UIFW expenditure: National departments bungled R7.9bn of taxpayers’ money in one year

National departments collectively incurred R7.9 billion in unauthorised, irregular, and fruitless and wasteful expenditure over the course of a year.

Finance Minister Enoch Godongwana recently disclosed these figures, revealing the financial mismanagement within national departments during the 2023/2024 financial year.

In a parliamentary response, Godongwana stated that 40 national departments were responsible for R4.9 billion in unauthorised expenditure, R2.9 billion in irregular expenditure, and R161 million in fruitless and wasteful expenditure.

National departments expenditure

Unauthorised expenditure occurs when departments exceed their allocated budgets.

In the last fiscal year, only six departments reported this type of spending.

The Department of Defence accounted for the largest share at R3.37 billion, followed by Correctional Services at R614.3 million, International Relations and Cooperation (Dirco) at R435.6 million, Justice and Constitutional Development at R291.8 million, Statistics South Africa (Stats SA) at R128.3 million, and Cooperative Governance and Traditional Affairs (Cogta) at R84.8 million.

Irregular expenditure, which happens when spending violates rules or laws, was recorded in 29 departments.

According to the framework, a transaction must be classified as irregular expenditure if it violates legislation such as the Public Finance Management Act (PFMA) and has financial consequences, meaning either a payment was made or a liability was recorded.

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The Department of Defence led in this category with R977.5 million in irregular expenditure, followed by Home Affairs at R578 million, Basic Education at R210.7 million, Dirco at R207.5 million, and Employment and Labour at R171.5 million.

Fruitless and wasteful expenditure refers to unnecessary spending that could have been avoided if “reasonable care had been exercised”.

According to Godongwana, 12 of the 40 departments managed to avoid such expenses, but the rest did not.

The highest amounts were recorded in Public Works and Infrastructure at R56.8 million, Defence at R50.9 million, Basic Education at R41.4 million, Mineral Resources and Energy at R3 million, and Transport at R1.9 million.

Action against departmental officials

When asked about disciplinary actions taken by the National Treasury against officials responsible for such expenditure, Godongwana emphasised that laws, including PFMA, empower accounting officers and authorities to initiate disciplinary measures against officials in departments for the misuse of public funds.

“Information related to disciplinary action instituted by accounting officers and accounting authorities can be found in the annual reports of those institutions,” the minister said.

Irregular, fruitless and wasteful expenditure

The issue of financial mismanagement is a recurring theme in South Africa.

In October last year, the Auditor-General’s office reported to Parliament that government departments and state-owned entities (SOEs) had accumulated R120 billion in irregular expenditure over five years.

Between 2018 and 2023, 36 national departments amassed over R1.48 billion in fruitless and wasteful expenditure.

The amount increased steadily, rising from R199.96 million in the 2020/2021 financial year to R286.59 million in 2021/2022 and reaching R432.22 million in 2022/2023.

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SOEs also contributed significantly, accumulating over R2 billion in fruitless and wasteful expenditure.

Meanwhile, 38 government departments racked up R50.65 billion in irregular expenditure during the same period, while 27 SOEs recorded R69.35 billion.

Delayed payments to suppliers and overpayment for services were among the key drivers of misuse of public funds.

The main root causes of unauthorised, irregular, and fruitless and wasteful expenditure include insufficient skills and capacity, governance failures, and a lack of accountability and consequence management.