PRETORIA, GAUTENG — The latest Auditor-General report paints a concerning picture of the South Africa local government sector, revealing that the sixth administration has failed to make the necessary progress in strengthening governance and improving service delivery. While there are minor “green shoots” indicating an improvement in the quality of financial statements handed over by some councils, widespread financial mismanagement and poor accountability continue to plague municipalities across the country.
Audit Outcomes and Financial Controls
According to the recent briefing, only 39 municipalities managed to secure a clean audit. On the other end of the spectrum, 1% of municipalities received disclaimed audits, indicating that their financial statements fell far below the standards required by the Auditor-General.
Furthermore, a staggering 117 municipalities fell into a “yellow” category. These councils submitted their financial statements but were flagged for non-compliance and irregular expenditure. When asked if councils have better control over their spending than in the past, the simple answer remains no, as irregular expenditures continue to drain local resources.
Widespread Struggles in Key Municipalities
The report highlights severe operational and financial struggles in several key regions, including the Free State, North West, eThekwini, and Johannesburg.
In provinces like the Free State and North West, municipalities are losing significant portions of their budgets to ghost workers and problematic procurement processes. Additionally, there is a marked failure to invest in upskilling existing municipal staff. Instead, these councils are overspending on external consultants without properly managing them, leading to further financial leakage and compromised service delivery.
Regression in Historically Clean Municipalities
Even historically well-performing municipalities are showing signs of regression. The City of Cape Town in the Western Cape, which has traditionally delivered clean audits over the past few years, is now facing scrutiny for the 2023/24 period. Concerns have been raised regarding the integrity of its infrastructure and mounting financial pressures that are beginning to weigh heavily on the city’s service delivery costs.
The Auditor-General Calls for Leadership Accountability
Addressing the root causes of these systemic failures, the Auditor-General emphasized that the tone of leadership directly dictates the health and efficiency of a municipality. The AG stressed that the quality, caliber, ethics, and priorities of elected and appointed officials set the standard for the entire institution.
“The tone of leadership says a lot. It has a direct impact on what happens in that institution,” the Auditor-General stated. “I’m talking about the quality, the caliber, the ethics, the priorities of the people elected and appointed to lead municipalities as mayor, the speaker, as councilors.”
The AG noted that political leadership sets the tone for administrative appointments, including municipal managers and Chief Financial Officers (CFOs), and determines what is considered acceptable performance and what gets punished.
To move the needle toward better performance, the Auditor-General urged a strict focus on the competence, expertise, and stability of administrative leadership. Ensuring that accounting officers and city managers have the requisite skills, combined with high-caliber executive leadership, is deemed essential to prioritize service delivery and restore accountability to citizens.
