Municipalities in dire financial state, can't pay workers

The inability by most municipalities not to pay their employees on time has seen more protests happening throughout the country.
The inability by most municipalities not to pay their employees on time has seen more protests happening throughout the country.
Image: Thapelo Morebudi

Some of SA's municipalities are so broke that they can't afford to pay workers' salaries and might be forced to use medical and pension funds to cover operational costs.

The dire financial state of most municipalities was laid bare by auditor-general Kimi Makwetu, who released the audit findings report of 257 municipalities in Pretoria yesterday.

The audit findings showed that SA's 257 municipalities recorded irregular expenditure amounting to R25,2bn in the 2017/2018 financial year.

Worryingly, Makwetu revealed that 34% of the municipalities disclosed that their expenditure far outweighed their income, making them unable to honour payments, including those of bulk electricity and water.

This comes as the largest union for municipal workers, the South African Municipal Workers Union (Samwu), announced that there were at least 30 municipalities across the country that have "constantly" failed to pay salaries and pensions of workers.

The list of the municipalities includes seven from the North West - two which invested money illegally into the VBS Mutual Bank - five each from the Free State, Eastern Cape and Northern Cape, three from Mpumalanga, two from both KwaZulu-Natal and Limpopo.

Dr Ruth Segomotsi Mompati and Madibeng local municipalities in the North West, which also lost R101m and R31m respectively after investing with the now collapsed VBS, currently owed pension and provident funds.

Makwetu said the municipalities currently with deficits were finding themselves in a situation where "the ability to pay creditors is slipping away".

"It means that you're going to find certain municipalities going to struggle to pay employees among others, you're going to constantly find municipalities that take money that was earmarked for things like medical aid and pension fund contributions being used to pay for operating costs," Makwetu said.

Only 18 municipalities received clean audits after they produced quality financial statements and performance reports.

They are owing pension fund R70m by their own admission
Dumisane Magagula, Samwu deputy secretary general

Samwu revealed that the Amahlathi local municipality in the Eastern Cape was one of the five municipalities who have informed their employees that it was not in a position to pay salaries last month.

Samwu's deputy secretary general Dumisane Magagula said the 30 municipalities owe a total of R70m in pensions. Mafube local municipality in the Free State, according to Samwu, has not paid workers's contributions to pension fund since 2012.

"They are owing pension fund R70m by their own admission. They have admitted, they have even admitted to the pension fund adjudicator, because we took this case to the pension fund adjudicator," said Magagula.

Makwetu yesterday said 92% of the municipalities could not formulate financial statements that complied with key legislation.

This, according to Magagula, was a key indication of cadre deployment gone wrong. He said they could not fathom how chief financial officers - who cannot produce financial reports - were still on municipality payrolls.

Makwetu also lambasted municipalities for ignoring recommendations made by his office.

Would you like to comment on this article or view other readers' comments? Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.

X