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THE FRAGILITY OF LOCAL GOVERNMENT IS A MANUFACTURED POLICY REALITY: LETS TALK

When EDI Holdings was established as a company to begin the transformation of the electricity industry, the ideational construct was to 'unbundle' the industry into generation, transmission and distribution. EDI Holdings would be modelled as a company holding majority shareholding in six regional electricity distribution companies (REDS), demarcated to be anchored by the then six metropolitan municipalities. The plan was for municipalities and ESKOM to enrol into the process by amongst others collapsing their electricity distribution assets in exchange of shareholding into the REDS.


As part of its stakeholder engagement process, EDIH had to engage with key players along the restructuring journey. National Treasury was one of the first to be engaged. Then Director-General, and now Reserve Bank Governor, Lesetja Kganyago, asked a question in one of the engagements; "if you take electricity distribution away from municipalities, which makes up for a substantial part of the local government fiscal resources, how do you plan to close the resultant revenue gap", he went on to submit that 'any change in the current configuration of the electricity industry, particularly its distribution, cannot be construed outside a national fiscal reform program, and our democracy is (was seemingly) not ready to have that engagement'. Twelve years after that discussion EDIH folded and ceased to exist as a structure, but its intents mutated into later policy decisions on and about ESKOM. 


Fast track to the six administration's proposals on 'economic reform' as published by a Tito Mboweni led National Treasury. Relevant to this rendition is the transformation thrust of the 'economic policy reforms' to 'unbundle' what the document calls 'network industries'. The document purports that such unbundling will 'open' or 'liberalise' aspects of the 'network' and create new value chains as well as allow for the 'market' to mitigate the 'risks' of 'monopolistic' 'public service' provision of electricity, water and logistics. The essence of this approach meant the 'electricity distribution role' and 'water authority status' of municipalities as agents of the local state was decisively recalibrated without any recourse to the constitutional implications thereto. A constitutional amendment without changing the constitution.


The 'unbundling', and it would seem, was more about the opening up of the 'transmission' and 'distribution' infrastructure for new 'independent power producers' and 'independent water producers' to plug in so as to have access to an otherwise 'public service' construed business system. The 'unbundling' approach, notwithstanding its foregrounded 'green energy' and 'climate change' intents which are plausible, does not deal with the 'fiscal implications' of the  pending real loss of revenue by municipal governments. 


The impact on household affordability of the reconfigured water and electricity provision costs, when current establishment subsidies are later factored out by market economy exigencies, and given the shrinking rates and taxes base occasioned by low to no growth economy, has not been adequately addressed. Without problematising the 'unbundling' policy trajectory, the implications of this new and emerging policy on the costs of providing democratic and accountable government to communities as a constitutional guarantee will be an unfunded mandate for municipalities.


The 'unbundling' induced policy space has seen aggressive moves by 'gated communities' and 'high paying water and electricity' users to remove the influence of municipalities on how they access these services. A 'services' based gentrification process is 'underway' and it ultimate impact will be the fragility of local government as the primary experience space of government by local communities. The inability of certain of municipalities to provide adequate local infrastructure and services to communities is very much a function of an absent fiscus as it is the 'no rates and taxes' base inherited from the R293 towns and the unsustainable erstwhile Black Local Authorities construct of local government.


Our national policy makers, unless otherwise proven, are hard at work manufacturing various fragilities into our local government system. This requires a new thinking movement to open up the discussion in the interest of those whose end will be at the periphery of the 'local state'. The feudal is becoming the new.


🤷🏽‍♂️A ndzo ti vulavulela

🤷🏽‍♂️Be ngi vesa nje

🤷🏽‍♂️Ek wys maar net

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