The DA's newly elected Tshwane mayor has painted a grim picture of the city's finances he just inherited from the ANC, which had been in charge of the capital since March through an administrator.
Randall Williams was elected the new Tshwane mayor on Friday, after the Supreme Court of Appeal set aside the decision of the ANC-controlled Gauteng co-operative governance department to place the municipality under administration.
Williams says the city's finances were decimated at an alarming rate under the administrators, led by Mpho Nawa, who was appointed by co-operative governance MEC Lebohang Maile in March.
According to Williams, between April and June, the city went from having an operating surplus of R284m to being plunged into a debt of over R4.4bn.
“Having now scrutinised the pre-audited financial results for the 2019/20 financial year, I have learnt that this surplus has been completely eroded and the city is now operating a significant deficit of R4.4bn,” Williams said. “This means that from April to June, just three months, the ANC administrators in Tshwane spent the surplus that they found, along with an additional R4.4bn.”
He uncovered this and more in just four days of being in charge.
The city’s cash and cash equivalents — which are assets that are cash or can be converted to cash as well as bank accounts and securities — also declined from when the municipality was dissolved from R2.5bn to R847m by the end of the financial year in June.
From April to June 2020, just three months, the ANC administrators in Tshwane spent the surplus that they found (R284m), along with an additional R4.4bn
— Tshwane mayor Randall Williams
“The cash/cost coverage ratio is particularly worryingly. This ratio indicates a city’s ability to meet at least its monthly fixed operating commitments from cash and short-term investment — without collecting any additional revenue, during that month. The norm for a financially sound municipality is between one and three months,” he said.
According to Williams, the most recent figures showed that the city’s cash coverage ratio declined from almost two months to just 12 days — which has led the city taking up debt and accessing its long-term investment as it was not able to meet its demands.
“Under the DA government, at the end of the 2018/19 financial year, the after had been achieved: 1.68 months or 52 days. In stark contrast, the most recent indicator on this for September 2020 shows a cash coverage ratio of 0.4 of a month — essentially 12 days.
“This is deeply troubling as the city must be able to cover its financial liabilities and obligations. This situation has seen the city take up a short-term debt facility of R800m and accessed withdrawals from its long-term debt redemption fund of R680m,” Williams said.
Under the administrators the city also failed to collect debt, especially electricity bills, which has led to a decline in revenue and an increase of about R5bn in its debt book.
Williams has vowed to turn the city’s fortunes around as a matter of urgency, giving himself until end of July 2021 to achieve this.
My first mayoral priority will be the restoration of financial stability in the capital
— Randall Williams
“When I took office, I promised to focus on improving core service delivery. This is why my first mayoral priority will be the restoration of financial stability in the capital,” he said.
“To do this will require a multipronged approach that seeks to expand the city’s revenue collection while also aggressively cutting costs and unnecessary expenditure. I want to assure every resident that my administration will stabilise the city’s finances with great urgency.”
