The Newcastle Municipality is no stranger to financial hurdles, but according to the government entity, it is actively working to enhance its financial standing.
In May 2023, the Newcastle Municipality openly addressed the Newcastle community regarding the substantial challenges it faced due to decisions made by previous administrations.
At that time, Newcastle Mayor Cllr Xolani Dube explained that the government entity grappled with the creditors payable versus cash dilemma. By 2020/2021, R800,264,666 was owed to creditors, while the municipality had only R9,500,299 in cash, resulting in a R790,764,364 shortfall.
Furthermore, Cllr Dube highlighted that residents owed a significant R1.593 billion to the Newcastle Municipality, with Newcastle East alone accounting for R1.2 billion of this sum.
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Nearly a year later, the question arises: How is the Newcastle Municipality’s financial situation faring? And has it improved?
In response to the question posed by Newcastillian News, the Municipality’s Communications Unit stated, “It is slowly improving; however, it is not where we would like it to be.”
Despite this slow improvement, the Communications Unit pointed out, “Our bank account is currently not overdrawn. Creditors’ age analysis has improved, and outstanding creditors are within 30 days (except for uThukela Water and Eskom).”
In addition, on 31 December 2023, the Municipality successfully paid the last instalment to 223 reinstated employees who were dismissed in 2019 following protest action, costing a substantial R80 million.
With the debt to reinstate employees settled, the Newcastle Municipality stated that it has extra finances for the community. However, the government entity is now taking additional steps to bolster its financial standing.
“Interim Finance Committee (IFC) was established and is sitting every Thursday morning to prioritise expenditure, monitor high-cost drivers and implementation of revenue enhancement strategies,” stated the Communications Unit.
The implementation of the Budget Funding Plan cost containment strategies, and revenue enhancement initiatives are all aimed at improving the cash position to prevent the recurrence of similar financial situations.
Furthermore, the Communications Unit highlighted ongoing efforts, stating, “The municipality must continue with the established Interim Finance Committee (IFC) where requisitions are approved based on the order of importance and availability of funds as part of monitoring high-cost drivers and reducing costs.”
Furthermore, the Municipality plans to purchase its own vehicles and plant equipment to improve service delivery and reduce costs on contracted services. The Municipal council has also approved incentive schemes to improve debt collection and reduce the debtors’ book.
Explaining outreach efforts, the Communications Unit said, “We also have an outreach program in place, held at strategic points around Newcastle where our staff members assist consumers with billing queries, payment methods, incentive schemes, meter-related queries, municipal bill, and indigent applications.”
The Newcastle Municipality added that the declining economic situation in Newcastle and the country (high inflation rates, high levels of unemployment, and high food and fuel costs) is making it increasingly difficult for consumers to pay their municipal bills and other living expenses, such as rental payments, bond payments, fuel and groceries.
Therefore, the outreach program is aimed at educating consumers about the available relief on offer.
“All these strategies are monitored in the Management Committee (MANCO) bi-weekly and reported to council structures including the Audit Committee on a quarterly basis,” said the Communications Unit.
As the Newcastle Municipality implements measures to enhance its finances, one significant challenge is the poor payment of municipal bills from Newcastle East Residents for services. As of 31 December 2023, Newcastle West owes R178,816,647.14, while Newcastle East owes an astonishing R1,568,960,777.64.
Addressing this, the Municipality’s Communications stated, “The COGTA appointed service provider is currently on-site assisting with debt collection in Newcastle East. We are also considering appointing a debt collector to assist us improve collection.”
While the Newcastle Municipality strives to improve its financial situation and encourages residents to pay for municipal services, the Communications Unit issued a message to the residents of Newcastle: “We are doing everything we can to improve financial stability and deliver services to the community.”
With the above in mind, be sure to share your thoughts in the comment section below.
Comments 2
I have never seen our Town in such a deplorable state with regards to all aspects from over growing grass, sewage, roads, water etc.. This administration is utterly and truly useless…
100% agreed, this admistration has done nothing to better this town, all monies paid by tax payers wasted on the mayor and deputy mayors new house. Newcastle municipality is basically nonexistant, its ridiculous how we are forced to pay rates and taxes yet nothing is being done to better the community.