KNYSNA NEWS - The DA in Knysna is seeking answers about the "surge" in the Knysna municipality's debtor's book which it alleges has increased by at least R200 million since the present coalition took over in September 2022.

"The debtor's book of the municipality, as of July 2024, currently sits at R575 million, the highest it has ever been," according to Ryan Smith, the DA's constituency head for Knysna.

Knysna mayor Aubrey Tsengwa has responded, saying the Knysna municipality is implementing "several interventions" to address these challenges, "with support from Provincial and National Treasury".

"These interventions include the Section 154 intervention by the Province, a Revenue Enhancement Strategy supported by the DBSA, and data cleansing activities," said Tsengwa.

Payment plan

Smith said the latest Section 71 report by the municipality revealed that its monthly financial commitments far exceed available cash by R75m.

Smith said the DA in Knysna will be writing to Tsengwa requesting a detailed payment plan in which his government intends to settle Knysna's surging debtor's book, "which has increased by R200m according to the municipality's latest Section 71 report for July 2024".

"This has happened since the ANC-PA-PBI-EFF 'coalition of corruption' took the reins in September 2022," said Smith.

Tsengwa said he had "noted with concern" the use of the term "coalition of corruption".

"I take serious exception to the newspaper using this term as a matter of fact. Could you please clarify whether this is the newspaper's official stance, as this could result in a complaint to the ombudsman," said Tsengwa.

'Acknowledge concerns'

The DA has, continuously in its media statements, referred to "the coalition of corruption", as reported by the Knysna-Plett Herald.

Tsengwa said: "We acknowledge the concerns raised regarding the current financial situation, as outlined in the latest Section 71 report. Several factors contribute to this regression, including non-payment for services, the increasing costs of service delivery, and the financial strain caused by unforeseen expenditures.

"Any decisions regarding debt management will be made in accordance with legal and financial regulations, ensuring that the municipality's interests are protected.

"Steps are being taken to rectify the financial situation, including intensified debt collection efforts."

'Financial mismanagement'

Smith said: "The regression of the Knysna municipality's financial performance in the recent Report on Local Government Audit Outcomes by the Auditor-General is also indicative of Knysna's financial decline under the coalition which continues to mismanage Knysna's finances and rob residents of crucial services."

This in comparison to the 20 DA-run Western Cape municipalities which achieved clean audits, including the City of Cape Town, the only metro in the country to do so.

"Knysna's financial mismanagement is further reflected in the Section 71 report, in which the municipality's monthly financial commitments far exceed available cash by R75 million.

"This places Knysna in an untenable financial situation under the current government, where irregular municipal cashflow and financial management continues to place the state of the municipality at peril," he said.

Covid-19 pandemic

He added that the DA in Knysna will also be requesting a detailed debtor's report from the Chief Financial Officer (CFO) to scrutinise large outstanding debtors, including Grey Elephant Investments (GEI), which allegedly owes the municipality in excess of R70m in outstanding rates and services "of which the 'coalition of corruption' is currently negotiating a substantial write-off. Knysna's debtor's book as of July 2024, sits at R575 million - the highest it has ever been".

"At the current rate, Knysna will soon be financially insolvent leaving the entire municipality without any means to sustain itself," said Smith.

Tsengwa said debt levels had "significantly increased" following the Covid-19 pandemic, with a consistent year-on-year rise.

"The contract with our debt collectors ended in June 2021. The then Acting CFO decided not to renew the contract to avoid imposing additional burdens on debtors through collection fees, which would have further inflated the debtor's book.

'Internal capacity'

"Instead, the focus shifted to strengthening internal capacity for debt collection.

"The annual increase in tariffs, coupled with the reduction in rebates and the discontinuation of write-off incentives, has had an immediate and noticeable impact on the debtor's book, further contributing to rising debt levels.

"It is important to note that all municipalities face financial risks, though the specific challenges vary.

"Knysna Municipality is no exception. For example, the impact of power supply issues, the increase in off-grid solutions, the rise in population without a corresponding increase in funds (equitable share), and non-payment for services all contribute to our financial concerns."

He said Knysna municipality was implementing several interventions to address these challenges.

‘We bring you the latest Garden Route, Hessequa, Karoo news’