City in financial crisis

2018-02-22 13:55
Councillors demand explanation as Msunduzi is left with month's revenue.

Councillors demand explanation as Msunduzi is left with month's revenue. (File)

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Tempers ran high on Wednesday as councillors demanded an explanation and a turnaround strategy for the City’s financial crisis, which has left it with just a month’s revenue in its coffers.

The councillors, who are members of the financial portfolio committee, said it is clear that the municipality is on the verge of bankruptcy.

They were commenting on the monthly cash flow report and investment register for December.

According to the report, the closing bank balance at the end of 2017 was R61,6 million and the total investment is at R585 million, of which R243 million is made up of unspent conditional grants.

“We should have three months’ worth of money in order to run the municipality,” said ANC councillor Mehmood-UL-Hassan Oumar.

CFO Nelisiwe Ngcobo conceded that the City is facing financial challenges.

She said that is the motivation behind the recently developed turnaround strategy and cost containment, which they hope will be able to cap the City’s expenditure.

“We are in a crisis and we are hoping that we will be able to turn that corner. National Treasury is coming next week to assist us with the financial recovery plan; we are hoping that it will be able to assist,” she said.

She said the Department of Co-operative Governance and Traditional Affairs (Cogta) has also issued a circular on cost containment, which should be the aligned with the City’s own strategy.

The finance unit and the committee will have to turn away some expenses that come for approval, especially for the staging of events, she said. Cogta and sponsors are also not going to be funding these events.

“We need to learn as the municipality that expenditure cannot be normal like we have done before. We really need to cut.”

In terms of revenue collections, Ngcobo said a team is on site and doing disconnections on the properties with high services debt.

But Oumar said some people are not paying because they are not happy with the level of service delivery. He said he has heard that some ratepayers are now embarking on a rates or service charges boycott.

However, City manager Sizwe Hadebe said the situation is not yet at crisis stage and there is no need to sound alarm bells. He said the necessary adjustments were made during the mid-term review and strategies will be implemented to cut expenses and enhance revenue, which will get Msunduzi’s finances where they need to be.

“I don’t want the media to leave here with the idea that maybe the wheels are coming off. The wheels are not coming off,” he said.

The councillors did not mince their words when they expressed their dissatisfaction with Hadebe’s explanation.

Oumar said Msunduzi is also failing to pay service providers on time, and refunds due to ratepayers are also paid months after the transfer of properties. “There is no such thing that the municipality is not in trouble. If you have one month’s revenue it means you in are trouble,” said Oumar.

The DA’s Sibongiseni Majola said the wheels came off in December when the bank balance was at R61,6 million. He said the committee wants to see the turnaround strategy so that they can interrogate it before its implementation.

“Let’s be honest, things are not going well. You can’t run such an institution like a spaza shop,” said the IFP’s Thinasonke Ntombela. “In fact, I believe some spaza shops are better run than this municipality.”

The ANC’s Sandile Dlamini said the managers were clearly in conflict about what is happening. He said concealing the truth is not going to help the municipality.

“For this municipality to recover, because it is in ICU, we need to be frank. It’s not going to work if we are not honest about what is going on,” he said.

Dlamini said service delivery across the municipality was at its lowest point. He said potholes were not even being filled and contractors are “painting them black” instead of using tar.

“For us to go forward, let’s not lie to each other. Let’s not fool each other. Getting the disclaimer [audit report] is a sign of problems,” he said.

The committee requested that a turnaround strategy be presented by the finance department in the next meeting.

Read more on:    pietermaritzburg  |  msunduzi municipality

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