27 June 2006

By Chris Khumalo

Auditor-General Shauket Fakie yesterday urged municipalities to improve their debt collection systems, warning that failure to do so would impact negatively on service delivery.

Fakie also told the South African Local Government Association (Salga) conference in Durban that municipalities were owed R19.2 billion and indications were that 50 percent of this debt was not recoverable.

This had effectively hampered the ability of the municipalities to delivery services to their residents.

He said the city of Johannesburg alone was owed R7.2 billion.

Fakie attributed this to poor financial management capacity and lack of processes within this sphere of government in the country.

He said the lack of systems saw 23 of top 50 municipalities having a period of up to 136 days to collect their debts while others took up to 500 days to collect.

"Debt collection is a critical problem. You cannot deliver the services that you are expected to deliver if your money is sitting with debtors. This is going to be a major problem when it comes to the liquidity of municipalities," he said.

Fakie said it was still difficult to establish the financial status of some of the municipalities as some of them either submitted their financial statements too late or never submitted them at all.

This, he said, made accountability difficult, particularly in cases of mismanagement and corruption.

"Annual financial statements are a key to show how we have spent money. They are an important tool to hold municipalities to account. Accountability delayed is accountability denied," he said.

Almost half of the 284 municipalities in the country submitted their 2005 financial statements.

"Of course there is a problem of quality of these statements," Fakie said.

He said 27 had not submitted their 2005 statements by March 2006. The municipal year end is April 30.

Related article:

• Mufamadi urges municipalities to curb bad governance

 

Source: BuaNews