Latest news with #AG
Yahoo
13 hours ago
- Business
- Yahoo
Resilience under pressure: Iran's leasing sector faces war, sanctions, and inflation
Iran's economy faces a turbulent path ahead in the aftermath of a 12-day war with Israel, compounding the pressure of longstanding Western sanctions, soaring inflation, and a deeply devalued currency. The conflict, which began on June 13 with Israeli airstrikes targeting senior military officials and nuclear scientists, escalated when the United States launched its own strikes on Iran's nuclear facilities. Although a ceasefire was reached on 24 June, the economic fallout is already being felt. Iran's projected economic growth has plummeted from 3.5% in 2024 to a forecast of just 0.3% for 2025, according to the International Monetary Fund. Inflation is expected to surge to 43.3% this year, and the Iranian rial continues to weaken sharply, particularly following renewed US sanctions. Against this backdrop of heightened economic and geopolitical uncertainty, Leasing Life spoke with Mohammad Hadi Moghaei, a key figure in Iran's leasing industry. With nine years of experience as Secretary General of both the Iranian Leasing Companies Association and the National Leasing Association of Iran (a post he held until July 2021), Moghaei is now CEO of Razi Leasing Company — a member of the National Leasing Association. He is also an active member of the Money and Capital Market Commission at the Tehran Chamber of Commerce. Alejandro Gonzalez (AG), the editor of Leasing Life, spoke to Moghaei (MHM) to understand how Iran's leasing sector is adapting to ongoing economic pressures. AG: During the recent 12-day conflict with Israel, several major cities saw residents evacuating due to airstrikes and safety concerns. Could you share how this affected you? MHM: Before addressing your questions, I'd like to express my gratitude to you, Leasing Life and your editorial team. The 12-day war came as a shock to many of us. The conditions didn't seem to point toward imminent conflict, so when it happened, it felt abrupt — almost surreal. It was an imposed situation that none of us had anticipated, and the initial reaction was disbelief, confusion, and concern. War, no matter where it happens, brings with it both visible destruction and invisible wounds — mental and emotional stress that can deeply affect people and businesses alike. As someone involved in economic activity, my first thoughts were not only for personal safety but for the sustainability of our business operations and the well-being of our teams. During those days, many companies temporarily shut down to protect their employees. While evacuations were limited, some residents, especially in Tehran, chose to leave for nearby cities, though most returned after a few days as the situation stabilised. Fortunately, business activity began to resume shortly after the ceasefire, and markets are gradually returning to a state of normalcy. However, the war has left a lasting impression. Personally, it made me more aware of the types of risks we've often overlooked — geopolitical and regional conflict being one of them. It's clear now that we in the Middle East must expand our risk assessments to include such scenarios. As business leaders, we need to be more proactive in designing strategies to mitigate these evolving risks. The experience has been a wake-up call — a reminder that resilience today also means preparing for the unthinkable. AG: What has been the general sentiment among leasing companies in recent months, especially with the intensifying geopolitical tensions? MHM: The prevailing sentiment has been one of deep unease — an overall sense that we've entered into a situation we neither expected nor desired. The uncertainty surrounding the possibility of war escalating or recurring has created anxiety at every level of the leasing sector. Employees are naturally worried about job security. Managers are under pressure, concerned about how to adjust business strategies and operations that were carefully planned under entirely different assumptions. Shareholders, meanwhile, are watching market values decline and facing the risk of financial losses. And perhaps most critically for our industry, there is a growing fear around rising default rates, as both individuals and businesses struggle to maintain their financial obligations under such strained conditions. Confidence in the short term is understandably shaken, but there's a collective effort to adapt and safeguard operations as best as possible. AG: Sanctions have impacted Iran for over a decade. From your perspective, how have 14 years of restrictions shaped the leasing sector's role in supporting SMEs, and what long-term effects are you now seeing? MHM: While sanctions are often described in terms of the past decade, the truth is that Iran has lived under various forms of sanctions for over 30 years. What we are witnessing now is the cumulative impact of those restrictions, which are becoming more visible and more deeply entrenched over time. During the sanctions period, leasing companies saw increased demand, particularly for credit-based purchases and rentals. This demand, however, was not as diverse or balanced as we would have liked. It was largely concentrated in consumer goods — such as household appliances, computers, digital products, and personal vehicles — rather than in the types of equipment and infrastructure that small and medium-sized enterprises (SMEs) truly need to grow and thrive. One major challenge is that Iranian leasing companies are not permitted to provide working capital. Our role is limited to financing