AG report: National intervention needed with failing municipalities

Commenting on AG Terence Nomembe’s report on the poor municipal returns this year, the financial and fiscal commissioner, Bongani Khumalo, told a special press gathering  that a point had to be created legislatively in the national and municipal finance rules where national intervention had to kick in.

The release of the Auditor General’s report this year was accompanied by the presence of not only minister in the presidency, Collins Chabane, but also the minister of finance, Pravin Gordhan, and minister of co-operative government, Richard Baloyi.

All appeared to be in support of the auditor general, Terence Nomembe, who conveyed to the media present that a mere 5% of the 283 municipalities in South Africa had received totally clean audits.

Gauteng, the largest of the audits in monetary terms, remained a constant worry, the AG said in his report, with no improvement over last year with its qualified report. Quite clearly its chaotic billing situation and tendering processes have left auditors in the cold as well as in the dark.

Five provinces, which included Gauteng, but also including North West, Free State, Northern and Eastern Cape could not claim one municipality with a single clean report; the final tally of clean reports being only a mere thirteen.  The “fruitless and wasteful expenditure” totals for all nine provinces, amongst the 283 municipalities, increased from R6bn in 2010 to R10bn this year.

53% of the municipalities received qualified, or what may otherwise termed as bad, reports but on a more positive note Nomembe drew attention to the fact  that once a large number of municipalities learned of their status, corrections were made and about 45  corrected the result to the AG’s satisfaction.

Among the issues identified as “challenges” were procurement, service delivery, and errors in financial disclosure. The municipalities with clean audits were in KwaZulu-Natal, Limpopo, Mpumalanga, and the Western Cape. The Western Cape had a problem that five reports were not submitted on time.

Said commissioner Khumalo, “The next step will have to be more rigid legislation, the finance and fiscal commission laying some of the blame with shortcomings in the Public Finance Management Act. (PMFA) on intervention processes.

Whilst the PMFA has been setting norms and standards successfully at national level, the commission says that this is not translating down to lower level tiers of government. Whilst the Municipal Finance Management Act (MFMA) allows national government to intervene it is only at cabinet discretion and is therefore a cabinet decision, Khumalo said.

Minister Gordhan promised amendments to national legislation insofar as it affected provincial and local government relationships. Western Cape premier Helen Zille said in a separate statement on the subject immediately after the media meeting that the national government had been deaf to her pleas on this same subject.

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