Cash crisis causes Pietermaritzburg to face bankruptcy

Msunduzi municipality recently announced that it only had R4.8-million in the bank, while it needed R200-million a month to function properly, leaving the municipality only enough money to operate for three days.

Johann Mettler, an executive director of the SA Local Government Association, told a local newspaper that the municipality had been running on a three-day budget since March.

Mettler was sent to the capital of KZN to assist in pulling it out of its financial struggle five months ago. He initially predicted the city's financial crisis would be over in six months, but this didn’t happen.

Investigations revealed that the municipality was facing bankruptcy not only because of rampant misuse of its money and infighting among council members, but also because of the Pietermaritzburg ratepayers themselves.

It was revealed that 90% of the city's small and medium-sized businesses had tampered with their water meters, resulting in more lost revenue.

According to Mettler, most of the R7-million a day the city earns from ratepayers is spent on salaries, service delivery and its electricity bill, not nearly enough to keep the municipality afloat.

KwaZulu-Natal's premier, Zweli Mkhize, has refused to bail out the municipality., forcing the municipality to come up with a turn-around strategy.

According to the municipality's three-month benchmark, safe financial ground for Msunduzi municipality would be an inflow of R600-million in the next three months.