The City of Tshwane has patted itself on the back for implementing what it said is strict fiscal discipline, which improved the metro’s coffers with “positive cash and cash equivalents” amounting to R835m at the 2022/23 year end.
In its audited 2022/23 annual report, the metro, which is run by a DA-led multiparty coalition, noted that over the previous financial years the city’s financial position deteriorated as it was dogged by a decline in billed operating revenue and the collection rate.
“Furthermore, the payment of municipal accounts was marred by the culture of nonpayment, which worsened during the pandemic,” the report stated. “In response to the growing nonpayment of services, the city introduced #TshwaneYaTima (disconnection) campaign, which has since been institutionalised to improve the collection of revenue.”
The financial situation resulted in the council adopting a financial recovery plan aimed at ensuring stability in the long run. Among other things, departments and municipal entities were requested to continue to find ways to ensure that services were rendered in an efficient, effective and economic manner.
“The city’s operating financial performance improved as the budget deficit narrowed to R446m in 2022/23. This resulted from a strategy to moderate operating expenditure while further optimising revenue management,” according to the annual report.
In March, ratings agency Moody’s Investors Service placed Tshwane’s rating on review for a downgrade for its failure to submit its audited financial statements to the JSE by February 29.
“It is important to note that the city was granted extension for submission of the annual financial statement by council and National Treasury. The city received a qualified audit opinion in the 2022/23 financial year, an improvement from the previous financial year’s adverse opinion.
“Management is currently assessing the management report, and internal controls and measures have been put into place to address matters of emphasis highlighted in the auditor-general’s report.”
The annual report stated that during the period under review the metro invested R2.2bn in capital infrastructure, “recording a capital spending of 79% against the budget of R2.8bn”.
It said the municipality did not borrow from the debt markets as capital expenditure was mainly from its own funding and grants.
“The city expenditure on repairs and maintenance of infrastructure for the 2022/23 financial year amounted to R1.2bn. The city ended with a positive cash and cash equivalents at year end of R835m for 2022/23 financial year,” the report said.
“Council approved the write-off report, which resulted in the reduction in the levels of unauthorised expenditure from R5.4bn recorded in the 2021/22 financial year to R423m recorded in the 2022/23 financial year.”
Tshwane city manager Johann Mettler said the metro entered 2022/23 with “some trepidation and uncertainty” as the adverse audit findings by the auditor-general for the previous year raised concerns regarding “our performance, our state of financial health (more specifically our revenue and liquidity), internal controls and historic findings that were not adequately addressed and the non-existence of consequence management and accountability”.
This, said Mettler, informed the metro’s approach to deal strategically with the challenges. “In order to enhance our revenue collection and cash flow, we have established a team with assistance from the National Treasury to deal with the entire value chain in the revenue protection arena. This approach is progressing well and is also influencing the institutional restructuring to among others efficiency and value for money ... I have no doubt that the challenges faced by the city can be addressed despite the difficulties,” said Mettler.
Tshwane executive mayor Cilliers Brink said: “The city requires a complete turnaround with regards to financial management in order to sustain its future. Strict fiscal discipline, restoration of internal financial controls and cost cutting must become the norm to restore liquidity.”
Brink said getting the basics right — such as regular infrastructure maintenance, repairing potholes and proper urban management — “restores trust in government and rebuilds the relationship that we have with residents”.
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