In April this year eighteen municipalities in the Eastern Cape owed creditors more than R167 million in unpaid accounts over thirty days. In five municipalities this was caused due to cash flow problems.
This is impacting negatively on service delivery to poor communities.
In terms of section 65(2)(e) of the Municipal Finance Management Act (MFMA) municipalities are compelled to pay outstanding creditors within 30 days of receipt of invoice.
A response to a written legislature question sent by me to the MEC for Local Government on 1 April this year has revealed startling information. For the response from the MEC, click here:
Five municipalities owed in excess of R64 million due to cash flow problems while the OR Tambo District Municipality owed a whopping R78.8 million to the Department of Water Affairs.
Of major concern is that the five municipalities who have cash flow problems namely Kouga (R38 million), Nxuba (R5 million), Tsolwana (R4.3 million), Gariep (5.9 million), Ntabankulu (R945 000) and Port St John’s (R10.8 million) these amounts make up huge payments on their small budgets.
Another concern regards large outstanding amounts to creditors due to disputes on accounts.
The non-payment of invoices can cause additional interest to accrue and has a burden on sustaining service delivery especially to the poorest of the communities.
Many of the municipalities affected with cash flow problems service indigent and poor communities who are the victims of continued service delivery backlogs and challenges.
I have written to the MEC for Local Government, Mlibo Qoboshiyane, asking what plans are in place to alleviate the cash flow problems of these municipalities and when the disputed amounts are to be paid to the suppliers.
Furthermore, the MEC must explain the long overdue amount of R 78.861 million owed by OR Tambo District when it took over as a district municipality and became a water services authority and provider.