End of an era for South Africa’s best-run city
The City of Cape Town has not received a clean audit from the Auditor General in South Africa, ending a streak that saw the Western Cape city the only metro to receive the accolade.
The AG reported on the audit outcomes of local government for the 2024-2025 financial year, with little sign of progress in service delivery in South Africa.
“Over the past four years, mayors and councils of the 6th administration have made limited progress to strengthen governance and improve service delivery,” said the Auditor General Tsakani Maluleke.
“Residents and businesses continue to experience unreliable service delivery, environmental hazards and deteriorating infrastructure. They further oversaw municipalities with deteriorating financial health.”
Only 39 municipalities across the country achieved a clean audit, around 15%. These municipalities administer R52.6 billion collectively, working out to only 8% of the total local government expenditure
38 municipalities, representing 24% of the total local government expenditure budget, have regressed since 2020-21, including municipalities that previously achieved clean audits and three metros.
The AG said that the audit outcomes and performance of the eight metros continued to decline, affecting millions of people, with none of them achieving a clean audit.
Maluleke said that the fundamentals of good governance are not in place at these municipalities, which serve about 25 million people, representing around 40% of the total population.
Metros and their municipal entities were responsible for delivering services to 8.9 million households, 46% of the country’s households. They managed R335.97 billion, 54% of the total local government expenditure budget.
Nevertheless, none of the metros achieved a clean audit. The number of metros with a qualified audit opinion during the administration’s term rose from two to five.
When it comes to rankings, clean is the highest, with statements free from material misstatements. This is followed by unqualified, qualified and then a disclaimer of opinion.
Cape Town loses its crown
The City of Cape Town fell from a clean audit to an unqualified audit opinion, sitting alongside the eThekwini and the consolidated group for the City of Johannesburg.
The City of Cape Town was previously the only metropolitan municipality to have received a clean audit outcome for the prior three financial years.
For the AG, municipalities that achieve clean audits display strong financial and performance management and adhere to legislative requirements.
It added that they also maintain institutional integrity through effective leadership and robust administration systems.
While a clean audit does not necessarily mean equal and consistent service delivery to all residents, it often lays the foundation for good governance.
The AG previously praised the City of Cape Town for its strong leadership, accountability, zero tolerance for audit findings, and robust internal controls that were monitored and improved.
While the City of Cape Town has lost its clean audit, the Auditor General did not report any material findings on its performance reporting, which was also the case for the City of Ekurhuleni.
The City of Cape Town and eThekwini were also the only metros in the country with good financial health indicators.
That said, the AG reported material findings on compliance with key legislation at all metros.
Persistent noncompliance by metros and their municipal entities over the last four years led to irregular expenditure of R73.87 billion, primarily due to procurement and contract management noncompliance.
“The weaknesses identified in these processes created an environment susceptible to fraud and manipulation and increased the risk of financial loss,” said the AG.
“The high levels of noncompliance were due to a lack of institutionalised controls to ensure that leadership and officials behave ethically, comply with legislation, and act in the best interest of the
metro.”
While Cape Town lost its top achievement, it is still outperforming several of its metro counterparts nationwide.
This could be seen in the nation’s economic powerhouse, Gauteng, where the cities of Ekurhuleni, Johannesburg, and Tshwane had unfunded budgets.
The City of Tshwane has been adopting unfunded budgets for the past four years. With budgets not being properly monitored, metros have incurred R21.72 billion in unauthorised expenditure since 2021-22
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