Ethekwini


New Durban mayor declares war against corruption

Durban’s new mayor on Monday “declared war” against corrupt councillors and officials.

“I declare war against fraud, corruption and maladministration and we will take action against councillors and officials who are found to be doing business with the municipality,” James Nxumalo said at the Durban City Hall on Monday afternoon, after being sworn in as the municipality’s new mayor.

A forensic firm was appointed earlier this year to probe fraud, corruption and maladministration allegations in the municipality. Auditor General Terrence Nombembe’s 2009/10 report indicated R532m had been spent irregularly in the municipality.

Nxumalo said strict measures would be put in place to ensure departments adhered to supply chain management processes. The municipality would also not allow officials to flout tender procedures.

He said he expected employees to work productively and passionately to improve the lives of residents.

The municipality would continue “the great track record of unqualified audits”.

He would convene a two-day workshop in August where the city’s “strategic framework” would be mapped out. Improving the city’s economy, providing jobs and ensuring the costs of public transport, housing and basic services were reduced, would be among subjects to be discussed.

Former deputy mayor Logie Naidoo was voted the municipality’s new speaker on Monday. Executive committee member Nomvuzo Shabalala would fill the vacancy he left.

Naidoo got 134 votes to the beat the Democratic Alliance’s Warwick Chapman, who got 44. The African Christian Democratic Party’s speaker candidate Jonathan Naidoo managed to get three votes.

Speaking after he was sworn in, Naidoo said he would ensure the municipality was a leading council in South Africa.

“I will make sure that this council improves the lives of our people. I will make sure that service delivery is a priority.”

Credit to: News 24 and Sapa

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eThekwini among those fingered in report

It is hard to believe that just 20 years ago the municipality of Durban was regarded as one of the most creditworthy local authorities in the world.

Today the eThekwini metropolitan municipality, encompassing Durban and seven formerly independent local councils with 3 million people, is one of many municipalities fingered in a research report by Ratings Afrika for its deteriorating municipal governance.

The intensive survey, carried out over the past five years, aims to highlight the state of financial governance at municipalities. The information will allow banks to assess the business merit of lending to municipalities that need to supplement their budgets.

Ratings Afrika found a worrying picture in eThekwini, with debt climbing and cash flow under pressure. Similar circumstances exist at many other metros and municipalities in the country as they struggle to extend basic services to all.

A lack of revenue is particularly pronounced in eThekwini, though. Net income as a percentage of total income declined from 25,41% in 2007 to 10,44% in 2010.

With income from water and electricity services under pressure since 2007, the metro did what many of its peers have done — it increased property valuations.

Even increasing this source of income was not enough for the municipality to avoid taking on further debt. Interest- bearing debt as a percentage of operating revenue has climbed from 46,3% to 54,2% while long-term liabilities have risen by R3bn from R5.1bn in 2008 to the present R8.2bn.

Provinces receive a budget from national government, but municipalities and metros mainly have to raise their own funds through rates. This has proved to be ineffective and they are turning to debt to run services.

Ratings Afrika CEO Charl Kocks says municipalities such as eThekwini cannot keep on borrowing to run basic services.

He is especially concerned about liquidity: “It is the lifeblood of any municipality.” At eThekwini, cash from operations as a percentage of income has declined from 34,5% in 2008 to only 13,47%.

The ratings index has a maximum score of 100 and assess 50 municipalities. They take into account the financial position of the municipality as well as its operating performance, debt position and liquidity management. Particular focus is placed on liquidity, which forms 40% of the weighting, followed by debt governance at 28%.

The average score of all municipalities was 62 points in 2007. It has fallen to 48 in 2010.
The lowest-scoring municipality was Madibeng (Brits) with 16 points, followed by Westonaria and Richards Bay with 21 each. Though scoring a full 100 points is technically possible, the best- performing council in 2010 was Saldanha Bay with 87.

Kocks says it is scary that the number of municipalities scoring 35 and less is increasing. In 2007 only three fell into this category but the number has increased to 15. “We are hitting the wall right now,” he says.

The number of municipalities with scores above 80 has declined from nine in 2007 to five now.

As with eThekwini, a marked deterioration is occurring in the bigger metros. Of particular concern is Johannesburg, which experienced a significant decline between 2007 and 2010 and only a moderate improvement over the past year.

