Municipalities will have the chance to earn extra grant payments for completing basic service delivery objectives.
National Treasury this week confirmed the allocation of billions in performance incentive grants to municipalities to improve electricity, water, and waste removal services.
However, the programme is voluntary and open only to the eight metropolitan municipalities in the country.
‘Declining public confidence’
Dubbed the Metro Trading Services Reform, the programme forms part of government’s Medium Term Development Plan 2024-29, and runs in conjunction with Operation Vulindlela.
To receive the performance incentives, the metros must demonstrate a “business-like approach” to accountability, effective management, and a financial turnaround.
Ideally, municipalities will show a “demonstrable and sustainable improvement in the financial and technical performance of the service and in service outcomes”.
Treasury’s Director-General, Duncan Pieterse, said the reform programme was necessitated by declining public confidence caused by infrastructure failures and strained municipal finances.
“Over the past decade, we have witnessed a steady erosion of municipal capabilities in many parts of the country.
“Government will mobilise R54 billion in performance-linked incentives, with R27.7 billion allocated over the medium term, to restore the operational and financial sustainability of metro trading services,” said Pieterse.
Additionally, National Treasury will incentivise revenue collection by matching the metro’s collected revenue with a grant for infrastructure investment.
‘Engines of national economic growth’
The reform has the support of the Presidency, the South African Local Government Association, Department of Cooperative Governance and Traditional Affairs and the Department of Water and Sanitation (DWS) and the Department of Electricity and Energy.
Success will be measured by the publication of the metros’ annual financial statements and the achievement of pre-agreed performance targets.
Pieterse said ensuring municipalities are functional was key to economic growth and to portraying an investor-friendly image.
“Our cities are the engines of national economic growth, inclusion, and innovation.
“Those of you who have visited some of the other major cities around the world will know how these cities drive economic activity in those regions. If our cities do not work, South Africa cannot grow,” Pieterse concluded.
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