Stabilising the City of Tshwane’s finances

IN THE past 11 months that I have been in office, I have sought to continuously communicate on the City’s financial position.

We must always seek to promote transparency and openness when it comes to the management of public finances.

When I was elected to office in November 2020, we inherited a deficit on the operating account that exceeded R4.3 billion from the ANC provincial administrators for the 2019/20 financial year. I was frank about this; we cannot deny what was reported in our financial statements.

To put this into perspective, when the ANC provincial administrators took office in March 2020, they inherited a surplus of R296 million. After their eight-month tenure, they left us with a deficit that exceeded R4bn.

Simply put, in a period of eight months (March to October 2020) the ANC administrators blew up a surplus of nearly R300m that had been left and further continued to mismanage City finances to leave a deficit of R4.3bn.

This all happened during 2020 when the City was placed in an untenable political position where the DA-led administration had to go through legal channels to take back control of the City of Tshwane after it was unlawfully placed under administration by the provincial government.

Dealing with a deficit of over R4bn is no easy task for any administration. The impact of this financial mismanagement was felt again when Moody’s downgraded the City. Despite this setback, we have managed to make some good progress in recent months.

We further found that during the tenure of the ANC administrators, revenue collection had dropped to as low as 75%. This severely compromised the City’s financial position as the administrators effectively abandoned any attempt to safeguard the City’s finances.

Worse still was that due to their financial mismanagement, core service delivery had effectively stopped, threatening the livelihood of our residents. To plug the City’s finances they even went as far as accessing an R800m loan just to fund basic operations.

To turn things around required a mammoth effort from our side as we had to re-implement core administrative processes to take the City forward. One of the earlier interventions was to approve an adjustment budget that reduced expenditure to match the lower income levels the City was facing. This intervention was implemented alongside other key interventions that assisted us to reduce the crippling deficit. This brought the City’s spending in line with its anticipated revenue.

We had to re-initiate all credit control processes in the City as well. This, of course, is not popular work, but it must be done. Credit control entails implementing disconnections and debtor management. We went as far as cutting the power to major national government departments, restricting the water supply to the Madibeng Local Municipality and even disconnecting some state ministerial houses. These actions were swiftly followed up by payments and commitments by the respective institutions.

The City is aggressively rolling out the installation of prepaid meters as these will assist greatly in ensuring a steady stream of income from revenue collection. They will also provide residents the opportunity to more accurately track and manage their electricity consumption.

Recently, in reviewing our financial performance, I was pleased to note that as of the end of June 2021 we had reduced the deficit on the operating account by R3.4bn.

The City now only faces a deficit of R934m, which we intend to eradicate in the current financial year (2021/22), which started on July 1, 2021. We also paid off the R800m short-term loan that the ANC administrators took out.

Stabilising the City’s finances while also ensuring that basic service delivery is not compromised is a core priority for the DA in Tshwane. With a full majority and mandate for another five years, we will be able to authoritatively shape the future of our capital city.