Limpopo municipalities need urgent skills audit as debt collection plummets

By Jacques Smalle MPL, DA Spokesperson on Cooperative Governance:

The DA has noted with concern that several municipalities in Limpopo are failing to generate revenues due to an ineffective billing and revenue collection systems across the province.

The DA believes that these collapsing systems will fuel the endless cycle of poor service delivery that normally leads to service delivery unrest. A municipality cannot function if it cannot collect what is due to it financially, and systems are essential to do this.

The AG recently reported that service delivery collection rates by municipalities remains a major challenge as 40% of our municipal auditees had a debt collection period of more than three months.

Furthermore, one-in-eight municipalities simply cannot recover more than 10% of their debt, which is a serious concern. For these municipalities, 90% of the money they are due will never reach their coffers.

This has a knock-on effect to the municipality itself paying its own creditors. The AG indicates just under half of all municipal auditees paid their creditors in periods exceeding 90 days.

More Limpopo municipalities continue to default on payments since the 2012/13 financial year and this has severely impacted small and medium businesses in particular in the province.

The AG’s  analysis shows that 45% of auditees had a vacancy rate of 15% or more in their finance units and that 36% of our municipalities CFO’s did not have the required competency levels. One-in-three Limpopo Chief Financial Officers is not qualified, directly linking to the massive financial collection problems.

The DA believes that Provincial Treasury must start improving internal affairs in order by putting measures in place.

We call on MEC Makoma Makhurupetje, to address these serious financial issues in Limpopo Municipalities, through a new campaign of finance training and upskilling, and investigation of underqualified appointees.

The DA urges MEC Makhurupetje to establish an urgent skills and competency audit of finance units of all municipalities, respond to this crisis accordingly and ensure that all creditors are paid on time.