The problems in Johannesburg relate to the integration of IT billing systems, negatively affecting revenue. Kocks says there is a real possibility that revenue and debtor figures are at least 10% in error. “But the biggest deterioration is with reputational risk and this could lead to more people not paying or defaulting because the figures cannot be trusted.”

Johannesburg’s performance declined quite rapidly but in 2009 it was one of four municipalities out of 283 receiving a clean audit opinion from the auditor-general.
Research Afrika’s research shows that little has improved since last year. The auditor-general was unable to give an opinion on 81 municipalities because of inadequate data.

Altogether 38 municipalities did not submit reports and 47 received qualified reports.
Kocks says it is not necessarily a political problem. Saldanha Bay is an ANC-controlled municipality while the controversial DA-led Midvaal performed only on average. Other municipalities doing well include Stellenbosch (80) and Lephalale (Ellisras) with 81. Tlokwe (Potchefstroom) was also a good performer at 82.

Sources within municipalities have disputed the figures used by Ratings Afrika in its research. They have questioned the validity of conclusions reached. But Kocks says this criticism should really get one worried. “We used only official data from treasury and all the municipalities had the opportunity to comment.”

Institute of Municipal Finance Officers president Chris Nagooroo says some of the findings could be unduly negative, though he has not read the report. He admits cash flow is a serious problem at most municipalities.

Many municipalities have improved their performance. “But much more needs to be done and we are definitely not where we want to be.”

Credit to: Financial Mail

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Durban faces massive water hike

Durban’s unicity council could be forced to increase water tariffs by a whopping 30 percent – or more – in a bid to avert a debt crisis that threatens to bankrupt the city’s water service.

Such a drastic hike would not only hit thousands of city household consumers hard, but could also lead to large-scale job losses as industries relocate to cities where water is cheaper.

Only three years ago, the water service ran at a healthy profit, injecting millions of rands a year into city coffers to help offset rates increases.

But shocked unicity executive committee councillors were warned on Tuesday that unless drastic steps were taken, the service faced a R100m loss at the end of the financial year in June.

One of the emergency steps outlined in a proposal before Exco was an immediate tariff increase of 15 percent, higher than last year’s increase. But this does not take into account any increase to be imposed by bulk water supplier Umgeni Water. Last year, Umgeni Water upped its price by 13 percent.

A similar price increase, coupled with the proposed 15 percent emergency council increase would amount to a combined tariff hike of more than 25 percent. But according to council sources, the Umgeni Water increase is likely to be “substantially higher” than last year’s.

“From what I’ve heard, we will be lucky to get away with a combined increase of less than 35 percent,” said one source. These and other “corrective measures” will serve merely to prune the R100m trading deficit to a more manageable R60m.

Water service boss Neil Macleod was at pains to emphasise that the crisis was not a result of the council’s policy of giving away 6 000 litres of water a month free to every household, but rather a combination of a drastic reduction in income and unforeseen expenses.

In the former townships of Mpumalanga, Clermont, KwaDabeka, KwaDengezi, KwaMakutha, Madadeni and Georgedale, water meters have not yet been installed as expected and tens of thousands of households have enjoyed free water for the entire year, resulting in an estimated R23m in lost income.

Even in areas where water meters have been installed, gangs of “unofficial plumbers” are making a living bypassing water meters, allowing householders to steal R18m from city coffers in the past year. Where people have received bills, many simply refuse to pay up.

Collectively, they owe more than R170m.

Employing field workers to go door-to-door to convince people to pay up and to disconnect non-payers cost R15.6m more than expected, while hiring security guards to protect them cost R7.5m extra.

Peter Cobett, a Democratic Alliance spokesperson for the unicity, described the situation as the biggest crisis in service delivery the city had faced.

“Over the past three years, the ANC has consistently pussy-footed around people who refuse to pay for services. Now, the chickens are coming home to roost.”

Logie Naidoo, the deputy mayor and an African National Congress member said it was irresponsible of the DA to use the situation for political point-scoring.

He said Exco had taken no decision on the recommendation and Umgeni Water had yet to formally propose its water increase. “So, it is premature to speculate about any possible tariff increase.”

