Multi-Party Government takes active steps to stabilise finances to repair and rebuild Joburg
It was on 22 November 2021 that I was voted in as the first democratically elected woman Executive Mayor of the City of Johannesburg Metropolitan Municipality. It was and remains a significant moment for the City and the country, as the economic hub of the country ushered in its vision to establish Joburg as a City of Golden Opportunities, which is vibrant, safe, and resilient; where local government delivers a quality life for every resident.
Over the last 12-months, having come into office mid-financial, we managed to pass an Adjustment Budget, adopt an Integrated Development Plan for the next five-years, and pass a R77,3-billion budget, which has been at work, repairing and building Joburg, since 1 July 2022.
This government has faced and reversed an illegal motion of no confidence, enabling us to re-establish the Multi-Party Government and continue with the work of rebuilding Joburg. Despite us facing yet another motion of no confidence today, I, along with the Members of the Mayoral Committee, remain as committed to our service delivery mandate as ever before.
The privilege to serve has never been nor will it ever be about what titles we hold, but it is about restoring hope for the 6-million residents of Joburg and providing them with the best possible services in a clean and transparent matter.
It is why we believe it is important that we outline where the City’s finances are, and what we intend on doing to ensure that services are delivered, the officials who are on the frontline receive their salaries, and that service providers are paid on time.
It might seem that Covid-19 is under control globally, but people are tired of hearing of it as an excuse for everything. The pandemic's impact is still being felt and will continue to be felt for the foreseeable future. China is again seeing Covid-19 related deaths, the first since May 2022, so it’s not done yet. This lived reality is the backdrop against any operating business in the City of Johannesburg and the world.
Impact on the City of Johannesburg
One of the resultant impacts was that the City struggled to attract loan funding in the 2021/2022 financial year. The global business market shared this experience, with capital markets being risk averse, especially more recently to investing in local Government.
The Auditor General found that many South African municipalities faced financial difficulties, and irregular expenditure had reached an untenable level. The struggle to attract loan funding was not isolated to the City of Johannesburg. We are affected by other municipalities' poor performance as investors tend to see all governments as a single entity.
Despite these challenges, we secured R1.5-billion of the R3-billion that had been included in the 2021/22 budget framework to ensure service delivery continues.
Despite the claims doing the rounds in the past few weeks, the City is in a position to honour its loan repayments. As it stands today, the City's Sinking Fund – the fund set aside to repay loans or bonds – is adequately funded for the next three years.
Our factual ability to honour our loan repayments brings us to today's business. Today, for the sake of the City of Johannesburg and its residents, the Multi-Party Government will once again request council to approve the report that will secure a short-term loan. This loan will be repaid by the end of June 2023.
Taking out a short-term loan is a normal business practice employed by the City of Johannesburg, as was the case during the budgeting processes during the 2015/16, 2016/17 and 2018/19 financial years.
Therefore, the disinformation by a corrupt cabal that short-term loans are unacceptable and that it somehow "proves" that the City is broke is unjustified and a political power play at best.
What residents need to know about the City of Joburg Budget
When presenting a City's budget to council for approval, a funding plan is included in the strategy. The plan describes how the City will raise enough money to pay for service delivery and infrastructure projects. Some of the money comes from National Treasury, to run the municipality, part of it comes from either national or provincial government to finance specific projects, some is collected from our residents, property owners and business owners, and the rest comes from long-term and short-term loans. This Council approved the current funding plan on the 27 May 2022.
In short, the City has three sources of funding:
- Revenue collection
- Grants; and
This is not unique to Joburg.
The City predominantly funds service delivery and building projects with revenue collected from water and electricity consumed, property rates, fines and other services.
As it happens when running any business, a shortfall between revenue received and expenses to be paid may occur, and in business terms, we have a cash flow mismatch. As we mentioned at the start, our customers are currently hard pressed.
This has resulted in a cash flow mismatch. The money owed is still shown in the debtors’ book as receivable, and once it is collected, the cash flow mismatch eases.
