DURBAN - The recent Municipal Financial Sustainability Index from Ratings Afrika has revealed the best and worst South African municipalities.
The report evaluates the financial standings of South Africa's 100 largest municipalities. Ratings Africa then gives them a rating based on their respective financial performances in the latest financial year.
The ratings come just after Parliament showed that 10 municipalities defaulted and they owned Eskom close to R10 billion. At the top of the list was Maluti A Phofung in the Free State who owed R2,8 billion to Eskom.
The report also assesses each municipality's operating performance, liability management, budget practices and liquidity position. After they are assessed they are scored out of 100.
The index revealed that a number of the municipalities are in financial trouble and they would need a government bailout of R22,4 billion to become financially stable again.
Below is a table with the profits, losses and state of liquidity for the various municipalities.
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Province
Operating profit
Operating loss
Liquidity surplus
Liquidity deficit
Rm
Rm
Rm
Rm
Eastern Cape
21
1092
341
830
Free State
-
3094
-
7747
Gauteng
-
1952
89
2585
KwaZulu-Natal
113
1757
1492
244
Limpopo
4
1644
551
619
Mpumalanga
96
2998
653
6215
Northern Cape
153
299
359
345
North West
-
2262
435
3640
Western Cape
644
227
3094
136
Total
1032
15325
7014
22362
Across the eight big metros, only Cape Town and Tshwane had an operating profit of R3,36 billion and R730 million respectively. The rest had a total operating loss of R5,14 billion.
Best and worst performers
Western Cape kept their leading position for a second consecutive year in a row while KwaZulu-Natal was the only other province to score above 50. The Free State was the worst performers and they have been in that position since 2013/2014.
Below is a table with the index scores for each province
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Province
2013
2014
2015
2016
2017
Eastern Cape
41
37
42
39
36
Free State
27
26
25
23
19
Gauteng
40
36
32
33
30
KwaZulu-Natal
58
58
62
56
54
Limpopo
44
52
44
41
42
Mpumalanga
30
27
30
28
28
Northern Cape
45
47
53
47
40
North West
33
29
26
29
23
Western Cape
47
52
58
59
62
National average
42
43
44
43
41
According to Ratings Afrika, only three municipalities scored above 80 a much lower number compared to the nine in 2012.
An article by Mossel Bay Advertiser stated that the Western Cape is the highest performing province with an average of 62. They are also the province that have shown the most improvement over the past 5 years.
Below is a table showing the best performing municipality in the respective nine provinces.
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Province
Municipality
Score
Eastern Cape
Senqu (Lady Grey)
79
Free State
Metsimaholo (Sasolburg)
33
Gauteng
Midvaal (Meyerton)
68
KwaZulu-Natal
Greater Kokstad
76
Limpopo
Fetakgomo Tubatse (Burgersfort)
61
Mpumalanga
Steve Tshwete (Middelburg)
77
Northern Cape
Sol Plaatjie (KImberley)
78
North West
JB Marks (Potchefstroom)
78
Western Cape
Mossel Bay and Swartland
84
This table shows the worst performing municipalities for each province.
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Province
Municipality
Score
Eastern Cape
Inxuba Yethemba (Cradock)
14
Free State
Matjhabeng (Welkom)
9
Gauteng
Emfuleni (Vereeniging)
17
KwaZulu-Natal
Newcastle
21
Limpopo
Modimolle (Nylstroom)
9
Mpumalanga
Lekwa (Standerton)
9
Northern Cape
Gamagara (Kathu)
24
North West
Madibeng
6
Western Cape
Kannaland (Ladysmith)
25
Ratings Afrika said that the municipal sector is currently in bad financial shape and significant political leadership correction is needed.
The Madibeng Municipality has the lowest rating form all on the provinces in the above table. According to Business Day, the second-quarter 2017-18 Section 71 Municipal Finance Management Act reports how that the municipality is one of many that owe creditors more than what they have in their coffers.
In January 2018, the Madibeng Municipality denied claims that they did not pay their employees salaries in time because of financial troubles according to Eyewitness News. The DA claimed that the municipality was unable to pay municipality salaries because of their financial problems. The DA also challenged a planned trip for the mayor and acting municipal manager. According to the DA the trip would cost taxpayers R1 million.
Tumelo Tshabalala the municipal spokesperson called the claims about the trip untrue. According to Tshabalala the trip only cost R53
Leon Claasen, a Ratings Afrika analyst said that business people who bid for government contracts should be informed that the weak financial stability of the municipality could indicate their inability to pay their suppliers in the 30 day time period as stated by legislation.
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