The auditor-general’s annual municipal audit report, released this week, details the alarming state of financial management at most of South Africa’s towns and cities.
Only 18 of the country’s 257 municipalities received clean audits in the past financial year.
See also: These municipalities are wasting the most taxpayer money
Unauthorised, irregular and wasteful expenditure at municipalities, which piled up over many years, has now reached R122 billion.
The report also highlights troubling case studies at specific municipalities, including:
Matjhabeng (Free State)
The municipality has been deducting pension, medical aid and pay-as-you-earn income tax from employees’ salaries, but R58 million of these deductions has not been paid to the pension funds, medical schemes or SARS.
Its debts now total R3.4 billion more than its assets.
“Immediate intervention is required as it is unlikely that the municipality will be able to pay its debts based on its current financial status,” the auditor-general says.
West Rand District (Gauteng)
The municipality lost its R76 million investment in VBS Mutual Bank, and is now technically insolvent. It is struggling to pay its employees and on average, it now takes 1,055 days to pay its creditors.
Residents are not paying for municipal services, with only 13% of customer debt now expected to be recovered. The municipality’s current liabilities exceed its assets by R357 million.
Metsimaholo (Free State)
The municipality spent R21.7 million on the Oranjeville sports complex – but when the auditor-general’s office inspected the site, they saw that only a single fence was built.
Kareeberg (Northern Cape)
The municipality budgeted R14 million for the construction of a water pipeline from Carnarvon to Vanwyksvlei. But following a controversial tender process, an unsuccessful bidder sued the municipality. Now the municipality decided not to budget for the project in the next financial year pending the outcome of the case. “The delay in the project resulted in an underspending of the grant and a delay in providing proper water services to the residents of Vanwyksvlei,” says the report.
Mahikeng (North West)
The upgrade of two streets involved irregular expenditure of more than R4 million, and was finished 6 months late “due to a lack of communication and coordination”. Also, the auditor-general’s office noted it found that the actual distance of road completed was less than what was stipulated in the contract.
Amathole District (Eastern Cape)
The municipality suffers a huge sanitation backlog, and approved a project to construct 12,388 toilets – at R780 each. But the contractors were paid R2,500 a toilet – which meant the municipality paid R21 million more than the approved allocation. Also, there were huge delays in the project and no evidence that the municipality conducted the necessary geotechnical studies on the site. Now, local spring water is at risk of being polluted, which could make residents sick, the auditor-general’s office warns.
Alfred Nzo District (Eastern Cape)
In 2013, the municipality launched a project to upgrade the Ntabankulu sewer system. It was supposed to be finished by 2015 – but it is still not completed. Also, it is millions over budget.
Drakenstein (Western Cape)
According to the auditor-general’s report, the municipality did not follow the correct bidding process to appoint a contractor for construction on the Paarl wastewater treatment works. This resulted in irregular expenditure of R46 million and an unfair and uncompetitive procurement process.
City of Tshwane (Gauteng)
The metro spent R65 million on the problematic upgrade of its city hall, which didn’t comply with national heritage council requirements.