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Ongoing regression of Northern Cape municipalities should serve as a warning to the premier, Dr Zamani Saul, that the failure of his government to immediately change the financial capabilities of ANC-municipalities, is going to cause a total collapse of services across the province.

Rampant municipal decline was the recurring theme at this week’s virtual oversight meetings by the National Council of Provinces (NCOP), that dealt in detail with the Phokwane, Dikgatlong and Joe Morolong municipalities.

It has been a trend of all three these municipalities to adopt unfunded budgets. This means they have been funding services and projects that have not been budgeted for. Examples of this include Pkokwane and Dikgatlong municipalities, that respectively had shortfalls of R14,520 million and R49,760 million, for the provision of free basic services for indigents. In addition, Joe Morolong municipality failed to provide for the provision of free basic services at all.

Unfunded budgets indicate a serious inability to properly budget and therefore also signify a dire lack of financial capabilities within these municipalities. Unfunded budgets also ultimately result in municipalities being unable to service their bulk electricity and water accounts.
It is therefore no wonder that Phokwane municipality owes Eskom R136,405 million, Vaalharts Water R46,655 million and Sedibeng Water R109,177 million. Dikgatlong meanwhile owes Eskom R135,568 million, Vaalharts Water R13,494 million and Sedibeng Water R15,291 million.

Very worrying, is the lack of action being taken by these municipalities to service this debt. In this regard, Phokwane does not yet have signed re-payment agreements with Eskom and Sedibeng water. It has also made no payments towards Sedibeng Water. At the same time, Dikgatlong municipality does not have a signed pre-payment agreement with Eskom and, while it does have an agreement with Sedibeng Water, no payment was made for August.

Too many municipalities, like Phokwane and Dikgatlong, are therefore up to their neck in debt. Any hope of them successfully managing their debt, also looks less and less likely, given that year after year, no distinct action is taken to break this cycle. This is despite the same problem coming before the NCOP, year after year.

Growing debt owed to municipalities, further aggravates municipalities’ financial situation. Debt owed to Phokwane municipality amounts to R650,745 million, with debt owed by organs of state amounting toR29, 865 million. Debt owed to Joe Morolong amounts to R325 million with government owing R96,005 million.

The financial situation of these, and many other municipalities, is increasingly dire and already, the effects of debt poses a constant threat to the continued supply of electricity, water and other services. In Phokwane, for example, unpaid debt owed by households, has seriously jeopardised the municipality’s ability to provide refuse removal services, which is having a direct impact on residents.

While municipalities increasingly turn to consultants to make up for their financial skills deficit, the outcomes of this are both costly and questionable. A case in point was Dikgatlong’s use of a consultant for assets. They subsequently received a disclaimer outcome in assets. While the contract for that consultant was terminated, Dikgatlong has appointed a new consultant for the Asset Register, and additional consultants for the compilation of the Annual Financial Statement.

The additional fees incurred on consultants, on top of the salaries already being paid to officials, who simply cannot do the work, is further eating away at diminishing municipal finances.

Until adequately qualified and experienced individuals are put in charge of municipal, finances, budgets will not balance, finances will not improve and services will continue to decline.

A hastened skills audit, coupled with decisive action to replace dead wood staff with competent and productive personnel, is urgently needed if Northern Cape municipalities are to be given a fighting chance to recover and prosper. We only hope that the Premier is listening.

Issued by The DA