The Gauteng government on Monday gave a clearer picture of the sad state of finances of two leading metros in the province, saying they were in the red by more than R2bn by September.
Ngoato Phadime, the back-to-basics co-ordinator in the provincial department of co-operative governance & traditional affairs, told a SA Local Government Association (Salga) provincial meeting in Tshwane that the Johannesburg metro alone had eroded an opening balance of R409.4m at the beginning of September to a negative balance of R835.5m.
The Ekurhuleni metro, which opened with R1.8bn in its coffers, was in the red by R1.44bn during the same period. This equated to a combined negative balance of R2.276bn for the two metros. Phadime’s revelations confirmed claims made last week by ANC caucus leader Dada Morero that Joburg is in a financial quagmire.
Morero said then that the situation was so bad it could result in the metro struggling to pay salaries for its 32,000 staff in two months’ time if no additional funding was received.
Morero said then that about R3.8bn of the city’s R77.3bn current budget, which came into effect on July 1, was unfunded, adding that plugging this financial gap had been the main focus during his brief stint in the executive office before the high court declared his election unlawful on October 25.
Poor collection
“We only came in for 25 days with the intention to correct and stabilise the city’s finances. If there is no improvement in the next two months, staff salaries won’t be paid,” Morero said, blaming poor revenue collection for the state of affairs.
Phadime told Business Day on the sidelines of the Salga Gauteng provincial members’ assembly that the state of finances in Joburg and Ekurhuleni was concerning and was a result of “over-commitments and slow revenue collection”. “Those are the two major issues,” Phadime said.
In his presentation, he said that by September Gauteng provincial government departments owed the province’s 11 municipalities a total of R608.3m for rates and services. Of that amount, Joburg was owed R287.3m, Ekurhuleni R97.4m and Tshwane R144.1m.
Gauteng metros have been rocked by political instability after local government elections in 2016 did not produce a clear winner across the province.
Salga Gauteng chair Jongizizwe Dlabathi told Business Day: “Salga Gauteng is generally concerned about the cash-flow picture that [poses a] serious risk on the sustainability of the municipalities. As part of municipal support programme, Salga will engage on a bilateral around revenue enhancement initiatives; cash-flow management practices; and the Asisho campaign that is amongst others aimed at promoting the payment for services, just to mention few. We also hope that the bilateral will dissect possible root causes, which will inform other possible interventions,” Dlabathi said.
Joburg finance MMC Julie Suddaby disputed the veracity
of the figures presented at the Salga meeting.
“I have two problems with this report published at Salga. First, the Section 71 report for September, that details the cash in the bank at that time cannot yet be made public as it has not yet served in council — Salga should not have been presented with any information.”
Second, the details as displayed are totally incorrect. But as point 1 remains valid, I cannot discuss the figures with you until the report is served in council. I am hoping for this report to serve in the ordinary council meeting of 23/24 November,” Suddaby said.
DA mayor Mpho Phalatse said at a media briefing last Thursday: “While finances are not in the best position, we are taking active steps to rectify this.” She dismissed anxiety about imminent nonpayment of salaries as a “fabrication”.
Blame
The metro blamed the previous ANC-led administration for the financial woes, but Suddaby admitted that the city’s finances are subject to “cash-flow challenges and that between July 2021 and December 2021, cash out of the city’s coffers [totalled] R2.7bn. [That’s] R2.7bn gone. Between January 2022 to June 2022, R100m dissipated out of the bank accounts of the metro. Cash flow at the moment is an issue.”
She said the city would not be able to provide services “if the R2.7bn cannot be covered in some way. The detail of that impact will be delivered in the state of finances report to be delivered in the next seven days or so”.
The City of Joburg has a budget of R77.3bn for the 2022/ 2023 financial year, Ekurhuleni has R51.2bn and Tshwane R44.9bn.
Erstwhile Ekurhuleni mayor Mzwandile Masina could not be reached for comment.
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