Municipalities — which stand at the coal face of delivery for all 60-million South Africans — are rapidly unravelling. And while you’d imagine the country’s auditor-general (AG), Tsakani Maluleke, would be watching this with a growing sense of despondency, she is doing her best to find the glimmers of hope amid the wreckage.
“Most of the municipalities are not moving in the right direction, but there are a few that are starting to listen,” she tells the FM in an interview. “You give recommendations, and you solicit commitments, and then you hope and trust that people implement them. And when they don’t, it just makes the situation even worse. I don't get frustrated — I don’t think frustration is a helpful way to respond to the moment.”
It’s a necessary view of what would otherwise be perhaps the most thankless job in the country — on a par with the role of Eskom CEO recently vacated by André de Ruyter, or the chair of the ANC’s integrity committee.
Maluleke is in the third year of a seven-year term as the head of South Africa’s state-run auditing office, tasked with verifying and signing off on the accounts of every government agency, department and state-owned entity. As the country’s supreme audit institution, her office is tasked with ensuring accountability in a government that has shown that the one thing it really doesn’t like is to be held accountable.
This was starkly evident in her crisp 144-page report on municipalities, presented to parliament last week, which revealed the deep rot at the heart of service delivery.
Consider the “highlights”: of the country’s 257 municipalities, only 38 got a clean audit (down from 41); nearly three in four didn’t have proper financial controls in place; irregular spending ballooned to R136bn; only two of the eight metros (Cape Town and Ekurhuleni) got a “clean audit”; fruitless and wasteful expenditure more than doubled to R4.7bn; and in 27% of the municipalities the signs were so ominous that there was “significant doubt” that they could continue operating much longer.
It was so gruesome that Zoliswa Kota-Mpeko, an MP from the governing ANC, which bears most responsibility for this state, said: “Let’s dump this nonsense of doing what we like — the people want services and they want them now.”
The decline was evident as far back as 2012, when then AG Terence Nombembe released a report that revealed just 13 of 343 municipalities got clean audits, while nearly 20% had disclaimers. The red lights were blinking, but in the decade since, the country’s political leaders looked the other way.
Nor are these just numbers: they are a reflection of the experiences of South Africans who, in many instances, are paying for services they’re not getting.
Kevin Allan, head of Municipal IQ, which assesses the performance of all the country’s municipalities, says that to dismiss Maluleke’s report as simply a technical financial report would be to understate the deep problems in our economy, which it lays bare.
“It manifests in what we saw in Tshwane in recent weeks, where the failure of municipalities to manage the engineering function they’re responsible for has led to a completely avoidable cholera outbreak [in which 26 people have died so far].”
This was the responsibility of the Tshwane metro, where the red flags had first been raised over the Rooiwal waste water treatment plant back in 2004. And it was made all the worse by a R250m tender awarded four years ago to a joint venture of CMS Water, NJR and Blackhead Consulting, run by state capture-implicated businessman Edwin Sodi. That project was never completed.
Allan says Maluleke’s reports don’t sugar-coat the collapse in local government.
“The fact is, everyone who pays taxes is paying for this local government failure, either directly because they live there and services have dried up, or indirectly, because the national government has to step in to provide financial support for those municipalities,” he says.
It’s a trajectory at the end of which lies the implosion of services in outlying areas — no roads, no water, no power, with residents and businesses fleeing to the larger metros that can support them. “You can’t have a successful country if your local economies are failing, and my concern is the government just doesn’t seem to realise this, and the risk this poses to the wider country,” says Allan.
Maluleke’s report also accords with the diagnosis of other agencies.
Last month, Ratings Afrika released its annual report into the state of 112 municipalities, which concluded that a “majority ... are on the brink of becoming dysfunctional”, with only those in the Western Cape demonstrating “adequate levels of financial sustainability”.
More disturbing was the trajectory: those 112 municipalities had a combined R33.7bn operating deficit — more than double the R15bn deficit five years before. The shortfall in working capital — essentially, money needed to pay service providers such as Eskom, and to invest in infrastructure — had nearly tripled to R65bn.
“An audit is simply accounting for money spent in a financial year; it’s not building a rocket ship to Mars,” says Allan. “The [AG] comes in and says: ‘Tell us what you spend and how you account for it’, and the vast majority of municipalities can’t do that — because government just doesn’t take auditing seriously.”
Ask Maluleke about this, and she’ll talk gamely of how her 3,600 staff “work hard to keep finding spaces where there is momentum, and where there is some responsiveness — and there’s always some”.
Though she chooses her words with the deliberation and poise you’d expect of a seasoned accountant, these pockets of momentum are becoming increasingly hard to find.
‘We’re no messiah’
Maluleke’s optimism is all the more noticeable since she’s had a front-row seat to this unravelling.
Back in 2012, when Nombembe presented his alarming diagnosis, few would have noticed the quiet chartered accountant who’d joined his office just a month before, but who would later become the first woman to hold that position, in 2020.
