Ralph Mathekga

Local government: Where state capture has led to state failure

2019-07-02 08:08
Auditor-General Kimi Makwetu addressing the media on Wednesday. (Jan Gerber/News24)

Auditor-General Kimi Makwetu addressing the media on Wednesday. (Jan Gerber/News24)

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The state of municipalities in South Africa is the closest you get to state failure, a scenario where rules are broken systematically with impunity, writes Ralph Mathekga.

The level of financial mismanagement and lack of proper accounting practices across municipalities should be a matter of grave concern for South Africans.

The Auditor General's latest report on local government audits shows that only 18 out of a total of 257 municipalities have complied when it comes to adhering to proper accounting practices stipulated by the law. Therefore, when it comes to keeping proper financial records, there is only a 7% compliance rate across all municipalities. To put it differently, a total of 93% of municipalities are not able to tell a complete story regarding how they spent the public funds.

Let's get something clear before we go further with this. Failure to adhere to stipulated standards and practices when it comes to financial management in municipalities does not necessarily imply that money has been misused. Further, failure to maintain proper financial and performance records across municipalities does not necessarily mean that service delivery has not been met. In the case of South Africa however, there is a strong correlation between the decline in adhering to proper financial records and the decline of service delivery and the rise of corruption.

Quite often in South Africa, remarks are made that the main drive for local government should be service delivery and not necessarily an obsession with audit outcomes. The EFF even accused the DA of obsessing over audit outcomes instead of focusing on service delivery, implying that a municipality can fail to maintain proper financial and performance records, while succeeding at delivering basic services.

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Municipalities should not obsess about audit outcomes to a point where service delivery is compromised. However, I am yet to come across a case where a municipality has an excellent record in service delivery amidst an excessively dismal record when it comes to financial record-keeping practices. This led me to the multibillion-rand question: what are the reasons for the progressive decline in financial record-keeping across municipalities in South Africa?

The Auditor General's report also indicates that only 19% of municipalities could provide financial statements without material misstatements. The rest, about 80% of municipalities, is a mixed bag of deliberate misstatements and perhaps to a limited degree genuine incompetence or lack of ability to maintain proper financial records. This means that 80% of the time, one cannot make sense of financial records coming from municipalities. Most of our municipalities' financial documents are deliberate gibberish, put together with the intention to deceive.

We should not be surprised about this horrid picture coming out of municipalities. If indeed there has been state capture as evidence is pointing out, we should expect an equivalent level of wrongdoing at local government level, perhaps even worse. The sad story of our local government is that in most cases municipalities are just impossible to audit due to a lack of credible information regarding what has been happening in those municipalities.

Our municipalities are gathering a reputation as turfs run by war lords who have captured their small enclaves where they do just about whatever they want to perpetuate their hold. This is more a rule than an exception, given that it is also an exception in South Africa for a municipality to perform well and keep proper financial records.

The state of municipalities in South Africa is the closest you get to state failure, a scenario where rules are broken systematically with impunity. Unfortunately, both the provincial and national spheres of government lack the moral rectitude to correct what is happening across municipalities because the two spheres of corruption are also no exception when it comes to rampant institutionalised corruption in post-apartheid South Africa.

- Ralph Mathekga is a political analyst and author of When Zuma Goes and Ramaphosa's Turn.

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Read more on:    local government  |  municipal audits


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