Summary

Auditor General finds Irregularities in spending by Municipalities

State should do more to improve the local level

Exports are on the decrease

The country’s Auditor General has recorded and identified mounting issues at the local government level.¹ These affect 170 municipalities and public entities racking up to 268 cases of material irregularities in the 2021/2022 financial year.² Material irregularities are instances of non-compliance or contravention of legislation or fraud, theft and any other breach of fiduciary duties that result in a material financial loss.³ The image portrayed by the Auditor General is one of compounding failure at a municipal level, with material irregularities piling up over the years.⁴ According to the AG, of the 268 cases recorded, 194 were attributed to material losses of R 5.2 billion.⁵ These relate to municipalities failing to pay for goods and services, unfair procurement processes, ineffective use of consultants, revenue not billed and not received, interest and penalties on late payments, and the loss of assets and investments.^{6 (Business/Tech)}

Rasulullah ﷺ said, ” Whoever relieves a believer’s distress of the distressful aspects of this world, Allah will rescue him from a difficulty of the difficulties of the Hereafter.”

The list continues with municipalities failing to pay for goods and services, unfair procurement processes, ineffective use of consultants, revenue not billed and not received, interest and penalties on late payments, and loss of assets and investments.⁷ There have also been other material impacts, such as public institutions failing to submit financial statements and hard done to the public through things like poor landfill management and the pollution of water sources.⁸ According to founder and executive chairman of Sygnia, Magda Wierzycka, municipalities are at the core of South Africa and the backbone of government.⁹ Municipalities are essential, she said, as they are constitutionally mandated to procure and provide critical services and wield more power than national and provincial governments in this regard.^{10 (Business Tech)}

It is chaos in terms of having a system that is transparent and accountable. The national government has to repair the damage in time for the general election. The dept that has amounted from the failure to pay for goods and services meant for public benefit raises questions. How did the state at provincial and national levels not investigate this? Is this how the mayors and councillors who interact with the citizens on a daily basis at the local level conduct state business? Municipalities are responsible for the local services, looking after the well-being of their local areas and citizens, through garbage collection and disposal, making sure the local fire, police and hospitals are properly staffed and supplied. What happens to the money in the budget allocated to the municipalities? The Auditor General should enquire concerning this and report to the National Prosecuting Authority (NPA) about it, if there had been wrong doing.

Meanwhile South African businesses and companies in the private sector have seen a decline in business conditions, but there has at least been an increase in the employment rate and wages.^{11 (Business Tech)}

Following little to no change in September, new orders also dropped in October.¹²Firms said that higher the fuel prices and inflation resulted in consumers cutting their expenses.¹³ Although new business from foreign clients was also in negative territory, it was the smallest contraction in three months.¹⁴ Supply issues also worsened at the start of Q4 as firms saw a delay at South African ports, input shortages and slowdowns due to increased fuel costs.¹⁵ “Overall delivery times lengthened to the greatest degree for several months.¹⁶ With demand and supply conditions deteriorating, South African companies reported a steep cut to purchasing activity in October,” S&P Global said.¹⁷ Efforts to save costs were also highlighted as a drag on spending.¹⁸ Both purchases and inventories of inputs fell at the sharpest rates since July 2021.^{19 (Business Tech)}

The problem with the private sector although it is supposed to and can grow on its own, they need support from the municipalities to provide a sustainable environment for them. Although petrol prices and food inflation have their role to play due to the war between Russia and Ukraine, the conduct of municipalities should also be looked into. Businesses need a suitable, attractive and safe environment to work in. The government needs to look for other alternatives in terms of fuel for shipping. Hydrogen is energy that can be used when manufactured to power tankers (cargo ships). The need to use an alternate source of energy is something the government should have invested in in the long run. The need to improve our exports depends on switching to manufactures goods. Manufactured goods made on South African soil. Its all a matter of time depending on how the government responds to the crisis.