Municipality’s financial crisis?

2017-09-06 06:01

DA caucus leader in the Msunduzi Council, Sibongiseni­ Majola, lambasted the municipality’s debt management, calling it a “crisis­”.

According to a January meter reading report at the municipality as of January, households make up 68% of the debt owed to the municipality, commercial entities make up 22%, organs of state make up three percent and the seven percent is owed by other institutions.

As of January 31, the money owed to the municipality for trade services rendered reflected an increase of R75,9 million in outstanding debt compared to the previous month, bringing the total to R1,81 billion.

Majola said the observation the DA made about the debt owed is that the municipality is failing to tell communities about the indigent policy­ so they can register for it and if they qualify, can benefit from it.

According to the indigent policy, a household that makes a total income of R3 780 per month qualifies to benefit.

Majola said the low figures of households registered as indigent customers compromises the municipality’s equitable share.

The equitable share is an unconditional grant that enables municipalities to provide basic services to poor households, and enables municipalities with limited resources to afford basic administrative and governance capacity and perform core municipal functions.

He asked how the municipality had allowed a situation where businesses continued to owe for services rendered without implementing the debtors’ policy.

In the report two commercial establishments were anticipated for the collection of services rendered in Ward 1, Sweetwaters, however, the report states that no meters were read.

Majola said this is a clear indication that the report is misleading because the area in question, where he is a resident, not only has more than two commercial establishments, it also has households and organs of state, including schools that are not reflected in the report.

He questioned how the municipality would then be able to draft a realistic budget if such reporting continues.

The report does not contain data for wards 2, 3, 4, 5 and 6 and does not state how much the municipality collected through prepaid electricity meters said Majola.

Last Wednesday, August 23, the January 2017 report was submitted for consideration by the financial service portfolio committee for the recommendation in respect of section 71 of the municipal financial management act (MFMA).

Majola said this shows how the municipality has failed to comply with the legislated stages of reporting in terms of the financial status of the municipality which, he said, are section 71 which deals with monthly reporting, section 52 (b), which is quarterly reporting and the mid-year budget adjustment, which is section 28.

The first stage of reporting as per section 71 of the MFMA is done 10 working days after the end of each month, the accounting officer, the municipal manager, must submit, in a prescribed format, to the mayor and relevant provincial treasury a statement reflecting the state of the municipality’s budget.

The second stage of reporting as per section 52, b, of the MFMA is done quarterly within 30 days of the end of each quarter, by then a report to council on the implementation of the budget and financial status of affairs of the municipality must have been submitted.

Majola said this is non-compliance by the municipality considering the report in question is being submitted in a new financial year, 2017/2018, when it is from the previous one and has slipped through monthly and quarterly reporting of the previous financial year, 2016/2017.

A request for comment was sent to the Msunduzi Municipality, but a response had not been received at the time of going to print.

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