AG Report: Horror story for KZN as the future of several municipalities hangs in the balance

15 Jun 2022 in Press Statements

The Auditor-General’s (AG) Annual Consolidated General Report on the financial state of KwaZulu-Natal’s (KZN) municipalities reads like a horror story, with seven municipalities identified as having ongoing serious issues for at least the past three years. This amid serious doubts as to whether they will continue to be financially viable.

According to the report: “The audit outcomes reflect a net regression over the term of the previous administration. This was partly due to inadequate leadership action in responding to key risk areas, political infighting and instability in key positions. The lack of enforcement of accountability and consequence management by leadership also persisted amid some improvements in audit outcomes since the previous year.”

The AG’s comments speak directly to KZN CoGTA MEC, Sipho Hlomuka, and his department’s inability to bring stability to the municipalities in our province.

This while the situation has worsened in terms of political stability since last years’ report, largely due to the many hung municipalities following the November 2021 Local Government Elections (LGE).

It is now vital that the MEC and his Department come up with a clear plan on how to bring order and structure to KZN’s municipalities.

Of specific importance is the stability of our province’s only metro, eThekwini. In 2020-21, eThekwini accounted for 53% (R47 billion) of the local government budget in the province. Today, a year later, this critical metro is governed by an unstable coalition where the deputy mayor – who is not an ANC member – has frequent public spats with the ANC-run provincial government.

While eThekwini managed to retain its unqualified opinion with findings, the A-G did raise several concerns, with the recommendation that the metro start focusing on strengthening its monitoring and review of procurement and consequence management.

This will require clear leadership, something that is sadly lacking in our province as ANC congress campaigning seems to take priority over the effective running of our municipalities.

Another municipality that should be keeping the MEC awake at night is Inkosi Langalibalele, which again received a disclaimed audit opinion – the worst audit opinion a municipality can receive.

This means that the municipality could not provide auditors with sufficient evidence of most of its amounts and disclosures within its financial statements. As a result, the AG is currently unable to express an opinion and also unable to determine what was done with service delivery funding for the past year. This is an unacceptable situation.

The AG’s outcomes – in most instances – are set to make the lives of KZN’s people even more difficult in the days and years ahead. This is particularly relevant when one considers that provincial municipalities currently owe Eskom R1.85 billion and while 15% of all municipalities also reported a deficit.

The future of KZN’s municipalities is hanging in the balance. Without proper leadership, the people of our province have little to look forward to.