Zweli Mkhize spooked by R1.6bn municipal deposits at VBS
Co-operative Governance and Traditional Affairs Minister Zweli Mkhize says his department was spooked by the discovery that VBS Mutual Bank held R1.6bn in municipal deposits and revealed it has formed a joint committee with the Reserve Bank.
"We support the forensic investigation by the Reserve Bank into the deposits involving 15 municipalities. We are working closely with the [Reserve Bank] and have formed a joint technical committee working on the matter following my meeting with the governor ...
"I will convene a meeting of mayors, municipal managers and [chief financial officers] to discuss this crisis and determine a way forward."
Mkhize made the remarks while delivering his budget speech vote in Parliament on Tuesday, when he also detailed the dire administrative state of municipalities in the country.
The department received R83bn for the 2018-19 financial year. SA has eight metros, 44 district municipalities and 205 local municipalities, most of which are under performing.
Our major concern right now are the municipalities which are becoming distressed or dysfunctional, including those that are regressing in audit outcomes
Mkhize said that based on his department’s assessment, only 7% of municipalities are classified as well functioning.
This week, municipalities in the North West were earmarked for intervention after the province was placed under administration following weeks of protests against Premier Supra Mahumapelo.
Mkhize said strides had been made, but many challenges remained at local government. He said that 31% of municipalities were reasonably functional; 31% were almost dysfunctional and 31% were dysfunctional or distressed.
"Our major concern right now are the municipalities which are becoming distressed or dysfunctional, including those that are regressing in audit outcomes. There are some that have been performing, which are now eroding their revenue base and eating into their reserves or diverting conditional grants for operational expenditure," said Mkhize.
Municipalities need to ensure good governance for effective use of public resources and the creation of conditions for investment, growth, job creation and poverty eradication and to achieve citizen satisfaction.
Good financial management was critical for municipalities.
On Wednesday, Auditor-General Kimi Makwetu is expected to announce the audit outcomes of municipalities.
"Even though there is an improvement in the overall municipal audit outcomes, we are concerned that 27 municipalities have received disclaimers. As part of our turnaround strategy, a strong focus will be paid to reversing these negative outcomes," Mkhize said.