But even then she seemed destined for greater things. Having trained at PwC, she cut her teeth in various corporate roles, including as finance director of Sipho Pityana’s Izingwe Holdings, an audit partner at Deloitte, and as chair of the SA Institute of Chartered Accountants.
Achievement is in her genes. Her father, George Maluleke, served as a judge of the high court from 1993 to his retirement in 2016; her sister Basani became the first black female head of a major bank (at African Bank) before she moved to Capitec as an executive in 2021; and her youngest sister Refilwe is the MD of marketing company Yellowwood.
It was Maluleke’s unruffled demeanour in the way she presented her findings last week, to the very politicians who’d caused the mess, that stoked the view of her office as a beacon of hope in a bleak landscape, and as a bulwark against unbridled corruption. In much the same way that people saw Thuli Madonsela as a messiah during her tenure as public protector, Maluleke’s office has been depicted as the final sandbank between South Africa and the slide to a failed state.
This burden of expectation, Maluleke tells the FM, is huge but ill-placed.
“It is problematic because it starts to shape a narrative that says we’re waiting for a messiah or saviour,” she says. “And that’s not helpful for the office, and not helpful for our democracy. There are different role players in the accountability ecosystem that must do their part.
“When people say to us, ‘we want to see people in jail’ — we don’t get to put people in handcuffs, as good as we are as auditors ... Or they’ll say, ‘we want you to make sure that people are held accountable’ — but all we can do is complement the system.”
And that is where that ecosystem can break down. For example, Maluleke’s powers were widely extended two years ago, to give her office greater powers of investigation and to allow it to make referrals to criminal authorities, such as the Hawks, when corruption has been detected. But once a case has been referred, her office has zero control of the pace of those investigations.
This is a necessary limitation, says Maluleke. “The people who work here went to school to become auditors, not investigators. Their inclination is to get excited about auditing, and not about carrying revolvers.”
This year, however, she’s seen a distinct change; municipal accounting officers themselves are referring cases to the criminal authorities. “Many of them are moving in terms of getting matters investigated, dealing with disciplinary issues, cancelling contracts, getting money back into their coffers. And naturally, we would want to see more of that,” she says.
Ratings Afrika analyst Leon Claassen says Maluleke is doing a fine job, “but she should perhaps be qualifying more municipal accounts, since there’s no way most of these municipalities are a going concern — they’re hopelessly commercially bankrupt, and there’s no likelihood that they’ll be able to trade out of that position.”
Allan agrees that there’s a huge weight of expectation on the AG office — but this is inevitable, as it’s one of the few state bodies holding anyone accountable.
“Maluleke is very courageous, and scathing where it’s necessary — which is, actually, all the time, since local government is under serious pressure and is failing in many areas. She rightly identified the root causes as inadequate skills and capacity, governance failures and a lack of accountability as the reason for this.”
Yet she can only do so much. The problem may begin in the municipalities, but culpability also needs to lie with the provinces they report to, and the National Treasury, which ultimately approves budgets it must know aren’t practical.
Budgetary fairy tales
Leaping off just about every page of Maluleke’s report is the clear message that the basic level of financial planning skills is entirely absent in many municipalities.
One of the more troubling findings is that 44% of municipalities have “unfunded budgets”, where they overestimate the revenue they plan to collect in order to justify their sky-high spending. But when the inevitable happens, and they don’t hit their targets, cash dries up for services and to pay creditors.
Maluleke says that in too many instances, municipal officials know, right from the start of their budgeting process, that they won’t get the revenue they’re hoping for. “It is significant — you’re essentially working yourself into an operational loss, or a deficit and a liquidity crunch. And then the impact is not just a weak balance sheet, but service delivery suffers.”
Allan says these unfunded budgets reveal inept financial planning.
“It’s deeply worrying that, in the vast majority of cases, there isn’t enough money coming in to provide services and to maintain infrastructure and, instead, that money is being spent on salaries. In the most glaring failing municipalities, you see administration buildings bursting at the seams with a bloated staff amid a sea of failure outside those walls,” he says.
Perhaps the most blatant example is the bankrupt Amathole district municipality in the Eastern Cape, centred on East London. In 2021 it needed a R180m government bailout to pay salaries for a bloated staff of 1,670 — even as it sought to hire a “political adviser to the mayor” for R1.5m a year.
This is the kind of unaccountable largesse that should end in municipal officials being fired, but rarely does.
Instead, the country’s political leaders wring their hands and mouth platitudes, rather than acting decisively.
President Cyril Ramaphosa, writing in his newsletter this week, said Maluleke’s finding that only 38 of the country’s 257 municipalities got clean audits is “worrying” and requires a “co-ordinated response” from the government.
Where councils have got it right, it seems to be through their own efforts, not thanks to any help from Ramaphosa’s administration. If anything, the government’s unwillingness to cut dead wood or, worse, those blocking reform, is standing in the way of progress.
Says Allan: “When there is demonstrable incompetence or mismanagement, how come there is no accountability? In two provinces — North West and the Free State — the provincial MECs for co-operative governance [& traditional affairs, Cogta] must also be held responsible for the failure of oversight. Why is no-one fired?”
