Municipal and Eskom debt are warning signs for JB Marks’ financial stability
Among the issues requiring public scrutiny are rising arrears for municipal services, increasing Eskom debt, as well as accumulated irregular expenditure, unauthorised expenditure, and fruitless and wasteful expenditure.
Kumaran Nair writes:
The statutory publications of the Auditor-General of South Africa (AGSA) and National Treasury have repeatedly raised concerns about the financial management, governance and service-delivery challenges facing municipalities across the country.
The municipality’s financial position and audit record should therefore be examined closely by the residents whose money funds municipal services and infrastructure.
The figures contained in the municipality’s financial and audit documentation paint a concerning picture. Among the issues requiring public scrutiny are rising arrears for municipal services, increasing Eskom debt, accumulated irregular expenditure, unauthorised expenditure, and fruitless and wasteful expenditure.
The state of the municipality’s finances:
| Management category | 2023/24 | 2024/25 | 2025/26 |
| Arrear municipal services debt | R1.2646 billion | R1.5449 billion | R1.8394 billion |
| Arrear & current Eskom debt | R564.4 million | R733.9 million | R945.3 million |
| Arrear & current water-board debt | R56.1 million | R51.9 million | R58.5 million |
| Aggregate financial deficit | R981.4 million | R1.0895 billion | R1.2016 billion |
| Cumulative irregular expenditure | R3.0189 billion | R4.0015 billion | R4.1684 billion |
| Cumulative unauthorised expenditure | R1.0051 billion | R1.017 billion | R1.089 billion |
| Cumulative fruitless and wasteful expenditure | R180 million | R201.7 million | R251.1 million |
| Management consultants | R54.9 million | R34.2 million | R41.3 million |
An increase in municipal debt, Eskom liabilities and accumulated irregular expenditure has consequences beyond accounting statements. Ultimately, financial pressure affects the municipality’s ability to maintain infrastructure, provide services and respond to the everyday needs of residents.
What does an unqualified audit opinion mean?
The municipality’s 2024/25 unqualified audit opinion has been presented as a significant achievement. An unqualified audit opinion should not automatically be interpreted as a clean bill of health for the municipality.
An unqualified audit opinion simply means that the books are neatly balanced only on paper, with fair presentation of financial and disclosure information in the annual financial statements. The Municipal Manager and Chief Financial Officer, with the expensive Management Consultants, continue to fail to compile and submit the annual financial statements that are free and clean of material misstatement or limitations to the Auditor General. The aforementioned is a prerequisite requirement.
Residents should therefore consider the complete audit outcome, including any findings relating to compliance, financial management and performance, rather than focusing solely on the words “unqualified audit opinion”.
What are the findings?
It must be acknowledged that the actual repetitive material and concerning findings of the Auditor-General reveal that underneath the neat math sits an accumulated R 4,15 billion in irregular expenditure, R 1,17 billion in unauthorised expenditure and an accumulated R 201.7 million in fruitless and wasteful expenditure.
The aforementioned financial numbers are represented by the Auditor-General in Actual Cash Rand value and not an estimate. In addition, the Municipal Manager and Chief Financial Officer funded the recurrent expenditure of R 34,2 million on Management Consultants to compile the annual financial statements, primarily because the Municipal Manager, Chief Financial Officer and Finance Managers, as expensive senior municipal officials, continue to be unable and find it impossible to perform the municipal finance work outputs under the MFMA Function.
Accountability must extend beyond the audit result
The reality of the truth is that the Auditor-General recorded and published significant repetitive material and concerning findings under the 32 and 45 individual categories of the Statutory Regularity MFMA Audit for the 2023/24 and 2024/25 municipal financial years.
The People of Potchefstroom, Ikageng, Promosa and Mohadin must acknowledge that on Wednesday , September 4, this deadline will determine whether the people will this time accept direct accountability and custodianship for their public money.
On Wednesday, November 4, the People of JB Marks Local Municipality will hold the ultimate audit tool: the ballot box.
It must be acknowledged by the People that the accumulated R 5, 32 billion and R 201,7 million in fruitless and wasteful expenditure represents hundreds of potholes unpatched, the significant high risks of the Eskom debt, and the complete collapse of institutional and infrastructure service delivery to their private households.
The Herald asked the JB Marks Municipality for comment on Wednesday, September 30, but has not received feedback yet at the time of publication.
