outcomes, only to regress again in later years.

By 15 April 2022, the report stated, the AG was dealing with 185 Material irregularities at various stages in the audit process. “We estimate the total financial loss of these material irregularities to be R3.9-billion, of which R1.6-billion was money lost by municipalities that had invested in VBS Mutual Bank.”

The closing balance reflected a staggering R119.07-billion of irregular, unauthorised, and fruitless and wasteful expenditure. This is a substantial increase compared to the last audit’s total of R110.18-billion and furthermore, very little has been done to address the situation.

One reason for this is that irregular, unauthorised, and fruitless and wasteful expenditure is still not being investigated or addressed. This means that municipalities did not take sufficient steps to recover, write off, approve, or condone such expenditure. In total, 51% of municipalities did not investigate the previous year’s irregular expenditure, 42% did not do so for unauthorised expenditure, and 41% failed to do so for fruitless and wasteful expenditure.

Despite the price tag of just over R11.67-billion spent on finance units and consultants, the key management controls of municipalities were not adequate to prevent material misstatements in the financial statements, the report noted.

“Despite AG reporting shortcomings and providing recommendations over the years as well as numerous and costly national and provincial initiatives and interventions, the poor status of key financial management controls shows that municipalities have not yet mastered financial reporting – 75% of municipalities were not able to submit quality financial statements for auditing.”

RESPONSE BY THE PRESIDENT TO THE ZONDO COMMISSION REPORT

Apart from the abuse of procurement for the purposes of state capture, the country’s procurement system currently faces challenges of professional capacity, fragmentation, and operational flexibility. The introduction of preferential procurement goals, which is an economic and social imperative, adds a layer of complexity that some have used to manipulate procurement outcomes,” reads the response document from Ramaphosa’s office.

The Public Procurement Bill, which is currently in draft form, already addresses some of the shortcomings of the sector, which find resonance in the National Anti-Corruption Strategy as well.

“A multi-pronged approach is required, which builds the state’s capacity in transversal contracts, reduces fragmentation, consolidates legislation, ensures enhanced regulatory and oversight capacity, and enhances transparency.”

The document further notes: “Recommendations that are covered under existing rules, and therefore do not require further action, include:

·??????The use of implementing agents, include the use of transfer payments, reprioritisation of budgets, oversight responsibilities of officials and structures, ensuring adequate accountability, and the keeping of reliable financial records.

·??????standardised guidelines for the appointment of implementing agents.

·??????ensuring project deliverables are included in business plans and effectively monitored.

·??????ensuring feasibility reports and business plans are available and approved prior to any funds being transferred to a service provider.

·??????noting the recipient of the transferred funds in departments’ financial statements to enable consequence management where funds have not been used for the allocated purpose.

·?????????ensuring provincial treasuries have consequence management mechanisms for recalcitrant HODs or CFOs.”

Ramaphosa asserts that the centralisation of procurement will be pursued only where it is feasible and where the benefits are likely to outweigh the costs in terms of reduced flexibility and departmental accountability for spending, delivery, and outcomes.

SIU – NATIONAL LOTTERY COMMISSION

The corruption, which took place over more than five years, was again laid bare in Parliament by the Special Investigating Unit (SIU).

The SIU said it was expected to hand over a first report, related to the theft of R273 million meant for the country's most vulnerable to President?Cyril Ramaphosa?by the end of October.

An old age home, a drug rehabilitation centre, and sports facilities were some of the projects started but many were never concluded.

That is because of a well-oiled syndicate of colluding former board members, officials, and non-profit organisations, who siphoned off grants for self-enrichment.

SIU head?Andy Mothibi?said two more phases of investigations, worth R246 million and R905 million respectively, would continue well into next year.

“The investigation has identified the methods through which these corrupt individuals used to siphon money - the so-called modus operandi. Misuse of proactive funding provisions in the NLC Act and we have indicated that process needs to be reviewed,” said Mothibi.

With the R27 million property of former board chairperson Alfred Nevahutanda already seized, the SIU still said it had eight more properties within its sights.

It also planned to hand a list of 13 implicated individuals to the National Prosecuting Authority.

The Special Tribunal order, dated 16 September 2022, interdicts the Liberty Group — the pension administrator — from paying out pension benefits to the value of approximately R2.8-million due to Letwaba, pending the final determination of an application to be brought by the SIU against Letwaba within 60 days.

The SIU approached the Special Tribunal on an urgent basis to freeze Letwaba’s pension benefits after he resigned from the NLC pending the institution of a disciplinary hearing into his role in the distribution of NLC funds to several non-profit organisations (NPOs).

An investigation by the SIU in the affairs of NLC had revealed that Letwaba allegedly benefited personally from monies received by NPOs from the NLC. The SIU investigation had revealed that Letwaba allegedly used friends and family businesses, and trusts to receive money from NPOs for his benefit and that of his family.

In one of several NLC funded projects investigated by the SIU, it was revealed that a Limpopo Province based NPO received approximately R25-million for the refurbishment of a torched school in Vuwani. Twelve days after the NPO received the money, it allegedly transferred approximately R4-million to Unbrand Properties without evidence of work being done and in violation of the funding agreement.

CONCLUSION

The time has passed that irregularities in the past and the arguments of self-pity handicap an excuse for bad government must be destroyed. Good governance starts at every official of the state with honest and hard work by its own part to do administration promoted services. The Secrecy bill was instated to keep information from the public, and this is clearly not good governance.

The past decisions that have been made by the government is clearly not on the right path to achieve good governance, and this needs change to protect and enhance the social security for most of the ordinary citizens.

There is numerous initiatives and targets that have been set, and they are showing an effort to achieve good governance in South Africa. South Africa therefore cannot afford poor service delivery and make bad choices. The backlog of South Africa has a huge gap between rich and poor. Only good governance can shrink this gap and create wealth.