Rédaction Africa Links 24 with Nonkululeko Njilo
Published on 2024-03-13 20:15:53
The financial state of Ekurhuleni, one of South Africa’s major metros, has taken a significant downturn since losing its clean audit outcome status in the 2021/22 financial year. The Auditor-General’s report for 2022/23, which should have been tabled by 31 January but was delayed due to a city dispute, revealed that the metro received an unqualified audit opinion with material findings. This is a minor regression compared to the previous years where the metro had received unqualified audit opinions.
Concerns raised by the Auditor-General in the previous year included irregular expenditure of more than R20-million and weak internal mechanisms in contract, procurement, and supply chain management. Despite the downgrade in the audit outcome, Ekurhuleni’s city manager, Imogen Mashazi, emphasized that the financials are stable and service delivery standards to the communities are being maintained, with only a mild regression to be addressed.
The city attributed the downgraded audit outcome partially to political instability and the impact of Covid-19 on the economy and finances. Notably, Ekurhuleni had R438 million in cash reserves in December 2023, which was less than the National Treasury’s requirement of 30 days’ worth of cash on hand. The AG highlighted that the cash reserves decreased due to a shortfall in the planned collection rate and the utilization of internal reserves for operations.
Despite the financial challenges, the AG acknowledged Ekurhuleni’s ability to generate revenue and manage borrowing within prudent levels. However, Moody’s further downgraded the metro’s credit ratings to “junk” status, reflecting the worsening financial position. The National Treasury also warned of potential loss of conditional grants amounting to R600 million due to poor expenditure.
In the midst of these financial struggles, internal governance issues and political instability have further complicated matters. Calls for the removal of Executive Mayor Sivuyile Ngodwana have intensified, with opposition parties advocating for dissolution of the council and change in leadership. However, attempts to table a motion of no confidence against Ngodwana have faced challenges, with council meetings marred by disruptions and adjournments.
The strained relationship between the ANC and EFF, who co-govern the metro, has also come to light, with the ANC expressing concerns about losing support to the EFF if the coalition continues. The ANC’s efforts to seek a change in leadership have been met with resistance from the EFF, highlighting the political tensions within the council.
As the situation unfolds, more than 150 councillors have signed a petition for an urgent council meeting to discuss the motion of no confidence against Ngodwana. The outcomes of these developments remain uncertain, with implications for the future governance and financial stability of Ekurhuleni.
Read the original article on Daily Maverick