Naidoo said the council would approach the national government for a subsidy and he was confident it had a strong case.

Credit to: Independent Online

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Durban officials benefit illegally

eThekwini councillors, officials and workers are among those who, on the face of it, have illegally benefited from the city’s dysfunctional supply chain management system, with more than R147.3m in tenders awarded to them or close relatives, and to other employees of the state.

They include close relatives of mayor Obed Mlaba and an unnamed senior manager, who together received contracts totalling R88m in the past year alone. It’s been previously reported that Mlaba’s daughter, Thandeka, benefited from municipal tenders.

The latest information is contained in a management report from the auditor-general’s office dated November, 2010 to city manager Michael Sutcliffe. The report forms part of the metro risk and audit committee’s annual report for the municipal year ending June, 2010.It has yet to be officially tabled before the city’s executive committee.

The report states that seven contracts totalling R11.4m went to councillors, in direct contravention of the law and supply chain management (SCM) policies, and constituted irregular expenditure.

A further 46 contracts valued at R5.4m went to entities whose directors, members, principal shareholders or stakeholders were in the service of the municipality.

The report identified two municipal employees by name, who received contracts amounting to R76 886 and R60 000 respectively. A further R1.2m payment was made to one employee after he changed the company’s name.

In its response, the city said it was still investigating whether the individuals were in fact employed by the city at the time and whether their previous or current jobs had anything to do with the contract.

The report also highlights that 107 awards totalling R42.5m were made to 123 entities whose directors, members or stakeholders worked at other state institutions.

This too is prohibited by law and SCM regulations and constitutes irregular expenditure.
The auditor-general’s provincial representative, Herman van Zyl, noted that procedures were not in place to ensure that potential service providers were not state employees.

He notes that “non-disclosure constitutes a corrupt and fraudulent act which should be investigated and dealt with”. This could include cancelling contracts.

In its response, the municipality’s policy and support unit said it was impractical and not cost-effective to verify suppliers for all contracts under R200 000. It also did not have access to the payroll database of all government employees.

Sutcliffe added that searches via the Companies and Intellectual Property Registration Office (Cipro) did not always yield the right information, and it was difficult to undertake independent checks on the spouses and children of municipal staff and councillors.

“In this regard, access to Home Affairs and Sars records should be made available to municipalities to ensure they could do more thorough checks,” he said.

Many of the allegations centre on the awarding of housing contracts. There is already a separate investigation by Willie Hofmeyr’s Special Investigating Unit into municipal housing.

In at least 10 instances, goods and services worth more than R200 000 were not procured through competitive bidding processes or through Section 36 emergency awards. The management report adds that 30 electricity department workers were paid R10.6m in overtime, R4m more than their total salaries of R6.7m.

The city’s management blamed the huge overtime bill on “gross understaffing”, saying the vacancy rate for electricians’, superintendents’ and clerks’ posts was 50 percent.

“While management has done everything possible in the past three years, there is a chronic shortage of utility experienced electricians in SA.”

The city said it was also not able to compete with Eskom and private companies in paying salaries.

While significant gains were made to attract and train electricians in the past 18 months, most were inexperienced and needed training to become productive.

Another reason for the excessive overtime bill was attending to theft of networks and illegal connections.

“The alternative is to leave customers cut off from (4pm) until normal works hours the following day if overtime was to be avoided,” the municipality said.

Credit to: The Mercury

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Damning report about Durban top officials

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Good water management crucial to avoid shortages

South Africa faces a water crisis and could start having critical shortages as early as 2020, experts told the inaugural South African Water and Energy Forum in Johannesburg.

Metropolitan municipalities including eThekwini, Nelson Mandela Bay, and the City of Johannesburg, will be the first to be hit by shortages.

The forum’s two-day conference is being held at the Sandton Sun for local and international experts to deliberate on water and energy supply issues in South Africa and globally.

Former Water Affairs director- general and visiting professor at the Wits University Graduate School of Public and Development Management Mike Muller told delegates that “a crisis is looming … If we don’t panic now and take action now, we will be in a crisis by 2020.”

The shortages, Muller said, will largely be due to water demand outstripping supply, and to a lesser extent by poor water quality as municipal infrastructure deteriorates.

