Prevalence and causes of irregular expenditure in KwaZulu-Natal Municipalities.

Abstract

Irregular expenditure in municipalities has been a persistent challenge, hindering effective service delivery and governance. The Auditor-General of South Africa has consistently reported high levels of irregular expenditure in KZN municipalities, exceeding R5 billion annually. This trend undermines public trust and compromises the integrity of municipal financial management. Despite efforts to address the issue, irregular expenditure persists, warranting an in-depth examination of its prevalence and causes. This research examined the prevalence and causes of irregular expenditure in municipalities in the KZN province of South Africa. It further investigated how KZN municipalities implemented consequence management for procurement irregularities, focusing on factors contributing to the lack of accountability and the extent of corruption within the system. The study culminated in the development of a framework aimed at addressing irregular expenditure, leveraging the research findings. The study used mixed methods to collect data, employing document analysis to analyse data from the Auditor General and Section 131 reports from 2013 to 2023, and included qualitative data collected from interviews with councillors. The interview results were analysed using NVivo version 20. Quantitative data collected through questionnaires from 450 residents and ratepayers’ associations, councillors, audit committees and consultants were analysed using SPSS version 25 and presented using descriptive statistics and inferential statistics. Additionally, Structural Equation Modelling (SEM) assessed the factors causing irregular expenditure and the impact of irregular expenditure on financial management by municipalities. The findings reveal a concerning trend of irregular expenditure in KZN municipalities, with 94% municipalities consistently reporting irregular expenditure. The findings indicate a widespread absence of accountability and consequence management in KZN municipalities, due to threats, assassinations, cadre deployments, and the involvement of mafia gangs. Overall, the study found that consequence management for procurement irregularities was non-existent, contrast with popular belief and literature that attribute irregular expenditure to a lack of skills. Lastly, the research developed a framework to prevent irregular expenditure in municipalities, highlighting the actions that must be taken by key role players and municipalities to prevent the occurrence of irregular expenditure and to deal with existing irregular expenditure.