The Democratic Alliance (DA) has raised concerns over the Msunduzi municipality's awarding of a contract for SMS and MMS messages to remind residents to pay up, without a tender process being followed.
Msunduzi, formerly Pietermaritzburg, is owed about R899 million, of which around R542 million has been due for more than 90 days.
George Mari, DA KwaZulu-Natal spokesman on co-operative governance and traditional affairs (COGTA), says: “This is a huge threat to the municipality's sustainability.” The municipality is one of the ninth largest cities in SA and has a population of almost 700 000.
Breaching rules?
Mari says the municipality, which until recently was under administration, is not following the correct credit control procedures and cutting off non-payers. Instead, he says, it elected to implement an SMS and MMS reminder service, without following the proper procedures.
Mari says the value of the tender, which he describes as “lucrative”, has also not been disclosed. “At no time did the municipal manager [Mxolisi Nkosi] bring to our attention the fact that the contract for this billing system had not gone out to tender and that it had been awarded.”
Previous problems
Nkosi's lack of transparency is concerning, as one of the municipality's strategies is to improve financial administration through proper supply chain management, says Mari. He says previous deviation from the process was one of the reasons the city was placed under administration.
Msunduzi was under administration for the entire 2010/11 financial year. At the beginning of the financial period, the city was on the verge of bankruptcy and there was a real possibility it would not be able to pay salaries and default on some of its major creditors, states its annual report.
The annual report notes that collections improved during the year, from 55% to 80%. “The situation of debtors is still, however, of major concern. The city has embarked on a process of ensuring the integrity of our debtor's book,” it states.
Msunduzi must make sure every consumer is correctly metered, billed and pays on time, states the report.
“While Msunduzi may have moved out of the crisis phase and onto a more stable level, there is much work to be done before it can move into a recovery phase, and with it, a financially viable situation,” says Mari.
ITWeb unsuccessfully attempted to obtain comment from the city several times.
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