Greed for Metro status leads to financial collapse

Dear Editor

The DA will request a parliamentary inquiry through the Portfolio Committee on Cooperative Governance and Traditional Affairs (CoGTA) into the failed section 139(7) intervention at the Enoch Mgijima Local Municipality.

The administrator appointed, requested to be withdrawn due to a lack of political support at a cost of R12 million as well as the abuse of legislation and the inability by the Eastern Cape to prevent the unauthorised salary expenditure.

This ANC-governed municipality continuously ignored legislation by its refusal to wait for CoGTA to issue out a section 12 notice for the re-grading of the municipality to a metro or grade 6 status.

The ANC cadres took it upon themselves to pay officials at a higher salary scale since 2016 and councillors since 2021 at a cost of R100 million.

Whilst under section 139(7) administration there was an increase of material misstatements and a deliberate attempt not to be transparent with the Auditor General of South Africa.

Some of the critical findings reported by the AG was that:

• 87 % of the municipality debt is deemed irrecoverable;
• Average debt-collection period = 317 days;
• Percentage electricity distribution losses = 22% resulting in a R99,8 million loss. Revenue from the sale of electricity billed and not collected resulted in an electricity loss of R85,2 million;
• R220,5 million fruitless and wasteful expenditure;
• Average creditor payment = 973 days;
• R1,3 billion owed to Eskom;
• R110m owed to other creditors;
• R914 million or 33% of municipal budget already overspent in current year leading to unauthorised expenditure; and
• R428,7 million of unauthorised expenditure and R79,8 written off without being investigated.

Furthermore National Treasury has observed that:

• The valuation roll has exceeded its validity period as prescribed by the Municipal Property Rates Act (MPRA) section 32(1)(b) and (2)(b);
• Property rates revenue of R162 million was billed in the 1stquarter of the 2023/24 financial year has since been reduced by R11.2 million to R150.8 million in the 2nd quarter ended 31 December 2023;
• The municipality postponed the termination of payment for unverified workers (ghost workers) since it was reported to have been completed in June 2023 at great cost to the municipality; and
• It is essential that the Minister get to grips with these major short-comings and start making sure that the systems are in place to provide the necessary support to local governments who are failing.

Currently 66 municipalities (25,68%) are categorised as dysfunctional, and 107 (41,63%) as Medium Risk , 57 (22,17%) low risk and 27(10,5%) as stable.

Parliament should take the first step to ensure compliance by scheduling an inquiry and demanding answers for the challenges identified by the Auditor General and National Treasuary.

Regards

Jacques Smalle MP
DA Shadow Deputy Minister of Cooperative Governance and Traditional Affairs (CoGTA)