COMMENT

Local govt is the weakest link

Phephelaphi Dube says the AG's audit reports make for grim reading

Local government is the weakest link

29 May 2018

The results of overall 2016/2017 audit outcomes prepared by the Auditor-General (AG) of the 257 municipalities are in. The results are grim and make clear that the local government system in South Africa is failing. The crux of the AG’s report is that of the 257 municipalities audited‚ 45 regressed and only 16 improved. Only 33 municipalities (13%) managed to produce quality financial statements and performance reports and complied with all key legislation‚ thus receiving a clean audit. 

The number of municipalities with clean audits decreased from 48 in 2015/2016, to 33. In addition, 112 municipalities received unqualified audit reports with findings, up from 108 in the previous year. Qualified audit outcomes increased from 60 to 66, and four municipalities got an adverse report with findings. 

Irregular expenditure increased by 75% - from R16.2 billion to R28.3 billion. Of this, R15 billion related to irregular expenditure from previous periods only detected in 2016/2017. The balance of R13.3 billion related to expenses paid in 2016/2017. Fruitless and wasteful expenditure increased to R1.5 billion, while unauthorised expenditure dropped by 9% to R12.6 billion. 

The dismal performance of local municipalities threatens the gains made post-1994 while many areas, particularly rural areas, remain unchanged at their core. This in turn threatens South Africa’s constitutional democracy in a number of ways.

To begin with, it is by design that South Africa’s Constitution provides for local government - this is an important aspect of constitutional democracy. The local government system is also a means of shoring up South Africa’s participatory democracy. As such, the failures of local government impact on the ability of citizens to participate in the democratic state. This in turn erodes the health of South Africa’s democracy - if national government and provincial government are forced to intervene in local government administration.

The role of the AG must be viewed within the constitutional framework. The AG is a Chapter 9 institution, alongside bodies such as the Public Protector and the Human Rights Commission (SAHRC). The AG, in auditing and reporting on the financial statements and financial management of all municipalities, plays a vital role in supporting the nation’s constitutional democracy. Furthermore, the AG’s Office should be performing its functions without fear or favour. In addition, no person or organ of State may interfere with its functioning. This inclusion of the AG as a Chapter 9 institution reinforces the understanding that the AG’s work is a vital cog in South Africa’s constitutional democracy. 

Presently, it appears as if the culture of impunity for maladministration and abuse of office in the public sector has taken root. As such, the fact that the National Assembly is at an advanced stage of adopting amendments to the Public Audit Act should be welcomed. The amendments will ensure that there are consequences for flouted processes. Such amendments include additional powers for the AG to refer substantial audit irregularities to independent agencies like the South African Police Service (SAPS), the Directorate for Priority Crime Investigation (DPCI) and the Public Protector. This will bring the reach of the powers of the AG in line with other Chapter 9 institutions such as the Public Protector, whose recommendations for remedial action have been found to be binding by the Constitutional Court.

While releasing the 2016/2017 Report, the AG remarked that “There has been no significant positive change towards credible results; instead there is a reversal in audit outcomes”. Citing statistics from as far back as five years, the AG made it apparent that the lack of consequences for those flouting regulations had led to the worsening audit outcomes. The upshot of the poorly performing municipalities, is the increase in service delivery protests, of which most are characterised by violence. Data collected by Municipal IQ in May 2018 reported that 94% of such protests in 2018 were marked by violence. Ironically, leadership appears to be more responsive to violent service delivery protests. Researchers at the University of the Free State (UFS) divide service delivery protests into three broad categories: systemic (maladministration, fraud, nepotism and corruption); structural (healthcare, poverty, unemployment and land issues); and governance (limited opportunities for civic participation, lack of accountability, weak leadership and the erosion of public confidence in leadership). The three categories are all linked to poor internal controls within municipalities and unaccountable leadership. The net effect of service delivery protests is an ever-shrinking trust deficit between the State and civic society, which in turn erodes South Africa’s fledgling constitutional democracy. 

It is apparent that there are simply too many weaknesses in internal controls for the vast majority of South African municipalities. These weaknesses in turn, have nurtured a culture of unaccountable leadership within various municipalities. This runs contrary to the Constitution’s demand that local government provide democratic and accountable government for local communities, while promoting social and economic development.  It is therefore vital that the AG is able to respond appropriately to stem the erosion of South Africa’s constitutional democracy.

By Ms Phephelaphi Dube: Director, Centre for Constitutional Rights, 29 May 2018