Johannesburg - Municipal officials handling taxpayers’ money without the required qualifications have been handed a lifeline to get qualified in the next 18 months – or be fired.
Finance Minister Pravin Gordhan has extended the deadline for municipal officials in finance and supply chain management departments to obtain the required financial qualifications.
Had Gordhan not extended the deadlines, officials – including chief financial officers – in 269 of the country’s 278 municipalities would have to be fired immediately.
In the country’s existing environment of skills shortages, the situation would also throw municipalities into recruitment chaos.
According to the Treasury, 269 municipalities indicated they needed more time for their officials in financial departments and supply chain management to be fully qualified.
The extension comes in the same month that Co-operative Governance Minister Lechesa Tsenoli approved regulations for some city managers in the country’s metropolitan municipalities to earn up to R740 000 more than President Jacob Zuma to retain scarce skills. Though capping the amount to be paid to municipal managers in the metros at just over R2.8m a year, the regulations make provision for municipalities to pay an extra 20 percent “market premium allowance”.
According to regulations published in 2007, officials were given until January last year to comply with minimum competency levels, so many would have had to be fired if Gordhan had kept to the deadline.
They now have until September next year to get the requisite qualifications and meet skills and operational requirements.
In the meantime, they will be among the municipal officials handling more than R40 billion this financial year, allocated by the Treasury to the country’s 278 municipalities in the form of infrastructure grants. Financial officials’ incompetence and lack of financial skills have been red-flagged in successive reports of the Auditor-General as contributing to municipalities’ failure to obtain clean audits.
The AG’s audit report for the 2011/12 financial year revealed that only nine municipalities had earned clean audits, with another eight municipal entities also receiving clean audits. More than R9bn was deemed as irregular expenditure, with fruitless and wasteful expenditures amounting to more than R560 million.
The use of consultants to help with municipalities’ financial audits had also increased. The extension also allows municipalities to hire officials who do not meet the requirements, provided they acquire such qualifications within 12 months of their employment.
Failure to obtain the qualification would result in the official’s employment being terminated one month after the 12 months has elapsed. The regulations require chief financial officials in municipalities with revenue of over R500m to have obtained at least an honours degree, a municipal finance certificate or be registered as a chartered accountant.
Those in municipalities with revenue of less than R500m are required to have a BA degree and a South African Qualifications Authority-accredited certificate in Municipal Financial Management.
Treasury spokesman Jabulani Sikhakhane said the decision to extend the compliance period was based on the fact that 269 of the 278 municipalities demonstrated that they had taken reasonable steps towards compliance.
“But what cannot be tolerated is the continued employ in key financial management and supply chain management positions of persons who do not have relevant skills or experience and who have made no effort to address this,” said Sikhakhane.
The SA Local Government Association (Salga) has welcomed the extension, saying though the minimum competency levels had noble intentions, the impracticality of implementation of last year’s deadline would have brought municipalities to a standstill.
Salga national executive committee member Subesh Pillay said strictly adhering to the regulations without amending time frames would have created difficulty for municipalities.
He said employing officials from the private sector would prove difficult, especially where the municipal finance qualification was mandatory.
“The chief financial officer of First National Bank would probably not be able to be the CFO of the City of Tshwane tomorrow, if there was no extension,” he said.
According to the regulations published by Tsenoli, managers getting a 20 percent premium while earning the maximum R2.8m will be R560 000 better off, taking their annual pay to almost R3.4m, which would represent R740 000 more than Zuma’s salary.
The regulations, which come into effect on July 1, can only be waived in exceptional circumstances and after good cause is shown by a municipality.
Municipal managers, depending on the size of the municipality, can earn a minimum salary between R576 000 and just below R1.9m, midpoint packages between R640 000 and R2.3m. Maximum packages range from R704 000, for small municipalities, to R2.8m for the country’s eight metro areas.