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The mayor of Ekurhuleni has made much of the recent Moody’s rating and, at great expense, has taken out full-page adverts in the press. The rating will allow for cheaper borrowings, but if you do not even spend your budget, what is the point of a borrowing facility, no matter how cheap it may be?
Let us put this into context. The rating has improved from the last evaluation on November 11, but overall, has declined from stable to negative. It reflects a large, diversified economy that includes the airport. These are given factors, not the creation of a municipality.
In fact, the aerotropolis study conducted by the municipality in 2013, at a cost of R100 million, has yet to be presented to council, and to date no direct jobs associated with it have been created – bar consulting jobs.
Also, any real development requires a significant wake-up and shift from SAA’s complacency – if not, airlines and airports in the Gulf, Ethiopia and Kenya, which are waiting in the wings, will eclipse any opportunity that OR Tambo International may have.
Then there is the fact that the manufacturing base has been declining for years, which requires improvement, investment and support to recapture the comparative advantage it had.
But the municipality is not spending nearly enough on infrastructure in terms of maintenance and capital expenditure – add to this the shortage of technically skilled staff.
A R5 billion capital budget has been released. It should be R10 billion. While some social spend is necessary, the bulk should go to job-creating infrastructure.
The maintenance spend is down in real terms compared with the previous year.
Now let us examine the cash management, which is described as prudent. The municipality has 60 days unencumbered cash, while the target is 55 days.
It has been as high as 70 days. There was little point in allowing banks to profit off this instead of spending on job-creating infrastructure.
Collection rates were 85% in 2001/02. There has been improvement since, and the target is now 93%, which has never been achieved. In the third quarter of last year, it was 90%.
Remember that, according to Generally Accepted Accounting Principles, if you spend or underspend recklessly, it is okay – as long as you report it, which then leads to a clean audit.
Now let us turn to water and sewerage. We have blue drop status for water, which means good quality if you have piped water – but many people do not.
We have no green drop status for sewerage, and have huge downstream and water-table problems. Only two or three sectors out of 17 have green drop status.
Water leaks result in a loss of 32% – 15% is the acceptable norm for uncontrolled and uncollected water loss (townships included).
Then there is the burgeoning issue of myriad scandals – illegally appointed city manager, water meter tender scams (R500 million), road tender fraud by senior officials, IT tender (R42 million), refuse tender and more – running into millions, if not billions.
In 2012 Jacob Zuma described Ekurhuleni as the most corrupt municipality in Gauteng. When even JZ calls you corrupt, you must have problems.
Cachalia is the DA mayoral candidate for Ekurhuleni