In North West, Nono Maloyi has been the Cogta MEC for seven months; in the Free State, Toto Makume has been MEC for about two months, but his predecessor, Mxolisi Dukwana, who held the post for 18 months, is now the premier of the economically delinquent province.
“When an entire province isn’t adhering to audit processes, ultimately the buck stops with the national minister of co-operative governance. It’s their responsibility to step in and ensure accountability,” Allan says.
In other words, minister Thembi Nkadimeng, and her long-standing predecessor Nkosazana Dlamini Zuma, should be held responsible for not stopping the long slow puncture of local government.
There are some interesting ideas floating about. The South African Local Government Association’s Sivuyile Mbambato, for instance, tells the FM his organisation plans to bring back experienced former councillors with good track records to help troubled municipalities implement better oversight.
The government also says the right things. Nkadimeng’s spokesperson Tsekiso Machike tells the FM the framework for professionalising the public service was adopted by the cabinet last year, requiring managers across all three spheres of government to be appointed on merit.
Of course, political instability — and coalitions — don’t help. In Tshwane and Joburg, factional fights leave the civil service with poor oversight, and little confidence that they won’t just be replaced when a new party wrests control. Machike tells the FM that Nkadimeng is working on legal changes to ensure “stability” in local government that should be passed before the 2026 local government elections.
But when the rubber hits the road, there’s plenty of scepticism about whether it will actually happen. If there were any urgency, critics ask, why wasn’t this process started a decade ago?
A recipe for municipal success
From the outside, it may seem like an unsolvable dilemma. But Maluleke has provided a recipe of sorts to fix municipalities, starting with three key interventions.
First, people must be appointed to critical positions because they are competent — not just because they are aligned to the politics of the day. She says: “We have some way to go to get to the point where political leadership will appoint professionals who, despite what they believe politically, are actually able to do the work.”
Second, civil servants need to be confident they’ll have secure tenure to ensure councils are stable.
“The municipalities with the clean audits, and the ones that maintain clean audits, have municipal managers and chief financial officers who stay longer than five years” she says. “And the reverse is also true: where there’s dysfunction, where there are disclaimers and adverse opinions, that’s where you’ve had significant churn at those levels.”
Third, she says, there have to be consequences for people who mess up — accountability, in other words.
It is, Maluleke says, about “thinking technocratically” — a skill that can actually enhance the political standing of a municipality, rather than detract from it.
“I would think that any politician wants to be associated with a public institution that delivers on the promises made — so if you hire for competence, you’re clear about the direction that has been set, and you oversee to ensure things are running in the way that you expect, I would have assumed that’s what you’d want if you’re politically ambitious,” she says.
If delinquent municipalities were serious about cleaning themselves up, there are a few examples they could emulate.
Cape Town mayor Geordin Hill-Lewis tells the FM that clean governance is a “culture” established over time. The prerequisites for creating that culture include professionalism among city officials and firewalling the procurement processes.
It’s a point echoed by Mzusekho Matomane, CFO at the Mnquma local municipality, which encompasses the town of Butterworth in the Eastern Cape. Mnquma is one of the vanishingly few municipal success stories. It went from a disclaimer six years ago to a clean audit now (see story on page 27).
Matomane says when he took over as CFO after the 2016 local election, when a new city manager was appointed, the council had just R7,000 in the bank. Today, it has a surplus of R169m, which it can use to build infrastructure and deliver services. “Politicians have to give administrators the space to implement controls — it’s as simple as that,” he says.
To get to a clean audit, Mnquma’s finance team worked closely with Maluleke’s office, refining its processes to the extent that it has been able to eliminate fruitless and wasteful spending. Matomane says risks of political interference remain, but he credits the municipal manager for taking a hard line against that.
Ratings Afrika’s Claassen relates the story of Theewaterskloof, in the Overberg region of the Western Cape, which encompasses Caledon, Grabouw, Villiersdorp, Greyton and Botrivier.
“Back in 2011, they got a very low score from us — 23 out of 100 — and the municipal manager was very upset, and called to speak to us about it. We explained, and the penny dropped about how bad their situation was. But they took ownership of it: they cut back on unnecessary expenses, did what they could to draw investment back in, and focused on collecting their debts,” he says.
In this year’s Ratings Afrika report, Theewaterskloof scored 55/100 — a remarkable turnaround.
Says Claassen: “Theewaterskloof was not a rich municipality, but they realised they had to go back to the basics: put in place proper financial planning, management and fiscal discipline. It’s really that simple. But it takes political will, and I think many municipalities don’t have that will.”
It’s a point Maluleke stresses often: fixing South Africa’s municipalities, filling in potholes, and delivering services, all begin with leadership.
“We’re not auditing in just theoretical terms. We want to impact and influence things so that the right choices are made by those who run the government. We want people to understand what it means on the ground, so they can understand why they shouldn’t tolerate [living in a municipality] with a disclaimer on their accounts,” she says.
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