According to Clr Ivan Naidoo, DA deputy shadow MMC for the Finance Oversight in Ekurhuleni, the City of Ekurhuleni is in dire financial crisis, with mere 13 days of cash left in its coffers.
This statement has been shared on social media platforms and judging from people’s comments, this has caused a great deal of uncertainty for residents who said City’s financial problems result from dwindling service delivery over the years.
The DA said it is shocked to learn that the ANC-led coalition government in the City has a mere 13 days of cash left in its coffers, despite the executive mayor, Clr Mzwandile Masina, declaring a stable financial position.
“The dire cash flow situation is a result of poor planning by the ANC coalition-led metro, who through decreasing revenue collection rates, costly overtime payments, and generally poor performance across key departments within the metro, find themselves in a desperate financial state.
“While the ANC-led coalition predictably blamed the situation on the Covid-19 pandemic during a virtual council meeting on January 28, it is clear that from financial performance results for the second quarter of the 2020/21 financial year, that this is a result of poor planning and no accountability,” said Naidoo.
The DA further stated that payments have been particularly devastating to the CoE’s financial state, and the City’s policy is clearly unsustainable.
“Since 2017, the DA has been calling for a shift rotation system in a number of departments and entities to offset these losses. “These calls, however, have fallen on the deaf ears of an uncaring ANC and its coalition partners.”
Naidoo said the financial squeeze on the City means a decrease in service delivery for the residents of Ekurhuleni.
“In the second quarter of 2020/21 financial year, the City underspent on maintenance and repairs, leading to an increase in potholes, power outages, sewage overflows and a general deterioration of basic services.
“This is a far cry from the Batho Pele principles of ‘We belong, we care, we serve’ that the metro supposedly subscribes to.”
The party concluded that the City needs an administration that can implement innovative, forward-looking, strategic measures and controls that can effectively manage the financial situation that the City finds itself, and thereby promote the wellbeing of residents through increased service delivery.
It’s unclear how long the City’s finances been in the red and whether there is a recovery plan.
Setting the record straight on the City’s financial affairs
Responding to the DA claims that the City is in dire financial crisis, Ekurhuleni metro spokesperson Zweli Dlamini said contrary to what he described as the DA’s attempt to score cheap political points, the City is in a sound financial position.
Check the Q & A below about the City’s finances:
Is the City running out of money or on the brink of bankruptcy, and struggling to render certain services?
The City of Ekurhuleni is in a sound financial position. It is performing well and able to deliver public services to the residents of the City. This statement is supported by the points below:
● The City utilised R922-million of its own generated revenue to finance projects funded by external loans. These funds will be reimbursed after the conclusion of the external borrowings process
● The City has passed an adjustment budget, focusing on reducing spending on non-essential goods and services, and to build reserves to an estimated level of R100-m.
● The City continues to meet its obligations, with 80 per cent of the invoices received being paid within 30 days as per the requirement of the Municipal Finance Management Act. This was reported in the second quarter of the City’s key performance indicators review.
● The City has honoured the salary-increment payment in January.
● All major suppliers, including Eskom and Rand Water, remain up to date. This is evident as there have been no interruptions in service provision to the citizens of the City.
How long have the City’s finances been in the red?
It should be noted that the pandemic has had an impact on the economy and other factors thereof; however, this has not resulted in the City being in the red. As part of dealing with the challenges of the pandemic, the City has had to be strict on issues of credit control. This was to ensure no significant impact on the revenue collection, and this has yielded the necessary benefits.
To date, the pandemic and its impact on the economy has not affected the City’s financial position and performance, including the ability to render services.
The DA’s statement claims this problem emanates from a range of key factors, including poor planning, decreased revenue collection rates, costly overtime payments and generally poor performance across key departments within the metro. Is this correct? If not, what led the City to the said financial situation?
Unfortunately, the DA would use a national disaster to attempt to score cheap political points. In a period where executive mayor Clr Mzwandile Masina has called upon all political parties to put their differences aside to combat the pandemic, the DA has opted to choose politics over the well-being of the people.
It is not a secret that the novel coronavirus pandemic has placed a strain on revenue collection. The nationwide lockdown resulted in mass retrenchments and business closures which has put an enormous amount of pressure on the ratepayer.
As a caring coalition government, we instituted a series of incentive-relief programmes to assist the ratepayer during this period.
There has not been poor performance during the nationwide lockdown period in the City of Ekurhuleni.
As a precautionary measure, under level five of the lockdown, the City instituted a work-from-home policy which was developed to protect City staff from contracting the Covid-19 virus at the workplace.
This drastic reduction of in-office staff initially resulted in a few hiccups as staff members adjusted to the new normal. However, with the numerous digital transformation initiatives the City of Ekurhuleni has developed, such as the My Ekurhuleni app, city officials have been able to receive service delivery queries in real-time and deploy response teams to logged complaints remotely.
The City has also embraced virtual collaboration platforms, such as Microsoft Teams to enable the work of government to continue seamlessly.
Has there been a revenue decline in the City or revenue shortfall?
The revenue collection for the City for the first half of the 2020/21 financial year is at 89.81 per cent compared to a target of 90 per cent. This demonstrates that the City has sound controls and processes in place to ensure that monies are collected from residents. The temporary shortfall has emanated from the need for companies to operate on a staff compliment of one third, with some companies remaining closed.
The City has not been able to fully bill these for the reasons stipulated.
What is the City’s recovery plan?
The City continues to implement and monitor credit control measures to ensure minimal impact on revenue collection for municipal services. Although the impact is not significant now, the City continues to assess the impact and risks of the pandemic and will be responding to these as and when they occur.
Management remains committed to ensure minimal impact on the ability of the City to provide quality services.
Has the metro applied for funds from the Disaster Relief Grant meant to assist struggling municipalities?
The fund was utilised in the previous financial year (2019/20) at the pandemic’s commencement for procurement of personal protective equipment for the City’s staff. In the current year, the grant has not been utilised. It should be noted that in both years, there was no application for additional funds.
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