A long list of priorities to tackle revenue management and assurance within municipalities awaits new Cooperative Governance and Traditional Affairs Minister David van Rooyen, said Grant Thornton advisory services director Oupa Mbokodo on Monday.
With municipalities owed some R100-billion – double the amount owed in 2009 – in a declining economy, an urgent resolution was required to ensure proper revenue management and to mitigate the now mounting levels of unpaid municipal debt, which had reached over R8-billion in power and water alone.
Currently, municipalities owed State-owned power utility Eskom more than R10-billion in outstanding payments and the water boards more than R2-billion.
Van Rooyen would be required to continue the progress made by former Minister Pravin Gordhan in turning around “bloated, inefficient entities” battling to deliver services to their communities and account for their budgets.
The continued restructuring and closure of businesses, which resulted in job losses, had far-reaching effects for local government and, with revenue generation already a struggle, municipalities would have to face up to dwindling revenue from rates, taxes and service charges.
A comprehensive revenue assurance mechanism could unlock financial sustainability, as well as enable appropriate funding, financial viability, revenue generation capability and revenue management processes for the municipalities to ride out the challenging environment they found themselves in.
“Effective revenue assurance could rescue many failing municipalities and underpin improved financial management, especially at a time where more challenges are forecast for the South African economy, [which is] already caught in the grip of stagnant economic growth,” said Mbokodo.
This would have widespread benefits for municipalities as it also enabled the planning and design of revenue management processes and systems, the identification and plugging of holes causing revenue losses, risk assessment, and the optimisation and enhancement of possible new sources of revenue.
“One of the constitutional objectives of municipalities is to ensure the provision of services to communities in a sustainable manner. Services rendered come at a cost and sustaining services require continuous investment in infrastructure, people, processes and technology,” he concluded.