City’s finances in a sound position declares
CoJ refutes allegations that it is on the brink of financial collapse
“The City’s finances are in a sound position and it’s totally inaccurate for the opposition to allege that, under Mayor Mashaba’s tenure the CoJ’s financial stability has declined,” said councillor Rabelani Dagada, Member of the Mayoral Committee (MMC) for Finance.
The City of Johannesburg (CoJ) has hit back after the African National Congress (ANC) raised concerns of it being on the brink of collapse due to its financial state.
The party held a media briefing on 6 August during which they said they believed the CoJ was facing imminent collapse. They raised concerns about the City’s revenue being under-billed and under-collected, about its liquidity as well as City Power operating on an overdraft.
In a press release by the MMC for Finance, councillor Rabelani Dagada, said these allegations are being refuted by the CoJ, and that their finances are in fact healthy.
“The truth 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. Since coming into office, we have learnt that almost 19 per cent of the City’s R55 billion budget has, over years, been lost to corruption. Creating an honest and transparent City that fights corruption and ensures a culture of enhanced service delivery with pride is what we do every day. The management of the City’s finances is a matter of public interest and we welcome our residents’ scrutiny. However, I would caution that the City’s finances should never be used as an instrument for petty politics,” Dagada said.
He added that stakeholders such as the Auditor General, National Treasury and Investors City [sic] kept them honest and constantly advised them on how their finances could be improved.
According to the unaudited numbers, compared to the 2015/ 16 financial year, there is a significant reduction in the variance between the budgeted and actual revenue collected. “We also assessed our revenue-collection performance through the financial ratios, and our forecast debt-to-revenue ratio is 40,7 per cent, well within our target,” he said.
He added that the City’s budget for 2017/ 18 was assessed by National Treasury and found to be funded.
He said, “There are many customers in the city who we believe were not being billed for the three metered services – electricity, water and sewerage. The plans that we proclaimed during the State of the City Address and the Budget Speech of collecting more revenue are already being implemented.”
The CoJ’s liquidity status was also said to be under control. “All short-term financial obligations are being paid as they fall due, and the City continues to pay salaries and its creditors. As part of prudent liquidity management, standby short-term loans are raised to manage potential cash-flow mismatches, which is a market best practice that is viewed favourably by all credit rating agencies,” he said.
City Power has been dealing with a number of issues that led to a deterioration of its liquidity position, such as a VAT refund of R300 million being withheld by the South African Revenue Service and the cancellation of the Kelvin contract to the value of R268 million. “A forensic accounting investigation is under way and the results will empower us to implement administrative controls to improve their finances,” Dagada said.
He concluded by saying, “Should they continue on this path, they will not only expose themselves as a failed government, but a failed opposition party as well.”
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