South Africa

South African cities flexed under the Covid-19 pandemic

By Manyane Manyane Post publication time14 min ago

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Johannesburg – Covid-19 added more financial pressure to metropolitan municipalities that were already struggling to generate enough revenue to provide services.

The State of Cities 2020 financial report released this week by the SA Cities Network (SACN) showed that cities’ financial situation has deteriorated.

The biennial report examines the finances of nine metropolitan municipalities: Joburg, Tshwane, Ekurhuleni, Nelson Mandela Bay, Cape Town, eThekwini, Buffalo City, Msunduzi and Mangaung.

SACN said cities are struggling to generate sufficient income to cover their mandates due to structural issues in the Local Government Budget Framework (LGFF) and the deteriorating macroeconomic environment in which they operate.

“Cities are already operating in an unstable and challenging macroeconomic environment, and this year they have had to deal with the unexpected burden of Covid-19 and the associated lockdown, which has resulted in lower revenues and additional responsibilities and costs Says the report.

“The pandemic has highlighted systemic issues affecting the ability of cities to meet local government policy goals of development and spatial transformation.

“Just as the shock of Covid-19 has prompted many countries to re-examine the way societies are organized, perhaps it is time to reconsider how cities and other municipalities fulfill their constitutional mandate to provide services to communities in a sustainable manner. “

SACN, which publishes the report once every two years, said that since 2018, the economy continued to perform poorly due to a myriad of challenges, including declining economic growth, unemployment, state-owned enterprises. struggling and electricity shortages.

“More recently, the global shock, caused by the Covid-19 pandemic and the unprecedented lockdown, aimed at protecting public health, has led to a sharp contraction in the economy.

“As a result, economic growth is expected to decline by 7.2% in 2020.

“This economic downturn comes in a period of continuing increase in fiscal risk,” the report said.

SACN program manager Danga Mughogho said the growing problem of rising incomes was also compounded by the inability of the public to pay for city services as many lost their jobs or saw the income. small households.

“And while the price increases were largely driven by higher water charges, not all services are affordable for the poorest.

“As such, structuring and setting tariffs is a delicate balancing act,” Mughogho said.

Ekurhuleni town spokesman Zweli Dlamini echoed the report, adding that the municipality had been affected.

“The most affected area of ​​our work is revenue collection.

“Although we identified cash collection, account inquiries and billing as essential services, during higher levels of foreclosure the City had to suspend some services in the revenue value chain,” including credit checks, disconnections and meter reading.

“The impact has resulted in a drastic reduction in revenue collection; increase in account disputes, requests for new payment terms and extensions, among others.

“We further anticipate an increase in the number of indigent applicants due to planned job cuts and salary adjustments, and an increase in business rescue applications.

“The ultimate destination – at least a loss of revenue of 1.2 billion rand in fiscal year 2019/20,” Dlamini said.

Independent Sunday

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South African cities flexed under the Covid-19 pandemic

SourceSouth African cities flexed under the Covid-19 pandemic

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