28 Aug

Call for Simplification of Laws to Solve Municipal Entities’ Governance Challenges

22 November 2013

Municipal entities—utilities owned by municipalities that deliver services like water, power and sanitation, or provide for economic and social development in communities—pose a set of governance challenges for local government. However, underlying these challenges is a legislative framework that is unnecessarily complex.

“One of the main challenges faced by municipal entities—and local government generally—is the plethora of legislation that must be taken into account,” said Joseph Maluleke, executive chairman of attorneys Rooth & Wessels. “To be effective, the law needs to be easy to understand and simple to apply. At present, just working out how to comply with all the relevant legislation is a battle for lawyers—municipal managers and other officials are at a real disadvantage. I believe that the cause of good governance would be greatly advanced if parliament would simplify the legal framework within the local government sphere.”

Maluleke was speaking at the launch of a discussion paper on the governance challenges faced by municipal entities. The paper was produced by the Public Sector Working Group of the Institute of Directors in Southern Africa (IoDSA), sponsored by PwC.

“Good governance is an antiseptic in a contaminated environment,” he said.

Christoph Braxton, a member of the Working Group and an associate director at PwC, confirmed Maluleke’s point about the legal complexity by noting that 88 percent of municipal entities had findings related to compliance as stated in the Auditor-General’s General Report on Audit Outcomes for Local Government 2010/11, an increase on the previous year’s 73 percent, while 37 percent of these findings related to sustainability challenges. “Governance can help to overcome these challenges,” he said. “Rigorous oversight is needed to ensure that municipal entities deliver services aligned to the municipal strategy but within the ambit of their governance framework.”

The paper identifies four key governance challenges for municipal entities: how to act as extensions of their municipalities rather than independent service providers; how to deliver services in an efficient, effective and transparent manner; performance monitoring; and collaboration with municipalities to achieve economies of scale.

Speaking at the same function, Andries Nel, newly appointed deputy minister for Cooperative Governance and Traditional Affairs, said that he welcomed the initiative. “We need to be open and honest in taking stock of the challenges we face in order to plan better,” he said. “The National Development Plan emphasises the importance of dealing with local government effectively.”


ISSUED ON BEHALF OF Institute of Directors in Southern Africa

ISSUED BY: PR Republic

MEDIA CONTACT: Juanita Vorster, 079 523 8374, juanita@prrepublic.co.za

ABOUT IoDSA (Institute of Directors Southern Africa)

The Institute of Directors in Southern Africa (IoDSA) is the only organisation in southern Africa that represents directors, professionals, business owners and leaders in their individual capacities. As the custodians of corporate governance, the IoDSA is committed to the development of those charged with governance duties through educating and improving governance structures.


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