Article re-cap
- South Africa's eight metros together manage 54% of local government expenditure and serve 40% of the population, making their financial health a national concern.
- All eight metros are regressing on audit outcomes, financial health, and service delivery, even as local, intermediate, and district municipalities have improved on a net basis.
- Cape Town lost its clean audit status due to procurement non-compliance, landing in the unqualified audit with findings category despite submitting quality financial statements and performance reports.
- eThekwini has remained in the unqualified audit with findings category for over a decade, with ongoing fragmentation and procurement non-compliance identified as the core problems.
- The City of Johannesburg received a qualified audit opinion this year after previously being unqualified, and Ekurhuleni also regressed to a qualified audit opinion over the 2021 to 2026 local government term.
Auditor-General Tsakani Maluleke has raised concerns regarding the financial health and audit outcomes of South Africa's eight metropolitan municipalities.
Maluleke presented the 2024/25 consolidated general report on local government audit outcomes to the National Assembly's Portfolio on Cooperative Governance and Traditional Affairs. She stated that metropolitan municipalities are regressing in terms of financial health and service delivery.
The Auditor-General noted that the City of Cape Town has regressed from its previous clean audit status. According to Maluleke, the municipality faced non-compliance regarding supply chain management and procurement issues which led to an unqualified audit with findings.
While the report confirmed the City of Cape Town submitted quality performance reports and financial statements, Maluleke said the municipality must address control matters in procurement. The metropolitan area is part of a group that manages 54% of the local government expenditure budget and 40% of the population.
The report highlighted that while some local and district municipalities have improved on a net basis, metros are going backwards. Maluleke noted that eThekwini Metro has remained in the unqualified audit with findings category for over a decade due to fragmentation and procurement non-compliance.
In the City of Johannesburg, several large entities including City Power, Pikitup, Joburg Water, and Metrobus hold significant parts of the budget. Maluleke reported that most of these entities have unqualified audit opinions with findings and suffer from weak financial governance and procurement leakages. Maluleke warned that the interest of investors in putting capital within the City of Joburg or within the city as individual investors will continue to diminish as financial health deteriorates, underlining that metros are expected to drive inclusive and sustainable economic growth for the country.
Maluleke added that Gauteng's three metros, Johannesburg, Ekurhuleni, and Tshwane, have regressed on audit outcomes over the course of the 2021 to 2026 local government term. A notable regression was Ekurhuleni, which regressed to a qualified audit opinion over the current term after credibility concerns with its financial statements emerged this year. The City of Tshwane has been in the category of qualified audit opinions for a number of years alongside Mangaung, the Buffalo City Metro, and Nelson Mandela Bay. Maluleke stressed the importance of closing what she described as an undesirable accountability and oversight gap among municipalities, especially metros, and in particular metros such as Mangaung, warning that without intervention, the slide in financial health and service delivery will continue.
This follows earlier local coverage of City of Cape Town Faces Audit Findings, Metro Regressing Says AG.
Frequently asked questions
What audit status did the City of Cape Town receive and why?
The City of Cape Town received an unqualified audit with findings. Although the municipality submitted quality performance reports and financial statements, the Auditor-General identified non-compliance regarding supply chain management and procurement issues that required the municipality to address control matters in these areas.
How significant is the City of Cape Town's budget within South Africa's local government?
Metropolitan municipalities collectively manage 54% of the local government expenditure budget and serve 40% of the population. The City of Cape Town, as a metropolitan area, is part of this group and therefore plays a substantial role in local government spending and service delivery.
What warning did the Auditor-General issue about metro financial deterioration?
The Auditor-General warned that as financial health in metros deteriorates, investor interest in cities like Johannesburg will continue to diminish. She stressed that metros are expected to drive inclusive and sustainable economic growth for the country, making their regression a national concern.
Why is the procurement issue a recurring problem across South Africa's metros?
The Auditor-General reported that procurement non-compliance affects multiple metros. EThekwini Metro has remained in the unqualified audit with findings category for over a decade due to fragmentation and procurement non-compliance, illustrating how systemic these issues are across the metropolitan system.
Source: capetimes.co.za
