The ANC’s Parks Tau has alleged that Herman Mashaba’s government is bankrupt after he left it with a ‘positive balance sheet of ‘R1.7bn’.
The City of Johannesburg has denied allegations made by the African National Congress in Johannesburg on Sunday about the city’s financial position.
“The comments are nothing more than the ANC’s attempt at reviving [former mayor] Parks Tau’s political career from the ashes,” mayoral committee member for finance Rabelani Dagada said.
“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. Since coming into office, we have learnt that almost 19 percent of the city’s R55 billion budget has, over years, been lost to corruption,” he said.
“The management of the city’s finances is a matter of public interest. We welcome scrutiny into the city’s finances by our residents. However, I would caution that the city’s finances should never be used as an instrument for petty politics.
“Stakeholders such as the Auditor-General South Africa (AGSA), National Treasury, and Investors City keep us honest and constantly advise us on how finances can improve. The financial performance for the financial year (FY) 2016/17 is yet to be audited by the AGSA and any proclamation on the figures undermines the role of the Auditor-General South Africa,” Dagada said.
Among other things, in terms of revenue collection for 2016/17, the unaudited numbers showed a significant reduction in the variance between the budgeted and actual revenue collected compared to 2015/16. There was an improvement from R3.4 billion negative variance in 2015/16 to R2.7 billion negative variance for 2016/17. In March and June 2017, revenue collected exceeded R3 billion, the first time ever revenue collection exceeded R3 billion for two months.
Total revenue collection in 2015/16 was R34.9 billion versus an improved collection of R35.2 billion in 2016/17. “We also asses our revenue collection performance through the financial ratios, and our forecasted debt to revenue ratio is 40.7 percent, well within our target. Our main liquidity ration measure, cost coverage ratio is also projected to be a healthy 36 days, well above National Treasury benchmark,” he said.
The city’s 2017/18 budget was assessed by National Treasury and found to be funded.
“There are many customers in the city that 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 so-called “billing crisis” was never reduced but rather “swept under the carpet” during the previous ANC administration by way of reduced credit management, which reduced customer complaints; increasing customer indebtedness by the “pay for what you are not disputing model”; and “fake actual readings”, which were called “calculated actuals”.
In terms of the city’s liquidity status, as at June 2017, the closing cash balance was between R3 billion and R4 billion. It should also be noted that liquidity had been deteriorating year-on-year due to the billing problems that went unresolved under the watch of the previous administration. The city’s current cash balances were around R4 billion.
The city paid all its short-term financial obligations as they fell due. The city continued to pay salaries and its creditors. Creditors were paid in compliance with the National Treasury requirement that suppliers should be paid within 30 days of receiving a valid tax invoice.
As for the short-term borrowing in the 2017/18 financial year the city could confirm that council had approved raising up to R3 billion from the Development Bank of Southern Africa (DBSA) to manage potential cash flow mismatches that might arise in the future.
“The city’s finances are in a sound position. The DA-led administration has made tremendous progress since taking office to ensure that we run a clean administration following acceptable governance practices. The financial state of affairs will be revealed by the AGSA when he issues his report in November 2017.
“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’s totally inaccurate for the ANC Joburg to purport that under mayor [Herman] Mashaba’s tenure the City of Johannesburg’s financial stability has been in a state of perpetual decline or precarious. This is a characterisation of their time in government. Should the ANC continue on their present path, they will not only expose themselves as failed government but a failed opposition party as well,” Dagada said.