OFFICE OF THE MMC FOR FINANCE
Cllr Mare-Lise Fourie MMC for Finance
02 June 2021
The City of Tshwane’s financial position has been a matter of interest in recent days as the budget was approved last week. As MMC for Finance, I would like to affirm our commitment towards ensuring the financial sustainability of the city.
Last month the Executive Mayor, Cllr. Randall Williams tabled the City’s operating budget of R39 billion accompanied by the Capital Budget that amounts to R3.7 billion for the 2021/22 financial year. The budget was subsequently approved by Council and is based on a forecast of revenue collection levels that are above 90%.
It is also worth noting that when this administration returned to the City in November 2020, it found that during the illegal tenure of the administrators the collection levels in the City had dropped to as low as 75% in some months which severely compromised the city finances.
Thus, there was a deliberate attempt to increase the collection rates and return them to 90% which was achieved by this administration in March of this year. Ensuring that collection rates remain high is critical in stabilising the City’s finances.
During the Budget debate it was highlighted that after a benchmarking session with National Treasury they identified that the city’s current liabilities exceed the current assets, therefore making the City technically bankrupt from an accountancy perspective.
While this is the case on paper, it will not compromise core operations as the City is able to ensure that it continues to function optimally. No projects have been halted and the City remains committed to continue in delivering quality core services to Tshwane residents.
However, during this benchmarking session National Treasury also found that from a governance perspective, the City achieved a positive rating.
This was achieved due to interventions by this administration by ensuring that a Budget Steering Committee was established to oversee the planning and budgeting process. Furthermore, the city was also praised for its extensive Public Participation Process on the Draft IDP and Budget as it was conducted through multiple media platforms and publicized widely.
This is why the approval of the 2021/22 budget was so critical to assist in restoring financial stability and driving core basic service delivery to refocus the City and take it forward.
The City is able to pay its debts, we are adequately servicing our loans and managing our relations with creditors.
In addition, debt collection and credit control measures have been put in place to address consumer debt arears and ensure that collection rates remain high.
In this regard, the City has adopted a two-pronged approach as part of our collection efforts.
The first debt collection approach is the use of debt collectors who have been assigned to collect on historical debt that is owed to the City. The second, is the implementation of credit control measures whereby notices are being issued to clients to pay their debts, failing to do so will result in electricity disconnections as a first step.
Through these measures we intend to manage the debtors book and ensure that we collect on the amounts that are owed to the city.
The current administration has also embarked on cost cutting measures which include the following.
- A limited number of critical vacancies were considered to ensure service delivery is maintained.
- No overtime will be processed unless for essential services.
- Departments are required to review all contracts for value for money.
- Measures must be put in place to manage the cost of bulk purchases downwards.
- Market analysis should be conducted before a tender is issued or a quote is requested.
- All leases and rental buildings must be renegotiated.
- Fleet contracts must be reviewed for better rates and value for money.
- The appointment of consultants will be strictly monitored and focused on revenue enhancement initiatives and the implementation of capital projects.
- Budgeting for all events has been severely restricted and centralized under Marketing and Communications.
The city is considering all its costs very carefully. The issue of wage increases will be engaged on further at the South African Local Bargaining Council which is the platform whereby these matters are discussed.
