The Organisation Undoing Tax Abuse (Outa) has expressed its concern over the Financial Recovery Plan for the dysfunctional Emfuleni Local Municipality.

The organisation says it is concerned that the plan has a lot of information but no clear plan, and that is “so inadequate that it is set up to fail”.

This week Outa made a written submission to the National Treasury’s Municipal Financial Recovery Service (MFRS) unit about its proposed Financial Recovery Plan for Emfuleni.

No clear implementation plan

Makhosi Khoza, OUTA’s Deputy CEO: Local Government says there is no clear implementation plan.

“An undertaking of such magnitude can only be successfully executed with skilled project management, planning and execution,” Khoza explains.

Michael Holenstein, Manager at the OUTA Local Government division, says the project management plan should include project managers and be detailed. “This plan should have specific actions and milestones focused on fixing the municipality and settling its debts.”

According to Holenstein the plan proposes borrowing R900 million but doesn’t provide a funding model or explain how this would be spent.

“It says municipal infrastructure is beyond restoration but does not provide a strategy for addressing this. It does not adequately address the municipality’s outstanding debts. It does not address the staffing costs and vacancy crisis. It does not address the inadequate collection rate and poor billing system and it was not based on audited financial statements,” he notes.

Outa’s recommendations

To help rectify the situation at the municipality Outa suggests that unit should compile a systematic project plan with clear deliverables and timelines.

It also recommends the following:

  • Dissolve the council and elect a new one, which should develop a new Integrated Development Plan and realistic budget.
  • External funding from National Treasury is needed rather than more unaffordable loans.
  • Non-essential assets should be sold to help pay debts.
  • Emfuleni debts to Eskom and Rand Water which are older than 90 days should be written off.
  • All consumers of Emfuleni services must have meters, the billing system must have integrity and all consumers should pay their current accounts within 15 days.
  • Staffing needs reassessing – particularly in the mayor’s office which has 60 staff – with a view to an affordable staff funded by reasonably projected revenue.