City’s finances in a healthy state, says MMC Makhubo
The City of Johannesburg's financial position remains strong despite the slump in economic activity.
The City's 2013-2014 annual report, tabled before Council by Member of the Mayoral Committee for Finance Councillor Geoffrey Makhubo on Thursday, shows a surplus of R4,2 billion, compared with the R3,4 billion it achieved the previous year.
As part of its commitment to investing more than R100 billion in capital projects over a 10-year period – including the creation of the Corridors of Freedom – the City upscaled its capital investment from R4,5 billion in 2012-2013 to R7,7 billion in 2013-2014. MMC Makhubo said capital investment was a key tool for improving service delivery and transforming the urban environment.
The City's revenue collection stood at 94%. It also improved on its capacity to spend its capital budget. The spend rose to 93% despite the 71% increase in the capital budget. Over the past three years, the City had focused on building up cash reserves through "stringent" cash management. In the year under review, its cash and cash equivalents amounted to R5,3 billion compared with R5,4 billion the previous year, notwithstanding the 71% capital budget increase.
The MMC said despite operating in difficult economic conditions, the City, which was given an unqualified audit opinion by the Auditor-General for the second year in a row, had maintained its respectable credit ratings, with Fitch giving it an AA- (zapzaf) rating with a stable outlook. The City's assets also increased by 5% to R66,6 billion, driven mainly by capital expenditure of R7,3 billion and a cash position of R5,3 billion.
The total income received during the financial year increased by 13% to R39,5 billion. Operational expenditure went up by 10% to R34,6 billion owing to bulk purchases of both water and electricity, as well as pressures on other expenditure.
MMC Makhubo said the City was committed to finding new and better funding mechanisms that would not only benefit it but also the local government system within the Gauteng City Region.
"In this regard, we issued a green bond COJGO1 in June 2014 to fund part of the 2013-2014 capital expenditure programme to the tune of R1,458 billion. The green bond, the first of its kind in South Africa and on the African continent, was oversubscribed by 150%, an indication of the confidence placed in us by our investors," said MMC Makhubo.
Some of the achievements the City made during the period include:
Giving support to 4 281 small, micro and medium enterprises (SMMEs) and 37 cooperatives. Two SMME hubs and four regional sector-based incubators were established, resulting in the creation of 1 397 jobs;
The SMME support initiatives resulted in an 11% growth in the informal economy. This was in line with the City's strategy of ensuring the development of SMMEs and the establishment of programmes to develop entrepreneurship as an alternative to formal employment;
The reduction of communicable and non-communicable diseases;
A total of 13 428km of roads were tarred and 623km of existing roads were resurfaced, an increase of over 700% compared with the previous year;
More than 30 000 solar heaters (geyser) were installed in various areas, including Alexandra, Devland, Lehae, Pimville, Pennyville, Tshepisong and Vlakfontein;
The Johannesburg Social Housing Company (JOSHCO) grew its housing portfolio to within 4% of the projected target for the year by increasing it to 7 034 units against a target of 7 298 units; and
Assaults and robberies in areas covered by CCTV cameras dropped by 37% and 28% respectively.
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