Businesses that trade and render services to the Thaba Chweu Local Municipality are being strangled to death by the inability of the municipality to pay for services rendered. The Select Committee on Cooperative Governance and Traditional Affairs, Water and Sanitation was informed during its oversight visit to the municipality that cash flow remains a huge challenge that impact progress in improving the fortunes of the municipality.

“It is completely unacceptable that it takes the municipality an average of 797 days to pay its creditors. This trend will kill the ability of small businesses to operate, leading to some of them closing down, and an increase in the unemployment rate in the municipality,” said Mr China Dodovu, the Chairperson of the committee.

The delayed payment of creditors is a direct breach of Section 38(1)(f) of the Public Finance Management Act (PFMA) which requires accounting officers to settle all contractual obligations and pay all money owing, including intergovernmental claims, within the prescribed or agreed period. Furthermore, the National Treasury’s Regulation 8.2.3 provides that “unless determined otherwise in a contract or other agreement, all payments due to creditors must be settled within 30 days from receipt of an invoice”.

The committee also raised serious concerns regarding the escalating debt to Eskom by the municipality. The Eskom debt is currently R807 million and rising. The municipality informed the committee that payments towards this debt make negligible difference due to the “high” interest rates levied by Eskom on this debt. The consequence of this debt is the intermittent disruption of electricity to the area which has a negative impact, especially to small businesses that are unable to operate generators.

The state of roads into the town was also raised as a serious concern by the committee. “The state of R36, with potholes big enough to be mini-dams, will impact the municipality’s ability to attract investment into the town, which will lead to increased job opportunities,” Mr Dodovu said.

The committee also called for the Mpumalanga Provincial Government to assist the municipality with infrastructure development, especially social infrastructure. The committee concluded that the R43.8 million Municipal Infrastructure Grant is not adequate to make a meaningful dent in the infrastructure challenges faced by the municipality.

Despite these challenges, the committee welcomes the announcement and assurances that there has been a stabilisation of both political and administrative leadership that will hopefully drive the initiative to improve the fortunes of the municipality. The committee has urged the provincial executive, together with the South African Local Government Association, to institutionalise support to the municipality as obliged by section 154 of the Constitution.

The committee will expect periodic reports on the work being done to improve the functioning of the municipality.

By Malatswa Molepo  
17 September 2020