Andisiwe Makinana|Published
Parliament’s public accounts watchdog is considering an inquiry into systemic failures in local government after identifying serious governance, revenue and infrastructure problems across seven municipalities, including five metros.
The Standing Committee on Public Accounts (Scopa) concluded on Wednesday that a deeper investigation was needed after hearing from the seven municipalities over the past few months. The committee is yet to decide which municipality or municipalities will be the focus of the proposed inquiry.
Scopa considers enhanced oversight
The committee, which conducted a similar inquiry into the Road Accident Fund (RAF), is considering an approach that would allow it to examine systemic problems in local government.
“We will end up with a local government inquiry into a metro and a local municipality or a district municipality. It will be sort of an enhanced oversight in the way that we did with the RAF. We will do that, but it's a matter of which one (municipality) and when do we start with that,” said Scopa chair Songezo Zibi.
Zibi said inquiries help to expose systemic problems and support broader policy discussions about local government and parliamentary interventions.
He said Scopa was likely to consider the municipalities it had already met to determine which one or two would be the focus of the inquiry.
Between May and June, the committee met five metros: Johannesburg, Tshwane, Ekurhuleni, Mangaung and eThekwini, as well as Msunduzi and Masilonyana local municipalities.
“There are steps to get there. The minister and MECs have to appear, and we can deal with their interventions because the information we will get from them will then inform the terms of reference of that enhanced oversight that we will do.”
Scopa also wants to intensify its oversight of municipalities through ongoing monitoring.
The committee wants Cooperative Governance and Traditional Affairs (Cogta) Minister Velenkosini Hlabisa and the nine Cogta MECs, who are legally empowered to intervene in municipalities, to account to the committee for their interventions.
Revenue losses and poor infrastructure maintenance
In its engagements with the five metros, Scopa found that all had serious revenue problems, both in collecting revenue and in terms of consumer affordability.
The municipalities also experienced electricity and water losses because of poor maintenance and cable theft.
The committee found that municipalities lacked effective management and governance of their entities, particularly the City of Johannesburg, where all entities had serious governance and performance issues.
Infrastructure maintenance was also well below the national guideline of between 8% and 10% of the budget, with nearly all the municipalities investigated spending less than 5% on maintenance.
Ekurhuleni systems exposed to manipulation
In Ekurhuleni, MPs noted that several critical systems in the City’s information and communications technology (ICT) environment were vulnerable to unauthorised access and manipulation, exposing the municipality to significant financial and operational risks.
These included billing and revenue management systems, where customer accounts could be altered and debt balances reduced or removed.
The electricity revenue system was linked to substantial under-collection of revenue through the manipulation of electricity accounts. The water revenue system was similarly compromised.
The rates clearance system also had records associated with property transactions unlawfully altered or removed, while the traffic fine management system became ineffective after a functioning platform was discontinued without a suitable replacement.
The committee said weaknesses across these systems undermined the integrity of municipal records, contributed to significant revenue losses and highlighted serious deficiencies in IT controls, oversight and system security.
eThekwini faced risks over flood disaster contract
In eThekwini, MPs highlighted “severe” procurement flaws and financial risks surrounding a contract to hire a marquee for flood disaster response.
The municipality entered into what the committee described as “an unsustainable agreement at an exorbitant rate of R208 000 per day” with a service provider.
After the municipality terminated the contract on the grounds of unaffordability, the service provider instituted a R70 million legal claim. Court intervention was ultimately required to enforce payment based on reasonable market benchmarks rather than the inflated contractual rate.
Scopa and the Cogta portfolio committee found that the matter demonstrated “a complete failure” in price benchmarking, supply chain management and contract oversight during emergency disaster response, exposing the municipality to unnecessary litigation and substantial financial risk.