North West Municipal Audit Outcomes paints a picture of a failed state
1 June 2023
Barely a week after the release of Ratings Africa’s annual Municipal Financial Sustainability Index (MFSI) confirmed the general state of collapse of North West municipalities, the Auditor-General’s (AG) municipal audit outcomes for the 2021/22 financial year released yesterday paints a picture of a province on the edge of becoming a fully-fledged failed state.
It is in the financial audit outcomes that we can verify what people experience in North West on a daily basis – a general collapse in basic service delivery and the decay or infrastructure. People in North West are increasingly being cut off from access to clean potable water and electricity supply, while raw sewage flows throughout every community.
Not a single North West municipality obtained a clean audit outcome. Ten municipalities obtained qualified opinions, six received disclaimed opinions, one obtained an adverse audit outcome and the audit outcomes of both the Mamusa and Ditsobotla local municipalities are outstanding in contravention of the Municipal Finance Management Act (MFMA).
The closing balance of irregular expenditure for North West municipalities is R30 billion with R3,2 billion incurred during the financial year under review. Unauthorised expenditure is at R2,3 billion and fruitless and wasteful expenditure came in at R306 million.
Bulk unpaid Eskom debt for the province is R2,44 billion and another R2,85 billion is owed to water boards for bulk water supply.
The AG confirmed the DA’s position that the financial situation of North West municipalities continue to deteriorate, negatively affecting service delivery outcomes. All municipalities struggle to budget and spend effectively on infrastructure maintenance which contributes to a general collapse in service delivery. North West municipalities on average invest only about 3% of their budgets towards infrastructure where the basic requirement is 8% to effectively maintain infrastructure.
Eleven North West municipalities must borrow funds from the current financial year to settle liabilities that should have been paid in the previous financial year. This is completely unsustainable and seven North West municipalities are unable to operate for the foreseeable future.
North West municipalities lack the skills and capacity to ensure effective financial management and reporting. Municipalities spent R282 million on financial consultants in addition to the salary bill of Chief Financial Officers and Municipal Managers. The R282 million could be considered wasteful expenditure. The AG identified compliance transgressions at all North West municipalities.
The collapse of North West local government is not only felt in the lack of basic service delivery, but it is a key contributing factor in the decline of the provincial economy as many businesses close down or relocate to other parts of the country where their operations could be supported by effective local government. More than a million people that want to work in North West can’t find a job here.
As things stand, North West is on the verge of becoming a fully fledged failed state should nothing change. While it may be a depressing thought, hope remains.
The AG confirmed what Ratings Africa said last week, that DA governments continue to improve the lives of residents through effective financial planning, management, and reporting, the delivery of quality basic services, and growing the local economy through infrastructure maintenance and development, which leads to job creation.
The people of North West can save this province in next year’s election, by voting DA, the only party of government that gets things done, as confirmed by the AG and Ratings Afrika. We can rebuild North West in 2024.
Issued by Leon Basson, DA North West Provincial Leader, 1 June 2023
