City saves R 418 million for service delivery with austerity measures
26 October 2018
Today, I was advised by the City of Johannesburg’s Finance team of R418 million in unaudited savings which have been achieved through cutting wasteful expenditure. This was done with the use of austerity measures focused on reducing self-promoting advertising, marketing, domestic and international travel, consulting and professional fees, and conferences and seminars.
The savings achieved through our austerity measures have resulted in a 45% decrease in non-essential spending.
(Table: Rand in ‘000)
|
2015/16 |
2016/17 |
Unaudited 2017/18 |
Savings |
|
|
Advertising |
R 252 279.00 |
R 44 966.00 |
R 40 800.00 |
R 211 479.00 |
|
Marketing |
R 126 799.00 |
R 58 272.00 |
R 49 973.00 |
R 76 826.00 |
|
Consulting and professional fees |
R 457 009.00 |
R 375 572.00 |
R 386 034.00 |
R 70 975.00 |
|
Conferences and seminars |
R 32 764.00 |
R 21 607.00 |
R 15 397.00 |
R 17 367.00 |
|
Subscription and membership fees |
R 24 278.00 |
R 20 066.00 |
R 20 093.00 |
R 4 185.00 |
|
International Travel |
R 28 285.00 |
R 3 594.00 |
R 3 816.00 |
R 24 469.00 |
|
Domestic travel |
R 20 545.00 |
R 11 367.00 |
R 7 200.00 |
R 345.00 |
|
TOTAL |
R 941 959.00 |
R 535 444.00 |
R 523 313.00 |
R 418 646.00 |
This is a continuation of sustained efforts by the multi-party coalition government to ensure that every cent of residents’ hard earned money is used efficiently and directed towards creating real value by improving service delivery.
This news also comes off yesterday’s news from Moody’s rating agency, which affirmed the City investment-grade rating, despite the deteriorating economic environment.
Though Moody’s highlighted concerns of the City’s constrained liquidity, affording it a negative outlook, the rating agency noted the sustained efforts of the multi-party coalition government to tighten internal financial controls, create an enabling environment for growing jobs and increasing spending on our resident’s service delivery needs.
In its report, Moody’s said:
“The City of Johannesburg is characterized by very strong administration which implemented improved management practices that strive to strengthen the city's financial performance and reporting. The City achieved an unqualified audit opinion in fiscal 2017 for the fifth year in a row, signalling continued improvement in financial management.
Over the past three years the new administration has attracted a number of businesses to assist in regenerating the city's economy, in particular within the inner city precinct. The City's status as business capital and very large revenue base enabled it to operate a sound financial management and budget planning. These initiatives support our view that an increase in capital spending pressure will not cause Johannesburg's overall financial performance to deteriorate.”
The rating agency also noted that current administration also succeeded in reducing operating expenditure which only grew 2% when compared to 9% in 2017, while operating revenue grew by 6%, resulting in an improved operating surplus of 7% in the 2017/18 financial year from a low 3%.
The savings achieved during the 2017/18 financial year will be redirected into bringing Diphetogo [real change] to our communities by enhancing critical service delivery areas. These are evident in addressing our R170 billion infrastructure backlog through the maintenance of traffic lights and street lights, repairing potholes, informal settlement upgrading, and the capacitation of key City departments.
These savings are not only indicative of the sustained prudent financial management which we aim to achieve with the City, following years of chaotic and corrupt management of the City’s finances of by the previous administration. It illustrates what can be achieved when we focus on getting the basics of government right instead of obsessing over vanity projects as was done under the previous administration.
As the multi-party coalition government, we will continue in our efforts to ensure we create and maximize on efficiencies for the benefit of our residents.
Statement issued by Cllr Herman Mashaba, Executive Mayor, City of Joburg, 26 October 2018
