Johannesburg Faces R4.74 Billion in Irregular and Unauthorised Expenditure: City Outlines Recovery Plan

The City of Johannesburg is grappling with nearly R4.74 billion in irregular and unauthorised expenditure, as revealed in its 2023/24 annual report. The Auditor-General South Africa (AGSA) found that the municipality failed to prevent nearly R2 billion in irregular expenditure, along with R2.755 billion in unauthorised spending.

Breakdown of Financial Irregularities

According to the AGSA report, a significant portion of the unauthorised expenditure stemmed from overspending on key budget votes. Additionally, the irregular expenditure largely originates from multi-year contracts that have previously been flagged, including the R1.2 billion Afrirent fleet deal.

The City of Johannesburg has challenged some of the findings, arguing that the AGSA’s assessment was based on incorrect information. “Management has reviewed the AGSA finding and found that the information provided by the city was incorrect. Some of it relates to previous contracts,” the city’s remedial action plan stated, adding that discussions with the AGSA are ongoing.

City’s Strategy to Address the Crisis

To tackle the issue, the city has developed a Unauthorised, Irregular, Fruitless, and Wasteful Expenditure (UIFWe) reduction strategy, pending council approval. The strategy includes:

• Strengthened consequence management for financial misconduct
• Implementation of recovery actions for material irregularities
• Legal proceedings to recover municipal funds
• Independent probity reviews for high-value tenders
• Stricter regulatory compliance for procurement deviations

Political and Governance Challenges

Instability in local government has further exacerbated financial mismanagement, according to DA Johannesburg caucus leader Belinda Kayser-Echeozonjoku. “We’ve had about eight or nine mayors in recent years. Each new administration sets different priorities instead of continuing existing programmes that work,” she said.

To address governance concerns, the DA has called for lifestyle audits of senior politicians and officials, as well as skills audits to ensure that qualified individuals hold key positions.

“We also believe that councillors should be held personally accountable for financial losses resulting from poor decisions. If the city loses money due to reckless governance, that money should be recovered from the politicians responsible,” Kayser-Echeozonjoku added.

Ekurhuleni Takes Action on R2.2 Billion in Irregular Expenditure

Meanwhile, the Ekurhuleni Metro has referred R2.2 billion in UIFWe cases to its Municipal Public Accounts Committee (MPAC) for further investigation. The committee is expected to report back to the council by the end of April, recommending whether the funds should be recovered from employees or service providers found responsible.

MPAC will also determine if some of the expenditure should be written off as irrecoverable.

With billions in irregular spending across Gauteng municipalities, pressure is mounting on local governments to tighten financial controls and improve accountability.

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