The DA in Mpumalanga has discovered that some municipalities in the province are spending nearly 60% of their annual budgets on employee related costs, councillor allowance, and paying for contracted services – compromising service delivery in the process.
According to Circular 71 of the Municipal Finance Management Act (MFMA) which sets out a range of uniform financial norms and ratios for municipal entities, municipalities should spend within a norm of 25%-40% of its total operating expenditure on employee related costs and councillor allowances. However, despite the acceptable norm being provided by the above Circular, Section 131 of MFMA report notes that during the 2020/21 financial year:
- Ehlanzeni District Municipality spent 59% of its operating expenditure on employee related and councillor allowances.
- Gert Sibande District Municipality spent 58% of its operating expenditure on employee related costs and councillor allowances.
- And Nkomazi Local Municipality spent 53% of its operating expenditure on employee related costs and councillor allowances.
For several years, most of our municipalities have struggled with huge infrastructure backlogs, high unemployment rates and lack of water. Using Nkomazi local municipality as an example, the DA cannot understand why this municipality would spend over 50% of its operating expenditure on employee costs and councillor allowances whilst service delivery takes a backseat.
When it comes to the use of consultants, MFMA Circular 71 provides a norm of 2% – 5%. However, despite which, the Section 131 MFMA report notes that the average spending by all local municipalities in Mpumalanga for contracted services made up 11% of the total expenditure of R9 117 billion for 2020/21.
In addition to the above and as per the above-mentioned report, municipalities in the province spent R2.5 billion on contracted services. The following municipalities are well over the accepted norm:
- Nkomazi- 14%
- Bushbuckridge- 15%
- City of Mbombela- 17%
- Chief Albert Luthuli- 19%
- And Dr JS Moroka- 25%
In a bid to increase service delivery output of our municipalities in the province, the DA has written to CoGTA MEC, Mandla Msibi, requesting that he ensures that municipalities stick to the prescribes Circular 71 of the MFMA and reduce their spending on employee related costs, councillor allowances, and spending on contracted services.