high-value assets, meaning SMEs looking for flexible credit lines or operational funding often fall outside our scope. This creates a mismatch between what the sector can offer and what SMEs actually require. There's also a broader issue at play. In many countries, SMEs struggle to attract financing unless they already have strong credit histories or substantial collateral. As the old saying goes: 'Those who have credit, get credit.' But that leaves us with a critical question — what about those who don't? This is where alternative finance models, like crowdfunding and inclusive financial platforms, have started to emerge, both globally and in Iran. I believe leasing companies can and should become instruments of financial inclusion, helping bridge the gap for underbanked businesses. Unfortunately, the lack of enabling legal frameworks, infrastructure, and public awareness has slowed this progress in Iran. If we want leasing to play a more transformative role, especially for SMEs, we must invest in building the necessary ecosystem: clear regulations, risk-sharing mechanisms, digital infrastructure, and a shift in how leasing is understood by the market. AG: The transport sector appears to have been hit hard recently, with nationwide lorry drivers' strikes (22 May to 4 June), and the explosion and fire earlier at Bandar Abbas port (26 April). How significantly are leasing companies exposed to the disruptions in logistics and transportation infrastructure? MHM: The recent truck drivers' strikes were relatively short-lived and did not cause significant disruption to business activity. Similarly, the fire at Bandar Abbas port, while concerning, did not occur in the area handling imported consumer goods, so the broader impact on domestic supply chains was limited. [The Iranian authorities said the explosion was caused by "hazardous goods and chemical materials" stored in the port]. That said, the incident did briefly affect the internal transit of goods within the country. However, I would like to address another deeper point that is hidden in your question — the limited role leasing companies currently play in Iran's transport and logistics sectors. The share of leasing contracts used to finance equipment for ports, road freight, and rail transport is minimal. In some segments, like rail, leasing plays virtually no role at all. This is largely because Iran's asset financing model remains heavily bank-centric. Banks provide loans for large-scale transportation assets, but typically only for a small portion of the purchase price. Leasing companies, constrained by their limited access to capital and relatively low market penetration in fixed asset finance, are unable to compete in this space effectively. As a result, disruptions in the transport and logistics sectors — while important to the economy as a whole — have little direct impact on the leasing industry. The exposure is minimal simply because leasing hasn't yet been integrated meaningfully into the financing of infrastructure or heavy transportation assets. To change this, Iran would need a more diversified and supportive financial ecosystem — one where leasing can complement bank financing, particularly in capital-intensive sectors like transport and logistics. AG: With the annual inflation rate expected to surpass 43% and the rial's devaluation continuing, how are leasing companies' currency risks, and what portion of them do you consider vulnerable to further depreciation? MHM: Iranian leasing companies face limited direct exposure to currency risk, primarily because sanctions have severely restricted their ability to engage in cross-border leasing or hold foreign currency assets and liabilities. Regulatory constraints further prevent them from importing equipment to meet customer demand. That said, there's an important missed opportunity: if leasing companies were allowed to import machinery or equipment, they could potentially benefit from inflation and currency devaluation by offering credit-based sales or rentals, generating strong returns on financed assets. But under current conditions, their role remains domestically confined, and thus only indirectly affected by exchange rate volatility. AG. Given the current climate of deep economic uncertainty, how is the leasing sector adapting to ensure the continued financing of essential assets? Is asset diversification and alignment with central bank policy proving critical for leasing companies' resilience? MHM: Business continuity is inversely related to uncertainty — the more unpredictable the environment, the harder it becomes to plan or sustain operations. In Iran, the only real constant in recent years has been rising inflation and a weakening currency. In this climate, leasing companies are adapting by prioritising short-term contracts, liquid assets, and low-risk clients backed by strong collateral. However, this risk-averse approach often clashes with customer behaviour: in uncertain economies, clients seek capital assets, longer-term agreements, and often avoid providing substantial collateral. This creates a difficult balancing act. Interestingly, demand for certain assets — like cars — has increased, not for usage but as a hedge against inflation. Customers are turning to leasing as a way to preserve the value of their money, expecting that the market value of the asset will exceed its book value even after depreciation. This is in contrast to non-inflationary economies, where leasing is primarily used for cash flow management and operational efficiency. Another challenge is the lack of contract diversity in Iran. Currently, most leasing