Newsletter 64 – The highs and lows of municipal finances – 26 March 2010
One of the excuses given to communities protesting against poor service delivery is lack of money. Communities should question this response as this holds very little truth for most municipalities. A report released by the national treasury reveals that more than R15 billion was not spent in the 2008/09 financial year.
On 16th March 2010, the National Treasury released the Local Government Budgets 2008/09 Financial Year Fourth Quarter Local Government Section 71 Report. The report shows the 2008/2009 financial results for all 283 municipalities in South Africa. It revealed that municipalities, on average, spent 90.9% of their budgets. They spent R181.6 billion in the period, out of a possible R197.2 billion. This means that R15.6 billion that could have been used to provide services or improve infrastructure for better service delivery was not spent.
The report also reveals that the recession had a minimal impact on revenue collection. Municipalities collected 92.5% of their adjusted budgets, or R182.4 billion out of a possible R197.2 billion.
Revenue collection for the fourth quarter of 2008/2009 for all municipalities was R46.3 billion. This is 26.3% higher than the amount of R36.7 billion received in the fourth quarter of the previous period.
Municipalities also experienced an increase in the number of debtors. This however, is not primarily due to the recession. According to the treasury report, this trend has been evident for a number of years.
Municipalities were owed R50.4 billion as at the fourth quarter of the 2008/2009 financial year. Of this, metropolitan municipalities were owed R29.4 billion. The City of Johannesburg was owed the largest amount at R9.1 billion, followed by the City of Ekurhuleni at R6.8 billion, and eThekwini and the City of Cape Town at R4.5 billion each.
The above snapshot of municipal finances indicates that better planning and monitoring of budgets is required, rather than more money alone, to improve service delivery in South Africa’s municipalities.
- Nthamaga Kgafela
by
nkgafela
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last modified
2010-03-26 10:19
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