OFOUR THESTATE

Finweek English Edition - - IN DEPTH -

the fi­nan­cial health of a whop­ping 92% of South Africa’s 278 mu­nic­i­pal­i­ties re­mains a con­cern and in­ter­ven­tion is re­quired if some of them are to con­tinue func­tion­ing, warns au­di­tor-gen­eral Kimi Mak­wetu. This is up from 82% in the 2012/13 fi­nan­cial year, when the Au­di­tor-Gen­eral of SA (AGSA) first in­tro­duced over­all as­sess­ments.

The au­di­tor-gen­eral’s an­nual re­port on the au­dit out­comes of lo­cal gov­ern­ment, which in­cludes 52 mu­nic­i­pal en­ti­ties (this in­cludes, for ex­am­ple, Rand Water and Pik­itup), shows a steady im­prove­ment in au­dit out­comes, with 53% hav­ing im­proved from the pe­riod 2010/11 to 2014/15. Over the same pe­riod, 13% of mu­nic­i­pal­i­ties re­gressed, while 34% re­mained un­changed.

Omar­jee Lameez By

Speak­ing at a press brief­ing on 1 June, Mak­wetu high­lighted that the fi­nan­cial health of most mu­nic­i­pal­i­ties was at risk as they were spend­ing in ex­cess of avail­able re­sources, lead­ing them to in­cur deficits. Cur­rent li­a­bil­i­ties ex­ceed cur­rent as­sets, mak­ing liq­uid­ity an is­sue. Mu­nic­i­pal­i­ties are also strug­gling to col­lect rev­enue from ratepay­ers, he ex­plained.

In to­tal, there is un­cer­tainty whether 26% of mu­nic­i­pal­i­ties will be able to con­tinue func­tion­ing in future – 10 more mu­nic­i­pal­i­ties than in the 2012/13 fi­nan­cial year. “There is a high risk of un­cer­tainty about their abil­ity to com­mit to ser­vice de­liv­ery in the fore­see­able future,” said Mak­wetu. The chal­lenge is twofold:

“There is a high risk of un­cer­tainty about their abil­ity to com­mit to ser­vice de­liv­ery in the fore­see­able future.”

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