contracts follow a lease-to-own model, where ownership transfers to the lessee at the end. In an inflationary environment, this model benefits the lessee, while operating leases — which leave the asset with the lessor — are more advantageous to leasing companies. Yet, such options are limited by regulation. To build resilience, greater alignment with the Central Bank is essential. This means creating flexibility in contract types, pricing structures, asset categories, and delivery mechanisms. The leasing industry needs regulatory support that reflects market realities and allows it to adapt to shifting demand. AG: What is the role of digital transformation in the Iranian leasing industry? MHM: This is a very important question, but before diving into the state of digital transformation in Iran's leasing industry, I want to briefly reflect on something that had a strong personal impact on me. In July 2022, Bill F. Stephenson, now CEO of PEAC Solutions and formerly CEO of DLL, spoke about his desire to create one of the world's largest independent asset finance providers. Stephenson was clear — the future of leasing lies in moving away from dependence on banks and toward a model focused on the asset lifecycle, value-added services, and pay-per-use. That message sparked something in me. It made me realise that digital transformation isn't just about automating existing processes — it's about rethinking the entire business model. And if Stephenson was embracing this shift at 70, I told myself I could do the same at 60, my current age. In Iran, digital transformation has so far been limited. Most efforts have focused on process digitisation — online forms, faster onboarding, small-ticket consumer financing. Banks led the way, and leasing companies followed, but only in areas like household goods and electronics. Sectors like vehicles, machinery, and industrial equipment have seen limited innovation. That's now beginning to change. Personally, I've started building a platform to support digital leasing in these more complex areas — one that connects lessors, customers, and sellers in a scalable, efficient ecosystem. Our goal is to create not just a digital process, but a digitally enabled leasing model that supports long-term asset use, customer value, and financial inclusion. From revolution to pandemic: Iran's path to leasing Where are the global Islamic finance hubs? "Resilience under pressure: Iran's leasing sector faces war, sanctions, and inflation" was originally created and published by Leasing Life, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
TimesLIVE
2 days ago
- Business
- TimesLIVE
Auditor-general demands action from KZN Cogta MEC in troubled uMkhanyakude municipality
Auditor-general Tsakani Maluleke has instructed KwaZulu-Natal Cogta MEC Thulasizwe Buthelezi to intervene in the trouble-torn uMkhanyakude district municipality. Buthelezi, an IFP deployee in the provincial legislature, and ANC-led uMkhanyakude officials are at loggerheads over the provincial cabinet's decision to place the council under administration. uMkhanyakude officials are resisting the decision, saying it is politically motivated. They have since taken Buthelezi to court over the matter. Earlier this month, Buthelezi was forced to announce that the municipality had been placed under administration at the entrance of the council offices after he was denied entry. On Sunday, Buthelezi said he had received formal correspondence from Maluleke instructing him to intervene in uMkhanyakude. 'The auditor-general has requested that I intervene in the uMkhanyakude district municipality due to the municipality's consistent failure to address material findings. These findings stem from the municipality's inability to implement a credit and debt collection policy, as required by section 62(1)(f) (ii) of the Municipal Finance Management Act (MFMA),' said Buthelezi. A material irregularity is defined in the Public Audit Act (PAA), as 'any noncompliance with, or contravention of, legislation, fraud, theft or a breach of a fiduciary duty identified during an audit performed under this act that resulted in or is likely to result in a material financial loss, the misuse or loss of a material public resource or substantial harm to a public sector institution or the public'. In the correspondence, Maluleke highlighted that 'The failure of the municipality to implement the municipality's credit and debt collection policy for a number of years and to take reasonable steps to recover outstanding debt from consumers is likely to result in a material financial loss for the municipality'. The AG further stated that: 'The failure of the accounting officer to take appropriate actions to address the material irregularity led to a decision by the AGSA's material irregularity committee, duly delegated, to approve reporting in the audit report of the municipality on the material irregularity with recommendations, as provided for in section 20(4) of the PAA, read with regulation 4(3) of the MI regulations on the steps the accounting officer should take to address the material irregularity within a stipulated period in the audit report.' Buthelezi said he was aware of the grave nature of the issues raised by Maluleke, which were emphasised during a meeting with the AG on July 23. He said he was committed to acting in the interest of the residents of the uMkhanyakude district. 'These residents bear the brunt of failed service delivery due to a lack of governance, financial, and consequence management measures within the district,' he said, adding that the AG has requested a formal report from him by August 15.
