Fin24.com | REVEALED: Top 10 municipalities responsible for R13.4bn irregular spend

Cape Town – Irregular spend for 2016/17 alone amounted to R13.35bn, according to a report from the auditor general.

The report on local government audit outcomes was released by Auditor General Kimi Makwetu in Parliament on Wednesday.

In total R28.376bn was identified as irregular expenditure. Of this, R15.026bn was expenditure from previous years that was uncovered and disclosed during 2016/17.

The total irregular expenditure amounts to 4% of the 2016/17 local government budget.

The main cause of irregular spend is related to non-compliance with supply chain management legislation. A total of R8.322bn or 30% of spend was incurred through procurement that did not follow a competitive bidding or quotation process.

More than R18bn or 64% was incurred through non-compliance with procurement process requirements, and R1.738bn or 6% was incurred through inadequate contract management.

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The report showed that 79% of municipalities identified the irregular spend themselves, while the remainder was uncovered through the audit process.

According to the report, the top 10 municipalities responsible for irregular expenditure are:

1. Nelson Mandela Bay Metro in the Eastern Cape

The municipality disclosed R8.184bn in irregular spend, and R0.045bn was incurred during 2016/17. The majority (99%) of the irregular spend is attributed to non-compliance with procurement process requirements. Key projects affected include water infrastructure, road infrastructure and housing.

2. OR Tambo District in the Eastern Cape

The municipality disclosed R3.082bn in irregular spend, and R0.680bn was incurred during 2016/17. Of the irregular spend, 99% is related to procurement without following competitive bidding or quotation processes. A water infrastructure project was affected.

3. City of Tshwane Metro in Gauteng

The municipality disclosed R1.825bn in irregular spend, and R1.211bn was incurred during 2016/17. The majority or 83% of the irregular spend is related to procurement without following competitive bidding or quotation processes. Key projects affected include a smart prepaid contract, a Wi-Fi contract and a fleet management contract.

4. Rustenburg in the North West

The municipality disclosed R0.984bn in irregular spend, and R0.540bn was incurred during 2016/17. All of its irregular expenditure is attributed to non-compliance with procurement process requirements. The key project affected was the Rustenburg rapid transport and various subcontracts related to it.

5. Ngaka Modiri Molema District in the North West

The municipality disclosed R0.828bn in irregular spend, and 20% or R0.164bn was incurred during 2016/17. The majority (80%) of irregular spend is related to procurement without following competitive bidding or quotation processes. Water infrastructure and sanitation were key projects affected.

6. The City of Johannesburg Metro in Gauteng

The municipality disclosed R0.706bn in irregular spend incurred during 2016/17. The irregular spend is attributed to non-compliance with legislation on contracts. Key projects affected are related to ICT.

7. City of Ekurhuleni Metro in Gauteng

The municipality disclosed R0.591bn in irregular spend. About 62% of that or R0.367bn was incurred in 2016/17. The majority or 59% is related to non-compliance with procurement process requirements. Key projects affected are refuse removal, housing infrastructure, chemical toilets and road infrastructure.

8. Buffalo City Metro in the Eastern Cape

The municipality disclosed R0.584bn in irregular spend, and 49% of this or R0.287bn was incurred in 2016/17. The majority or 77% relates to non-compliance with procurement process requirements. The key project affected is a multi-year contract for road infrastructure.

9. Madibeng in the North West

The municipality disclosed R0.562bn in irregular spend, and it was incurred in 2016/17. The majority (80%) is related to non-compliance with procurement process requirements. The key project affected is linked to water infrastructure and sanitation.

10. Moretele in the North West

The municipality disclosed R0.557bn in irregular spend, and 25% of this or R0.139bn was incurred during 2016/17. All of it is related to non-compliance with procurement process requirements. It is related to a project for water infrastructure and sanitation.

The total irregular spend incurred by the top 10 amounted to R17.903bn – 63% of the total irregular spend disclosed during the period.

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