City still needs fixing

2011-11-25 00:00

A PROVINCIAL Intervention Team set up to rescue the embattled Msunduzi Municipality has failed to live up to expectations, with National Treasury called in to assess why the city is still in intensive care.

Yesterday, co-operative governance spokesperson Lennox Mbaso confirmed that MEC Nomusa Dube has asked for National Treasury’s intervention.

It is the strongest sign yet that the provincial turn around strategy has not succeeded.

However, administrator Sbu Sithole, who was appointed by the province to nurse the municipality back to health, believes that the situation has in fact improved under his watch.

The tabling of the report comes at a sensitive time for Sithole, who is widely tipped to become eThekwini’s new municipal manager when Mike Sutcliffe’s term ends next month. Yesterday Sithole tried to put a positive spin on affairs. He said he will present a detailed exit report next week, which he believes will counter the Treasury’s negative assessment.

“We are at the stage where we can say the municipality is finally out of hospital, but like any patient that has been discharged from the hospital we cannot say everything is well but we are quite confident about the work that we have done as it would be highlighted in my exit report supported by facts.”

The Treasury report dated October 7 and titled Draft Status Quo Report, was merely tabled for noting at yesterday’s Executive Committee meeting and was not interrogated.

Sithole told Exco: “According to this report the municipality should have closed shop by October, but it does not take into consideration the progress we have been able to accomplish.” He added that the municipality’s revenue collection, which was sitting at 53%, is now at 83% and closer to the ideal of 95%.

However, a key finding of the draft report states: “It has been observed that there is a tendency to misrepresent critical aspects of past and present financial performance — creating a false trajectory of performance and future projections.”

The report goes on to point out that this misrepresentation affected the budgeting process.

It states that the adopted budget is still not credible and that a major budget restructuring process will have to take place.

Other points in the Treasury report include:

• Credit control measures introduced by the earlier intervention team have stalled. This affects the municipality’s cash flow, as was clearly seen in July and August. There are only four staff in the credit control unit.

• Uncollected consumer accounts have increased during the period under administration from R214 million to R402 million in 2010/11.

• All departmental head positions are currently vacant. In addition, 219 individuals are acting in posts throughout the municipality. There are 253 permanent officials in posts that have not been approved.

• The critical posts of chief financial officer, senior managers for revenue and expenditure have not been filled for the last three years.

• The relatively low expenditure on repairs and maintenance is a concern as this indicates that asset stripping is taking place and that future capital expenditure would have to be redirected to the rehabilitation of infrastructure at the expense of eliminating backlogs.

• The vehicle fleet, core to service delivery, continues to be poorly mananged.

• The municipality’s Integrated Development Plan did not contain any financial plan to indicate how and when backlogs and other projects will be financed.

• There are plans in the budget to increase borrowing in the 2011/12 financial year, but this raised concerns over the municipality’s ability to repay these loans.

• There is major concern over the lack of information from building inspectors on new buildings and alterations to existing buildings.

Download the full report here (15MB).

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