Bloomberg
4 days ago
- Business
- Bloomberg
Bankers Prep Up To €2 Billion Debt for DSM Animal Nutrition Unit
Bankers are willing to lend up to €2 billion ($2.3 billion) for DSM-Firmenicgh AG's animal nutrition and health business, as the sale process draws closer to a conclusion. Final bids for the unit are expected this month, according to people familiar with the matter, who asked not to be identified because the talks are private. Bankers are working out how much debt could be made available to back a bid, they added.
Yahoo
6 days ago
- Automotive
- Yahoo
Private credit's growing role in asset finance: a conversation with FIS
Private credit is rapidly reshaping the asset, motor, and equipment finance landscape. Once dominated by banks and public markets, these sectors are now seeing a shift as regulatory pressure limits traditional lending — and private credit steps in as a flexible, scalable source of capital. Unlike syndicated loans or public debt, private credit offers bespoke structures, faster execution, and funding aligned with real-world collateral like fleets, equipment, or receivables. As PwC notes, it's not just mimicking traditional finance, it's building a more tailored, efficient system for connecting borrowers and investors. This is no longer a marginal trend. As of September 2024, combined unrealised value and dry powder in private debt reached $1.05 trillion, a 94% increase since 2019, according to Preqin and S&P Capital IQ data Asset finance providers are tapping into this trend through co-lending, forward flow deals, and structured facilities that blend traditional and alternative capital. To explore how technology is supporting this evolution, Alejandro Gonzalez (AG), editor of Leasing Life, spoke with Murad Baig (MB), Global Equipment and Auto Finance Strategy Lead, Capital Markets at FIS, about how private credit is changing the rules, and how the right platforms are helping lenders adapt. MB: How is your technology helping private credit funds streamline the origination and underwriting process specifically for asset finance transactions? AG: Private credit funds are under pressure to deploy capital quickly while maintaining underwriting discipline, especially in asset-heavy sectors like equipment leasing, auto finance, and energy transition infrastructure. FIS helps address this through a unified origination platform that streamlines onboarding, credit memo creation, and real-time stipulation checks using AI. Our tools automate financial spreading, risk scoring (PD, LGD, EL), and scenario analysis, significantly reducing underwriting time while ensuring consistency and control. We also support structural flexibility, allowing lenders to incorporate ESG-linked KPIs, PIK interest, and covenant tracking into deals. This adaptability is crucial for private credit's bespoke lending models. Beyond origination, our Loan Services Suite offers middle-office support, handling loan onboarding, daily cash tracking, trade settlement, waterfall calculations, and portfolio reporting. It's a full-service solution for managing private credit portfolios. A strong example is Apollo, which uses our Commercial Lending Suite to scale its asset-backed finance strategy across equipment leasing, auto loans, and even royalties, relying on our systems for structured cash flow management, covenant logic, and collateral waterfall support. FIS delivers the tools private credit funds need to move fast, manage risk, and scale in today's evolving asset finance markets. MB: What kinds of data integrations or analytics capabilities do you provide to help credit investors assess asset-backed risk and performance over time? AG: In today's environment, especially when lending into emerging or volatile sectors, investors need more than just basic reporting, they want real-time, asset-level insight. That means full visibility into loan performance, covenant compliance, and increasingly, ESG alignment. At FIS, we make that possible by integrating loan, contract, and asset data across our asset finance and supply chain finance platforms. This gives investors and fund managers a clear, consolidated view of their portfolios, right down to individual assets. Our investor reporting tools, including PCS, VPM, and ISS, provide LP-grade transparency. That covers everything from IRR and waterfall modelling to covenant tracking and performance metrics. For hedge funds managing private credit loans, VPM can be paired with our middle-office outsourcing to ensure seamless reporting and operations. Additionally, our analytics layer provides users with access to self-service dashboards and predictive tools, enabling them to identify early warning signals and manage risk proactively across their portfolio. A great example is MetLife Investment Management. They're using private credit to support energy transition projects, things like solar leasing and EV infrastructure. Their strategy relies on tracking ESG performance, borrower alignment with net-zero goals, and impact reporting. Our platform gives them the tools to do just that, with ESG metrics fully integrated into origination and ongoing reporting. In short, we help private credit managers turn data into