COGTA to be asked to intervene as MLM’s financial crisis deepens
27 July 2021
According to the AG, MLM incurred a staggering loss of R76 348 177 during the financial year 2019/2020, and also that the municipality’s current liabilities exceeded their current assets by R923 548 805. A local municipality is charged with providing basic services, including temporary services, to all residents, formal and informal.
“A municipality which is in financial distress can never be in a position to deliver services to its residents. A letter will be written to the MEC of Cooperative Governance and Traditional Affairs (COGTA), Busisiwe Shiba, asking her to intervene and help these municipalities fix their dismal financial status so that they can be in a better state to provide proper services to residents.”
Trudie Grovè-Morgan, MPL Democratic Alliance (DA) Spokesperson on COGTA expressed concern over the lack of service delivery from several Mpumalanga municipalities, with Msukaligwa Local Municipality (MLM) and eMalahleni being in the spotlight. The 2019/2020 Auditor-General’s (AG) report of both municipalities of eMalahleni and Msukaligwa showed that they are facing deepening financial crises. This, in turn, makes it difficult for them to provide services to residents. “Since 2016, the DA has been requesting that they are placed under administration, to no avail. The Eskom debt in eMalahleni increased from R1 billion at the end of December 2016, to being the R5 billion it is today. This exponential increase can never be justified as deserving residents are robbed of basic services by interest which is generated on this overdue account,” Grovè-Morgan said. Closer to home, residents under the wing of MLM are also feeling the brunt, with service delivery being an extremely sore point, in Ermelo, Breyten, Chrissiesmeer, Wesselton, and Sun City. The financial issues faced by MLM has also not improved since the previous AG’s report. The report stated that several Mpumalanga municipalities showed blatant disregard of compliance with key legislation, with no consequences from government. MLM, along with six other local municipalities were identified by the AG as in crisis.
The AG further expressed concern that despite highlighting areas of concern and recommending action to remedy the situation on the two reports prior to the 2019/2020 report, municipalities did not investigate any unauthorized, irregular or fruitless and wasteful expenditure. Therefore, the trend of wasteful expenditure while residents suffer still continue. According to the AG, MLM incurred a staggering loss of R76 348 177 during the financial year 2019/2020, and also that the municipality’s current liabilities exceeded their current assets by R923 548 805. A local municipality is charged with providing basic services, including temporary services, to all residents, formal and informal. However, there have been several reports and complaints from residents that fall under MLM, living in informal settlements, who, amongst other things, have to dig their own pit toilets or use the veld. The provision of basic electrical and sewerage infrastructure is also being neglected , or simply not provided. Refuse is not removed, and the dubious quality of the water supply is a major cause for concern. A myriad of raw sewage overflows in a multitude of areas further aggravate the situation. All of these factors endangers residents’ health, particularly during a pandemic.
Residents and businesses in Ermelo and the surrounding areas buckle under the strain of daily electrical outages, where many areas are left without electricity for days on end. Damage to electronics and household appliances is a burden weighing heavily on residents withing MLM’s governance, with the municipality simply washing their hands of it. Furthermore, the political and administrative leadership in Mpumalanga local government is criticized for not demonstrating decisiveness in dealing with the deteriorating internal control environment, allowing unethical behavior, misconduct and a culture of no consequences in the process.
The AG has noted concern that these circumstances may facilitate theft and fraud, while a number of financially distressed municipalities in the province can’t be resuscitated, even with assistance from the provincial task teams dispatched to implement financial recovery plans.
The audit outcomes indicate that internal controls do not work effectively. According to the AG’s reports, employee cost across the municipalities averaged up to 45% of the total municipal budget. This, in turn, cuts into funds allocated for service delivery, hence the spectacular failure of service delivery from many municipalities, including Msukaligwa Local Municipality. It was also noted that the majority of the local municipalities, including Msukaligwa Local Municipality, failed to spend conditional grants for infrastructure development and maintenance from the national government.
“The DA thus calls on the Mpumalanga provincial government to intervene and assist municipalities such as eMalahleni and Msukaligwa Local Municipality, as they are financially distressed, and not in a position to deliver the intended services to residents.”