Ekurhuleni Housing Company bleeding the City dry

by Cllr. Mabekenyane Thamahane — DA Shadow MMC for Human Settlements in Ekurhuleni

Date: 30 April 2021

Release: Immediate

Type: Media Statement

In October 2020, the Democratic Alliance (DA) in Ekurhuleni expressed its concern about the financial sustainability of the Ekurhuleni Housing Company (EHC) after the entity reported poor performance in their quarterly financial results.

In March 2021, the City of Ekurhuleni (CoE) submitted to Council, the EHC Annual Report, inclusive of the Auditor General’s (AG) Report for the 2019/2020 Financial Year, and a worrying performance was, again, reported for this entity. The entity reflected material losses of over R1-million, subsequently being written off as irrecoverable debt. Furthermore, the entity had fallen well short of meeting its targets leading the AG to grant an unqualified, and not clean, audit opinion.

On Thursday, 29 April 2021, the ANC and its Coalition Partners* reported to Council the Unaudited Financial and Performance Results of EHC for the third Quarter of the 2020/2021 Financial Year and the entity’s pattern of poor performance is extremely evident, particularly its collection rate.

The collection rate for the third Quarter was only 51%, instead of the targeted 95%. Thus, indicating that 44% of the target was not achieved. The collection rate has also decreased by 6% from the second Quarter. While the impact of Covid-19 on the collection rate is noted, it should not be used as an excuse for poor performance, as the EHC has been a dysfunctional and failing enterprise for years.

There also seems to be no plan from the ANC-led Coalition City of Ekurhuleni (CoE), as there has been no short-term stabilisation strategy implemented. The Metro has also failed to implement the Audit Committee’s recommendation that a revenue optimisation plan be urgently implemented to stabilise the operational financial position of the EHC.

The financial reports of the EHC have been painting a bleak picture, with an overall regression in audit outcomes, unauthorised expenditure, irregular expenditure and fruitless and wasteful expenditure. This is a direct result of lack of accountability and internal oversight by the ANC and its Coalition partners*.

It is completely irrational why the CoE insists on flogging a dead horse in the form of dysfunctional and failing enterprises such as the Brakpan Bus Company (BBC), Ekurhuleni Water Care Company (ERWAT), and the EHC. These enterprises yield very little or no returns for the City. Instead, the City’s purse keeps bleeding at the detriment of the residents of Ekurhuleni.

The residents of Ekurhuleni deserve their taxes to be used appropriately for service delivery, and not wasted on entities that do nothing but drain the City’s dwindling fiscus.

A DA-run Ekurhuleni will urgently implement a revenue optimisation plan to stabilise the operational financial position of the EHC. In addition, the DA will reduce wasteful expenditure by implementing the recommendations of the Auditor-General to ensure that officials are held accountable.

*Coalition Partners: African Independent Congress (AIC), Pan Africanist Congress (PAC), Patriotic Alliance (PA) and Independent Ratepayers Association of South Africa (IRASA)

Cllr. Mabekenyane Thamahane

DA Shadow MMC for Human Settlements in Ekurhuleni