Auditor-general Tsakani Maluleke has bemoaned the shambolic state of local government, which lost R17.6bn over the past three years to fruitless and wasteful expenditure, saying little had changed as the sector remained in a dire state.
That was despite a slight increase in councils that received clean audits in 2023/24. A total of 41 of the country’s 257 municipalities obtained clean audits, an increase from the paltry 34 registered in 2022/23. Maluleke tabled the consolidated general report on local government audit outcomes for 2023/24 in parliament on Wednesday.
In 2023/24, 99 municipalities received unqualified audit opinion with findings, down from the 110 in the 2022/23; 90 received qualified opinions with findings (83 in 2022/23); adverse with findings remained unchanged at six; and 11 municipalities received disclaimers, down from 15 in 2022/23. A total of 10 municipalities had outstanding audits.
The rot in local government spurred President Cyril Ramaphosa to use his state of the nation address in February to outline sweeping measures to turn around a sector buckling under the weight of pervasive malfeasance and systemic corruption that has resulted in billions being lost to fruitless, wasteful, unauthorised expenditure each year.
The entrenched issues facing local government have already attracted the attention of Operation Vulindlela, a joint initiative of the Treasury and Ramaphosa’s office set up in 2020 to reinvigorate the economy.
The second phase of the initiative would focus on local government , which has drawn sharp criticism from business leaders and citizens for its failure to roll out basic services such as potable water, electricity, clinics and refuse collection.
On Wednesday, Maluleke said of the eight metros in the country, only the DA-run City of Cape Town received an unqualified audit with no findings.
In 2023/24, SA’s metros and their municipal entities were responsible for service delivery to 8.9-million households or 46% of all households in the country.
During the period under review, the metros of Buffalo City, Nelson Mandela Bay, Tshwane and Mangaung all received qualified audit opinions, while the cities of Johannesburg, Ekurhuleni and eThekwini received unqualified audit opinions with findings. All the metros, except for Cape Town, accounted for R941.9m in fruitless and wasteful expenditure during 2023/24.
The auditor-general noted that during the year under review, accounting officers of municipalities managed an estimated expenditure budget of R561.95bn. “Since 2021/22, we have consistently highlighted the lack of careful spending and the eroding of the limited funds available. Funds, including grant funding, are spent but service delivery does not improve.
“In simple terms, the quality of spending remains a problem. Local government is losing billions of rand each year because of poor decisions, neglect or inefficiencies. Since 2021/22, municipalities have incurred a total of R17.65bn in fruitless and wasteful expenditure.” This works out to R4.9bn in 2020/21, R7.4bn in 2022/23 and R4.2bn in 2023/24.
Communities were yet to experience quality service delivery through new and well-maintained infrastructure, “despite national government making available R68.4bn for infrastructure projects” during the year under review.
At year-end, the total deficit in local government was R11.2bn, with 90 municipalities (39%) having spent more money than they had available.
“Municipalities lost revenue because they did not bill or collect all revenue owed to them, and they estimated that 67.80% of the revenue that they disclosed in their financial statements would not be recovered. Water and electricity losses due to infrastructure neglect accounted for an additional R37.28bn in lost revenue,” according to the auditor-general.
In her last three general reports the auditor-general had called on the local government players to work with urgency to overhaul the sector.
“Each year, I also engaged with those in national and provincial government tasked with overseeing and supporting local government, including premiers, ministers, members of executive councils and portfolio committees in provincial legislatures and parliament, imploring them to intervene and assist municipalities that were failing,” Maluleke said.
“Despite the commitments made in response to these calls, action has been too slow and has had little impact on the lived realities of South Africans.” Municipal finances were severely troubled but mayors, councils and municipalities displayed little fiscal discipline.
“Failure at municipal level has a direct and significant impact across South African cities and towns. Residents and businesses face regular disruptions in service delivery and have to contend with water leaks, potholes and filth in their streets.”
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