Municipalities spent R1.6 billion on consultants in 2020/2021

Issued by Jacques Smalle MP – DA Shadow Deputy Minister of Cooperative Governance and Traditional Affairs (CoGTA)
07 Jun 2023 in News

The Auditor-General presented the 2020/2021 Local Government Audit outcomes in Parliament yesterday and the findings confirm the DA’s views that most municipalities lack financial planning, have inadequate financial controls, lack of internal skills capacity and an overall lack of accountability.

The result of poor planning negatively impacts finances and municipal service delivery; in the year under review112 (44%) of municipalities passed unfunded budgets.

Consultant fees amounted to R1.6 billion or 13% of the total financial reporting cost of R12.3 billion. The lion’s share was spent by 3 provinces:

  • KwaZulu-Natal (48 municipalities) – R309,26 million,
  • North West Province (20 municipalities) -R282,33 million
  • Limpopo (26 municipalities) – R263.18 million

Poor payment practices resulted in 84% of municipalities being unable to pay their creditors within the 30-day period as prescribed by Treasury Regulations.

The average creditor payment period is 258 days. The highest outstanding creditors are:

  • Eskom- R36.36 billion
  • Water Boards- R14.34 billion
  • Water losses -R11,91 billion

Estimated revenue not collected amounted to R112.88 billion including a debt write-off of R39.63 billion.

The DA calls on COGTA Minister, Thembi Nkadimeng, to reduce the overreliance on consultants through the termination of cadre deployment, a recommitment to Operation Clean Audit that would have seen all municipalities achieve clean audits by 2014 and the appointment of internal audit committees by the national fiscus to prevent cadre appointments.