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MEC Nqatha must appoint a special task team to save failing EC municipalities from collapse

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https://youtu.be/4mIZ2EFudAY

The DA’s Vicky Knoetze speaks on the collapse of Municipalities in the Eastern Cape.Vicky Knoetze is a South African politician serving as a Member of the Eastern Cape Provincial Legislature for the Democratic Alliance. She was elected to the provincial legislature in May 2014.

Dear MyPE

This year will be crunch time for most municipalities in the Eastern Cape that are on the edge of collapse, as illustrated by the announcement that the bankrupt Amathole District Municipality (ADM) is unable to pay staff and creditors over a four-month period.

The Eastern Cape MEC for Cooperative Governance and Traditional Affairs (CoGTA), Xolile Nqatha, cannot sit back and simply watch these municipalities fall over the fiscal cliff, without tough measures being introduced and action taken.

People across the province live with rubbish piling up in their communities, sewage flowing in the streets and constant water and electricity outages as part of their daily lives.

A large number of local municipalities in the Eastern Cape are on the verge of total collapse. Service delivery is deteriorating rapidly in the devastating wake of alarming levels of financial mismanagement, severely bloated local authorities and a complete lack of consequence management.

Governance in the province has been crippled by various factors that are evident from the following:

  • 14 Municipalities in the province are in serious financial distress in terms of which National Treasury have been approached for bailouts.
  • The 2020 Auditor General (AG) Report indicated that 83% of municipalities in the Eastern Cape are facing significant cash-flow restraints and the expenses of 38% of municipalities exceed their revenue.
  • Bloated staff complements of local authorities, with the cost of employment in the majority of Eastern Cape municipalities far above the National Treasury norm.
  • The collective debt to Eskom is in excess of a billion rand, with no sustainable solution to eradicate the debt.
  • There are alarming levels of irregular, fruitless and wasteful expenditure, in terms of which the EC stands at an accumulated figure of R11 billion, while 69% of municipal debt in the province is deemed irrecoverable.
  • Collection rates are dismal at only 84,5% against the National Treasury benchmark of 95%.
  • EC municipalities continue to regress in terms of financial sustainability, with 13 municipalities regressing according to the 2020 AG report.
  • More than a third of municipalities in the province have been allowed to deteriorate to a state of complete bankruptcy. A recent example is the ADM, which will be unable to pay staff, councillors and creditors during February, April, May and June of this year. This is a shocking indictment of the leadership of these municipalities. It is extremely concerning that provincial government waits until there is complete collapse of municipalities before intervening.

In the light of these extremely concerning factors, my colleague in the Provincial Legislature, Vicky Knoetze, MPL, has written to MEC Nqatha to request the establishment of a special task team for the evaluation of distressed municipalities in the province. (Letter attached)

This task team must re-evaluate the financial sustainability of all the municipalities in the province and carry out a complete re-estimation to establish which municipalities are in distress. Municipalities that are found to be in distress must either be placed under administration or dissolved completely in terms of section 139 of the Constitution.

In essence, the EC needs a renewed focus on:

  • A zero-tolerance approach to maladministration, corruption and the flouting of municipal supply chain management processes, with severe consequence management process at local government level.
  • Ensuring that municipalities are operating with an approved organogram to reduce the cost of employment and that all municipal employees are qualified and fit for their purpose.
  • Improving collection rates.
  • Ensuring that viable financial recovery plans are in place.
  • The compulsory ring-fencing of funds received from electricity sales to settle Eskom debt.
  • I have also tasked the Leader of the DA in the EC Legislature, Bobby Stevenson, MPL, to ensure that the provincial government is held to account on this matter.

Local government is the bedrock of service delivery, if local government fails, everyone suffers. Provincial government must act urgently and decisively to free the residents of these municipalities from the shackles of poor governance.

Regards

Cllr Nqaba Bhanga
DA Eastern Cape Provincial Leader

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