The Minister of Cooperative Governance and Traditional Affairs (CoGTA), Dr Zweli Mkhize has welcomed the audit improvements in some municipalities and expressed serious concern about those that have regressed, in light of the 2016/17 audit report released by the Auditor General (AG) today, 22 May 2018.
The audit outcome reflects the results for the first year of the newly elected councils, after the re-demarcation of municipalities from 278 to 257, and the local government elections held in August 2016. This municipal general audit report is being communicated 11 months after the financial year end.
The Ministry congratulates the 33 municipalities that received the unqualified audit opinion with no findings in the period 2016-2017 and express concern over the general regression of the audit outcome as announced by the Auditor-General (AG) today.
While this number remains very low, CoGTA notes from the AGâ€™s report that a total of 145 or 56% of municipal audit outcomes are classified as unqualified â€“ this represent a solid base for national and provincial governmentâ€™s support programmes to improve financial management in municipalities.
â€œWe are encouraged that with the ongoing efforts to improve the municipal audit outcomes, there are municipalities that do get things right and become exemplary to others. This is especially encouraging when this AGâ€™s audit report representsa period when a two third of councillors had just been elected into their new council positions following the 2016 Municipal Elections,â€™â€™ said Minister Mkhize.
Minister Mkhize expressed serious concern that the audit outcome for the financial year ending June 2017 has regressed in almost all areas. This is a continuous trend seen after every local government election. The areas of regression range from weak governance, the poor quality of annual financial statements, internal control weaknesses, and performance challenges.
â€œThe AGâ€™s audit outcome is a very useful yard stick to gauge the general performance of municipalities. It corroborate CoGTAâ€™s own assessment through the Back to Basics programmes which indicates that 31% municipalities are dysfunctional and another 31% are almost dysfunctional,â€ said Minister Mkhize.
Critical to local governmentâ€™s mandate is the requirement that they work to improve the lives of all the citizens in their municipality. â€œThe improvement of the peoplesâ€™ lives has to be achieved through the provision of basic services, development and growth of the economy, recognising and harnessing the skills potential of people living in the municipality, job creation, and mobilising the people to make their own contribution to improve their living conditions. Notwithstanding significant progress across the three spheres to achieve this ideals, our country remains divided, with opportunities still shaped by the legacy of apartheid and some communities not having access to basic services as most our municipalities are still in distress and dysfunctional. To this effect, the report today by the AG shows the challenges still faced by our municipalities as many communities are trapped in poverty,â€™â€™ Minister Mkhize added
Alongside the South African Constitution, the policy framework for Developmental Local Government remains one of the best in the world. The driving vision of building developmental and responsive municipalities through active collaboration between the state, civil society, business and ordinary residents, remains governmentâ€™s ideal as envisaged through the Back to Basics (B2B) programme.
The B2B approach recognises the tremendous progress that Local Government has made in the delivery of basic services – water, sanitation, electricity, and refuse removal. It acknowledges that between 2000 and current these services have been progressively extended to more citizens than ever before, but there are still challenges and unevenness in the performance of municipalities.
CoGTA is striving to achieve the ideal municipality which is one that contains the following ingredients;
- Provide democratic and accountable government for local communities;
- Be responsive to the needs of the local community;
- Ensure the provision of services to communities in a sustainable manner;
- Promote social and economic development;
- Promote a safe and healthy environment;
- Encourage the involvement of communities in the matters of governance;
- Facilitate a culture of public service and accountability amongst its staff; and
- Assign clear responsibilities to the municipal management, and ensure the coordination of administrative units and mechanisms.
Given this Constitutional and legislative mandate, the AG report today indicates that there is an urgent need to intervene in distressed municipalities as they have been confronted by a series of problems. Institutional incapacity and widespread poverty have undermined the sustainability of the local government project, leading in some instances to a catastrophic breakdown in services.
It is within this context that since joining CoGTA in February 2018, Minister Mkhize has set in motion various interventions through the Ministryâ€™s Back to Basics programme which will without a doubt contributes towards improvement of municipal audit outcome. The Minister has engaged big business and black professionals to secure their support to distressed municipalities that often struggle with contract management; and inability to plan, deliver, operate and maintain infrastructure which is largely dependent on the competence of the municipal officials.
In the immediate term the Minister announced that CoGTA is to deploy District Technical Support Teams who are experts that will be deployed to municipalities to focus on infrastructure planning, delivery and maintenance; financial management support; governance and administration issues.
These team will be supported by the Rapid Response technical team which will be assisting the financially distressed municipalities develop financial recovery plans in collaboration with the National Treasury and ensure that they are able to access the Financial Management Conditional grant offered by the National Treasury to promote reforms in financial management and build capacity in municipalities.
â€œI am currently embarking on provincial visits as part of CoGTA consultative process to refine the nature and extent of the problems faced by the municipalities to inform concrete long-term interventions that are effective,â€ said Minister Mkhize.
All these efforts are geared at ensuring that municipalities have effective governance systems in place; and qualified and competent senior professionals to manage municipal finances with accountability and within applicable policies.
Since the constitution of the new councils after the municipal elections, the ministry has worked closely with other government components, such as the National Treasury; Department of Monitoring and Evaluation; Auditor-General South Africa; SALGA and provincial government, to induct the new councillors and support them in discharging their oversight responsibilities effectively â€“ this commitment remains.
Working with the National Treasury and SALGA these efforts are currently being implemented in the municipalities to improve financial management:
- Strengthening municipal oversight structures such as Municipal Public Account Committees and Municipal Public Disciplinary Boards of 10 municipalities with the highest unauthorised, irregular, fruitless and wasteful expenditure. The councillors serving in these structures have been receiving training since November 2017
- Development of audit action plans for municipalities with adverse or disclaimer audit opinions to address the root causes of their audit findings, progress has been noted since the engagement started in November 2017.
- Improving compliance with supply chain management processes through the use of the central supplier database of the Office of the Chief Procurement Officer to prevent awarding municipal contracts to public servants as this has been highlighted by the AG.
- Management tools such as guides; circulars; Financial Management Capability Maturity Model; Financial Norms and Indicators; MPAC Guide and Toolkit, Standard Operating Procedures; and GRAP e-learning have been developed and are being implemented to address gaps in internal controls and financial management which promotes non-compliance with Municipal Finance Management Act.
CoGTA will continue to provide the required support to all Municipalities that are in distress to ensure that they deliver services as per their mandate.
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