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AG report: Limpopo municipalities have regressed and declined

  • by African Times
  • 10 Months ago
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THE Auditor General has painted a bleak picture of municipal governance in Limpopo, with audit outcomes regressing and the state of good governance declining once again.

Kimi Makwetu’s report shows that accountability has continued to fail, the quality of submitted reports has dropped and irregular expenditure is “unacceptably high”.

In addition, there were no consequences for the provincial municipal officials behind the mess.

Unpacking the local government audit results in Polokwane last week, the AG’s business executive responsible for Limpopo, Nthanyiseni Dhumazi, said the province had failed to get a single clean audit.

All of the 27 municipalities failed to improve on their audit results and showed an overall regression when compared to the previous year.

Among others:

  • Irregular expenditure showed a slight improvement from R1.324 billion to R1,316 billion;
  • A total of 95% of irregular expenditure in 2016-2017 resulted from instances of non-compliance with supply chain management regulations;
  • At least 116 awards worth R455 million were made to service providers who are close family members, partners and associates of persons in service of the state;
  • Fruitless and wasteful expenditure amounted to R243 million (R75 million in 2015-2016);
  • No fewer than 21 municipalities spent R96 million on consultants for financial reporting in 2016- 2017;
  • There was no return on investment as R71 million was spent on consultants that received qualified, disclaimed or adverse opinions;
  • Nine municipalities (33%) managed to obtain unqualified audit opinions;
  • Only three (13%) of the 23 municipalities produced reports that were useful and reliable;
  • The root cause of poor performance is a lack of capacity and understanding of the performance reporting process;
  • Sekhukhune District Municipality (R333 million), Vhembe District Municipality (R226 million) and Polokwane municipality (R199 million) are the top contributors of irregular expenditure;
  • The top three contributors of fruitless and wasteful expenditure are Mopani (R164 million) for a water project that was discontinued, Sekhukhune (R22 million) for SARS penalties and Musina (R17 million) for interest on late payments.

Dhumazi said all of Limpopo municipalities had material findings due to non-compliance with legislation.

“The blatant disregard of controls, compliance with legislation and recommendations made by my office to hold officials accountable has created a culture of complacency,” she said.

Dhumazi said the most common compliance finding related to the poor quality of financial statements submitted for auditing (100%), not presenting authorised expenditure (96%), and the poor management of procurement and contracts (82%).

Limpopo’s poor municipalities including Vhembe, Giyani and Tubatse/Fetakgomo are among the entities that illegally invested R1.5 billion in VBS Mutual Bank.

More than R900 million of that money has since vanished from the bank’s accounts, forcing Reserve Bank Governor Lesetja Kganyago to place the bank under curatorship. The Hawks are investigating four criminal cases against VBS officials who allegedly looted the bank. The bank’s curator has filed a High Court application for permission to sequestrate the assets of five of VBS’ senior officials including Head of Treasury Phophi Mukhobodwane, COO Robert Madzonga and Vele Chairperson Tshifhiwa Matodzi.

Dhumazi said there were accountability failures in local government in Limpopo, with management failing to implement recommendations and resolutions of the various assurance providers such as internal audit units, audit committees and Municipal Public Accounts Committees (MPACs).

She added that Premier Stan Mathabatha’s commitments “to deal with poor performing municipalities have not acted upon” in order to turn around the “state of declining good governance in the province”.

“The root cause of poor performance reporting is a lack of capacity and understanding of the performance reporting process,” she said.

“We remain concerned about the status of compliance with legislation in the province.”

Limpopo MEC for Co-operative Governance, Human Settlements and Traditional Affairs Jerry Ndou acknowledged the AG’s report and that the back to basics approaches to make municipalities more functional should be implemented.

“With all the energies and focus being on ensuring success rate on the service divertible, the keen interest should be to ensure our municipalities are able to produce clean audit outcomes. So far the picture we get is that there are eight audit outcomes that we must work on,” Ndou said.

He said that the department had developed differentiated support plans to targeted municipalities and identified the need to support them with preparation for annual financial statements and annual reports, the appointment of senior managers in municipalities, revenue enhancement measures and forward planning to stimulate expenditure.

Newly elected Limpopo ANC secretary Soviet Lekganyane told African Times two weeks ago that one of his priorities was to improve local governance and deal with financial mismanagement. The dire municipal governance situation in Limpopo prompted Minister of Cooperative Governance and Traditional Affairs, Dr Zweli Mkhize, to meet seven distressed municipalities in Polokwane last week as part of an oversight visit to dysfunctional municipalities in the province.

He emphasised that the visit was to strengthen the back to basics approach in municipalities.

“We want to clean municipalities and ensure that our communities are able to benefit from them,” Mkhize said.

He noted Mopani and Vhembe as the two district municipalities that were distressed and Thabazimbi, Musina, Mogalakwena, Fetakgomo-Tubatse, and Modimolle-Mookgopong as local municipalities that needed attention.

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