City’s cash flow crisis

2009-08-31 00:00

THE Msunduzi Municipality is on the verge of a financial crisis.

This is evident in a report written by acting municipal manager Phil Mashoko, which was tabled at last Wednesday’s full council meeting and then suddenly withdrawn at the insistence of council speaker Alpha Shelembe.

Well-placed sources told The Witness that the reason for the sudden withdrawal of the report is that it contains a confidential item about the municipality’s cash flow crisis that was not to be discussed in the presence of the media.

When Mashoko attempted to present the report, Shelembe cut him off and said discussion of the report would be delayed. When DA councillor Bill Lambert asked why “such a good report” is being delayed, Shelembe said there are certain aspects that need to be discussed by the executive commitee (Exco) first.

According to the report, which The Witness now has in its possession, the municipality’s cash flow position is a cause for serious concern.

“… the cash flow position of this municipality is not as healthy as it should be. As at 30 June 2009, the cash position decreased from R256 million to R125 million. As at 25 August 2009, the cash balance position stood at R100 million.”

The report goes on to say that although the municipality’s monthly collection rate is at 75%, it still needs to improve its cash position.

The cash reserves were replenished on August 20 by the municipality’s chief financial officer, Roy Bridgmohan, by “drawing down the long-term loans granted in the 2008/09 financial year”.


Local financial fundis are baffled at how the city’s cashflow could drop by R150 million in just two months, from the beginning of July 2009 to the end of August. They say that councillors have every right to expect a full and detailed explanation on how this has happened and as financial experts, they too are curious. This is more so as the report states that the average collection rate for money owing to the municipality stands at 75% over a 30 day period, which is not a critical scenario. These experts believe that the municipality has to become a lot more imaginative in how it draws up the budget and believes more needs to be done to grow the city’s rates base to enhance the city’s coffers..

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