What life is like in South Africa’s worst municipalities

South Africa’s municipalities are in a disastrous state, with two receiving disclaimed audits for seven years in a row.

According to the Office of the auditor general, the state of South Africa’s municipalities is deteriorating, with only 38 municipalities receiving clean audits in 2021/22 – down from 41 in 2020/21.

“The financial health of municipalities continued to deteriorate, partly because increased economic pressures meant that consumers were not paying their bills, but also because of poor financial management,” the AGSA said.

“Municipalities are losing money because they are not billing and collecting revenue, are using unfair and uncompetitive procurement practices, and are paying for goods and services that they either do not receive or do not use.”

All municipalities should aim for a clean audit, which contains financial statements that are free from material misstatements or other non-compliance with legislation.

However, several municipalities in South Africa have received ongoing disclaimed audits – the worst audit opinion in South Africa.

This means that the auditee provided insufficient documentation to base the audit opinion.

When a municipality receives a disclaimed audit opinion, it also usually highlights a lack of accountability and transparency. This poor financial management is evident in failing infrastructure.

During the 2021-22 period, 15 municipalities received disclaimed audit opinions, which accounts for almost 6% of all municipalities. This number can also increase as more audits are completed.

Most of the municipalities that received disclaimed audit opinions were in the Northern Cape and the North West.

The worst offenders were the Joe Morolong local municipality in the Northern Cape and Madibeng local municipality in the North-West, which both received disclaimed audits for seven years in a row.

Joe Morolong Locla municipality

Despite being one of the worst-run municipalities, there is a rather surprising data point regarding the Joe Morolong Municipality.

According to the most recent Spatial Economic Activity Data, the municipality has the highest median income in the country, coming out at R34,599.

For context, this is far higher than the R11,761 for the City of Johannesburg and the R8,290 for the City of Cape Town.

However, other insights show that the municipality faces serious issues.

The School Dropout: Context Counts 2022 report said that only half of those who start primary school progress to high school. Only 15% of residents finish matric, well below the national competition rate of 38%.

According to Stats SA, the unemployment rate in the area stood at 39% in 2016.

That said, the municipality has seen a major uptick in employment due to mining activities.

The area has large amounts of manganese ore, essential for electric car batteries and other manufactured products.

According to Spatial Economic Activity Data, the area’s indexed total jobs – which looks at the relative performance of each region adjusted for size in the starting year – was better than the average.

The nationally indexed total jobs (green) reached 107.26 in 2021, which was slightly lower than the Joe Morolong municipality’s (yellow) 108.84:

Madibeng Local Municipality

Despite being home to the popular tourist destination Hartbeespoort and having easy access to Gauteng, the Madibeng Local Municipality also faces major financial issues.

For instance, the municipality has seen a substantial drop in employment numbers.

The indexed total jobs in the municipality (in yellow) dropped from a high of 106.54 in 2016 to 103.25, all while the national average (green) climbed from 102.9 to 107.26 over the same period:

The municipality has been in the news recently, but not for the right reasons.

For instance, last July, the Pretoria High Court gave the City of Tshwane – which is facing its own financial management crisis – permission to attach the bank account of Madibeng to retrieve R250 million owed in unpaid water debt.

As reported by the Sowetan, in April this year, the municipality also lost close to R150 million the national treasury based on anticipated non-performance on its allocations. The FF+ and Cosautu said that this money could have been used to improve service delivery.

This lack of service delivery has recently culminated in protests, with over 300 residents in the municipality taking to the streets this week due to electricity and water outages, GroundUP reported.

The Itereling Village, for example, has had regular electricity blackouts on top of load shedding, with it also not having water for close to three months.

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