Masina ignores Ekurhuleni’s dire financial state in SOCA address
by Cllr. Fana Nkosi — DA Shadow MMC for Finance in Ekurhuleni
Date: 25 March 2021
Release: Immediate
Type: Media statement
The City of Ekurhuleni’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. It is no wonder that Executive Mayor, Cllr. Mzwandile Masina, glossed over the precarious financial state of the Metro’s finances during his State of the City Address delivered on Wednesday the 24th of March 2021.
In the latest credit rating by Moodys Rating Agency, 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 poor management practices, along with low liquidity levels and poor budgeting, as being key contributors to the Metro being operationally inefficient. This 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 as a stable benchmark by National Treasury. The current liquidity ratio stands at 1:3, indicating that the City cannot meet its working capital requirements in paying their suppliers on time and ultimately adversely affecting service delivery.
Furthermore, the CoE’s debt 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.
Hopes of Mayor Masina delivering a solid plan to turn the Metro’s finances around were dashed after he barely mentioned the issue in his SOCA.
A DA-led administration will prioritise stabilising the Metro’s finances through increasing collection rates and implementing responsible budgeting processes, as well as implement strict monitoring and financial controls to ensure efficient and targeting spending according to the Metro’s needs in the interests of being more responsive to residents. Furthermore, the Party would implement strict oversight to mitigate against fraud and corruption through an open and transparent tender process. These strategies were glaringly absent during the Mayors speech illustrating the ANC and their coalition partners neglect of the Metro.
*Coalition Partners: African Independent Congress (AIC), Pan Africanist Congress (PAC), Patriotic Alliance (PA) and Independent Ratepayers Association of South Africa (IRASA)
Cllr. Fana Nkosi
DA Deputy Shadow MMC for Finance in Ekurhuleni