First Quarter of the 22/23 Financial year
As a backdrop for context, it is essential to note that the City did not meet its collection targets in the last three years. The decrease in revenue collection can be attributed to the economic effects of Covid-19, the massive increases in food and fuel prices due to, among others, the war in Ukraine and the sudden increase in interest rates and inflation since June 2022 creating a downward pressure on the revenue collection efforts
In the month of July, we collected R3.6-billion in revenue which is only 76% of our revenue collection target. Our immediate response was to set up a revenue collection war room with a dedicated task team to increase collections as quickly as possible, which included an enhanced revenue collection campaign under the banner of Operation Buya Mthetho.
As a direct result of these efforts, the revenue collection for August and September jumped to R4.5-billion and R4.2-billion, respectively – raising our revenue collection to 93% of total targeted collection – and I want to thank all those who diligently continued to pay for their services.
In October, revenue collection fell to 86%, translating into over half a billion Rand of under-collection. November collection rate can only be reported on at the end of the month when all revenue collection activities are closed off.
It is evident, then, that the City is still recovering from a tough economic time. Our residents are recovering from a tough economic time. It is at this point that the city seeks to secure, a loan over the shortest term possible to ease the cash flow mismatch that is currently being experienced. We have secured access to R2-billion – all we need is for Council to approve the application.
Political Power Plays
It must be noted that, although illegally installed, the government led by Cllr Dada Morero also recognised the possibility of a cash flow mismatch that could affect the City.
So much so, that Cllr Morero and his cabal were ready the table the same report before Council, which was signed by the then illegal MMC for Finance, Cllr Margaret Arnolds. Meaning that those tabling a motion of no confidence against the Multi-Party Government are willing to deliberately collapse the City for a narrow political end, despite us all agreeing that this loan is necessary. What our political opponents are doing can best be characterized as “opposition for the sake of opposition”.
We will nonetheless, once again request Council to adopt the report that gives effect to the R2-billion DBSA loan. The Multi-Party Government is confident that it has been able to garner enough political support to see this DBSA come into effect. This loan is not about the survival of the Multi-Party Government but to ensure that services are delivered in an uninterrupted manner.
On that basis, the reinstated Multi Party Government had a reasonable expectation that the ANC and their coalition partners would support the report. That those same councillors voted to reject the application is disingenuous at best.
This Government hopes that today, all of Council will be working for the residents of our beloved Johannesburg and will vote in favour of the loan application.
While the City does not find itself in an immediate crisis, we may find ourselves in an uneasy state of financial affairs should we not approve this loan through Council.
Pay your municipal account
It is important to note that residents also have a role to play in stabilising municipal finances and advancing service delivery programmes by paying their accounts on time and in full.
We will continue to be diligent in our revenue collection, which also means reigniting the Operation Buya Mthetho enhanced revenue collection campaign. Those who simply refuse to pay will be notified of our intention to terminate their municipal services. Whether you are a residential, business or government municipal account holder, you will be on our radar.
This week, the Revenue Shared Services Centre began with Buya Mthetho operations:
- After cutting off electricity, Gauteng e-Gov Department has settled close to R40-million owed to the City.
- A mining company paid close to R110-million in November in settlement of an old dispute.
- Gauteng Health Department services are scheduled to be cut off if close to R240-million is not paid by Friday.
- National Heath Laboratory Services has agreed to pay R47-million in settlement of a dispute with the City
On 15 November 2022, the City wrote to Gauteng Premier Panyaza Lesufi, outlining debts owed to the City by Provincial Departments and Entities. That correspondence has not been responded to, hence we commenced with the termination of services.
We therefore encourage our residents with outstanding amounts to pay your municipal bills. If you are struggling to pay the monthly charge, come into any of the City's walk-in centres and make a payment arrangement on the arrears. Make sure you apply for all the rebates or programs for which you qualify, including the Extended Social Package for indigent households.
Given that the majority of our budget is financed by our own revenue, we all need to realise that if one of us does not pay for services, the whole of the City can be affected.
As the City and Government, we will continue to do our part by providing quality services at the best possible value for money to all who live, and work, and play in our wonderful City.