The decision by international ratings agency Moody’s yesterday to downgrade the credit rating of three Gauteng metros will hit residents and business hardest.
The downgrading of South Africa’s national credit rating due to economic and political uncertainty undoubtedly had a knock on effect on the credit outlook for the Tshwane, Johannesburg and Ekurhuleni metros.
However, the financial crises and absence of proper financial accountability in these municipalities undeniably worsened the situation. It would be wrong of the Gauteng Finance Department, which is tasked with oversight over local government in the province, to ignore some fundamental problems in the finances of these metros.
The fundamental weaknesses in financial management are illustrated by:
· The continued billing crisis in both Johannesburg and Tshwane;
· Corruption scandals such as the Miss World fiasco, now subject to a Public Protector investigation;
· The difficulties experienced by Tshwane in raising loans, specifically through an ill-advised bond issue;
· A deterioration of the audit assessments by the Auditor-General, including the qualified opinion issued in respect of Johannesburg;
· The criticism of National Treasury of the asset re-valuation in Ekurhuleni;
· The concern of National Treasury regarding the amount of cash available in the municipalities to pay amounts owed to suppliers.
The unfortunate reality is that residents and businesses will be worst affected by the inability of these municipalities to ensure sound financial management, as securing credit will become more difficult and the cost of rendering basic services will increase.
Ultimately the poorest and most vulnerable of Gauteng will bear the brunt of ineptitude, corruption and uncertainty in the affairs of these metro councils.
The DA will engage with the Finance Portfolio Committee and Finance MEC Mandla Nkomfe regarding adequate support and, where appropriate, intervention in these troubled councils.