Is Musina a gravy train for officials and councillors?

Date: 19 July 2024 By: Anton van Zyl

Musina Municipality, the smallest municipality in Vhembe, has some of the best-paid officials and councillors in the country. The budgeted remuneration for the municipal manager and the chief financial officer is roughly R1.9-million each per year. Many residents believe this is one of the reasons for poor service delivery, because after salaries and perks have been paid, not much is left to spend on maintenance and to expand services to all residents.

Disgruntled Musina residents blocked entrances to the municipality and engaged in protest action the past month, to show their discontent with what is currently happening. One of the complaints from the protesters is that the municipal manager and certain officials increased their salaries to ludicrous levels, totally out of kilter with what a small municipality can afford.

Last Thursday, the MEC for Cooperative Governance, Human Settlements, and Traditional Affairs, Mr Basikopo Makamu, visited the municipality. He previously promised to provide feedback on a range of concerns raised by the protesters. One of the complaints was that the officials had increased their own salaries to unacceptable levels.

During his visit, Makamu confirmed that the municipal manager, Mr Nathi Tshiwanammbi, is being paid more than what is allowed but said this is a matter for the council to resolve.

 How much do the staff earn?

An analysis of the last few years’ annual financial statements and budget documentation shows that the residents of Musina might carry a burden that is way too heavy for them.

Musina, an area inhabited by just over 130,000 residents, is by far the smallest of Vhembe’s municipalities. The latest available figures state that the municipality has 467 positions available, but only 244 have been permanently filled. It has 18 councillors.

In the 2023/24 financial year, the salary bill for municipal staff amounted to R164.27-million. That means the average salary for workers at the municipality was R56,102 per month. The councillors collectively received R11.43-million, or an average of R52,900 per month.

The municipality’s income, however, is not as significant as the salaries. In the latest budget, presented on 27 June, the pre-audited income for the 2023/24 financial year is stated as R542.58-million. This figure does not include grants from the central government for capital projects, but it does include the Equitable Share Grant, which was R227.14-million. Musina collected an estimated R26.95-million in property rates and R181.03-million in service charges. These two main income earners bring in almost R208-million, which will cover the salary bill with a couple of million to spare.

But, much like in any other business, one cannot just “sell” commodities without buying stock. Musina’s bulk purchases for electricity totalled R144.82-million, which means the “gross profit” does not get close to covering the salary bill.

The two other income items are the investment revenue (R855,000) and “other own revenue” of R106.61-million. In certain years, such as 2022/23, much of the other revenue seems to have come from debt collection, specifically from entities such as the Vhembe District Municipality.

Debt collection still seems to be a serious challenge for the municipality. In his budget speech, Mayor Godfrey Mawela expressed his disappointment with rising debt levels. “On 23 June 2022, when I delivered my budget speech, I indicated that the consumer debt in our municipality was over R40-million. Painfully, as I’m addressing you here today, the amount of consumer debt has doubled and risen to over R86-million,” he said.

Salary bill is 40% of income

But presuming the municipality did manage to collect the rates and taxes that they budgeted for, the salary bill is still excessive. If the Equitable Share Grant is taken into consideration, it is 32.38% of the income. If only its own revenue is taken into consideration, it rises to 55.70%.

The past decade also saw most Vhembe municipalities outsourcing work that was previously done by staff members. In some cases, it became more convenient to use expertise from outside, rather than appointing their own workers. Musina’s contracted services for the 2023/24 year were stated to have cost R40.31-million, which should be added to the staff costs to get a clear picture of how big a percentage of the total costs it represents. This means that the “salary bill” would be closer to R216-million, or 39.81% of the operational income.

But Musina Municipality is also guilty of some very creative accounting techniques, where the budget and the annual financial statements differ dramatically. Certain expense items, such as remuneration of officials, some costs were apparently deliberately omitted in certain years. (More about this later.)

 Who is earning the big bucks?

Musina’s mayor, Godfrey Mawela, took home R905,259 (with allowances) in the 2023/24 financial year, while the Speaker, ES Shirilele, collected R733,088. This is not totally out of line with the other mayors and Speakers in Vhembe, but considering Musina’s size, this is a stiff bill for the residents to pay. (Makhado’s mayor received R926,455 in 2022/23 and Thulamela’s mayor pocketed R981,839 the same year.)

A big slice of the salary cake goes to the municipal manager (MM), Mr Nathi Tshiwanammbi, and the chief financial officer, Mr Thomas Nephawe. 

