First published in the Daily Maverick 168 weekly newspaper.

The municipality providing water to a large part of the central Eastern Cape, employing more than 1,600 people, this week declared that it was technically bankrupt, owed hundreds of millions of rand to service providers, especially for water, and would not be able to make payroll.

Khanyile Maneli, the Amathole District Municipality’s mayor, said they were in talks with national and provincial government in an effort to save the municipality.

Of highest concern was the more than R100-million owed to the Amatola Water Board and the Department of Water and Sanitation for water-related services, but Maneli said they were negotiating with the municipality’s top 10 creditors to ensure that they could continue service delivery.

Amathole District Municipality includes local municipalities Raymond Mhlaba in Fort Beaufort, Ngqushwa in Peddie, Amahlathi in Stutterheim, Mnquma in Butterworth, Great Kei in Komga and Mbhashe in Willowvale.

Amathole was one of 14 district municipalities identified by the Eastern Cape provincial government last year as being in distress. At the end of last year, the Amahlathi municipality also indicated that it would no longer be able to pay salaries.

This week the National Treasury said in a written response that there would be no bail-out for Eastern Cape municipalities.

“The National Treasury will not compensate any municipality that has failed to manage finances appropriately. Secondly, even if the National Treasury wanted to assist, the national fiscus is not in the position to do so under the current economic circumstances,” the Treasury added.

Community activists said the collapse of local government structures in the Eastern Cape was putting vulnerable communities at increased risk, especially in the context of the ongoing threat of the coronavirus epidemic and the drought in large parts of the province.

Suffering

“It is painful to see our people live in mass poverty and hunger. People have lost hope. They are powerless. In Klipplaat, people have to share water with animals and drink water contaminated with human waste,” Lungile Mxube said. “We did not struggle for this.”

Mxube is a part of the Unemployed People’s Movement, a group of local government activists who took on the Makana Local Municipality in Makhanda at the beginning of last year – and won a landmark ruling. In May, Judge Igna Stretch ordered the provincial government to dissolve the municipal council of the Makana Local Municipality for its unconstitutional lack of service delivery.

Premier Oscar Mabuyane’s government and the Makana Municipality will appeal this ruling at the Supreme Court of Appeal later this year.

“We were very inspired by what happened in Makhanda,” Mxube said. “It was a victory for constitutional democracy.”

He said their mission was now to help other communities avoid the suffering they have had to endure in Makhanda.

The Mayor of the Amathole District Municipality, Khanyile Maneli Picture: Supplied

Mxube said they were in talks with community activists and would support them in taking legal action similar to the one they spearheaded in Makhanda.

Earlier this week he published an open letter to Dr Nkosasana Dlamini Zuma, the Minister of Cooperative Governance and Traditional Affairs, asking for an investigation into the decline of the Amathole District Municipality, the Ikwezi Municipality (formerly based in Jansenville and now part of the Dr Beyers Naude Local Municipality), as well as the Nqushwa Local Municipality.

“The recent revelations that the Amathole District Municipality is bankrupt did not come as a surprise to many of us and it cannot be a coincidence that the same municipal manager who left Ikhwezi and Nqushwa bankrupt is now presiding over a bankrupt Amathole District,” he wrote.

Mxube added that the investigation should include lifestyle audits and inputs from civil society, social movements and communities.

“Enough is enough. People are frustrated. I go to bed at night highly traumatised by the levels of poverty and suffering that I am seeing. The municipalities are treating our people like dogs. The SPCA would never let a dog die in the street. But people are being treated worse than that.

“I am hoping that the minister will do something. The rural municipalities are badly neglected. If they fall, where will people get water, electricity and housing?

“The current system treats water and electricity like a commodity, a bag of potatoes that you can buy. It violates basic human rights. Especially poor people are no longer treated as citizens. They are merely viewed as customers and if they can’t pay that is it,” Mxube said.

Nonceba Madikizela-Vuso, a spokesperson for the Amathole Municipality, said they needed R65.7-million a month for the next few months and another R150-million for severance packages to stay afloat.

The municipality spends R789-million on salaries a year. It has an unfunded budget and owes creditors R322-million.

Madikizela-Vuso admitted that it was unable to budget for operations and maintenance of water and wastewater infrastructure.

When the municipality was formed, it had to take over the employment of more than 900 people between the 2013/14 financial year and 2017/18, resulting in an inflated organogram that includes functions not strategic to the operations of the municipality.

When the track record of Thembikile Mnyimba, the municipal manager of the Amathole District, was pointed out to Maneli, he said the council had full confidence in the municipal leadership.

“We are happy with what he has done,” Maneli said.

He said revenue collection had dropped due to the ongoing drought as it limited the ability to provide a reliable water supply.

A report from Treasury in December, describing reasons for the municipalities’ financial distress, concluded that the municipalities were “living beyond their means, spending more than they collect in revenue and have bloated organisational structures that are not fit for purpose”.

The report said many municipalities purposefully overstated their revenue collection in their annual budgets to avoid unfunded budgets.

“The revenue estimates are seldom underpinned by realistic or realisable revenue assumptions resulting in municipalities not being able to collect this revenue and therefore finding themselves in cash-flow difficulties. Should such situations arise, municipalities must adjust expenditure downwards to ensure that there is sufficient cash to meet these commitments.

“The failures in these municipalities can’t be fixed by additional funding. Prudent financial management is required together with proper political and administrative leadership,” Treasury said.

Evil and heartless

Luzuko Yalezo, the Eastern Cape secretary for the South African Municipal Workers’ Union (Samwu), said they were shocked about the decision to freeze salaries for the five months from February to June this year.

“Samwu is of the view that the challenges faced by the municipality are systematic in nature and not necessarily financial. Despite the budgetary provisions for salaries having been made last year, the municipality now asks workers to render their services without any remuneration for five months.

“This evil and heartless municipality is forcing workers to be indebted as they won’t be able to pay credit providers for five months without salaries. Food is not bought on credit, transportation to work for workers and that of their dependents is not given on credit,” he said.

Yalezo called on the Eastern Cape premier to place the municipality under immediate administration.

Nontando Ngamlana from Afesis-Corplan, a non-profit promoting active citizenry and good local governance in the Eastern Cape, said the imminent collapse of the Amathole District Municipality had been in the making for a long time.

“The Amathole District Municipality is responsible for water services in the region. If they collapse it will be devastating for so many people. It also is one of the biggest employers in the area. The impact will be huge and the burden will be heavy.

“In many respects this is the result of poor governance…  There seems to be this idea that the Treasury will always bail us out. The Covid-19 pandemic found many municipalities very fragile and especially the rural municipalities as they do not have any reserves.”

She said the problems at the Amathole District Municipality also highlighted the lack of oversight provided by municipal councillors.

“Many councillors are more interested in a career in politics than in service delivery. We have also allowed them not to be accountable to us as the public.” DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for free to Pick n Pay Smart Shoppers at these Pick n Pay stores.