An Eastern Cape municipality is broke.

• More than 900 people who were not needed were hired by the Amathole District Municipality between 2013 to 2018.
• The municipality will not be able to pay salaries to its 1 670 workers for the months of February, April, May and June.
• For the past two years, the broke council has been relying on bank overdrafts to pay its R65m monthly salary bill.

The Amathole District Municipality hired more than 900 people who were not needed from 2013 to 2018, resulting in a bloated organogram and unaffordable salary bill.

Of those, 500 were hired in a single month in 2013 in what the municipality termed mass employment.

The mayor of the profligate municipality, Mkhanyiseli Maneli, and municipal manager, Thandekile Mnyimba, revealed this at a press conference in East London on Wednesday when they explained some of the factors that led to the municipality’s financial crisis.

This week, the municipality announced that it would not pay salaries to 1 670 workers, including councillors and traditional leaders, due to strained financial resources.

For the past two years, the broke council has been relying on bank overdrafts to pay its R65m monthly salary bill.

But it says the exercise is costly and unsustainable in the long run and it is begging the national and provincial government for a bailout.

READ | No pay for workers for 4 months, says bankrupt Eastern Cape municipality

On Wednesday, Mnyimba announced that they asked for an immediate bailout of R180m to pay salaries for February, April, May and June.

March will be covered when the municipality receives its equitable share from the National Treasury. It will not be enough to cover other months.  

The salary freeze bombshell sparked widespread anger with the South African Municipal Workers’ Union, which called for Mnyimba to be sacked over allegations of financial mismanagement. The EFF called for his suspension and a forensic investigation.

Maneli said the people hired did not have the skills for the core business of the municipality.

The district municipality’s mandate is to provide water to six local municipalities.

But all the municipalities – Raymond Mhlaba in Fort Beaufort, Ngqushwa in Peddie, Amahlathi in Stutterheim, Mnquma in Butterworth and Mbhashe in Willowvale – have had to endure an unreliable and interrupted supply of water for the past three years. 

About the bloated organogram, Maneli said: “Those people were not put in strategic positions. It was a wrong decision to take those people and put them in those positions because they were not assisting the institution in terms of the service delivery,” said Maneli.

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Asked why they were hired in the first place, Mnyimba said the employees were recruited in the organisation as interns and later absorbed.

This happened before the current administration took over, while Mnyimba was not yet municipal manager. 

“These employees joined the institution as interns and when they were inside the organisation they were then planted across the organisation. They did not form part of the organogram. This has contributed to the situation we find ourselves,” said Mnyimba.

He added that while it was easy to hire the people, offloading people employed on a permanent basis was a tough task.

To fix the issue of a high salary bill, the municipality has asked workers to apply for mutual separation, targeting 33% of those in senior management.

In the red

However, hardly any employees have come forward.

A council document also shows that the municipality is deep in debt and owes creditors an outstanding R322m.

It also owes:

• the Amatola Water Board an outstanding debt of R173m, and
• the Department of Water Affairs an outstanding debt of R50m.

The Amathole municipality is also struggling to pay R37m annual rent for their Chiselhurst head offices in East London.

The council document also shows that the management of the municipality fleet costs the municipality R2m per month. 

Eastern Cape ANC regional secretary in Amathole Terris Ntuthu said: “We are calling for the intervention of the national department of Cogta and National Treasury to investigate all the allegations in the district [municipality],including the involvement of the provincial department of Cogta in the chaos we see in the municipality, and also investigate the water blockages to our communities of Amathole.”

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