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Speaker’s notes for Councillor Geoffrey Makhubho, Member of the Mayoral Committee (MMC) for Finance at the launch of the City of Johannesburg’s 2014/15 Financial Year Annual Report:
Ladies and Gentleman, this year as we celebrate the 40th Anniversary of June 16, 1976 student uprisings, I am reminded of what the President of the ANC, OR Tambo, said: “a nation that does not nurture its youth does not deserve its future”. We all have a responsibility to know where we come from. If we do, we can have a better understanding not only of the road that we have traveled thus far, we can indeed have a better grasp of where we are today. And if we know where we are today, there is a greater possibility of forecasting more accurately and of shaping our own future. If the future is a place where our youth is going to spend most of the time, then we need to invest in that future. We need to help young people prepare themselves for this better tomorrow”.
Today as we release the City of Johannesburg’s 2014/15 Annual Report it is demonstrably clear that measured against any indicator this City in 2016 is a much better place to live in for all its residents. The City is in good hands.
This is a remarkable year for local government; it is a year in which we are reaching the end of term of the current tenure of this City administration. Again, we can look back on this period with a considerable sense of achievement when we consider the strides we have made since the introduction of democratic local governance. Very few of our current critics want to be reminded of the fact that Johannesburg teetered on the brink of bankruptcy before the ANC took over the running of Johannesburg in the advent of democracy.
Today we can say with a sense of great pride that the City has been truly turned around. We have laid the foundation. We are a City at Work – Today is better than Yesterday and tomorrow will be better than today.
Ladies and gentlemen, I am pleased to report that the City received an unqualified audit opinion from the Auditor General. It is also pleasing to note that the number of our Municipal Entities (MEs) who achieved clean audits has increased to 6. The following MEs have achieved clean audits in 2014/15:
- Johannesburg Social Housing Company (JOSHCHO)
- Joburg Theatres
- Johannesburg Roads Agency (JRA)
- Pikitup
- Johannesburg Property Company (JPC)
- Johannesburg Development Agency (JDA)
The City is proud of this achievement, and corrective measures and action plans have been put in place to ensure that the matters reported on by the Auditor General are remedied going forward. We will work hard to restore the clean audit opinion of the audit of the Joburg Market and move all other entities and core towards a clean audit.
This is a firm indication of the dedicated leadership which drives governance, compliance and strategic financial management. We continue to strive towards clean administration and the highest standards of corporate governance.
The City’s financial management strategy, and the Financial Development Plan, continues to deliver positive results.
In the year 2014/15 the City achieved a surplus of R3,9 billion (2013/14: R3,8 billion) in line with the approved budget notwithstanding the economic climate which remained fragile throughout the financial year.
We have remained focused on our targets and accomplished what we set out to achieve, including the following:
- The City increased its capital spending by 38% from R7,3 billion in 2013/14 to R10,1 billion in the current year. Capital investment is a key tool for improving service delivery and transformation of the urban environment. Our multi-year capital budget appropriation is beginning to yield benefits for the City as evidenced in the ability of the departments and MEs to spend the capital budget appropriated.
- In the year 2014/15, the City spent 94% of its record R10,1 billion approved capital budget.
- The City’s cash and cash equivalents at year end amounted to R4,9 billion, excluding R3,7 billion reserved for future debt redemption, despite the capital expenditure increasing by 38% in the current year. Our focus has been, and remains, to maintain adequate cash reserves to fund service delivery programmes through a stringent cash management approach.
- The challenging macro-economic environment continues to negatively impact on the payment by our customers. In 2014/15 financial year, the City achieved a revenue collection rate of 92%. We continue to intensify our credit control function however some customers have demonstrated affordability challenges due to, in some instances, the high level of household debt levels in the country.
- The approach we have adopted has contributed in achieving the current collection rate and this should continue into the following financial year. We will increase payment channels to customers to improve ease of effecting payments for municipal services.
- We encourage customers experiencing cash flow challenges to enter into alternative payment arrangements.
- The City has maintained healthy levels of liquidity notwithstanding the successful redemption of debt amounting to R971 million, including listed bonds and loans received from investors, during the year under review.
- Due to our sound credit record, the City successfully raised R3,3 billion long-term borrowings to fund infrastructure investments to improve the lives of Joburg citizens.
- The City has maintained its respectable credit ratings with Fitch Ratings and Moody’s Investor Services during a difficult economic climate where the global trend has been that of institutions suffering downgrades in recent times. The City enjoys the highest National Short-term ratings from both international ratings.
- Our ratings as follows:
- Fitch has upgraded the National long-term rating and the National senior unsecured ratings on outstanding bonds from ‘AA- (zaf)’ to ‘AA (zaf)’. Fitch also affirmed the National Short-term rating at ‘F1+ (zaf)’. The above ratings were issued with a Stable Outlook.
