Indigent management

Without a credible register of people in need, municipalities will be spending on free basic services that they cannot account for or producing bills for accounts that will never be paid. Zama Soji, Key Expert for Vuthela’s Public Finance Management (PFM) Component writes that the Vuthela Programme has helped the iLembe District Municipality acquire a credible indigent register to help it budget accurately for revenue, free basic services and associated expenses.

By the nature of its developmental mandate, local government must be concerned with the problem of poverty. Municipalities are expected to look after those households who battle to make ends meet by providing them with free basic services as determined by the Municipal Indigent Policy Framework. These services are rendered by different spheres of government and in this case, we will focus on those basic services rendered by local government (municipalities).

Broad definition

In terms of the indigent management framework, the term “indigent” means “lacking the necessities of life”. In interpreting this for the purpose of this policy, a position has to be taken on the “necessities of life” in the South African context. The Constitution provides a guide in this regard, leading to the view that the following goods and services are considered as necessities for an individual to survive:

  • Sufficient water
  • Basic sanitation
  • Refuse removal in denser settlements
  • Environmental health
  • Basic energy
  • Health care
  • Housing
  • Food and clothing

Anyone who does not have access to these goods and services is considered indigent.

While it is argued that there is nothing for free as someone in the entire value chain will have paid for it, it is for this reason that National Treasury, when allocating equitable share to municipalities, will reflect a portion as a free basic services grant. It is expected that the greater the number of indigent beneficiaries within the municipality’s boundaries, the more equitable share will be allocated. However, this is not the case since most municipalities in the country are unable to produce a credible indigent register after beneficiaries’ status has been certified and verified through relevant vetting.

Municipalities offer different kinds of relief ranging from 50 kW of free basic electricity and 6 kl of free water.

Vuthela initiatives

Phase One

Upon the execution of the Vuthela PFM component programme plan, two projects were identified. Phase One involved the alignment of indigent policies and registers across the district. Phase Two involves the automation of these registers to produce a credible indigent register for each municipality. We have observed that district municipalities often battle to develop such registers as they depend on the information shared by the local municipality, yet in terms of powers and function, they provide water as a basic service across the district. Therefore, if the local municipalities do not have registers or do not share with the district, it becomes difficult for the district to provide qualifying indigent communities with 6 kl of water. The iLembe district was not an exception during the execution of phase one because upon review of their indigent register, the beneficiaries were far less than the beneficiaries recorded by local municipalities who are battling to produce an indigent register that is informed by its population.

 

Upon completion of the Phase One project, a consolidated indigent register, after being verified in different vetting platforms, reported that the iLembe District Municipality indigent register should have 28 900 beneficiaries as opposed to the 2 000 which were on record. The verification of the registers from municipalities uncovered several discrepancies which included people who were in the service of the state, deceased, employed and those who do not meet the criteria in terms of the council adopted policy for relief.

Shared service model

An indigent management system to be used will be used by all municipalities in the district for uniform purposes. All municipalities in the district have agreed to the use of this system, and a Memorandum of Agreement (MOA) was drafted by the Vuthela Programme, which has been signed by all municipalities. The detailed shared service MOA, which clearly defines the role, responsibilities and liabilities of each municipality, will last for three years, providing municipalities the opportunity to understand the system and produce a system-generated credible indigent management register.

Ultimate goal

Phase Two

The Vuthela Programme will procure the system and donate it to iLembe District Municipality which will then manage the shared services MOA. Vuthela will also pay for the licensing and maintenance in the first year of implementation of the system, while the municipalities will pay for the remainder of the years.

Phase Two of the indigent project will then automate the indigent register for each local municipality within the iLembe district with the view of feeding into the district indigent register. The envisaged process flow process of registering indigent beneficiaries will be done on the system and no longer on paper – and will follow an automated process of verification and approval and produce the credible register. The system will be aligned with the indigent management policy – this is important especially when it comes to exiting the system and to wean beneficiaries off the indigent benefits. Municipalities may consider innovative ways through their local economic policies and strategies in prioritising indigent beneficiaries on poverty alleviation projects.

Often, programmes of this nature come and go, leaving no impact. It is, therefore, the intention of the project to improve, develop, capacitate and add value to the manner in which municipalities conduct their businesses, and this flagship programme will be something that is hoped will leave a lasting legacy in the iLembe district.

The ideal system is perceived to simplify the entire application process up to approval, while keeping the applicant in the loop. There will be seamless communication with the district in terms of updating the register, since ideally the local municipalities indigent register must inform the district one. Moreover, municipalities will be able to understand the population of indigent beneficiaries per ward, and this may be considered when planning for projects and also in demonstrating convincingly the number of communities living below the poverty line.

 

System procurement

Vuthela has finalised the process of appointing the service provider for the system, and the project is set to commence this month (February 2023).

Benefits to the municipalities

Some municipalities are spending on free basic services, either water or electricity or other services for households, that they cannot account for. Municipalities are continuously producing bills for accounts that will never be honoured for payment and the debtors’ books are increasing on a monthly basis for debts that will not be recovered. The production of credible indigent registers will assist municipalities to budget accurately for revenue, free basic services and associated expenses. It will also give a better picture of whether the municipality will be able to collect long outstanding debts or not. Since applicants will be vetted, only those who qualify will benefit from the indigent system. With frequency of verification, municipalities will be able to identify those beneficiaries whose situation changes during the year and remove them from the system should they not volunteer to do so.