BIL­LIONS WASTED

Poor lead­er­ship, lack of skills are to blame

The Star Early Edition - - FRONT PAGE - TE­BOGO MONAMA AND ZINTLE MAHLATI

SOUTH Africa’s mu­nic­i­pal­i­ties con­tinue to bleed bil­lions of rand in tax­pay­ers’ money on ir­reg­u­lar and waste­ful ex­pen­di­ture, de­spite lo­cal gov­ern­ments bat­tling to de­liver ser­vices.

And the prob­lems are the same: un­skilled mu­nic­i­pal of­fi­cials and may­ors; fail­ure to en­sure that the ba­sics – in­clud­ing bud­get­ing, cost-man­age­ment and ad­her­ing to the pre­scribed ten­der pro­cesses – are done cor­rectly; as well as a lack of ac­count­abil­ity.

These were among the find­ings by Au­di­tor-Gen­eral Kimi Mak­wetu yes­ter­day when he re­leased his re­port for the 2015/2016 fi­nan­cial year, which paints a bleak pic­ture of most mu­nic­i­pal­i­ties re­gress­ing in their fi­nan­cial con­trol sys­tems.

Out of the 263 mu­nic­i­pal­i­ties in the coun­try, only 49 re­ceived clean au­dits. In to­tal, R16.1 bil­lion has been lost to ir­reg­u­lar ex­pen­di­ture – trans­lat­ing to an in­crease of 50% – in what has been de­scribed as a deep-seated cri­sis in lo­cal gov­ern­ment.

More dis­con­cert­ing is that even the big metros have not fared well in their fi­nan­cial man­age­ment, with the City of Cape Town the only one that re­ceived a clean au­dit. None of the metros in Gaut­eng – Joburg, Tsh­wane and Ekurhu­leni – have re­ceived a clean bill of health on fi­nances.

Of the 263 mu­nic­i­pal­i­ties across the coun­try, those in the West­ern Cape came out tops, with 80% of their lo­cal gov­ern­ments ob­tain­ing clean au­dits, fol­lowed by KwaZu­luNatal and the East­ern Cape, at a low 18% and 16%, re­spec­tively.

A clean au­dit, ac­cord­ing to the AG’s web­site, is when fi­nan­cial state­ments have have in­cor­rect or omit­ted in­for­ma­tion. This means a mu­nic­i­pal­ity should fully ac­count for how they used money al­lo­cated.

In Gaut­eng, only Mid­vaal re­ceived a clean au­dit, with the likes of Sed­ibeng and Mo­gale City fail­ing their fi­nan­cial tests again, hav­ing re­ceived qual­i­fied au­dit opin­ions on their state­ments.

The Au­di­tor-Gen­eral named North West, North­ern Cape and the Free State as the prov­inces with the poor­est re­sults.

“There was lit­tle im­prove­ment in these prov­inces from the pre­vi­ous year’s out­look. Fo­cused po­lit­i­cal will and a con­sid­er­able in­vest­ment in en­sur­ing that the ba­sics are done right are re­quired to cre­ate a base­line from which ac­count­abil­ity can be re­stored in these prov­inces,” Mak­wetu said.

He blamed the lack of proper lead­er­ship and tal­ent re­ten­tion in key po­si­tions in the mu­nic­i­pal­i­ties. He said more had to be done to hold mu­nic­i­pal lead­ers ac­count­able, and his of­fice had been con­sult­ing with Par­lia­ment on the mat­ter.

“If you look at the ar­chi­tec­ture of the man­age­rial roles, a chief fi­nan­cial of­fi­cer is re­spon­si­ble for man­ag­ing the fi­nance de­part­ment, while the mu­nic­i­pal man­ager is in charge of the en­tire sys­tem.

“If we have made au­dit rec­om­men­da­tions to the in­sti­tu­tions, we look at the man­ager and the fi­nance de­part­ment to im­ple­ment them. The longer they are in that in­sti­tu­tion, the bet­ter the achieve­ment of the so­lu­tions.”

He also lamented that his of­fice could not rec­om­mend ac­tion against mu­nic­i­pal­i­ties that did not per­form.

Karen Heese of Mu­nic­i­pal IQ, a body that mon­i­tors the per­for­mance of mu­nic­i­pal­i­ties, said some of the rea­sons why the fi­nan­cial man­age­ment at mu­nic­i­pal­i­ties has re­gressed might have been the prepa­ra­tion for last Au­gust’s elec­tions.

“There might not have been lead­er­ship from politi­cians in en­sur­ing that there’s po­lit­i­cal con­trol. They might have been con­cern about the elec­tions, in­stead of fo­cus­ing on mu­nic­i­pal man­age­ment. It’s con­ceiv­able to think the elec­tions might have un­der­mined fo­cus on gov­er­nance.”

But she said that wasn’t a good ex­cuse, be­cause ser­vice de­liv­ery should also top their agenda.