- Moody’s affirmed the National long-term rating at A2.za and the National Short-term rating at P1.za both with a Stable Outlook.
The City remains committed to prudent management of its finances. Our Financial Development Plan will ensure continued financial sustainability and effective financial planning through sensible borrowing, generation of annual operating surplus, and the creation of cash reserves to increase the level of infrastructural spending to improve service delivery. The recent positive rating action serves as an endorsement to our prudent management of the City finances.
Ladies and gentlemen, looking back at the 12 month period under review I want to refer briefly to some of the achievements made besides the financial gains.
- The City achieved a 15% reduction in waste to landfill and (and the target was15%) and it installed 61,871 electricity smart meters.
- 5 ha of Alien and Invasive Species (AIS) infested land was cleared (target: 300 ha) this was as part of Climate Change resilience and environmental protection.
- 6 kilometres of lane road was resurfaced city-wide as per Pavement Management System (target: 526 kilometres)
- 132 Wi-Fi hotspots were created in City owned facilities. Joburg successfully rolled out Free Wi-Fi to 100 locations within the City, this included public areas such as clinics, libraries, theatres and the Braamfontein precinct. Free Wi-Fi was activated in more than 68 offices of the City and 35 libraries gave public access to internet connection.
- The City supported 4,681 SMMEs (target: 1000 SMMEs) and it facilitated R3.26 billion value of business transactions.
- 51,977 Expanded Public Works Programme opportunities were created citywide and 2,496 jobs were created by new and existing enterprises which were contracting through Jozi@work.
- On average 5,500 individuals in the City benefited from the City’s food programmes during 2014/15 financial year.
- 6,160 orphans and vulnerable children were supported through the City’s basket of services.
- The City recorded a 9,55% reduction in ‘common’ crime (with 8,818 fewer incidents reported).
- A 4,22% reduction in the mortality rate was recorded – a result of quality emergency services.
- 39,078 food insecure households have received support.
On core services the City received good satisfaction levels in the latest Customer Satisfaction Survey:
- 83.9% residents satisfied with water services;
- 82.4% satisfied with sanitation;
- 85.1% satisfied with waste removal; and
- 75.3% satisfied with storm water.
Ladies and gentlemen, it is important to state, however, that in his report the Auditor General highlights some issues that require further attention. I want to assure you that the City is looking into all of these and is correcting them as part of our quest to improve the overall quality of our administration.
In the City of Johannesburg we will continue to strive for better and clean audit reports. We know that we have a responsibility to collect what is due to the City and ensure the judicious use of these resources. Service delivery and the improvement of the quality of life of our people are central in measuring the progress that the City of Johannesburg is making.
Going forward we will continue working together to ensure that tomorrow will be better than today and tomorrow is better than today for all who reside in the City of Johannesburg. We remain committed to strengthening the City’s financial position as we focus on achieving financial sustainability and resilient as we build a liveable Johannesburg.
Ladies and gentleman, Joburg is a City of achievements and firsts:
- Joburg Mayor was nominated an African candidate for UCLG Co-Presidency.
- Joburg is a first City in the C40 Cities Climate Leadership Group to issue the Green Bond.
- The City received Green Bond C40 award, in the Finance and Economic Development Category for financial innovation through the issuance of the Green Bond to fund green projects.
- Joburg’s greening drive got the national thumbs-up when the City was named the winner of the 2015 Arbour City Award in September 2015.
- MMC for Health and Social Development was elected Vice President of the Network for Locally Elected Women of Africa (REFELA), an integral part of the United Cities and Local Government Africa (UCLG Africa).
- MMC for Finance is a Co-President of FMDV.
- The Health Information System (HIS) digitisation pilot project in partnership with Anglo-American has made positive gains that have reduced long queues and paperwork at our clinics.
- The City partnered with Discovery Foundation as part of its healthy lifestyle programme.
- Johannesburg was ranked the second-most inspiring city in the world in a 2014 Good City Index study conducted by the global Good magazine, measuring city indices that included Hub of Progress, City Engagement, Street Life, Defining Moments, Connectivity, Green Life, Diversity and Work Life Balance.
- The 2015 edition of the Global Financial Centres Index (GFCI) ranked Johannesburg as the 33rd most economically powerful city in the world, and the number one city in Africa.
We said we will put the City in a healthy financial position and we did! As we reach the end of the term of office, we say, we have indeed established a solid financial foundation. The City is in good hands. The positive feedback from rating agencies, investors and the Joburg residents is that the City is delivering.
Ladies and gentlemen, today is better than yesterday and tomorrow will be better than today.
— Courtesy of Group Communication and Tourism, City of Johannesburg