R600m lost by Limpopo municipalities

Municipalities in Limpopo affected by the demarcation merger process have lost R600 million in fruitless, wasteful and unauthorised expenditure.

The irregular spending was laid out in the audit outcomes of municipalities for the 2014/15 financial year by Auditor-General Thembekile Makwetu this week.

Vuwani, which is about 150km northeast of Polokwane, made headlines after schools in the area were burnt down during violent protests against the relocation of some villages to the newly established Malamulele municipality from the Makhado municipality.

Cooperative Governance and Traditional Affairs Minister Des van Rooyen this week again defended the planned realignment of municipal boundaries to form a new municipality, saying the process would see 278 municipalities decrease by at least 11.

Van Rooyen reiterated that the primary goal in realigning municipalities in Limpopo was to make municipalities more “financially viable”. But none of Limpopo’s 30 municipalities received a clean audit, and most of them seemingly struggle with financial controls.

Opposition parties such as the DA have warned that the amalgamation of struggling municipalities would not necessarily lead to greater financial viability and efficiencies.

Both Makhado and Thulamela municipalities fall under the Vhembe municipality and all three had serious findings made against their finances. The Vhembe municipality received an adverse audit finding.

According to the Auditor-General’s report, Vhembe incurred R205 million in irregular expenditure, R258 million in unauthorised expenditure and R31 million in fruitless expenditure. The Auditor-General also red-carded the district municipality over its supply chain management processes.

The Makhado municipality received a qualified audit – it spent R78.8 million irregularly and a further R4.8 million was incurred as fruitless expenditure. It is not clear from the report what the money was spent on, but the Auditor-General argued that irregular expenditure did not necessarily mean corruption or fraud had taken place. It did mean, however, that legal prescripts were not followed.

The Thulamela municipality also incurred unauthorised expenditure of R14.4 million and irregular expenditure of R1.9 million. An amount of R480 000 was incurred as fruitless expenditure, meaning it could have been prevented and no value for money was received.

Answering a question regarding the planned realignment of municipalities in Limpopo, Makwetu said the previous merger between Tshwane, the struggling Metsweding municipality and two local municipalities (Nokeng tsa Taemane and Kungwini) worsened the municipality’s position because the Tshwane municipality also had to absorb the debt of these struggling structures.

However, Van Rooyen said lessons learnt from the Tshwane merger were being taken into consideration to make the process in Limpopo go smoothly.