Emfuleni Municipality Faces Dire Financial Crisis and Service Delivery Woes

  • Emfuleni Municipality's Deteriorating State: The Select Committee on Cooperative Governance and Traditional Affairs, Water and Sanitation, and Human Settlements (COGTA) has expressed serious concerns over the lack of progress in resolving governance and financial control issues within Emfuleni municipality. The situation has further deteriorated, negatively impacting service delivery and leading to regressed audit outcomes.
  • Financial Crisis and Debt Burden: The municipality is operating on an unfunded budget, which is illegal, and faces a debt of R6.5 billion. This has resulted in the attachment of municipal accounts by Eskom, making it difficult for the municipality to access funds for essential services and debt payments. An alarming 172% increase in unauthorised, irregular, fruitless, and wasteful expenditure adds to the financial crisis.
  • Capacity and Revenue Collection Challenges: Emfuleni municipality is struggling with limited capacity as only two of seven senior management positions are permanently filled, and the chief financial officer is suspended. Additionally, the municipality faces revenue collection issues due to substantial water losses, affecting its balance sheet.
Financial Crisis

In a recent visit to the Emfuleni municipality, the Select Committee on Cooperative Governance and Traditional Affairs, Water and Sanitation, and Human Settlements (COGTA) expressed grave concerns over the lack of progress in resolving material risks of governance and financial control. The committee’s findings indicate that the situation has further deteriorated, exacerbating the already dire state of service delivery in the region. The committee’s Chairperson, Mr. China Dodovu, pointed out several key issues that need urgent attention.

The most pressing concern raised by the committee is the municipality’s operation on an unfunded budget, which is deemed illegal. This financial situation severely hampers the municipality’s ability to provide essential services to its residents. Moreover, there is no disciplinary board in place to investigate cases of fruitless and wasteful expenditure, further perpetuating financial mismanagement.

The Emfuleni municipality’s financial woes are evident in its regressed audit outcomes. The municipality’s financial statements, which had previously shown unqualified findings, received a qualified opinion for the 2021/22 financial year. This lack of tangible improvement highlights the municipality’s reluctance to implement solutions to remedy its dysfunctional state, causing concerns over the potential for increased corruption.

Of particular alarm is the massive increase in unauthorised, irregular, fruitless, and wasteful expenditure, which surged by a staggering 172%. Such a financial environment fosters an atmosphere conducive to corruption and mismanagement, necessitating immediate action to rectify the situation.

The municipality’s financial viability is further jeopardized by its substantial debt amounting to R6.5 billion, leading to the attachment of its accounts by Eskom as per a court order. As a result, the municipality is only able to allocate funds for employee salaries, severely restricting its ability to fulfill essential service delivery obligations and debt payments.

To resolve the mounting debt crisis, the National Treasury has intervened, but the committee emphasizes that effective financial management measures must be implemented by the municipality to ensure long-term financial viability.

The committee also raised concerns over the municipality’s limited capacity to address its issues effectively. Out of seven senior management positions, only two are permanently filled, and the chief financial officer is currently suspended. This capacity risk could hinder the administration’s ability to devise strategies to improve governance and deliver effective services.

Another significant issue highlighted during the visit was the municipality’s struggle with revenue collection due to substantial water losses, negatively impacting its balance sheet. The committee finds it unacceptable that the municipality attributes these losses to aging infrastructure, considering that approximately 46% of its capital funding is allocated for such purposes.

Despite the challenges faced by Emfuleni, the committee welcomed the South African Local Government Association’s announcement to include the municipality in support initiatives aimed at improving the state of municipalities.

As part of their ongoing efforts to assess the state of municipalities, the committee is now visiting the City of Johannesburg to evaluate the implementation of audit action plans and address areas identified by the Office of the Auditor General.

In conclusion, the Emfuleni municipality’s governance and financial woes are deeply concerning and have led to a severe decline in service delivery to its residents. Immediate and effective actions are necessary to rectify the financial mismanagement, reduce debt, and improve the municipality’s capacity to deliver essential services. The eyes of the public and stakeholders remain on Emfuleni as they hope for swift and decisive measures to salvage the dire situation and ensure a better future for its citizens.

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