Auditor-General confirms EC Local Government on brink of collapse

Issued by Vicky Knoetze, MPL
Shadow MEC for COGTA

The latest Auditor-General report on municipal finances for the 2019/20 financial year shows that the Local Government structures in the Eastern Cape are on the brink of collapse.

In light of these damning results, the Democratic Alliance once again challenges the Premier, Oscar Mabuyane, and the MEC of CoGTA, Xolile Nqata, to take action.

The DA has repeatedly called on the provincial government to make use of the powers granted to it through the constitution to intervene and provide the support needed, before it is too late.

These calls have mostly fallen on deaf ears, as the ANC-led provincial government opted to protect its deployed cadres, rather than put the interests of the people of this province first.

The AG’s MFMA Report for the 2019/20 financial year shows municipalities in crisis, not paying for goods and services received, poor planning and budgeting, lack of oversight and consequence management and general non-compliance with legislation.

These elements have resulted in high incidences of fraud and corruption, wastage, deterioration of infrastructure and service delivery failures.

What is most alarming, is that these warning bells have been ringing for years, and the latest report is already a year out of date, with local government now in the 2021/22 financial year.

It is clear from the AG report that, not only has the ANC’s cadre deployment robbed the Eastern Cape municipalities of critical skills, but procurement processes have been so corrupted that even the consultants that are brought in to assist, add no value.

As a result, billions are being siphoned from municipalities to line connected cadre’s pockets, at the expense of service delivery to the long-suffering residents of this province.

This is in stark contrast with the Western Cape government, which once again highlights that where the DA governs, things work.

What is needed is capable local government, that will put the people of the province first by appointing people that are fit for purpose, with the necessary skillsets.

What is needed is a capable provincial government, that will take action when action is needed, and intervene when it is necessary to do so, not bury its head in the sand and protect its own at any cost.

The DA has clearly demonstrated that it gets things done, knows how to put sound financial systems in place and spends tax payer’s money with transparency and accountability.

That’s why the only towns in South Africa that work are DA towns. DA towns have the lowest unemployment and the highest rates of basic services, according to the Auditor-General. The gap between towns governed by the DA and ANC gets bigger every year, because the DA gets things done.

Snapshot of EC Municipalities:

Total Municipalities: 39

  • 2 Unqualified Audits with no findings (Elundini LM and Senqu LM)
  • 15 Unqualified Audits with findings
  • 14 Qualified Audits with findings
  • 2 Adverse (Amathole DM and Sakhisizwe LM)
  • 4 Disclaimers (Chris Hani DM, Makana LM, Ingquza Hill LM and Sunday’s River Valley LM)
  • 2 Outstanding

Unauthorised Expenditure: R 1 752 million
Irregular Expenditure: R241 million

Ten Eastern Cape Municipalities have been identified as a ‘going concern’ which means that there is significant debt, and in the near future, they will not be able to continue with their operations as they have insufficient reserves to cover expenditure and spend more money than they have – these are Amahlati LM, Amathole DM, Dr Beyers Naude LM, Enoch Mgijima LM, Intsika Yethu LM, King Sabata Dlalindyebo LM, Kou Kamma LM, Makana LM, Raymond Mhlaba LM and Walter Sisulu LM.

Eastern Cape Municipalities cumulatively are one the three largest contributors to ESKOM Debt at over R1 billion.

Eastern Cape Municipalities cumulatively are one of the three provinces with the highest incidences of prohibited awards to other officials – R 272 million.

Eastern Cape Municipalities cumulatively are one of the three provinces with the highest incidences of prohibited awards to close family members – R 103 million.