Auditor-General flags financial instability in five KwaZulu-Natal municipalities
Officials from the Office of the Auditor-General SA met with members of the Scopa committee at the KwaZulu-Natal legislature this week to give a detailed briefing on the state of municipalities.
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Five KwaZulu-Natal municipalities have been flagged amid concerns that they are on the verge of financial collapse.
The office of the Auditor-General of South Africa (AGSA) has expressed significant doubt about the ability of Ugu District Municipality, Endumeni, Mpofana, Uthukela District Municipality, and Umzinyathi District Municipality to continue as going concerns. The Mercury reached out to the municipalities; three did not respond to requests for comment.
Their precarious state was detailed in a report by the AGSA KwaZulu-Natal office during a recent meeting with members of the Standing Committee on Public Accounts (Scopa).
The AGSA tabled a comprehensive report on the state of municipalities in the province as part of the audit for the 2023-2024 financial year. On the state of the five municipalities, it said: “There is doubt whether these municipalities can continue as a going concern.”
Endumeni, Umzinyathi, and Uthukela municipalities had not responded to a request for comment by publication. The Ugu District Municipality declined to comment, saying it had not seen the report. Mpofana Local Municipality Mayor, Thembi Magubane, said they will be in a position to comment once they have seen the report.
“However, what I can say is that while we have previously faced challenges with our finances, there has been much improvement,” she added.
Marlaine Nair, chairperson of the Portfolio Committee on Cooperative Governance and Traditional Affairs (Cogta), stated that these revelations are a serious concern.
“This means these municipalities are at risk of financial collapse due to persistent deficits, poor revenue collection, and escalating debt. Such instability compromises their ability to deliver basic services, pay creditors, and maintain infrastructure,” she said.
Scopa chairperson Tim Brauteseth said he will write to the MEC requesting a presentation of the specific challenges in each municipality as well as his turnaround strategy.
“The Auditor-General’s 2023-24 report raises urgent red flags about the financial sustainability of our municipalities. Notably, 26% of municipalities ended the year in deficit, and in 17 municipalities, more than 80% of debt cannot be recovered. The debt recovery period at 16 municipalities was more than 90 days,” he said.