/Local government: Where state capture has led to state failure

Local government: Where state capture has led to state failure

2019-07-02 08:08

The state of municipalities in South Africa is the closest you get to state failure, a scenario where rules are broken systematically with impunity, writes Ralph Mathekga.

The level of financial mismanagement and
lack of proper accounting practices across municipalities should be a matter of
grave concern for South Africans.

The Auditor General’s latest report on
local government audits shows that only 18 out of a total of 257 municipalities
have complied when it comes to adhering to proper accounting practices
stipulated by the law. Therefore, when it comes to keeping proper financial
records, there is only a 7% compliance rate across all municipalities. To put
it differently, a total of 93% of municipalities are not able to tell a
complete story regarding how they spent the public funds.

Let’s get something clear before we go
further with this. Failure to adhere to stipulated standards and practices when
it comes to financial management in municipalities does not necessarily imply
that money has been misused. Further, failure to maintain proper financial and
performance records across municipalities does not necessarily mean that
service delivery has not been met. In the case of South Africa however, there
is a strong correlation between the decline in adhering to proper financial
records and the decline of service delivery and the rise of corruption.

Quite often in South Africa, remarks are
made that the main drive for local government should be service delivery and
not necessarily an obsession with audit outcomes. The EFF even accused the DA
of obsessing over audit outcomes instead of focusing on service delivery,
implying that a municipality can fail to maintain proper financial and
performance records, while succeeding at delivering basic services.

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Municipalities should not obsess about
audit outcomes to a point where service delivery is compromised. However, I am
yet to come across a case where a municipality has an excellent record in
service delivery amidst an excessively dismal record when it comes to financial
record-keeping practices. This led me to the multibillion-rand question: what
are the reasons for the progressive decline in financial record-keeping across
municipalities in South Africa?

The Auditor General’s report also indicates
that only 19% of municipalities could provide financial statements without
material misstatements. The rest, about 80% of municipalities, is a mixed bag
of deliberate misstatements and perhaps to a limited degree genuine
incompetence or lack of ability to maintain proper financial records. This
means that 80% of the time, one cannot make sense of financial records coming
from municipalities. Most of our municipalities’ financial documents are deliberate
gibberish, put together with the intention to deceive.

We should not be surprised about this
horrid picture coming out of municipalities. If indeed there has been state
capture as evidence is pointing out, we should expect an equivalent level of
wrongdoing at local government level, perhaps even worse. The sad story of our
local government is that in most cases municipalities are just impossible to
audit due to a lack of credible information regarding what has been happening
in those municipalities.

Our municipalities are gathering a reputation
as turfs run by war lords who have captured their small enclaves where they do
just about whatever they want to perpetuate their hold. This is more a rule
than an exception, given that it is also an exception in South Africa for a
municipality to perform well and keep proper financial records.

The state of municipalities in South Africa
is the closest you get to state failure, a scenario where rules are broken
systematically with impunity. Unfortunately, both the provincial and national
spheres of government lack the moral rectitude to correct what is happening
across municipalities because the two spheres of corruption are also no
exception when it comes to rampant institutionalised corruption in
post-apartheid South Africa.

– Ralph Mathekga is a political analyst and author of When Zuma Goes and Ramaphosa’s Turn.

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