The Namibia Stop 8 Housing Project in Inanda, eThekwini, started in 2019, but to date only this RDP house has been completed. Photo by Tsoanelo Sefoloko
Twelve years — and R120 million — after the eThekwini metropolitan council started a project to provide 343 houses at Stop 8 in Inanda, only three houses have been built.
Two of them are double storey units that have serious quality defects including uneven brickwork on the stairs, ineffective bathroom and kitchen drainage and sub-standard ceiling boards.
The third, a single storey house, was built for a disabled beneficiary, but has no ramp access and was completed with a standard bathroom, rather than one modified to meet the owner’s needs.
These shocking service delivery failures by the city were highlighted in parliament on Tuesday by the Auditor General of South Africa in its briefing on eThekwini’s audit outcomes for 2022-23 to the standing committee on public accounts (Scopa).
The project was among several selected by the auditor general for investigation to assess the effect of the city’s failure to comply with supply chain management and other regulations on its ability to deliver services.
According to the auditor general’s report, the Stop 8 project was initially delayed because of the slow speed at which land had been expropriated for the development. This, in turn, had resulted in 15 variation orders totalling R7.84 million, with the cost of the project escalating by R143 million.
The auditor general found there was ineffective project management — resulting in huge cost increases — and a lack of due care by the project team to ensure quality of work and compliance with specifications for disabled residents.
“The quality inspection by the project team (municipality, consultant, and contractor) was not effective and resulted in various quality deficiencies being observed by the audit team at the site inspection,” the report said.
Not only did the cost increase by about R143 million, but the delays frustrated residents who vandalised the houses that had been built.
The auditor general recommended that eThekwini streamline its planning processes and develop standard procedures for tracking and monitoring housing delivery. It also suggested the city improve its quality control procedures to ensure that defects are identified and repaired during construction to ensure that the final homes they produced were up to standard.
The ANC recalled mayor Mxolisi Kaunda earlier this year over the service delivery failures and replaced him with Cyril Xaba as part of the package of interventions in the city. President Cyril Ramaphosa also appointed an intervention team to work with the city in addressing its water crisis, while the provincial government has also placed eThekwini under Section 154 administration.
They have battled with eThekwini’s inability to provide its residents with water and the collapse of the city’s sanitation system in the wake of the 2022 floods, corruption in the city administration and pushback from the ANC’s eThekwini region.
The auditor general said the municipality was “quite stable” and had a “well resourced budget and resource office” but its financial controls had regressed and city leadership had consistently failed to act on recommendations made in the annual audit over a number of years.
Key supply chain management posts had not been filled, while the city had consistently failed to monitor and act against staff and councillors who were doing business with the municipality.
The city fell far short of the 30-day norm on collecting revenue and paying creditors, taking 105 days to collect and more than 56 to pay.
Only 3.9% of the budget had been allocated to infrastructure maintenance and repair, which was “way below” the norm of 8%, which, in conjunction with illegal connections, has resulted in a loss of 58% of eThekwini’s water.
The city had racked up R2.4 billion in irregular expenditure during 2022-23, most of it because of a lack of supply chain management controls and for not adhering to regulations with regard to local content in services procured.
The auditor general said eThekwini had “remained stagnant” because of “repeat non-compliance with legislation relating to environmental, expenditure, consequence and procurement and contract management”.
The unqualified audit, with findings on predetermined objectives and compliance with regulations, found expenditure management, consequence management, procurement and contract management and environment management had all worsened.
Supply chain management officials participated in processes relating to contracts where family members, partners or associates had an interest and failed to disclose these, while procurement above R200 000 had been done without inviting competitive bids.
The city had not instituted disciplinary proceedings or criminal action against senior managers and staff where independent investigators had proved financial misconduct, despite recommendations by independent investigators.
This was part of a pattern of repeated non-compliance by city management, which had failed to take action recommended by the auditor general over successive years and a “slow response” by the municipality’s leadership to attempts to deal with non-compliance.
“Similar non-compliance instances were previously identified during prior audits. The primary cause of these issues can be attributed to weaknesses in internal controls, which has perpetuated the recurrence of non-compliance,” the report said.
The report recommended that the city conduct regular reviews of the sewerage network and develop plans to address deficiencies while ensuring that it passes appropriate capital and operating budgets to support plans that fall within the national treasury’s norms.
It called on the city management to “set the tone at the top by shifting the culture of the municipality towards compliance with laws and regulations”.
The auditor general asked Scopa to intensify oversight on consequence management and the implementation of remedial action by the city, its infrastructure management and planning and the implementation of the audit action plan.
It wants the committee to use its powers to to request reports on the management of key projects, particularly those highlighted in earlier audits, and on the process of addressing the weaknesses in the city’s supply chain management measures.
Scopa will conduct an oversight visit in eThekwini at the end of November.