Alarm bells over city’s cash-flow crisis

ACTIONSA in eThekwini expressed concerns about the current financial position of the municipality, after a meeting of the municipality’s Finance Committee on Wednesday.

- ZAINUL DAWOOD

The financial ratios presented to the committee paint a worrying picture of a municipality under serious cash and operational strain, said ActionSA KwaZulu-Natal chairperson Zwakele Mncwango.

According to the committee reports, eThekwini currently has a cash/cost coverage ratio of approximately 0.5. Mncwango explained that the municipality has less than one month of cash available to cover its operating expenses.

“This level of cash coverage is extremely risky and leaves the city vulnerable to service delivery disruptions and financial shocks. While the current ratio of 1.48 suggests that the municipality can meet its short-term obligations on paper, ActionSA cautioned that this is largely driven by non-cash items such as outstanding debtors and grants receivable,’ Mncwango said.