The Democratic Alliance (DA) in Limpopo has vowed to take action against municipalities for their poor creditor and debtor management practices.
In a statement, Jacques Smalle the DA’s spokesperson for Provincial Treasury, expressed serious concern over the Treasury’s analysis of creditor aging, which reveals that municipalities are failing to settle payments with suppliers within the mandated 30-day timeframe as specified by Treasury Instruction Note 34 and MFMA circular note 49.
Smalle pointed out that a mere 16% or R316 million is owed to creditors within 0 to 30 days, while a staggering 75% or R1.454 billion is overdue by over 90 days.
The municipalities’ failure to comply with timely payments significantly undermines the sustainability of small and medium-sized enterprises, exacerbates financial strain on municipalities, stifles economic progress, and leads to job losses.
He noted that municipalities in the province are grappling with collecting debts from debtors, casting a bleak shadow over their financial viability.
“The debtors’ ledger for these municipalities shows that R14.6 billion, or 91% of the total, is overdue by more than 90 days, making recovery unlikely. Mopani District is the largest offender, contributing 33% or R4.946 billion, while Sekhukhune District contributes the least at 10% or R1.504 billion,” Small reported.
Smalle highlighted that the municipalities’ ongoing struggle with adherence to reporting obligations poses a significant challenge for the Provincial Treasury.
According to Section 71 of the MFMA, all municipalities must submit monthly budget statements to the Provincial Treasury. Additionally, Section 71(7) mandates the Provincial Treasury to publicly disclose a consolidated report on the status of municipal budgets at the end of each quarter.
The section 71 consolidated report presented to the Limpopo Legislature in June 2024 indicates that three municipalities—Vhembe, Mogalakwena, and Thabazimbi—failed to submit their debtor reports for the specified period.
Furthermore, five municipalities, including Molemole, Vhembe, Mogalakwena, Thabazimbi in Waterberg, neglected to submit their household debtor information.
Additionally, five others—Greater Giyani, Ephraim Mogale, Fetakgomo-Tubatse, Thabazimbi, and Waterberg—did not report outstanding amounts owed to creditors.
“Immediate attention is needed regarding the inaccurate and incomplete data provided by municipalities during reporting,” Smalle emphasized.
He insists that the Provincial Treasury must take urgent action to rectify the poor debtor and creditor management practices and investigate the non-compliant reporting behaviors among municipalities.
“These reports are essential for early detection of financial issues, enabling monitoring, support, and necessary intervention for municipalities in need of assistance.
Effective management of creditors and debtors is vital for maintaining financial stability. The DA is dedicated to ensuring precise financial reporting that fosters transparency and robust financial governance,” Smalle concluded
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