The Auditor General (AG) report has revealed working trends of financial mismanagement, poor consequence management and poor revenue collection by most KwaZulu-Natal municipalities.

AG Tsakani Maluleke’s report covers the period from 1 July 2023 to 30 June 2024. 

According to the report, shared with the KwaZulu-Natal Treasury headed by MEC Francois Rodgers, poor financial management remains prevalent as municipalities lost revenue because they were not billing and collecting money and experiencing financial losses. 

They are also not cautious with their spending practices.

The issue of poor financial management was mainly prevalent in ANC-run eThekwini, the only metro in the province, where irregular expenditure was recorded at R1.6 billion and fruitless and wasted expenditure stood at R6.7 million. 

The AG also recorded that the metro water loss is above normal at 53 percent (worth R2 billion) of the water it buys from the Umngeni-Uthukela Water Board before it reaches paying consumers .

Moreover, Maluleke reported that in most municipalities, infrastructure projects are delayed, costing more than they are planned. The projects are of poor quality, and new infrastructure is not put into use as soon as it is ready. 

“Existing infrastructure continues to deteriorate because it is not properly maintained and safeguarded,” the AG report said. 

The report noted that some municipalities are using outdated IT infrastructure, affecting key financial and performance reporting systems and are exposed to cybersecurity risks. 

Maluleke’s report also raised concerns about a “continued culture of no accountability” in most municipalities. That is evident in the fact that in 60 cases of material irregularities that resulted in R1.15 billion loss, no action was taken until the AG issued notifications. 

It was only after the AG intervened that one case of fraud was registered with law enforcement agencies and one contract was cancelled after a supplier failed to deliver as required and money was lost.

In some cases, some municipalities like Amajuba District Municipality overspent their budgets but got little results. It was followed by Harry Gwala District Municipality which spent 100 percent of its budget but only got 34 percent results in return.

“Despite spending majority of the budgets, key service delivery targets were not achieved with the exception of Zululand district that achieved 100% of its targets… Reason for non achievement of targets include delays in supply chain management process, poor performance from contractors, poor project management, weak financial controls as well as inadequate resource planning,” Maluleke’s report added. 

The AG warned that non-achievement of key service delivery targets poses significant risks relating to insufficient access to water, sanitation, electricity, and waste management services leading to deteriorating living conditions.

“Residents/communities may lose trust in local government, leading to protests, service delivery strikes, and civil unrest.”

Only seven municipalities got clean audits. They are Msinga, uMshwathi, Umvoti, Richmond, Umlalazi, City of Umhlathuze and King Cetshwayo District Municipality.

The worst municipalities were Umzinyathi District Municipality, Umzumbe and Endumeni local municipalities.

The AG recommended that based on observations from other provinces, COGTA in KwaZulu-Natal should drive a comprehensive review of IT infrastructure landscape at all municipalities to identify those in need of upgrades. 

Municipalities that require new IT systems should be prioritized, ensuring that their technology aligns with operational needs and supports efficient service delivery.

To deal with financial mismanagement, the AG recommended that Municipal Public Accounts Committees (MPACs) and disciplinary boards should be strengthened to improve accountability.

“COGTA should ensure that Municipal Public Accounts Committees (MPACs) and disciplinary boards operate effectively to enhance consequence management. Measures should be implemented to address unauthorized, irregular, fruitless, and wasteful (UIFW) expenditure, reinforcing accountability and improving financial management practices.

“Furthermore, COGTA should actively monitor and support the resolution of material irregularities by accounting officers in municipalities. This can be achieved through closer engagement with accounting officers and municipal councils, along with the development of an effective tracking system to monitor progress in resolving these irregularities,” the AG recommended.