clarity, so they can deliver accountability to investors and make smarter, faster decisions in a fast-changing market. MB: How do your solutions accommodate the structuring flexibility often required in private credit deals — such as PIK interest, covenants, or tailored repayment schedules? AG: Private credit deals rarely follow a one-size-fits-all structure. Whether it's PIK toggles, covenant waterfalls, or hybrid amortisation schedules, flexibility is the name of the game, and that's where FIS adds real value. Our platforms are built to handle this complexity. We support fully customisable repayment structures, whether it's bullet, straight-line amortisation, or a hybrid of the two. Need to embed a PIK toggle or margin ratchet? Our systems can do that too, with logic built right into the origination and servicing workflows. We also make covenant tracking easier and more transparent. From covenant thresholds to multi-layered waterfalls, our tools give you the flexibility to model bespoke terms — and the automation to monitor them without manual workarounds. For deals involving multiple borrowers or SPVs, our credit assessment tools can consolidate financials and performance data across entities, so you're getting a true picture of risk and exposure at every level of the structure. Firms like Paul Weiss have noted the growing demand for structures with PIK interest, covenant-light documentation, and drop-down protections. Our platform supports those exact needs through configurable facility templates and robust monitoring engines—making it easier for funds to design and manage these increasingly sophisticated deals. Simply put, we help private credit managers build the deal they want, track it seamlessly, and scale without friction—no matter how bespoke the terms. MB: In what ways does your platform support collaboration between private credit funds and traditional finance providers, such as co-lending or tranche-based structures? AG: As banks face increasing capital constraints, many are shifting long-duration, capital-intensive assets off their balance sheets. That's opening up new opportunities for private credit funds to step in—through co-lending arrangements, forward flow agreements, and even synthetic risk transfers. At FIS, we're helping bridge that gap between traditional lenders and private credit capital. Our tools like FIS SyndTrak and FIS LendAmend digitise key parts of the syndication process, from managing data rooms and investor communication to amendment voting and bookrunning. This makes it easier for private credit funds to collaborate with banks on shared transactions, with clear visibility into each step of the deal lifecycle. We also offer tranche-level tracking, so funds and banks can manage their positions with clarity, monitoring exposure, waterfall distributions, and investor allocations across senior and mezzanine tranches in real time. On top of that, our platforms support forward flow and synthetic risk transfer (SRT) structures, which are increasingly popular for risk-sharing between banks, insurers, and credit funds. These tools enable efficient capital deployment without burdening balance sheets, while still delivering the long-duration returns investors want. A great example is how FIS Supply Chain Finance (formerly Demica, recently acquired by FIS) is supporting TreviPay's global expansion. The deal used a hybrid structure combining securitisation and invoice discounting, all executed through our Supply Chain Finance platform. That setup allowed both banks and private credit funds to participate in funding, each taking on a role that matched their risk profile and capital strategy. In short, we're not just supporting private credit, we're helping build the infrastructure that connects it to the broader financial system, creating more ways to fund growth collaboratively. MB: How are you helping private credit participants meet operational and regulatory requirements — particularly around transparency, compliance, and reporting? AG: As private credit becomes more mainstream, the regulatory spotlight is getting brighter — especially in the US and Europe. Funds are facing growing expectations around AML, KYC, ESG transparency, and investor disclosures. It's no longer just about deploying capital efficiently; it's also about proving you're doing it responsibly, with full compliance and transparency. That's where FIS comes in. Our Investor Services Suite automates much of the heavy lifting around onboarding, AML/KYC checks, and tax compliance, covering FATCA, CRS, and more. This reduces operational burden while ensuring every step is audit-ready. We've also embedded ESG metrics directly into the origination workflow, so funds can track KPIs tied to environmental or social outcomes from the very start of a deal. That makes it easier to report against frameworks like SFDR or TCFD without scrambling for data later. When it comes to investor and regulatory reporting, our platform can generate NAV packs, investor statements, and disclosure-ready documents on demand, whether it's for periodic reviews, audits, or ad hoc investor requests. Take MetLife Investment Management (MIM) as an example. Their transition finance