16 January 2004

By Brian Shepherd

Pay now… It is the bright thing to do. This catchy play on words that is similar to other pay-up campaigns in South Africa has paid major dividends for our festive efforts to try to eliminate more than R300-million arrears.

Our billing payments for December 2002 were R51 021 298 and our target for December 2003 was R56 123 428. We collected R73 035 586, shooting our payment level up 43% and 30% up on our target.

The Directorate of Finance is proud of this achievement that shows our communities are maturing in their moral obligations to pay, in realising the advantages to the city in paying and are becoming sensitive to the penalties for non-payment. It also shows support for our incentives to promote payment.

The turnaround, which we hope to sustain through a fair and just credit control policy, was preceded by a steady rise in collection performance. In retrospect, we are also grateful to City Manager Mxolisi Tsika for promoting and guiding our revenue enhancement while supporting our endeavours to get our finances right.

It is certainly the right thing to do if we are to prosper as a vibrant African city in a global, borderless world where cities are becoming prominent roleplayers in international relations.

Our progress, however, and our standing as a good investment destination worthy of our best municipality in South Africa status, will be hampered if we do not address legislatively driven key issues designed to make our city financially fit.

These include the fundamental issue of promoting community participation that will instill civic patriotism and pride as well as a vibrant interest in the city's projected R1,4-billion budget and how it is linked to the Integrated Development Plan, the blueprint development and management plan for our city.

Various other plans and projects have been put in place by the Finance Directorate that will ensure sustainability. These include:

• budget reforms;
• implementation of asset registers;
• valuation of council's assets;
• bringing accounting systems in line with Generally Accepted Municipal Accounting Practice in case of municipalities; and
• launching the willingness to pay survey, which will be crucial to our revenue enhancement strategy.

We have an investigation into a rates and tariff policy with the emphasis being equity and ensuring a proper balance in the taxing of businesses and the home owner. In the process all properties in the newly democratic Buffalo City Municipality area will be brought into the tax-net in order to improve our revenue base.

Control

The introduction of Activity Based Costing in certain service areas as well as expenditure control and cashflow monitoring are in place, putting the city in a position where bank overdrafts are fast becoming something of the past.

In the next six months in the run up to the budget in June, we will be taking the IDP and budget to the people and we want it to be a rich interaction in which our technocrats will be exposed to community wisdom in crafting an appropriate budget.

It must be a people's budget that our political and administrative leadership, together with our communities, can take ownership of as a key instrument of governance.

It is only by such interaction that we will prosper and ensure our citizens are exposed to the true nature of our daunting challenges of our financial situation.

Ugly misconceptions

It is hoped that some of these challenges and the solutions can be unpacked in subsequent media endeavours but an ugly misperception must be dispelled first: that the Department of Finance exists merely as an uncaring money-grabbing arm of our local authority that cuts people's water and lights or sells their houses if they do not pay their municipal accounts.

We have one of the best indigent policies in the country which provides a safety net for our poor through a R110 monthly package for each family. It impacts on the lives of some 200 000 people.

The department is at the centre of formulating a creative and dynamic developmental role for the municipality to alleviate poverty, create jobs and correct spatially entrenched socio-economic inequalities within the framework of our IDP linked to the budget cycles.

Restructuring

In line with modern change management, the department is restructuring to address the challenges created by the tension between what we need and hope to do and our financial capacity to do so: R1-billion alone is needed to bring existing infrastructure up to scratch so that we can supply uninterrupted electricity, water and sanitation services while providing the necessary social infrastructure so desperately needed in some of our formally marginalised areas.

By 30 June 2004, we will have completed our restructuring that will attempt to ensure service delivery that is sustainable, effective and affordable. Simultaneously, we must provide electricity, water and sanitation to the nearly 40% of our people who do not even have these basic services.

The Department of Finance is formulating new ways to approach our challenges and service delivery through a result-oriented and outcome-based approach that is aligned to good strategic and financial planning and budgeting based on the Triple-E concept: efficiency, effectiveness and economical strategies. This prevents irregular, unauthorised or fruitless expenditure and enables the Auditor-General to give us an unqualified audit.

Stewards

As the main stewards of the city's billions of rands assets, we are managing these assets and risks, managing our budgets and treasury as well as our revenues.

Buffalo City must have a coherent, realistic and credible strategic approach to manage these activities. It is not just about collecting revenue, although 80% of our expenditure is derived from money generated locally.

We believe we are laying the financial management building blocks for a well-run city where cost recovery for services is done professionally, with integrity, with people receiving uncontestable bills and good customer care.

Over the next three years, we are planning 10 service centers that will make our administration more responsive. Long queues and numerous account queries will be things of the past as we fashion a billing system with integrity and promote a culture of greater customer care.

In subsequent articles I hope to deal with the challenges and the solutions to the city's daunting and seemingly intractable problems through our city-wide revitalisation plan that will alleviate our financial problems.