“It’s not ac­cept­able that they might have had their eye off the ball.

“Ir­reg­u­lar does not nec­es­sar­ily mean that it’s money that was not spent well, just that it was money that was not ac­counted for.

“It does point to a deep-seated cri­sis in lo­cal gov­ern­ment,” Heese said.

The new mu­nic­i­pal coun­cils formed af­ter last year’s elec­tions don’t form part of this re­port.

Co-op­er­a­tive Gov­er­nance Deputy Min­is­ter An­dries Nel said: “Our sys­tem of lo­cal gov­ern­ment is com­par­a­tively young. Lo­cal gov­ern­ment as it’s pre­scribed in the fi­nal con­sti­tu­tion is re­ally ef­fec­tive from the year 2000. We are deal­ing with a sys­tem that is about 17 years old.”

The SA Lo­cal Gov­ern­ment As­so­ci­a­tion’s Mpho Khu­nou said they were con­cerned about ar­eas of re­gres­sion, es­pe­cially around ir­reg­u­lar ex­pen­di­ture.

“Mu­nic­i­pal­i­ties must be a lot more strin­gent in im­ple­ment­ing cost man­age­ment.”

TWO of the City of Joburg’s en­ti­ties have failed to main­tain clean au­dit re­ports due to non-com­pli­ance with leg­is­la­tion, ac­cord­ing to the lat­est re­port by Au­di­tor-Gen­eral Kimi Mak­wetu.

Pik­itup and the Jo­han­nes­burg Roads Agency were found to have been non-com­pli­ant in “in­ad­e­quate con­tract man­age­ment”.

Pik­itup was at the time of the au­dit pe­riod, em­broiled in con­tro­versy with its for­mer head Amanda Nair, who was im­pli­cated in mul­ti­mil­lion-rand cor­rup­tion. She was dis­missed in Oc­to­ber af­ter in­ves­ti­ga­tions and months of protests by the SA Mu­nic­i­pal Work­ers’ Union.

The AG re­port for the 2015/16 fi­nan­cial year in­di­cated that City of Joburg was one of the three in the province that did not ap­prove water in­fra­struc­ture man­age­ment poli­cies. This, the re­port warned, might have an ad­verse im­pact on the mu­nic­i­pal­i­ties’ abil­ity to de­liver ser­vices.

Joburg mayor Her­man Mashaba blamed the poor per­for­mance on the pre­vi­ous ANC-led ad­min­is­tra­tion.

“The au­dit out­comes il­lus­trate poor at­ten­tion to fi­nan­cial man­age­ment prac­tices under the pre­vi­ous gov­ern­ment.

“This was also man­i­fested in the fail­ure to ad­e­quately in­ves­ti­gate cases of unau­tho­rised ir­reg­u­lar and fruitless ex­pen­di­ture over years,” the mayor said.

Over­all, Gaut­eng’s mu­nic­i­pal­i­ties re­gressed with only one mu­nic­i­pal­ity – the DA-run Mid­vaal – ob­tain­ing a clean au­dit.

Three mu­nic­i­pal­i­ties: Ekurhu­leni, Sed­ibeng and Mo­gale City – re­gressed in the 2015/16 fi­nan­cial year from a clean au­dit to a qual­i­fied opin­ion with find­ings.

“The re­gres­sion at Ekurhu­leni and Mo­gale City was due to com­pli­ance with sup­ply-chain man­age­ment pre­scripts not be­ing mon­i­tored ad­e­quately,” the re­port stated.

Re­gard­ing Mid­vaal, the DA’s spokesper­son for co-op­er­a­tive gov­er­nance Kevin Mile­ham said the lat­est au­dit re­sults proved that where the DA gov­erns, money is spent on ser­vice de­liv­ery and is “not lost on ir­reg­u­lar, unau­tho­rised, fruitless and waste­ful ex­pen­di­ture”.

The re­port also in­di­cates that Gaut­eng mu­nic­i­pal­i­ties’ fi­nan­cial health was still con­strained and they still face huge chal­lenges in col­lect­ing rev­enue from res­i­dents.

Mak­wetu rec­om­mended they pay at­ten­tion to their debt-col­lec­tion pro­cesses and proper fi­nan­cial spend­ing to al­low them to im­prove ser­vice de­liv­ery.

Other ar­eas high­lighted were City of Joburg projects that in­cluded Fleurhof mixed-hous­ing where 11 000 mixed-de­vel­op­ment units were con­structed.

“Over­all the units built were of ba­sic qual­ity with an im­prove­ment in the stan­dard of work­man­ship noted from the pre­vi­ous year,” the re­port stated.

Pic­ture: Bon­gani Shilubane

HIGH­LIGHTED SHORT­COM­INGS: Au­di­tor-Gen­eral Kimi Mak­wetu re­leased the au­dit re­sults of the coun­try’s mu­nic­i­pal­i­ties for the 2015/16 fi­nan­cial year in Pre­to­ria yes­ter­day.

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