Thebe Mabanga
The reform of local government under Operation Vulindlela II is gathering steam, with the review of the Local Government White Paper complete and government set to spend R 57 billion over the next seven years to establish Metro Trading Companies to take over the sale of water and electricity.
This was revealed at a quarterly update briefing on the progress of the reforms, driven by the National Treasury and the Presidency.
The second phase of Operation Vulindlela, which was adopted by cabinet in March this year, covers digital transformation, local government, and spatial inequality.
Rudi Dicks, the head of the Project Management Office for Operation Vulindela in the Presidency, told the briefing that the review of the 1998 Local Government White Paper is complete. The aim is to review the institutional structure of the local government system and review the local government fiscal framework, including the use of conditional grants.
OV II also aims to standardise and professionalise the appointment of senior officials in local government by extending the mandate of the Public Service Commission to cover local government.
The most critical phase of the reforms is spending R 57 billion over the next seven years to set up the Metro Trading Companies to take over the function of trading in water and electricity, the most critical sources of revenue for any municipality.
According to Treasury, the aim of the Metro Trading Company is to “shift to a utility model for water and electricity services to ensure financial and operational sustainability”. The utility model will also be adopted for waste management.
The reforms will also impact local government through spatial inequality as they aim to create dense urban areas by increasing provision and concentration of housing in certain areas, and the revival of the passenger rail services by the Passenger Rail Agency of South Africa (PRASA).
Over the past two years, PRASA has returned 35 of its 40 corridors to service, although not yet optimal. This is up from only four, or 10%, just three years ago as the service was vandalised during Covid. In the last financial year, PRASA increased the number of passenger trips from 39 million to 77 million.
On the provision of housing, government says it aims to complement supply-side measures of housing provision such as building of social housing with demand-side measures such as improving subsidies.
Sello Seleke, an economist at ABSA, noted that PRASA is still far below the pre-Covid peak, when the agency delivered 600 million trips. Next year, through fixing of signalling systems, increasing the speed and frequency of trains, PRASA aims to achieve 149 million trips.
Through digital transformation, the government aims to introduce measures including digital identity as well as digital payments. The aim is to reduce the number of visits and waiting time in visits to places such as Home Affairs and thereby improve productivity. In India, digital payment were found to have added 1,5% to GDP growth.
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