BY NATHAN GUMA
ZIMBABWE’S local authorities have lost millions of dollars through mismanagement and weak controls, as repeated Auditor-General (AG) reports reveal a critical failure to establish basic risk management policies.
Risk management policies are designed to guide institutions on how they can manage economic pitfalls that may lead to financial losses.
Hence, the failure by local authorities to craft proper risk management policies has resulted in losses running into millions of dollars, through overpayments, misstatements and non-delivery of paid-for goods.
Findings from the 2023 AG report flagged eight local authorities for not having risk management policies, which has led to potential revenue loss.
These include Norton Town Council, Bubi RDC, Zibagwe RDC, Chaminuka RDC, Mutasa RDC, Zaka RDC, Mudzi RDC and Gokwe South RDC.
Mudzi Rural District Council and Zibagwe Rural District Council have been repeatedly flagged in both the 2020 and 2023 reports, demonstrating a prolonged inability to implement these vital guidelines.
The flaggings by the AG are also worrisome, with data indicating an increase in governance issues between 2019-2023, which have been crippling local authorities and raising concerns about accountability.
According to the 2023 AG’s report covering 86 local authorities and 98 financial statements, governance issues have been sharply rising, from 63 in 2019 to 190 in 2023, driven by weak internal controls, the absence of bank reconciliations, and incomplete records.
The number of local authorities with up-to-date financial statements for audit has also been declining since 2020, compared with those whose statements are not current.
Furthermore, a substantial 71.29% of audit findings from 2020-2022 remain unaddressed, highlighting a systemic failure to implement recommendations.
Additional irregularities have also been identified, including the diversion of devolution funds from their intended purposes, coupled with limited knowledge of International Public Sector Accounting Standards (IPSAS).
This mismanagement, alongside poor revenue collection practices, directly undermines essential service delivery, affecting residents’ access to clean water, education, healthcare, and safe sanitation across the country.
Financial loss
Several local authorities have been bleeding public funds due to the lack of risk management policies.
For instance, Bindura Municipality failed to account for US$418,000 which was invested with an asset management company between 2020 and 2021, amid indications that the council does not have a proper risk management policy.
“This was contrary to the Public Finance Management Act [Chapter 22:19], section 1(a)(i) which requires an accounting authority to ensure that the public entity maintains effective, efficient systems of financial and risk management. The non-disclosure of the investments was also against fair presentation according to IPSAS 1 – ‘Presentation of Financial Statements’,” according to the report.
Kadoma City Council was also flagged over non-delivery of goods which were paid for by the local authority.
“The Council procured a motor vehicle (High Rider Single Cab Toyota Hilux 2.4L Diesel) on 13 July 2021 with a condition that the contractor deliver the motor vehicle within six weeks from the signing of the contract. At the time of my audit in 2022, the council had not yet received the procured vehicle,” she said in the report.
In the period under review, Redcliff Municipality was also flagged over the delivery of incorrect equipment, which led to financial loss. “In 2020, the Municipality (seller of land) entered into an agreement with a certain company (purchaser of land) for the supply of vehicles in exchange for land,” reads the report.
Masvingo City Council has also been under fire over the past years, amid indications that the local authority lost millions in 2021 through overpayments in the Emergency Road Rehabilitation Programme (ERRP).
In 2021, Harare City Council lost US$1.8 million in a botched trash compactor deal in which FAW Zimbabwe could not deliver 15 out of 30 trucks contracted it.
This has seen poor service delivery in various suburbs around the metropolitan province.
