Cash-strapped UNESWA hovering on the brink of closure
BY NIMROD MABUZA
Auditor General, Timothy Matsebula, is extremely concerned about the huge wage bill at the University of Eswatini (Uneswa).
Also causing worry are several control weaknesses at this institution of higher learning, which are threatening the sustainability of services provided by the tertiary institution to the public.
Uneswa is burdened by a wage bill of about E40 million a month or E480 million annually, which it often struggles to pay.
This is a malaise that also faces the government. The state’s annual wage bill is over E7 billion, which is unsustainable and is having a detrimental effect on the ability of the government to deliver.
“The university largely relies on government subvention for revenue, yet it receives only 40% of its budget request,” the AG reported in a recently released audit report.
“Moreover, the university has sometimes received (from government) E10 million or E12 million per month, yet its wage bill is three times more than that, at around E40 million; which further exacerbates the financial challenges.”
It is understood that upon his appointment as chairperson of the university in 2018, Prince David approached the office of the Auditor General for an audit when he realised the state of the affairs at the institution.
Previously the pride of the Kingdom of eSwatini, the university is a pale shadow of its former self and has over the years been hanging by a thread. It is technically insolvent as its liabilities far exceed its assets.
“When reviewing the audit report of the external auditors, I also observed that the university’s current liabilities exceeded its current assets by E836 874 589. This indicates the university did not have working capital and therefore was unable to pay its debt obligations,” reported the AG.
“Now that government’s revenue streams are declining, I am concerned that without additional subvention or other means of generating income within the university, the university may not sustain the services it provides to the public, in the near future.”
Matsebula grimly warned that if this situation is not brought under control, the university risks losing , portion 7 of portion 3 of farm number 319, which is situated in Manzini and portion 10 of portion 4 of farm Dalriach number 188 situated in Mbabane.
These assets are held by First National Bank of Eswatini Limited as security for an overdraft facility,” he noted.
Despite the introduction in 2020 of austerity measures, the university remains in crisis.
To worsen matters, following a workers’ strike last month, the university management agreed to a cost of living adjustment of three percent yet it is unclear where the money will come from. The university itself is in the dark.
The tertiary institution relies on government’s subvention but these have been stagnant for 10 years and are currently just about 40% of budget request.
The AG wrote: “I am concerned that the university’s spending pattern is reflecting expansionary spending, which may eventually affect the sustainability of the services that the university provides to the public. Therefore, the proposed strategy of increased subvention from the government is unsustainable.”
The last time the tertiary received a healthy subvention from government was during the 2007/08 fiscal year.
“One of the strategies that the university promised to use to contain the costs is to obtain an increased subvention from the government,” reported the AG while expressing concern that an increased subvention is a pipedream in particular because the dwindling revenue from the Southern Africa Customs Union (SACU).
In financial year ended March 31, 2020, the AG reported that the institution’s “direct education costs, administrative and operating costs depleted the entire revenue of E520 647 978 leading to a net deficit of E146 902 465 and total comprehensive loss of E128 543 170.”
The shortage of funds has forced the institution to default on some of its obligations, such as the remittance of Pay As You Earn (PAYE), Eswatini Provident Fund and banks for staff members who had secured services.
“Unremitted PAYE for the year ended 31 March 2020 was E115 407 955 and in the previous financial year it was E115 666 424. The non-compliance has been going on for a number of years as the university had an outstanding debt of E656 698 408 as at 31 March 2020,” said the AG.
The university, the AG found, operates according to its own rules in complete disregard of the Public Enterprise Control and Monitoring Act of 1989. To side-step the PEU Act, the institution uses the University Act of 1983.
Despite the problems, the University of Eswatini has been living large and over-paying some of its staff members, particularly those in management.
The AG found that the tertiary institution had overstaffed the council by eight members and has 17 members instead of nine.
The PEU Act stipulates that the governing body of each public enterprise shall consist of members not exceeding nine and not less than five.
“I was not provided with any piece of legislation or written correspondence that exempts the University from complying with the above-mentioned section of the Law.
One of the factors that may be contributing to the cash flow of the university may be caused by having the additional 8 members; draining the already limited funds of the University, as additional payments are made on their behalf,” noted the AG.
Management at the university justified the excess numbers by stating that it acted in terms of the University Act of 1983 saying that the “PEU is fully aware of this situation.”
It further explained that the University Council meets only four times a year and there is an allowance for extraordinary meetings.
External auditors also found that some executive members at the institution were earning more than the requirement of the PEU Act. The accumulated excess payment was E1 558 400.
The salaries of certain executive members have been used by the workers’ union to bolster its demand for an increase.
“Management submitted that the university has always benchmarked the executive salaries against these points of similar positions in South Africa and SADC universities because of market related comparisons,” reports the AG.
According to the AG’s report, the Vice Chancellor “admitted that there was no document waiving the dictates of the PEU Act and that the Remuneration Committee was currently engaged in a process to correct the anomaly.”
The AG further discovered that the utilities allowance for some employees was above the range set by the PEU.
“Also noted was that reimbursements of travel expenses were above the amount stipulated by the PEU Act,” the AG said.
“I am concerned about the violation of the PEU Act and statutory requirements. The excess benefits negatively impact on the cash flow position of the university and may lead to insolvency.”
Vice Chancellor, Professor Justice Thwala, did not seem to take the matter seriously. He reportedly told the AG that the university hires international professionals and is compelled to offer attractive packages.
“He further informed me that the allowances paid in respect of utilities amounted to E12,000.00 for the 12-month period. Moreover, he explained that no recoveries have been made as their allowances are enshrined in their Terms and Conditions of Service.”
When Prof. Thwala was questioned on why members of the executive attending council meetings were paid sitting allowances yet their salaries are structured to cover the meetings (and therefore the sitting allowances), he said that in 2016 council resolved to pay sitting allowances as council meetings usually took place after hours.
The resolution neither received cabinet nor the PEU’s approval.
Prof. Thwala only said E40 160 was paid per year in sitting allowances for seven members of management.
It was further found the university owes three of its employees leave days. One of the employees was owed 730 leave days, which translates to two years.
The other two were owed 534 and 529 days. The question was why did these employees not utilize their leave days? When last did they go on leave?
The AG noted: “Employees who do not take leave vacation are likely to suffer from fatigue resulting in poor performance by the university. Payment of leave days will increase the overall labour cost of the organisation.”
The AG found that an invoice amount was incorrectly accounted for as E156 227.50 instead of E5, 750.
It could not be ascertained why the invoice amount was overstated.
