Buffalo City Metro lost nearly R7m in potential revenue in the 2024/2025 financial year after wrongly classifying more than 200 urban households as indigent.
It also provided R2.9m in free basic service subsidies to the same households.
The findings were revealed by provincial auditor-general Thobile Ntetha, who recently tabled the metro’s latest audit outcomes before parliament’s standing committee on public accounts (Scopa).
Ntetha said the audit found the metro’s indigent register was not managed properly, with 214 urban consumers incorrectly classified as indigent and benefiting from subsidies meant for destitute households.
“The total value of free basic subsidies provided to these invalid indigents amounted to R2.9m and bad debt write-offs provided to invalid indigent debtors amounted to R6.8m for the current year,” Ntetha told parliament.
The auditor-general’s national spokesperson, Africa Boso, said their office had come to the findings after a “full population of the indigents register was scrutinised and compared against other databases, such as those of the department of home affairs and other departments and entities, to identify exceptions or invalid indigents.”
“The municipality is disadvantaged because it is losing revenue as it provides services to indigents who do not qualify to be indigent,” Boso said.
The Dispatch understands that some of those who had been flagged also include politicians and government officials staying at affluent areas such as Beacon Bay, Bunkers Hill, Gonubie and Nahoon in East London, and in Bhisho and West Bank in Qonce, among others.
BCM spokesperson Bongani Fuzile also failed to respond.
The indigent support programme is intended to assist households with combined gross monthly incomes of R3,600 or less.
To qualify, the account holder must be registered with the municipality, reside at the property and not own more than one fixed property.
Approved households receive a subsidy of R782.26 a month, which includes up to 50 kilowatts of free electricity and six kilolitres of free water.
In 2023, the metro reported it was subsidising more than 50,000 indigent consumers.
Since 2016, the city has spent R1.7bn on registered indigent households.
In September 2025, the municipality launched an intensified indigent registration campaign to identify and register qualifying households.
At the time, mayor Princess Faku announced the introduction of an enhanced management system.
“The system will be able to validate all applications to ensure that only qualifying households benefit,” Faku said.
“It is about fairness, accountability and ensuring public funds are used responsibly.”
The city said the upgraded system was intended to improve compliance and reduce fraud and leakages in the indigent support process.
However, the AG’s latest findings indicate that weaknesses in the system remain.
The issue of irregular indigent beneficiaries has surfaced before.
In September, News24 reported that Ward 11 councillor Nozuko Stemela had admitted to unfairly benefiting from the municipality’s indigent programme.
In July 2019, former BCM mayor Lulamile Nazo defended himself after it emerged that the metro had written off about R42,000 in municipal debt linked to him after he was listed as indigent.
At the time, Nazo, who lived in Bunkers Hill in East London, said he had applied lawfully.
“I applied for the indigent status rightfully so, it’s within my right to do so.
“I’m not working and this has nothing to do with my previous status as mayor,” Nazo said at the time.
He said he lived alone and was supported financially by his children.
“Being an indigent has nothing to do with where you live but everything to do with affordability.
“I’m not the only indigent who lives in Bunkers Hill.
“There are many people who are indigents there, even white people, but you don’t hear anyone complaining about them.
“Even when I was mayor, I earned a stipend; it was never a salary so my previous status is irrelevant,” Nazo said.
Providing false information should result in the reversal of benefits and potential legal action
— Anathi Majeke, DA councillor
DA councillor Anathi Majeke said on Friday that her party had repeatedly called for a comprehensive audit of the city’s indigent register.
“This is a repeat finding from the AG.
“The fact that 214 urban consumers were wrongly classified proves that the current verification process is either broken or being bypassed,” Majeke said.
“Providing false information should result in the reversal of benefits and potential legal action.
“It is quite clear that BCM does nothing in this regard and allows undeserving beneficiaries to simply benefit unduly.
“We have consistently proposed the integration of the city’s database with Sars, home affairs and banking institutions.
“If a potential indigent household has a high-income earner registered at the address or owns multiple properties, a simple data cross-reference would flag it immediately.
“It appears BCM is treating these subsidies as a blank cheque rather than a targeted intervention.
“Perhaps most concerning is that these issues are deliberately suppressed from council when indigent and bad debt write-offs are brought to council.
“When reports are suppressed, it prevents public representatives from holding officials accountable, leading to the repeat findings we see today.
“The DA will continue to demand that the mayor and the city manager [Mxolisi Yawa] provide a clear timeline for the integration of modern verification systems.
“Consequence management needs to be instituted and those who do not meet the requirements to be indigents must be taken off the register and legal action instituted against them.”
EFF councillor Mziyanda Hlekiso said it was deeply concerning that households were benefiting undeservedly while thousands of destitute residents remained unable to access the programme.
“It is really bad that people who can afford find themselves on the register, while thousands of our needy and desperate people remain in limbo,” Hlekiso said.
Daily Dispatch
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