Eastern Cape municipalities have serious problems‚ AG warns

Auditor-general Kimi Makwetu has raised concern over the financial situation of municipalities in the Eastern Cape.

In his national municipal audit report for the 2016/17 financial year‚ Makwetu said on Wednesday that the trend of improvements in the past few years did not continue.

Six municipalities in the Eastern Cape improved their outcomes - but seven regressed.

“We warned these municipalities to keep the administration as stable as possible‚ fill vacant positions‚ and not underestimate the complexities of the mergers of municipalities. Of greatest concern in this province were the accountability failures in the areas of supply chain management and infrastructure development.

“Infrastructure projects were not delivered as a result of poor planning and [poor] project management. Irregular expenditure of R13.55-billion‚ 48% of the total‚ was incurred by municipalities in the Eastern Cape. This represents 35% of the provincial local government expenditure budget‚” Makwetu said.

Makwetu released the audit outcomes of South Africa's 257 municipalities and 21 municipal entities in Cape Town on Wednesday.

In the report‚ the Nelson Mandela Bay Metro in the Eastern Cape incurred R8.18-billion in irregular expenditure‚ topping all the municipalities in the country.

Second on the list was another Eastern Cape municipality‚ OR Tambo District‚ with R3-billion of irregular expenditure.

Third was the city of Tshwane with R1.8-billion‚ Rustenburg municipality in the North West came in fourth with R984-million and Ngaka Modiri Molema District in the North West took the fifth spot with R828-million. The city of Johannesburg took the sixth spot with R706-million in irregular expenditure while the city of Ekurhuleni recorded R591-million‚ taking the seventh place.

On the eighth spot was another Eastern Cape municipality‚ Buffalo City Metro‚ with R584-million and the ninth place was taken by North West municipality Madibeng‚ with R562-million in irregular expenditure.

The last of these top 10 municipalities which contributed the most to irregular expenditure was Moretele‚ with R557-million. All these 10 municipalities have incurred irregular expenditure for the past three years.

Presenting the report‚ Makwetu said the expenditure budget for the municipal sphere in the 2016/17 was R362.13-billion. Municipalities with clean audit opinions represented R25.68-billion (7%) of this amount‚ while those with unqualified opinions with findings represented R243.82-billion.

Municipalities with qualified audit opinions made up R61.14-billion (17%) of the total budget‚ while those with adverse and disclaimed opinions represented R22.81-billion (6%). Municipalities with outstanding audits constituted R8.68-billion (2%) of the total expenditure budget.