Financial recovery plan in Mangaung fails due to poor governance

Deputy Finance Minister David Masondo (PHOTO: Carien Kruger)
Deputy Finance Minister David Masondo (PHOTO: Carien Kruger)

Despite a financial recovery plan set up for the embattled Mangaung Metropolitan Municipality in December 2019, poor governance and budget management has led to the ineffectiveness of the intervention, Deputy Finance Minister David Masondo announced.

Masondo and Cooperative Governance and Traditional Affairs (Cogta) Deputy Minister Parks Tau visited the municipality on Tuesday, as part of an oversight visit after interventions were put in place.

According to Treasury, on December 11, 2019, Masondo recommended an intervention in the metro. The Mangaung council adopted the intervention on December 19, 2019.

"Mangaung Municipality's finances have deteriorated substantially since 2018-19, leading to the adoption of a financial recovery plan for the municipal council, as jointly agreed between the national department of Cogta and the National Treasury," Treasury said in a statement.

READ | Moody's downgrades Mangaung Municipality even further

"Nevertheless, poor governance and budget management in the municipality, as well as low revenue collection, led to the ineffectiveness of the financial recovery plan and a cash flow crisis during the 2019-20 financial year."

During his visit on Tuesday, Masondo highlighted the current economic and fiscal situation in the country and the implications of this for the finances of the province and local government.

In this regard, he emphasised the need to drastically improve efficiency of spending, address governance failures and eliminate waste and corruption.

"In addition, National Treasury officials presented a draft financial recovery plan to the provincial exco, and the mayoral committee of the Mangaung Municipality. Deputy Minister Tau and officials from Cogta also discussed a plan to address service delivery and governance failures."

Swift recovery

The intervention in this case means that the municipal council will not be dissolved. However, council is obligated to implement the financial recovery plan which has been jointly drafted by the National Treasury and the Provincial Treasury.

The first phase of the financial recovery plan is designed to bring swift recovery in the operations of the municipality, Treasury said.

"In addition to the financial plan, a service delivery recovery plan has been drafted and will be implemented under the supervision of the national and provincial departments of cooperative governance.

"A set of draft indicators have been proposed by National Treasury and Cogta within the recovery plans. Pending the approval of the province, these indicators will be used to monitor progress, and the intervention team will report monthly to the province, the National Treasury and national Cogta."

The metro was previously placed under administration.

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