AG Report indicates a total collapse of Free State municipalities

Issued by David van Vuuren – DA Finance Spokesperson in the Free State Legislature
15 Jun 2022 in Press Statements

Note to Editors: Please find attached English and Afrikaans soundbites by David van Vuuren MPL.

The latest consolidated MFMA report from the Auditor General (AG) of South Africa indicates that municipalities under the ANC have already regressed past the point of no return.

The ANC has shown that it is incapable of turning around the sinking Free State, and it needs to go before the well is drained completely dry and all municipalities and the provincial government reach service delivery day zero.

The poor audit outcomes in the report are a direct reflection of the poor service delivery experienced by Free State residents and even where good audit outcomes are achieved, service delivery is not up to par. Even if the actions suggested by the AG are implemented, they will not result in improved outcomes.

Free State municipalities have the highest number of outstanding audits in the country. Since the 2016/2017 financial year, the Free State has wasted R254 million of the taxpayers’ money on consultants to improve financial outcomes. Yet it is disconcerting to see that in that time, the ANC leadership has proven itself incapable of achieving clean audits, even with external support. It is clear that external consultants do not provide good value for money.

Even with the assistance of external consultants and intensified municipal and provincial interventions from the Provincial Treasury, not one municipality has been able to achieve a clean audit or improved their audit outcomes over the last 5 years.

It is impossible to turn around the current situation without capable and qualified senior managers, which is currently prevented by the ANC’s cadre deployment policy. Ultimately, political intervention is needed. The ANC is currently being tasked with fixing problems they have caused, which is an impossible task. The AG refers to incoming councils to set the correct tone, but unfortunately mediocrity is entrenched in ANC-run councils run by the same ineffective political management who continue to be re-elected.

Despite Section 139 interventions from COGTA, municipalities under national and provincial administration have shown no improvement in service delivery.

The ANC in the Free State should be ashamed that only this province has a Metro Municipality under administration. Mangaung has large outstanding debts amounting to R8.2 billion, with irregular expenditure debt of R190 million. It is also criminal for government entities to forfeit money back to National Treasury as a result of underspending. Mangaung Metro was forced to forfeit R490.02 million in conditional grant funding that should have been spent on public projects, and this has not been done despite protests and pleas for service delivery from the public.

Free State municipalities owe large debts to SARS, Eskom and water boards. Municipalities in the province currently experience water losses up to R888.7 million, which is made even more egregious by our mounting water crisis. The astounding water losses are directly linked to a lack of adequate controls.

Creditor’s payment and debt collection are serious issues that need to be addressed. Payments should be made within 30 days, but currently average at 483 days. It is impossible to support municipal budgets which have shown that they cannot be trusted to pay creditors on time. In the same vein, no municipal cash flow can be sustained when it takes on average 563 days to collect outstanding debt. Municipalities cannot mitigate service delivery issues without effective debt collection, but the last 5 years have only seen an increase in debt and no relief. 

Within municipalities, officials have shown that they are incapable of fulfilling their job requirements. There is no accountability for public officials and no effective consequence management from management.  ANC cadre deployments have infected municipal staff with mediocrity and corruption. The DA agrees with the AG’s comments that effective consequence management must be implemented – but this is currently impossible because the ANC refuses to take action against its own members and cadres due to factional infighting among cadres.

Public officials and politicians cannot place themselves before the public’s interests. They are not entitled to do as they please with public money, they are stewards of it, tasked with using it to improve the lives of the people. If these officials and politicians are incapable of fulfilling the basic functions of public servants, they must go.

The AG’s reports over the past several years have called for immediate action, and yet the ANC has carried on with business as usual – cadre deployment, corruption and poor service delivery.

Only DA-run governments show stable audit outcomes and are able to deliver basic services to residents. This is the only choice and electoral action available for the Free State residents.