Published by the South African Cities Network (SACN) every other year 2020 City Financial ReportFind out the finances of nine South African cities.
Since the 2018 report, South Africa’s economy has been sluggish due to a myriad of challenges, including slow economic growth, persistently high levels of unemployment, the struggle of state-owned enterprises, and power shortages.
Recently, the global shock caused by the Covid-19 pandemic to protect public health and the unprecedented blockade has caused the economy to shrink sharply, with the latest Stats SA data showing a decline in 2020 expectations. The rate is now 7%. ..
SACN covers its mission as the largest city in South Africa due to unfavorable economic conditions, mainly as a result of structural problems within the local government and as a result of the deterioration of the macroeconomic environment in which they operate. I feel that it is becoming more and more difficult to earn enough money.
Both are beyond the control of the city itself.
This is also exacerbated by household problems, with more consumers liable for reasons such as not willing to pay bills or simply not being able to pay, and alternative sources of services such as water and electricity. The number of people looking for is increasing.
As urbanization progresses, so does the low-income population, and the problem of finding jobs that aren’t available is increasing, the group said.
“Reduced margins on electricity and water sales as a result of both rising unemployment and stagnant household income, and more than inflation in the cost of bulk purchases, provide basic services for lower cities. Means that they cannot mutually subsidize income earners, “said SACN.
According to SACN, South African cities rely on a combination of subsidies and their own sources of income to fund their constitutionally mandated spending responsibilities.
Since 2015/16, city revenues have been growing at various rates, and actual city revenues tend to improve compared to budgets. However, the group states that cities make very different assumptions about future growth rates.
“Between 2015/16 and 2018/19, actual gross revenue increased at an average annual rate of 5.7%, but average revenue growth rates varied significantly between cities. Johannesburg (6.2%), Cape Town (6.1%), Eklleni (6.3%) and Tsuwane (6.7%) have the highest average annual growth rates, and Buffalo City’s revenues have increased by only 3% annually.
Among the major metropolitan areas, the city of Johannesburg is the most profitable, with revenues of R52.3 billion in fiscal year 2018/19. In addition to Ekurheni (Rant 35.1 billion) and Tsuwane (Rant 33.2 billion), the larger “City of Tshwane” supercities account for more than half of the income earned by South Africa’s major metropolitan areas.
Municipalities generate their own income in several ways, including real estate fees, user fees for local government services provided, and other local taxes. However, these sources have been in tension for many years as the population themselves feel the pressure of a recession.
Local governments operate on an accrual basis. That is, revenue is recorded when the municipal invoice is issued at the time it is collected.
The money in this book cannot be used to pay for services like Eskom, or to pay for city debt or other expenses. Metro relies heavily on monthly bill collection.
However, if the city’s recovery rate is low and debt remains unpaid, it is a sign of future financial difficulties, SACN said.
So, bad news for big cities, while the number of debtors (households not paying bills) is increasing, recovery rates are declining year by year.
“Non-payment of municipal bills, and thus lower recovery rates and higher consumer debt, can be due to high bills that households, businesses and institutions cannot pay,” the group said. Stated.
“It could also be because you don’t want to pay for a variety of factors, including dissatisfaction with the service and reduced trust in the municipality.”
The decline in debt collection rates and the increase in debt may be due to the failure of local governments to implement credit management and debt collection systems, or to the way cities record and amortize non-performing loans, he said. ..
According to SACN, people sometimes put the sourcing of services in their own hands, which also affects the collection.
Throughout major metropolitan areas, municipal collections have declined from about 91% in 2015 to 86% in recent fiscal years, and the situation is not expected to improve much in the coming years.
The collection has tended to decline for years, but the Covid-10 pandemic exacerbated this, the group pointed out.
Johannesburg, for example, suspended credit controls during the blockade, leading to a revenue shortfall of R $ 1.4 billion over the past year in April.
“Covid-19 has the potential to increase nonpayments, increase debtors and reduce cash balances,” said SACN.
Amount of money earned by South Africa’s largest city
Source link Amount of money earned by South Africa’s largest city