eThekwini's financial condition raises concerns among residents due to growing debt and low liquidity

Despite the eThekwini municipality's statements about progress with the online billing system, contractors report significant delays in receiving payments. While the municipality actively promotes improvements to the payment system, contractors claim that hundreds of invoices for completed work remain unpaid.

Mayor's Statements and Contractor Issues

These complaints arose after Durban Mayor, Cyril Shabha, stated on Sunday that the payment system is being successfully implemented among contractors. However, representatives of contractors working in the water supply and electricity sectors reported that they continue not to receive their due funds due to issues related to the system itself.

Several weeks ago, a serious dispute occurred between the city and contractors regarding the use of the system. Contractors protested its implementation, claiming they lacked the necessary skills to use it, which led to payment delays. The municipality countered, insisting that the system launch was postponed to give contractors time to adapt and guarantee payment for completed work.

Municipality's Position

The municipality previously announced improvements made and stated that over 800 million rand has been paid through the new system. The Mayor recently emphasized that the system is functioning correctly. He noted that according to government policy, service providers must be paid within 30 days of submitting a valid invoice. For a long time, the municipality could not consistently meet this requirement, leading to remarks from the Auditor-General.

The Mayor explained that to solve this problem, the municipality transitioned to an online billing system. This is part of broader efforts to strengthen financial management, improve supplier payment processes, and prevent malpractice in the supply chain. He added that the new system is intended to speed up payment processing times, reduce manual errors, and simplify tracking invoice status for suppliers. He expressed satisfaction that, through engagement with suppliers, they have adopted the system and view it as a solution to long-standing payment delay problems.

Complaints About System Inefficiency

The Mayor acknowledged that the system faced some difficulties during the initial implementation phase, but continuous training and support have significantly improved the pace of invoice approval and payment execution. Nevertheless, one contractor reported persistent serious problems with the new supplier portal. This portal was introduced several months ago, but suppliers still have not received money. The contractor called this an unfair treatment by the municipality towards partners and expressed doubt about the system's effectiveness, noting possible corruption.

Another contractor pointed out the inconsistency of payments: sometimes money arrives, and sometimes it does not, making the situation unbearable. Other contractors reported unpaid invoices dating back to February. One mentioned knowing a company with millions in unpaid bills. The source expressed uncertainty about whether the delays were related to the system or other reasons.

Yet another contractor reported not receiving payments since February and currently has about 100,000 rand in unpaid invoices. He shared that he is forced to earn from private contracts and run a food business while many of his colleagues are struggling. Another contractor noted that the system remains unstable, stating that approximately 340 invoices are currently unpaid, although recent information from a meeting with the mayor indicated that payments are indeed being made.

Reasons for Processing Difficulties

Andre Beetge, an executive committee member, reported that some contractors find the system complex and cumbersome. A request has been sent to the treasury to expedite the processing of delayed invoices and improve communication with contractors when information is lacking. Beetge pointed out that difficulties include data duplication, incorrect order numbers, wrong work card numbers, erroneous VAT calculations, inaccurate company details, and lack of supporting documents. He stressed that the inability to process payments may depend less on the municipality and more on the readiness or ability of the contractors to provide the necessary information.

Residents and civil society members of the eThekwini municipality have expressed outrage over the municipality's ongoing financially inefficient management following the publication of a recent audit report. The audit revealed alarming instances of irregular spending and service delivery failures.

State Audit Findings

According to the Consolidated General Report on Local State Audit Outcomes for 2024/2025, presented by Chief Auditor Tsakani Maluleke, only 39 out of 257 municipalities nationwide passed a clean audit. This report demonstrated deeply entrenched poor governance and systemic failures.

The report showed that despite managing a budget expenditure of R71.02 billion—which accounts for 57% of the KwaZulu-Natal municipal budget—the eThekwini municipality has been unable to achieve a clean audit for over ten years. Furthermore, irregular expenditures sharply increased from R3.41 billion in 2020/2021 to R7.80 billion in 2024/25, with eThekwini contributing R4.48 billion, which is 57% of this total.

Infrastructure and Service Issues

The report also indicated that 98% of the R7.5 billion main infrastructure grant received in 2024/25 was utilized. This grant was intended for infrastructure development and maintenance. Severely damaged roads, poor drainage systems, and sewage leaks were noted in eThekwini and Msunduzi (Pietermaritzburg), indicating inadequate planned maintenance and delays in defect response.

Moreover, in eThekwini and the city of uMhlathuze (Richards Bay), wastewater treatment plants continued to discharge non-compliant effluent, and this issue remained unresolved. The municipalities of eThekwini, Msunduzi, and Indumbi (Dandy) also failed to ensure compliance at landfill sites, combat illegal dumping, and manage environmental risks.

