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Outstanding Debts will cripple Service Delivery in Nelson Mandela Bay

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The financial outlook for Nelson Mandela Bay continues to deteriorate with the September collection rate slipping to 85.5%. This is 10% below what is required to maintain a stable fiscus that will fund our R8 billion budget and guarantee the delivery of services.

The DA is concerned that approximately R40 million in revenue remains uncollected by the municipality. The reduced collection rate is largely due to the fact that a budget deviation to allow us to appoint a panel of attorneys to do our debt collection has not been renewed. This deviation was valid for three months expiring on 30 September 2013 and is now sitting on the desk of the Acting Chief Operating Officer. Adding to our collection problems, the labour dispute in Debtor Management remains unresolved and the staff ‘go-slow’ continues.

Ongoing negotiations between the Metro’s high energy users and the municipality have produced little to no positive outcome resulting in the increased withholding of rates which will only further destabilize our financial situation. Adding fuel to the financial fire is the fact that the municipality is left with only 15 days working capital (below National Treasury’s recommended minimum of 30 days) which has exposed us to unnecessary risk.

The consequence of all of these factors is a diminished capacity to deliver services come the adjustment budget early next year. This is something Nelson Mandela Bay does not deserve and cannot afford.

A budget task team was convened to scrutinize the budget on a regular basis and make recommendations to ensure that our financial situation does not deteriorate. This task team has not met its objectives.

In order to get a handle on this rapidly deteriorating situation the following steps must be taken by the Budget Task Team as a matter of urgency:

  • Progress report on all arrear debt collected (government, business and domestic) since the budget task team was established
  • Deviation to appoint attorneys to collect outstanding debts
  • A progress report on the impact of withholding of arrears by high energy users
  • A plan to assist High Energy Users
  • A plan to recover government debt owing to the municipality
  • An action plan to reduce growing arrears

On the one hand we are attempting to address historic arrears but we are failing to collect our current accounts. This effectively leaves us chasing our tails while we slip further into financial chaos.

Nelson Mandela Bay is an R 8 billion service delivery machine that deserves better financial management in order to fuel its optimal performance. The current financial management of the Metro leaves a lot to be desired and requires urgent attention to avoid any further deterioration of service delivery.

Angelo Dashwood

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Port Elizabethan

This author is a 'catch-all' for occasional articles and letters written to MyPE. The Author of each article can be found in the signature at the bottom of each individual article.