ON 14TH MARCH 2022, THE Appeal Court ordered the Makana Municipality and the Eastern Cape Government to come up with a financial recovery plan (FRP) to improve the financial and management position of the failing municipality.
In 2020 the Makhanda High Court had issued a groundbreaking ruling. It set a precedent that a municipality can be dissolved for its unconstitutional failure to deliver services. The court heard about frequent and extensive water outages, problems with electricity, sewerage and waste management, and issues concerning road maintenance in the Makana Local Municipality. Judge Inga Stretch ruled that service delivery failures were so severe, widespread and extensive that they violated the constitution and justified the dissolution of the municipal council. She refused permission for either the provincial government or the municipality to appeal against her order, saying that the provincial government should “hang their heads in shame”.
However, the Eastern Cape Government obtained permission for an appeal from the Supreme Court of Appeal. This led to the latest settlement by agreement between the parties. A financial recovery plan for the municipality is now an order of the court.
The order requires the Eastern Cape Government to report to a judge every three months on the progress made in the financial recovery of the municipality. In addition, Eastern Cape MEC for Cooperative Governance and Traditional Affairs, Xolile Nqatha, must appoint a person to take responsibility for these three-month reports. And the reports must also be submitted to the Unemployed Peoples’ Movement and the municipality.
This comes in the wake of a shocking report from the Auditor-General on the financial health of the municipality. The Auditor-General found that its liabilities exceed its assets by a staggering R813 million and that there was R340 million of irregular expenditure and R577 million of unauthorised expenditure. A criminal investigation is underway against a senior manager in the Makana Local Municipality.
Another court order
And this is not the only court order against Makana Municipality. Another far-reaching Makhanda High Court ruling is forcing the Makana municipality to collect refuse, provide bags to households and manage the towns rubbish properly. This case was brought by the Ezihagwini Street Committee and the School Governing Body of Mary Waters High School, represented by the Legal Resources Centre.
The court held the council officials in contempt for failing to manage the municipal landfill. It has also ordered the municipality to report to a judge on the management of water leaks and sewerage in town.
Apartheid legacy and austerity
At the core of the Makana municipality problems is the national government policy of neoliberalism, austerity and budget cuts. This has led to a misguided approach that municipalities must operate on a cost-recovery basis. This is based on the illusion that municipalities can raise revenue from collecting taxes, getting locals to pay for the basic services rendered. The problem is that, for historical reasons inherited from our apartheid past, these municipalities are surrounded by declining industries and millions of unemployed residents. There is very little hope that there will ever be any meaningful recovery plan as long as the policy basis of the national government remains unchanged.
What is required to ensure that the wishes of the courts are fulfilled is a strong national civil society movement of communities and organized labour to launch a countrywide struggle against the policy of neoliberalism, austerity and budget cuts. This movement must demand basic services to be provided to all citizens of the country, without regard to cost recovery. The municipalities must subsidise the provision of basic services. Municipalities cannot be expected to operate like businesses when their primary role is to provide services to the people. The national government must make all the necessary resources available for this constitutional responsibility of the municipality.
If this does not happen, then the situation we see in Makhanda will be widespread in the country. Ezihagwini Street Committee’s Vuyelwa Maholo, said in the court papers: “I have lived for more than 20 years with my husband and five children in Extension 6, referred to as Ezihagwini, which translates loosely as a place for pigs, or a pigsty.” That cry will become commonplace. We are living in a ticking time bomb as all such communities are on the verge of collapse.
Madoda Cuphe is Programme Manager for Building Counter Power at the Alternative Information and Development Centre (AIDC).