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The Auditor General has given the City of Joburg an unqualified audit opinion with material findings, noting that South Africa’s economic hub is in a solvent position and able to meet its financial obligations.

The Auditor General has also found that despite the myriad challenges facing the municipality, Joburg remains able to continue to deliver basic services to its residents, an improvement from the previous year.

The AG’s findings are contained in the City’s Integrated Annual Report for the 2017/18​ financial year, tabled in Council on Wednesday, 30 January. The Auditor General notes an improvement in the City’s working capital position, as well as cash flow from operating activities, which are both positive at year-end compared to the negative position the year before.

“The [City’s] annual financial statements indicate a solvent position, highlighted by a net current asset position,” the report reads. 

Executive Mayor, Herman Mashaba has welcomed the findings, saying that since taking over the reins in Johannesburg, his administration has ensured budgetary processes focus on the urgent needs of indigent communities, through investment in infrastructure, provision of free basic services and the growth of the local economy.

“We will continue in our concerted efforts to manage our cash flow and generate cash backed surpluses to fund future capital expenditure,” Mashaba explains.

The City also recorded a surplus of R 1 375 882 000 as compared to R1 070 611 000 in the previous financial year. The municipality is on average, able to pay its suppliers within 32 days, an improvement from the prior year’s 48 days.

The AG however expressed concern about the City’s senior management vacancy rate, which remains high. But Mayor Mashaba says the City is acting swiftly to fill the vacancies. “I [am] confident that this is an area we will continue to improve on,” the Mayor says.

The City’s three service entities have managed to improve in the following ways:

Joburg Water:

Replaced 45.4 kilometres of sewer pipes against a target of 33.5 kilometres
Provided an additional 620 informal dwellings with access to basic sanitation
Distributed an average of 1.55 billion litres of drinking water in the 2017/18 period, marking an increase of 2.5% in the daily volume compared to the 2016/17 financial year
Retained its Blue Drop status by maintaining compliance to the standard of quality of drinking water provided

City Power:

Installed 1 374 public lights against a target of 1 000 in the 2017/18 fiscal period
Electrified 2 167 units in informal settlements compared to a target of 810

Joshco:

Delivered 1 159 housing units in the 2017/18 financial year

Johannesburg Roads Agency:

Resurfaced approximately 301, 12kms of roads against an annual target of 250kms across the City
Spent R162-million of its capex budget on road resurfacing Citywide
Created 1 494 jobs against an annual target of 1 250 by employing 89 local emerging contractors

“Despite these improvements, there is no denying that much work still needs to be done to address the backlog of our historic challenges,” says Mashaba.

About 869 cases of financial misconduct, fraud, or improper conduct in Supply Chain Management are being investigated. The mayor says going forward, the City will continue to fight fraud and corruption and eliminate unauthorised, irregular, fruitless, and wasteful expenditure.

The City will continue to establish governance structures to mitigate illicit financial transactions, Mashaba adds.

The Auditor General’s unqualified audit opinion comes after Council, on the same day, adopted the 2018/19 adjustment budget, enabling the municipality to carry out its service delivery projections efficiently. Overall, the Adjustments Budget will see the City increase budgetary allocations on key infrastructure projects by over R600-million, in contrast to the approved 2018/19 Budget.

Adjustments include:

R82-million additional spending for the electrification of informal settlements, bringing the budget to R200-million for 18/19
R25-million additional spending for the procurement of mobile clinics by the City, up from R5-million in the approved budget
R20-million additional spending for the installation of new public lighting citywide
R15-million for the procurement of a mobile sub-station to reduce power outages related to sub-station damage
R130-million for the electrification of Fleurhof and South Hills developments
R50-million additional spending to upgrade Council-owned flats and old-age homes
R30-million additional spending for transitional housing in the Inner City to give effect to the Revitalisation Plan
R50-million additional spending for the planned replacement of sewer lines to reduce the number of blockages
R135-million for road reconstruction and rehabilitation
R20-million for traffic calming measures
R35-million for upgrades to the City’s EMS, JMPD and Disaster Management Operations Centre to improve safety and security
R10-million for much needed fire and rescue equipment
R15-million for the expansion of the Olifantsvlei Cemetery to provide more burial space
R20-million for the revamping of informal trading stalls in the Inner City

A further R300-million in the adjustment budget will be invested in transport, electricity, water and housing, marking an over 10 percent increase from 58% in 2017/18 to 69%.

“As a City, we remain on the path to deliver the change so desperately needed by our residents and to create a civil service which continuously works in the best interests of our residents,” the mayor explains.