City of Windhoek has incurred cumulative losses of 2, 8 billion dollars over the past nine years, with another loss of N$480m recorded for the 2021 financial year and is considering selling undeveloped (virgin) land back to the Government for an amount still to be determined.
This was revealed today by Councilor Jurgen Hecht, who presented an overview and analysis of the financial state of the capital.
The councillor questioned what development could have been done with this N$3,2 billion loss, stating that CoW is a Titanic which has hit the bottom of the ocean.
‘’Its present only lifeline being its N$200m overdraft facility with FNB Namibia. It will take very ingenious and committed financial engineering along with some ruthless decisions to get this ship raised from the sea bottom to independently start sailing the wide-open ocean again,’’ he added.
In terms of the Municipality’s solvency, no commercial enterprise would have survived such an amount of losses and would have been declared bankrupt within two to three years.
‘’Solvency means in principle the ability of an organization to settle its long-term obligations as they become due; this means COW cannot settle its current expenses and liabilities by means of its cash resources and outstanding debtors,’’ he said.
He referenced the 2020 audit report by the Auditor General which states “that there is a material uncertainty on the commercial insolvency of COW in the foreseeable future, as at 30 June 2020, COW’s current liabilities of N$ 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. “
If the CoW succeeds in selling virgin land back to government it would be selling its “golden eggs”/sacrificing future profitable land sale proceeds,’’ Hecht said.
‘’We have instructed the Property Department to present to us a comprehensive overview of all “virgin” land belonging to COW to assess exactly how much unsold land and land to be developed, COW has at its disposal for future development.’’
Meanwhile, the CoW presently uses a N$200m overdraft facility to finance its day-to-day operations.
‘’Last week we were again very close to the N$200m limit. This N$200m overdraft facility is presently CoW’s absolute lifeline! The CoW is stuck in a cash flow dilemma for which no financial strategy and remedy has been found over the past few years,’’ revealed Hecht.
Furthermore, CoW’s total outstanding debtors as at 31 March 2022 amounted to N$1,2 bn, of which N$929m was in arrears.
According to Hecht CoW’s management is not able to collect its own revenue as N$450m of the debts were handed over for collection, pensioners owing N$95m, normal clients and businesses N$120m, SoE’s and Govt owe N$78m were some of the biggest individual debtors as at March 2022.