DA Urgent Motion results in Special Council Sitting to debate the dire State of the City’s Finances
Joint Statement by Cllr Fanyana Nkosi, DA Spokesperson for Finance, and Cllr. Alta de Beer, DA Member for Finance and MPAC in Ekurhuleni
Date: 28 September 2023
Release: Immediate
Type: Press Statement
In the 28 September 2023, Ordinary Council Meeting, the Democratic Alliance (DA) in Ekurhuleni tabled an urgent motion to debate the dire state of the City’s finances under the EFF-led Coalition.
The motion was tabled after the DA expressed concern about the financial state of the City, particularly, its liquidity and its ability to pay its Creditors.
At the End of June 2023, the City’s cash flow was reported at R438 million in the Annual Draft Financial Statement. This represents less than 0,13 days of cash on hand (or 4 hours in cash to provide service delivery).
The City is also sitting with just over R3 billion in outstanding payments owed to Creditors, of which R254 million is owed to Eskom, R174 million owed to Rand Water, R117 million owed to the City’s very own entity, ERWAT, and R2.5 billion is owed to other Outsourced Contractors.
These outstanding payments are putting considerable strain on the City’s ability to function and are now starting to affect service delivery, with infrastructure failure and lack of maintenance becoming the order of the day.
Given the worsening economic growth outlook of the country and the impact of intense loadshedding on revenue collection, the DA requested an urgent debate on the state of the City’s finances with a particular focus on:
· The current collection rate of the City
· The City’s liquidity (Cash on hand) of R438 million
· The City’s debt ratio (Amounts owed in loans, and the amounts owed to suppliers and contractors) of over R3 billion.
The Speaker of Council acknowledged the importance of the DA’s motion and committed to having a Special Council Meeting convened in the next two weeks where the motion will be discussed and debated.
The debate will also include a discussion on the current financial strategies that are in place in the City to ensure credit and expenditure control and improved revenue collection.
The motion also requests that the current financial strategies be reviewed, a turn-around strategy be presented by the next Council Meeting, and a monthly status report be tabled in every Council Meeting to provide an overview of the state finances in the City up until the financial position of the City has improved/ stabilized.
During its tenure, the DA was determined to ensure the long-term financial well-being of the City by implementing amongst other things, numerous budget cuts, cost containment measures, stricter expenditure and credit control measures, a debt rehabilitation programme, and revenue collection and service disconnection programmes to collect outstanding monies.
The DA is concerned that despite the interventions implemented during its tenure to nurse the City’s finances back to health, the City’s finances have continued to deteriorate at a rapid rate.
Given the requirements of the Municipal Finance Management Act of 2003, that the “resources of the municipality are used effectively, efficiently, and economically” and that “irregular and fruitless and wasteful expenditure and other losses be prevented”, it was incumbent on the DA to table an urgent motion to ascertain the financial state of the City, improve its performance, and prevent any further financial losses, and the likelihood of the City being placed under administration.
We look forward to the debate on the financial state of the City and will ensure that concrete solutions are presented in Council to save the City from financial ruin.
Cllr. Fanyana Nkosi
DA Spokesperson for Finance, Ekurhuleni
063 649 7044
Cllr. Alta de Beer
DA Member for Finance and MPAC, Ekurhuleni
082 777 1406
