Business Leadership SA (BLSA) CEO Busi Mavuso has slammed the financial state of SA’s metropolitan municipalities as shocking and a serious constraint on much-needed economic growth.
Mavuso’s newsletter on Monday was largely based on the auditor-general’s (AG) local government audit outcomes for 2023/24. Tabled in parliament last week, they show the metros struggle with getting basic financial management right.
“Our metros are the economic hubs of our country. It is completely unacceptable that most cannot get basic financial management right. They have budgets in the billions — Joburg will spend almost R90bn this year — but cannot manage that money adequately,” Mavuso said.
“In the case of companies, if management is unable to produce reliable accounts that auditors are content to sign off (on), shareholders would revolt. In the case of our local government, the shareholders are the public, who must exercise their votes.”
According to the AG’s report, in 2023/24, 99 municipalities received unqualified audit opinions with findings, down from the 110 in 2022/23. Ninety 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.
In her report, auditor-general Tsakani Maluleke said of the eight metros in the country, only the DA-run City of Cape Town received an unqualified audit with no findings.
The metros and their municipal entities were responsible for service delivery to 8.9-million households, or 46% of all households in the country.
The metros of Buffalo City, Nelson Mandela Bay, Tshwane and Mangaung all received qualified audit opinions during the period under review, 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 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.
“What makes it even more galling is that the state of financial management tracks with the level of basic service delivery. Joburg, which most of our biggest companies call home, has been in a state of gradual decline for many years,” Mavuso states in the newsletter.
“Traffic lights seem to have been abandoned, local roads left to decay into unpassable tracks. Ramaphosa, two months ago, decried the state of the city which is meant to serve as host of the G20 later this year, promising intervention from national government.”
She said intervention was sorely needed.
“As the auditor-general makes clear in her report for the 2023/2024 year, the challenges are driven by a lack of financial management skills and vacancies.
“There simply aren’t enough qualified people working in local government to ensure the accounts are done properly. That is despite the billions at stake.”
“The AG’s report is a very helpful spotlight on one of the drivers of service delivery failure in local government,” said Mavuso. “This is now a national priority and one of the biggest constraints on economic growth. Service delivery failure often means businesses can’t function.”
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