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Emfuleni’s financial distress still far from over

But the municipality insists that it is ‘making progress’ following a Financial Recovery Plan instated early last year.
Image: Shutterstock

The cash-strapped Emfuleni Municipality in the Vaal scored just five out of 100 in Ratings Africa’s 2020 Financial Stability Index, which flagged concerns around declining operating performance and liquidity management.

These issues have contributed to poor levels of service delivery, with residents being subjected to sewage spills, lack of garbage collection, potholes and unreliable water and electricity supply over the years.

Emfuleni’s net deficit grew from R651.8 million in 2018 to over R1 billion in 2020, and its expenditure growth has been consistently surpassing its revenue growth, for at least the past three years according to the ratings agency.

Charl Kocks, principal of Ratings Afrika, says Emfuleni’s biggest problem is the lack of governance and its inability to manage the municipality properly.

“Unless the governance structures are replaced with people willing and capable to govern on sound principles, and the management is replaced with competent and willing managers that take their responsibilities seriously and manage properly, this municipality will probably never come right,” he warns.

Read:

The extent of SA’s municipal problem? R51bn, says Ratings Afrika

Emfuleni and Midvaal enter the record books, but for very different reasons

“Mismanagement of funds as well as wasteful and irregular expenditure has been a norm in Emfuleni,” says DA’s Emfuleni north constituency head, Kingsol Chabalala.

“This has resulted in the municipality facing a serious cashflow crisis.”

Chabalala added that the mismanagement of funds has resulted in the municipality failing to pay service providers for work rendered and a virtual total collapse of service delivery.

The Emfuleni municipality has denied that it is in a financial crisis and has criticised the rating it received from Ratings Afrika. It claims that the rating was solely based on perception and not facts.

“Their rating is questionable. They have not spoken to anyone from Emfuleni, and they have not done their research,” says Thabiso Hlongwane, head of communications at Emfuleni.

“A team of administrators has been deployed in Emfuleni to deal with the question of financial discipline and to make sure that our people get the services they deserve,” he adds.

Hlongwane says following a Financial Recovery Plan instated early last year, invoked through Section 139 1(b) of the Constitution, progress is being made with greater financial discipline.

Read:

Moody’s four-notch sovereign ratings downgrade of SA’s administrative capital

“All creditors that we owed are paid. Rand Water and Eskom are being paid on 70% capacity for their monthly fees,” he points out.

“Emfuleni is not disputing its previous financial crisis, but we are saying that the municipality is currently in a correct state of finances through dealing with the challenges of providing basics,” he adds.

Just last week Auditor-General (AG) Tsakani Maluleke briefed parliament on the outcomes of her office’s annual investigations into municipalities, which presented a disturbing picture of the financial state of most South African municipalities.

Read the AG’s report before you invest in a municipality, says Sapoa CEO

Maluleke reported a staggering R26 billion in irregular expenditure at 246 municipalities in the 2019/20 financial year.

“We found that a large number of municipalities ended the year with a deficit,” she noted.

“With many municipalities relying on [the] equitable share and conditional grants to pay salaries and councillor remuneration, this comes at the cost of not being able to deliver the services and conduct required maintenance on infrastructure,” she said.

In the year under review across all municipalities, just over R1 billion was spent on consultants to help them compile their own financial statements. This is roughly R150 million more than in the 2018/19 financial year.

* Palesa Mofokeng is a Moneyweb intern

COMMENTS   16

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Not to worry, “We Have a Plan”…….

Where is Emfulini ???
Hopefully well away from Cape Town.

Was wondering as well.

So many weird names popping up.

The problem is these comrades pay themselves first, and only then think about services (if they ever do).

That’s what they mean when they say ‘A better life for all’!!!

The effluent is running freely in Emfuleni

Hlongwane says……..”Emfuleni is not disputing its previous financial crisis”.

Is he referring to worst kept secret of the blatant Looting, Stealing and Corruption that was going on there a few years ago.

The attitude was “what you going to do about it”.

Allow me a really dumb question.

Why do these cadres go for the job if they don’t know how to do it?

Likejust stepping into an A380 and hitting the starter button.

27 years of downhill and they now have a plan.

Because they get paid a fortune for supposedly doing the job. In reality they get paid a fortune for doing nothing. Furthermore the is considerable scope for increased income by awarding contracts to friends at inflated prices i.e. they probably earn more from corruption than their salary.

Knew that, just wanted to know that someone else also thought along those lines.

I remember when as chairman of my local rate payers association, I went to congratulate the new mayor and MM. I mentioned that the time for politics was over and they were running a huge bussiness now. Municipality Inc. They were shocked, had no clue as to what they had to do.

This brings us to ask the question: What is a municipality?

A municipality is supposed to be a “co-operative” where the members are property owners who join forces to supply services to themselves. At some stage, this agreement grew to the point where the residents needed legal backing to force the freeloaders to fund their part of the services. The crux of the matter is that a municipality “belongs” to the property owners who appoint the city council to manage their “co-op” for the benefit of property owners.

Under the ANC government, a municipality is the total opposite. A South African municipality is a legal entity empowered by the law to extract funding from property owners to benefit the entitled municipal staff, mostly cadres, and ward councilors. What is left is supposed to be spent on services to those who do not own property as part of a vote-buying exercise. It is a vehicle for the extortion of property owners. Service delivery to property owners is merely a sideshow or inconvenience. This is what they describe as “redistributive policies”. The capital value of properties is siphoned off legally and disappears into salaries for politically connected cadres. This is a socialist structure of plunder, and unsustainable as such because the exercise destroys the value of properties which serves as the basis for taxes.

When the sewage runs down the streets and dams up in the potholes it actually describes what this process of legalized plunder does to the asset value of property owners. It is the capital value of your house that is flowing down the road there.

This is a municipality under the ANC regime.

The sewage running down the streets was reputedly said by Ian Smith many years before the independence of Zimbabwe. So maybe he knew a thing or two.

This Hlongwane guy is not to bright because he contradicts himself that is in saying “All creditors that we owed are paid. Rand Water and Eskom are being paid on 70% capacity for their monthly fees,”. Eskom and Rand water are creditors that are not being paid correctly because they are only paid 70% of the money due to them.

5 out of 100 – they were probably lucky to get the 5.

Methinks the distress has only just started !!

You understand now why Cyril bought his property well up the mountain.

He knows better than anyone what they are good for. The picture says it all. Oops sorry. It does not. Sewage is flowing like rivers into the Vaal river in multiple places. Go look next to the Rivera Hotel in Vereeniging. Been flowing like that for months.

If I am not mistaken it is a crime against humanity.

Also get a clearer picture of actually how disgusting this lot actually is.

In their case the picture says it all.

End of comments.

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