18 municipalities in the Eastern Cape owe creditors more than R 167 million in unpaid accounts over 30 days.
In five municipalities this was caused due to cash flow problems. Kouga, which includes the surfing mecca of Jeffreys Bay is one of these municipalities.
This is impacting negatively on service delivery to poor communities.
In terms of section 65 of the Municipal Finance Management Act (MFMA) municipalities are compelled to pay outstanding creditors within 30 days of receipt of invoice.
A response to a written legislature question sent by the DA to the MEC for Local Government on 1 April this year has revealed startling information.
Five municipalities owed in excess of R 64 million due to cash flow problems.
The five municipalities who have cash flow problems are Kouga (R38 million), Nxuba (R5 million), Tsolwana (R4.3 million), Gariep (5.9 million), Ntabankulu (R945 000) and Port St John’s (R10.8 million).
The non payment of invoices can cause additional interest to accrue and has a burden on sustaining service delivery especially to the poorest of the communities.
Kouga’s plan of action is to target their top 100 debtors in an effort to relieve the cash flow crises that has developed over the past few years.
The newly elected Council will have their work cut out to balance the Municipality’s books as it becomes more and more apparent that the financial chaos is a lot more serious than anybody expected.