Auditor-general’s shocking findings about mismanagement by KwaZulu-Natal municipalities

eThekwini municipality. Photo: Supplied

eThekwini municipality. Photo: Supplied

Published Jun 1, 2023


Durban – Auditor-General Tsakani Maluleke (AG) made shocking findings in the state of KwaZulu-Natal municipalities in her 2021-2022 audit report which was released on Wednesday.

She said they issued notifications for 45 material irregularities with a total estimated financial loss of R553.74 million.

So dire is the situation the AG reported that at least nine municipalities face imminent collapse under the weight of years-long challenges.

“Nine municipalities reported doubt about their ability to continue operating, with six of these having reported such challenges for at least the last four years.

“The lack of sound financial management practices within municipalities has a negative impact on crucial expenses such as infrastructure repairs and maintenance, further hampering the delivery of services,” the AG said in her report.

The AG also found that municipalities are failing to collect their revenue, they have also failed to implement credit-control and debt-collection policies.

“On average, they will find it difficult to recover 66% of their debt.

“They have also failed to implement credit-control and debt-collection policies, and we issued notifications for material irregularities relating to writing off debts without attempting to recover them, and thus failing to raise revenue.

“Because of cash-flow constraints, municipalities also struggled to promptly pay off their debts.

“At year-end, they owed Eskom a total of R820.5m that was past due, and the water boards a combined R1.1 billion that was in arrears.”

In some instances, the AG was forced to rope in the Special Investigating Unit (SIU) to probe a case where the IFP-run Amajuba district municipality in the north of the province paid for overpriced goods.

“At Amajuba District Municipality, we referred one on overpricing of procured goods and services to the Special Investigating Unit for investigation.”

Specifically, the AG found that the eThekwini water and power was because there were no maintenance plans to inform the actual budget needed to maintain its assets, and thus faced major water and electricity supply challenges due to failing infrastructure.

“eThekwini Metro did not have maintenance plans to inform the actual budget needed to maintain its assets, and thus faced major water and electricity supply challenges due to failing infrastructure.

“The crumbling municipal infrastructure has not only affected service delivery but has also increased the risk of harm to communities and the environment,” the AG recorded in her report.

In another shocking incident of financial mismanagement, the ANC-led Harry Gwala District municipality in southern KwaZulu-Natal and which is led by mayor Zamo Nxumalo, the AG shockingly found that a consultant was overpaid to conduct a conditional assessment of water infrastructure.

“We notified the municipal manager of Harry Gwala District Municipality of a material irregularity for not complying with contract management legislation and consequently overpaying a consultant to do a conditional assessment of water infrastructure.”

Not to be outdone in wrongdoing, the ANC-led Umkhanyakude District Municipality in northern KwaZulu-Natal failed to submit its financial statements to the AG Office on time and their audit is not included in the latest audit results.

The province’s perennial bad boy of the local government sphere, Msunduzi (Pietermaritzburg) Local Municipality, continued where it left with its bad audit findings.

The AG said they identified significant internal control deficiencies in the municipality’s billing system, where revenue from the sale of water did not match internal meter-reading reports.

Msunduzi Local Municipality was slow to resolve material irregularities because of instability at municipal manager level and delays in completing investigations and disciplinary processes, prompting us to issue remedial action for a material irregularity relating to revenue not billed at the landfill site,” the AG said about the municipality.

Msunduzi is not only failing to manage its affairs, but it is also struggling to pay a debt owed to Eskom and Umgeni water board for bulk water supply.

“Msunduzi Local Municipality is responsible for 42% (R341.7m) of the arrears owed to Eskom and 75% (R829.15m) of the arrears owed to the water boards.”

On a positive note, the IFP-led King Cetshwayo District Municipality and the City of uMhlathuze and Okhahlamba local municipalities sustained their clean audit outcomes because of the level of commitment of municipal managers and senior management, the AG said.

The AG reports show that Ugu District Municipality, AbaQulusi, Dannhauser, eDumbe, Inkosi Langalibalele, Nquthu, Ray Nkonyeni, uMngeni, and uMshwathi local municipalities improved their audit outcomes.

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