Cash crisis looms as municipality struggles to pay service providers
Makana Municipality is facing a cash crisis as it desperately needs R110-millionto pay its service providers, including Eskom.
Makana, which comprises Grahamstown and Alicedale among other areas, had just managed to get its head above water, following a two-year national government intervention, when it started experiencing cash-flow problems again.
The town is struggling to collect enough money from its ratepayers and businesses to be able to service its debts.
ANC chief whip Mthuthuzeli Matyumza said they were facing a financial crisis as ratepayers owed the municipality almostR300-million.
“The reality is that we are not financially sound,” Matyumza said.
“In some months we collect R18-million,and R12-million of that money goes straight to salaries.
“From the rest of the R6-million, we give a big chunk to Eskom as it is our biggest creditor. ”
Makana’s revenue collection rate ranges between 75% and 80% a month, a figure that has to improve for the municipality to be able to pay its bills and keep delivering services.
It relies heavily on Rhodes University as one of its biggest ratepayers.
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