Other than in the Western Cape, municipalities are failing miserably
Even before the coronavirus struck, SA’s municipalities were withering on the vine.
It comes as no surprise that Ratings Afrika’s latest Municipal Financial Sustainability Index (MFSI) outlines the ongoing deterioration at the local government level.
It’s as if we have heard this story before. In fact, we have heard it before.
Read: Municipal sector faces collapse – Ratings Afrika
The 2019 Municipal Report by the Auditor-General (AG) suggests that 60% of revenue reflected on the books of municipalities will never be paid. Only 8% of the 257 municipalities received clean audits in the 2017/8 financial year, and half of them had financial statements deemed “quality”. Irregular expenditure totalled R32 billion and the likely financial loss from material irregularities came to R24 billion.
Read: Auditor-General speaking into the void on local government corruption
The Ratings Afrika study takes a broader look at financial sustainability, measured around six components: operating performance, liquidity management, debt governance, budget practices, affordability and infrastructure development. Municipalities are then given a score out of 100.
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