Mogale responds to damaging DA claims

The Mogale City Local Municipality’s (MCLM) stance of refraining from a public cat and dog fight with the local Democratic Alliance (DA) remains.

“This, regardless of the DA getting some level of support from media, such as the News, who repeatedly in more than one article re-publicise how our residents will foot the bill for the R100 million overdraft application approved by our municipal council,” a communique from MCLM’s communications department reads.

Mogale is responding to the claims made by the local DA after an article published by the News earlier in June stated that 38 ANC and one IFP councillor voted in favour of the R100 million overdraft facility, while the DA and Freedom Front Plus opposed it, and the Economic Freedom Fighters abstained.

“Since the above is not factual, not providing a response under a cloud of ongoing injurious reporting and considering that the Mogale City administration is accountable to the people, the municipality emphatically wishes to respond to the misleading claims and reporting.”Firstly, when dealing with this matter it’s critical to put issues into context. Hit by widespread power shortages and an economy in recession, South Africa’s economy shrunk by 1,4 per cent in the last quarter of 2019.

This meant declining economic growth which has further been impacted on by the Covid-19 pandemic, where now we are seeing either company scaling down productions, new mergers and diversification in business for economic survival, continued high unemployment or a host of other new challenges that the country and its government are faced with. On the local front, different spheres of government and more so municipalities that also depend on revenue collection have likewise been affected by these macro-environmental trends.

“Consequently, the municipality renewed an overdraft facility for the financial year 2020/ 2021 to the value of R100 million to bridge the current cash flow gap within the Municipality. As alluded to above this is informed by various factors including slow revenue collection and the current effects of the Covid-19 pandemic where not only big businesses were affected to pay for municipal rates and services, but also residents, tenants renting and others alike.”

Under such circumstances, the Municipality is permitted to take such steps in line with local government financial regulations and in this case section 45 of the Municipal Finance Management Act 56 of 2003, which states that: “A municipality may incur short-term debt only in accordance with and subject to the provisions of this Act and only when necessary to bridge shortfalls within a financial year during which the debt is incurred, in expectation of specific and realistic anticipated income to be received within that financial year; or Capital needs within a financial year, to be repaid from specific funds to be received from enforceable allocations or long-term debt commitments”