Fred Nel MPL
Spokesperson on Local Government
Randfontein Local Municipality is struggling to pay its creditors on time according to a reply to my question from the Gauteng MEC for Local Government and Housing.
The guideline used by National Treasury to measure a municipality’s ability to meet its obligations is a threshold of 2% creditors to operating budget ratio.
According to the reply the Randfontein municipality has exceeded this ratio. This is the same municipality who has only spent 40% of its capital budget in the previous financial year.
These two indicators point to a municipality with serious cash flow problems that prevent it from pay its creditors on time.
It is clear that Randfontein is in financial trouble.
The MEC believes that the situation can be remedied through her department’s normal support framework. This framework has failed Randfontein to date and can no longer be the solution.
The DA disagrees with this approach and believes that the situation is so dire that the Randfontein municipality is staring down bankruptcy.
The MEC must intervene in the municipality using her powers in terms of section 139 of the South African Constitution.
Randfontein is in serious financial trouble and the situation requires urgent intervention.