MEC tables the new financial recovery plan for Govan Mbeki Municipality

Govan Mbeki Municipality’s (GMM) debt to Eskom has ballooned from R1,4b in 2019 to more than R4,5b in 2024.

This escalation in debt has again brought the provincial government to GMM’s doorstep with plans to curb wasteful expenditure and improve its revenue collection.

Mpumalanga MEC of Finance Bonakele Majuba tabled a reviewed financial recovery plan (FRP) for the GMM during an extraordinary council meeting in the Secunda council chambers on February 6.

The national and provincial treasury initially intervened with a mandatory FRP in 2019 to help the municipality recover from its massive financial problem.

Majuba said they reviewed this plan to enhance the municipality’s financial viability and to support sustainable delivery of services to the community.

The MEC said although there is a positive shift in many aspects of the previous plan, there is still work to be done.

“To ensure we achieve the objectives of the amended plan, we will enhance our reporting mechanism and establish an integrated oversight at the executive level, using the district development model as the anchor of public accounting on the plan,” said Majuba.

He is pleased the municipality has improved with capital budget spending, reaching over 90%, but wants the debt collection efforts to improve. The current rate of 70% is not good enough.

“I urge councillors to support the administration in enforcing credit control measures and to ensure the registering of residents who meet the requirements of indigent policies.

“Together, we can continue to build on these improvements and ensure a stronger financial future for GMM,” said Majuba.

Thankful for the provincial intervention, the executive mayor, Nhlakanipho Zuma, received the reviewed FRP from the MEC.

This intervention comes after the Auditor-General (AG) again issued a qualified audit opinion on GMM’s financial affairs. This means the AG could not fully verify the accuracy of the financial statements because of a lack of evidence or specific accounting practices.

The AG’s office presented this audit outcome during an ordinary council meeting in the Secunda council chambers on January 30.

Irregular wasteful expenditure and not opening cases against corrupt officials were the AG findings, causing GMM to receive its fourth consecutive qualified audit opinion.

Other findings were the incorrect calculation of paying suppliers because of unexplained material differences. The AG could not determine the full extent of the errors.

The AG also said his office could not determine if any adjustments were necessary to the net cash flow from investing activities stated at R159m.

The municipality’s purchase of property, plants and equipment was incorrectly calculated, as it contained unexplained material differences.

The AG also could not determine the full extent of errors from these purchases.

According to the AG, the municipality did not monitor the performance of contractors or service providers every month. Problems, delays or defects identified during project monitoring or inspection have also not been rectified.

The AG could not obtain sufficient evidence for the restarted opening balance of irregular expenditure in the prior year because the municipality not investigating to determine the full extent of the irregular expenditure incurred from the previous year.