Tshwane mayor vows to hunt down debtors to rescue city finances
Tshwane mayor Cilliers Brink has announced a bold financial rescue mission to improve the city’s ailing financial performance.
Brink has his sights set on increasing revenue and reducing expenditure in the range of R1bn a month for the next six months.
“There is simply no other way to unlock the needed resources and drive performance. What we have to our advantage is a R23.3bn debtors’ book that we aim to turn into cash.
“If a quarter of this debtor’s book is collectable, it is collectable in the next six months. If we succeed, we improve our cash flow, our Eskom account as well as our credibility and creditworthiness.”
Brink said this strategy would give his government time to fix tariff problems and to achieve better value for money in supply chain management.
However, should his administration not succeed, they will have to make a number fundamental changes to the way they deliver services by the end of June 2024, when a new budget must be adopted.
“To understand each of the aspects of the city’s financial rescue mission, you can draw a series of five concentric circles. The outside circle represents bulk purchases from Eskom and Rand Water, as well as other overhead expenses.
“The second circle represents the tariffs and property rates levied by the city to cover those expenses, including water and electricity. The third circle represents the metering of consumption.”
Brink said the fourth circle represents billing based on metering, while the fifth circle represents credit control and debt collection — in other words, collecting the money already owed to the city based on tariffs, metering and billing so the city can cover its own costs.
“Our performance on one of these circles impacts our performance on subsequent circles. The city’s problem can therefore be summarised as follows: the city’s tariffs do not cover our expenses to deliver services, in part because those costs are too high.
“Our costs are, in turn, affected by factors like the productivity and compensation of our employees and the value we receive from tenders. Of the total consumers of the city’s services, too few are being metered due to defective meters and illegal connections.
“Of those whose consumption is being metered, too few receive accurate bills or have their disputes resolved in time. Of the total who are being billed, too few actually pay their bills, because our credit control and debt collection system is ineffective.”
The mayor said this was indicative that the further one goes down the spiral, the less money due to the city is received in their bank account.
“By fixing each one of these aspects (circles) of our revenue value chain, we will achieve financial recovery. Some of the repairs can be done sooner and others later. Bulk purchases and tariffs will take a little longer, while metering, billing, credit control and debt collection are in our immediate focus.”
Here is the full strategy to be employed by the capital city to rescue its finances:
- Saving significantly on bulk purchases and expenses, particularly Rooiwal Power Station being brought online and a deal is concluded with a private operator.
- Aiming to reduce the interest accrued on outstanding Eskom debt by implementing the other aspects of the financial recovery plan and reducing Eskom debt.
- Managing illegal connections and meter tampering. A new Tshwane metro police department unit is being established to focus on illegal connections.
- An application has been made to Treasury for debt relief.
- Making tariffs cost reflective and reducing costs. To ensure that in the budget for the new financial year that starts on July 1 2024, these tariffs are as cost reflective as possible.
- Getting better value for money for residents who pay rates, tariffs and charges. In addition, a review of the supply chain management policy to preferred bidders that deliver value, including original equipment manufacturers.
- Management changes in the supply chain management division. Tender awards in the city will now be granted based on a market assessment. Systems and controls in acquisition and stock management will be tightened up.
- The integrity management framework recently adopted by council will allow the city manager to order lifestyle audits on officials. The city will look carefully at which supply chain function officials try to undercut or undermine its new systems and controls.
- The city will update the property valuation roll in 2025.
- Rolling out smart prepaid metering (without replicating the PEU/TUMS disaster).
- On metering, the mayoral committee has approved the rollout of as many smart, prepaid electricity meters as possible.
Brink said prepaid metering not only allows the consumer to control consumption, but also affords the city the power to enforce credit control and practise load-reduction, depending on the functionality and the nature of the meters. Ensuring that everyone gets a bill and speeding up dispute-resolution processes.
“On billing, the city is allocating additional resources to ensure that our data is correct and that billing disputes are dealt with effectively. We will also make sure that everyone gets a bill, if not online, then on their phones. We can no longer count on the post office, nor require residents to visit municipal offices once a month. We must use technology.”
The mayor vowed to sharpen up credit control and debt collection, hailing its previous “Tshwane ya Tima” campaign that was rolled out in 2022 for its effectiveness.
“We wanted Tshwane ya Tima to become a standard operating procedure for the city, but our efforts were undermined by the strike. It is difficult to run a large-scale credit control effort, disconnecting high-value arrears accounts and sending a warning to all other consumers, if your city is burning and waste is piling up.”
Brink said his administration’s focus will be on the top 1,000 consumers — and promised to become stricter on other consumers as they work through the backlog.
“There are three fundamental changes we have made in the past few months. We finally have a permanent chief financial officer. We have new management in two critical divisions, namely supply chain and revenue. And, we have the strike behind us and a newfound understanding in the city of the efforts that will be required to secure the future of the city.”
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