Municipalities ‘too reliant on consultants’
Municipalities’ spending on consultants has not let up, even as many of the 263 councils across SA spend beyond their revenue.
More alarming is that just over a quarter of the municipalities audited were assisted with their financial reporting by consultants, although this is a decrease from 29% in 2014-15 to 26% in 2015-16.
Another 11% of the municipalities that received assistance from a consultant were given disclaimers or adverse findings.
On Wednesday AuditorGeneral Kimi Makwetu highlighted that municipalities spent up to R3.5bn on consultancy services. Such dependence on consultants has been an Achilles heel for many years. This also speaks to the difficulty municipalities experience in getting specialised management and accounting skills and keeping them for the long term.
A total of 230 of the 263 councils used consultants of one form or another.
According to the auditorgeneral’s consolidated municipal audit outcomes report, municipalities spent R838m on financial support services, R71m of which was paid by provincial treasuries as well as cooperative governance departments.
“The number of municipalities assisted by consultants had slightly decreased from the previous year and the consultants’ costs had increased by only 2%. The use of consultants’ services was most common in Limpopo, the Northern Cape and North West municipalities,” said the report.
Deputy Minister of Cooperative Governance Andries Nel said local government in SA was still young and the outcomes reflected an improvement.
Municipal IQ economist Karen Heese said she believed the auditor-general was flagging poor financial controls around issues such as debtor management which undermine the sustainability of municipalities.
“Net deficits, therefore, do not reflect productive expenditure but suggest poor financial management – this is a concern to anyone living in the 65% of councils flagged by the auditorgeneral as being in poor financial health,” said Heese.