It never rains but it pours, a phrase that aptly describes the mounting financial crisis facing the Matatiele Local Municipality, which is now under pressure from service providers demanding payments amounting to nearly R30 million.
The municipality has received formal payment demands from two companies, S’dumo Housing Trust and Amakhaya Construction CC, for services rendered in the construction of RDP houses across various wards in Matatiele. There are also unconfirmed reports that a third company has submitted an additional claim of R5 million, further deepening the municipality’s financial woes.
These companies were contracted under agreements to build RDP houses, with the Matatiele Local Municipality acting as the implementing agent appointed by the Department of Human Settlements. In terms of this arrangement, the municipality was responsible for procuring contractors, overseeing construction, inspecting completed houses and submitting invoices to the department for payment.
However, the municipality now finds itself grappling with the payment demands as the Department of Human Settlements appears unwilling or unprepared to settle the outstanding invoices. As a result, the municipality may be forced to use its own limited funds to pay the contractors, despite concerns that it is already in a dire financial position.
The situation is not without precedent. Last year, S’dumo Housing Trust attached and seized the municipality’s movable assets in an effort to recover R1.9 million in interest alone, linked to an outstanding R13 million payment that should have been settled earlier in the year.
Adding to the pressure, a special council meeting has been convened for Tuesday to discuss two critical matters: the growing financial demands from service providers and the resignation of the municipal manager.
The municipality has accused the Department of Human Settlements of breaching their service level agreement by failing to honour invoices totalling about R30 million. In response, the department issued a brief statement indicating that the matter is sub judice and therefore could not be discussed further.
Commenting on the issue, Democratic Alliance councillor in Matatiele, Wonga Potwana, said the party was deeply concerned about the increasing number of court cases involving the Department of Human Settlements. Potwana also criticised the municipality’s legal department for failing to identify loopholes in the service level agreement.
“We are going to advise council that these companies must be paid, because if we delay by choosing to defend the matter in court, the municipality will accumulate even more interest,” Potwana said. “The municipality should pay the contractors and then take legal action against the Department of Human Settlements.”
As financial and governance challenges continue to pile up, Matatiele Local Municipality faces growing uncertainty over how it will navigate its obligations without further crippling its already strained finances.
