Auditor-General uncovers major problems with South Africa’s Covid-19 spending

The Auditor-General (AG) has published its second report on Covid-19 spending in South Africa, showing ‘significant faults’ in procurement and contract management processes of government’s Covid-19 spending.

Presenting the report on Wednesday (9 December), AG Tsakani Maluleke acknowledged that in response to the pandemic government had to react quickly and decisively in uncertain times and in an already compromised control environment.

However, she said that the country could have achieved more if the funds and related initiatives had been managed better.

Maluleke’s office found that the IT systems, processes and controls used in government were not agile enough to respond to the changes required.

The lack of validation, integration and sharing of data across government platforms resulted in people – including government officials – receiving benefits and grants to which they were not entitled.

Some of the initiatives did not achieve the desired results and were even abandoned because of failed coordination, monitoring and relationships across the three spheres of government.

Where implementing agents were involved, the auditor-general found weaknesses in coordination and monitoring which compromised delivery, transparency and accountability.

TERS benefits 

The auditor-general said that because the UIF depends on the accuracy of the declarations and information submitted by the claimants, this exposed the fund to the risk of paying fraudulent claims.

This risk, said Maluleke, was increased by the Temporary Employer-Employee Relief Scheme (TERS) benefit coverage being expanded to include employees who were not registered with the fund before the Covid-19 pandemic.

To respond to this exposure, the fund designed post-validation processes to verify the claims paid out.

However, the AG found that as at the date of her report, this process, which includes the verification of employer and employee employment information, had not yet started.

Another risk reported was the possibility of the benefit being trapped at the level of employer or bargaining council and not reaching the intended employees.

“From May 2020, the fund also introduced direct payments to employees’ bank accounts, although the claim application would still need to be submitted by the employer,” she said.

Personal protective equipment (PPE)

Maluleke reported that the bulk of the government’s procurement of PPE is taking place in the health and education sectors, with an estimated R4.6 billion spent by 30 September.

For its latest report, the AGSA audited the procurement and payment process, which was completed before the previous report, and at provinces and sites on which it did not previously report.

In both the health and education sectors, the auditors continued to find instances where competitive processes were not followed, resulting in the contract being awarded to a specific supplier or group of suppliers without the necessary motivation or approval for such deviations.

Through the National Treasury instruction notes, it was made clear that the standing requirement to favour local producers must be applied.

However, the auditors did not see this requirement applied consistently in all the PPE procurement processes.

Businesses that provide PPE across the country were not treated in a fair and equal manner, as some were disqualified based on not complying with the requirements, such as tax clearance certificates, declarations of interest, registrations as companies and small business, or on their status as local producers – while others were not.


Maluleke said that if officials, leaders, sectors, implementing agents and institutions do not do their part and actively partner to strengthen the delivery value chain, it undermines the effectiveness of the programme and leads to losses, abuse and costly investigations.

The public sector requires long term, more effective solutions to deal with the underlying causes of people, systems and processes not delivering optimally, she said.

“From our side as the audit office, we will continue to audit the Covid-19 funding and follow up on the progress made in addressing the audit findings and observations from this report as part of our normal annual audit.

“We will also identify material irregularities from this process and commence with the processes required to deal with these irregularities,” Maluleke said.

Read: Mboweni on government using South African pension money, and winning back the people’s trust

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Auditor-General uncovers major problems with South Africa’s Covid-19 spending