Active citizens are needed to help stop the financial rot in municipalities

Auditor-General’s report again shows failure of municipal managers, councils and CoGTA

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15/06/2022 12:18:26

Active citizens are needed to help stop the financial rot in municipalities

The Auditor-General’s report on local government audit outcomes for 2020/21 paints a devastating picture that effects the life of every South African. 

OUTA supports the AG’s call for active citizens to ensure that community needs are heard and municipal leaders are held to account.

"Civil society needs to become more active than ever before to end this downward spiral. Citizens and businesses must take hands and become organised to ensure their municipalities start working for them,” says Wayne Duvenage, OUTA CEO.

The AG’s report shows that less than half of our municipalities show reasonable financial management. 

“Municipalities haven’t failed overnight,” says Julius Kleynhans, OUTA Executive for Social Innovation. “The failures have occurred over a decade under the watch of political parties and their councillors, provincial governments and their MECs, the Department of Cooperative Governance and Traditional Affairs, the Treasury and Parliament.”

The AG emphasised the need for active citizenry, calling it “crucial” to ensure that municipal leadership is accountable to communities, and calling on citizens to participate in the public processes such as on the integrated development plan.

Only 18% of the 257 municipalities achieved clean audits. Financial reporting consultants cost local government R5.31 billion from 2016 to 2020 and 70% of municipalities use consultants every year.

Half the municipalities did not investigate the previous year’s irregular expenditure and there were no consequences for transgressors. The municipalities ran up R1.96 billion in fruitless and wasteful expenditure, R20.45 billion in unauthorised expenditure, and the irregular expenditure balance grew to R119.07 billion (from the previous year’s R110.18 billion).

Municipalities prioritised paying staff and councillors, leaving R25.37 billion owed to Eskom and R13.29 billion owed to water boards. By year end, almost half the municipalities owed creditors more than they had in their bank accounts.

The main source of revenue for municipalities is property rates and service charges, so it is crucial for civil society, business and communities to act as both the shareholder and customer of a municipality. 

“Every year we see service delivery getting worse, our roads getting more potholes, our water quality deteriorating or being interrupted, and electricity coming and going. Yet municipal charges increase and politicians get clever in adding additional tariffs to generate more money, whilst municipalities are externalising costs to residents who are forced to start looking after themselves. We see more people buying bottled water, fixing the potholes or cleaning the curbs. As civil society, we now need to draw a line in the sand,” says Kleynhans.

The way forward

Organised, active citizens are needed to work towards accountable municipalities.

Municipal managers are the accounting officers and should be held to account for the overall performance of a municipality. 

Cadre deployment must stop.

Unions should not protect underperforming municipal workers or cadres.

Consequence management is key. 

Zero-based budgeting should be brought in, requiring municipalities to budget appropriately for the most critical components of basic service delivery.

Officials should treat their communities with respect and dignity.

Accurate billing, timeous debt collection and payment of creditors on time is crucial. There should be no political meddling in this space to win votes.

Indigent registers need to be accurate and complete. Grants paid for free basic services must be allocated to the appropriate beneficiaries and not spent elsewhere. 

Maintenance budgets must meet Treasury guidelines.

Municipalities must seek innovative solutions, for example on energy and with SMART technology. 

More information

A soundclip with comment by OUTA's Julius Kleynhans in English is here and in Afrikaans is here.

The Auditor-General’s report is here and the AG’s suggestions for active citizens are here.

Picture: OUTA