State of SA local government concerning

The state of local government finances is concerning.

The auditor-general noted a continued pattern of deterioration with only 145 of the 257 municipalities achieving unqualified audits in 2016/17.

The situation is much better in the Western Cape, however, where 83% of municipalities achieved a clean audit.

At the end of 2017/18 40 municipalities had negative cash balances. There are 128 municipalities in SA that are in financial distress.

One of the main reasons is poor revenue collection and the situation is getting worse.

In the 2017 financial year only 25% of municipalities collected more than 95% of their bills.

In the 2019 financial year this has declined to 20%.

Poor revenue collection affects the ability of municipalities to service their suppliers.

One of the major suppliers affected is Eskom. At the end of September 2018, municipalities owed Eskom R12.8bn.

There is a direct correlation between the performance of municipalities and their ability to manage revenue collection.

Municipalities that have a better revenue collection record are able to pay suppliers on time and sustain service delivery. The problem with municipalities who have poor revenue management records is they will not have funds to perform their functions and service delivery is adversely affected.

It is clear that the current government is unable and unwilling to appoint competent staff who understand administration and efficient debt collection procedures.

Dr Malcolm Figg MP, shadow

minister of public works