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our cities need to be well run

26 May 2011

I am starting to accept that we cannot turn Msunduzi around in a matter of months. This council has been mismanaged for years, and we cannot expect quick-fix miracles. That is the way it is." 

This was a frank admission by Msunduzi administrator Johann Mettler when discussing the KwaZulu-Natal municipality's failure of administration, poor governance and financial management, which inevitably led to a meltdown. 

He and his intervention team were appointed to develop a turnaround strategy and financial recovery plan to save the city from total collapse.  

Now that the electorate has spoken, what are we as voters, provincial authorities and the national government going to do to make sure that our municipalities and cities are financially sound and committed to excellence and service delivery? 

The answer is: our cities should use the same basic principles that apply to a well-run corporation. The philosophy of managing the city as a business is the key to any municipality's success. 

Also, in this new era employees and employers need better skills that allow them to innovate. So our recently elected local governments must invest in skills development as a key to the economic success of their towns and cities. 

Let me start with skills development as an imperative for the financial viability of municipalities. People are viewed as a kind of capital because individuals with skills, knowledge and experience add economic value to enterprises and governments. 

Highly skilled workers tend to be more innovative and productive. They are crucially important to local governments. It follows that cities have to have an incentive to invest in training for employees and schooling for the entire population. 

We need to work across the government to reduce bureaucracy and introduce more flexible funding for training and skills. We must get more young people interested in vocational courses, through expanding apprenticeships to meet skill needs at trade and at higher levels and we must give more responsibility for planning and funding skills action to regional and local bodies, which understand what skills are needed in their labour market. 

And now let me tackle why I think running a city, town or a municipality like a business and not like a political party is important to the economic survival of our local governments: as with corporations, a city has its own board of directors (the city council) and its own chief executive (the city manager). The council sets policies and goals, including the general strategic plan, which is the statement of the city's long-range goals. The city manager, like the chief executive of a company, carries out the council's policies and manages the day-to-day affairs of the city. 

All organisations, cities and municipalities are infuriatingly political. Anyone who loves to accomplish things must learn to love politics. Moreover, for better or for worse, politics is as important for dictators as for democrats. You can't take people where they aren't willing to go. Dictators and democrats understand this.  

Politics means inducing and managing creative contention, giving people airtime and building winning coalitions. They are the human element of the implementation process. The best leaders, including sole proprietors, who by definition depend on others for survival, spend day and night massaging relationships and egos, that is, working at politics. Politics is about releasing the potential in followers, inspiring them to remake your vision to fit their passions and then to implement it with zest. 

Our new councillors and mayors must understand that to engage lustily in politics, they must release the potential in followers to the city's sole purpose. This is dictated by the general strategic plan to provide high-quality services to the residents, industries and businesses of their metropole in the most cost-effective way.  

After the fiercely contested elections, there is no doubt that managing a city big or small like a business and not a political party is the key to success. I believe that our municipalities should be run on three business principles: long-range planning, performance budgeting and performance auditing.  

While cities are required by law to prepare long-range comprehensive planning documents, few use these for all of their planning and budgets. Msunduzi serves as an example in this regard.  

The councils must contract municipal managers to do a specific job. Not only should city managers be paid based on the market rate, but they must earn a bonus or suffer a pay cut depending on their ability to meet service delivery standards.  

For example, they should receive a fixed-term, let us say five-year, projection of the impacts of their fiscal decisions; feedback and ideas are sought from every conceivable source. 

The purpose of the five-year strategic plans, as Mettler said, should be to recognise that public-policy goals cannot be accomplished in the span of a one- or two-year budget appropriation but require concerted effort over a longer time frame.  

The key products of these strategic plans are goals, policies and action statements directing the city's future programmes and service delivery. Each of the strategic plans should be developed through advisory committees and commissions, and with significant public participation. Municipalities should take their inhabitants along with them. 

An attempt should be made to review and update the strategic plans every 12 to 18 months. The strategic plans should be the blueprint of high-level goals and the compass by which the municipalities set their direction for a long-term planning horizon. Systems for goal setting and performance measurement or programme budgeting should be employed in all municipalities. 

Every city's planning and management system should link fundamental long-term planning goals contained in the city's general plan with a five-year resource allocation plan, or budget. The city council should define service levels and policies, and the plan must identify the resources needed to achieve them. 

The cities should develop strategic plans and identify critical areas of city services and policy setting. These strategic areas should range from project revenues to debt costs and capital needs, as well as operating programme costs; from law enforcement to air quality, and even from libraries to human services. 

A multi-year financial planning tool is useful in projecting where the city is heading. It is less for the accuracy that might exist in forecasting revenues and expenditures and more for understanding the trends and effects of the city's actions on its financial health.  

After the elections, our cities and municipalities should be governed by sound business practices, not politics alone. 

Ideas, ethics and principles are the lifeblood of every successful business. To be competitive, organisations need all staff to think creatively and productively about ways to improve service delivery and about how to work as efficiently as possible. 

After the hard-fought elections, managing a city like a business, complemented by a high rate of skilled people who innovate and support the economy by identifying and putting into practice solutions for skill improvements, is the key to success.  


Source: Our Cities need to be well run