Treasury will help Govan Mbeki Municipality to recover financially

According to the National Treasury findings, the Govan Mbeki Municipality (GMM) has faced significant obstacles in executing its Financial Recovery Plan (FRP).

The treasury found among these challenges is inadequate revenue collection, which has intensified financial constraints and hindered the full implementation of FRP initiatives. Furthermore, substantial distribution losses have exacerbated the municipality’s financial difficulties.

The municipality’s debt to Eskom surged from R1.1b in the 2020 financial year to R4.5b, while its debt to Rand Water rose from R200m to R818m.

At the same time, revenue and debt collection rates dropped from 67% in the 2021/22 financial year to 65% in the following year. Additionally, delays in creditor payments increased from 775 days in 2021 to 1,049 days in 2023.

The treasury also found the GMM faced significant distribution losses, with water losses at 40% and electricity losses at 64% in the 2022/23 financial year, highlighting the severe financial strain on the municipality.

The municipality also encounters significant infrastructure challenges that intensify its difficulty in meeting community demands and facilitating development.

The municipality’s ageing and inadequate infrastructure significantly hamper its operations. Issues such as illegal connections and dysfunctional meters have led to complex billing complications, making it difficult to account for service usage accurately.

Restricted access to meters in certain areas further complicates the billing process, leading to revenue losses and inefficiencies.

Insufficient repairs and maintenance compounded these infrastructure problems, resulting in frequent service interruptions that severely impacted residents’ quality of life and eroded public trust in municipal services.

These were some of the findings by the National Treasury office team sent to the GMM to assist with the Financial Recovery Plan for the municipality.