South Africa biggest cities left to collapse and decay

South Africa’s major metros oversee multi-billion rand budgets, but are left to collapse and decay in serious financial disrepair. Urgent intervention is needed on a national basis. 

Auditor General Tsakani Maluleke has slammed the widespread poor financial performance of the nation’s cities, with only one of the eight metros receiving a clean audit in 2023/24.

Maluleke said that the performance doesn’t make sense due to the budgets and economic positioning of the cities.  

“The eight metros across the country look after half of the expenditure budget for local government and provide services to 46% of South African households,” she said

“Their budgets are significant, and they sit in economic activity centres. They should have no difficulty attracting the skills they need to run their environments.”

Most metros failed with basic accounting standards, with the City of Cape Town the only one to receive a clean audit outcome. 

Buffalo City, Tshwane, Mangaung and Nelson Mandela Bay all received qualified audits, which indicate material failures in their accounts. 

Johannesburg, eThekwini and Ekurhuleni received unqualified audits with findings, suggesting that the accounts are reliable but that some matters require attention.

Business Leadership South Africa CEO Busisiwe Mavuso said that the nation’s metros are the country’s economic hubs, making it unacceptable that most cannot get basic financial management correct. 

“In the case of companies, if management is unable to produce reliable accounts that auditors are content to sign off, shareholders would revolt,” said Mavuso.

“In the case of our local government, the shareholders are the public who must exercise their votes.” 

She added that failures in financial management are linked to a poor level of basic service delivery. 

The City of Johannesburg has become the poster child of the crisis.

Despite having an almost R90 billion budget, most of the city’s traffic lights seem abandoned, and local roads are left to decay.

This has become a national embarrassment, as the city plans to host the G20 Summit later this year. 

What needs to be done 

The AG’s report shows that a lack of financial management skills and vacancies drives the challenges.

“There simply aren’t enough qualified people working in local government to ensure the accounts are done properly. That is despite the billions at stake,” said Mavuso. 

Although there has been an overall improvement in the performance of municipalities, this cannot be said of metros.

The performance of metros has regressed since 2020/21, with three metros downgraded over the last year. 

The AG noted that Johannesburg and Tshwane approved unfunded budgets. She also bemoaned the culture of municipalities approving unfunded budgets. 

“It should concern all South Africans that elected councillors can willingly approve spending plans for which there simply isn’t the money. That is not budgeting, it is reckless spending,” said Mavuso.

Mavuso stressed that the poor financial management of municipalities is now a national priority and one of the most significant constraints on economic growth. 

Service delivery failure often means businesses can’t function, limiting employment and economic growth. 

The local government issues have, however, been given national prominence via Operation Vulindlela 2.0. 

The joint initiative by the National Treasury and the Presidency has made strong progress in tackling the electricity and logistics crises, among other reforms. 

“The need for decisive intervention in municipal performance is also very clear,” said Mavuso.

“We have to get people into municipalities who can deliver on action plans that will improve the financial function.” 

The AG also highlighted weak information technology, driven by a lack of skills and controls. 

This shows the areas that Operation Vulindlela needs to target, mainly a large number of competent finance professionals, who will be required. 

There is also a much-needed review underway of the 1998 white paper on local government, which has the potential to overhaul policy and find ways to support local government. 

This should ensure better coordination between the local, provincial and national governments. 

 “The white paper should elevate the importance of consequence management, especially where there is a lack of performance and continuous service delivery issues,” said Mavuso.