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Remaining relevant and essential

Up until now, the common approach For the AG, it’s a recurring story, despite to fixing poorly planned and repeated warnings. The upside, though, is that executed infrastructure has been there are shining municipal examples, even in to throw more money at the this recessionary environment. These higherproblem. However, the only way to correct this is by addressing the root cause within the public delivery space. performing municipalities are planning the flight and flying the plane, with contingencies in place for bad weather.

That’s especially important as South Africa steadily accepts the need to move towards the

2018/19 local government performance

public-private partnership (PPP) model for the execution of critical projects. It can only work well Referring to the latest local government audit report for the 2018/19 period, Auditor-General

when competency, experience, commitment and accountability are common and shared values for all those who sit on these PPP boards.

Depending on their scale, listing PPPs as limited companies on the Johannesburg Stock Exchange (JSE) would also provide far greater scrutiny and control for investors, especially pension fund shareholders. Within the SOE domain, Sasol is a classic example of a predominately government entity that took its vision to the stock market, first registering on the JSE in 1979 and then the New York Stock Exchange in 2003.

There are also great opportunities for private sector investors to buy out or take a controlling stake in public entities, as the government follows the international trend towards unbundling statecontrolled companies.

Managing for profit

At the local government level, the AuditorGeneral (AG) of South Africa’s audit outcomes on municipalities over the past three years have clearly highlighted that people, policies, and processes are not aligned. The result is massive irregular, fruitless and wasteful expenditure.

The Covid-19 lockdown has compounded the problem by placing an additional brake on revenue inflows as private citizens and industry struggle to pay their municipal bills. Electricity and water continue to be consumed, but there’s a sharp drop in those able or willing to pay for these services. Some municipalities can’t or won’t Kimi Makwetu said, “The best practices at these municipalities include a stable leadership that is committed to a strong control environment and effective governance.” Another key commendation is their “proactive approach to dealing with emerging risks”.

In Gauteng, Midvaal was the only municipality to receive a clean audit for 2018/19. However, this was also the only province where all its municipalities attained unqualified audit opinions, with findings. Inadequate monitoring of preventative controls was an issue, and irregular expenditure incurred for municipalities in the province came to some R1.7 billion.

The Western Cape retained pole position in terms of the percentage of municipalities with clean audits. Around 93% obtained unqualified audit opinions. However, irregular expenditure still collect, so Eskom and the water boards also end

To our avid readers, check out what we are talking about on our totalled some R2.7 billion for this province.

Overall, financial performance variations within provinces, and from one province to the next, show what a difference the right leadership, skills and experience can make. With the right teams on board, it’s clear that vast improvements can be made in a relatively short period of time. And we need to make them. Covid-19 has tested our resilience, but when times are tough, winners evolve and innovate.

up not being paid. Heavily indebted municipalities cannot survive purely on government grants.

Alastair

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