CoGTA intervenes at cash-strapped Great Kei municipality

Friday, July 13, 2018

With debt estimated at R28 million, the Cooperative Governance and Traditional Affairs (CoGTA) Department has taken over the running of the Eastern Cape’s Great Kei Municipality.

“Intervention in the Great Kei Local Municipality was done because the municipality has failed to fulfil its executive obligations, including non-compliance with the Municipal Finance Management Act (MFMA) in relation to expenditure management.

“The municipality is unable to fund its operations and currently owes creditors approximately R28 million, of which an amount of R22 million is more than 90 days old that is owed to creditors. The municipality is unable to fund its daily operations,” said Eastern Cape CoGTA MEC Fikile Xasa.  

According to the MFMA, municipal managers (MMs) are expected to take all reasonable steps to ensure money owed by the municipality is paid within 30 days of receiving the relevant invoice or statements, unless prescribed otherwise for certain categories of expenditure.

In this regard, Xasa said the local municipality failed to pay all money owed to its creditors within the stipulated period.

He said Great Kei municipality currently owes, amongst other creditors, R1.1 million in staff pensions, R7 million, excluding penalties, to the South African Revenue Services; R5.8 million to the Municipal Standard Chart of Accounts and R1.2 million to Eskom.

CoGTA takes charge

Xasa said under the circumstances, CoGTA, through the Provincial Executive Council, has intervened and assumed responsibilities as follows:

•           Corporate Services, the recruitment process and the appointment of the municipal manager. The Municipal Council retains the power to make final approval only on the appointment of the MM.

•           Financial Management and Administration, in particular credit control and debt collection, supply chain management and the development of a financial recovery plan.

“The municipality's salaries a month are about R4.3 million and the municipality is only able to collect revenue of about R2 million on average each month. This means that every month, there is a shortfall of R2.3 million and it is only on receipt of the Equitable Share transfers that the accumulated shortfall is paid,” said Xasa.

Xasa said so far, the intervention managed to make available R10 million of the Equitable Share from National Treasury due to Great Kei to pay for salaries.

“We call on the political principals and officials to work with us to sustain the intervention once we have pulled out.  We need to refocus and a mind-set change to realise the common objectives of cooperative governance,” he said. –