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Mayor Macpherson Highlights Oudtshoorn Financial Management Improvement over the Past Five Years

Oudtshoorn, 14 June 2021 – The recently released Oudtshoorn Municipal overview shows that the Municipality, which was in a brink of bankruptcy, made great strides in its financial recovery over the past Five years.

“This great improvement places the Oudtshoorn Municipality in a position to start focusing on utilising economic resources towards service delivery, infrastructure refurbishment and maintenance, instead of using available resources to pay off overdue debt,” said the executive mayor, Chris Macpherson.

Mayor Macpherson made this announcement when he was tabling the town’s budget for 2021/2022 to 2023/2034 financial years on 7 June 2021.

The following highlights show how the Municipality improved its financial management from the past Five years when the current Council took over the reins from when the Council was placed under Administration in 2016:

  • The cash position has improved over the last 5 financial years, from a cash flow deficit of approximately R110 Million in August 2015 to a positive cash flow of R177 Million as at June 2020.
  • Trade Creditors have decreased from an amount exceeding R90 Million in November 2015 to R3.4 million in 2020
  • Debtor collection has improved from 86% in early 2016 to exceed 96.5% in 2019, but decreased in 2020 to 92.5% due to Covid19 negative impact on the local economy. The cash flow position, although significantly improved in line with the liquidity requirements in the long-term financial plan of R111 million it is still a concern as cash is not available to create a capital replacement reserve; and
  • The current cost coverage ratio is only 1:8:1 which means we have only sufficient cash in the short term available to cover 1.8 month of fixed operating expenditure. This declined from 2:8 in 2020

“The current economy was heavily affected by the corona virus, as with the rest of the world. The tourism industry of Oudtshoorn will suffer loss a loss of approximate R80 million 2020 with major events such as the KKNK that was cancelled in 2020 and 2021 and the lock-down of the Cango Caves. This will have a ripple effect and further losses are forecasted for the 2021/22 financial year,” Macpherson added. 

Cost containments measures as emphasized in MFMA Circular 82, 92 and the Cost Containment Regulations effective 1 July 2019 were implemented. It is emphasized that we should ensure the continued implementation and enforcement of savings and austerity measures to ensure that the municipality becomes financially sustainable, and therefore approved the Cost Containment Policy and will monitor as from 1 July 2019.

Macpherson wishes to congratulate the Municipal officials for their meticulous implementation of the financial recovery plan and extend a “hearty gratitude to the residents and stakeholders of the Greater Oudtshoorn for their continuous assistance to turn Oudtshoorn Municipality to a better municipality than it was Five years ago”.