Poor public finance management haunts local authorities

PUBLIC finance mismanagement continues to haunt local authorities as a lot of anomalies surfaced during the financial year 2022, according to findings by the Office of the Auditor General (OAG).

The Public Finance Management Act and the Audit Office Act requires the Auditor General (AG) to prepare and submit to the Treasury by no later than June 30 each year, a report on the outcome of an examination and audit of the financials prepared by the Government and its entities.

This is expected to stimulate good governance through enhancing efficiency, transparency and accountability in the use of public funds.

However, most findings in local authorities continue to be in respect of financial mismanagement, non-compliance with international accounting standards and laws and regulations, untaxed benefits, lack of adequate controls over contract management and management of stands sales, and poor service delivery.

According to the AG’s report, some local authorities did not use the devolution funds as intended. For example, the Bindura Municipality received about $34,2 million but used $7,7 for salaries and $19,2 million was invested at the expense of undertaking development projects.

The report also noted 64 issues concerning the mismanagement of assets. For instance, Kadoma City Council lost 800 bags of cement as a result of solidification and inventory and equipment worth US$33 000 to theft.

Local authorities are also mandated to maintain key infrastructure like local road networks to bolster efficient transport systems, reduce fatal accidents and lower the cost of doing business. This leads to increased investment, commerce, job creation, ease of access to markets and powering inclusive economic growth.

Since 2019 the government has set aside 5 percent of the national budget for resourcing the Devolution Fund, which should be used for capital projects like road maintenance, upgrading clinics and schools.

However, this has not been the case with Bindura, which also failed to prepare acquittal reports to show how it utilised its devolution funds. Another example is Gokwe Town Council, which used devolution funds worth $7,3 million in 2020 but failed to document evidence of project implementation.

“The foregoing shows that local authorities are too prone to financial loss caused by misappropriation of funds,” said the Zimbabwe Coalition on Debt Development (ZIMCODD).

“The Treasury must ensure timely disbursements of devolution funds to all local authorities to uphold the time value of money and avert effects of price inflation,” said the civil organisation group.

The report from the OAG also shows many of the audited local authorities are operating without key policies such as housing and human resources policies, they are grossly violating public procurement laws and regulations, lack proper segregation of duties, and have weak internal controls.

Interference from the central Government has also been cited as a contributing factor to local authorities’ poor performance.

“Since the transfer of political administration of most urban councils from the ruling party to the opposition party, there is increased government interference in the operations of local authorities through the Ministry of Local Government, demonstrating a lack of administrative autonomy,” said ZIMCODD.

ZIMCODD cited the Government interference in the Pomona Waste-to-Energy deal between Harare City Council (HCC) and a private company Geogenix BV.

“This deal was reportedly expedited with government’s undue and unaccountable pressure on HCC officials and was reached neither by public consultation nor subjected to oversight by Parliament,” said ZIMCODD.

In order to cope with rising demand, authorities should find innovative ways such as strengthening Public-Private Partnerships (PPPs), raising revenue to invest in water and sanitation infrastructure, while adhering to public finance management guidelines. These should help enhance transparency and good governance.