Amathole District Municipality needs R411m to survive, intends to retrench employees
Durban — The cash-trapped Amathole District Municipality in the Eastern Cape has issued an SOS call to the provincial and national government, saying it needs at least R410 million to stay afloat.
On Thursday, the municipality, which is one of the 14 distressed local and district municipalities in the province, sent a memo to staff and other stakeholders, warning them it won’t be able to pay them their salaries for four months.
It attributed that to a devastating cash crunch and among those who won’t be paid their salaries in February, April, May and June, are councillors and local traditional leaders.
“This is due to strained financial resources within the institution. You are further advised to consult all your creditors and advise them accordingly,” reads part of the memo sent to staff.
Asked exactly how much the municipality needed to stay afloat, its spokesperson, Nonceba Madikizela-Vuso, revealed the R410m figure.
"The request to the provincial government is for R65 794 822 times the number of months we are unable to pay salaries. Further to the request is an amount of R150m targeted at what the municipality terms ’Mutual Separation Package’, where employees would be afforded an opportunity to apply to part ways with the municipality. This is targeting 33% of employees at middle management where the cost of employment is too high,” she said.
She added they had always been honest with what led them to the crisis.
Among the issues is a high wage bill which she said they aimed to slash by retrenching some of their workers.
“The municipality has constantly highlighted that the root causes of it being technically bankrupt, amongst other things, is the high salary bill as a result of benefits and the unlawful re-categorisation of the municipality from a category 6 to category 7 and standardisation. With the limited revenue-generating resource base, If the cost of employees is not curbed, the municipality will certainly not recover from its liquidity challenges,” she said.
Madikizela-Vuso added their wage bill for 2020/21 was R789 537 869 and on a monthly basis, they spent R65 794 822 on salaries . Efforts to retrench staff was recently halted by the Labour Court.
Spokesperson of the Department of Cooperative governance and traditional affairs in the Eastern Cape, Makhaya Komisa, said they could not comment, as the issue of the municipality was being handled by the national Treasury, which was looking after distressed municipalities.