Durban -The Auditor-General’s (AG’s) office has made a series of findings about the administration of the Msunduzi Municipality, including that there are poor financial management practices, an inability to implement debt control policy and poor collection mechanisms.
The AG’s revelations led to the municipality receiving a qualified audit opinion. A qualified opinion means the financial statements contain material misstatements or omissions.
The AG’s office also noted the city’s declining reserves. Just as with eThekwini Municipality, Msunduzi has been warned of massive losses in water and electricity, and the overall impact this has on the city’s financial standing.
Reflecting on the significant losses of electricity and water, the AG’s office noted that a significant number of prepaid electricity consumers had not purchased electricity in the current year.
“Management didn’t perform compulsory audits, as required by the credit control and debt collection policy. Illegal connections of electricity, ageing infrastructure and vandalism of municipal infrastructure assets contribute to electricity and water losses that are above acceptable norms,” the report read.
Responding to the report yesterday, Msunduzi mayor Mzi Thebolla said a corrective audit action plan had been developed and adopted for implementation by all relevant stakeholders in the municipality. The plan included addressing the root causes, corrective measures to address the findings, target dates and time frames and progress to date.
He conceded that the municipality was battling to contain rising consumer debt.
“The municipality’s debtors are continually increasing, which poses a serious threat to the municipality’s future sustainability. A significant amount of debtors relates to the household debtors’ category, which amounts to R4.47 billion, of which R4.02bn has been outstanding for more than 90 days.
“Commercial debtors are the second largest category of debtors owing money to the municipality, amounting to R770.5 million, of which R506.4m has been outstanding for more than 90 days.”
He added that the municipality would continue to introduce measures to ensure acceptable levels of debt collection. The mayor also expressed trust in the Msunduzi management, led by city manager Lulamile Mapholoba.
DA councillor Ross Strachan was dismissive of the possibilities of the municipality improving its fortunes, saying there was a lack of political will to deal with the problems and continued interference in administrative matters by political figures.
“We know that part of the problem is failing to collect revenue from households that can afford to pay for water and electricity, and that is why we are losing money,” said Strachan.
ACDP councillor Rienus Niemand said the leadership needed to make bold decisions, even if they were unpopular in some circles, as long as they would help improve the city’s financial situation.