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Municipalities with VBS investments told to produce recovery plans

Cooperative Governance Minister Zweli Mkhize has this week met with the 14 municipalities who invested a total of R1.5 billion with the bank.

FILE: Cooperative Governance and Traditional Affairs Minister Zweli Mkhize. Picture: GCIS.

CAPE TOWN - Municipalities which invested in the failed VBS Mutual Bank have been given a month to come up with plans to mitigate their losses.

Cooperative Governance Minister Zweli Mkhize has this week met with the 14 municipalities who invested a total of R1.5 billion with the bank.

The bank was placed under curatorship in March when municipalities who had illegally invested with the bank, withdrew their money, causing a liquidity crisis.

VBS Bank is currently under forensic investigation by the Reserve Bank.

Mkhize has met with the mayors of the municipalities in the North West, Limpopo and Gauteng which invested their money with the bank.

He wants them to produce recovery plans to augment possible service delivery disruptions, as a result of the budget shortfall caused by the investment losses.

The affected municipalities are to provide the department with a report on their finances and the impact on service delivery within a month.

The situation is a double blow for North West municipalities, in particular, 12 of which are already receiving assistance from the department and Treasury.

Mkhize is in the Free State on Friday to determine what interventions are needed in its only metro which is distressed and dysfunctional, and nine other municipalities which need help.

Intervention teams have also been established to work with 12 Eastern Cape municipalities.

(Edited by Zamangwane Shange)

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