Endumeni Municipality running into crippling financial trouble

Armed men robbed Endumeni Municipality’s Dundee office, and the municipality’s financial viability as a going concern has been questioned. That’s how bad the last week has been for the Endumeni municipality.

The 2022/23 report by the Auditor-General’s office paints a bleak picture of the institution’s finances, with a loss of R99 million and current liabilities exceeding current assets by R105.44 million.

The municipality is struggling with a collapse in revenue collection, leading to millions of owed funds that have not been collected. The electricity theft of R40.74 million, representing 30% of the electricity purchased from Eskom, has compounded the financial conundrum.

Sinenhlanhla Sibiya of the Auditor-General’s office noted that nothing had been done to investigate fruitless, wasteful, unauthorised, and irregular expenditure racked up in the previous financial year. Endumeni takes on average 236 days to pay creditors and the amount owed to creditors was greater than available cash.

Irregular expenditure doubled from R10.5 million in 2019 to R21.7 million in 2022/23.

“The majority of the fruitless and wasteful expenditure was incurred by the municipality because the Eskom account was not paid in time, while irregular expenditure was caused by a breach in the basics of procurement, which lays down a process of fair, equitable, cost-effective, transparent and competitive procedures,” Sibiya said.

She noted that Endumeni takes on average 236 days to pay creditors and at financial year-end, the amount owed to creditors was greater than available cash.

The performance indicators were also not pretty reading: 750 square meters of potholes should have been repaired in the previous year. Yet the actual performance, according to the Auditor-General, was zero square metres due to insufficient funds.

The performance indicators were also not pretty reading, with nil performance recorded for electrical connections at Kunene Farm and Nyanyeni. Mayor Ndolvu, who arrived late for the meeting, recognized the challenges faced by the municipality and called for immediate action to change the situation.

See this weeks Courier dated February 9. 2024, for the full front page and page 2 story