West­ern Cape is tops

CityPress - - News - POLOKO TAU poloko.tau@city­press.co.za

The re­lease on Wed­nes­day of the Au­di­torGen­eral’s re­port on mu­nic­i­pal­i­ties could be the worst tim­ing for po­lit­i­cal par­ties try­ing to win in the lo­cal gov­ern­ment elec­tions. The re­port showed that the ma­jor­ity of those as­sum­ing of­fice af­ter the Au­gust elec­tions would take over mu­nic­i­pal ad­min­is­tra­tions fraught with ser­vicede­liv­ery chal­lenges.

On top of this would be the enor­mous task of res­cu­ing these mu­nic­i­pal­i­ties from a state of near fi­nan­cial col­lapse.

Au­di­tor-Gen­eral Kimi Mak­wetu’s 2014/15 au­dit out­comes found se­ri­ous prob­lems in sev­eral mu­nic­i­pal­i­ties.

It rated the fi­nan­cial health of 92% of mu­nic­i­pal­i­ties as “ei­ther con­cern­ing or re­quir­ing in­ter­ven­tion”.

On the other hand, the re­port noted a “steady im­prove­ment” in the past five fi­nan­cial years from 2010/11.

Adding to the headaches of po­lit­i­cal par­ties con­test­ing the elec­tions would be the gov­ern­ment’s daunt­ing key tar­get – spelt out in the medium-term strate­gic frame­work (MTSF) – of “achiev­ing an over­all mu­nic­i­pal au­dit out­comes with at least 75% of mu­nic­i­pal­i­ties re­ceiv­ing un­qual­i­fied au­dits by 2019”, along with no ad­verse or dis­claimed opin­ion by the same year.

The MTSF is aligned to the Na­tional De­vel­op­ment Plan, a gov­ern­ment pro­gramme to eliminate poverty and re­duce in­equal­ity by 2030. In ad­di­tion, the same strate­gic frame­work is seek­ing an “in­crease in the level of pub­lic trust and con­fi­dence in lo­cal gov­ern­ment from 51% in 2012 to 65% by 2019” – as mea­sured by the Ip­sos (a global re­search or­gan­i­sa­tion) sur­vey. This adds even more pres­sure to the next term of lo­cal gover­nance hope­fuls.

Mak­wetu said 53% of mu­nic­i­pal­i­ties had im­proved, 13% had re­gressed and 34% re­mained un­changed.

The West­ern Cape led the pack of top achiev­ers, reg­is­ter­ing the high­est pro­por­tion of mu­nic­i­pal­i­ties with clean au­dits in 2014/15 at 73%. Gaut­eng fol­lowed at 33% and KwaZu­luNatal at 30%.

The North West and Lim­popo were the only two prov­inces that failed to reg­is­ter a sin­gle clean mu­nic­i­pal au­dit in the past fi­nan­cial pe­riod.

Mu­nic­i­pal­i­ties in the North West, Mpumalanga, the Eastern Cape and Lim­popo were cited as “the main con­trib­u­tors to the sig­nif­i­cant in­crease in ir­reg­u­lar ex­pen­di­ture over the past five years”.

Those in Mpumalanga, North West, Free State, the North­ern Cape and the Eastern Cape were the main con­trib­u­tors to the in­crease in unau­tho­rised ex­pen­di­ture.

Nel­son Man­dela Bay Metro leads the pack in fruit­less and waste­ful ex­pen­di­ture at R422.6 mil­lion in the past fi­nan­cial year fol­lowed by Matjhabeng lo­cal mu­nic­i­pal­ity in the Free State – al­beit with a huge gap – at R151.8 mil­lion.

Po­lit­i­cal an­a­lyst Pro­fes­sor Tinyiko Maluleke said po­lit­i­cal par­ties should not show con­cern about mu­nic­i­pal per­for­mances only dur­ing elec­tions year. The same went for whether the Au­di­tor-Gen­eral’s find­ings mat­tered and why noth­ing had been done about the pre­vi­ous find­ings.

