SAMWU ALARMED BY THE CRITICAL STATE OF MUNICIPALITIES AS OUTLINED BY THE 2022-23 MFMA AUDIT FINDINGS

TO ALL MEDIA HOUSES
For immediate release

27 August 2024

SAMWU ALARMED BY THE CRITICAL STATE OF MUNICIPALITIES AS OUTLINED BY THE 2022-23 MFMA AUDIT FINDINGS

The South African Municipal Workers’ Union (SAMWU) is gravely concerned by the 2022-2023 Municipal Finance Management Act (MFMA) audit outcomes as released by the Auditor General (AG), Tsakani Maluleke, on the 27th August 2024. Briefing the Portfolio Committee on Cooperative Governance and Traditional Affairs (COGTA), the AG revealed alarming issues related to financial management, service delivery, and governance across many of South Africa’s municipalities. While there have been some positive developments, the overall picture is one of severe challenges that threaten the financial stability and service delivery capacity of numerous municipalities.

According to the AG, an overwhelming number of municipalities continue to struggle with poor financial management practices. Her findings indicate that 110 municipalities collectively incurred R27.3 billion in fruitless and wasteful expenditure. This rise in expenditure is indicative of systemic issues within municipal financial governance that demand immediate attention. Such expenditures reflect a widespread disregard for financial regulations and highlight the urgent need for stronger oversight and enforcement mechanisms.

The AG further revealed that only 38 municipalities received clean audits for the 2022-23 financial year, representing a mere 13% of all municipalities. This is a slight improvement from the previous year, but remains far below acceptable levels, indicating that many municipalities are still failing to meet basic financial management standards. Conversely, 66 municipalities received disclaimers or adverse audit opinions, signifying severe shortcomings in their financial reporting and internal controls. These audit outcomes suggest that many municipalities are not only struggling to manage their finances effectively but are also failing to account on how public funds are being used.

The AG’s findings on service delivery are equally troubling. It highlights that many municipalities are unable to provide consistent and reliable services to their communities, largely due to inadequate financial management and infrastructure investment. As the AG points out, 57% of municipalities are unable to maintain or upgrade their water and sanitation infrastructure, leading to frequent service disruptions and, in some cases, complete service failures. This lack of investment in critical infrastructure is directly linked to the financial mismanagement highlighted in the report, as funds that could be used for infrastructure development are often wasted or misallocated.

In the 2022-23 fiscal year, 74 municipalities reported that they were unable to collect more than 80% of their billed revenue, leading to significant shortfalls in their operating budgets. This has had a direct impact on their ability to deliver essential services such as water, electricity, and sanitation. Moreover, the AG notes that 81 municipalities are facing severe cash flow problems, with many unable to pay their creditors on time. This financial instability has far-reaching consequences for service delivery, as it hampers municipalities’ ability to procure goods and services, maintain infrastructure, and pay workers.

These audit outcomes raise serious concerns about the state of governance and accountability within the local government sector. A total of 87 municipalities have vacant senior management positions, including Chief Financial Officers (CFOs) and Municipal Managers, which are critical for effective financial oversight and decision-making. The lack of permanent leadership in these roles has led to a breakdown in financial governance, with many municipalities failing to implement basic internal controls or follow up on audit findings from previous years.

Furthermore, the AG highlights that 102 municipalities have not implemented any of her office’s recommendations from the previous audit cycle. This indicates a worrying lack of accountability and a culture of impunity within local government. The failure to address audit findings not only undermines public trust in the sector, but also perpetuates the financial mismanagement and service delivery failures highlighted in the report.

The financial and governance challenges outlined in these audit outcomes have significant implications for both municipal workers and the communities they serve. The inability of municipalities to manage their finances effectively has resulted in delayed salary payments for workers in 29 municipalities, creating financial uncertainty and hardship for those employees. Additionally, the AG notes that 45% of municipalities have reduced their staffing levels due to financial constraints, leading to increased workloads for the remaining workers and contributing to burnout and low morale.

The service delivery failures identified in the audit outcomes also have a direct impact on communities, particularly in poorer and rural areas. The inability to provide basic services such as water, electricity, and sanitation not only affects the quality of life of residents but also exacerbates existing socio-economic inequalities. SAMWU is deeply concerned that the continued mismanagement of municipal funds and the resulting service delivery failures are placing an undue burden on municipal workers, who are often blamed for issues beyond their control.

In light of these findings, SAMWU calls for urgent and decisive action to address the financial, governance, and service delivery challenges facing the country’s municipalities. The Union urges the national and provincial governments to strengthen oversight and support mechanisms for municipalities, particularly those that are struggling to comply with the MFMA. This should include targeted interventions to improve financial management, enhance accountability, and ensure that municipalities are adequately resourced to fulfil their service delivery mandates.

Furthermore, SAMWU calls for a renewed focus on protecting the rights and well-being of municipal workers. As the backbone of local government, workers must be provided with the necessary tools, resources, and support to carry out their duties effectively. This includes ensuring timely payment of salaries, improving working conditions, and addressing the staffing shortages that are exacerbating service delivery challenges.

SAMWU also demands that stronger measures be put in place to hold municipal officials accountable for financial misconduct and to ensure that audit recommendations are implemented without fail. Additionally, the Union calls on all Municipal Managers whose municipalities incurred fruitless and wasteful expenditure to be held personally liable for the waste of the much-needed municipal resources. The culture of impunity that currently exists in municipalities must be eradicated if we are to restore public trust in local government and improve service delivery outcomes. SAMWU stands ready to work with all stakeholders to ensure that these challenges are addressed and that our municipalities can deliver the services that our communities so desperately need.

Issued by SAMWU Secretariat

Dumisane Magagula,
General Secretary
(076 580 4029),

Or

Nkhetheni Muthavhi,
Deputy General Secretary
(082 526 5224)

Or

Papikie Mohale,
National Media Officer
(076 795 8670).