By Michael Appel
The Auditor-General of South Africa recently released a report naming and shaming government departments who consistently incur fruitless and wasteful expenditure (FWE). That’s accounting talk for money being wasted.
In a briefing to Parliament’s Standing Committee on Appropriations, the AG’s CFO Bongi Ngoma told committee members that over the past five years, FWE to the value of R1.5bn had been incurred by the 41 national departments. That equals R25m a month spent in what the AG calls “expenditure which was made in vain and would have been avoided had reasonable care been exercised”. Simple maths tells you the South African government misspent an average of R833,000 a day for the five years in question.
Let’s use government’s own R350 social distress relief grant – meant to keep the most vulnerable from starving to death – as an example. In a country with so much desperation and need, that R833,000 spent in vain per day by government could have provided 2,380 people with that monthly R350 grant EVERY SINGLE DAY for five years. According to SA Facts data regarding the cost to build a single RDP house, government could have built roughly eight homes a day with the money squandered. That’s 14,400 extra houses over five years.
Ngoma referred to 21 of the 41 departments, representing 51% of government, as “consistent delinquents”.
The AG looked at FWE during the period between 2016/17 and 2020/21. There was R132.5m captured as FWE in 2016/17. That figured ballooned significantly to R625.9m in the following financial year. Between 2018 and 2021, FWE amounted to R763m. Put another way, government departments wasted R21.2m a month, or roughly R700,000 a day over those three financial years.
Ngoma also reported to the committee the number of Material Irregularities (MIs) issued by the AG since October last year. An astonishing R8.6bn was flagged for irregularities by national government departments alone. The bulk of the 60 MI notices relate to non-compliance with procurement processes, payment for goods and services not received, or payment to incorrect beneficiaries. If you include the quantum of local and provincial government MIs issued, the value rises to R14.7bn.
Here is a list of the top 15 fruitless and wasteful expenditure delinquents in national government over five years. There are certainly some surprises on the list – with the top offender being the Department of Defence at R460m, followed by National Treasury at R340m. The Basic Education Department comes in at number three with almost R107m squandered. The Tourism Department and Environment, Forestry and Fisheries are fourth and fifth on the list with R92m and R88m respectively.
Closer inspection of just what money is being wasted on by government departments is astonishing. “Travel cancellation costs” is listed nine times on the document. A committee member stated his surprise at the nonchalant manner in which government officials don’t honour travel commitments saying when he misses a flight as an MP, the money is recouped from his salary the next month. Apparently not so in government.
Other listed reasons constituting fruitless and wasteful expenditure include paying for unoccupied buildings, paying for software that isn’t used, and damages to vehicles and infrastructure.
As for the general financial health of the 381 audits conducted on government departments, public entities, and state-owned entities (SOEs), the overall picture should keep any finance minister up at night.
According to the AG’s report, only 29% of government departments, across local, provincial and national, are in a “good” financial position. Over 60% are “of concern” and 9% have “intervention required”. As for SOEs, it’s a shocking state of affairs with only 9% on a good financial footing. That leaves 91% of South Africa’s parastatals in either a concerning position (76%) or requiring intervention (15%).
Committee member Shaik Emam of the National Freedom Party made an important observation about the lack of consequence management for officials who repeatedly break the law.
“People get suspended from their positions, but there is no deterrent because they get suspended with full pay. By the time you find them guilty, their contracts have come to an end. They’ve received full pay and you get nothing back out of them. Companies that may have unduly benefited end up liquidating, very conveniently many of them liquidate, so you don’t get anything back from them [either],” said Emam.
The state continues to suffer from a dearth of skilled and competent people. Ngoma highlighted that while there has been some improvement in the filling of critical vacancies, far too many jobs have no permanently appointed person one can hold accountable.
“Let’s start from 2018/19, the vacancies of key officials were at 39% [within government departments]. Then in 2019/20 those vacancies were at 37%. Then in 2021 they were at 33%. To have vacancies of this level…one third of critical positions are vacant. Chairperson, it speaks to all these issues that we have been talking about, because we know that capability enables accountability,” said Ngoma.
She advised the committee that steps will be taken to work together with the Special Investigating Unit and the Hawks to clamp down on “repeat offenders” within government while acknowledging that cases brought against implicated officials are often beset with delays and drag on for years.
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