BY NATHAN GUMA
AN analysis of the auditor general’s reports between 2019 and 2024 shows that corruption and illicit financial flows among Zimbabwe’s local authorities have been rising sharply suggesting that bad governance is deepening.
The number of local authorities with up-to-date financial statements has sharply declined during the period under review, while simultaneously, the number of local authorities with financial statements in shambles has been rising, pointing to bad financial governance taking root.
Findings from an investigation, which analysed audit reports and plotted the data on an interactive map, show that the failure by local authorities to craft risk management policies is directly linked to the loss of millions of dollars through overpayments, misstatements and non-delivery of paid-for goods.
The investigation revealed that local authorities without risk management policies are more prone to revenue losses.
Risk management policies are designed to guide institutions on how they can manage economic pitfalls that may lead to financial losses.
The absence of risk management policies has directly enabled financial losses and illicit financial flows, as councils without these controls repeatedly fail to detect fraud, prevent unauthorised spending or verify payments.
An analysis of the reports shows that where risk frameworks are missing, basic safeguards such as reconciliations, procurement checks and investment verification collapse, creating loopholes that have cost local authorities millions of dollars.
By contrast, local authorities with risk management policies have not been flagged for losses as much as those without them.
The interactive map shows each local authority, with commentary on the state of its risk management policy.
As seen on the above map, the lack of the policies is directly linked to higher risk of revenue loss with councils failing to detect fraud, control spending, or safeguard assets, allowing leakages, errors and misuse of funds.
At times, this also leads to goods being paid for, but not accounted for by suppliers.
For instance, in 2021, Harare City Council lost US$1.8 million in a botched trash compactor deal in which FAW Zimbabwe failed to deliver 15 out of 30 trucks contracted it.
The following year, then Auditor-General Mildred Chiri recommended that Harare should acquire an Enterprise Resource Planning (ERP) software that can manage risk management and compliance.
Bindura Municipality failed to account for US$418,000 which was invested with an asset management company between 2020 and 2021. The local authority 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 2022 report.
Kadoma City Council, which has also been flagged for not having a risk management policy, was highlighted for 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,” according to the AG’s 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).
Chegutu Municipality’s failure to establish a risk management policy resulted in serious accounting issues, including unreconciled payables variance of US$10 675 in 2021 due to transactions lacking appropriate supporting documentation.
The loss has also been a feature even outside the period under review. Gokwe Town Council, as an example, operated without essential fraud or risk management policies during 2017 and 2018, leading directly to US$106,525 in unauthorised and undocumented spending.
Zibagwe Rural District Council, also missing a risk management policy, logged an unexplained cash on hand variance totaling US$35 244 in its 2018 financial statements, pointing to a severe internal control failure.
The flaggings by the AG are also worrisome, with data indicating an increase in governance issues between 2019 and 2024, which have been crippling local authorities and raising concerns about accountability.
These include non-submission of financial statements.
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 been declining since 2020.
Furthermore, a substantial 71.29% of audit findings from 2020-2022 remain unaddressed, highlighting a systemic failure to implement recommendations.
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.
Local Authorities Response
Efforts to contact most local authorities were fruitless as most of them could not respond in time of publishing.
For instance, Norton Town Council public relations officer Leeroy Kaponda did not pick up calls for consecutive days.
Gweru Town Council Credit Controller, Proctor Chauke, directed calls to chamber secretary Owen Masimba, who was unavailable.
Mudzi Rural District Council said that they now have policies on risk management in place.
“We now have some policies in place,” said Victor Nyamutswa, Chief Executive Officer at Mudzi Rural District Council. “We have the Integrity Committee Charter, Accounting Policy and Procedures Manual, Risk Management Policy, Whistle Blower and Complaints Handling Policy.
“Loss Control Policy, Due Diligence Policy, Fraud Policy. The above-listed are some of the policies available at the council.”
In response to questions sent by The NewsHawks, Gabriel Masvora, Director of Communication and Advocacy at the Ministry of Local Government, stated that he would look into the issue.
Expert Opinion
Experts say lack of risk management policies show governance failure and breed illicit financial flows.
“Risk management policies are essential for any institution. We cannot operate without them because we always depend on their ability to foresee risks coming and learn how to mitigate those risks,” said John Maketo, Zimbabwe Coalition on Debt and Development (Zimcodd).
“I think it’s very difficult, and surprising that we have local authorities, up to this point, that do not have a risk management policy. It is also a reflection of governance failure, because these local authorities are actually run by professionals.”
Maketo said that there are no reasons for non-implementation of risk management policies, considering the influx in illicit financial flows which have caused loses to several local authorities.
“You will even be inclined to think that this is benefiting someone. For instance, illicit financial flows have been flagged, and the reason for non-implementation are almost zero,” he said.
He said local authorities have been creating conditions difficult for training them to curb illicit financial flows through risk management training.
“We have approached some local authorities to assist them in doing this,” he said.
“Their problem is that they present a very big and unnecessary bill for institutionalising this. For example, they’ll ask, you know, we need a workshop to do this. Let’s say you’re in a chauvinist room, they are disabled.
“They’ll tell you, please take us to Kariba for a workshop for five days to develop a risk management policy, which makes it difficult, leading to partners pulling out. Then they want to use the residents money to do that, which is unnecessary, and it’s not budgeted for.
Maketo said trainings can be done at low cost in town halls, boardrooms, council halls, where facilitators can be invited to assist them to develop a risk management policy which they can implement at very low and minimum cost.
