AG JB Marks Annual Report echoes DA’s warning of financial collapse

Issued by Cllr Chris Hattingh – DA Constituency Head, JB Marks Local Municipality
03 Feb 2023 in Press Statements

Note to Broadcasters: Find linked soundbites in Afrikaans and English by Cllr Chris Hattingh

The Auditor-General (AG) echoed the DA’s persistent warning over several years, that the JB Marks Local Municipality is moving toward financial collapse. In the AG’s 2021/22 Annual Report, the downward-spiral of the municipality has been deemed a risk to its financial sustainability.

The AG identified irregular expenditure of R279 million for the year under review, increasing the total irregular expenditure to R2,9 billion, which still needs to be resolved, while R24 million was lost in wasteful and fruitless expenditure.

Receivable income is impaired by R1,3 billion while only about 19% of the total receivable amounts are not impaired, household debt as of the end of December 2022 totals almost R1 billion of which only about 20% will be recovered.

The impact of the increased pressure on the JB Marks cash flow reverberated in the mid-year report on the financial performance of the municipality, indicating a reduction of about 50% in income from investments halfway through the financial year. At the same time, revenue from water and electricity sales saw a 12% and 41% reduction in collections from the projected revenue as per the annual budget, respectively.

While JB Marks struggles to collect revenue, negatively affecting its cash flow, illegal electricity and water connections, as well as pipe bursts, vandalism, and theft, contribute to further financial decline. JB Marks is the only North West municipality that can service its bulk Eskom account timeously, but a risk of default is now a reality. In short, JB Marks loses millions of rands through illegal water and electricity connections, while the financial losses due to pipe bursts and a decaying infrastructure add millions more.

JB Marks must urgently take action against illegal connections and should invest in repairing and replacing ageing infrastructure.

The JB Marks Public Safety revenue collection rate is at only 2%, with a financial shortfall of more than R90 million. This is indicative that, despite the staff count and resources allocated, public service has imploded with almost no law enforcement taking place.

Despite the poor financial performance of JB Marks, the ANC, EFF and PA joined forces, closed ranks, and voted in favour to reappoint the acting Chief Financial Officer, who oversaw most of financial collapse of the municipality for another three months.

The JB Marks Executive Mayor Gaba Thithiba Ka Qhele chose to absolve himself from the financial and service delivery collapse of the municipality and instead blamed self-serving, belligerent and obstructive officials, which were all in any case appointed through the ANC’s cadre deployment policy.

The proposal that a detailed financial remedial plan be tabled in the JB Marks Council along with an adjustment budget during February. The motion was unanimously adopted.

It is clear that the ANC’s mismanagement and cadre deployment policies aggravated by a deeply embedded reluctance to deal with procurement transgressions and financial misconduct, have now reached a level that cannot further be sustained.