bad news for u msunduzi

THE cash-trapped uMsunduzi municipality in Pietermaritzburg has been dealt a double blow.

This comes after an announcement yesterday by MEC for cooperative governance and traditional affairs Nomusa Dube that the municipality had lost its bid for metro status.

Dube, pictured, also found that the municipality only had sufficient cash to fund about a week of operations.

An independent team of financial experts had been roped in to assist the municipality with a financial turnaround strategy.

Dube admitted that the municipality was in trouble financially. She said the financial status of the municipality was reflected by the net available cash, which fell from R120million in 2007-08 to a mere R1,7million in 2008-09.

"As a result the cash coverage ratio has dropped, indicating that the municipality only has sufficient cash to fund approximately one week of its operations," she said.

Dube and finance MEC Ina Cronjé had earlier in the day met uMsunduzi mayor Zanele Hlatshwayo to announce the appointment of three "highly qualified independent officials" to help in the matter.

The team will freeze all unwarranted expenditure and only authorise approved processes.

"It's a highly qualified team that's expected to report back to us after three months on its progress. The team will formalise a recovery plan for the municipality," Cronjé said.

The team will assume financial responsibility for the municipality internal staff and will, among other matters, oversee revenue generation, expenditure, monitor and report on supply chain management and manage all debtor processes.

On the issue of the municipality's application for metro status, she said the decision had nothing to do with its financial status.

"I received a letter from the Municipal Demarcation Board informing me that their earlier decision to grant the status of metro to the municipality had been rescinded," Cronjé said.

The municipality would have been granted the status effective on the date of the next local government election in 2011.

The province has one metro, eThekwini municipality.

"The municipality will for now until further notice remain a category B and continue to constitute part of uMgungundlovu district," Dube said.