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City of Windhoek, a Sinking Titanic… Surviving on N$200 Million Overdraft

Staff Writer

The City of Windhoek is broke and is operating at the back of staggering cumulative losses of N$3.2 billion over the past 10-year period.

City councillor Jürgen Hecht broke the bad news on Monday morning, describing the insolvency situation as shocking as the organization’s workforce rakes in fat salaries, exerting pressure on cash flows.

He also said the City presently uses a N$ 200 million overdraft facility to survive its day-to-day operations.

Last week the City was very close to the N$ 200m limit.

“This N$ 200m overdraft facility is presently COW’s absolute lifeline. The 2020 audit report by the Auditor General states that “there is a material uncertainty on the commercial insolvency of CoW in the foreseeable future, as at 30 June 2020, CoW’s current liabilities of N$ 2.3 billion exceed its current assets of N$ 1,64 billion by N$ 1,259 billion.”

“Thus, there is commercial solvency risk on the ability of COW to settle its creditors in the normal course of business. As of 30 June 2020, there was thus a shortage of N$ 1,259 billion to cover the City’s immediate expenditure; in view of the 2021 draft financials, this shortage will be N$1,1 bn for the financial year 2021,” he said.

The City has been stuck in a cash dilemma for six years now, with nothing much done to remedy the situation.

Last year, former mayor Job Amupanda revealed that residents owed the municipality more than N$1 billion.

According to the City’s official statement for June 2020, a provision of N$630 million was created for medical aid.

Currently, there are 593 City of Windhoek retired members.

These enjoy a whooping N$2.3 million per month in medical aid contributions while in retirement

1,875 employees are also presently entitled to this benefit once they retire, while about 90 per cent of the in-service members remain on this municipal health care arrangement, posing further liability to the City.

Hecht said upon the death of a retired member, their surviving dependents may continue benefitting from the medical aid scheme.

“As more City of Windhoek employees retire, this provision needs to be adjusted. For the current new financial year, we made a provision of N$160 million more or less just to adjust this provision again. So, what I am saying is that we are getting close to N$900 million, and the question is, in the wake of our precarious financial situation, this is a problem,” he said.

Further financial bleeding has been caused by poor cash collection, retired employees that continue to cash in on medical aid, and a highly paid City police force which carried 440 active staff members.

Presently, there are 193 vacant positions, and there are plans to fill them.

The City police alone operates on a budget of N$230 million, which is about 90 per cent of the entire city police cost structure.

The force collects a paltry N$90 million from traffic fines and the Road Fund Administration (RFA).

“The fact is again, that all commendable action by City Police, and I have myself called them a couple of times when there was noise pollution in particular neighbourhoods and their action time was fantastic and the turnaround time,” he said.

Hecht added that the City of Windhoek police and Nampower also have a duplication of services that need to be reviewed.

The City can scant afford a City police force of N$230 million in the current financial predicament.

Hecht described the City as a sinking Titanic which needs drastic action in dealing with fat salary payouts, a possible stoppage to filling City police vacant positions and getting rid of a situation where a significant number of bus drivers continue on the pay-roll while not performing 24/7.

The City is currently making a N$70 million loss in its bus services division while there is an existing pool of 50 drivers earning about N$50 000 a month.

“Only a certain amount of these 50 bus drivers are constantly in use, are constantly working. About 20 of these 50 are, what I understand, are on standby. Again, we have to address it. We cannot afford this issue. It’s simply not affordable,” he said.

The 2022/23 budget, which has yet to get ministerial approval, was forged out of lengthy meetings with individual departments with a directive to save costs and expenses.


Staff Writer

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