Picture: The North West MEC for Treasury, Motlalepula Rosho
By OBAKENG MAJE
The Auditor General (AG) painted a grim picture of North West municipalities amid maladministration, misappropriation of funds and lack of good governance. According to the AG, not even a single North West municipality obtained a clean audit outcome.
The Democratic Alliance provincial leader, Leon Basson said 10 municipalities obtained qualified opinions, 6 received disclaimed opinions, 1 obtained an adverse audit outcome and the audit outcomes of both Mamusa and Ditsobotla Local Municipalities were outstanding in contravention of the Municipal Finance Management Act (MFMA).
Basson further said, the closing balance of irregular expenditure for North West municipalities is R30 billion with R3.2 billion incurred during the financial year under review. He added that, unauthorised expenditure is at R2.3 billion and fruitless and wasteful expenditure came in at R306 million.
“Bulk unpaid Eskom debt for the province is R2.44 billion and another R2.85 billion is owed to water boards for bulk water supply. The release of Ratings Africa’s annual Municipal Financial Sustainability Index (MFSI) confirmed the general state of collapse of North West municipalities.
“The AG’s municipal audit outcomes for the 2021/22 financial year released a month ago paints a picture of a province on the edge of becoming a fully-fledged failed state.
It is in the financial audit outcomes that, we can verify what people experience in North West on a daily basis – a general collapse in basic service delivery and the decay or infrastructure,” he said.
Basson said people in North West are increasingly being cut off from access to clean potable water and electricity supply, while raw sewage flows throughout every community. He said the AG confirmed the DA’s position that, the financial situation of North West municipalities continues to deteriorate, negatively affecting service delivery outcomes.
“All municipalities struggle to budget and spend effectively on infrastructure maintenance, which contributes to a general collapse in service delivery. North West municipalities on average invest only about 3% of their budgets towards infrastructure where the basic requirement is 8% to effectively maintain infrastructure.
“Eleven North West municipalities must borrow funds from the current financial year to settle liabilities that should have been paid in the previous financial year. This is completely unsustainable and seven North West municipalities are unable to operate for the foreseeable future,” he said.
Basson said, North West municipalities lack the skills and capacity to ensure effective financial management and reporting. He said municipalities spent R282 million on financial consultants in addition to the salary bill of Chief Financial Officers (CFOs) and Municipal Managers.
“The R282 million could be considered a wasteful expenditure. The AG identified compliance transgressions at all North West municipalities. The collapse of North West local government is not only felt in the lack of basic service delivery, but it is a key contributing factor in the decline of the provincial economy as many businesses close down or relocate to other parts of the country, where their operations could be supported by effective local government.
“More than a million people that want to work in North West can’t find a job here. As things stand, North West is on the verge of becoming a fully-fledged failed state should nothing change. While it may be a depressing thought, hope remains,” said Basson.
Meanwhile, the North West MEC for Treasury, Motlalepula Rosho said: “We have challenged the municipal leadership to confront their challenges head-on, emphasizing the need for a hands-on approach by all stakeholders to effectively implement the action plans.
“The importance of addressing the root causes of poor audit reports, primarily stemming from ineffective governance and financial management systems within the municipalities. Proactive measures, such as the implementation of audit recommendations, will enhance accountability and improve operations, ultimately leading to the recovery of the municipalities’ financial health.”
She said there is a crucial need for accountability from both municipalities and councillors to the citizens, as this transparency forms the foundation of a responsive local government capable of meeting the needs of society. Rosho said municipalities pledge to transform audit findings and improve governance.
“The leadership of municipalities in the province has united in acknowledging the pressing need to address the persistent negative audit reports received by their municipalities over the past years. Recognizing that these unfavourable audit outcomes have cast a shadow on the reputation of the province, the leadership has committed to a selfless and honest approach, working diligently to change the narrative surrounding their respective municipalities.
“This consensus emerged during a series of productive working sessions held between the Provincial Treasury and municipalities, collectively known as the 40 Days Audit Acceleration Plan, conducted from June 21 to 30. To effectively address the findings raised by the AG in the audit reports of various municipalities, the Provincial Treasury has developed a comprehensive 40-day audit acceleration plan programme,” said Rosho.
She said this programme aims to ensure that municipalities and their entities make significant progress in addressing the identified issues.
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