Consumers owe City of Joburg R20.4bn, says Makwetu

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Johannesburg - Auditor-General Kimi Makwetu has revealed the state of the City of Joburg’s finances as consumer debt ballooned by over R4.3 billion to almost R20.4bn. In his audit for the 2018/19 financial year, Makwetu identified the R20.4bn owed by Joburg consumers as a material impairment representing more than three-quarters (76.36%) of its total consumer debt. Consumers owed more than R16bn in the previous financial year. ”The consumer debtors balance has been impaired,” said Makwetu’s report. The auditor-general found that the City of Joburg had no effective system of internal control for debtors and revenue for its entities in violation of the Municipal Finance Management Act (MFMA). Makwetu also slammed the City of Joburg for failing to investigate irregularities identified in 2017/18.

The report said 1173 irregularities were identified in the year up to June, including financial misconduct, fraudulent acts, theft and non-compliance.

He said the majority of the 1173 irregularities were investigated internally by the City of Joburg’s forensic department and were identified prior to the 2018/19 financial year.

Among Makwetu’s findings is that the municipality failed to take reasonable steps to prevent irregular expenditure of almost R2.4bn.

Makwetu found that the R2.4bn irregular expenditure was due to its failure to comply with the National Treasury’s municipal supply chain management regulations.

In terms of the regulations, municipalities are allowed to procure goods or services under a contract secured by another organ of the state and can deviate from normal procurement processes but under strict conditions.

According to Makwetu’s report, reasonable steps were not taken to prevent nearly R494million in unauthorised expenditure, the majority of which was caused by overspending on non-cash items.

He said the municipality did not always pay its suppliers within 30 days as required by the MFMA.

Makwetu’s report comes as the ANC and the DA are involved in a public mudslinging match over the state of Joburg’s finances.

DA City of Joburg caucus leader Funzela Ngobeni defended the party’s reign. He said over R1.3bn in lost revenue was recovered during Herman Mashaba’s reign and that since the launch of its anti-corruption unit, 6000 cases have been under investigation, more than R35bn in transactions.

He blamed the increase in consumer debt to increased financial pressure on residents.

The council will debate the 2018/19 annual report next month after receiving comments from the public and other interested stakeholders.

Political Bureau