South Africa: Northwest Treasury Department over Communities in Financial Need


Provincial Finance Ministry hires municipalities to provide feedback on analyzes

The MEC for Finance Motlalepula Rosho, Head of Department, Mr. Ndlela Kunene and Head of the Community Support Program, Ms. Linda Nengovhela, initiated a process of feedback to communities in financial need.

The feedback analysis is the result of a five-year evaluation (2015/2020) of regional municipalities by the regional treasury in accordance with the provisions of §§ 138 and 140 of the Municipal Finance Administration Act to determine whether a municipality has seriously violated its financial obligations.

The feedback analysis to three communities (Dr Ruth Segomotsi Mompati, Naledi and Maquassi Hills) was carried out via a virtual link and was in preparation for the implementation of Chapter 13 of the MFMA to help communities resolve their financial problems.

According to the results of the investigation, thirteen (13) of the state’s 22 municipalities are in financial distress and the provision of services is on the verge of collapse.

“The results of the municipal audit show that more than half of the financial systems as well as the administrative management and financial information of the municipalities are inadequate. These widespread weaknesses leave municipalities vulnerable to financial mismanagement which then leads to a crisis in which no corrective action is taken. Continued Tolerance of chronic and serious financial problems undermines public and investor confidence and also affects the community’s ability to perform its basic functions and provide services to residents and businesses, “says MEC Rosho.

She admitted that despite efforts by the provincial finance ministry to support the municipalities, the support had not produced the desired result. However, the province has seen a small improvement in the financial performance of the communities it receives.

She highlighted that, among other challenges for provincial parishes, a bloated structure / inapplicable organogram, the appointment of incompetent people; Failure to raise and collect own revenue and acceptance of unfunded budget among other things.

She said hiring people who are unskilled and unable to learn has placed communities in intolerable situations.

She added that municipalities need to have competent and qualified managers and people who are up to the task, particularly in the Budget and Tax Office (BTO), which she describes as the bedrock of municipal performance.

The technical team presented the feedback from the five year financial valuation and the picture presented in relation to sections 138 and 140 of the MFMA leaves much to be desired.

“The culture of planning to spend more resources than is available is wrong and cannot be changed by simply adding more resources. Introducing budget discipline and consequence management are critical to creating financially sustainable communities. This is an area that we left unsupervised and left behind. ”Taking responsibility and being afraid of being unpopular as a manager. When you lead, you as a leader have to make unpopular decisions, “Rosho said.

She also criticized the culture of not holding managers who do not fulfill their duties accountable and thus stopping the rotting in the communities.

The meeting was attended by key stakeholders, including municipal political and administrative leadership, SALGA, COGHSTA and the National Treasury, who made recommendations on what needs to be done in the future to help the municipalities fulfill their mandate towards the municipalities.

Mayors are expected to submit the report to their respective councils within 30 days and to submit a council resolution to the provincial treasury.

Given the current status quo, the collective agreed that a financial recovery plan needs to be implemented to improve the financial sustainability of communities in need.

City leadership welcomed the feedback as a true reflection and pledged to work with the provincial treasury and other key stakeholders to implement the recommendations to change the turnaround.

The Executive Council has already decided that municipalities facing a serious financial crisis must intervene in accordance with Section 139 (5) of the RSA Constitution in conjunction with Section 139 MFMA.

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