Municipal spending slammed households owe R7,9 bln

2016-06-22 13:00
Belinda Scott

Belinda Scott (Jonathan Burton)

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Pietermaritzburg - Fiance MEC Belinda Scott on Tuesday slammed KZN municipalities for underspending on their capital budgets.

Delivering her report on the municipal budget performance 2015/16 second quarter review yesterday at the legislature, she rated their performance as “poor”.

With the exception of Zululand, none of the other nine district municipalities or eThekwini metro managed to achieve the capital expenditure rates of 50% which were expected at mid-year.

Even the 54,5% recorded by Zululand had been due to Abaqulusi Municipality reporting an incorrect capital expenditure of R86,9 million of the capital budget of R65,1 million which is 133,5% expenditure.

Scott revealed that by December 31 last year, municipalities in the province had only spent R5 billion of their capital budgets.

This is equal to 35,5% expenditure, prompting Scott to point out that the spend is “significantly below the 50% ... expected at mid-year”.

The funds are allocated to mainly infrastructure projects that include housing, road transport, water and waste management, community and public safety, electricity and other services.

Uthungulu, Umkhanyakude and Uthukela reported the least expenditure of 25,3%, 27,5% and 27,7% respectively.

The categories of health and others reported the least capital expenditure of 0,2%. Of the 0,2% spent on health, eThekwini contributed 98,4% of the amount spent.

“The largest portion of spending was reported on water and waste water management at R1,4 billion or 28,5%. eThekwini metro recorded the highest expenditure of R362,3 million in this category of expenditure, while Amajuba district recorded the least expenditure of R41,5 million.

“The second largest capital expenditure was on road transport at R1,4 billion or 28,5%. eThekwini metro recorded the largest spending in this category with R855,3 million, followed by Umgungundlovu district with an amount of R98,5 million,” said Scott.

The overall spending by the municipalities had also decreased compared to previous years.

By December 31, municipalities had spent R24 billion or 45,8% of the total approved budget of R52,5 billion.

“This percentage is moderately lower compared to 47,1% achieved in the second quarter of previous years.

“Honourable members, it is tormenting that 40 out of the 61 municipalities in the province have not reported on debt impairment. Furthermore no municipality within the Ugu district reported any expenditure against debt impairment whilst a debtors balance of R553,7 million was reported as at the end of the second quarter of 2015/16 financial year.”

Scott also reported that a number of municipalities in the province did not fully comply with the Division of Revenue Act (DoRA) and Municipal Finance Management Act (MFMA) requirements.

“A total of 15 municipalities did not submit all monthly reports, while five municipalities did not report on certain conditional grant expenditure, 49 municipalities did not submit their annual returns and 25 municipalities did not submit their quarterly returns.

“Further to this, 38 municipalities did not submit the relevant return pertaining to the minimum competency levels for the first half of 2015/16 financial year, which was due on January 30.

“I also note with grave concern that 26 municipalities had not submitted their MFMA implementation plans, which were required by the end of ­January this year,” she said.


BY December 31 last year, KZN municipalities were owed R14,2 billion and 79,3% of the debtors are in the over 90 days category.

Of that amount, R7,9 billion is owed by households, while commercial customers contribute a total of R4 billion.

“Disturbingly, a sizable amount of R1,3 billion or 9,2% of total debt is owed by various national and provincial government departments,” said Scott.

A total of R16,4 million had been written off as bad debts as at December 31 last year.

“The majority of the debt written off is for households, at 50,6% or R8,3 million, followed by commercial at 43,2% or R7,1 million and organs of state at 3,9% or R645 000.”

Vulamehlo, Ezinqoleni, uMshwathi and Abaqulusi municipalities did not report any debtors for the period under review.

“eThekwini metro recorded the highest outstanding debtors amounting to R6,5 billion of the total debt owed to KZN municipalities, followed by Umgungundlovu at R2,4 billion.”

Outstanding creditors for the KZN municipalities as at December 31 last year, amounted to R3,5 billion, with creditors due within the zero to 30 days category owed R2,1 billion.

The bulk of the outstanding creditors relate mainly to loan repayments of R1 billion, followed by bulk electricity of R979,8 million and trade creditors of R617,3 million. “Of the bulk electricity outstanding balance of R979,8 million, R46,7 million is in the over 90 days category.

“This is mainly due to the fact that Ulundi Municipality owed Eskom R41,4 million [over 90 days] for unpaid electricity,” she said.

Scott said a task team had been set up to support the municipality.

“A repayment plan was entered into whereby Eskom will no longer be charging interest as per the agreement between them and the municipality. Provincial treasury has closely monitored payments to Eskom on a monthly basis to ensure that the municipality adheres to its repayment plan.

“The municipality defaulted on the repayment plan in June 2015, July 2015 and September 2015, which has resulted in the revision of the payment plan.” — WR.

Read more on:    pietermaritzburg  |  msunduzi municipality

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