Gauteng municipalities collectively owe half a billion rand to service providers

By Fred Nel MPL, DA Gauteng Shadow MEC for Cooperative Governance and Traditional Affairs:

ANC-run local municipalities in Gauteng collectively owe just over R505 billion rand to service providers over a 120 day period. Only two out of the 12 local municipalities owe zero rands, one of which is the DA-run Midvaal municipality.

This points to the severe degradation of financial management in Gauteng municipalities affecting their sustainability and ability to deliver services. Serious attention needs to be given to the improvement of financial management.

Section 65(2)(f)  of the Municipal Finance Management Act (MFMA) requires accounting officers to ensure that all money owing by the municipality be paid within 30 days of receiving the relevant invoice or statement.

Under section 173(1) of the MFMA the accounting officer is guilty of an offence if that accounting officer “deliberately or in a grossly negligent way, contravenes or fails to comply with a provision of section 65(2)(f).

(Click here to view the MFMA Circular relating to late payments)

  • Payments that are 90-120 days late amount to just over R314 million with Emfuleni owing R121 million, Randfontein R64 million and the City of Tshwane R41 million respectively.
  • The biggest culprit in non-payment within a 60 day period is Merafong municipality owing R17,9 million to service providers. 3
  • 30 day late payments amount to an astounding R150,5 million. Mogale City owes R97,1 million and once again Emfuleni municipality at R 11,4million.

Reasons provided for delays in payments by municipalities were a unanimous “cash constraints and low revenue collection.”

It is concerning that municipalities commit expenditure even though they do not have the money to fund it. This is irresponsible and if not checked will cause provincial and national government to bail out these municipalities.

(Click here to view the reply)

Political leaders as well as municipal officials must be held accountable for contravening the law.

Payments that are late or held back for compliance reasons hamper the delivery of critical services to residents in municipalities across the province.

It is irresponsible of government, especially local municipalities that are at the forefront of direct governance to not comply with Treasury Regulations and the MFMA.

In most cases these service providers are small to medium businesses and creates many jobs for residents in Gauteng.

If a municipality can’t pay its bills on time, it certainly cannot deliver good quality services to its residents.

The DA will monitor the payments of service providers through submitting a series of questions to ensure all bills are paid on time and services are effectively delivered.