The capital’s money problem

Mayor Nasiphi Moya is confident that Tshwane has turned the corner and is on the road to financial recovery after passing a budget last month. But there are potholes ahead for the metro’s ANC-led coalition administration, which took office in October last year.

Moya says she and her team are taking tough decisions to achieve a fully funded budget. She has been lauded by opposition parties for retaining Johann Mettler as city manager in the face of pushback from some coalition partners. Mettler was appointed in September 2024 by the previous DA-led coalition, to head a 19,000-strong administration that has routinely been flagged as weak and ineffective in annual auditor-general reports.

Former DA mayor Cilliers Brink, who leads the opposition in the council, says the retention of Mettler gives him hope that the city finances can be turned around. He describes Mettler as a “seasoned technocrat” who has ties to the National Treasury and, crucially, no links to any political party.

Ironically, it was Moya’s party, ActionSA, that blocked Mettler’s appointment to the equivalent position in Joburg — which has suffered under a string of compromised city managers, including the acting incumbent, Helen Botes.

Moya tells the FM it is early days, but she is confident that the initiatives put in place by her administration will go a long way in ensuring Tshwane’s financial sustainability. 

However, the AG’s report for financial 2024 signalled doubt for the fourth year in a row that the city can continue as a going concern. 

Insufficient revenue collection was flagged as a major weakness, made worse by poor budgeting and financial management practices, especially in managing collection and creditor payments.

According to the AG, Tshwane had a debt collection period of 55 days and had written down 72% of its debt as possibly not recoverable. It had an average creditor-payment period of 243 days. This remains a severe problem. Moya tells the FM that “most people have actually withdrawn from paying the municipality”. It is a stark admission and a crisis that has to be dealt with urgently.

She says her priorities are payments to Eskom and a substantial VAT bill owed to the South African Revenue Service. She is confident that a payment agreement now in place with Eskom is a giant leap forward.

The fully funded budget that we are looking for is attainable

—  Nasiphi Moya

“In any given month we would pay Eskom between R50m and R77m in interest alone. The ultimate goal was that in the adjustment budget, we must reduce the deficit significantly. And we did. So when the budget was approved, the deficit was just over R4bn and we were able to reduce it by R1.4bn. If we can get that right, the fully funded budget that we are looking for is attainable.”

She says another major problem was the way billing for water and electricity was based on estimated consumption. This has since been all but eradicated, with billing based on actual meter readings in nearly all cases. Another problem was widespread illegal connection of services. The administration has incentivised residents to come forward by waiving the tamper-fee on connections and rolling out tamper-proof electricity meters to all those households.

The city has implemented a contentious R500 a month “cleaning levy” on all households, which is being challenged in court by AfriForum and some residents. The levy is meant to be used to keep the city clean, yet the budget for the environmental department has shrunk, says Brink. 

He says there are very few options for Tshwane to extricate itself from its financial straits, and its problems cannot be “taxed away”. The two initiatives the city appears to be relying on to increase revenue are the cleaning levy and an estimated increase in revenue of 20%-25% from the property valuation roll.

That might give you a funded budget, but the big problem is the already overburdened tax base

—  Cilliers Brink

“That might give you a funded budget, but the big problem is the already overburdened tax base,” says Brink. “You can try to collect, but if your efforts aren’t matched by significant improvement in services, then you run the risk that you’re not in fact going to collect and your debtors book is just going to increase.” 

In Joburg during former mayor Herman Mashaba’s tenure, a key decision was taken at the prompting of the EFF in the then DA-led coalition. The city agreed to insource contracted workers in various areas from security to cleaning.  A noble idea perhaps, but the city’s wage bill ballooned to unsustainable levels.

Mashaba went on to form ActionSA, Moya’s party. Now she is taking the insourcing route in Tshwane, despite its extremely vulnerable financial state.

Brink was a member of the mayoral committee for shared services in Tshwane when Mashaba conducted the insourcing experiment in Joburg between 2017 and 2019. 

“The information we got back then was that Joburg had significantly underestimated the cost,” says Brink. “It’s not just that government has a higher minimum wage than the private sector, it’s also the concomitant costs. Guns, bulletproof vests, guarding houses, cars, buses, shifts, the necessary insurance, training, industry grading. All of that stuff was completely underestimated by Joburg.

“That’s why I’m saying, when [Moya] says the budget is funded and somehow claims success for this beyond increasing taxes, it worries me because it means that she thinks that there’s money for stuff like insourcing, which there isn’t.”

Brink is adamant that Moya may be the ActionSA face of the city, but it is the ANC and the EFF that are really in charge. 

While Moya concedes that coalitions are difficult, impossible almost, she says she keeps to the core priorities that were agreed at the outset. She avoids being used by other parties through making sure no politician can “own” any part of the municipal administration.

“You can be a good coalition, but if the relationship between the political executive and the administration is not defined, then you’re going to have a problem. Because each politician will want to own parts of the administration.”

She has increased the frequency of mayoral committee meetings to ensure that key decisions are canvassed across the coalition partners and not taken unilaterally. 

“You should never feel comfortable in a coalition, even if it is working for you. This is a space where you must take it literally one day at a time, because anything can upset anybody. However, when we started, we had priorities that we agreed on. When we were approaching the adjustment budget, we had one view. We wanted a reduced deficit that will lead us to a funded budget. 

“So I think that was one of the tests for us to say, we don’t want a ‘kumbaya’ kind of a relationship, but we have a constructive relationship as coalition partners,” Moya says.

Work has already begun on the next municipal audit. This will be the real test of whether Moya and the coalition are setting the city’s financial health to rights. The DA fears the worst, saying the budget deficit is already widening, just months after the new coalition took office.

With local government elections taking place next year just months after the release of the next AG report, parties across the board will have hard numbers to boast about — or try to explain away.