The City of Joburg is South Africa’s second-worst municipality when it comes to settling debts with contractors. The city takes an average of 10.3 months to pay its contractors, while Mangaung holds the title for the worst payment record with 10.6 months. This is based on the auditorgeneral’s Consolidated General Report on Local Government Audit Outcomes 2023-2024, which was updated in August.
Joburg’s payment problems stem from both a liquidity crunch and the “sweeping” arrangement employed across all departments and entities of the city. Sweeping refers to the pooling of the money generated by the entities into a central bank account – meaning that they do not have control over their finances and leads to them not being able to pay contractors. The result of these late payments or non-payments is evident across all Joburg’s entities, but particularly so at Joburg Water.
The payment problems have led to delays in the completion of crucial projects and the suspension of work on various sites. This reputation for late payment has also seen many engineering contractors and suppliers unwilling to tender for contracts because they know the city has a poor record of managing and paying service providers. In October, City Power acknowledged that it owed contractors more than R1.2 billion, which it said was largely due to funding challenges in Joburg.
Read Full Article on The Citizen
[paywall]
Municipalities are supposed to pay service providers within 30 days. Joburg takes an average of 311 days to pay its creditors, according to the auditor-general.
[/paywall]
