13 July 2018

South Africa: MEC Fikile Xasa On Intervention in the Great Kei Local Municipality

press release

MEC Xasa clarifies Cogta's intervention in Great Kei

Cogta MEC Fikile Xasa has said that the intervention in the Great Kei Local Municipality was done because the municipality has failed to fulfil its executive obligations including non-compliance with the Municipal Finance Management Act (MFMA) in relation to expenditure management.

In terms of the Act, Municipal Managers (MMs) are expected to take all reasonable steps to ensure that all money owing by the municipality be paid within 30 days of receiving the relevant invoice or statements, unless prescribed otherwise for certain categories of expenditure.

In this regard, said MEC Xas,a the Great Kei Local Municipality has failed to pay all money owing to its creditors within 30 days.

He added that the municipality's salaries a month are about R4,3 million and the municipality is only able to collect revenue of about R2 million on average each month. This means that every month there is a shortfall of R2,3 million and it is only on receipt of the Equitable Share transfers that the accumulated shortfall is paid.

"The municipality is unable to fund its operations and currently owes creditors approximately R28 million, of which an amount of R22 million is more than 90 days old that is owed to creditors. The municipality is unable to fund its daily operations," said MEC Xasa.

He added that Great Kei municipality currently owes amongst other creditors the following:

Staff pensions R1, 1 million.

South African Revenue Services R 7 million excluding penalties.

Municipal Standard Chart of Account (MSCOA which is a financial accounting system) implementation to Sebata R5, 8 million.

ESKOM invoices as at March and April 2018 amounted to R1, 2 million.

MEC Xasa added the under the circumstances Cogta through the Provincial Executive Council intervention assumed rresponsibilities as follows:

Corporate Services, including recruitment process, appointment of the MM. The Municipal Council retains the power to make final approval only on the appointment of the MM.

Financial Management and Administration, in particular credit control and debt collection, supply chain management and development of Financial Recovery Plan.

MEC Xasa said so far, the intervention has managed to make available R10 million of the Equitable Share from the National Treasury due to Great Kei to pay for salaries.

"We call on the political principals and officials to work with us to sustain the intervention once we have pulled out. We need to refocus and a mind-set change to realise the common objectives of co-operative governance," said MEC Xasa.

Municipalities are responsible for the provision of basic services such as water, electricity, refuse removal and municipal infrastructure said MEC Xasa.

He said his department will continue to exercise its authority within the regulatory framework to monitoring compliance and the fulfilment of executive authority by all municipalities.

"Our interventions happen when the constitutional and statutory obligations are not fulfilled by municipalities," said MEC Xasa. Ends.

Issued by: Department of Traditional Affairs

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