ECONOMY
Municipalities owed up to R19.2bn
Posted Tue, 27 Jun 2006
South Africa's municipalities are owed R19.2-billion and do not expect to recover more than 50 percent of this debt. Municipalities' failure to effectively collect money for services rendered was severely impacting on service delivery, Auditor-General Shauket Fakie said on Monday. Johannesburg alone had made a bad debt provision of R7.2-billion. "Really, that's serious stuff," Fakie told the delegates at the national assembly of the SA Local Government Association in Durban.
Some municipalities had average debt collection periods of up to 500 days, with the average of the country's top 50 municipalities being 136 days. This delay affected the liquidity ratio for municipalities which was at 1.2:1 when the norm was 2:1. Without municipalities' bad debt provision, many would be in "serious trouble", said Fakie. Municipalities' late submission of annual financial statements was another problem.
It made accountability difficult, particularly
in cases of mismanagement and corruption — as did high staff turnover — and placed enormous stress on his department's ability to carry out municipal audits. "They (annual financial statements) are a key to show how we have spent money. They are an important tool to hold municipalities to account. Accountability delayed is accountability denied." Fakie said a few of the country's 284 municipalities had still not submitted statements for the 2004 financial year end. He said 27 had not submitted their 2005 statements by March 2006. The municipal year end is April 30.
However, this was an improvement on the previous year when 40 municipalities did not submit their statements.
Sapa
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