County Budget Deficit Villains

August 19, 2013

“Public officials in dire straits” was the headline in The Times newspaper of South Africa last Wednesday, August 14th 2013. As I read the story that followed I went through alternating bursts of manic laughter and picking my shocked jaw off the floor. The article highlights a report presented by the province of Gauteng’s Department of Finance to the province’s Finance Portfolio Committee the day before. Gauteng Province is the home to South Africa’s financial and administrative capitals Johannesburg and Pretoria so no prizes for guessing the importance of the province on the overall South African economy. The report states that most of the province’s officials are belabouring under the following conditions a) drowning in debt with garnishee orders (orders to attach property of an individual) averaging six per employee b) suffering from high levels of stress and depression c) employees have a high mortality rate and d) employees are often absent from work on Mondays and Tuesdays on unscheduled sick leave.

The province pays these employees R 42 billion (Kshs 369 billion) a year in salaries to its nearly 182,000 employees. Scientific research presented showed that the most vulnerable were employees in lower salary levels who were also generally less qualified, more vulnerable to HIV/AIDs and more likely to be conspicuous consumers living far beyond their economic means. But the problems don’t end there. The Auditor General Terence Nombembe also released a report on the same day (clearly Tuesday August 13th was release-a-gobsmacking-report-day in South Africa) stating that most of the country’s 278 municipalities battle to function with officials that can’t do their jobs. So the auditor general made the traffic stopping discovery that chief financial officers, municipal managers and supply chain mangers are in short supply. The consequence of these vacancies is that 71% of the entities audited were dependent on consultants to assist with financial reporting, which of course comes at a cost. Outsourced services, the report found, cost more than R 378 million (Kshs 3.3 billion) in 2011/12. Nombembe found that many officials realised that they did not have what it takes to produce financial statements required of local government, but only acted close to deadlines by calling in consulting firms. Now hold onto your seats, this ride gets even rougher. Only 17 municipalities (6%) obtained clean audits last year, which apparently has been the trend over the last three years.

First off, I made a promise to myself that I will no longer make any commentaries about our county governments. I broke it within a week. I made another promise. I can’t seem to keep it either. So I have thrown two promises in the dustbin where they’ve been joined by any sense of credibility that the counties of Mombasa,Vihiga, Siaya, Kisumu, Meru, Nakuru and their 17 other budget deficit county cousins ever had. You’ve got to give it to these guys though; it takes serious gumption to send in a budget with a deficit the first time that you ever have to do so. Then the counties get surprised when the budget is thrown back in their egg painted faces for not being balanced. It takes even more gumption to promptly retort, as the Vihiga governor Moses Akaranga reportedly did, that he will generate new revenue by opening up a county television and radio station. Right. We now have a Rupert Murdoch wannabe governing the unwitting residents of Vihiga. After all, television and radio stations have been defined in the Warren Buffet lexicon of moneymaking ventures as the quickest win in the quest for low hanging profits. Who knows what the chaps in Siaya or Nakuru have up their sleeves, perhaps it will be canned tilapia in brine or bottled water from the untapped aquifers of the Eburru escarpment.

It has been reported that the government is pondering over the fact that devolution has had little or no impact on the high public sector wage and is considering an audit to weed out ghost workers. Let me throw in a little crumb of a clue here. There are no financial officers in 23 out of 47 counties. There are ghosts there, as no finance professional who purports to hold an accounting degree from a credible institution could possibly append their John Hancock to a deficit laced county budget on its maiden submission. And the ghost of mediocrity stalks the floor of those 23 county assemblies infecting those assembly representatives with delusions of grandeur and hopelessly misplaced priorities.

Sadly, in the insidious race to the bottom that many of our county governments have girded their loincloths for, the South African archetypes are bound to snake their way north to our own devolved governments. Poor financial planning, demotivated work forces and recurring audit failures are bound to follow. Far be it for me to prescribe a solution, for it will most certainly fall on vaporized ears. But we elected them. An unseen wicked hand did not impose them upon us. They are as much a reflection of us as the municipalities in South Africa are a reflection of that society.

We have propelled the it’s-our-turn-to-eat mentality to dizzying heights and it has morphed into the DNA strands that course through the veins of our evolving society. We will rely heavily on the few heroes and heroines that will emerge from the Commission on Revenue Allocation, the Controller of Budget, the Salaries and Remuneration Commission as well as all the other unsung heroes (or villains depending on what side of the budget deficit you’re standing on) who will try and give guidance or keep in check the excesses of the novice counties.

But the silver lining in this cloud is that perhaps there is scope for private sector growth here. Can I hear an Amen from the accounting professionals who are bound to be hired as consultants in the very near future to help county governments undertake financial planning soon?

[email protected]
Twitter: @carolmusyoka

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