Financial conditions in South African municipalities: Analysis of irregular, unauthorized, fruitless, and wasteful expenditure

Type of the article: Research ArticleAbstractThis study analyzes the financial conditions pertaining to South African municipalities that have given rise to disclosures of irregular, unauthorized, fruitless, and wasteful expenditures for the financial periods from 2011/2012 to 2020/2021. The study employed the Poisson regression model to compare annual government expenditure on irregular, unauthorized, fruitless, and wasteful expenditures, based on a content analysis of the National Treasury’s expenditure reports for metropolitan municipalities over a ten–year period. The results highlight a p–value < 0.05 for government expenditure in all eight metropolitan municipalities. The financial year 2013/14 (R3.4 billion) had the highest fruitless and wasteful expenditure total, followed by the financial year 2014/15 (R1.9 billion). Irregular expenditures for the financial years 2016/17 and 2018/19 recorded R12.46 billion and R12.54 billion, respectively. The financial year 2019/20 had the highest unauthorized expenditure (R5.3 billion), as compared to other financial years. The municipalities in South Africa continue to pursue irregular, unauthorized, fruitless, and wasteful expenditures each year, without any apparent indications of valid efforts to end or prevent ongoing occurrences. The seriousness of fruitless and wasteful expenditure totals indicates the magnitude of financial benefits foregone by municipalities, and that can be avoided with proper oversight.