Durban - A report by the KwaZulu-Natal Treasury has painted a bleak picture of the state of municipal finances in the province, saying entities are battling to maintain their infrastructure and to collect rates and service fees from ratepayers.
The report was tabled recently by the MEC for Finance Ravi Pillay and covers the financial performance of municipalities in KZN as at the end of the third quarter of the 2019/20 financial year that ended on March 31.
Pillay described the picture as “bleak”.
“Let us be under no illusion. This report paints a grim picture of the state of municipal finances,” he said, adding that some of the challenges included the lack of resources due to the high levels of vacancies.
The resignation of key officials, such as the chief financial officer, during key periods, the non-filling of vacancies, and the significant reliance on consultants or interns to perform the work of municipal officials were also mentioned in the report.
“The A-G noted that accountability was not adequately practised and enforced by leadership, and the failure of key controls continued.
“Most district municipalities continued to struggle with basic financial and performance management processes, displayed a lack of responsiveness to implement and monitor action plans, and had weak governance structures that did not enable effective accountability,” he said.
Pillay said by March 31, all KZN districts, including eThekwini Metro, had spent a total of R3.1billion (61.2%) on repairs and maintenance, only Zululand had spent about 95% of the maintenance budget.
“Underspending on repairs and maintenance could harm service delivery, and this issue is one that has been flagged by the auditor-general in the latest audit outcomes report.
“For municipalities supplying water and electricity, the consequence of low expenditure on repairs and maintenance is evident in their reported annual electricity and water losses,” Pillay said.
He said a total of R22.6bn was owed to municipalities in the province. Of this, a total of R18.1bn (80.1%) of the debt was in the over 90 days category.
In terms of the total debt owed to municipalities, eThekwini Metro reported the highest amount of R13bn, followed by uThukela District at R1.9 bn, Amajuba District at R1.7bn and uMgungundlovu District at R1.3bn.
The debt owed relates to water followed by property rates at R6.3bn and electricity at R2.6bn.
Analysis by the customer group indicates that households owed R15.4bn of the total debt, followed by commercial debtors at 21.2% or R4.8bn and organs of state at R1.8bn.
“It should be noted, however, that this debtors figure is understated due to the fact that the Msunduzi, Mkhambathini and uPhongolo Local Municipalities, as well as iLembe District Municipality, did not report any debtors for the period under review,” he said.
Pillay said the non-payment of creditors within 30 days remained a serious concern to the provincial Treasury, as it exposed municipalities to avoidable penalties and interest. Incurring penalties and interest under such circumstances was tantamount to fruitless and wasteful expenditure.
“I especially call on our professional management, from municipal managers to chief financial officers and supply chain management practitioners, to defeat the narrative that we are a corrupt and inept state. Refuse to do wrong,” he said.
Pillay said his department would continue t o support municipalities.
IFP spokesperson on Co-operative Governance and Traditional Affairs Otto Kunene said municipalities were in crisis, with abuse of resources, corruption and lack of consequences.
“We are faced with situations where daily, (people are crying for water). We have to overhaul the way municipalities are operating,” he said.
DA MPL Francois Rodgers said the report by Treasury was in line with what the AG had been saying.
“Our municipalities are the face of service delivery, that is where we see these protests, they are in a state of crises.”
The Mercury