strategy focuses on ESG-aligned lending, with impact reporting built in. Their framework, recognised by Environmental Finance, relies on the kind of borrower-level ESG tracking and regulatory reporting our solutions are designed to support. In today's environment, demonstrating compliance, transparency, and impact isn't optional. FIS gives private credit funds the infrastructure to do it all—efficiently, accurately, and at scale. MB: As private credit continues to scale in asset finance, what future innovations or capabilities are you building to support next-generation lending models? AG: Private credit is evolving fast. As the market shifts toward digital origination, deeper ecosystem partnerships, and financing the global energy transition, private credit funds need platforms that can keep pace — and that's exactly where our roadmap is focused. At FIS, we're building a unified, API-first asset-based lending platform that brings together asset finance, supply chain finance, and fund administration into a single, modular stack. That means funds can originate, structure, and manage deals more efficiently, no matter how complex or cross-border the transaction may be. We're also developing digital loan passports, essentially tokenised loan identities that make it easier to track ownership, enable secondary trading, and give LPs greater transparency into individual exposures. This is a game-changer for funds looking to scale or bring more liquidity into their portfolios. On the energy front, we're supporting financing for electrified transport, solar infrastructure, and ESG-aligned asset-backed lending. As BloombergNEF has highlighted, the world needs $4.8 trillion annually in energy transition investment by 2030, and private credit will be a big part of that. Our platforms are already being used to support EV fleet financing, solar leasing, and grid upgrades, helping funds underwrite real assets with long-term impact. We've also digitised the processing of Loan Agent notices using AI , which is especially valuable in private credit, where formats vary and reporting can be unstructured. This reduces operational friction and improves accuracy across syndicated and bilateral deals. In short, we're not just reacting to where private credit is going, we're helping to shape its future. Whether it's through digital origination, ESG-aligned lending, or next-gen reporting tools, FIS is committed to equipping private credit funds with the infrastructure they need to grow and lead in a changing world. "Private credit's growing role in asset finance: a conversation with FIS" was originally created and published by Leasing Life, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
The Citizen
6 days ago
- Business
- The Citizen
Auditor-General's war on waste and corruption yields R4.5bn
But it's a war that is far from won. A good outcome, but Auditor-General Tsakani Maluleke seems exasperated at the lack of accountability among those charged with spending public money. Image: Brand South Africa Auditor-General (AG) Tsakani Maluleke says R4.5 billion has been recovered over the last five years after being flagged as irregular. Some of this came from the recovery of part of the R700 million awarded by the Energy and Water Sector Education and Training Authority (Seta) for training programmes where little to no value was delivered, and in violation of National Treasury rules which require evidence of services rendered before payment. The R4.5 billion recovery over five years may seem like chump change given the magnitude of the problem confronting the AG. Its latest report on local government identifies R8.74 billion lost in 285 municipalities as a result of non-compliance with the law and suspected fraud. Speaking at a Centre for Development and Enterprise (CDE) presentation, Maluleke seemed exasperated at the lack of accountability among those charged with spending public money. 'I've been here at AG for 13 years and we've looked at this from every direction and concluded we have to look at governance. ALSO READ: Government overspent or wasted R49 billion since 2019, says Auditor General 'Basic management disciplines are not in place,' she said. Asked what improvements she observes, Maluleke pointed to the reduction in the number of disclaimers in AG audit opinions – down from 28 to 14 – and the not-insubstantial R4.5 billion recovery in funds. The recovery operations were fortified by changes in the law in 2019 that gave the AG expanded powers to demand action and accountability for material irregularities. These include payments for goods and services not received or of poor quality, penalties imposed on municipalities for non-payment of Eskom and water board bills, and revenue lost due to unbilled accounts or unrecovered debts. The AGSA's expanded powers allow it to issue stronger recommendations and refer cases to bodies like the Hawks or the Special Investigating Unit for disciplinary action. ALSO READ: 'Culture of lack of accountability': Government departments, SOEs rack up R120bn in irregular expenditure No easy task The perception of auditing as a safe and sedentary occupation was shattered by the recent murder of Ekurhuleni's senior auditor, Mpho Mafole. Mafole, a former Auditor-General South Africa (AGSA) staffer, was investigating R2 billion in missing funds when he was gunned down. 