Ekurhuleni Housing Company not sustainable
by Cllr. Victor Lukhele — DA PR Councillor and Member of the Human Settlements Oversight Committee in Ekurhuleni
Date: 01 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.
On Wednesday, 31 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 has, again, been reported for this entity.
The EHC has been a dysfunctional and failing enterprise for years now, and the AG report can attest to this. The entity’s state of affairs has not improved, and an array of challenges have been identified by the AG. The customer debtors balance has been significantly impaired. The allowance for impairment was R42 435 008, and this is money that cannot be recovered. The entity incurred material losses of R1 189 864, as a result of a write-off of irrecoverable debt.
Furthermore, the entity failed to achieve its target as set out in the Metro wide Service Delivery and Budget Implementation Plan (SDBIP). The EHC achieved 48% against the planned 95% target. It is evident that the EHC’s problems are mounting through the perennial operational and financial underperformance, putting into question its sustainability.
Concerningly, the EHC’s main source of revenue is derived from rental income, which is in drastic decline as indicated in the Report. There are constant revenue collection issues in the EHC. The poor rate of rental income collection is likely to be further exacerbated by the lockdown associated with the Covid-19 pandemic, which adversely affected resident’s ability to honour their rental agreements. Yet, there seems to be no plan from the ANC and its coalition partners*, as there has been no short-term stabilisation strategy implemented.
The DA calls on ANC appointed Executive Mayor, Cllr. Mzwandile Masina, to take urgent and definitive steps to get the EHC back on track before it is added to the pile of failed entities, which includes the Brakpan Bus Company.
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 fully capacitate the entity for it to sustain itself and generate its own revenue.
*Coalition Partners: African Independent Congress (AIC), Pan Africanist Congress (PAC), Patriotic Alliance (PA) and Independent Ratepayers Association of South Africa (IRASA)
Media Enquiries
Cllr. Victor Lukhele
DA PR Councillor and Member of the Human Settlements Oversight Committee in Ekurhuleni
