South Africa's Municipal Financial Mismanagement Alarms Auditor-General

In a forthright address to Parliament's portfolio committee on co-operative governance and traditional affairs (Cogta), Auditor-General (AG) Tsakani Maluleke expressed grave concerns over the financial management of South Africa's local governments. The 2022/2023 municipal audit outcomes presented an alarming picture: out of 257 audited municipalities, a mere 34 secured clean audits, and an upward spiral of fruitless and wasteful expenditure reaching R7.41-billion from R4.89-billion the previous year, coupled with R24.12-billion in unauthorized expenditures.

The AG emphasized that familiar challenges persist among a majority of municipalities with little to no improvement visible, impacting the everyday lives of South African citizens. Despite incremental advances in reporting rates and a degree of responsiveness to interventions by the AG and provincial authorities, actionable improvements have failed to materialize at a pace that resonates with the pressing needs of the population.

A slight reduction in consultancy fees was noted from R1.63-billion down to R1.35-billion, with Limpopo and the Western Cape being the highest and lowest spenders respectively. While this decline can be seen as a positive note, systemic and compliance issues continue to plague 110 municipalities, categorized as 'unqualified with findings,' reflecting a widespread disregard for AG's compliance standards.

The issue of compliance remains a significant stumbling block, with 86% of municipalities incurring material compliance findings, marking a regression from prior years. Moreover, none of the eight metropolitan municipalities, save the City of Cape Town, could join the clean audit ranks. The state of district municipalities was surprisingly poor, with only 18 achieving clean audits, despite being less complex and carrying more significant budgets.

Dr. Zweli Mkhize, committee chairperson and former health minister, recognized key challenges and called for priority action from the Cogta department, the National Treasury, and other relevant ministries to reverse the regression.

Responding to the situation, Minister Velenkosini Hlabisa outlined the initiation of a turnaround plan, focusing on a skills audit of mayors and executives in the poorest performing municipalities, and expressed the necessity of appointments that align with required qualifications.

AG Maluleke called for a resolute professionalisation of the local government sector, paired with a capacitation effort for the betterment of municipal systems and service delivery. The urgency for action was stressed – with a note to the political leadership of municipalities to foster a legacy of improved governance and to respond affirmatively to challenges with appropriate reforms and support structures.

With municipal financial mismanagement drawing to a critical point, the message from the Auditor-General was clear: time is of the essence for South Africa to recommit to ethical and accountable leadership to ensure the wellbeing and progression of its local governance structures.