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

Tuesday, February 13, 2024
 – The City of Tshwane has set itself an ambitious goal of collecting an additional R1-billion per month for the next six months from defaulting customers and businesses as 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.”

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.

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.

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. 

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.”   

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