PRETORIA, Gauteng — The Auditor-General’s latest report on local government has revealed a troubling trend: municipalities are increasingly relying on external consultants to bridge a persistent skills shortage, yet failing to achieve meaningful improvements in financial reporting and accountability. According to governance experts, this overreliance highlights deep-seated compliance and management failures within the local government sector.
Governance expert Hlumelo Xaba and University of the Free State research fellow Dr. Harlan Cloete recently unpacked the findings, pointing to a complex web of revenue constraints, legislative non-compliance, and poor internal management.
Dr. Cloete noted that local government finances are severely constrained by inadequate revenue collection. While municipalities rely primarily on rates, taxes, and the equitable share, approximately 70 municipalities currently have their equitable share withheld by the National Treasury. These underlying financial constraints contribute significantly to poor performance across the board.
Despite these challenges, the Municipal Finance Management Act (MFMA) provides clear frameworks for municipal operations. Chapter 11 of the MFMA stipulates provisions for procurement, including the hiring of financial consultants. However, Xaba emphasized that a widespread lack of compliance by municipal accounting officers drives the unnecessary outsourcing of roles that should be handled internally. The Auditor-General’s report highlighted specific financial irregularities, such as a Northern Cape municipality (Joe Morolong) failing to maintain proper records of financial statements submitted for audit.
This outsourcing trend is not limited to financial accounting. Municipalities are increasingly hiring private firms to prepare financial statements for the Auditor-General, as well as outsourcing engineers to assess critical water drainage and sewer systems. These are not inexpensive exercises, yet they represent a band-aid solution to a deeper systemic issue.
Dr. Cloete pointed out that the Skills Development Act and the Skills Development Levies Act were passed in 1998, requiring municipalities to submit annual workplace skills plans to the Local Government Sector Education and Training Authority (SETA). The SETA offers discretionary and mandatory grants to assist in addressing these gaps. However, research indicates a severe management problem: municipal managers frequently abdicate their responsibility for staff development, dumping the entire burden on human resources departments.
Consequently, the return on investment for these skills plans remains exceptionally poor. Dr. Cloete described the Auditor-General’s cited figure of a 54% skill shortage as “bizarre” given 28 years of skills development legislation. The root cause, he argued, is “training for the sake of training,” with no logical link between employee development, the Integrated Development Plan (IDP), and municipal strategy. Even progressive measures like the recognition of prior learning for blue-collar workers are being mismanaged or denied due to administrative neglect.
When addressing where accountability lies in the local government value chain, Xaba was clear: the Municipal Manager (MM) bears the primary responsibility. As the administrative head of the municipality, the MM is legally entrusted under the Municipal Structures Act and the MFMA to exercise optimal oversight over operations, staffing, and accountability mechanisms. This includes ensuring the timely submission of financial statements and annual reports. Weak internal controls and a fractured accountability value chain are the primary catalysts for the maladministration and malfeasance currently plaguing the public sector.
The ability to retain or attract mid-career and seasoned professionals also varies drastically depending on the municipality. Metro municipalities, such as the City of Tshwane or the City of Johannesburg, receive larger budgets and can feasibly attract professionals with the necessary prior learning and experience. Conversely, rural Category B municipalities, particularly in provinces like the Eastern Cape and Free State, face severe resource constraints that make competing for top talent nearly impossible. Furthermore, Dr. Cloete warned that local government remains a highly politicized, volatile, and uncertain environment, which actively deters skilled professionals from entering the sector.
To resolve this crisis, Dr. Cloete proposed a structural shift in how skills development is managed. He advocated for the creation of a “skills development equity budget implementation plan” that mirrors the Service Delivery Budget Implementation Plan (SDBIP). This would decentralize responsibility, making every senior manager and director directly accountable for the skills plan within their specific directorate, rather than leaving it isolated within HR.
These systemic failures also cast doubt on the progress of national reform agendas. When President Cyril Ramaphosa took office in 2018, he made the professionalization of the public service a cornerstone of his State of the Nation Addresses. According to Xaba, there has been little to no tangible change in the implementation of this objective within local government. While strides have been made on paper, such as the White Paper on Local Government, the practical reality remains stagnant. Although a small number of municipalities have shown improved audit outcomes, the vast majority have either remained in the same precarious position or actively digressed.
Until municipal leadership takes skills development and internal accountability as seriously as they do service delivery and integrated development planning, experts warn, the cycle of overreliance on external consultants and financial mismanagement will continue unabated.
