City of Tshwane seeks R1bn a month from debtors to solve financial crisis

Uncollected waste in Pretoria on 19 September 2023, during a protracted municipal strike. (Photo: Gallo Images / Lefty Shivambu)

By Nonkululeko Njilo

12 Feb 2024

Mayor Cilliers Brink says if Tshwane’s plan to collect R1bn a month for six months from non-paying residents fails, it will have to make fundamental changes to service delivery.

The indebted City of Tshwane has set itself an ambitious goal of collecting an additional R1-billion a month for the next six months from defaulting customers and businesses.

This is part of its financial rescue mission.

The city, home to more than four million residents, has been candid about its severe financial constraints, part of which it has attributed to the previous ANC-led administration which was at the helm for nearly two decades before it was replaced by a DA-led coalition in 2016.

The metro is currently collecting almost R3-billion a month, but has a massive deficit owing to a recent protracted municipal strike and load shedding, among other issues.

With R23.3-billion in its debtors’ book, executive mayor Cilliers Brink said his administration intended to convert it into cash which could help turn the tide.

“If we succeed, we improve our cash flow, our Eskom account as well as our credibility and creditworthiness. This also buys us the time to fix problems with tariffs and to achieve better value for money in supply chain management.”

The city is not oblivious to the challenges ahead.

Brink said, “If we do not succeed, we will have to make a number of fundamental changes to the way we deliver services by the end of June 2024 when a new budget must be adopted.”

Strike impact

It will not be the first time that the city has made tough decisions.

In 2023, it refused to bow to political pressure to grant thousands of municipal workers a 5.4% salary increase, the final phase of a three-year wage agreement signed at the South African Local Government Bargaining Council in 2021.

Read more in Daily Maverick: Cash-strapped Tshwane targets service delivery backlog after municipal strike ends

city of tshwane Elvis Nkuna carries his water buckets in Mamelodi on 7 February 2024. (Photo: Gallo Images / Lefty Shivambu)

This later led to a protracted municipal strike and the collapse of services including waste collection, attending to electricity and water outages, and fixing leaks, potholes and streetlights. It turned violent and 255 vehicles belonging to the city were torched.

While addressing journalists at Tshwane House on Monday, Brink admitted that the strike hurt the city’s finances, but said the total monetary cost had not been quantified.

Despite this, Brink maintained that the damage was “significantly less” than the R600-million it would have cost the city to grant the salary increases.

The city’s management says it can’t afford a salary increase this year because its R45-billion budget for the 2023/24 financial year was underfunded.

In addition to refusing worker increases, the city staggered the payment of a 13th cheque to all workers over three months. This was necessitated by the failure to meet the revenue collection target.

Tshwane Switches Off

Last week, the city embarked on a campaign to clamp down on clients who failed to pay their bills, including households and businesses, in an attempt to claw back some of the more than R6-billion owed to the municipality.

The cut-off campaign, named #TshwaneYaTima (Tshwane Switches Off), was introduced in 2022 and in May 2023 Brink declared it a standard operating procedure.

Now, the city is looking at rolling out #TshwaneYaTima more intensely than in the past.

Read more in Daily Maverick: Tshwane cuts defaulting customers’ electricity in bid to stabilise finances, improve service delivery

The DA-led administration has often come under scrutiny from opposition political parties for deteriorated service delivery, with parties like the EFF suggesting that services are only delivered to affluent areas.

Responding to this, Brink said, “We know that service delivery in Tshwane is not where it should be. We have to be clear about that… The financial constraints in the city are among the key reasons why service delivery is not on par.”

city of tshwane Uncollected waste in Tshwane on 19 September 2023 during a protracted municipal strike. (Photo: Gallo Images / Lefty Shivambu)

Last month, the administration also came under fire for the appointment of its first deputy mayor, Dr Nasiphi Moya, which the opposition dubbed as an attempt to fulfil personal agendas and a sense of entitlement to political positions as the city had been wilting under poor finances.

Debt risk

Auditor-General Tsakani Maluleke’s report for the 2021/22 financial year found that Tshwane did not have adequate systems for identifying and disclosing all irregular expenditures, which sat at more than R10.4-billion.

It appears that the financial problems of the City of Tshwane and the City of Ekurhuleni are far from over, as neither has provided annual financial statements to the JSE within the required seven months. They have until month-end to do so or their debt-raising instruments could be suspended, Business Day reported.

Probed on the failure to submit the financial statements, Tshwane city manager Johann Mettler said they had approached the National Treasury and the office of the Auditor-General to ask for permission to submit them late to fix what had gone wrong in the previous financial year.

Brink voiced similar sentiments.

“To me, that is an example of a proactive, deliberate and responsible effort on our side to deliver a set of credible financial statements.” DM

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Strike impact

Tshwane Switches Off