Fi­nan­cial re­cov­ery in full fo­cus


Makana Mu­nic­i­pal­ity’s Ex­ec­u­tive Mayor Cllr Nomhle Gaga is pos­i­tive that the mu­nic­i­pal­ity can turn its fi­nan­cial sit­u­a­tion around with­out re­ly­ing on a bail out from pro­vin­cial gov­ern­ment. This emerged dur­ing a visit by a del­e­ga­tion from the Co­op­er­a­tive Gov­er­nance and Tra­di­tional Af­fairs (Cogta) to Makana on Tues­day this week, led by Cogta MEC Fik­ile Xasa.

Xasa and his team were in Makana to kick-start pro­vin­cial vis­its to mu­nic­i­pal­i­ties to of­fer sup­port as part of Cogta’s man­date. The meet­ing that took place in the coun­cil cham­bers on Tues­day was at­tended by the Coun­cil of Makana Mu­nic­i­pal­ity as well as of­fi­cials. Xasa told the gath­er­ing that since last year’s lo­cal gov­ern­ment elec­tions they had been vis­it­ing four mu­nic­i­pal­i­ties that had been amal­ga­mated in the prov­ince.

The vis­its ac­cord­ing to the MEC were meant to of­fer sup­port to the amal­ga­mated mu­nic­i­pal­i­ties in deal­ing with the “pe­cu­liar prob­lems” they face. Fol­low­ing the con­clu­sion of the vis­its to the amal­ga­mated mu­nic­i­pal­i­ties Xasa said Makana was the first mu­nic­i­pal­ity to be vis­ited as part of their vis­its to mu­nic­i­pal­i­ties around the prov­ince to find out how they can best pro­vide sup­port to them. Xasa also ex­pressed con­cern over the mu­nic­i­pal­ity’s on­go­ing wa­ter and san­i­ta­tion prob­lems, say­ing in­stead of the sit­u­a­tion im­prov­ing it seemed to be a re­cur­ring prob­lem, par­tic­u­larly in the lead-up to the Na­tional Arts Fes­ti­val. In re­sponse, Gaga said as long as the mu­nic­i­pal­ity doesn’t solve prob­lems of wa­ter and san­i­ta­tion there will al­ways be prob­lems for the Fes­ti­val be­cause peo­ple come in large num­bers.

“If we can sort out the is­sue of wa­ter and san­i­ta­tion we will solve most of our prob­lems,” she said.

Dur­ing the dis­cus­sions Gaga said the mu­nic­i­pal­ity wasn’t look­ing for a bail-out from the pro­vin­cial gov­ern­ment, de­spite the fact that the mu­nic­i­pal­ity is fac­ing a dire fi­nan­cial sit­u­a­tion. Gaga ap­pealed to Cogta to se­ri­ously con­sider sec­ond­ing a per­son from the prov­ince to act in the po­si­tion of municipal man­ager while the mu­nic­i­pal­ity awaits the out­come of the case in which the process of ap­point­ing a full time municipal man­ager was in­ter­dicted.

ANC Chief Whip in Coun­cil Mab­huti Matyumza said the mu­nic­i­pal­ity al­ways ap­pre­ci­ates as­sis­tance from the gov­ern­ment. Matyumza said, how­ever, that he felt even though as­sis­tance was needed, it wouldn’t re­quire the dis­so­lu­tion of Coun­cil as per Sec­tion 139(1)(c) of the Con­sti­tu­tion.

Act­ing Municipal Man­ager Dali Mlen­zana pre­sented an over­view of the cur­rent state of the mu­nic­i­pal­ity to the Cogta del­e­ga­tion. In his pre­sen­ta­tion, Mlen­zana said the mu­nic­i­pal­ity is cur­rently ex­pe­ri­enc­ing se­ri­ous fi­nan­cial chal­lenges in so far as the cash-flow is con­cerned. This is mainly due to old and his­tor­i­cal debt that the mu­nic­i­pal­ity is re­quired to ser­vice.

Mlen­zana said the mu­nic­i­pal­ity has en­tered into pay­ment plans with some cred­i­tors, of which the big­gest are Eskom, the Depart­ment of Wa­ter and San­i­ta­tion, the Au­di­tor Gen­eral and Ama­tola Wa­ter. “As a re­sult of that, the mu­nic­i­pal­ity in most cases is un­able to pay cred­i­tors in the form of sup­pli­ers, etc, within the 30 days stip­u­lated by the MFMA,” he said.

Mlen­zana said the rev­enue col­lec­tion of the mu­nic­i­pal­ity is cur­rently sit­ting at 70% on av­er­age, which trans­lates to an amount of about R18m a month.

“This amount is not enough for the mu­nic­i­pal­ity to meet its monthly fi­nan­cial obli­ga­tions which are al­most R30m. The av­er­age em­ployee costs per month are about R12m. That only leaves the mu­nic­i­pal­ity with only R6m which goes to Eskom. That is the rea­son the mu­nic­i­pal­ity strug­gles to pay cred­i­tors within 30 days,” he said.

In con­clu­sion Mlen­zana said Makana can only pro­vide ser­vices to com­mu­ni­ties of Makana if there is fund­ing to fi­nance op­er­a­tions. “Makana is do­ing every­thing in its dis­posal to en­sure that it is fi­nan­cially vi­able. That in­cludes in­creas­ing rev­enue col­lec­tion by im­prov­ing the mu­nic­i­pal­ity’s billing sys­tem, im­prov­ing the me­ter read­ing, writ­ing off ir­recov­er­able debt, reg­is­ter­ing of in­di­gents,” he said.

Mlen­zana said the Of­fice of the Ex­ec­u­tive Mayor has also formed a Fi­nan­cial Re­cov­ery Task Team, adding that Makana is also in the process of dis­pos­ing of all ob­so­lete as­sets in and around the mu­nic­i­pal­ity.

The act­ing municipal man­ager rec­om­mended that ECCoGTA as a mat­ter of ur­gency speed up the process of the sec­ond­ment of an Act­ing Municipal Man­ager. That the mu­nic­i­pal­ity restarts the process of the ap­point­ment of a per­ma­nent Municipal Man­ager as soon as the court case is con­cluded. That the mu­nic­i­pal­ity en­sures that rev­enue col­lec­tion is in­creased to reach the ac­cept­able thresh­old of 90%. That the mu­nic­i­pal­ity re­duces its ex­pen­di­ture by re­duc­ing em­ployee costs more specif­i­cally on over­time.

The Ex­ec­u­tive Mayor con­cluded by say­ing that as the Coun­cil they are com­mit­ting them­selves to work­ing to­wards turn­ing the mu­nic­i­pal­ity around.

This amount is not enough for the mu­nic­i­pal­ity to meet its monthly fi­nan­cial obli­ga­tions which are al­most R30m. The av­er­age em­ployee costs per month are about R12m. That only leaves the mu­nic­i­pal­ity with only R6m which goes to Eskom.

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