Msukaligwa Municipality’s financial struggles persist despite intervention
A review of the Financial Recovery Plan was recently undertaken by the treasury department in conjunction with financial recovery services.
ERMELO – Msukaligwa Local Municipality (MLM) has continued to grapple with significant financial challenges, even though it has been under provincial intervention since the 2018/19 financial year.
The intervention, initiated by the Mpumalanga Provincial Government under Section 139 of the Constitution and the Municipal Finance Management Act, was designed to stabilise the municipality’s finances and improve service delivery.
A special council meeting held on December 5, attended by delegates from the Mpumalanga Provincial Treasury and MEC for Finance, Bonakele Majuba, shed light on the municipality’s ongoing struggles.
Basie Strauss of the Provincial Treasury presented an update on the Financial Recovery Plan (FRP), revealing that while some progress has been made, issues of financial mismanagement and governance remain unresolved.
Key updates on the Financial Recovery Plan (FRP):
A review of the FRP was recently conducted by the treasury in collaboration with financial recovery services.
The review aimed to update the plan and align it with modern approaches to financial recovery, addressing the municipality’s current challenges.
Extensive consultations with stakeholders, including government departments, municipal leaders, and creditors, were part of the process.
Challenges in revenue collection and Eskom payments:
Electricity supply and revenue collection remain critical issues for MLM. Key figures as well as from recent months, illustrate the severity of these challenges:
- September 2024: Eskom bill – R56.5 million
- October 2024 electricity income – Just over R29 million
- Eskom payment – R10.2 million, leaving a shortfall of R46.2 million
- Accumulated Eskom bill (August to September 2023) – R606.5 million
- Electricity revenue collected – R316.3 million
- Eskom payment made – R305.3 million, covering only 50% of the total owed
- Resulting shortfall – R301.2 million
Rising costs of municipal operations: Over the past five years, the municipality has seen a marked increase in various expenses:
- Salary expenses – Increased by 26%
- Overtime costs – Increased by 7%
- Stand-by and shift allowances – Increased by 44%
- Contracted services – An additional R12 million in costs during this period
These figures underline the ongoing financial strain on Msukaligwa Local Municipality, despite efforts to stabilise its finances.
Highvelder reached out to Mandla Zwane, the municipal spokesperson, with several questions on the matter.
Zwane stated, “The issue will be addressed during a Management Executive Committee meeting scheduled for December 9. Following the meeting, the municipality will provide a response immediately.”
The municipality’s responses will be published in Highvelder’s final edition for the year, next week.
Read the complete article in this week’s Highvelder with more feedback on the meeting as well as what Strauss deems the possible shortcomings that hindered the municipality’s effectiveness in implementing the FRP.
