By Vhahangwele Nemakonde.
Auditor-General Tsakani Maluleke has painted a grim picture of the country’s municipalities, which are increasingly depending on consultants for basic tasks yet still deliver poor-quality work.
On Wednesday, Maluleke presented the 2024-25 local government audit outcomes to Parliament.
Although there have been improvements in some municipalities, the overall picture suggests no end to governance failures, which result in irregular expenditure and poor service delivery.
According to Maluleke, four years ago, 29 municipalities were issued a disclaimer audit opinion, meaning the Auditor General of South Africa (AGSA) could not obtain sufficient and appropriate financial statements to form an audit opinion. They are now eight, signalling an improvement.
However, of the eight municipalities, seven are repeat disclaimers, with the Kamiesberg Local Municipality in the Northern Cape regressing to a disclaimer in this round of the audit. According to Maluleke, the seven must be given attention as they have demonstrated “an inability to move out of this governance failure”.
The seven include Masilonyana in the Free State, which has been in disclaimer territory for 10 years, and Nketoana municipality, also in the Free State, and is a seven-year repeat disclaimer. Mohokare municipality, also in the Free State, is a three-year repeat disclaimer.
The Eastern Cape has the Makana and Sundays River Valley municipalities, which have been disclaimed for seven years. Ditsobotla in the North West is a nine-year repeat disclaimer, while Kannaland is a four-year repeat disclaimer. These municipalities serve about 173 000.
Metros ‘going backwards’
According to the Auditor-General, South Africa’s eight metros need “particular attention” as they handle 54% of the local government’s expenditure budget. They look after almost 40% of South Africa’s population and households.
“Unfortunately, what we’re seeing is that of all the categories of municipalities, metros are going backwards. Local municipalities have improved on a net basis. Intermediate cities have improved. District municipalities have improved on a net basis. Metros are going backwards, “said Maluleke.
“The City of Cape Town regressed on supply chain management issues, procurement issues that led to non-compliance, which then landed them in the unqualified space with findings. They did submit quality financial statements, so no problem there. They did submit a quality performance report; no problem there. What they need to do now is sort out the control matters that let them down on procurement.”
The eThekwini Metro has received an unqualified opinion with findings for over a decade.
They don’t struggle to compile financial statements and haven’t struggled for a very long time. The CFO and the finance team get that job done. However, what we’re seeing in eThekwini is that the basic functions across different sections within the metro, and how they collaborate, are still a problem.
“There’s ongoing noncompliance with the law around procurement in particular, leading to significant leakages. There’s little attention to ensuring that when funds are available to drive infrastructure projects, they’re spent properly. Unfortunately, they’re often not spent properly, leading to delays in infrastructure and poor-quality work delivered by the chosen contractors.”
City of Joburg ‘needs attention’
The City of Joburg operates through entities including City Power, Pikitup and Johannesburg Water, and, according to the AG, most of these entities have received unqualified audit opinions with findings for years.
“They can put the financial statements together for the audit process, but their financial governance is weak. Their procurement issues continue to be plagued by noncompliance and leakage. Their performance management remains quite weak.”