In August 2016, this Council took over a Municipality with financial mismanagement that carried on through the previous political term, leaving the Municipality in serious financial despair, with no money at all in the bank, and creditors knocking down the door.
These are the highlights of the bleak financial situation I referred to above:
- The Municipality owed Eskom debt of R54 Million
- The Municipality started with a cash deficit of ± R98 Million in February 2016
- Conditional grants for capital intended for capital expenditure were used in operations, in excess of R25 Million
- Debtors payment percentage was low, at 86%
- Housing funds were misappropriated by R14 Million
- Unpaid creditors exceeded R70 Million.
- The municipality did not have a credible budget
- Management structure was left vacant
- Excessive number of temporary staff carried “outside the organogram” increased staff up to 1100 employees
- Many “no value for money contracts” existed
Six months later, the current administration is pleased to announce that, following implementation of the financial recovery plan, hands-on oversight by Council and the appointment of the top structure, the situation has improved significantly.
- Housing funds have been paid in excess of R14 Million
- We have saved approximately R 2 Million on temporary staff cut-back
- We have rationalised the vehicle fleet management by reducing expensive rentals and engaging in new leasing arrangements at much lower cost
- The organizational structure was reviewed, restructured and reduced to 850 staff
- There is also a reduction in overtime, standby and acting allowances
- Conditional grants shortfall returned to investments amounts to R15 Million
- The Municipality can now be proud to have prepared a credible revised and new Budget going forward
- We have reduced Creditors with ± R25 Million.
- Arrangements made with creditors amounts ± R1,2 million per month excluding Eskom debt arrangement
- Debtors collection rate has improved to 96%
- We have also ensured value for money in spending:
- Savings in printing is ± R900,000 per annum
- Interest on Eskom saved R3.38
- Pre-paid commission saved R1 Million per annum
- Eskom repaid R37.4 Million in debt down from R54 Million to R16.6 Million
- Additional revenue generated is R18.5 Million on water accounts corrections of bulk consumers as well as refuse units correctly charged
- In total ± R 60 Million turnaround since Administration started with a R40 Million improvement over the last 12 months
It is our duty to improve financial management systems across expenditure, revenue and debt to determine the most effective way of solving the Municipal financial problems.
With the above financial status, we are confident that the current administration has shown not only commitment to improve the livelihoods of the people of the greater Oudtshoorn, but also made huge strides to restoring trust and confidence of the community to the Council, with its finances.
We will continue to diligently ensure that the Oudtshoorn Municipality is well governed with the holistic approach on strategic leadership, institutional stabilization, and transformation, financial management and focused sustainable service delivery.