Government departments are the worst culprits when it comes to servicing their debts which forces various municipalities to borrow money for key service delivery commitments.
The shocking revelations emerged on Wednesday in Durban during the state of municipalities report released by the South African Local Government Association (Salga) KwaZulu-Natal chapter.
Provincial Salga chairperson Thami Ntuli bemoaned the approach taken by various government departments not to pay for services rendered by municipalities, saying it impacts heavily on the financial sustainability of municipalities, especially those in rural areas with a limited revenue base.
Government debt passes R2.5-billion
“Government debt for municipal services in KZN has just passed the R2.5-billion mark for the first time in history,” said Ntuli.
“When government and businesses fail to pay or delay paying for water, lights, rates and refuse removal services they receive, municipalities often have to secure commercial bank loans to ensure that projects do not grind to a halt.”
He explained that the tendency of government departments exposes the local government sector to interest rates hikes and higher costs of servicing loans.
Other issues that emerged was what Ntuli said is the frivolous use of administrators in failing municipalities, but instead of assisting the ailing councils to improve, the situation goes from bad to worse.
He explained: “None of the municipalities under section 139 intervention showed any meaningful improvement in their audit outcomes.
Audit outcomes lauded
“The administrators brought in by provincial government are former administrators who have only two consistent traits about them, their track record is questionable and they are rotated frequently.”
Ntuli took the time to laud the improvement in audit outcomes for some municipalities in the province, saying 43 out of 54 municipalities in KwaZulu-Natal have either an unqualified audit opinion or clean audit, which signals a major improvement.
For the financial year to June, King Cetshwayo district municipality, the City of uMhlathuze, Okhahlamba in the Drakensberg and Umlalazi recorded clean audits.
It was a first in many years for Umlalazi which services the rural town of eShowe and Gingindlovu in northern KwaZulu-Natal.
Salga is an umbrella body representing all municipalities across the country.
