Time ripe to rethink ways councils generate revenue
For municipalities to function well, residents and businesses must pay for services
Those of us who survived the deadly Covid-19 pandemic that stole two years of our existence, livelihoods, savings and loved ones are still trying to get back on to our bearings and the respective trajectories we were on before the onslaught.
And while the world is gradually opening up, loadshedding and water-shedding have entered the fray in SA, causing untold damage to all business and households, and municipalities have not been spared.
As it stands, infrastructure disrepair, backlogs and under-investment have prevented optimal revenue generation. And daily we are witnessing how the economy is severely battered by everrising interest rates, inflation and job losses.
All these elements have led to the cost of living rising, and this has resulted in many citizens finding themselves in a position where they cannot afford basic expenses; and this includes paying municipal service bills.
For local government stakeholders, the time is ripe to relook at how income is generated from the communities that are under severe financial strain, and how such income is appropriated wisely.
Municipalities have to rethink how they price their services, how they measure their usage, how they bill and collect against those services, and lastly, how to exercise effective credit control and debt recovery methods.
Municipalities need to go back to the principles of revenue management and the value chain thereof with an understanding that a revenue division represents the business side of local government.
The revenue value chain is about achieving four goals that include predictability through management, completeness of revenue (through billing and collecting every rand), protection of revenue following defined processes and growth.
Perhaps the time to start thinking about how to integrate this value chain has arrived. The planning and designing of a dwelling is the first step in defining a revenue generation plan.
Municipalities have to master each of the revenue value chain components in order to achieve the set targets or thresholds.
For any municipality to function, it needs residents to consistently pay for the services they receive.
On revenue collection, the municipalities must consider several factors including an assessment of the Customer Relationship Management Policy, the municipality’s strategic position on how it intends to develop better customer relations and to automate customer interaction to achieve better turnaround times.
Municipalities must realise cash-flows from billing customers accurately by implementing billing integrity and quality assurance processes. This is evaluated by, among others, ensuring that all revenue lines items and all customers are billed every rand of consumption every month.
They should also have the ability to efficiently generate income from a diverse pool of both available and innovative revenue sources to improve the revenue base.
It has to use revenue data science techniques to analyse complex volumes of municipal data to identify revenue leakages and discover opportunities to increase revenue from existing and new sources.
In the context of revenue, data science is about utilising data analytics across all the phases of revenue collection and management to create dashboards that will indicate how revenue is generated.
Revenue management and increase require a scientific, entrepreneurial discipline to create, test and grow new revenue lines.
In addition, councils must employ more skilled revenue professionals who are innovative and can apply systemsthinking approach to revenue generation, conversion and sustaining revenue.
Lastly, municipal officials must practice the highest levels of discipline when it comes to governance, to safeguard the expenditure of revenue including the grants under their care to meet the service delivery mandates and to develop infrastructure that will support the growth of the local economy.