Five of the country’s biggest metros have been put on notice by the National Treasury over escalating irregular, wasteful and fruitless expenditure.
Sowetan can today reveal that finance minister Enoch Godongwana wrote scathing letters to the mayors of Nelson Mandela Bay, Johannesburg, Tshwane, Mangaung, and Buffalo City, threatening to stop all financial transfers to the municipalities that are in persistent breach of financial management prescripts and the alleged mismanagement of public funds.
At the weekend, Sowetan’s sister publication, the Sunday Times, reported that Godongwana had written to Joburg mayor Dada Morero over the city’s chaotic finances, threatening to partially withhold Treasury funding if he fails to take decisive remedial action.
It has now emerged that four other metros have earned the finance minister’s wrathand have been given until August 13 to respond by outlining the reasons for their failure to comply with the Municipal Finance Management Act (MFMA) and corrective action they would take to hold officials to account.
Godongwana noted that the metros’ unauthorised, irregular, fruitless and wasteful expenditure had run into billions of rand.
He said Tshwane incurred R2.14bn in unauthorised expenditure, R2.39bn in irregular expenditure and R817m in fruitless and wasteful expenditure in the past year.
Cumulatively, fruitless and wasteful expenditure has reached R3.09bn, with irregular expenditure at R15.4bn.
Godongwana noted that the municipality “did not demonstrate sufficient effort to recover or write off unauthorised, irregular, fruitless and wasteful expenditure in line with Section 32 of the MFMA.”
The auditor-general (AG) highlighted Tshwane’s “weak internal controls” in May.
“These three metros [Tshwane, Nelson Mandela Bay and Joburg] also did not adequately budget for the impairment [writing down] of infrastructure assets and consumer debt [non-cash items] and, as a result, did not have funds to maintain and replace assets or to pay their creditors on time,” said AG Tsakani Maluleke.
Johannesburg recorded R2.77bn in unauthorised expenditure and R1.98bn in irregular expenditure in 2023/24, with an additional R1.47m in fruitless and wasteful spending. Cumulatively, the metro is now sitting with R4.4bn in unauthorised expenditure, R7.9bn in irregular expenditure and R81.9m in fruitless and wasteful expenditure.
The minister also referenced reports by the AG in May, which flagged all five metros for lacking accountability. Some were found to have underspent on critical grant funding.
Maluleke focused sharply on Johannesburg, warning that it lacked the right skills to compile quality financial statements.
[Joburg] is a big city, the biggest in the country and on the continent. There should be no difficulty in ensuring the necessary skills and capabilities to compile financial statements.
— AG Tsakani Maluleke
“[Joburg] is a big city, the biggest in the country and on the continent. There should be no difficulty in ensuring the necessary skills and capabilities to compile financial statements,” Maluleke said.
In the Eastern Cape, Nelson Mandela Bay metro reported more than R1.44bn in unauthorised expenditure, R1.58bn in irregular expenditure and R17m in fruitless and wasteful expenditure for 2023/24, according to the letter Godongwana sent to mayor Babalwa Lobishe.
Godongwana said there is no evidence that the accounting officer is taking reasonable steps to prevent unauthorised, irregular, fruitless and wasteful expenditure and that there has been little to no action taken by the municipality to address these balances..
However, Nelson Mandela Bay council spokesperson Sithembiso Soyaya said the offices of the mayor, city manager and chief of staff have not received the letter.
“If we receive a letter of this nature, the municipality needs the mayor’s office to deal with the contents of the letter and to provide a response as required. However, not all those offices are aware of the letter, which is then bizarre. And so, how do we respond to something that we say we haven’t received?” Soyaya said.
The Mangaung metro in the Free State was also flagged by the AG, which recorded R1.34bn in unauthorised expenditure and R122.5m in fruitless and wasteful expenditure. It is now grappling with cumulative expenditure totals of R7.8bn (unauthorised), R3.39bn (irregular), and R448m (fruitless and wasteful).
The municipality did not submit evidence of any attempts to recover or write off any of its unauthorised, irregular, fruitless and wasteful expenditure.
The AG cast doubt on the city’s viability, noting it had failed to spend R194m in allocated grants and had R297m withheld due to implementation delays.
Buffalo City accumulated R403m in unauthorised expenditure and R1.31bn in irregular expenditure in 2023/24. It is now carrying R10.55bn in cumulative irregular expenditure.
In May, the AG also highlighted severe operational weaknesses, noting that Buffalo City had left a senior engineer post vacant for 80 months.
In all five letters, Godongwana expressed that while some metros have written off historical waste, others continue to incur new unauthorised, irregular, fruitless and wasteful expenditure at alarming rates.
Last year the treasury wrote to 13 biggest transgressors to curb their spending and implement consequence management, but these five metros remained noncompliant.
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