Municipality cannot provide basic services, pays managers huge travel allowances
The local municipality of Amahlathi has a history of financial mismanagement.
The local municipality of Eastern Cape Amahlathi, broke, is struggling to provide basic services or pay its employees.
Stutterheim, the administrative center of the local municipality of Amahlathi in the Eastern Cape, is the seat of Stutterheim, the administrative center of the local municipality of Amahlathi.
In January, the municipality was unable to pay its civil servants. Municipal spokesperson Anathi Nyoka said Wednesday that all municipal employee salaries will be paid by Friday.
Residents have been protesting municipal failures for years.
In 2018, young people angered by unemployment and nepotism took to the streets and burned down municipal offices, a local clinic and the new Mlungisi shopping mall.
“We are in crisis here,” says Thembikaya Wapi, organizer of the Amahlathi crisis committee created following the 2018 protests.
Wapi said he was sad to see the municipality slowly collapsing. He said that after the 2018 protests, the municipality was placed under administration “but nothing has changed”.
In 2020, young people were again protesting against lack of basic services, sex work scandals and unemployment, he said.
“Prime Minister Oscar Mabuyane was here and GroundUp witnessed you, you reported his visit [in February 2020]but he did nothing.
In the township of Xolorha, outside Stutterheim, the municipality fails to collect garbage, so residents have taken it upon themselves to burn the garbage.
Resident Sinovuyo Velebesi said he had not received any garbage bags from the municipality for the past five years. “Personally, I used to go there to ask for the trash bags, but I’ve stopped now because they keep telling me they don’t have them,” Velebesi said.
The municipality’s financial difficulties date back to 2014. Municipal spokesperson Anathi Nyoka said that was when municipal allowances were introduced, including the granting of travel allowances to executives. subordinates worth up to 30% of their salary, costing the municipality R4 million a year. .
“There appears to have been poor judgment on the part of the management at the time in arriving at the decision to bring them in. This is also supported by the fact that all of these managers are based in the office and therefore a travel allowance does not serves them no purpose other than milking the municipality out of its scarce resources,” Nyoka said.
Between 2014 and 2016, the municipality irregularly purchased factory equipment for road construction – known as the yellow fleet contract – for the amount of R92 million, but the promised equipment did not materialize. never materialized.
A lawsuit to recover the funds from those responsible has been filed.
Then, in the 2016/17 financial year, Nyoka said the municipality’s fair share, money received from the national and provincial government, had been reduced due to a demarcation process that had reduced the number of quarters from 20 to 15.
City manager Ivy Sikhulu-Nqwena said the fair share was R124 million in 2016 and now, six years later, is R116 million. If the 2016 demarcation decision had not taken place, the revenue from their fair share would be around R162 million.
Nyoka said that compounding the decline in income, the ANC-led council took the decision in the 2016/17 financial year to agree to a ‘normalization’ of wages, which saw some staff pay double , or even triple.
When we asked further questions, Sikhulu-Nqwena said the board was not originally in favor of the decision. She said ‘undue, violent and reckless pressure’ had been exerted by the unions, which led to the council giving in to the ‘horrendous demands’.
During the council meeting where the decision on the standardization of wages was to be taken, trade unionists embarked on an “illegal protest action” provoking “a stampede” which resulted in the injury of a municipal director .
“It marked the demise of financial stability for the municipality, as is evident now,” she said.
The municipality applied to the High Court to overturn these decisions.
HISTORY OF BAD FINANCIAL MANAGEMENT
Financial data published on Municipal Money, an online initiative of the National Treasury, reveals that Amahlathi has a history of financial mismanagement.
The amount of money held in the municipality’s bank account, its cash balance, has increased from R100 million in 2016 to just over R10 million in 2019.
In the 2018/19 financial year (the latest available on the site), Amahlathi exceeded its operating budget by 31%. The operating budget is used to pay day-to-day operating expenses, such as salaries, and an overrun of 15% is considered high risk.
At the same time, the capital budget, which is used to finance new infrastructure such as housing, sewers and water reticulation, was underspent by 21%. The National Treasury notes that the 15% underspending of the investment budget is “a clear warning sign”. To compound the impact on service delivery, nothing was spent on repairs and maintenance.
And although in 2018/19 the municipality only had enough cash to cover a week of running costs, R62.3m (32% of its budget) was used for wasteful and wasteful spending.
According to the Auditor General’s report, Amahlathi’s irregular, wasteful, wasteful and unauthorized expenditure during the year 2019/2020 amounted to R67.3 million. Of this amount, R4.3 million was interest paid on invoices not paid within 30 days.
ROAD TO RECOVERY
While the municipality takes legal action to recover the money from the yellow fleet contract and seeks to have the decision to standardize wages and allowances overturned, it is also negotiating with the union.
Amatole regional secretary of the South African Municipal Workers Union (SAMWU), Luthando Juju, said meetings with the municipality had already taken place and more were planned.
Juju said SAMWU was aware that travel allowances paid to office managers were among the reasons the municipality had no money.
“The employer will file all issues that cause these financial problems in this municipality. If that means we have to talk to our members to let the employer reduce that travel allowance, we will,” he said.
This article first appeared on GroundUp.