Auditor General Sounds Alarm on Staggering R38 Billion Government Overspend

In a stern rebuke delivered to parliament's portfolio committee chairs, Auditor General Tsakani Maluleke unveiled troubling figures that put the spotlight on deep-rooted financial mismanagement and disregarded accountability within South Africa's government departments and public entities.

According to Maluleke, government overspending has shockingly reached more than R38.8 billion, driven by what she describes as a "culture of tolerating non-compliance." This financial indiscipline has resulted in South Africa losing R14.3 billion over five years due to payments for undelivered goods and ineffective resource utilization.

During the presentation, which included the House Chairperson of Committees Cedric Frolick, the Auditor General outlined the deteriorating fiscal discipline, citing the alarming rise of irregular expenditure which now stands at over R49.5 billion for the current fiscal year. This marks a significant increase from R27.4 billion in the previous year and dramatically higher than R13.65 billion recorded in the 2019-20 period.

Maluleke pointed fingers at "lazy and errant accounting officers and departmental heads" who have failed to address or rectify the underlying issues, allowing mismanaged funds to accumulate and exacerbate the financial discrepancies from one year to the next.

The failure to enforce compliance and accountability has grave implications. From 2019, the National Assembly-amended Public Audit Act gave the Auditor General enhanced powers to enforce stricter financial oversight. However, Maluleke emphasized the limitations of these powers, which include no provision for jailing or directly disciplining responsible individuals.

The Auditor General also highlighted recoveries made by her office, with over R3 billion reclaimed from the staggering R14.3 billion lost to material irregularities since 2019. Despite this partial recovery, a significant gap remains, underscoring the need for more robust preventive measures and timely interventions.

While addressing the ramifications of poor financial governance, Maluleke brought up the broader economic context of South Africa’s struggling growth forecast, which hovers around a mere 1.8% for the next three years. She argued that the economic underperformance places additional stress on the country's fiscus and underscores the urgency of reforming financial management within government entities.

Particularly troubling is the situation within the Compensation Fund, which has experienced 12 years of non-compliance issues and poor financial handling, despite managing substantial funds derived from employer contributions. The fund's consistent disclaimers in audit reports point to persistent governance failures that require immediate and decisive action.

Furthermore, Maluleke criticized the state of financial statement submissions and procurement processes, emphasizing that too many departments flout the laws designed to ensure quality and value in public spending. The result is not only billions in unauthorised and irregular expenditures but also a continued strain on the provision of quality services and goods to the public.

These revelations call for a renewed commitment to strict financial oversight and immediate corrective measures. Maluleke urged parliament's chairpersons to intensify their oversight roles, pushing for accountability that could herald a change in the prevailing culture of financial negligence — a shift crucial for redirecting South Africa toward a path of economic stability and fiscal responsibility.