The briefing will be attended by the Free State Premier, Sisi Ntombela, and the MEC for Economic, Small Business Development, Tourism & Environmental Affairs (Destea), Makalo Mohale at the entity’s headquarters in Bloemfontein. Last month, Mohale told OFM News that the board was appointed in December 2021 already, following a scathing mention in the Auditor-General of South Africa’s report on the audit outcomes of provincial and national departments for the 2020/21 financial year. The briefing will get underway at 11:30 am.

AG, Tsakani Maluleke, revealed in her report that the entity was without a board and in the midst of a liquidity crisis. Maluleke and company highlighted some of the revenue challenges that are negatively impacting the FDC presently. For one, the entity earns revenue by leasing out the commercial and residential properties it owns in the province, and also by charging interest on the loans it offers to small, medium and micro enterprises. The entity allegedly doesn’t receive many financial grants from Destea because it is meant to be self-sustaining, but it isn’t. In order to improve its cash flow, the FDC needs to recover its long-outstanding debt from tenants and loan recipients - 96% of which has been deemed irrecoverable. A part of this debt was paid to a billing and collection service provider procured by the FDC. However, this service provider ended up going into voluntary liquidation, and now owes the FDC over R100 million of the funds recovered.  “The entity should also use its in-house legal department to recover the long-outstanding debts owed by tenants, instead of paying external parties to do so,” said the AG.

Mohale weighed in briefly on the matter in his interview with OFM News, mentioning that the FDC was in a legal process to recover the funds that were owed to it by varied businesses. The FDC management recently presented their turnaround strategy to the executive committee (EXCO) of the province. The strategy entails ensuring that the entity has sufficient liquidity, by recouping money owed to it by local businesses indebted to it.

Also read: FDC gets new board

Furthermore, the AG’s office has reported irregularities discovered at the FDC to the Hawks for criminal investigation.

Also read: AG reports irregularities at FDC to the Hawks

OFM News