No intervention, despite broke Amahlati Municipality blowing insurance pay-outs on salaries

Issued by Vicky Knoetze, MPL
Shadow MEC for COGTA

Provincial Government will not intervene in the affairs of the cash-strapped Amahlati Local Municipality, despite the municipality blowing R41 million in insurance pay-outs, meant to replace destroyed municipal infrastructure, on salaries.

The municipality is in dire financial distress and is on the brink of collapse, having once again run out of money to the extent that it will not be able to pay salaries for May or June.

This is something delegates at the ANC conference should reflect on, as their current approach is destroying local government.

Despite this, the MEC of Cooperative Governance and Traditional Affairs, Xolile Nqatha, has revealed that the province remains resolute on its stance that it will not intervene in the municipality.

In response to a parliamentary question from the DA, MEC Nqatha said: “[T]here is no intention to intervene in terms of Section 139 [of the Constitution]”.

The rampant runaway cost of salaries has turned this municipality into an employment agency at the expense of service delivery.

The MEC went on to say that “the department does not have funding to support the municipality … however a support plan has been developed and a voluntary financial recovery plan will be developed.”

See response

This is another classic example of how the Provincial Government is failing to uphold its Constitutional obligations to intervene in a municipality when it does not fulfil its executive obligation in terms of legislation.

In his response, MEC Nqatha revealed the municipality only had R17.6 million in its bank account as of 15 March 2022, while the total salary bill, excluding councillors, is in the region of R11 million per month.

This was brought home last week, when an Amahlati council meeting revealed the municipality was unlikely to be able to pay May and June salaries. Previously, the municipality had to enter into an arrangement with a supermarket chain store to provide groceries for staff that it could not pay.

This means that the MEC knew as far back as March that there would be insufficient funds to cover salaries, yet his department has failed to act.

In fact, the combined salaries of staff and councillors in Amahlati are over R144 million per annum – roughly 62% of its total budget – and far above the 45% benchmark set by the national treasury.

MEC Nqatha also revealed that the R41 million paid out from insurance for municipal buildings destroyed during the 2018 protests has since been spent on salaries.

These funds were initially ringfenced to replace the destroyed municipal offices, but a decision was made in November 2019 to release the funds for salaries.

See response

This means there are no longer any funds available to refurbish destroyed municipal infrastructure, depriving residents of services, to ensure incompetent ANC deployed cadres get their pay.

Last month the National Department had to pick up the slack and place the Enoch Mgijima Local Municipality under administration. If the lack of effective support to municipalities and failure to intervene continues, the national intervention will become a trend in the province.

If there is no accountability, the situation will continue – not just in Amahlati but across the entire province.

The time is now. Provincial Government must send a message to rogue municipalities that have become a law unto themselves. The DA is appealing to the province to intervene in these municipalities and prevent these local authorities from going over the fiscal cliff.