Financial Turmoil at OR Tambo Municipality Leads to Nearly R1bn in Irregular Expenditure

The OR Tambo Municipality has faced severe financial and managerial setbacks, as revealed in the latest Auditor-General's report for the 2022-23 fiscal year, culminating in the writing off of nearly R1 billion in irregular expenditure. These issues were disclosed during a pivotal meeting between the Auditor-General of South Africa (AGSA) and Parliament’s Standing Committee on Public Accounts (Scopa).

The virtual meeting, led by Scopa chairperson Songezo Zibi, highlighted a year plagued by political infighting and poor financial management within the municipality, which impacted the essential services it provides. The Eastern Cape entity is responsible for delivering water services to five municipalities, affecting millions of residents who rely on these basic necessities.

The Auditor-General's report painted a stark picture of non-compliance and mismanagement, with notable deficiencies in meeting water quality standards and providing adequate sanitation services. For example, the municipality achieved only 57% compliance in wastewater effluent quality against a target of 93%. Moreover, a significant shortfall was noted in the number of households with access to basic level sanitation services, with only 2,133 achieved against a target of 7,500.

The financial discrepancies are equally concerning. OR Tambo's creditors' payment period alarmingly increased, exacerbating the financial instability and leading to the abandonment or delay of critical projects. Furthermore, the annual irregular expenditure surged by R59 million from the previous year, totaling an alarming R171 million in 2022-23.

Following the in-depth audit, about 50% of this expenditure has been addressed, with efforts to recover these funds ongoing. However, the remaining 50%, amounting to approximately R997 million, was regrettably written off. This has sparked significant debate among Scopa members, with pointed questions about the adequacy of recovery efforts and the rationale for such substantial write-offs.

Vanuja Maharaj, the AGSA's head of portfolio, emphasized that the municipality had taken steps to rectify these issues, including appointing new financial officials and promising rigorous supervision of ongoing projects. Despite these efforts, many challenges remain, highlighted by the direct impact on community health and safety due to inadequate water and sanitation infrastructure.

As the municipality moves forward, the focus is on rigorous financial management and ensuring that service delivery targets are met, to restore trust and provide the basic services its residents so desperately need.