Image:Twitter@James61808060
‘A disgrace’: eThekwini municipality only has a month’s cash on hand to render basic services
A source within the City’s finance department reportedly said that the situation was expected to get worse.
Image:Twitter@James61808060
Reports coming out of Kwazulu-Natal say the eThekwini Municipality’s cash on hand to render basic services has dramatically declined over the past months and could only last for 27 days excluding cash on reserves.
According to the recent budget statement and since confirmed by the city’s chief financial officer Krish Kumar, who said the situation was dire not only within the eThekwini Metro but across all sectors, the Sunday Tribune reported.
The situation is even more concerning as an IOL report in May 2020 documented that theThekwini Municipality revoked its Covid-19 lockdown relief scheme amid fears of a “financial collapse.”
A report presented to the City’s executive committee had revealed that the municipality had R13 billion in arrears and if debt-collection processes did not resume, or be more effective, the eThekwini Municipality would “be in serious financial trouble by year-end.”
It appears not much has been done since, and the predictions are now a distressing reality.
Revenue shortfall after offering Covid-19 relief to ratepayers
The City has suffered severe financial losses due to a decline in revenue collection after it had offered Covid-19 relief to ratepayers, it said.
The budget statement revealed that the City had lost billions in revenue collection as the municipality could not issue billing statements from March to June while it offered incentives for Covid-19.
A source within the finance department told the Sunday Tribune that the situation was expected to get worse and revenue collection has been instructed to come up with emergency collection strategies.
“The city’s revenue has been on a downfall even before the Covid-19 which worsened things. The management has therefore instructed the revenue department to embark on a collected drive to stabilise the situation.”
“The city has started to send out billing statements after the instruction to embark on mass collection. Even some of the management have already complained that they have received exorbitant bills.”
Unnamed source
Last week the municipality reportedly urged residents to pay for services or make payment arrangements to avoid being disconnected.
In the notice, the eThekwini Municipality said it understood the plight of those that have been financially affected by the Covid-19 pandemic, but warned residents that it will not hesitate to disconnect services of those who do not pay.
Drop in collection rates
Asked about the risk of sending exorbitant bills which have been an issue for a long time in the municipality, Kumar told the newspaper that the billing system was accurate.
“The recovery will take some time as the world is facing an economic meltdown. Our billing system is working perfectly and is audited.”
City spokesperson Msawakhe Mayisela said the main reason for the current cash crisis is due to the drop in collection rates the city had from March to June, where it saw collections plummet to an all-time low.
“The city has also not fully activated disconnections but are rather only taking action against those consumers that have run up huge arrears and are not willing to make efforts to make payments. We will also ensure that vulnerable groups are not impacted.”
“The city had several incentives to address this, we also have the on-going Covid-19 debt relief programme which concludes on June 30. The incentives included the writing off all interest on the debt and allowing customers to pay over 24 months with no interest, we also did not raise any interest on the debt for the 20/21 financial year.”
Opposition not buying that version
Opposition parties, however, have no appetite for the explanations put forth.
They say poor management is the main reason why the eThekwini Municipality is in dire straits.
Yogis Govender, DA EXCO member said it was very worrying that cash on hand was very low and fluctuating.
“Any recovery plan must be juxtaposed against the backdrop of a potential third wave and fourth wave of Covid and its financial implications on city coffers.”
“The irrecoverable losses in the electricity and water departments, the parastatal debtors owing the city billions, erroneous billing, unread meters, uncollectable revenue is indicative of the downward spiral in service delivery in multiple units within the municipality.”
IFP EXCO member Mdu Nkosi said it was a disgrace that the city has only a month’s cash on hand.
“I do not think we suppose to be where we are if we were doing things correctly. Millions are not accounted for, the city has been borrowing money for no good reasons. I do not think Covid-19 led us to this situation in such a short period.”
