Bankrupt MEGA must be disbanded as it no longer has the ability to continue as a “Going Concern”
The Democratic Alliance (DA) calls for the Mpumalanga Economic Growth Agency (MEGA) to be urgently disbanded because it is bankrupt and no longer can continue as a “Going Concern” (as highlighted by the Auditor General), but used as a “Cash Cow” for ANC Comrades.
MEGA was formed in terms of the MEGA Act No. 1, of 2010 to provide funding to and promote foreign trade and investment in Mpumalanga, for the benefit of Historically Disadvantaged Individuals (HDIs).
The entity itself was borne of a merger of three bodies: The Mpumalanga Economic Growth Agency (the former MEGA), responsible for funding small, medium and micro-enterprises and promoting trade and investment; the Mpumalanga Agricultural
Development Corporation, responsible for financing and growing agricultural projects; and the Mpumalanga Housing Finance Company, which financed housing.
“In her last two consecutive reports for the 2022/2023 and 2023/2024 financial years, the Auditor General (AG) warned that MEGA was no longer a going concern,” said Trudie Grovè-Morgan: MPL – Spokesperson on Finance and Economic Development: Mpumalanga Legislature
The AG’s 2023/2024 report mentioned, “MEGA’s current financial statements indicate that a loss was incurred during the year ended 31 March 2024”. The report also mentioned that MEGA’s “current liabilities exceeded their current assets.
The losses are as follows:
- Material loss allowance of R110 million because of the provision for impairment of other financial assets;
- Material loss allowances of R175 million because of the provision of impairment of trade and other receivables.
It was also mentioned in the AG report that the above events or conditions within MEGA, along with other financial matters “indicate that a material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a Going Concern.
“The AG’s report literally tells us that MEGA is bankrupt and can no longer continue as a Going Concern,” said Trudie, “This term, Going Concern, refers to a company or entity’s ability to make enough money to stay afloat or to avoid bankruptcy. With concerns that MEGA is not a going concern anymore, it means it’s gone bankrupt and its assets must be liquidated.”
“Why is the Mpumalanga Provincial Government insisting on keeping MEGA afloat when it does not have the ability to make money then?”
The DA is gravely concerned about this financial crisis gripping MEGA. This fiscal mismanagement within MEGA affirms what the DA has been saying for years, that this entity MUST be disbanded.
“Initially, MEGA was created to drive economic growth in Mpumalanga which in turn creates decent employment and promotes sustainable development through partnerships. However, despite being envisaged to foster economic growth and in turn, providing much-needed services to the residents of Mpumalanga, it has become nothing more than a looting pot set up to line the pockets of the connected individuals whilst stealing away from much-needed service delivery,” concluded Trudie
State-owned enterprises that consistently drain public resources, like MEGA, must no longer be bailed out while essential services crumble.
The financial crisis in MEGA is not only threatening SMME’s future, economic growth and job creation, but it is also a symptom of larger financial mismanagement across Mpumalanga government departments and municipalities that affects all frontline services.
