Cape Town is the only South African city with the capacity to successfully weather the Covid-19 storm, a survey of the financial sustainability of metros has found.

Source: Timeslive

DA-run Cape Town soars above every other metro, says ratings company

Cape Town, the only metro in SA run by the DA, scored 74 out of 100 on Ratings Afrika's sustainability index. The average for the country's metros was 48.

Cape Town, the only metro in SA run by the DA, scored 74 out of 100 on Ratings Afrika’s sustainability index. The average for the country’s metros was 48.

Cape Town is the only South African city with the capacity to successfully weather the Covid-19 storm, a survey of the financial sustainability of metros has found.

Ratings Afrika gave the Mother City a score of 74 out of 100 on its sustainability index. The average was 48.

The index looked at operating performance, liquidity management, debt governance, budget practices, affordability and infrastructure development.

Cape Town deputy mayor Ian Neilson says the report confirms that the management of Cape Town's finances is excellent.

Cape Town deputy mayor Ian Neilson says the report confirms that the management of Cape Town’s finances is excellent.
Image: Supplied

 

“The report is confirmation that the management of financial affairs in Cape Town is excellent,” said deputy mayor Ian Neilson, who is also in charge of finance.

“This provides the resilience the city needs to provide services to its residents while also being able to survive multiple disasters such as droughts and pandemics. It is a beacon for the good governance practised in the city.”

The Ratings Afrika report, based on information collected before the Covid-19 lockdown, found Cape Town is the only metro operating at “an adequate level to provide sufficient funds for its operations to cover expenses, to provide the funding capacity for infrastructure development and to build the necessary reserves to absorb financial shocks”.

Cape Town scored 94 on liquidity management (the average was 39) and its revenue collection rate of 95% is the country’s highest.

“This strong focus on debt collection is one of the key reasons for the high sustainability, and shows how important it is to think of the big picture when collecting rates and tariff income to ensure we can carry on delivering services and revitalising our local economy through capital programmes and infrastructure injections,” said Neilson.

“It is therefore important that those who have the means to pay their rates and services continue to do so. For the current financial year, we have made provision for R3.3bn in rates and service assistance, and have kept our average increases to about 4%, which is among the lowest in SA.

“When setting up the rates and tariff income parameters, affordability and sustainability have been key considerations.”

Speaking to Moneyweb, Ratings Afrika director Charles Kocks said DA-run Cape Town was the only metro in SA to show significant improvement in the past five years.

“We are looking only at the financial results. We’re not looking at some kind of a political background. It is management, management, management that makes a difference here,” he said. “To the extent that any political party is in control of the council, as long as they give their managers – the right kind of managers, of course – the ability to do their jobs well, things will go well.”

Kocks said the other seven metros would need a “sizeable” government cash injection to handle the Covid-19 crisis.

“The R20bn central government has said it has available is not going to be enough. We are talking about a very serious situation,” he said.

Kocks said the index’s lowest scorer, Mangaung (28/100), appeared to be bedevilled by “very bad management, or a lack of interest in improving things”.

He said: “If you know things are going bad, you should be doing something to correct it. We don’t see that correction process. Any municipal manager should wake up and smell the coffee burning on the stove. They need to take serious action.”