Stan Ramaila, Sekhukhune District Municipality Mayor, elaborates on challenges confronting the district Municipality during his budget speech.
RAKGWADI – Stan Ramaila, Sekhukhune District Municipality Executive Mayor, has announced that the budget proposal presented last Wednesday was not sufficient to respond to all the needs and aspirations of the people as expressed during IDP public consultations.
This Ramaila said during the district municipality’s budget speech at Matlala Traditional Authority office at Rakgwadi village within Epharim Mogale Local Municipality as he highlighted on challenges confronting the SDM.
The Executive Mayor said one of the most pressing challenges confronting the district was that of uncertainty around its financial sustainability.
Ramaila explained: “We say this because we have been identified by both GOGHSTA and Provincial Treasury as one of the municipalities in the province that are technically insolvent.
The measure used to gauge financial stability and sustenance of a municipal entity such as ours is liquidity ratio. An ideal situation liquidity ratio of a financially healthy municipality should be 1.5:1, meaning that our assets should always be more than our liabilities.
Our liquidity ratio stands at 0.80:1 and this poses a serious threat going forward. What this means is that the municipality will not be in a position to pay all its debtors should it be litigated.”
He said the challenge was due to the fact that the municipality largely still remains a grant dependent one with a mere 7% of the budget representing own revenue and the rest coming from national fiscas.
“This creates a serious challenge of the municipality operating without capital reserves. A healthy organization is one that creates buffers for any eventuality.” further said Ramaila.
The Executive Mayor added that the leadership collective had a mammoth task of ensuring that it worked together with communities, rate payers, business, civil society, magoshi, government departments and all social partners to ensure the inculcation and enforcement of a culture of paying for municipal services.
“It must be clear that this municipality will never provide sustainable water services without generating revenue from users, what is commonly referred to as cost recovery. There is no municipality in South Africa which is providing free services to its entire people without cost recovery measures. We must work together to embrace and implement the spirit of the law. The law in this regard is very clear that only indigent people, who cannot afford should be provided with free services up to a certain standard,” further said Ramaila.
Ramaila added that another important aspect of the issue was the allocation of VIP toilets. He said the district municipality has learned that the past allocations were not based on correct application of the law as it benefited everybody including the middle-class, business people and those who could generally afford.
He further mentioned unresponsive operations and maintenance interventions as a serious ongoing challenge for the district.
“We are also concerned about the escalating cost for electricity purchase, is currently budgeted at R34 million. It is our firm belief that administration should immediately investigate and explore renewable energy as an alternative to electricity,” said Ramaila.
The budget breakdown of the district municipality Medium Term Revenue and Expenditure Framework (MTREF) for 2017/2018-2019/2020 financial years totals to One billion Hundred and fifty six million Rand for 2017/2018, One billion five hundred and seventy million Rand for 2018/2019 and One billion seven hundred million for 2019/2020 respectively.