City spends N$27m on ex-employees’ medical bills
Staff overpaid, finances deplorable
Post-retirement healthcare benefits are costing the Windhoek municipality an arm and a leg annually.
Post-retirement healthcare provision is costing the City of Windhoek - which has made cumulative losses of N$3.2 billion in nine years - N$2.3 million per month, which amounts to N$27 million annually.
This according to councillor Jürgen Hecht, who gave the media rare insight into the City’s financial troubles at a press conference yesterday, called by management committee chairperson Ndeshihafela Larandja.
Another press conference will be held at the City chambers today by mayor Sade Gawanas, who yesterday stormed out of the Larandja press conference because she did not believe it should take place.
Hecht slammed the fact that City of Windhoek employees earn 30% to 40% above market rate.
The N$3.2 billion cumulative losses would have been able to construct over 6 000 houses if each unit was to cost an average of N$500 000, Hecht, an accountant, said.
The Independent Patriots for Change (IPC) councillor used the occasion to bring to the fore issues around the City’s remuneration structure, the finances of the City Police and the benefits employees enjoy.
According to him, the City could have completed various capital projects if it did not incur the astronomical losses it has been making over a nine-year period.
“If you look at the past nine years, the City of Windhoek has been incurring cumulative losses to the value of N$3.2 billion. If we would have only managed to break even... A good, proper two-bedroom house will cost you N$500 000, then 6 300 houses could have been built with the N$3.2 billion,” he said.
“If you assume that one kilometre of tar road could cost you N$1 million, then 3 200 kilometres of road could have been tarred,” Hecht added.
The state of finances has taken a toll on the City, Hecht said.
“We have a shortage of N$1.1 billion so the solvency of Windhoek is catastrophic; it is of alarming proportions,” he said.
Overpaid City officials
The City pays among the highest salaries in Windhoek - if not Namibia, Hecht said information shared by its human capital department showed.
A comparison was done between what the City pays and what the conventional Patterson grading system recommends, he added.
“It is no secret that the City pays some of the highest salaries in Windhoek. Employees earn 30% to 40% above market rate and this poses a major problem to our existing cost structure,” Hecht said.
“In the lowest bands, we pay 620% above market rate. In the highest bands, 144% more than the market rates. We cannot afford it.”
Benefits galore
Hecht also questioned an asset financing arrangement entered into with a major financier, saying the arrangement was not of any benefit to the City.
“There is a staff vehicle financing arrangement the City has. A City employee can buy a car, it gets financed at 5%, however the municipality pays for it at a prime interest rate of 8.5%.
“The interest rate differential is carried by the City; it’s part of our operational expenditure.”
Another concern for Hecht was the post-retirement healthcare provision the City had to create as part of its obligations.
“We’ve got a post-retirement healthcare benefit scheme at a certain cost to the City. If you look at our official statements, a provision of N$630 million has been created. Presently, we’ve got 593 employees who have retired who are enjoying this benefit. This costs N$2.3 million per month,” he said.
A cause of concern was that a further 1 875 employees will soon be eligible for this benefit, for whom financial provision would have to be made.
City Police unaffordable
The City Police is now also unaffordable, Hecht said, highlighting the need for it to be realigned with the Namibian Police.
“The salaries budgeted for this new financial year for City Police are N$230 million and that is 90% of its entire cost structure. We cannot afford a City Police of N$230 million in our current financial predicament.”
The City Police currently has 440 employees, Hecht said.
“Fact is again, City Police together with the Namibian Police has duplication of services and this needs to be reviewed.”
City Police peace officers were also earning twice as much as their peers of similar rank in the Namibian Police, the councillor said.
This according to councillor Jürgen Hecht, who gave the media rare insight into the City’s financial troubles at a press conference yesterday, called by management committee chairperson Ndeshihafela Larandja.
Another press conference will be held at the City chambers today by mayor Sade Gawanas, who yesterday stormed out of the Larandja press conference because she did not believe it should take place.
Hecht slammed the fact that City of Windhoek employees earn 30% to 40% above market rate.
The N$3.2 billion cumulative losses would have been able to construct over 6 000 houses if each unit was to cost an average of N$500 000, Hecht, an accountant, said.
The Independent Patriots for Change (IPC) councillor used the occasion to bring to the fore issues around the City’s remuneration structure, the finances of the City Police and the benefits employees enjoy.
According to him, the City could have completed various capital projects if it did not incur the astronomical losses it has been making over a nine-year period.
“If you look at the past nine years, the City of Windhoek has been incurring cumulative losses to the value of N$3.2 billion. If we would have only managed to break even... A good, proper two-bedroom house will cost you N$500 000, then 6 300 houses could have been built with the N$3.2 billion,” he said.
“If you assume that one kilometre of tar road could cost you N$1 million, then 3 200 kilometres of road could have been tarred,” Hecht added.
The state of finances has taken a toll on the City, Hecht said.
“We have a shortage of N$1.1 billion so the solvency of Windhoek is catastrophic; it is of alarming proportions,” he said.
Overpaid City officials
The City pays among the highest salaries in Windhoek - if not Namibia, Hecht said information shared by its human capital department showed.
A comparison was done between what the City pays and what the conventional Patterson grading system recommends, he added.
“It is no secret that the City pays some of the highest salaries in Windhoek. Employees earn 30% to 40% above market rate and this poses a major problem to our existing cost structure,” Hecht said.
“In the lowest bands, we pay 620% above market rate. In the highest bands, 144% more than the market rates. We cannot afford it.”
Benefits galore
Hecht also questioned an asset financing arrangement entered into with a major financier, saying the arrangement was not of any benefit to the City.
“There is a staff vehicle financing arrangement the City has. A City employee can buy a car, it gets financed at 5%, however the municipality pays for it at a prime interest rate of 8.5%.
“The interest rate differential is carried by the City; it’s part of our operational expenditure.”
Another concern for Hecht was the post-retirement healthcare provision the City had to create as part of its obligations.
“We’ve got a post-retirement healthcare benefit scheme at a certain cost to the City. If you look at our official statements, a provision of N$630 million has been created. Presently, we’ve got 593 employees who have retired who are enjoying this benefit. This costs N$2.3 million per month,” he said.
A cause of concern was that a further 1 875 employees will soon be eligible for this benefit, for whom financial provision would have to be made.
City Police unaffordable
The City Police is now also unaffordable, Hecht said, highlighting the need for it to be realigned with the Namibian Police.
“The salaries budgeted for this new financial year for City Police are N$230 million and that is 90% of its entire cost structure. We cannot afford a City Police of N$230 million in our current financial predicament.”
The City Police currently has 440 employees, Hecht said.
“Fact is again, City Police together with the Namibian Police has duplication of services and this needs to be reviewed.”
City Police peace officers were also earning twice as much as their peers of similar rank in the Namibian Police, the councillor said.
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