Mediator: Co-operative Governance and Traditional Affairs Minister Zweli Mkhize is tackling municipal debt. Picture: SUPPLIED
Mediator: Co-operative Governance and Traditional Affairs Minister Zweli Mkhize is tackling municipal debt. Picture: SUPPLIED

Co-operative Governance and Traditional Affairs Minister Zweli Mkhize says municipalities affected by the collapse of VBS Mutual Bank are expected to report back to his department on the issues around their finances and the effect on service delivery within a month.

Some of the municipalities deposited about R1.5bn in VBS. In March, the Reserve Bank placed VBS under curatorship after it faced a liquidity crisis.

Treasury deputy director-general Ismail Momoniat has told Parliament that the Treasury is worried that the unavailability of funds invested by municipalities in VBS would affect service delivery. Their deposits are not guaranteed.

VBS clients with less than R1,000 in their accounts must close their accounts before the end of August, according to reports, in an attempt by the curator to ease pressure on the beleaguered bank. But the curator dismissed claims that the bank was shutting down in two months, the SABC reported.

Delivering his budget speech in the National Council of Provinces on Thursday, Mkhize said he had met the 14 municipalities that invested money with VBS. About R1.5bn was deposited at the bank by municipalities from the North West, Limpopo and Gauteng.

The right people with the right qualifications must be appointed to key positions in municipalities. We will not compromise on that aspect. During the 2017-18 financial year, 423 appointments were concluded with competent and suitably qualified senior managers.

"We have urged the provincial departments and affected municipalities to work on recovery plans to augment possible service delivery disruptions due to the budget shortfall as a result of loss of investment," he said.

"All municipalities are expected to report [to the department] on the issues around the finances and their impact on service delivery within a month."

The South African Reserve Bank was investigating the matter and had the full support of his department, he said.

Mkhize said many of SA’s dysfunctional municipalities were facing problems created by poor management and lack of relevant qualifications for key positions. SA has eight metros, 44 district municipalities and 205 local municipalities.

The minister said based on his department’s assessment, only 7% of municipalities were classified as well functioning. He said 31% of municipalities were reasonably functional; 31% almost dysfunctional and 31% dysfunctional or distressed.

"The right people with the right qualifications must be appointed to key positions in municipalities. We will not compromise on that aspect. During the 2017-18 financial year, 423 appointments were concluded with competent and suitably qualified senior managers."

Since the amendment of the Municipal Systems Act in 2011, a total of 1,651 municipal employees have been dismissed for misconduct and 130 resigned prior to the finalisation of disciplinary proceedings.

Mkhize said the department had developed a database that would ensure the blacklisting of managers who were dishonourably discharged from service in any municipality.

Many municipalities had been unable to spend the municipal infrastructure grant, which meant people could not obtain services such as water or roads and electricity.

There are 226 municipalities that receive the grant.

phakathib@businesslive.co.za