Ekurhuleni loses clean audit status after attempt to oust mayor stalls again

Chaotic scenes at Ekurhuleni council on 29 February 2024.( Photo: Screengrab)

By Nonkululeko Njilo

13 Mar 2024

Ekurhuleni and Cape Town were the only two metros in South Africa to receive a clean audit in 2021/22. Ekurhuleni lost that status in 2022/23 and the city’s leading coalition partners, the ANC and EFF, have come to blows as their relationship has broken down.

In the 2021/22 financial year, Ekurhuleni was one of only two metros in SA that received a clean audit outcome. A year later, the metro has lost that status with its financial predicament and governance woes deepening.

Executive Mayor Sivuyile Ngodwana tabled the Auditor-General’s 2022/23 report in council on Tuesday.

By law, it should have been tabled by 31 January. However, a dispute filed by the city delayed the finalisation of the report.

For 2022/23, the metro received an unqualified audit opinion with material findings, while in the previous three years it received an unqualified audit opinion, as did the City of Cape Town.

Last year the AG flagged concerns about Ekurhuleni’s irregular expenditure of more than R20-million and noted the city’s weak internal mechanisms on contract, procurement and supply chain management.

Ekurhuleni city manager Imogen Mashazi said, “The report is not bad; it’s a minor regression. In terms of financials, we are good. Performance information is green in terms of service delivery standards to our communities. It’s just a mild regression and we are going to work on it.”

In the report’s foreword, Mashazi partially blamed political instability and Covid-19 for the downgraded audit outcome.

“This financial year was not an easy one, considering the instability in the political landscape due to hung municipalities. Another major difficulty was that of stabilising the ship after the devastation of Covid-19 and the impact it had on the economy, especially the finances of the institution and ratepayers…”

Service delivery failure

The audit outcome does not come as a surprise, particularly for opposition political parties, which had expressed concerns over the municipality’s liquidity amid ongoing financial and governance woes.

Read more in Daily Maverick: Cracks continue to appear in ANC/EFF Ekurhuleni coalition over state of city’s finances

They said the previous clean audits had not reflected reality, pointing to a lack of service delivery, a waste disposal crisis and failure to pay service providers and implement lifestyle audits.

In December 2023, the city had R438-million cash on hand, meaning it had cash reserves for fewer than 15 days. The National Treasury requires cash on hand for 30 days.

The AG said, “The cash on hand decreased significantly due to the fact that the planned collection rate was not achieved, and internal reserves were utilised to fund operations.”

There was, however, a glimmer of light: the AG appeared to be satisfied with the city’s ability to generate revenue, and with its borrowing habits.

“The fact that the cash generated from operations is over R2.869-billion more than the cash generated from financing activities shows that the city is able to generate funds from its own operation and does not borrow beyond prudent levels. This will minimise the borrowings for the financing of the capital expenditure programme in future and repayment of the amount borrowed,” the report reads.

Ekurhuleni’s financial woes are well documented.

Last week, the credit rating agency Moody’s downgraded the metro’s ratings further into “junk” status in the wake of the worsening financial position.

It lowered Ekurhuleni’s long-term issuer (domestic) and senior unsecured ratings to Caa2 from Caa1 and its baseline credit assessment to Caa2 from Caa1, MoneyWeb reported.

Last month, the National Treasury said Ekurhuleni stood to lose R600-million in conditional grants and instructed the metro to submit written representations for its poor expenditure, Daily Maverick reported.

The release of the audit comes as animosity between the ANC and EFF, who co-govern the metro with some smaller parties, deepens and service delivery takes a knock.

No-confidence motion stalls

In a bid to restore service delivery, the Democratic Alliance has called for the dissolution of the council, while ActionSA is calling for the executive mayor’s head.

ActionSA has tabled a motion of no confidence against Ngodwana, who ascended to the powerful position as a compromise after the EFF and ANC could not agree on a candidate.

ekurhuleni audit mayor Chaotic scenes at Ekurhuleni council on 29 February 2024. (Photo: Screengrab)

An attempt to remove Ngodwana failed on 29 February after the meeting descended into chaos when councillors heckled and threw bottles of water, with fistfights breaking out, predominantly between ANC and EFF members.

The latest attempt to remove Ngodwana was on Tuesday. It was also unsuccessful as the speaker, Nthabiseng Tshivhenga, adjourned the meeting on the basis that she needed to seek a legal opinion on possible amendments to the motion, a decision to which opposition parties did not take kindly.

ActionSA caucus leader Siyanda Makhubo said, “The council meeting was once again illegally adjourned by [the] speaker of [the] council, which is very difficult because what we’re seeing is an EFF speaker [who] is very partisan. She always misinterprets the council rules and when things do [not] go the EFF way, she either collapses or adjourns proceedings.”

ANC caucus leader Jongizizwe Dlabathi said, “We are equally disappointed about the abrupt manner in which that decision was taken.”

ANC, EFF at odds

Despite the disappointment, Dlabathi was adamant that change was coming. The ANC is expected to vote in favour of the motion to remove Ngodwana despite co-governing with the Red Berets, pointing to further cracks in their relationship.

In June 2023, Dlabathi penned a letter to the ANC’s provincial leadership asking it to reconsider the coalition. He warned that the ANC was at risk of losing its support base to the EFF if the coalition remained in place.

Little or nothing was done by the ANC provincial leadership. While the ANC National Executive Committee has supported abandoning its coalitions with the EFF, the Gauteng ANC is reportedly reluctant to act as the end of the marriage between the two would have a bearing on the other metros which they co-govern, including Johannesburg.

Part of the amendment to Tuesday’s no-confidence motion sought by the ANC is that the council adopts a resolution which allows for a political party with the most votes or seats to take the executive mayor position, a proposal that the EFF vehemently opposes.

EFF regional leader Nkululeko Dunga told SABC News, “The ANC wants us to make and accept a recommendation that says we must elect them for [the] mayorship, which is not in the spirit of democratic principles.”

Daily Maverick understands that more than 150 councillors have since signed and submitted a petition for the speaker to call an urgent council meeting on Friday to table, discuss and vote on the motion of no confidence against Ngodwana.

Dlabathi would not be drawn into divulging the ANC’s plan should the motion succeed.

“I am not going to reveal our plan at this point in time. Our preoccupation is that we must go through the motion, after which we will then deal with the next phase.” DM

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Service delivery failure

No-confidence motion stalls

ANC, EFF at odds