Twenty-five of the Eastern Cape’s 39 municipal chief financial officers do not meet the minimum requirements for their posts, says finance MEC Oscar Mabuyane.
He was responding to questions asked by DA MPL Bobby Stevenson at the Bhisho legislature last week, including how many CFOs were qualified for their crucial positions.
Mabuyane said according to the Municipal Regulations on Minimum Competency, these CFOs should be fired if they failed to attain the relevant qualifications within 18 months of their appointments.
These minimum requirements, updated earlier this year – which include minimum higher-education qualifications, work-related experience and core managerial and occupational competencies – were introduced to professionalise the local government sector and mitigate some of the root causes of poor financial management and service delivery.
According to Mabuyane, the municipalities in question include Buffalo City Metro, which has an acting CFO. Others include all six of the province’s district municipalities, Amathole, Sarah Baartman, Chris Hani, Alfred Nzo, Joe Gqabi and OR Tambo.
Mabuyane pointed out that Intsika Yethu, Sakhisizwe, Walter Sisulu, Ingquza Hill, Port St Johns and Makana municipalities do not have permanent CFOs.
He also highlighted that Sakhisizwe and Sunday’s River Valley municipalities had not submitted their 2017-18 annual financial statements to the auditor-general for auditing.
The latest available Municipal Finance Management Act audit report, for the 2016-17 financial year, shows that just 5% of the province’s municipalities received a clean audit, down from 20% for the previous period.
Auditor-general Kimi Makwetu stated that irregular expenditure increased due to instability, disregard for laws and regulations, and the absence of solid, internal controls.
Makwetu said more than half the province’s 39 municipalities were in dire financial distress. Some have liabilities exceeding their entire budgets for 2017-18. Eastern Cape municipalities incurred R23bn in irregular expenditure in 2016-17.
One municipal manager from a particularly troubled municipality disputed Mabuyane’s statement, saying their CFO had all the right qualifications. “He is contributing immensely to the organisational turnaround plan of the institution, including the financial recovery plan where he plays a pivotal role in terms of our financial recovery and revenue strategies.”
Provincial Treasury spokesman Phumelele Godongwana said the failure of CFOs to meet minimum requirements led to poor spending on grant allocations, and non-compliance with the Municipal Finance Management Act. Underperforming CFOs also impacted on supply chain management, infrastructure procurement plans, budgeting and annual financial statements compilation, and increased wasteful spending on government financial resources. Godongwana listed as serious challenges to municipalities:
lUnfunded budgets adopted by councils, which meant there was no money for service delivery;
l An inability to collect revenue causing persistent “cash flow challenges” (no money) and an inability to meet financial commitments.
Cogta provincial spokesperson Mamnkeli Ngama said: “The impact (of underqualified CFOs) could be on good financial management. The entire financial management of a municipality will not be effective, transparent and accountable if the CFO does not have the minimum competency levels. The CFOs who do not have the municipal finance programme certificates are currently enrolled with institutions of higher learning to obtain the qualification.”
Cogta had also spoken to municipalities with acting CFOs in an effort to make sure that the vacancies were filled with competent candidates.
ANC provincial secretary Lulama Ngcukayitobi acknowledged that some municipalities in the province faced serious challenges of political and institutional instability.
Stevenson commented: “Unqualified chief financial officers not only result in qualified audits but open the floodgates for corruption. It is no wonder local government is in a mess, with some municipalities facing Eskom cut-offs and collapsing service delivery. People are resorting to violence as they burn with frustration by setting fire to municipal facilities.”..