Newcastle – The IFP-run Newcastle Local Municipality, in northern KwaZulu-Natal, has admitted that it is facing financial difficulties, but said it’s working on turning the situation around.
The municipality said the dire financial situation did not creep in yesterday, but it started almost a decade ago when the municipality’s finances were badly managed and there was a borrowing spree from financial institutions.
Its acting Chief Financial Officer (CFO) Mfanafuthi Ndlovu, said the last time their finances were in order was in 2012.
It was Ndlovu who revealed that they have about R300 million in the bank, yet their liabilities were about R900m.
“‘If we were a business, we would be under business rescue,” Ndlovu said.
Video: Sihle Mavuso/IOL
Since then, the fourth biggest municipality in KwaZulu-Natal has been on a steep decline and to arrest the situation, drastic measures were needed.
This emerged on Tuesday when the municipality revealed its state of finances before councillors and the media.
It was during that press conference where the mayor of the municipality, Xolani Dube, said at some point, a former CFO warned the previous political administration that they were suffocating and he was “forced” out immediately after that warning.
Dube implied that their situation has been made worse by some provincial government departments like the Department of Cooperative Governance and Traditional Affairs (Cogta) led by Bongi Sithole-Moloi.
He also took a swipe at the Department of Human Settlement, which is led by Dr Ntuthuko Mahlaba, who is also the former Mayor of Newcastle.
Dube said Sithole-Moloi’s department was not working with them and it recently forced them to slash their unfunded budget by R100m.
He claimed that the department said if they don’t do that, their equitable share was going to be suspended.
He said they believe that was a political move which was aimed at pitting municipal workers against them since it was claimed that if the equitable share is withheld, they won’t be able to pay staff salaries.
“Maybe this has to do with politics,” Dube claimed.
In response to Dube, KwaZulu-Natal Cogta said it has the right to conduct oversight of municipalities.
"As emphasised by MEC Bongiwe Sithole-Moloi in her department’s budget speech policy statement last month, municipalities must not approve an unfunded budget.
"KZN Cogta may invoke relevant laws and legislation to encourage municipalities to spend what they can afford, which may include instructing the national treasury not to release grant funds due to non-compliance," the department said.
Regarding Mahlaba, Dube said he claimed the municipality was using housing grants to pay salaries that were never there when they took over.
He said Mahlaba must explain what happened to those grants as he was at the helm.
“He is the one who should be explaining what happened to that money as we never found it.
"How can you take away something that is not there?” Dube asked.
In response to Dube, Mahlaba’s spokesperson, Mlungisi Khumalo, said during his tenure, the finances of the municipality improved and he should not be made a scapegoat.
“Dr Mahlaba has cautioned at the posture taken by municipality’s leadership of constantly using previous administrations as scapegoats, and says this stance is not sustainable.
“Dr Mahlaba has urged the municipality to focus on improving service delivery, which is something that has not happened since the new administration took the reigns in 2021.
“Dr Mahlaba reiterated that funds from the Department of Human Settlements should be solely utilised for their intended purposes and stands by his utterances made during a press briefing.
“He dismissed the claims alleging that there was abuse of these funds during his tenure as laughable and ludicrous.
“He will not be retracting his utterances," Khumalo said on behalf of Mahlaba.
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