Ugu District Municipality is in dire financial straits, according to municipal manager, ‘DD’ Naidoo.
Instead of the situation improving following a qualified audit in February this year, the municipality’s finances are deteriorating, Mr Naidoo reported at a press briefing on Tuesday this week.
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The qualified audit meant Ugu had failed to comply with some municipal finance management laws.
Months later, the municipality is in debt to the tune of R500-million, and can barely sustain itself.
Because of this, the entity has reportedly failed to pay some of its accounts and service providers and can now not afford its staff component, Mr Naidoo admitted.
Fuel costs, a poor billing system, poor revenue collection, hefty salaries and spending money on non-core activities are among the issues said to be at the root of the crisis.
In February this year, the auditor-general warned Ugu that it was spending more money on salaries than the original budget allocation.
The AG had also found that Ugu had not followed the correct processes to prevent irregular expenditure of some R16-million, and had not undertaken investigations to determine whether officials were liable for this irregular expenditure.
The municipality had also been unable to produce appropriate audit evidence on service charges and receivables from exchange transactions, due to inadequate internal controls in the billing process.
It seems the the AG’s report hit the nail on the head, as Mr Naidoo admitted that officials and management at Ugu were partly to blame for the current situation.
Blame, he said, could also be laid on the recent deadlock between the municipality’s water and sanitation staff and management, which he claimed had cost the municipality some R29-million, despite the fact that province had intervened through its disaster fund.
Mr Naidoo added that the grants from National Treasury and Provincial Treasury were not enough to keep the municipality afloat.
He also admitted that the municipality’s spending patterns were not in line with its collected revenue or income.
According to Mr Naidoo, several government departments, schools and private businesses had huge debts outstanding to Ugu which they had consistently failed to pay.
“We are compelled to shut down supply to these institutions if they don’t pay up, because their debts are contributing towards this crisis.”
He pointed out the municipality had been faced with huge losses of water where revenue could not be collected.
This included the major pipe breaks, water leaks, water supplied by water tankers and the six kilolitres of free water provided to all households.
Going forward, the municipality said it planned to cut its spending to try and keep the municipality functional.
This would be done by monitoring the usage of the Ugu fleet to cut down on fuel costs, cutting travel costs to functions outside the Ugu district and getting the billing system fully operational, among many other strategies.
Asked if they would be retrenching any staff, Mr Naidoo said that would be the last resort, as there were other measures to be implement before this would be considered.
Management must Go
The South African Municipal Workers’ Union (Samwu) has called for Ugu management to step down.
The union said the current management team had failed to run the municipality properly.
Samwu chairman, Mthandeni Ngcobo was responding to reports that the municipality could not afford its staff and had been in financial trouble through its failure to control its cash flow.
Mr Ngcobo said workers had been hired by Mr Naidoo and his management team, and they were fully accountable for that.
“We are of the view that the entire management needs to leave and make way for new people who are willing to make this municipality work.”
In the midst of this, Ugu offices in Oslo Beach and Port Shepstone were reportedly broken into and several laptops and files stolen.
Mr Naidoo confirmed this, saying that police were looking into the matter.
Samwu workers questioned the motive behind the burglary.
The union wondered why no forensic teams had been seen taking fingerprints, and why police had also reportedly not taken statements.
Saps spokesman Captain Gerald Mfeka said no case had been opened.
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