The financial viability of Magareng municipality has again come under the spotlight, with the very real risk that it may not be in a position to pay November salaries and Christmas bonuses to staff.
The municipality already applied for an overdraft to pay September and October salaries but the ovedraft has reached its limit. Given that the next tranche of its equitable share allocation is only due in December, it cannot siphon funds intended for service delivery, to pay staff.
This has left the municipality in a precarious position. Payments to service providers also hang in the balance.
The DA has been advocating for years, for Magareng municipality to institute a more aggressive debt collection strategy to improve its financial status.
As of 30 September 2022, Magareng had R355,6 million in outstanding debt owed to it, with R10,2 million due from state institutions, R23,6 million owed by business and the bulk amount of R320,2 million outstanding from households.
Out of desperation, the municipality has finally decided to implement its Debt Collection and Credit Control Policy, which was approved by Council. Had this been implemented long ago, it could have averted the financial crisis now faced by Magareng. Whether it can still save Christmas for Magareng employees, remains to be seen.
While the declaration of the State of Disaster played a big role in the financial demise of Magareng, it is not solely to blame. The municipality’s long-standing indifference towards the culture of non-payment has caught up with it, and it must be held accountable for this massive failure.
The DA will report the financial debacle to COGHSTA and the Office of the Auditor General, requesting assistance to mitigate the situation and the enforcement of consequence management. Willfully poor debt collection and the utilization of service delivery funds for salaries, must be admonished.