In financial distress

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Making finances work  Picture: SUPPLIED
Making finances work Picture: SUPPLIED

THE Enoch Mgijima Municipality’s quarterly budget monitoring report shows a critical financial position, particularly in terms of cash flow.
The report was tabled to council at a special meeting on Friday to present the financial status of the municipality for the quarter ending September 30. The newly merged municipality includes the local government structures of the former Lukhanji, Tsolwana and Inkwanca municipalities.
Chief Financial Officer Nomthandazo Ntshanga said the municipality had collected less revenue than expected. “The overall budget shows that there’s a capital expenditure of R18.03-million for the quarter ending September 30. The operating income is below the service delivery and budget implementation plan (SDBIP) by 26%, which means the municipality has collected less revenue than expected, and the operating expenditure is 27% below the (SDBIP). If the trend continues, capital expenditure will reach only R88.2-million, operating expenditure will be R637-million while only R637.2-million will be collected by June 2017.”
She said the report did not include financial details from the former Tsolwana and Inkwanca municipalities.
“It is worth mentioning that actual revenue figures do not include Tsolwana and Inkwanca due to the late processing of transactions. Those two entities were unable to submit financial statements on time,” she said, adding that the two-month strike by the South African Municipal Workers’ Union (Samwu) had had a negative impact on revenue collection.
“Overall, the operating budget as at the end of the first quarter indicates that we have collected R47.8-million less than what was planned for the period under review, 26% under collection when compared with the SDBIP. The under-collection is due to the strike that started at the beginning of July and continued into the month of August. This has impacted negatively on the municipality’s capacity to collect revenue,” she said.
The problem would hinder the delivery of services to the people of the area.
“The total planned collection from property rates and services as per SDBIP for the current month, shows that revenue from property rates, electricity and refuse tariffs have been under-collected. The municipality seriously has to start collecting all billed revenues and area debts. The low revenue collection will be a limiting factor in the municipality’s quest to deliver basic services to the community if more drastic measures are not put in place to remedy the situation,” Ntshanga said.
The report also showed that the under-collection was from all the municipality’s revenue sources. “The municipality planned to collect R18.5-million from property rates but collected only R11.4-million, while revenue from electricity tariff planned collection was R57.9-million but only R39.5-million was collected by the end of September 2016. This has resulted in the municipality overall under-collecting by 26% when compared with the planned SDBIP. The revenue section has to devise strategies to improve its revenue collection if the 2016-17 budget as approved by council will be implemented. It must be noted, though, that the above revenue collected does not include revenue received from Molteno and Tarkastad.”
Ntshanga said the municipality was working towards addressing the challenge.
“A revenue enhancement strategy has been developed and will be presented to committees of council. A debt collection service provider will be appointed to assist the municipality in the collection of outstanding debts.”

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