The worst-run municipality in the Western Cape for 3 years in a row
Kannaland Local Municipality could be considered the worst-run municipality in the Western Cape, having received a disclaimed audit opinion for three consecutive years.
This was highlighted by the Auditor-General’s (AG) Consolidated General Report on Local Government Audit Outcomes for 2023/24, which outlined the persistent failures in governance, accountability, and service delivery.
“When a municipality receives a disclaimed audit opinion, it means that it could not provide us with evidence for most of the information in its financial statements,” the AG’s report explained.
“Therefore, we could not express an opinion on whether its financial statements were credible or determine what it had done with the funds that it received for the year.”
The report added that municipalities in this category typically fail to support the performance achievements they report, do not comply with key legislation, and offer little transparency in how they use public funds, ultimately depriving residents of essential services.
The report identified seven local municipalities across four provinces that have consistently received disclaimed audit opinions.
These include Makana and Sundays River Valley in the Eastern Cape; Nketoana in the Free State; Ditsobotla, Lekwa-Teemane and Ratlou in North West; and Kannaland in the Western Cape.
These seven municipalities together managed a combined expenditure budget of R3.48 billion in 2023/24, including R780 million in equitable share and R420 million in conditional grants.
Despite this, the AG noted that they could not properly account for how these funds were used.
“The seven municipalities are responsible for delivering services to 182,207 households, with five being water providers and six being electricity providers,” the AG said.
“The lack of records and poor management controls was prevalent in the planning, management and reporting on service delivery.” In all seven municipalities, the AG found material flaws in performance reporting.
Among them, Ditsobotla and Kannaland stood out for the severity of their audit outcomes. Ditsobotla with a disclaimed opinion, and Kannaland with “pervasive material findings.”
According to the report, these municipalities not only performed poorly but also harmed their communities.
Additionally, material noncompliance with legislation was identified at all seven municipalities every year since 2021/22.
This included violations in procurement and contract management, revenue handling, strategic planning, performance management, and human resource management.
The exception in the Western Cape
This level of dysfunction is often unheard of in the Western Cape, a province widely regarded as the best-run in South Africa.
The Auditor-General found that 25 municipalities across the country achieved consecutive clean audits, 17 of which were in the Western Cape, more than all other provinces combined.
The North West, Limpopo, and Free State had none. However, Kannaland stands as a glaring exception to the Western Cape’s good reputation.
Located in the Garden Route District Municipality, Kannaland encompasses the towns of Ladismith, Calitzdorp, and Zoar, and serves a population of just under 32,000 people.
Despite its small size, the municipality has demonstrated a consistent inability to meet even basic governance standards.
“The provincial treasury hosted financial statement workshops, but only junior staff attended,” the AG noted.
“The provincial treasury’s municipality-wide assistance did not have a positive impact on the audit outcomes.”
In 2023/24, the South African Local Government Association brought in a consultant to assist Kannaland, but this too yielded little progress.
As a result of its financial mismanagement, Kannaland was placed under the municipal debt-relief programme in August 2023 and has been under provincial intervention since November 2024.
Despite these measures, meaningful change has yet to materialise. “Some of the municipalities that have repeatedly received disclaimed audit opinions have systemic issues that will take multiple years to fix,” the report stated.
While the AG acknowledged that provincial treasuries and departments of cooperative governance have taken steps to support municipalities with disclaimed audits, it stressed that this alone is not enough.
“Even with this support, political and administrative commitment is needed to fully eradicate disclaimed audit opinions,” the report emphasised.
“The outcomes in Kannaland show that the municipality does not have the institutional capability to produce credible and useful financial and performance reports,” the AG said.
“Nor do they have the institutional integrity to ensure that municipal leadership and officials consistently behave ethically, comply with legislation and act in the best interest of the municipality and its residents.”
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