Other contributing factors include leaking pipes and the theft of water for agricultural purposes by farmers along the Vaal River.

“Good water management is very important for growth and development,” said Muller.

“South Africa will not run out of water, but the next drought will see supply cuts. New work must start now.”

He urged the government and municipalities to start building water infrastructure immediately.

Business Leadership South Africa CEO Michael Spicer said South Africa had sophisticated legislation and institutions, but was failing to implement those pieces of legislation.

SA Chamber of Commerce and Industry’s Neren Rau said the crisis was “now”.

“Government has to take the lead. We don’t believe this is being taken seriously.”

Pancho Ndebele, director for Emvelo, a company specialising in solar energy and water eco-solutions, said it was important that companies understand their water footprint.

In Europe, he said, companies were toying with the idea of detailing the water footprint of every item they sell.

Credit to: Times Live

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Damning report about Durban top officials

The eThekwini municipality is sitting on a damning forensic report that fingers some of the city’s top officials for alleged financial irregularities.

The report, which follows an investigation by Durban accounting and forensic investigations firm, Ngubane and Co, calls for disciplinary action and investigation into the city’s financial affairs.

The report has not been tabled or given to all executive committee members but was discussed at a closed committee meeting last week. Municipal manager Mike Sutcliffe and city treasurer Krish Kumar were asked to leave that meeting, although the reasons are unknown at this stage.

On Thursday eThekwini mayor Obed Mlaba said he was not prepared to divulge any of the report’s details.

Questioned on who the report fingered and what it said about Sutcliffe, Mlaba said: “Whether the city manager is in trouble or not, I don’t know at this stage.”

Mlaba said no other information would be coming from him as the municipality’s financial issues were under investigation and he would not respond to rumours or allegations by the opposition.

“We are a committee (exco), we act as a collective, even as different parties.”

This comes amid reports of tensions between Mlaba and Sutcliffe, with the mayor allegedly feeling that he had been isolated by senior officials on mayoral decisions.

These tensions, it is alleged, date back to the days of the late ANC regional chairman, John Mchunu, who was apparently the only one briefed and consulted by Sutcliffe on major decisions affecting the city.

Earlier this week, Desmond Msomi, the managing director of Ngubane and Co, confirmed the existence of the report, but said he could not divulge anything about the investigation as the firm had been commissioned by the municipality’s internal audit unit and was bound by confidentiality rules.

DA councillor Tex Collins on Thursday said he did not have a copy of the report, but “information at hand suggests that several highly placed individuals within the administration should in fact be suspended pending the outcome of further forensic investigations”.

Apart from the Ngubane report and the 2009/10 audit report, which has not yet been made public, Mlaba this week called for another full-scale investigation into the city’s money matters.

In his 2009/10 audit report, auditor-general Terence Nombembe highlighted the city’s R532 million of irregular expenditure as well as its lack of internal controls and supply chain management contraventions.

That report also underlined 25 cases of alleged procurement fraud and irregularities, as well as the delivery of municipal housing which was under investigation.

In his State of the Nation address on Thursday night, President Jacob Zuma said the government had directed the Special Investigating Unit to probe alleged maladministration or corruption in various government departments, municipalities and institutions.

The unit’s Willie Hofmeyr on Thursday night confirmed that the agency was investigating housing irregularities in the municipality.

Minority Front councillor Patrick Pillay said: “The writing is on the wall, the days of irregular and wasteful expenditure are over. The flouting of tender regulations and usage of section 36 freely and without due consideration to the city and its ratepayers will soon be over.”

Credit to: The Mercury and Independent Online

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‘Durban favourite for 2020 Olympics’

South Africa’s four-city race to host the 2020 Summer Olympic Games appears to be going in favour of Durban, with a top government official even suggesting that it is the favourite.

Durban faces competition from Johannesburg, Port Elizabeth and Cape Town, which, according to Sports Minister Fikile Mbalula, have all indicated willingness to host the sporting mega-event.

Cape Town has said they would not enter the bidding race.

Durban’s hopes will be given a boost today with a visit to the city by International Olympic Committee (IOC) boss Jerome Rogge.

Rogge is addressing the World Conference on Sport, Education and Culture, and will, on the sidelines of this, have a joint programme with the city and will hold informal discussions with Mayor Obed Mlaba.

