Financial tall order
Oudtshoorn is in intensive care and the prognosis for the Klein Karoo town of 62 000 is not good. The prospect of a full recovery is far from certain.
It is a task Kamalasen Chetty has been grappling with since his appointment in August as the town’s administrator by cooperative governance & traditional affairs minister Pravin Gordhan and Western Cape MEC Anton Bredell. He is the town’s second administrator. The first, Louis Scheepers, was brought in to oversee it in 2007.
“Chetty faces a mammoth task,” says Johan Strasheim, chairman of Oudtshoorn Business Chamber. “The town has been mismanaged to the extreme.”
It is a mild description of the state of a town racked by a vicious political battle sparked by ANC town councillors’ refusal to hand over power to a DACope coalition, the victors in an August 2013 by-election.
With the backing of Gordan and Bredell, Chetty — a former municipal manager of the Cape Winelands District Municipality — acted fast. “All power was removed from the council,” says Chetty. “As administrator I act as mayor, speaker and town manager. We have to have political stability to deal with the issues.”
One of the issues that looms large is financial stability. Restoring this is a tall order in a town hopelessly in debt despite having hiked municipal rates by 22% in the past two years.
The municipality has defaulted on loans of R90m; it owes Eskom about R50m and numerous contractors have yet to be paid, says Chetty.
Among its contractors is one owed R3m for a revamp of the lighting in the town’s most famous attraction, the Cango Caves. Relieved by the municipality of all revenue and an R18m investment account, the caves, which are worth R400m/year to Oudtshoorn’s economy, are cash strapped.
“They have no working capital,” says Niel Els, president of Oudtshoorn’s tourism authority.
Bredell’s objective is to ringfence the caves’ finances from those of the rest of the municipality. “Perhaps by February next year it will happen,” says a frustrated Els.
Right now Chetty has his hands full sorting out the municipal budget. “The budgeted expenditure was way in excess of income,” says Chetty.
Despite income of about R480m, expenditure was set at R530m. To balance the budget Chetty says its council did some “interesting things”. Among them was to take the income from the Cango Caves into account, while failing to include its expenditure. Also excluded was spending on housing.
Chetty went in with a big axe. “Departmental budgets have been cut drastically,” he says.
It is not good news for town residents. “Roads are in a bad state of disrepair, electricity maintenance is not up to date and the sewerage plant has serious problems,” says Strasheim.
Chetty does not specify how long his repair job will take. But as the town heads for a municipal by-election on November 11 the risk is that another round of political warfare could lie ahead.