The DA in Free State said it was looking at legal action to remove the Mayor of Mangaung Municipality following a downgrade of the municipality by Moody's. File picture: Mike Segar/Reuters
The DA in Free State said it was looking at legal action to remove the Mayor of Mangaung Municipality following a downgrade of the municipality by Moody's. File picture: Mike Segar/Reuters

Mangaung Mayor faces legal action after Moody's downgrades municipality

By ANA Reporter Time of article published Aug 8, 2019

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Johannesburg - The Democratic Alliance (DA) in the Free State said on Thursday it was looking at legal action to remove the executive Mayor of Mangaung Municipality, Olly Mlamleli, following a three notch downgrade of the municipality by Moody's.

Ratings agency Moody's Investors Service on Tuesday downgraded Mangaung Municipality's long-term global scale issuer rating to B3 from Ba3, with a negative outlook, following a review initiated in May. 

Moody's said the three notch downgrade reflects the Free State municipality's weak and rapidly declining liquidity position, which recently led to a failure to service commercial bank debt on time, implying a relatively high probability of default in future. 

Last month, the cash-strapped municipality also had water restrictions imposed by Bloem Water to areas due to nonpayment of water bills.

The rating agency said liquidity pressures in Mangaung reflect a combination of weak local governance, which exacerbates collection issues, and poor effectiveness of the recovery plan with the central government. 

Patricia Kopane, provincial leader of the DA in the Free State, said Moody's downgrade was a warning that unless urgent steps were taken, the Mangaung Metro will collapse.

Kopane said Mangaung residents have borne the brunt of the serious maladministration and poor governance of the current ANC administration under Mlamleli since the 2016 Local Government Elections.

"The hallmark of this administration has been a stubborn political unwillingness to employ the most basic principles associated with good, clean and accountable governance," Kopane said. 

"Despite continuously being warned to put in place the necessary systems to collect revenue, the rate of revenue collection still stands at nothing higher than 60 percent, while the budgets of the metro routinely assumes a collection rate of at least 90 percent.

"For the past two financial years, the municipality paid R61 million to the company that failed to help it improve collection rates, as per contract. Despite the poor municipal financial state, the office of the Mayor paid R1.7 million as a donation for the Miss Glamorous beauty contest. 

"It is clear that the priorities of the Mayor are not in line with the needs of the people of Mangaung. This money could have been used for service delivery. Apparently there are more than 400 people employed in the office of the Mayor alone without clear job descriptions."

Kopane highlighted some of the key service delivery challenges in Manguang, including refuse removal, lack of metro police, the poor state of roads, poor infrastructure maintenance, poor water supply, financial mismanagement, and many others.

She said the DA was on Thursday putting Speaker Mxolisi Sionzana on terms. 

"We will, this afternoon, at the sitting of Council, hand a formal letter to him in which he is given seven working days to convene a special meeting of Council to debate and vote on our Motion of No Confidence, or he must be prepared to possibly face a Court application to compel him to do his job," Kopane said.

"We are also consulting our lawyers urgently on this potential legal action. It is never our first choice that we need to resort to the legal route, but the ongoing obstructions of the ANC leave us no choice, and the people of Mangaung deserves action."

African News Agency (ANA)

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