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.”