MALAIKA MAHLATSI: Corruption forcing cash-strapped govts to rely on consultants

OPINION

A week ago, the Auditor-General of South Africa Tsakani Maluleke released 2021-2022 audit report into the state of municipalities in the country.

The report laid bare the perilous state of municipalities across the country, with 45% of municipalities receiving poor audit outcomes.

In her reflections, Maluleke noted that in just four years, nearly R6 billion has been lost in fruitless and wasteful expenditure by municipalities, with a year-on-year increase since 2019. As expected, when resources are wasted, debt is incurred.

According to Maluleke, by year-end, 52% of municipalities owed their creditors more money than they had available in the bank as they continued to spend money they did not have.

This means that over half of all municipalities are using their budgets for the following year to cover their spending for the current year, and are facilitating a dangerously escalating debt cycle.

But to me, the most concerning part of the audit report is with regard to the amount of money that municipalities are spending on consultants.

The report found that in the reporting period, municipalities had spent more than R1.6 billion on consultants. This amounts to 13% of total financial reporting costs of just over R12 billion.

One might expect that these consultants possess critical and rare skills and are thus being hired to perform complex tasks. However, it has been found that in many cases, these consultants are hired to perform the most basic tasks such as tax returns and VAT – something which municipal staff should be able to do.

One might also expect that the work of these consultants would be impeccable given the amount of resources availed to them, but this too is not the case.

Maluleke reported that 62% of financial statements that municipalities submitted for auditing included material misstatements in areas of consultant work. She attributes this ineffectiveness of consultants to, among other things, non-delivery and poor project management.

The over-reliance on consultants in municipalities and across all spheres of government has been happening for many years.

As far back as 2014, former Auditor-General Kimi Makwetu was reporting on the growing costs of the use of consultancy services by municipalities. At the time, 230 of the 263 municipalities used consultants.

And yet, even then, these consultancy services were not always effective.

In 2017, roughly 11% of the municipalities that received assistance from consultants were given disclaimers and adverse findings.

Thus, there is clear evidence that the use of consultants does not necessarily translate to better management or governance in municipalities. In fact, it might be an indicator of weak management and poor governance.

Municipalities argue that a lack of skills and unfilled vacancies are the main reasons for appointing consultants.

This explanation begs for critical interrogation. The difficulty that municipalities experience in getting specialised skills, including management and accounting skills, and keeping them for the long term, is the direct result of the culture of corruption that has found root in local government.

Suitably qualified professionals are weary of plying their trade in the public service because the entrenchment of corruption and maladministration makes it impossible for them to perform their duties.

Many an administrator has been compromised by the corruption of political principals. The political-administrative interface at local government level is defined by power dynamics that disadvantage administrators.

This is especially true for senior administrators whose appointments are decided by councils. These administrators have very limited options in terms of how much they can do to arrest the decline, in great part because of inadequate whistle-blower protection that has seen those who report corruption and maladministration in municipalities made targets of harassment, intimidation, and even assassinations.

No skilled professional would want to work under such conditions.

The fact of the matter is that the over-reliance on consultants by municipalities is a direct consequence of corruption and cadre deployment.

I support the principle of cadre deployment.

It is a universal practice that is rooted in the logic that government administrators must have a sociological and political understanding and commitment to the vision and aspirations of the governing party or coalition.

It is done in the United States, China, United Kingdom, and many other countries. It is not inherently wrong.
What makes it problematic in the context of South Africa and particularly of local government is that incompetent, unqualified, and unskilled people are deployed to critical positions to make decisions that have far-reaching consequences for society.

This is evidenced in the recent revelation by the Minister for Public Service and Administration, Noxolo Kiviet, who stated in Parliament that nearly 2,000 senior managers in the public service do not have the necessary qualifications for the positions that they occupy.

While this was specific to provincial and national government, on the balance of probabilities, the situation in local government is the same. One of the consequences of this situation is the catastrophic maladministration and poor governance that characterise municipalities.

This consultancy-focused local government does not bode well for the building of a capable state.
A capable state demands a professional public service – one that has skills and capacity to execute its functions.

Furthermore, spending so much money on consultants goes against the “value for money” principle of Batho Pele, according to which government must provide services to communities in a manner that is resource efficient and economical, while simultaneously ensuring best value.

This means government must stretch resources to ensure that services are delivered equitably, while also saving as much money as possible.

Municipalities need to build internal capacity. This will be anchored on the implementation of a professionalisation of public service framework.

Additionally, they must establish systems to detect and report fraud and corruption. Strong monitoring and evaluation units must be established within executive offices and departments.

And finally, war rooms must be established to develop a strategy for the elimination of wasteful and fruitless expenditure.

We know that these interventions work because the City of Ekurhuleni Metropolitan Municipality under former executive mayor Mzwandile Masina implemented them and received consecutive clean audits.

Other municipalities should learn from this.