As Gamagara municipality’s cash flow dries up, the Democratic Alliance (DA) is calling on the Municipal Manager (MM) to take urgent action against the Chief Financial Officer (CFO) for gross financial mismanagement.
The worsening financial situation came to a head today when salaries of the 504 municipal employees were not paid out. When the 25th falls on a Sunday, it has become customary for Gamagara to pay salaries on the 23rd of the month. By this morning, the DA could confirm that salaries were not yet authorized by the CFO because of inadequate funding available yesterday.
The situation, which points to a critical lack of financial cushioning, raises the alarm on the worsening financial state of the municipality.
Eskom debt of R575 million is strangling Gamagara as the municipality fails to honour its payment agreement. Meanwhile, R560 million is owed to the municipality, of which 64% or R363 million, relates to household debt. The municipality’s contract with its debt collection contractor has come to an end and is extended on a month-to-month basis. The collection rate has also dropped significantly over the past months, to an average of 66%.
Part of the municipality’s failure to generate revenue relates to its refusal to issue clearance certificates to property owners. The municipality currently has 300 overdue clearance certificates and 1300 of which have yet to be finalized. Contrary to Section 118 of the Local Government: Municipal Systems Act 32 of 2000, the municipality has been wrongfully insisting that inspections relating to building regulations be conducted before clearance certificates are issued. Without clearance certificates, new owners cannot be registered, and no new accounts can be opened. This situation, for which the municipality has already received a lawyer’s letter, is resulting in loss of revenue and causing financial strain on the private sector. The DA raised the matter in a motion on the 5th of August and we have been putting pressure on the CFO for the urgent finalization and issuing of the backlogged clearance certificates.
These and other matters point to poor financial decision making and a lack of financial accountability within the institution.
The DA will today submit an urgent motion for the council meeting of the 29th of August, to insist that the MM acts against the CFO’s failure to properly manage Gamagara’s finances. We are also requesting financial reports in relation to Eskom debt, that are being withheld from us, as well as an updated financial statement to assess the municipality’s functioning as a going concern. We will further not hesitate to report the municipality to COGHSTA if salary payments are not made by Sunday, the 25th of August.