FAEEZA LOK and OLWETHU MHAGA: How AI can save SA’s finances

“We cannot discuss the budget while totally ignoring government misuses money through bad policy, wastes it through maladministration, and loses it entirely through corruption” — Songezo Zibi, chairperson of the standing committee on public accounts. 

The finance minister has finally delivered his hotly anticipated budget speech, marking an opening salvo in what promises to be a defining test for SA’s government of national unity. Yet while headlines obsess over the political infighting to come, and while much of the public discourse has fixated on the minister’s controversial decision to raise VAT by one percentage point over two years, the real scandal remains untouched — should it pass, this budget would once again force taxpayers to bankroll dysfunction, incompetence and corruption. 

SA’s financial crisis is like watching a slow-motion train wreck, except the train is packed with cash and the wreck happens every single year. The country unfortunately remains cursed with an innumerable list of public institutions that have repeatedly demonstrated their inability to spend effectively. It is therefore disconcerting that rather than debating how to ensure existing resources are managed with accountability and efficiency, the conversation has focused on where and how the state should raise more revenue.  

Critics of the budget such as DA leader John Steenhuisen have highlighted this exact problem, pointing out that instead of cutting wasteful spending government continues to hike taxes. While Steenhuisen correctly identifies the problem, the DA has yet to offer a bold and unique solution to tackling this fiscal Everest. Fortunately, this article just might. South Africans simply cannot afford to continue rewarding such failure — and artificial intelligence (AI) could be the enforcer we desperately need. 

A Treasury that enables dysfunction 

The Treasury’s budgeting process has become a perverse cycle of enablement. Year after year dysfunctional departments and state-owned enterprises (SOEs) extend their begging bowls, and year after year the Treasury obliges. Despite claims of fiscal discipline, the finance minister once again dipped into public coffers to rescue failing SOEs.

Eskom, which has guzzled billions in past bailouts, is set to receive another R40bn for 2025/26, followed by R10bn in 2028/29. This despite the power utility's supposedly improving financial position. Meanwhile, Transnet continues to limp along on lifelines, further reinforcing the Treasury’s habit of throwing good money after bad. It’s becoming a sickening ritual: SOEs burn through billions, then limp back to Treasury for yet another rescue — and they always get it.

AI could prevent such disasters with the introduction of AI-driven oversight tools such as Brazil’s Alice system, in which government contracts and procurement data are automatically analysed daily to identify inflated bids, ghost vendors or irregular tenders. This AI tool flagged inconsistencies in 203 audit investigations in 2023 alone, involving the equivalent of more than R27bn in suspicious transactions.  This real-time monitoring approach has significantly curtailed fraudulent activities in Brazil’s public procurement process, setting a powerful precedent for SA. 

Other developing nations, such as Ukraine, have also successfully leveraged AI. The DoZorro platform, integrated with Ukraine’s public procurement system, continuously analyses tender data and flags suspicious patterns such as collusive bidding. By combining AI insights with citizen reporting, DoZorro has helped expose violations in over 30,000 tenders valued at $4bn, ensuring authorities act before funds are misused. SA’s R2.1bn in Covid-19 relief funds, now under investigation for corruption, might have been safeguarded with similar systems in place. 

Watchdogs without bite 

But what about the financial oversight institutions that have brought to light the continued deluge of graft and corruption that has come to characterise SA’s public sector? Well, SA’s fiscal oversight framework is built on two primary institutions: the standing committee on public accounts (Scopa) and the auditor-general. Both play a vital role in holding government accountable for the use of taxpayer funds, yet both are constrained by one fatal flaw — they can only act after the money is gone. 

Scopa is parliament’s financial watchdog, but it’s one that arrives too late. While Scopa reviews government spending and interrogates ministers, even referring cases to the Special Investigating Unit, it does so only after the damage is done. 

Zibi, leader of the new party Rise Mzansi, was selected as the committee’s chair. This was viewed as a breakthrough moment, an opportunity to rein-in wasteful spending and force departments to justify their budgets by an ethical and competent leader, but unfortunately Scopa remains powerless to stop the looting as it occurs. 

Similarly, the auditor-general is a constitutionally mandated institution led by the well lauded and competent Tsakani Maluleke, which audits the financial statements of government departments, SOEs and municipalities. While the auditor-general has the power to investigate mismanagement and issue binding remedial actions, it is fundamentally reactive as financial statements are reviewed only after the money has been spent. 

Even so-called “real-time audits,” like those conducted during the Covid-19 pandemic, examined transactions only once they had already occurred. By the time the auditor-general had uncovered mismanagement, billions had already vanished. 

In a further attempt to curb waste the finance minister has announced that the Treasury’s financial review process will now shift to the presidency. But like Scopa and the auditor-general, this review process will also be after the fact — investigating inefficiencies and waste only once the money has disappeared.

Instead of cutting off the flow of wasteful spending as it happens, this new arrangement simply creates another retrospective audit body — a historian of theft rather than a proactive safeguard. 

While Scopa, the auditor-general and the new Treasury-presidency review process all rely on post-theft audits, AI tools like those used in India’s PFMS 2.0 continuously analyse government transactions in real time. This system detects irregularities such as duplicate payments, suspicious vendor behaviour and inflated invoices. By automatically flagging anomalies in billions of rupees worth of payments, PFMS 2.0 has strengthened oversight across India’s welfare and development programmes. SA’s R14.6bn in irregular expenditure last year could be slashed with similar pre-emptive systems.

AI as the fiscal enforcer 

Even in the developed world, the US has already shown how AI-driven oversight can stop fraud before it happens. Despite the media’s focus on Elon Musk’s shredding of the federal government through his department of government efficiency (Doge) team, the US treasury’s AI tools blocked $4bn in fraudulent Covid-19 payments by cross-referencing bank accounts, death records and payroll databases. Having at first also faced a multitude of fraud and corruption from their grant and loan programmes during the Covid-19 pandemic, AI systems in parts of the US government now scan government transactions in real time, flagging anomalies and blocking suspicious payments before the money disappears. In SA, integrating the SA Revenue Service, home affairs and supplier databases could replicate this at scale. 

To turn the corner on this era of politicians proclaiming “It’s our turn to eat”, predictive analytics, through machine learning models, should be used to assess risk factors and identify high-risk transactions before mismanagement occurs, reducing the likelihood of financial leaks. Meanwhile, continuous monitoring would ensure that government spending is scrutinised daily, allowing immediate intervention when irregularities emerge rather than waiting for year-end audits. 

AI won’t replace human oversight, but it can ensure every rand is spent efficiently before corruption drains the fiscus. Scopa and the auditor-general could finally enforce discipline, not just report on past failures. 

The World Economic Forum estimates that AI could save governments $1-trillion annually by 2025. For SA, investing even 1% of Eskom’s bailout into AI oversight infrastructure would yield exponential returns. The choice is clear — we either take control of our finances now or we finance our own collapse. The era of unaccountable spending must end. AI can help make it happen — but only if we have the political will to use it. 

• Lok is marketing & brand manager at machine learning and optimisation company Isazi AI, and founder of NGO Voice Of The People. Mhaga, a tech enthusiast and entrepreneur, is an attorney focused on business development and project management.