'We're under threat of violence every day,' said Maluleke. 'We must get to the bottom of who did what and why. Our thoughts are with his family.' With 4 000 staff, including 900 chartered accountants, the AG's office conducts over 1 000 audits annually across all public institutions, as mandated by Chapter 9 of the Constitution. These audits assess the credibility of financial statements, performance against objectives, compliance with the rule of law, and systemic issues in governance. The reports are intended for citizens, parliamentarians, ministers and departmental management, backed by actionable advice to improve operations. AGSA is one of the country's most respected institutions, having gained public trust by naming and shaming those involved in squandering or looting funds. Its independence is constitutionally guaranteed, making it one of only two global audit bodies with full autonomy, according to the World Bank. ALSO READ: Decisive intervention needed for municipal performance — BLSA Municipalities still an issue Municipalities, however, remain a weak link, with mayors, municipal councils and executive teams failing in their oversight duties. This extends to the provincial level, where many of the responsible leaders don't even bother to read the AG reports. 'When councils are unstable, performance suffers, budgets go unfunded, and infrastructure crumbles,' said Maluleke. Many municipalities misallocate grant funds to pay debts, like last year's Eskom bills, or hire underperforming staff instead of maintaining critical services such as water and electricity. This creates a vicious cycle: economic strain reduces ratepayer payments, squeezing municipal cash flow and crowding out essential infrastructure spending. Operation Vulindlela, set up by President Cyril Ramaphosa to reform the economy as a trigger for growth, shows spending on salaries in SA's cities increased 84% between 2010 and 2014, while property rates and service charges have virtually doubled over the same period. Of the eight metros in SA, only Cape Town achieved a clean audit, meaning it has credible financials and no significant non-compliance. Three metros received unqualified audits, but four – including Johannesburg – failed to present reliable financial statements. ALSO READ: SIU finds no corruption in City of Joburg but Auditor-General has concerns City of Joburg Joburg's deterioration at the hands of squabbling councillors is visible to the eye but preceding this was a steady weakening in its institutional capacity, marked by poor project management and irregular spending – including the award of R972 million in tenders to family members linked city officials and councillors for the extension of the BRT/Rea Vaya bus system in 2023. This was flagged by the AG for its potential conflicts of interest, though she says there is no law that specifically prohibits the award of tenders to close family members or business associates. The real question was whether the City of Joburg failed in its oversight duties. 'Joburg has high levels of irregular spending and does not seem to be getting [it] under control. The [city] council, speaker and mayor don't seem to be decisive,' she said. Maluleke attributes this to poor financial management, noting that municipalities often lack basic disciplines like matching budgets to performance goals. Operation Vulindlela's latest report (July 2025) echoes this, advocating for financial reforms to stabilise municipalities through better revenue collection and governance. High salary costs exacerbate the problem, with some municipalities prioritising personnel over infrastructure, a trend Maluleke links to weak councils fostering a culture of impunity. ALSO READ: Eastern Cape local municipality is the worst run – Auditor General Some bright spots It's not all doom and gloom. Midvaal in Gauteng, with clean audits for over a decade, exemplifies strong stewardship, maintaining quality roads and services. Maluleke's audit staff complain of speeding tickets because the roads in Midvaal are in such good order. The municipality's responsiveness is what sets it apart, said Maluleke, contrasting this with poorly run municipalities where living conditions deteriorate. The 2024 Public Procurement Act aims to close loopholes using technology for better oversight, but Maluleke cautions that no legislation works if rules are flouted without consequence. She advocates for stronger codes of conduct, skilled leadership, and internal controls to enforce accountability. AGSA has come under political attack from different quarters but remains steadfast, protected by rigorous, evidence-based processes. Maluleke doesn't sign reports herself; a qualified team ensures objectivity. 'We should never tolerate [audit] disclaimers,' she said. By referring cases to investigative bodies and pushing for governance reforms, there is hope that the war against impunity and waste will eventually win the day. But we're still a long way from that. This article was republished from Moneyweb. Read the original here.
