AS SOUTH Africa’s economy reels from the downgrade by Moody’s to junk status, and the country being on lockdown due to the coronavirus, the eThekwini Municipality said it has only enough money for two months’ operations.
File image: IOL
AS SOUTH Africa’s economy reels from the downgrade by Moody’s to junk status, and the country being on lockdown due to the coronavirus, the eThekwini Municipality said it has only enough money for two months’ operations. File image: IOL

Coronavirus: Durban Metro could run out of money in two months if ratepayers stopped paying

By Mphathi Nxumalo Time of article published Apr 1, 2020

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Durban - AS SOUTH Africa’s economy reels from the downgrade by Moody’s to junk status, and the country being on lockdown due to the coronavirus, the eThekwini Municipality said it has only enough money for two months’ operations.

In a frank admission, treasurer Krish Kumar said the city only had about R6-billion cash in hand and eThekwini would be bankrupt after this money was used up.

He said the city was on its own and could not get any financial assistance from the government.

Kumar said the coronavirus was a global catastrophe that affected everyone and they could not have predicted it. “It is unprecedented.”

Out of the R6bn, R1.2bn went to paying Eskom and Umgeni Water, and R600 million towards salaries,” he said.

“We are under severe pressure.”

Kumar said it was important for Durban residents to pay their water and electricity bills to help the city in this dire situation.

He said the city had suspended interest on utility bills and people could use their previous bills as an estimate for how much to pay for this month.

Kumar said he also expected unemployment figures to increase during this period as the economic impact hits businesses hard.

He said the city would do its best to balance the interests of all of its residents.

People could pay at Pick * Pay and Shoprite stores, and use online facilities, he said.

Political parties said the lack of cash reserves could be blamed on the city’s lack of financial control. IFP executive committee member Mdu Nkosi said the municipality would not be in this precarious situation if the city had proper financial controls and did not waste millions of rand on fruitless and wasteful expenditure.

He said the coronavirus had exposed the city’s vulnerable financial situation.

“We would not be in this situation if we had proper internal controls.”

The lack of consequence manage- ment was another issue that contributed to the financial situation, Nkosi said.

He said the municipality should have had between R15bn and R20bn in cash reserves if proper financial management had been implemented.

“A big municipality like eThekwini should not have so little money.”

Nkosi said eThekwini was looking at the prospect of becoming bank- rupt, like other municipalities in the province.

DA caucus leader and exco member Nicole Graham said it was important for people who could pay their bills to pay them and that there should be relief for those who were unable to pay.

She said it was important for the city to recover money from state-owned enterprises and government departments which owed the city vast amounts of money.

“The issue is that big players have money to pay, but they don’t pay because there is no accountability,” Graham said.

There was a lack of political will to make these organisations pay the monies they owe the city, she said.

She added that there was a possibility that the lockdown could last longer than the 21 days initially announced.

Its effects would be felt in the next few months and even years to come by businesses.

Graham said there could have been a decision to make the situation better for residents.

“It could have been cushioned better.”

Daily News

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