Project Implementation Failures

Weaknesses in project management further hindered service delivery to residents. For instance, the Etafuleni residential project in eThekwini was supposed to be completed in 2014 but remained significantly delayed after 12 years. The report noted that some beneficiaries live in unfinished houses without basic services. This occurred due to poor planning and weak coordination of essential service connections, leading to illegal electricity connections and insufficient water access, posing health and safety risks.

Public Organization Response

Abdul Walodia, chairman of the Overport Ratepayers Association, stated that the report paints a worrying picture of the eThekwini municipality's persistent inability to achieve a clean audit over the last decade. He called it unacceptable for a metropolis of such size and strategic importance. According to him, these failures directly affect the daily lives of eThekwini residents, as ratepayers in areas like Overport continue to pay high taxes but face potholes, frequent sewer blockages, unreliable water supply, and growing protests over service provision.

Walodia emphasized that the most vulnerable populations suffer the most. He urged the municipality to take the findings as a 'wake-up call,' demanding immediate and decisive action, such as strengthening financial controls and eradicating irregular, fruitless, and wasteful expenditure through transparent procurement processes and applying accountability measures to officials who fail to comply with regulations. He demanded that the mayor, city manager, and council present a credible recovery plan with clear timelines and measurable goals within the next quarter.

Rachel Naidu, secretary of the Tongaat Public Association, stated that irregular and wasteful expenditure is unacceptable. She insisted that the municipality must move beyond merely identifying and writing off irregular expenses to ensuring strict enforcement of accountability measures. Naidu called on the city to conduct a thorough review of supply chain processes, as recurring irregular spending related to expired contracts and non-compliance points to a systemic failure in internal controls that must be corrected at the administrative level.

Paul Govender, chairman of the Shalcross Public and Ratepayers Association, noted that while the report caused deep concern, it was not a surprise. He observed that communities have lived with the consequences of municipal failures for years. Govender stated that the municipality must move beyond crisis management and implement a comprehensive strategy for infrastructure renewal, preventive maintenance instead of reactive repairs, competent project management, and transparent procurement.

Yogesh Naidu, chairman of the Reservoir Hills Ratepayers Association, pointed to chronic weaknesses in financial management, including poor budgeting practices, weak revenue and cash flow management, as well as massive water and electricity losses. He noted that for the communities, this translates to unnoticed pipe bursts, deteriorating road conditions, sewer leaks, and housing project delays spanning more than a decade.

The Audit Risk Committee (ARC) found that the eThekwini municipality uses an outdated system for property valuation. This system requires frequent and continuous updates and improvements, which is a laborious process and may negatively affect operational efficiency.

Report Presentation and 2026 Assessment

The ARC Chairperson, Professor Imtiaz Wali, presented his report for the third quarter, ending March 31, 2026, to the eThekwini executive committee (Exco) on Tuesday. One of the issues raised by the committee was the nature of the 2026 valuation roll.

Wali explained that compiling the 2026 valuation roll involves numerous simultaneous changes across the Deeds Office data, the eThekwini municipality's property system, Value Assist, and the Revenue Management System (RMS). He noted that this inevitably leads to minor discrepancies between these datasets, and the review of the 2026 valuation roll revealed some minor exceptions related to property data obtained from various systems to form the consolidated roll.

Report and Municipal Reaction

According to the ARC report, these exceptions are mainly linked to limitations in data extraction and presentation, rather than a lack of underlying property information, which is addressed during current data cleansing processes. The report also stated that the core data in the roll is easily accessible for queries and subsequent verification.

The municipality responded that the system remains functional, stable, and suitable for its purposes, having successfully enabled the issuance of the 2026 valuation roll. City Manager Musa Mbele reported that the system continues to support key valuation processes and integration with the Geographic Information Systems (GIS) and RMS departments. He emphasized that this did not affect the municipality's ability to create a relevant and accurate valuation roll.

System Modernization Plans

Mbele added that the implementation of a new system is part of a broader reform program aligned with the Municipal Standard of Accounting (MSCOA). He reported that the business case for the new system has been approved, and the procurement process, including bid evaluation, is currently underway. In the interim period, the municipality will use the Value Assist system to meet operational needs.

Strengthening Governance and Control

The municipality welcomed the progress made in strengthening governance, accountability, and internal control through the implementation of action plans by the Internal Audit Service and the Auditor-General. As of March 31, 2026, 54% (334 out of 623) of issues identified by the Internal Audit Service have been resolved, compared to 48% (278 out of 579) at the end of December 2025. Mbele noted that outstanding matters continue to receive close attention, prioritizing those unresolved for over 180 days.

Furthermore, Exco received an update on 13 material irregularities identified by the Auditor-General between 2020/21 and 2025/26. The municipality reported that five irregularities have been rectified, five corrective actions have been implemented, two are in the process of further action, and one is under the directive of the Auditor-General. Mbele stressed the enhancement of accountability measures, including incorporating the completion of the audit action plan into the performance evaluation of executive directors, which accounts for 20%.