EDITORIAL: Little glory in local government

Last week’s report by auditor-general Tsakani Maluleke on the audit outcomes of SA’s 257 municipalities for the 2021/22 fiscal year again focused the spotlight on the financial malaise of this sphere of government which is so crucial to service delivery.

A sign of the deterioration in financial management was that only 38 municipalities received a clean audit, down from the 41 of the previous year. The regressions, Maluleke told MPs, were due to instability in key positions, as well as inadequate monitoring and review of controls relating to compliance.

The auditor-general noted that local government had been characterised by dysfunctional municipalities, financial mismanagement, council and administrative instability, and crumbling municipal infrastructure.

Most of the municipalities have been run into the ground due to maladministration, looting and corruption, while others have been dogged with cash-flow challenges and have struggled to pay staff salaries and service providers, and deliver basic services. Audit outcomes among other things reflect the soundness or otherwise of basic accounting and adherence at local government level to the Municipal Finance Management Act and other laws.

Of the 38 clean unqualified audits achieved, the DA-run Western Cape led with 21, followed by Northern Cape with four, KwaZulu-Natal with four, Eastern Cape with three, Gauteng with two, Limpopo with two and Mpumalanga with two.

In Gauteng, which contributes about 40% to national GDP, only the Ekurhuleni metro and Midvaal local municipality received clean audits.

Municipalities racked up R4.74bn in fruitless and wasteful expenditure during the period under review. The estimated financial loss from noncompliance and fraud was R5.19bn.

Other indications of the financial malaise in local government were revealed in the 2022 State of Local Government Finances which identified 169 municipalities that were in financial distress at the end of the 2021/22 financial year. The report noted a continued pattern of decay, as only 66 local councils were in a similar situation a decade ago.

Finance minister Enoch Godongwana has often highlighted the financial problems of local government, citing in particular their adoption of unfunded budgets. A lack of skills is also a glaring problem which often means that consultants are pulled in at great cost to do the work that employees are paid for.

Maluleke in her briefing to MPs spoke out against the reliance on consultants for financial reporting, saying 220 municipalities paid R1.6bn (R1.3bn previously) to consultants in 2021/22. The reasons for this lay in a lack of skills, and vacancies. Consultants were employed in the fields of asset management, tax services, preparation or review of financial statements and accounting services, among others.

These financial indicators are often the tip of the iceberg of the poor service delivery which plagues many municipalities, made worse by the instability of their coalition governments which are more focused on positions and power than on meeting the needs of their communities.

Lack of delivery can be seen in potholed roads, broken and dysfunctional water infrastructure and the lack of refuse removal, among other things. Load-shedding just worsens the situation for those having to live in this situation.