City of Johannesburg finance MMC Julie Suddaby said SA’s biggest metro has a number of initiatives lined up to deal with the cash-flow challenges dogging the country’s economic hub, but would not say what these entail.
“The city has experienced a cash-flow challenge arising from the council’s refusal to approve the R2bn loan from DBSA [Development Bank of Southern Africa],” Suddaby said on Monday.
“A series of interventions have been identified to enhance revenue collection and to curtail unnecessary expenditure. These will bear fruit in the next two months.”
The municipality, which fell under a DA-led multiparty coalition after the 2021 municipal elections, has been battling a cash-flow crisis that could lead to failure to pay service providers or salaries for its 32,000-strong workforce, or honour its service delivery obligations to its 6-million residents.
Attempts by the council to pass a R2bn short-term loan facility from the DBSA failed late in 2022 after the ANC and other smaller parties voted against the report.
Executive mayor Mpho Phalatse’s spokesperson Mabine Seabe said the mayor convened the budget steering committee last week “to begin the process of rebasing the budget ahead of the budget adjustment, and to begin the process of preparing the 2023/2024 budget”.
“The finances of Joburg are an ongoing matter which the executive mayor and the MMC for finance are seized with, along with the mayoral committee. We must ensure that monies owed for services rendered are paid by municipal account holders,” Seabe said.
“Notably, the November/December month-to-date collection rate was 107%, showing that communication and operations like Buya Mthetho are showing results in enhancing revenue collection, and that residents have confidence in the multiparty government.
“Further to this, the reactivation of speed cameras across the city will not only keep our roads safe but also act as an alternative revenue stream. The mayoral committee is looking at all departments and entities that collect revenue, and ensuring that they do so.”
This comes after revenue collection in the city, which has a budget of R77.3bn for the 2022/2023 financial year, fell to 86% in October, translating into more than R500m of under-collection.
Seabe said Phalatse has written to Gauteng premier Panyaza Lesufi requesting a meeting to discuss “intergovernmental relations and to ensure that Gauteng departments and entities pay their municipal accounts”.
The executive mayor called on residents to continue paying their municipal accounts as collected revenue is a key driver of service delivery.
“The multiparty government will soon announce interventions that will look at raising funds for infrastructure projects, as critical infrastructure attracts investment, which accelerates service delivery, and ultimately makes Joburg a better place to live, work, play and pray,” Seabe said.
The governance of Gauteng’s three metros of Joburg, Ekurhuleni and Tshwane has come under intense scrutiny from opposition parties who accuse the DA-led multiparty government of failing to deliver services.
Both the Ekurhuleni and Joburg metros were in the red by more than R2bn in September 2022 and struggling to pay service providers. In the capital city Tshwane, auditor-general Tsakani Maluleke’s report for the 2021/2022 financial year found that Tshwane did not have adequate systems for identifying and disclosing all irregular expenditure, which the metro valued at more than R10.4bn.
ANC Greater Joburg regional spokesperson Chris Vondo said: “Our understanding is that the financial situation in the City of Joburg has not changed. We are going to embark on a budget review process by the end of January which will paint a clearer picture about whether they [multiparty coalition] are now robbing Peter to pay Paul or are discontinuing projects approved in the budget.”
Vondo said if the metro is bankrupt it must “find a way of engaging with National Treasury to plead their case”. The city’s financial situation speaks to leadership issues “both at a political and administrative level”.
“As you know, the metro has no city manager and CFO [chief financial officer] and this current administration has not prioritised those issues,” Vondo said.
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