City’s R1,9 bln contracts budget

2018-03-26 13:30
Msunduzi may spend more despite collection problems.

Msunduzi may spend more despite collection problems. (File)

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Councillors want Msunduzi to reduce its massive spend on contracted services, which is mostly due to the use of consultants and security services, including bodyguards.

They were reacting to the draft budget for 2018/19, which indicates that the City plans to spend R1,9 billion on contracted services over the next three years. The draft budget was presented by the chief financial officer Neli Ngcobo to the financial services portfolio committee last Thursday.

Despite the current collection problems, Msunduzi is anticipating an increase in its revenue from R4,7 billion in the 2017/18 financial year, which ends in June, to R4,98 billion for 2018/19. The overall operating expenditure is expected to amount to R4,9 billion, which will result in a R73,9 million surplus.

In terms of employee-related costs and councillors’ remuneration, the City is projecting a 7,5% increase, from R1,1 billion to R1,2 billion and from R45,1 million to R48,5 million respectively.

“Employee-related costs account for 25,4% of the operational expenditure budget while bulk water and purchases account for 42%,” said Ngcobo.

There is a projected increase from R537 million to R608 million on contracted services. This includes the use of consultants and service providers such as security companies and bodyguards for members of the council and the municipal manager.

DA Msunduzi caucus leader Sbongiseni Majola said almost every business unit has brought up the issue of vacant posts to justify non-performance. He estimated that there are approximately 2 000 unfilled positions in the municipality.

“I know that there is a directive from [National] Treasury which gives us a ceiling, in terms operating budget, that we can use up to a certain percentage on employee-related costs. But in terms of our operating expenditure it’s 25,4%, that’s a real problem to me because if I’m not mistaken I think the ceiling is 40% or somewhere over 30%,” he said.

He said he does not understand why the City is not taking advantage of the leeway given by Treasury and fill the vacant posts because that will not only accelerate service delivery but also create employment opportunities for youth.

Majola confessed that he has always had a problem with high expenditure on contracted services, but he believes it can be reduced if there is a will to do so.

He said Cogta has also given a directive that the municipality must reduce the number of bodyguards for mayors, deputy mayors and speakers to two, but that has not happened.

In 2013/14 the municipality spent R21 million on contracted services, R29 million in 2014/15, R462 million in 2015/16, R556 million in 2016/17 and R537 million is budgeted for the current financial year.

His sentiments were echoed by ANC’s Mehmood Oumar, who said Msunduzi needs to find ways to curb the multi-million rand annual spend on service providers. He said the municipality also cannot afford to continue with the trend of not finalising suspensions timeously.

During the 2016/2017 financial year the City incurred R11 million in fruitless and wasteful expenditure due to protracted suspensions.

Oumar added that he does not think there will be any surplus because Msunduzi is struggling to balance its revenue collection with its expenditure and has to repeatedly dig into its reserves to keep afloat.

ANC councillor Sphiwe Ndawonde said the City should not concern itself about budgeting for the increases in councillors’ remuneration.

“From where I’m standing it looks like we are heading to another disclaimer audit opinion so there [be] will no increase at all when it comes to the councillors’ salaries,” he added.

Last month the MEC for Co-operative Governance and Traditional Affairs Nomusa Dube-Ncube wrote to Msunduzi informing the council that there will be no salary increments and bonuses for councillors and senior managers this year as a consequence for a negative audit opinion for the 2016/17 financial year.

Responding to the councillors’ concerns, Ngcobo said the City will be looking into other revenue sources and the recently approved cost containment strategy will help curb the expenditure.

She said some of the vacant posts have been advertised internally but the external advert will be published next week.

“On contracted services, yes the expenditure has been high but I’m hoping the expenditure committee will assist us in terms of checking if that is what we really need as a municipality,” she said.

The recently formed expenditure committee has been tasked with reviewing all requisitions for goods and services before they go to the finance committee.

The draft budget road shows will take place where the public will have an opportunity to comment on its contents including the tariffs. However, it still has to be debated by the full council on Wednesday before the community meetings are convened.

“National Treasury is also on site analysing the same budget, reason being that there’s been challenges in terms of decline on cashflow,” said Ngcobo.

Read more on:    pietermaritzburg  |  msunduzi municipality

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