The Keetmanshoop municipality is paying N$391 000 a month on renting 26 vehicles, including a Mercedes-Benz for the mayor, despite struggling financially.
This has attracted criticism from municipal councillors who are calling the expenditure “absurd and a waste of resources”.
Acting chief executive Desiree Boois last month said the municipality has opted to rent vehicles because of “outright purchase cash flow constraints and continued community service delivery requirements”.
She said the municipality is renting about 26 vehicles from Avis Fleet at a monthly fee of about N$391 080, excluding value-added tax.
Boois said the rental agreement, signed on 17 July 2017, runs for five years.
She confirmed that one of the rented vehicles is a Mercedes-Benz assigned to Keetmanshoop mayor Melody Swartbooi.
Swapo councillor for the town Emrico Blaauw last week said the vehicle rental arrangement is “absurd”.
He said the municipality’s priorities were misplaced.
“You don’t spend what you don’t have,” he said.
“The basic necessities, which are water and power, should always be first,” Blaauw said.
He said the mayor wanted to return the Mercedes-Benz, but was allegedly told doing so would amount to a breach of contract and cost N$400 000.
“For me, it was unnecessary spending without clear thinking,” Blaauw said.
Avis Fleet declined to comment on the agreement, citing that the company’s contractual arrangements are “private matters between the company and its clients”.
‘BENEFITING OTHERS’
Independent Patriots for Change shadow minister of urban and rural development Armas Amukoto says the Keetmanshoop municipality’s use of public funds appears to be difficult to justify.
“I hope the information is only a rumour,” he says.
Amukoto says N$390 000 spent on 26 vehicles monthly suggests the council could have instead bought these vehicles through a hire purchase arrangement at roughly N$15 000 per vehicle every month.
“This situation raises concerns about how the decision was made and whether it is in the best interest of the municipality,” he says.
He says the rental agreement creates an impression that the council may have entered into an arrangement that is not “financially sound and could be benefiting others at the expense of public funds”.
‘NOT PART OF IT’
Former Keetmanshoop chief executive Desmond Basson has distanced himself from the current agreement, saying the original contract was limited to a five-year period and should have expired in 2021.
“The vehicles we signed for at that stage were supposed to be returned after five years,” he says.
He says any vehicle currently in use by the municipality is part of new agreements concluded after his tenure.
“I’ve been out of the office for about four to five years now.
These are new deals they signed. I’m not part of that,” he says.
Basson says the original agreement involved a different class of vehicles, including single-cab bakkies, and did not include the new vehicles allegedly in use currently.
“What they have now are different vehicles, double cabs, sedans and others.
That has nothing to do with the agreement we signed,” he says.
Calculations including 15% VAT show that the five-year rental arrangement could amount to about N$27 million over five years.
A calculation by The Namibian shows that the municipality pays at least N$17 000 per vehicle every month, including VAT.
Former acting chief executive Paul Andries says the vehicle leasing arrangement stems from the council’s inability to secure financing due to outdated financial records.
“We cannot afford to buy vehicles through the banks because our books are in the red,” he says.
Andries says the municipality’s agreement started during his tenure and is a long-term arrangement that has been renewed over time.
He says the municipality has not been able to access loans, because its financial statements are not up to date and remain unaudited.
“As a result, we are not qualifying for any loans to buy vehicles. That’s how Avis came in and why we hire vehicles every five years,” he says.
Andries says the lease costs are comparable to what the municipality would pay under a hire-purchase agreement with a bank.
“It is almost the same amount you would pay if you were buying through hire purchase,” he says.
‘DIFFICULT TO COMMENT’
Independent Patriots for Change Keetmanshoop councillor Pieter Skeyer says it is difficult to comment on the current rental agreement, as he “found it there”.
“To cancel means we have to pay for the remainder of the contract that is more expensive,” he says.
He advises that the municipality should consider cheaper cars in future.
Skeyer says he believes renting could in some cases be better than buying, although it does not give the municipality ownership of the vehicles.
