Prepare for total collapse, led by municipalities

The recent collapses of water services in Grahamstown and the KwaZulu-Natal South Coast are not anomalies. They are harbingers of nationwide collapses.

Gift of the Givers handing communities in Makhanda (formerly Grahamstown) bottled water. Image: Gift of the Givers website

The auditor-general, conveniently for the government, waited until after the State of the Nation address by President Cyril Ramaphosa to release his annual report. The president should be appropriately grateful.

The bad news from Kimi Makwetu is that more municipalities are near collapse and non-compliance has increased. The AG’s staff is also increasingly being threatened with violence and hampered in its work.

The good news? Well, not much.

For the past years every single AG’s report into the financial state of municipalities has shown an accelerating downward trend. Every year, the AG has bemoaned the lack of decisive leadership at the very top of government and the fact that there are no consequences for corruption and incompetence. Every year, nothing substantial is done, setting the scene ever more emphatically for a major disaster.

According to his report, more than a third of municipalities are technically bankrupt and 18 have been placed under direct administration.

Only 8% received clean audits, down from 14%. Almost two-thirds ignored previous AG-identified irregularities, while fully three-quarters of them made zero effort to investigate AG-identified misconduct and fraud.

The scale of deliberate dishonesty – rather than congenital incompetence – is staggering. Almost a billion (R921 million) of tenders were fraudulently awarded to state-employed officials. Another R1.2 billion of procurement could not be audited because of missing or incomplete documentation – in local government, “misfiled” and “lost” are synonyms for “stolen” and “shredded”.

More than 824 of suppliers were found to have made false declarations. And in 88% of municipalities, the procurement processes were uncompetitive or unfair.

More than 80% of the R2 billion illegally “invested” by municipalities in the plundered VBS Mutual Bank cannot be recovered. Of the 16 municipalities involved, 14 are now unable to pay creditors, or deliver services.

The big auditing firms have already taken a reputational hammering over complicity in state capture at SOEs and criminal incompetence or collusion with private sector shenanigans. They fare no better in their highly paid work for local government.

The R907 million spent on consultants – up by 20% on 2016/17 – did not buy even minimal competence. Fully two-thirds of the financial statements had “material misstatements” in the areas where the consultants had done the work.

Four out of 10 municipalities have no road maintenance plan and almost half of them have no water or sanitation maintenance plans.

It’s clear from these statistics the recent collapses of water services in Grahamstown and the KwaZulu-Natal South Coast are not anomalies. They are harbingers of nationwide collapses.

Municipalities owed R6 billion to the water boards and, at March, R20 billion to Eskom.

Behind this lies the culture of non-payment, tolerated for the past quarter century. According to the Democratic Alliance in the Free State, in many municipalities in that province, barely 10% of residents pay their municipal bills.

Samwu warned this week that it will embark on strike action if workers at about 30 municipalities nationwide, who did not receive salaries this month-end, are not paid immediately. The president, says Samwu, has been “complicit” in failing municipalities by not unlocking central government funding.

To even begin to deal with this morass of overstaffing, under-performance and criminality, the Ramaphosa administration will have to lock horns with powerful and arrogant unions that are nominally part of the governing alliance.

Whether a former trade-unionist president will dare pick up the gauntlet remains to be seen.