Almost 19% of the city’s R55 billion budget has, over the past few years, been lost to corruption.
So said the City of Joburg, while refuting allegations made by the ANC in Joburg over the weekend, in which the party announced the DA-led council in Joburg is in financial trouble.
This press conference followed a statement from the ANC last week announcing that the member of the mayoral committee (MMC) for finance, Rabelani Dagada was about to be axed, a claim which the DA has denied.
The DA slammed the ANC, saying its comments were “nothing more than the ANC’s attempt at reviving former mayor Parks Tau’s political career from the ashes.
“The truth of the matter is that, under ANC administration, the city and its finances were run in an environment of chaos and disorder, all of which allowed a culture of corruption to fester and flourish. The management of the city’s finances is a matter of public interest and members of the public were welcome to scrutinise the city’s finances,” he said.
“I would caution that the city’s finances should never be used as an instrument for petty politics. Stakeholders such as the auditor-general, National Treasury and Investors City keep us honest, constantly advising us how to improve finances,” he said.
Regarding the ANC’s accusations about revenue collections, Dagada said that, in terms of revenue collection for the year 2016/17, the unaudited numbers show a significant reduction in the variance between the budgeted and the actual revenue collected compared to 2015/16.
“This is an improvement from R3.4bn negative variance of financial year 2015/16 to an improved R2.7bn negative variance for 2016/17. In March and June 2017, revenue collected exceeded R3bn – a first in the City of Joburg, where revenue collection exceeded R3bn for two months.”
The total revenue collections in 2015/16 was R34.9bn versus an improved collection of R35.2bn in 2016/17.
Speaking of the 2017/18 budget, Dagada said it was assessed by National Treasury, and it was found to be well-funded.
The billing crisis, said Dagada, was never reduced, but rather “swept under the carpet”.
“A further analysis revealed that there was no excuse for non-payment of these accounts. The reason for excluding them from credit management was to reduce customer complaints. Upon identifying these customers, we have instituted a credit management. We are in the process of conclusively resolving every account query registered with the city, he said.
In terms of the city’s liquidity status, as of June 2017, the closing cash balance was between R3bn and R4bn.
Over the years, there were many inefficiencies in the financial management of the municipal owned entities (MOEs) such as City Power, Joburg Water and Pikitup. The inefficiencies had a negative impact on the MOEs’ finances and this prompted the DA-led administration to start a process of reabsorbing the MOEs to improve efficiencies in financial management, he added.
A downfall the council experienced was that it had to pay a VAT refund of about R300 million to the South African Revenue Service (Sars), inherited by the previous administration and the cancellation of a contract with Eskom and the Kelvin power station, which lost the city R3m.
Dagada said a number of revenue enhancement interventions are under way to improve the completeness of revenue and consequently the liquidity position of the city.
“The city’s finances are in a sound position. The financial state of affairs will be revealed by the auditor-general when he issues his report in November. The City of Joburg is the least dependent on national government grants and the highest spender – proportionately – on social housing, community facilities and equipment to enable front-line services.
“We have increased access to basic services, including electricity, to unprecedented levels, including through our new micro-grids in informal settlements. We have increased investment in roads and traffic signals which are the arteries of life and commerce in this great city, upgrading our key bridges and highways as we go.”
It was inaccurate for the ANC Joburg to purport that, under mayor Mashaba’s tenure, the City of Joburg’s financial stability has been in a state of perpetual decline or precarious.