UGU District Municipality has been instructed to speedily conclude the process of employing a chief financial officer (CFO) as the municipality’s financial resources are not being handled judiciously.
This was the advice of the portfolio committee on Cooperative Governance and Traditional Affairs (Cogta) after they visited the South Coast municipality on Wednesday.
The visit was part of the committee’s week-long oversight programme in KwaZulu-Natal to assess, among others, the delivery of services to communities.
Faith Muthambi, chairperson of the committee, said it was unacceptable that the municipality was experiencing a monthly expenditure shortfall of R40 million and does not have a permanent CFO.
Muthambi said the CFO was needed urgently to drive the municipality’s financial recovery plans and ensure fiduciary duty over the municipal finances.
“It is in this context that the committee views it necessary to urgently conclude the recruitment process of the CFO which has dragged on for over a year,” she said.
The committee raised its concerns that the municipality was technically insolvent.
“It is operating on an unfunded budget and with cash coverage of less than a month, which is below the Treasury norm of 1.5 to 2.1 months.”
Furthermore, the committee said it was concerning that total liabilities of the municipality exceed assets by 73%.
According to the committee, the financial challenges that were experienced by the municipality resulted in service delivery issues.
The service delivery failures include intermittent water cuts, sewage spillages due to inability to service infrastructure and bad quality of water.
The committee found that the situation had resulted in the decline of tourism in the municipality.
The committee also condemned the reported vandalism of infrastructure, saying it had the potential to exacerbate an already dire situation.
The municipality has been experiencing a lot of vandalism, especially of water infrastructure.
“While we acknowledge the frustration of the residents, vandalising infrastructure undermines the progressive efforts to turn the municipality around. We thus call on the residents of the municipality to exercise caution when venting their frustration,” Muthambi said.
The committee has urged the municipality to urgently enhance its revenue collection rate which is currently languishing at 64%.
The committee has also called on the municipality to improve its billing system to ensure that the residents are given accurate bills, to increase revenue collection.
Municipal spokesperson Mondli Ngcobo said that the committee did raise concerns about the vacant CFO post, saying this would be addressed urgently.
Ngcobo said the municipality had already advertised the post and they were hoping to fill it before the end of the year.
“The municipality has also formulated its financial recovery plan which will ensure that the municipality is able to collect its revenues,” said Ngcobo.
The Mercury