A municipal funding agreement with local contractors after protests at municipal buildings has set a precarious precedent in KwaDukuza says the opposition.

Some opposition councillors raised concerns about the municipality being held to ransom by the companies they have supported and appointing contractors that do not have the capacity to fulfil service delivery obligations.

The KwaDukuza Local Municipality (KDM) has promoted previously disadvantaged contractors for municipal projects but has run into problems when the contractors could not afford materials for project completion.

Contractors have staged numerous protests, demanding help from KDM to solve the problem.

In response, municipal manager Nhlanhla Mdakane proposed a tripartite agreement whereby KDM would pay material suppliers on behalf of the contractors.

This would help ease cashflow problems and prevent the contractors from having to turn to loan sharks for funding, said Mdakane.

“South Africa has long been a country of two faces. The privileged are those who are given priority by the banks,” he said, framing it as a moral issue that warranted municipal action.

“The aim of this item is to deal with these objective realities in our country.”

All payments to suppliers would come out of the original budget allocated for projects, he said.

Several councillors from the African National Congress and Independent Alliance voiced strong support for the item and praised it as ‘pro-poor’.

The Democratic Alliance (DA) and ActionSA had concerns, however.

Ward 22 DA councillor Privi Makhan referenced a complaint from a contractor who had submitted an invoice in June but had still not been paid.

This showed a lack of internal capacity within KDM to honour the proposed agreement and enforce proper oversight, she said.

“This has set quite a precarious precedent in that going forward, there’s going to be an expectation that council becomes a funding entity for emerging contractors,” said Makhan.

“We want local contractors to grow, but it cannot be done by holding council to ransom. Due diligence must first be done to ensure contractors have the adequate financial muscle to fulfil contractual work.”

ActionSA caucus leader, Nel Sewraj, had similar concerns.

“As the item is presented, much needs to be clarified about our responsibility and legal obligations as council. This matter needs to be workshopped,” he said.

“Generally, we should know that contractors have the capacity before a project is awarded which, if not, talks to a level of incompetence. We are toying with service delivery here, without even mentioning the added administrative burden the agreement would bring.”