AG Report casts spotlight on EC local government failings

Issued by Vicky Knoetze, MPL
Shadow MEC for COGTA

Auditor-General (AG) Kimi Makwetu’s latest report on the Audit Outcomes for Local Government is the clearest message yet that Local Government in the Eastern Cape is collapsing.

Not only have 13 municipalities reports worsened compared to the previous year, only one municipality in the entire province received a clean audit!

These poor audit outcomes are as a result of the continuing looting of municipalities, corruption and maladministration, as well as non-payment of suppliers, such as Eskom. This places a heavy burden on communities.

The report tells a story of widespread lack of financial controls and project monitoring in the Eastern Cape, with a culture of lack of accountability and a tolerance of transgressions, which resulted in a further regression in audit outcomes in the province.

Improvements were rare and the general trend over the past three years remained negative. Eight municipalities were unable to adequately support the information reported in their financial statements and received disclaimed opinions.

The Eastern Cape is recognised as the poorest province in South Africa in terms of GDP per capita, it is therefore critical that the limited financial resources are prudently managed.

Instead the province’s municipalities are riddled with unstable councils, the reckless flouting of legislative prescripts, restricted consequence management, limited performance management and financial instability.

Accumulated irregular expenditure has ballooned to over R 11 billion, with an extra R2.5 billion being identified in the 2018/19 financial year. A total of 69% of municipal debt in the Eastern Cape was disclosed as being irrecoverable.

The result is that municipalities are failing to respond to the needs of the people. As infrastructure and basic service delivery continues to crumble under the pressure of the effects of poor planning, weak project management and a lack of financial management.

Earlier this week, I wrote to the MEC of COGTA, Xolile Nqatha, to request a re-determination of the municipalities in distress in the Eastern Cape.

As it stands the province has only identified 14 unsustainable and bankrupt municipalities, while the AG is of the opinion that 83% of municipalities are facing significant cash-flow restraints, 38% of municipalities’ expenses exceed their revenue and 24 municipalities are so severely cash-strapped that they are unable to pay their creditors within the legislated 30 day period.

Out of the 39 municipalities in the Eastern Cape, only 1 municipality (Senqu Local Municipality) received a clean audit, 15 municipalities received unqualified audits findings, 13 received qualified audits with findings, a staggering 8 municipalities received disclaimers and the audits of 2 municipalities were incomplete.

The Democratic Alliance believes that the province must establish a special task team for the evaluation of distressed municipalities in the Eastern Cape, with a specific focus on filling key vacancies to create stability, action audit outcomes and action plans, and develop a culture of zero-tolerance for non-compliance and transgression of legislative prescripts.

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