PROVINCIAL NEWS - Jacques Smalle, MP - DA Shadow Deputy Minister of Cooperative Governance and Traditional Affairs (Cogta), said that the financial losses across 176 municipalities in South Africa were estimated to be R5,19 billion.
In an interview with Smalle, he said that the Auditor General of South Africa (Agsa) recently released a report into the material irregularities (MIs) in local government. This report addressed, among others, the non-compliance with or contravention of legislation, and the misuse or loss of a material public resource for the 2021/22 financial year.
The audit highlighted a systemic failure by various role players to hold public servants accountable for serious financial maladministration in local government.
"Material irregularities are defined as any non-compliance with, or contravention of, legislation, fraud, theft or a breach of a fiduciary duty identified during an audit performed under the Public Audit Act that resulted in or is likely to result in a material financial loss, the misuse or loss of a material public resource, or substantial harm to a public sector institution or the general public," said Smalle.
Over R5b lost
According to Smalle, Agsa reported that more than five billion rand in financial losses were accrued across various municipalities, of which less than two hundred million rand has been recovered.
Of the fraudulent municipalities recorded, it was noted that Northwest was responsible for the highest number of MIs at 46 and also the slowest to respond to them. Free State, KwaZulu-Natal and the Eastern Cape were also high with 42 MIs each.
Only 13 municipalities invested more than one and a half billion rand of which less than ten percent was recovered through the liquidation process. To date only a handful of officials have been charged and mayors and councillors in these municipalities are yet to be held accountable.
"Municipalities do not function in isolation and therefore it will be legal to issue a certificate of debt against transgressors who have been responsible for significant financial harm to the institutions they were supposed to manage," said Smalle.
Smalle requested the National Minister of Cooperative Governance and Traditional Affairs, Thembi Nkadimeng, to tighten consequence management mechanisms, and improve systems that monitor financial accountability and financial recovery, that prevent financial irregularities and improve accountability.
The inability of municipal councils or accounting officers to act jeopardises the possibility of recovering lost funds, addressing the impact of financial mismanagement, and holding to account responsible officials and/or implicated suppliers.
Unused grant funding
Reacting to Smalle's statement on 7 March, Dr Vicky Knoetze, MPL, DA Shadow MEC for Cogta, said that EC municipalities failed to spend over R2,2b in grant funding. Knoetze states that at least R2,2b in grant funding has been returned to the national treasury by municipalities in the Eastern Cape over the past four financial years because they failed to spend the funds allocated for key infrastructure projects.
The result of this underspending is that hundreds of thousands of people are being forced to live with sewage in their streets, because the people who have been placed in charge are incapable of spending the money they have been given.
Dr Vicky Knoetze, MPL, DA Shadow MEC for Cogta
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Infrastructure failing
Knoetze said that critical infrastructure projects, ranging from water augmentation to electrification and bulk infrastructure upgrades, have fallen because of maladministration and incompetence. These shocking figures, which exclude funding returned by the province's two metros, were revealed by Cogta MEC Zolile Williams, in response to a parliamentary question from Knoetze.
She further stated that based on the figures provided, between the 2019/20 and 2022/23 financial years, R1,147b of the Municipal Infrastructure Grant (MIG) allocation, R176,2m of the Integrated National Electrification Programme (INEP) allocation, R315,2m of the Water Services Infrastructure Grant (WSIG) allocation, and R553m of the Regional Bulk Infrastructure Grant (RBG) allocation was returned.
"Just look at the continuous problems with water infrastructure across the Eastern Cape, especially in areas such as Makana and Alicedale, as well as Koukamma and many other areas," Knoetze said. "With a shrinking fiscal budget, every rand allocated as a grant to municipalities must be utilised optimally and effectively."
The unspent R2,2b represents a missed opportunity to address critical infrastructure needs across various municipalities. This failure to utilise allocated funds not only hampers the progress of essential projects but also raises concerns about the efficiency and accountability of municipal administrations.
Cross-spending of grants
One of the biggest issues within municipalities is the spending on infrastructure grants to address socio-economic challenges and service delivery. "How effective is the support provided by the department to municipalities?" she asks.
Knoetze said Cogta was mandated to support municipalities, yet it has repeatedly failed to rescue the 16 municipalities across the province that are in financial distress. These municipalities have not shown any significant improvement over the past five years.
"Strengthening monitoring mechanisms and providing technical assistance to struggling municipalities can help prevent the recurrence of underspending and enhance the overall effectiveness of grants and the management thereof," she said.
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