Service delivery failing in EC municipalities

Issued by Vicky Knoetze, MPL
Shadow MEC for COGTA

Service delivery in Eastern Cape municipalities is buckling under the weight of financial mismanagement and the lack of support by the Department of Cooperative Governance and Traditional Affairs (COGTA).

Maladministration, irregular and wasteful expenditure, corruption and factionalism are also rampant, and this contributes to the general implosion of service delivery in our municipalities.

The plight of Eastern Cape municipalities was highlighted in terms of the 2018/19 Consolidated General Report on the Local Government Audit Outcomes.

Out of 39 municipalities:

  • Only 2 municipalities received a clean audit opinion (unqualified without findings), these were Senqu Municipality and Joe Gqabi District Municipality.
  • 18 municipalities received unqualified opinions with findings.
  • 13 municipalities received qualified audit opinions.
  • 3 municipalities received disclaimers.
  • 2 municipalities received adverse audit opinions including Elundini Municipality and Mnquma Municipality.
  • 1 municipality, namely Sakhisizwe Municipality failed to submit all documentation by the cut-off date.

Amalgamated municipalities are also failing and struggling financially. This is exacerbated by the fact that the equitable share of these municipalities has declined while their responsibilities have increased.

Since 2016 the DA has been saying that municipalities were amalgamated for the wrong reasons, driven by an ill-conceived political agenda.

This struggle is highlighted by the fact that 3 out of 4 of the amalgamated municipalities, Dr Beyer’s Naude Municipality, Enoch Mgijima Municipality and Walter Sisulu Municipality, have received repeat disclaimer opinions.

The Department, together with Provincial Treasury, must engage National Treasury with respect to the formula used in the allocation of the equitable share to these amalgamated municipalities – and in the interim engage with Provincial Treasury to assist.

In general, the Consolidated Report also found:

  • 47% of municipalities (almost half of the municipalities in the Eastern Cape) received
    adverse, disclaimed or qualified audit.
  • Only 13% of the municipalities submitted financial statements which did not require adjustments during the audit process even though a total of R 166 million was spent on consultants to assist municipalities with the submission of financial documents.

In terms of irregular expenditure, the report states:

  • Irregular expenditure has increased from R 22.1 Billion to R 25.5 Billion
  • 76% of municipalities has concerning financial health indicators or requires investigation.
  • 29% of municipalities face significant cash-flow and financial viability issues.

We need to use public money to create an environment for economic growth and job creation. We need to spend money on improving educational outcomes and providing health care, housing, basic services and safety and security.

The government needs to urgently change direction to chart a new course for the province. The government must make sure that municipalities have the necessary systems, capacity and skills to deliver services effectively.