According to City Press the political leadership of the province and the city, and Mbalula would also be at the meeting.

IOC spokesperson Sandrine Tonge said there would be no discussion of a Durban Olympic bid.

Durban appears to be in the driving seat, positioning itself strongly and developing the Kings’s Park sporting precinct.

The precinct runs from the Moses Mabhida Stadium to the Durban International Convention Centre and provides, among other things, a 76 000-seater stadium, several small stadiums including Absa Stadium, a cycling track and an arena suitable for indoor sports.

A senior city official said the city had already begun its lobbying process, with KwaZulu-Natal’s premier, Zweli Mkhize, notifying the South African bid committee of the province’s willingness to back the city’s bid.

In terms of process, cities make their pitches (which require the backing of their provincial government) and a national selection process takes place.

Mbalula yesterday played down any suggestion that it was a certainty that Durban would be the winning city.

He said the process was still wide open, with all four cities making representations to government.

“We understand that Durban is particularly enthusiastic, but the issue of the host city has not yet been finalised.

“Where we are at now is that while Cape Town had earlier said they were not interested, they have changed this position and the matter is wide open.

“We should be able to finalise the issue by the end of January or early in February, and we will then make an announcement as to which South African city will make the country’s bid,” said Mbalula.

He added: “The overall principle is that South Africa is prepared to host the Summer Olympics.

“The issue now is which city.’’

The Nelson Mandela Bay Municipality (Port Elizabeth) yesterday confirmed that it would also be putting in a bid to host the 2020 Games.

Municipal spokesperson Roland Williams said they were awaiting details about the requirements from the South African Sports Confederation and Olympic Committee (Sascoc).

“We have many sporting facilities and infrastructure such as indoor sports fields and hotels to offer,” said Williams.

He said that the municipality had written to Sascoc asking for the specifications regarding the bid, but it had not received any feedback.

Various spokespeople for the City of Johannesburg yesterday could not provide any details about the city’s bid status.

City of Cape Town spokesperson Pieter Cronje yesterday said the Mother City would not bid to host the 2020 Olympics.

“We have informed Sascoc that we might in future bid for the Olympics held after 2020,” he said.

“After the 2010 World Cup we reconsidered all the costs of the infrastructure, such as public transport, that has to be put in place for the Olympics, and we decided to rather look at hosting other sports, entertainment, arts and culture events in the meantime.”

While the 2020 host will be announced in Buenos Aires only in mid-2013, the bidding process must take place next year.

Other cities expected to bid are Rabat (Morocco), Delhi (India), Rome (Italy), Brisbane (Australia) and Guadalajara (Mexico).

Credit to: News24 and City Press

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Joburg metro most productive

Although the City of Johannesburg’s performance was hampered by the recession, it remains the most productive metropolitan area in SA to work, live and invest in, according to a productivity index released by web-based data service MunicipalIQ yesterday.

The index found that the Western Cape has the most productive local municipalities, while eight out of the 10 worst municipalities are in the Eastern Cape.

The findings come on the eve of an African National Congress summit on provincial and local government to explore ways of improving service delivery in the two spheres of government.

The index measures poverty levels and how municipalities respond to it; access to municipal services; and infrastructure used by residents to participate in the economy. It also examines financial governance, expenditure levels and staff vacancy rates.

MunicipalIQ MD Kevin Allan said the rankings of metro, district and local municipalities fell.

“It is worrying that we can see the recession feeding through into this year’s index results, in large part due to diminished spending by municipalities and shrinking revenue bases,” he said.

“This is of special concern given that service delivery protests have become an apparent fixture on the South African landscape.”

Johannesburg was the best- performing metro, followed by Cape Town and eThekwini 9Durban). Buffalo City in East London did the worst, although it will become a metro only after next year’s local government elections.

According to Karen Heese, an economist with MunicipalIQ, the metros were the worst affected by the recession, which resulted in drops in productivity in Gauteng and the Western Cape.

“Poorer provinces have been better insulated from the recession than higher-spending ones if we consider differences between 2009 and 2010 … which show that the drop … by the Western Cape and Gauteng is much higher than other provinces,” Heese said.