The 2023/24 budget is very misleading, as the total remuneration of the municipal manager is stated as R1,463,734. The CFO’s annual package is given as R1,196,484. However, in the latest budget, the MM’s remuneration jumps to R1,894,000 and R1,902,000 is set aside for the CFO. This would mean that the salary for the MM increased by 29.4% and that of the CFO received a 58.97% boost.

A quick look at the 2022/23 AFS shows the discrepancies. During this year, the MM received a total remuneration of R1,707,861 and the CFO was paid R1,234,506. In the case of the MM, it included “leave pay” of R426,455.

When the discrepancies were queried with the municipality, the spokesperson, Wilson Dzebu, responded by saying that the total remuneration as stated in the 2022/23 AFS includes actual subsistence and travelling costs that were incurred by the municipal manager, “whereas the remuneration budget will only provide for what is estimated to be the cost as per the upper limits for municipal managers.”

When Dzebu was then asked why these additional costs seemed to be reflected in the latest budget, the response was very vague. “We are not required to add those when budgeting as these are budgeted in departments where these officials belong,” he said. Dzebu added that the municipality acknowledged that the budgets in the 2024/25 financial year were higher, “hence I mentioned that they will be adjusted accordingly when the new gazette is finalised.”

The gazette he referred to would be the notice of the Minister for Cooperative Governance and Traditional Affairs, which determines the upper limits of total remuneration packages payable to municipal managers and managers directly accountable to municipal managers.

This was done early in May this year by Minister Thembisile Nkadimeng.

 What should the MM earn?

The decision as to how much the municipal manager and officials get paid is one that every municipal council makes. An argument is also made that getting people with the relevant skills and experience to work in remote areas, such as Musina, is difficult. The premise is that only properly qualified (and expensive) personnel will ensure proper service delivery.

In the notice, the minister spends some time emphasising that municipalities must ensure that the remuneration of senior managers is cost-effective, externally competitive, and “aligned to the achievement of the objectives of municipalities while providing a uniform remuneration framework for local government.”

A point system is used to determine the category of each municipality. This classification considers the gross income of the municipality, the population, and the Equitable Share Grant received from the national government.

Based on the 2022/23 financial year, Musina will just slip into the Grade 4 category. That is mostly thanks to the R347-million “other income” for the specific year, which seemed to have been boosted by a reversal of debt by the Vhembe District Municipality. Based on the year before, Musina would have been a Category 3 municipality.

The lower limit for MMs of Category 4 municipalities is R1,253,656 and the upper limit is R1,661,806. Musina is also classified as a remote area, which means that a 4% additional allowance may be paid. This jacks it up to a maximum of R1,728,278.24. The MM is also entitled to a R1,695 monthly pension payment.

In the case of managers accountable to the MM, such as the CFO, the lower limit is R1,050,411 and the upper limit is R1,358,462. The remote allowance of 4% is again applicable.

The amounts stated in Musina’s latest budget are considerably higher than the maximum limits. When Dzebu was questioned about this, he responded by saying: “Even though the amounts in the budget are high, the actual implementation in the 2024/25 financial year is as per the gazetted upper limits. The budget will be adjusted downward by the end of February 2025.”

 How does Musina compare?

In the 2022/23 financial year, Makhado Municipality’s MM received R1,364,687. The notes state that this had only been for 10 months and that he had received an acting allowance for two months. The latest available budget predicts it to be R1,754,243. The CFO is expected to earn R1,433,999 this year.

In the case of Thulamela, the municipality did not have an MM for part of the period. The cost is stated as R1,279,572. The previous year, the municipality spent R1,531,099 on its MM. Thulamela’s latest budget makes provision for a total annual remuneration of R1,541,333.

Both Makhado and Thulamela are much bigger municipalities than Musina, especially in terms of residents. The latest census stats indicate that Makhado has a population of 502,452 and Thulamela is home to 575,929 people.

With regard to the percentage of income spent on remuneration, Musina is not the worst. Thulamela has been under fire for spending 43% of its operating budget in 2022/23 on salaries and allowances. If outsourced work gets taken into consideration, it jumps to 66%.

“The National Treasury guideline is a maximum of 40% and the [Musina] municipality is currently at 38%,” Musina spokesperson Wilson Dzebu said. “The municipality continues to realign the organisational structure during review periods to ensure that positions are not just filled to deal with the vacancy rate, but they should also be towards fulfilling the core mandate of the organisation.”

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Anton van Zyl

Anton van Zyl has been with the Zoutpansberger and Limpopo Mirror since 1990. He graduated from the Rand Afrikaans University (now University of Johannesburg) and obtained a BA Communications degree. He is a founder member of the Association of Independent Publishers.

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