Limpopo municipality unable to provide water and sanitation due to poor revenue collection

Makhuduthamaga local municipality in the Sekhukhune area of Limpopo is so poor that it purely depends on National Treasury funding to function and its only source of revenue is properties owned by the department of public works.
Makhuduthamaga local municipality in the Sekhukhune area of Limpopo is so poor that it purely depends on National Treasury funding to function and its only source of revenue is properties owned by the department of public works.
Image: 123rf.com/Riccardo Lennart Niels Mayer

A rural Limpopo municipality with zero revenue collection has been unable to provide water and sanitation to residents because it does not even have technical skills to do so and instead relies on district municipality it falls under to provide the services.

Makhuduthamaga local municipality in the Sekhukhune area of Limpopo is so poor that it purely depends on National Treasury funding to function and its only source of revenue is properties owned by the department of public works.  

The municipality is one of a dozen councils across the country named as a "beggar" in the latest research report on Municipal Revenue Maturity Benchmark by Ntiyiso Consulting firm.

Other municipalities with equally dismal and low revenue collection rate included, KouKamma , Naledi, Ditsobotla, Newcastle, Moretele , Grearer Taung, Greater Letaba  and Musina.

The research focused on  municipalities' 18 traditional revenue sources, which are segmented within nine main revenue layers including grants and loans, user fees, electricity sales, water sales, property rates received, sewage and sanitation charges, refuse removal charges, fines, levies and other taxes.

Ntiyiso Consulting’s chief revenue officer Miyelani Holeni  said the Makhuduthamaga had insufficient sources of revenues.

“Their ability to convert their resources into money is not where it should be. The municipality is unable to supply water and sanitation because they don’t have technical skills and such services are provided by the district municipality. They also don’t have an infrastructure to provide electricity hence their revenue is non-existent,” he said.

The municipality's spokesperson Lemson Moropjane said the municipality is mostly servicing poor communities in deep rural areas.

“We are servicing many rural areas and some are in the indigent programme where they are not paying for electricity and water. And 92% of our rates collection is in properties that are owned mainly by the department of public works,” he said 

The benchmark report said growing burden of municipalities depending on Treasury funding demands that municipalities become more self-sustainable by identifying new pockets of revenue.

The report further found that the metro with the highest maturity level is the City of Johannesburg followed by City of Tshwane judged from their performance.

Holeni said both these metros have scored significantly higher in the revenue coverage and revenue data analytics pillars.

“Umzinyathi is the highest scoring district municipality with a maturity score of 2,98, while the highest scoring local municipality is Alfred Duma Local Municipality with a maturity score of 4,02,” he added.

The research also found the municipalities were still using old-fashioned methods of appointing new employees.

“A case in point is the fact that, according to statistics provided by National Treasury, 14% of non-managerial positions, a total of 8279 positions, have been vacant since June 2018. The municipalities that have a higher conversion rate tend to have a lower vacancy rate,” stated the report.

 Holeni said municipalities with lower current debt collection rates tend to have higher vacancy rates. 

He said to understand what new revenue sources municipalities were considering, their survey asked: “Is your municipality currently exploring any new revenue sources?”.

"The results were overwhelmingly disappointing, mostly because the list of new revenue sources under consideration by the respondents were fundamentally “traditional” and reflective of the traditional revenue mix proposed by National Treasury," he said.

According to the National Treasury, the ideal collection rate is 95% anything less than this is considered deficient.

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