The Executive Mayor of the Mogale City Local Municipality (MCLM), Councillor Tyrone Gray, wrote an open letter to residents of Mogale City, explaining the current situation in the municipality.
Gray and his team have been at the helm in Council for close to three months.
In his letter he highlighted the current financial status of the municipality, the budget that was approved by the previous council, and the strides the current council is making toward getting the municipality’s finances on par with the standards they have set.
The Mayor wrote as follows:
Good day, I hope this letter finds you well.
The purpose of this letter is to detail an honest and transparent summary of the status quo of the municipality, as well as to describe the plan of action to turn the situation around, stabilise finances and take our City forward. There are numerous issues facing our Mogale City.
The new executive was elected on the November 23, 2021, marking today (February 1) as the 10th week in office.
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As of 30th November 2021, the section 71 report states the following:
• Outstanding creditor: R346 630 271 (Eskom); total creditors outstanding R594 147 597
• Average overdraft used for November 2021: R82 066 747,48
As of 31st December 2021, there is already movement in a positive direction:
• Outstanding creditor: R291 123 886 (Eskom); total outstanding creditors R484 468 138
• Average overdraft used for December 2021: R25 590 640, 19.
There are interest penalties on overdraft facilities, which are borne by the residents. To utilise debt is unsustainable and is tantamount to simply painting over rust. We need to address the root causes and not simply the symptoms.
This will hamper delivery in the short term but ensures that the long term is taken care of. It isn’t proper to indebt residents to make politicians look good.
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To stabilise finances and ensure the long-term financial viability and sustainable provision of services, it is critically important to craft cash-backed credible and surplus-realising budgets that generate additional revenue streams and reduce inefficient expenditure.
Operational spending must be reduced and monitored continuously by all departments as internal generated revenue is declining and to avoid unauthorised expenditure. All non-essential expenditure must be curtailed. Tight fiscal controls to be implemented.
The Municipal Cost Containment Regulation 2019 and Cost Containment Policy must be enforced.
Contract services must be reduced during the 2021/ 2022 financial year to optimise operational efficiency. The municipality must become internally capacitated by building up and bolstering our internal services to reduce dependence on outsourced core functions, and eliminating burdensome middlemen. Feasibility studies for insourcing will be conducted. This will allow the municipality to have the necessary grass-cutting equipment, sufficient resources for road repairs and maintenance, ensuring that dedicated teams are present for streetlights, storm water, water reticulation and electrical distribution repairs and maintenance.
Utilising specific public-private partnerships will also allow for better quality and profitability, such as sustainable housing initiatives and energy generation. The capital spending level must be monitored to ensure 100% spending on conditional grants to optimise service delivery.
Spending on repairs must be monitored to ensure assets of Council are well maintained to avoid any service interruptions.
Furthermore, Municipal Finance Management Act National Treasury Circular 71 will be utilised to ensure budgeting is allocated according to treasury norms and standards, with the correct financial ratios in place as a monitoring, evaluation, review, and reporting dashboard. Monthly updates will be directly communicated to the public with result-based and solutions-orientated engagements.
Restructuring of the organogram to prioritise service delivery and streamline the administration is already underway. Skills audits and competency tests will assist in gauging fit-for-purpose officials.
The municipal court operations will be enhanced to create a platform for any financial misconduct to be reported locally, with punitive sanctions implemented to create a culture of ethical conduct.
Newly resolved via council is the auditing of all council assets, both movable and immovable, including forensic audits on capital projects, along with an analysis of all bypassed meters, including verification of the indigent management system, and ring-fencing of by-law promulgation funds to uphold the rule of law.
Revitalisation of community assets and the generation of additional income streams. Numerous agri-business and renewable energy initiatives will place Mogale City in a competitive and innovative light to attract more investment.
Using a network of Mogale-based businesses and cycling the economy locally, we can take advantage of keeping the value chain local to improve our local economy. Supply chain expenditure will also become localised by supporting entrepreneurs within our own locality.
The adjustment budget will be furnished by February 28, 2022, and the final budget for 2022/ 2023 is due to be approved and adopted to be effective July 1, 2022.
The financial well-being of the council is directly linked to the objects of local government, and within the financial and administrative capacity of Mogale City the following constitutional mandates as per section 152 of the Constitution of the Republic of South Africa, 1996 need to be met: providing democratic and accountable government, ensuring the sustainable provision of services, promoting social and economic development as well as safe and healthy environments, and encouraging the involvement of local communities and community organisations in the matters of local government.
Working together, we can all be part of the solution and take our Mogale City forward.
