The Makana Municipality in South Africa is facing a severe financial crisis, with a warning that it may collapse within three years if it continues to underspend on repairs and maintenance. According to finance expert Owen Skae, the municipality currently spends only 22 cents of every R100 on repairs and maintenance, which is woefully inadequate. Skae, who teaches finance, made these remarks at a Democratic Alliance (DA) stakeholder event held on 20 October.
Skae's analysis, based on public information including Auditor-General reports, reveals that the municipality collects only R58 of every R100 it bills, which is significantly lower than the required 80% to break even and 95% to meet the national norm. He also noted that the municipality has about three weeks of cash and can take up to 16 months to pay a supplier. The municipality's debt to creditors is estimated to be around R54 000 for each of its roughly 24 000 households.
The DA has proposed a 10-step recovery plan to address the municipality's financial woes, which includes accountability, financial discipline, infrastructure, and service delivery. Mayoral candidate Luvuyo Sizani presented the plan, which aims to turn the municipality around within three to five years. Sizani, who previously served as the municipality's revenue manager, attributed the low collection rate to residents not paying for services they do not see.
Sizani also highlighted that 1 650 of 24 170 households are on the indigent register and proposed changing the criteria to allow more people to qualify. He also promised to establish a locally-based security company to protect substations and ensure a visible mayor. The DA's recovery plan also involves creating jobs in rural areas by working with local farmers.
Residents who attended the event expressed their concerns about the municipality's service delivery, with issues such as water, sanitation, streetlights, potholes, and jobs being top priorities. Ward 13 candidate Enathi Ngesi noted that young people without jobs often turn to alcohol and drugs, while Ward 2 candidate Sivuyile Twatwa emphasized the need for streetlights, jobs for young people, and care for elderly residents.
The DA's constituency leader, Jane Cowley, stated that the event was the party's last stakeholder event before the local government elections on 4 November. She thanked business donors, candidates, and activists for their support. The party plans to win the elections outright and has ruled out planning for coalitions.
Skae, who conducted the analysis in his own time as a civic duty, emphasized the need for voters to be educated about financial terms such as irregular expenditure and disclaimer audits. He warned that if spending on repairs and maintenance remains low, the municipality's water, sewage, and electricity systems will fail. Sizani told Grocott's Mail that the event took two months to plan and that the party has visited farms around the town as part of its campaign.
Key points
- The Makana Municipality may collapse within three years if it doesn't increase spending on repairs and maintenance.
- The municipality's low collection rate and irregular expenditure are major contributors to its financial crisis.
- The DA has proposed a 10-step recovery plan to address the municipality's financial woes and improve service delivery.
