Despite a sixty million debt cloud Mbhashe Local Municipality receives good ratings on key performance areas
An over R64 million cloud of debt hangs over the Mbhashe Local Municipality in the Eastern Cape. A large portion of the debt comes from residents and government departments. Despite this, the municipality received excellent key performance area ratings.
This is according to a report on the municipality’s financial results for the third quarter of the previous financial year, which started from January 2023 to March 2024. The report was tabled last week in the Mbhashe Municipality Council meeting, along with the institutional performance report and others.
“The balance of the outstanding debtors as of March 2024 is R64 914 228 and a substantial portion of this debt relates to residents and government departments. Government departments are engaged through the arrears debt sessions organised by the provincial treasury,” read the report.
The report also outlined that the billing of schools and clinics by the municipality to the provincial government in the previous financial year contributed to the increased debt, while also pointing out that historical debt was taking longer to collect. However, the municipality is making use of a debt collector to assist with collection and credit card policies.
The municipality is also driving a debt incentive scheme to motivate customers to pay; however, the effect will be reflected in another upcoming report.
The municipality added that it received R6 million from the Provincial Department of Public Works.
In terms of the key performance indicators of the Service Delivery and Budget Implementation Plan (SDBIP), the municipality obtained 91% in transformation and organisational development. Meanwhile, it scored 72% in service delivery and infrastructure and 100% in local economic development and financial viability, while good governance and public participation were rated at 97%.
With energy efficiency strategies that are aimed at reducing the load on the grid through strategies, such as retrofits of street lights and buildings, the municipality received R5 million, with its expenditure already reported to be at 41% towards the end of the last quarter.
Retrofits of street lights and buildings is one of the initiatives conducted by the municipality, where the lights use solar energy instead of energy from the grid to become more efficient.
Another element that stood out in the report was the unspent R403 597 budget allocation from previous years for libraries.
On the overall performance of the municipality, the chief financial officer, Vuyo Jam Jam, reported that the ratio at the end of the quarter showed a healthy financial status for the municipality. He said the ratio was calculated using current assets and financial liabilities.
“The municipality is sustainable, and there are no other factors that we have identified that point to the existence of a risk that would negatively affect the municipality. We prepare realistic cash flow projections monthly, which helps us monitor the inflow and outflow of cash. This has proved to be effective in controlling expenditure and improving working capital,” Jam Jam said.
Jam Jam added that the actual capital expenditure to the total budget summed up to 93%, which is above the norm of 10-20%. This means that the municipality is investing and spending towards its capital requirements, he added.
