Alarming number of South Africa’s municipalities are on the brink of failure

 ·22 Jun 2021

The financial state of municipalities in South Africa has continued to deteriorate as a lack of accountability and poor governance continues to dog the country at a local government level.

Presenting to parliament’s standing committee on public accounts on Tuesday (22 June), auditor-general Tsakani Maluleke said that the country was effectively facing two main issues: there is not much money going around and yet the right hands are not at the till.

“Local government are under pressure, and are relying on short-term and costly solutions such as consultants to compensate for a lack of financial management and reporting skills,” she said.

Maluleke added that supervision and monitoring are not taking place and there must be better accountability for these failures.

This was demonstrated in the financial results for the 2019/2020 financial year which shows that over a quarter of municipalities (27%) face significant doubts about their ability to continue as a going concern.

She added that this was the financial state before the full impact of the Covid-19 pandemic had hit, which was only accounted for in a portion of the financial year. Maluleke said that these figures will almost certainly worsen due to the pandemic.

Another problem identified was around how the money was spent, with 46% of recoverable revenue and equitable share used for salaries and council remuneration  – while only 2% was spent on maintenance expenditure.

Nearly a third of municipalities (30%) also ended the financial year in a deficit.

Covid-19 spending

Maluleke’s presentation also showed widespread irregular expenditure from municipalities as a result of the Covid-19 pandemic, with problems in spending identified all the way from infrastructure to protective equipment.

Some of the specific issues which were identified include:

  • Excessive/inflated amounts were paid for quarantine sites;
  • Inadequate planning led to PPE shortages or excessive PPE procurement;
  • Awards were given to family members and officials employed by the state;
  • Prices paid by the government are often well-above market prices;
  • PPE did not meet specifications, was underdelivered and was delivered late;
  • Water tanks bought at inflated prices and were not filled.

Maluleke said that the only way to address these and other problems was to set the correct tone at the top, which will require ethical leadership, service orientation and good governance.

She added that local government needs to be properly capacitated and free from any political interference and changes. Strong external controls also need to be put in place to prevent financial loss and wastage.

There should also be consistent, appropriate and swift consequences for accountability failures, she said.

Read: Why South Africa continues to slide down this global ranking system

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