WHILE Eastern Cape Finance MEC, Mlungisi Mvoko, was impressed with the implementation of the Financial Recovery Plan (FRP) by OR Tambo District Municipality, the local authority still needs to improve its revenue collection.
This is contained in a report tabled by provincial treasury officials during a meeting with OR Tambo on Wednesday, October 9. Mvoko was part of the meeting, whose purpose was to discuss the financial and conditional infrastructure grant performance of the district and its local municipalities. The District Municipality is currently under Section 39 (a) intervention and is therefore receiving continuous support from the National Treasury and Provincial Treasury to improve its financial sustainability through the implementation of an FRP.
The FRP is measured against four pillars: governance, institutional stability, financial management, and service delivery. Mvoko said the latest report on the FRP implementation shows that the municipality has completed 62% of their activities, 28% are still in progress, and only 10% have not yet commenced. He said some of the achievements in activities to improve governance include the review and approval of the unauthorised, irregular, fruitless, and wasteful expenditure strategy by the council. An organisational structure, the MEC said, has been reviewed and adopted by the council, and the system of delegation has been developed and adopted by the council.
“On financial management achievements, there is 100% adherence to grant fund spending in line with the Division of Revenue Act. A funded budget was tabled for 2024/25, the Credit Control and Debt Management Policy is being implemented, and the municipality is adhering to payment arrangements with major creditors,” Mvoko said. On the service delivery pillar, the municipality had established an operational call centre. The district municipality had also established an active leak detection and management programme. There was continuous training of plumbers for sewer networks and the process controllers in the district to deal with challenges.
“We appreciate the progress made by the municipality on the implementation of the FRP. This kind of progress shows that there is willingness and commitment to achieve financial sustainability by the municipality. You can tell that they want to be a viable municipality that is able to run its affairs without extensive support from us and national treasury. Critical issues that they must focus on now to get them out of the situation are to improve their revenue collection rate and improve from the current 50% to the norm of 95%,” Mvoko said.
Mvoko was happy with the municipality spending 98% of its conditional grants in the 2023/24 financial year. “They also need to be consistent and improve on the implementation of their debt and credit policy. Outstanding issues on service delivery include that the municipality must develop a strategy to identify illegal connections. Lastly, the municipality must work on reducing its salary bill to the norm of 25% to 40%,” Mvoko said.
