Mpumalanga local municipalities struggle financially

The Mpumalanga Treasury says government is implementing various interventions within municipalities that have been struggling financially. This was in response to a statement made by the Mpumalanga DA recently regarding the “dilapidated” state of the province’s finances.

The statement said they had previously written to the former MEC of Cogta and current premier, Refilwe Mtshweni-Tsipane, detailing the financial issues, asking her to place the Emalahleni Local Municipality under administration after its bill to Eskom reached “an exorbitant R1 billion”.

“Her failure to do so resulted in this financial crisis spiralling out of control and the growth of this debt by R3,6 billion. This funding could have been redirected to the poor service delivery in the municipality,” said the statement.

It said municipalities such as Emalahleni, Govan Mbeki, Lekwa and Thaba Chweu continuously struggle with revenue generation, debt collection policies and frequent meter readings, “and the resultant paying off creditors on time and within agreed amounts, despite the adoption and implementation of financial recovery plans”.

It said as of the 31st of October, 2020, Emalahleni was owed R5,3 billion for the provision of services and in turn the municipality owed Eskom R4,6 billion. Over the same time period, Thaba Chweu owed the entity R827 million.

“As a result of this debt, the above-mentioned two municipalities and many other municipalities in our province often find themselves on Eskom’s disconnection list,” said the statement.

However, Mpumalanga Treasury said that the government “continues to support municipalities to address the current financial management challenges. Mpumalanga Treasury spokesperson, Letshela Jonas, said the government is implementing various interventions within the municipalities in terms of financial recovery plans “as prescribed in Section 139 (1)(a) of the MFMA”.

“A detailed assessment was conducted on the situation of each municipality, and the root causes were identified that contributed to the current status,” said Jonas.

He said the challenges were not only due to financial management issues but a combination of other factors as well. Jonas said these challenges included old, dilapidated infrastructure, adding to technical and non-technical losses of water and electricity, and illegal connections and tampering of meters by some industries, businesses, and households. He said this further contributed to the escalation of distribution loss and “consequently, to Eskom debt’s escalation”.

Jonas said Treasury and Cogta’s support to municipalities to ensure the recovery plan implementation includes placement of resident financial advisers to support the improvement of financial management by Treasury and Development Bank, and technical support through the Municipal Infrastructure Support Agency.

“The Provincial Treasury has analysed all municipal budgets and assisted municipalities to table reviewed funded adjustment budgets. Municipalities have been assisted with developing Municipal Revenue Management strategies and action plans that are being monitored regularly,” said Jonas.

“Furthermore, MPT and Cogta have assisted municipalities with reviewing standard operating procedures in revenue management, expenditure management, supply chain management and asset management, to improve financial management,” he added.

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