City of Windhoek CEO Moses Matyayi has assured the City's stakeholders, partners, and the residents that for now and in the foreseeable future, the capital city is "a going concern". This is an accounting term describing a business that is expected to operate for the foreseeable future, typically at least for the next 12 months. The term assumes that entity in question can generate sufficient income to meet its obligations and is financially stable to continue its operations indefinitely until evidence suggests otherwise.
"We are actively crafting a financial recovery plan aimed at securing long-term financial sustainability. Our focus is not only on developing a robust strategy but also on ensuring its effective execution to achieve our goals in line with the strategic plan 2022- 2027," the CEO stated.
Matyayi was responding to the Auditor General (AG) Junias Kandjeke's conclusion of a qualified audit opinion for the 2020/2021 financial audit report that was recently tabled in Parliament. In the report, Kandjeke cautioned that the City does not have a solid plan on how it is going to turn around commercial insolvency and its current deficit-making position in the foreseeable future. The report was compiled in September 2023.
"The financial statements present fairly, in all material respects, the financial position of the Municipality of Windhoek as at 30 June 2021, and its financial performance and its cash flows for the year then ended," Kandjeke stated in the City's audit report, justifying the qualified audit opinion.
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A qualified audit opinion is expressed when the auditor either obtains sufficient appropriate audit evidence, and concludes that misstatements, individually or in the aggregate, are material but not pervasive to the financial statements.
The City of Windhoek municipality accumulated a cumulative loss of N$3.2 billion between 2012 and 2022, a N$300 million wage bill, a N$100 million annual employee vehicle scheme, N$70 million losses on bus services, and a lifelong post-retirement medical aid scheme for which it spends N$27 million a year. The latter amount has been described as a growing liability, as it depends on the number of employees who go on retirement.
Meanwhile, the CEO continued that this is the first time in 12 years that the City received a qualified audit opinion. Therefore, he added, moving from a disclaimer audit opinion to a qualified audit opinion represents significant progress in financial reporting.
"These results are an indication that the organisation has been occupied with addressing previous operational uncertainties and financial deficiencies, which has now resulted in improved transparency and reliability of the financial statements to date," Matyayi explained.
According to him, the City has made significant strides over the last two financial years, which include effectively containing expenditure. He placed specific emphasis on employment cost and that no salary increases were granted in the last four years since 2020, despite the economic hardship experienced over this period.
As a result of these efforts, Matyayi noted that current liquidity has improved further when excluding government loans.
