The Port Elizabeth City Hall. The Nelson Mandela Bay Metro has seen irregular expenditure of R3 billion over the past three years. Photo: Wikimedia Commons
  • The latest municipal audit report shows that unauthorised, irregular and fruitless and wasteful expenditure at municipalities has reached R122 billion.
  • This is more than the total market capitalisation of Shoprite and Spar, combined.
  • A number of municipalities are wasting massive amounts – and fewer are launching proper investigations into irregular spending.
  • For more stories, go to Business Insider SA.

This week, the Auditor-General Kimi Makwetu released the annual municipal audit report, which painted a grim picture:

  • Only 7% (18 of 257) of municipalities received clean audits in the past financial year.
  • A third of municipalities spend more than they earn.
  • Municipalities owe Eskom more than R9 billion and had outstanding water bills of almost R6 billion.

One of the most shocking numbers was that unauthorised, irregular and wasteful expenditure at municipalities has now reached R122 billion. This is more than the total market capitalisation of Shoprite and Spar, combined.

These amounts have accumulated over many years and had not been dealt with. 

Even worse, municipalities seem to be doing less to investigate this irregular and wasteful spending. The report shows that at 62% of the municipalities, there was a failure to conduct the required investigations into this expenditure. In the previous year, it was 60%.

These were some of the worst offenders (measured over the past three years):

Irregular expenditure

Nelson Mandela Bay Metro, Eastern Cape - R3 billion

Much of the amount is related to procurement in water services, where there were irregularities in the awarding of contracts to successful bidders. In the last year alone, the metro recorded R2.7 billion in irregular expenditure.

Tshwane, Gauteng - R1.7 billion

The amount relates to the irregular awarding of prepaid meter contracts and fleet management.

OR Tambo, Gauteng - R1.4 billion

A large part of the amount was for irregularities in awarding contracts for water and sanitation services.

JB Marks, North West - R1.3 billion

There was non-compliance with contracts for water, the construction of a canal at Ikageng, an asbestos cement pipeline, and security services.

City of Johannesburg, Gauteng - R900 million

The irregular expenditure relates to the provision of SAP support services and fleet management.

eThekwini, KZN - R733 million

Procurement processes for service contracts were not followed.

Alfred Nzo, Eastern Cape - R622 million

There are questions about the awarding of the contract for the upgrade of the Ntabankulu sewer.

uThukela district, KZN - R400 million

Non-compliance with procurement for water tanker contracts.

Dr Ruth Segomotsi Mompati, North West - R380 million

Non-compliance with procurement for sanitation projects.

Matjhabeng, Free State - R377 million

Irregular expenditure in the awarding of contracts for a new storm water system and sanitation in Welkom.

Together, these municipalities represented 51% of total irregular spending in 2017/18.

Wasteful spending

These municipalities incurred the most fruitless and wasteful expenditure for the past three years:

Mathjabeng, Free State — R169 million

Emalahleni, Mpumalanga — R110 million

Govan Mbeki, Mpumalanga — R82 million

Lekwa, Mpumalanaga — R78 million

Tshwane, Gauteng — R65 million

City of Matlosana, Northwest — R52 million

Msukaligwa, Mpumalanga — R40 million

uMkhanyakude district, KZN — R38 million

Ngwathe, Free State — R36 million

Naledi, North West — R29 million

Much of this fruitless spending was on interest and penalties for unpaid bills owed to Eskom and for water services. The Tshwane overspending mostly related to the upgrade of the city hall, which did not comply with National Heritage Council requirements.

Unauthorised expenditure

These municipalities had the highest overspending of their budgets

Tshwane, Gauteng — R1.14 billion

Mogalakwena, Limpopo — R1.12 billion

Majhabeng, Free State — R873 million

Ngoka Modiri Molema District, North West— R596 million

Polokwane, Limpopo — R411 million

Rand West City, Gauteng — R325 million

Mbombela, Mpumalanga — R329 million

Johannesburg Metro, Gauteng, — R305 million

Fetakgomo Tubatse, Limpopo — R298 million

Nelson Mandela Bay Metro, Eastern Cape — R260 million

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