The index showed that municipalities in rural areas and former homelands continued to generate poor revenue, as skills shortages undermined their capacity to deliver services, she said.

The number of “major” municipal service delivery protests to have taken place so far this year (107), has surpassed last year’s figures (105), the results showed.

Credit to: Business day

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Farm union warns govt on water

Government will carry the burden should farmers be forced to cease agricultural activities due to water pollution, agricultural union TAU-SA said on Wednesday.

Its deputy president Louis Meintjes said the government, which holds the exclusive constitutional custodianship of the country’s water resources, must implement effective measures to counter the pollution of water systems to avoid this.

Meintjies was reacting to reports which confirmed their concerns about contaminated food.

This was because production thereof was dependent on water containing poisonous heavy metals, chemicals and waste material.

“It is a well known fact that mines, industries, agriculture and municipalities make the biggest contribution to existing levels of pollution,” he said.

Meintjies admitted that farmers were also responsible for pollution by “ill-informed” application of fertilisers and poisons. This had in turn led to the establishment of an environmental management committee to advise farmers on good practices.

Meintjies said the union had raised concern about polluted water resources and the implications thereof on water security, but this had been ignored by, among others, the minister of water affairs. “It fell on deaf ears,” he said.

Another problem is the lack of skills in water provision, particularly at the municipal level.

Neil Macleod , eThekwini municipality’s head of water and sanitation, said there were fewer than 1400 engineering professionals in local government.

Many in leadership positions had risen rapidly through the ranks, resulting in a skills gap.

The Development Bank of Southern Africa hosted a dialogue on municipal water services recently.

Its report warned that there had been an overemphasis on water delivery at the expense of demand management, and that better asset management was needed.

“The deterioration in water services and the way in which delivery is proceeding will have serious implications (on) people’s lives, health and wellbeing, growth and development prospects, and national water security,” said the report

Credit to: Sapa and News24

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R29bn debt burdens metros

South Africa’s six metros are owed a staggering R29-billion in water and electricity bills and property rates payments.

TimesLive report that this is having a major impact on service delivery and adding to the debt burden are provincial administrations.

The Western Cape government owes the City of Cape Town R139-million, and Eastern Cape departments owe the Nelson Mandela Bay metro in Port Elizabeth about R74-million.

KwaZulu-Natal owes Ethekwini metro about R682-million, R481-million of which is being disputed.

City of Johannesburg revenue spokesman Stanley Maphologela refused to say how much the Gauteng administration owes, saying: “There have been meetings with provincial departments called by the premier [Nomvula Mokonyane] to deal with those accounts.

“It’s not like the government departments didn’t want, or don’t want, to pay. They say they can’t pay invoices based on estimates.”

But citizens are responsible for much of the lost money, which includes water and electricity losses through illegal connections and theft.

In the 2009-2010 financial year, the City of Cape Town could not account for nearly 83.4million kilolitres of water costing R493-million. Cape Town also lost 810million kilowatt-hours of electricity worth R485-million “of which R364-million is due to technical losses – which is due to system design and the natural elements”.

Johannesburg lost electricity worth R250-million because of illegal connections, Maphologela said.

All the metros said the losses of such vast amounts meant that residents were deprived of services.

Ethekwini spokesman Themba Nyathikazi , who said that his municipality had a collection rate of well over 96% in the 2009-2010 financial year, warned that “service delivery will be hampered because funds are needed for it”.

“It also means reduced cash flow to undertake various tasks and procurement for services.”

Maphologela said: “The general high level of consumers’ indebtedness affects ratepayers directly, causing them to default on payment of the rate bills, which is an impediment to the council’s revenue collection initiatives, and thus increasing our debtors’ book.”

In a bid to increase collections, Ekurhuleni has resorted to waiving debtors’ interest for six months – from this month to March.

“This is an effort to recover nearly R5-billion owed for services rendered,” said spokesman Zweli Dlamini.

The amounts owed to the country’s metros are:

  • Johannesburg R8.4-billion;
  • Ekurhuleni R7.7-billion;
  • Tshwane R3.5-billion;
  • Ethekwini R4.3-billion;
  • Nelson Mandela R1-billion; and
  • Cape Town R4-billion.

Credit to: Times Live

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