Austerity measures for iLembe

2016-10-19 06:00
Photo: makhosandile zulu iLembe District Municipality council speaker Lucky Makhathini, mayor Sduduzo Gumede and deputy mayor Dolly Shandu at the press briefing.

Photo: makhosandile zulu iLembe District Municipality council speaker Lucky Makhathini, mayor Sduduzo Gumede and deputy mayor Dolly Shandu at the press briefing.

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THE iLembe District Municipality is not bankrupt.

This was clarified at a press briefing on Tuesday (yesterday) regarding its current financial status and to respond to a media report in a local newspaper that the municipality is bankrupt.

“We want to say that our municipality, the iLembe District Municipality is not bankrupt because we are still able to meet our main commitments,” iLembe District mayor Sduduzo Gumede said during the press briefing.

He said that as of 30 September the municipality has a cash balance of
R6.7 million and that it can and will continue to timeously pay salaries from its own coffers.

“We didn’t borrow or utilise any funds from iLembe Enterprise, the iLembe Enterprise is surviving only through this municipality, there is no way that we can borrow from them and utilise funds from them,” Gumede said.

With regards to the decision to cut off the water supply to Stanger Heights Primary School due to an unpaid debt, the mayor said the municipality had no other option.

“We can’t allow people to keep on receiving a service that they are not paying for, more so, the school is part of our government, we know that there are funds from government that go to schools and schools must pay for the services they receive,” he said, urging schools to prioritise paying for water services.

Gumede said the municipality has implemented cost containment measures in response to its loss of revenue mainly attributed to the drought and the subsequent costs incurred in alleviating its effects.

“For the 2016, 2017 budget, the municipality took certain actions to ensure that we have a credible, a realistic and a fully funded budget and the initiatives that were taken were, all non-essential expenditure was drastically reduced with an understanding that our core function is the provision of water and sanitation. The overtime expenditure was also reduced in the budget by about 50 percent,” he said.

Gumede said the budget was approved by the newly inaugurated council, however, he said treasury indicated that the municipality had to deal with certain issues.

“We then had a meeting with the treasury just recently on 20 September because their assessment was indicating that there were issues that they wanted us to respond too. We have actually responded to them, there was a meeting that involved the mayor, the chairperson of the portfolio committee and the management and we all agreed that we need to attend to certain issues that they were raising,” he said.

The mayor said that the municipality would ensure that its budget reflects the "actuals", adding that the budget that was approved may not have reflected the correct projections in terms of the funds the municipality was meant to receive and how it would spend these monies.

“But all in all we did indicate to the treasury that we are going to be ensuring that we implement strategies in order to increase the collection rate. We indicated to the treasury that we are working on a recovery plan and we are going to be preparing calculations so that come the adjustment budget we will have realistic calculations in terms of the actuals at the time,” Gumede said.

He said that as of 30 September 2016, the municipality is owed R221.7 million and that the collection rate is at 73% (R15.5 million), an improvement compared to the 59% collection rate at June 2016.

The mayor said that before the new council was inaugurated, the municipality wrote off R83 million at the end of June 2016 which was owed by consumers from Mandeni which also contributed to the current financial challenges.

“Two critical areas remain as a challenge insofar as expenditure management is concerned, the key one being the payment of creditors within 30 days. As 30 June 2016 it had taken an average of 30 days to pay creditors invoices, while it was 103 days as at 30 September 2016, so the situation has not improved, instead of improving it is becoming a problem,” Gumede said.

He said that, however, the municipality has not incurred any irregular, fruitless, wasteful or unauthorised expenditure, adding that recent media reports on irregular expenditure concerned the previous budget.

The mayor said that the growth of the collection rate will significantly improve the municipality’s revenue and that the implementation of the austerity measures would ensure that wasteful expenditure is curtailed.

“The management is supporting the implementation of austerity measures and we are actually implementing that programme vigorously now,” Gumede said.

He said the implementation of austerity measures was adopted by the council and that councillors are affected as well.

The mayor said he is confident that the council working hand-in-hand with the municipality’s management will turn the financial situation around.

· Some of the austerity measures include councillors sharing transportation when attending meetings in far flung areas and no longer spending the night in those areas so as to save on overnight reservations.

· The mayor, deputy mayor and speaker no longer use expensive vehicles which were used previously, but have opted for more economically viable vehicles.

· The mayor said the drought and the municipality’s response to it affected revenue collection and water sales declined.

· He said the impact of the drought has cost the municipality approximately R150 million.

· He said the hiring of tankers from external service providers cost just over R61 million.

· Leasing of water tankers cost just over R14 million, the mayor said.

· He said the estimated loss of revenue caused by the drought is approximately R54 million.

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