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Municipalities battle to provide services after VBS scandal

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Limpopo municipalities that invested with the troubled Venda Building Society Mutual Bank or VBS are battling to provide services to communities.

The investment contravened the Municipal Finance Management Act.

A total of R1.5 billion was deposited at VBS by 14 municipalities from Gauteng, North West and Limpopo.

The bulk of the money, R1.2 billion, came from eight municipalities in the largely rural Limpopo province.

The Vhembe District Municipality in Limpopo is one of the councils that invested R311 million with VBS.

Recovering the money from VBS will not be easy – and could take up to seven years after the Reserve Bank placed VBS under curatorship in March 2018.

A long drawn-out battle is likely to take place to recoup the money, but it’s the communities in the affected municipalities that are bearing the brunt.

Residents are demanding answers over the reckless investments.

Vhembe resident Helen Ndou says: “Why is the government so afraid of these people? The community is suffering; these people must sell their properties to give back the money, all of it.”

DA Limpopo’s  Jacques Smalle says: “What is concerning is that there are seven remaining municipalities that still have investment within VBS, and there is a clear indication that they will not get their money back.”

The municipalities are not disputing that they’ve contravened the Municipal Finance Management Act.

Mayor Florence Nedzilani says: “It is not a good idea to invest money while people are suffering. Like I said before, the money was not meant for capital projects, it was for operational activities.”

While national government has intervened to assist the municipalities get back their money, it’s expected to take up to seven years to do so.

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