Mpumalanga municipalities, a mere extension of the social grant program

Issued by Trudie Grovè-Morgan: MPL – DA Spokesperson on CoGTA
25 May 2023 in Press Releases

The DA is concerned that taxpayers are again forced to bail out dysfunctional municipalities, like the ANC-led municipalities in Mpumalanga who have dismally been failing for years to service their electricity and water debts. 

Despite numerous government interventions, including financial recovery and administration, within the last 6-years, Mpumalanga municipalities’ Eskom debt increased dramatically from R990 million in 2016 to R17.2 billion in 2022. 

In addition to the above, municipalities in the province owed both Rand Water R1 billion and the Department of Water and Sanitation R2.3 billion for water provision. 

Despite their struggle to pay creditors, Mpumalanga municipalities are currently spending nearly 60% of their annual budgets on employee related costs, councillor allowance, and paying for contracted services – compromising their creditors and 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 their total operating expenditure on employee-related costs and councillor allowances, not more. 

This is a clear indication that lack of skills, corruption and cadre deployment are the main reasons why the ANC-led municipalities in Mpumalanga are failing to generate revenue from debt collection for services rendered and for failing to pay their creditors. 

As of the end of 2022, South African municipalities owe Eskom R56.3 billion – a figure which is increasing daily, and Mpumalanga municipalities are unfortunately contributing by R17.2 billion to that figure. 

Last month, Deputy President Paul Mashatile told the National Council of Provinces (NCOP) that the government has introduced a debt relief package for Eskom to help municipalities that are struggling to pay the utility company. He also mentioned that they proposed that Eskom writes off some of the municipal debts under strict conditions with guidance from the National Treasury. 

The DA is gravely concerned that ANC-led municipalities which are supposed to be self-sustainable through revenue generating, are becoming an extension of the social grant program, more like Social Grant Beneficiaries. This is putting more strain on the 5 million South African taxpayers who are already supporting nearly 20 million social grant beneficiaries. 

Provinces like Mpumalanga need to stop cadre deployment in municipalities and employ qualified people who will strengthen billing systems and enforce proper implementation of revenue collection policies and legislation, whilst encouraging a culture of paying for services rendered to their customers.