“Po­lit­i­cal par­ties will make prom­ises to get votes in all mu­nic­i­pal­i­ties.

“The Au­di­tor-Gen­eral’s re­port will be used for cam­paign­ing. But will it be used to cor­rect things that went wrong? That we don’t know,” he said.

Giv­ing a five-year per­for­mance assess­ment for the pe­riod 2010/11 to 2014/15, Mak­wetu em­pha­sised that:

Clean au­dit opin­ions in the pe­riod 2010/11 to 2014/15 fi­nan­cial years in­creased from 47% to 59% while mu­nic­i­pal­i­ties re­ceiv­ing dis­claimed or ad­verse opin­ions eased from 33% to 11% over the same pe­riod;

Ir­reg­u­lar ex­pen­di­ture has more than dou­bled since 2010/11 to R14.75 bil­lion;

Fruit­less and waste­ful ex­pen­di­ture in 2014/15 was more than R1 bil­lion higher than in 2010/11 at R1.34 bil­lion;

Unau­tho­rised ex­pen­di­ture also rose three­fold from 2010/11 to R15.32 bil­lion, mainly on the over­spend­ing of bud­gets; and

From the to­tal mu­nic­i­pal ex­pen­di­ture of R347 bil­lion – just for the 2014/15 fi­nan­cial year – clean au­dits rep­re­sented R134 bil­lion, un­qual­i­fied opin­ions R143 bil­lion and qual­i­fied opin­ions R49 bil­lion.

Out­stand­ing au­dits – of six mu­nic­i­pal­i­ties – rep­re­sented R1 bil­lion.

“One of the big­gest and most dis­ap­point­ing ar­eas is com­pli­ance with leg­is­la­tion [which] gives rise to ir­reg­u­lar, fruit­less and waste­ful, as well as unau­tho­rised, ex­pen­di­tures.

“The rules of the game are not ob­served,” said Mak­wetu.

He also ex­pressed se­ri­ous con­cern about the use of con­sul­tants to pre­pare au­dit re­ports for mu­nic­i­pal­i­ties, only to pro­duce neg­a­tive out­comes and er­rors for some of them.

He said mu­nic­i­pal­i­ties had in 2014/15 spent about R3.7 bil­lion on con­sul­tants, with R892 mil­lion of this go­ing to fi­nan­cial ser­vices and R615 mil­lion on IT ser­vices. The Au­di­tor-Gen­eral warned that the “over­re­liance on con­sul­tants” was a sign of a lack of ca­pac­ity and skills in lo­cal gov­ern­ment.

Mak­wetu said while con­sul­tants were “an ex­pected and wel­comed area of sup­port” at times, the costs to the state were “dis­pro­por­tion­ate” to the ser­vice.

“We can’t spend this amount of money ... [with­out] im­prove­ments in the out­comes. If a mu­nic­i­pal­ity is able to spend R10 mil­lion a year on fi­nan­cial man­age­ment ser­vices and still ends up with a gen­er­ally lousy out­come in au­dit re­sults, then the ques­tion to be asked is: What is the value of that ex­pen­di­ture if it does not trans­late into some­thing bet­ter?”

To im­prove and sus­tain au­dit out­comes in mu­nic­i­pal­i­ties in the fu­ture, Mak­wetu has rec­om­mended, among other things, “ef­fec­tive lead­er­ship [po­lit­i­cal and ad­min­is­tra­tive] that is based on a cul­ture of hon­esty, eth­i­cal busi­ness prac­tices, good gover­nance, and pro­tect­ing and en­hanc­ing the in­ter­ests of [in­di­vid­ual mu­nic­i­pal­i­ties and en­ti­ties]”.


WARN­ING Au­di­tor-Gen­eral Kimi Mak­wetu says many mu­nic­i­pal­i­ties around SA are ‘fac­ing near fi­nan­cial col­lapse’

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