Finance — The Financial Status of the City
By Fanyana Nkosi- DA Shadow MMC for Finance in Ekurhuleni
Date: 24 March 2021
Release: Immediate
The COE’s financial health under the leadership of the ANC and their Coalition Partners* has deteriorated to an extent that service delivery has been severely compromised.
In the latest credit rating by Moody’s, the CoE has been downgraded from investment grade to junk status, due to poor budget management practices indicated in every financial quarterly report since the beginning of the political term in 2016. Moody’s cites these poor management practices, along with low liquidity levels and poor budgeting, meaning that the Metro remains operationally inefficient, despite Masina continuously bragging about the relatively better state that the CoE finds itself in when compared to other Metros.
As indicated, the City’s liquidity position as reported in the Second Quarter of the 2019/2020 Financial Year, is woefully inadequate. The reported cash reserves of R1.5-billion equating to 13 days of cash on hand is unsatisfactory when compared to the 30 days considered stable by National Treasury. The current liquidity ratio stands at 1:3, indicating that the City cannot meet its capital requirements in paying their suppliers on time and ultimately adversely affecting service delivery.
Furthermore, the CoE’s revenue collection rate stands at 89,8%, meaning that it has an R18-billion shortfall on charges on rates and services from residents, and thereby severely compromising its ability to carry out its mandated operational functions.
A DA-led Ekurhuleni will:
· Stabilise the Metro’s finances by increasing collection rates and implementing responsible budgeting processes,
· Implement strict monitoring and financial controls to ensure an efficient and targeting spending according to the Metro’s needs in the interests of being more responsive to resident’s needs,
· Implement strict oversight to mitigate against fraud and corruption through an open and transparent tender process.
*Coalition Partners: African Independent Congress (AIC), Pan Africanist Congress (PAC), Patriotic Alliance (PA) and Independent Ratepayers Association of South Africa (IRASA)
For a video on the state of Ekurhuleni’s finances, click the link below:
Cllr Fanyana Nkosi
DA Shadow MMC for Finance in Ekurhuleni
