A municipality that bears the name of the first post-apartheid Deputy President of the Senate (now called the National Council of Provinces), Govan Mbeki, is tethering on the brink of a financial abyss, with expenditure far exceeding income. This has resulted in many service delivery challenges, with the municipality unable to pay its creditors for services rendered, leading to service delivery disruptions for essential social services like electricity and water.

This dire situation was encountered by the Select Committee on Cooperative Governance and Traditional Affairs, Water and Sanitation when the committee visited the municipality on an oversight visit. 

“The situation is very bad in the municipality. This municipality was one of the leading municipalities in the country in terms of clean audits. It was also receiving awards, from Vuna to Govan Mbeki Award for housing, as well as being one of the cleanest municipalities in the country. But all of that good work seems to have been reversed,” said the Chairperson of the committee, Mr China Dodovu.

The committee was informed that the currently, the debt book of the Municipality is standing at R2 175 999 577. This amount consists of over R2 billion owed to Eskom and R317 941 203 owed to Rand Water, which provides electricity and water to the municipality. The consequence of the debt is intermittent cuts in electricity to the residents of the city, something which complicates their lives, and also has a negative effect on the running of the state’s energy entity, Eskom.

What was even more concerning for the committee was information that the 2018/19 audit of the municipality remains outstanding due mainly to the late submission of financial statements of the municipality. Municipal Finance Management Act (MFMA) requires municipalities to prepare and submit annual financial statements and within two months after the end of the financial year, which is a deadline of 31 August.

The late submission of financial statements was concerning in the context of the disclaimer audit opinion the municipality received for the 2017/18 financial year. Members of the committee were unanimous that the late submission raised suspicions that the municipality was hiding mismanagement of funds by the municipality. While the committee welcomed the announcement that the Municipal Manager (MM) was suspended as a result of the late submission of financial statements, it questioned why only the MM was suspended and the Chief Financial Officer was spared from concomitant consequence management.

Also concerning for the committee was the ever-rising unauthorised, irregular, fruitless and wasteful expenditure by the municipality. For the 2018/19 financial year, irregular expenditure was R1.34 billion, fruitless and wasteful expenditure was R164 million, and unauthorised expenditure was R568.9 million. For the previous year, irregular expenditure was R459.5 million, fruitless and wasteful expenditure was R145.5 million, and unauthorised expenditure was R317.3 million. “The question we have is why would the municipality break the law and its policies if there is no motive for corruption to flourish?” asked Mr Dodovu.

The Office of the Auditor-General informed the committee that the municipality has displayed a lack of appetite by management to implement consequence management for continuous deviation from laws, regulations and controls.

The committee has for its part urged the provincial government to urgently table a forensic report it commissioned to the council of Govan Mbeki Local Municipality, and for the council to implement associated action against those found to be in the wrong.  

By Malatswa Molepo

 16 September 2020