Auditor-General Tsakani Maluleke has raised alarm over the deteriorating state of municipal finances, revealing that only 41 out of 257 municipalities achieved clean audits in the 2023/24 financial year. Maluleke presented the Consolidated General Report on Local Government Audit Outcomes in Parliament this week, highlighting persistent financial mismanagement and weak accountability in local governance.
The South African Local Government Association (SALGA) has called for urgent intervention to reverse the decline in audit performance. Lerato Phasha, SALGA’s Portfolio Head of Municipal Finance, emphasized the need for enhanced leadership and skills development among municipal officials and political office bearers.
Leadership and Skills Crisis
Phasha noted that a key factor behind poor audit outcomes is weak leadership, particularly among mayors and council speakers who lack the necessary financial oversight skills.
“One of the fundamental issues is leadership. Municipalities have focused on qualifications rather than the skills needed for financial management and oversight,” Phasha said during an interview.
She stressed that political deployees often lack the expertise to interpret financial statements or enforce consequence management, leading to repeated audit failures.
Engaging Political Parties for Change
Phasha revealed that SALGA has been engaging political parties to improve the quality of leadership in municipalities.
“Political parties feed the system, so we need them to understand the financial state of municipalities and deploy capable leaders,” she said.
Risks of Poor Financial Reporting
The report singled out major metros, including Johannesburg, for failing to submit quality financial statements. Phasha warned that inaccurate reporting undermines transparency and could hide fraud, wasteful expenditure, and financial mismanagement.
“If financial statements are not fairly presented, it becomes difficult to hold municipalities accountable,” she explained.
Way Forward
SALGA has proposed scaling up training programs and strengthening collaboration with National Treasury and COGTA to improve municipal governance. However, Phasha acknowledged that without political will and better leadership, progress will remain slow.
As pressure mounts on municipalities to clean up their finances, the Auditor-General’s report serves as a stark reminder of the urgent need for reform in local government.