With the results of the election being finalised the global body for CFOs sees no respite for the pressures faced by public sector CFOs and municipal finance managers. Political meddling in the finance departments of the public sector is a major contributor to unstable municipalities and service delivery protests.
“With 60% of the country’s key municipalities in financial trouble and South Africa’s financial governance being questioned internationally, increased focus on financial sustainability within municipalities should be the first priority of any political party earning the trust of the electorate,“ says Nicolaas van Wyk, SA Institute for Business Accountants' (SAIBA) CEO and International Association of Finance Executives Institutes (IAFEI) Board member.
Financial sustainability and transparent financial management is crucial to address appropriate levels of service delivery. Service delivery is one of the major determining factors this election, influencing who the public will support.
“Governments the world over are struggling to balance their budgets. Years of over commitment on welfare support in the face of slower economic growth have left very little money for infrastructure development,” says Van Wyk.
Consumers are equally under pressure with below inflation salary increases and having to spend a larger part of their income on debt repayment. The effect on municipalities are therefore very acute.
“Municipalities are struggling to collect municipal levies and are getting a smaller percentage of the national budget making them near unsustainable. Most of their budgets are spent on salaries and hence they struggle to have money available to spend on service delivery. Failure to provide services to communities’ result in service delivery protests, which has the potential for a tax revolt,” states Van Wyk. This is confirmed by the Ratings Africa 2016 study that due to financial constraints, service delivery is poor.
Service delivery protests are costing the South African government millions every year, hampering the investment that can be made towards new infrastructure and improved services. The only way to ensure the financial sustainability of municipalities and achieve greater governance and efficiency, is to professionalise the financial function within municipalities. “Municipal financial managers are subjected to political influence from political parties, traditional leaders and the electorate. Their role needs to be strengthened through legislation to protect them from unwarranted influence and to allow them freedom of access and movement to make independent decisions,” comments Van Wyk.
Local and international professional bodies such as SAIBA and IAFEI, seeks to strengthen the finance function by setting standards of conduct and supporting the professionalisation of this sector. Van Wyk states, “We will do everything in our power to protect and assist municipal finance officers with the very difficult task of balancing and accounting for budget spend. SAIBA, through its membership of IAFEI, facilitate international cooperation among financial executives towards making financial systems and regulations more uniform, compatible and harmonious worldwide.” For the public’s interest, especially after the elections, it is important that the municipal finance function is re-evaluated and professional support provided to regain public confidence.
The global finance community views the threat to finance professionals in the public sector so serious that this is a main theme of the upcoming World Congress for CFOs in Cape Town this November. The Congress will take a strong stance in favour of more protection, independence and professionalisation of the public sector finance function.
“This a unique opportunity for more than 300 international CFO’s, Finance Managers and Controllers, from public and private organisations, to meet and discuss topics and issues facing South Africa and that are common to a number of countries and municipalities around the world. Best practices around governance, controllership and f
The global CFO community needs to play a stronger role in mapping the path to recovery and can no longer just rely on politicians and governments to solve the problems within their own countries.