A report tabled by the auditor-general to the Eastern Cape Legislature this week revealed financial turmoil in the province’s municipalities.
The AG’s report revealed that 16 out of 39 municipalities in the Eastern Cape are in financial distress. The report found that the financial mismanagement threatens the municipalities’ ability to provide adequate services to communities.
Some 39 irregularities relating to non-compliance and suspected fraud were documented, resulting in financial losses estimated at a staggering R632.82 million.
Three cases were found to have led to substantial harm to public sector institutions and, in one case, substantial harm to the public.
DA Cooperative Governance and Traditional Affairs (CoGTA) shadow MEC Dr Vicky Knoetze said the biggest problem was that those responsible for the financial turmoil are seldom held accountable.
“Eastern Cape municipalities are in financial chaos and are not holding those responsible for financial misconduct to account, despite these individuals placing municipalities, public institutions and the people they are meant to serve at risk.”
“This is why sewage flows in the streets, electricity outages occur, roads disintegrate and water pumps fail to deliver water to households,” she said.
Buffalo City Metro and Nelson Mandela Bay are among 19 municipalities where a shocking total of 43 material irregularities were reported.
In Buffalo City, four irregularities resulted in an estimated loss of R96.72 million, while in Nelson Mandela Bay there were seven irregularities, resulting in an estimated loss of R98.71 million.
However, the most concerning of the municipalities was Makana Municipality in Makhanda (formerly Grahamstown).
The municipality’s failure to keep proper records of its financial affairs resulted in substantial harm, creating uncertainty about its ability to continue operating.
The municipality’s inability to fulfil its service delivery mandate impacts the lives of its residents.
Some municipalities like the Amathole Municipality and Sundays River Valley did not even submit their financial statements for the 2022/2023 financial year which ended in June.
The EFF’s Eastern Cape MPL Simthembile Madikizela described the state of affairs in the province as “extremely bad”.
Knoetze added that no actions were taken to address 88% of these matters until the AG issued notifications.
“In those municipalities which decided not to submit their financial statements, we see a certain level of arrogance and selfishness, as well as a lack of understanding of the need to commit to the people of the Eastern Cape,” she said.