Cape Town - Corruption has been named as a reason for municipalities’ over-reliance on consultants as Auditor-General (AG) Tsakani Maluleke found in her 2021-2022 audit report that councils had spent more than R1.6 billion on consultants.
At times, these consultants were employed to do very basic tasks, such as VAT and tax returns, even though the municipalities had staff to do this, Maluleke said.
She said 62% (137 municipalities) of financial statements submitted for auditing included material misstatements in areas of consultant work.
Among the reasons why consultants were ineffective included work not being adequately reviewed, inadequate or no records and documentation, non-delivery and poor project management.
Her report released this week shows that 216 municipalities paid R1.55bn to consultants. Their costs equalled 13% of total financial reporting costs of R12.36bn. Municipalities have cited a combination of lack of skills and vacancies as reasons for appointing consultants.
In the Western Cape R45.25 million was spent on consultants for the year in review.
Emeritus Professor at Tilburg Law School and Dean of the School of Social Innovation at Hugenote Kollege, Erwin Schwella, said: “We have these appointments of consultants because of incompetence which is linked to corruption and cadre deployment.
“If that is the case, the question then is how do we set it right. We must actually get competent municipal government officials and then we can save on these consultancy costs.
“However, the consultancy costs are also a result of a form of corruption. I assure you that many of those consultants have been appointed on the basis of giving some compensation to connected cadres.
“It’s unfortunate that the AG will also report on this matter next year. It will be the same report but somewhat worse because there are no consequences for this behaviour.”
Director at the School of Public Leadership at Stellenbosch University, Professsor Zwelinzima Ndevu, said consequence management should be applied as a way of addressing the issue.
Political analyst and Human Rights activist Nkosikhulule Nyembezi said: “The latest revelations in the AG’s report on local government lay bare that inadequate skills and capacity is a necessary step to convince voters with longstanding relationships with dominant political parties that there are superior alternatives on offer to deal with limited skills and capacity in finance, information technology and technical units leading to municipalities relying heavily on expensive consultants.”
Independent Municipal and Allied Trade Union (Imatu) general secretary Johan Koen said they were deeply concerned at the inability of municipalities to take corrective action with regard to regressing audit opinions.
“The AG highlighted a number of issues of concern which again highlights the lack of skills of employees in the finance departments. This has been highlighted in the past by the AG, but municipalities seem to be ignoring the warnings in this regard.
“The fact that municipalities are using consultants to deal with straightforward issues such as VAT returns is extremely worrying.
“It is a well known fact that consultants don’t transfer skills to the sector and this practice must stop. The only solution is for municipalities to fill vacancies in the finance departments with skilled and experienced staff,“ said Koen.
South African Local Government Association spokesperson Sivuyile Mbambato called on the 45% of municipalities that received poor audit outcomes to work hard to turn around municipal financial management and governance to achieve the same outcomes that have been obtained by the majority of municipalities.
“This calls for a renewed approach to enforce accountability and consequence management.
“A carrot and a stick approach, where excellence is rewarded while mediocrity and maladministration are punished is what is needed to turn local government around,” he said.
Cape Times