The National Treasury has today released data on revenue collection and expenditure as well as spending on conditional grants for the third quarter of the 2012/13 financial year by all of the 278 municipalities. The period under review runs from 1 July 2012 to 31 March 2013.
This report is part of the In-year Management, Monitoring and Reporting System for Local Government (IYM), which enables provincial and national government to exercise oversight over municipalities, and identify possible problems in implementing municipal budgets and conditional grants.
In-year reporting is now well institutionalised with most municipalities consistently producing in year financial reports.
The reporting facilitates transparency, better in-year management and oversight of budgets, making these reports management tools and early warning mechanisms for councils to improve municipal performance.
Key trends:
Aggregate trends
1. On aggregate, municipalities spent 60.1 per cent or R172.7 billion of the total adjusted budget of R287.2 billion. In respect of revenue, aggregated billing and other revenue amounted to 68.7 per cent or R196.4 billion of a total adjusted revenue budget of R286 billion.
2. The aggregated adjusted capital budget for all municipalities in the 2012/13 financial year was R54 billion of which only R21.2 billion or 39.3 per cent was spent in the third quarter. However, past performance suggests that this number will improve toward the end of the municipal financial year, a trend that should not be a practice in a municipal context given the accrual nature of municipal accounts.
3. Metropolitan municipalities achieved 69.1 per cent or R115.6 billion of billed and other revenue of the total adjusted revenue budget of R167.2 billion. Mangaung has the highest proportion at 75.4 per cent, followed by Ekurhuleni Metro at 72.0 per cent. The lowest was reported by City of Tshwane at 66.5 per cent.
4. A comparison of the March 2013 and March 2012 quarters shows that on average metros increased revenues by 4.2 per cent. Most of this increase can be attributed to higher rates and tariffs, rather than efficiency improvements in revenue management.
5. Metropolitan municipalities spent 62.7 per cent or R104.4 billion of the total adjusted expenditure budget of 166.3 billion for the 2012/13 financial year.
6. The aggregated adjusted capital budget for metros in the 2012/13 financial year was R26.5 billion, 39.3 per cent of which (R10.4 billion) was spent by 31 March 2013:
a. By the end of the third quarter Mangaung had spent 54.8 per cent of its adjusted
capital budget and Cape Town 44.9 per cent; and
b. Spending was low in Buffalo City, Ekurhuleni Metro and the City of Johannesburg where less than 35 per cent of the adjusted capital budget was spent by the end of the third quarter.
7. In aggregate, metros spent the following on core services when measured against their adjusted budgets:
a. Water R12.4 billion or 71.3 per cent;
b. Electricity R35.3 billion or 68.7 per cent;
c. Waste water management R2.6 billion or 66.6 per cent; and
d. Waste management R4.1 billion or 66.5 per cent.
8. The spending on core services for the secondary cities was as follows:
a. Water R2.6 billion or 65.3 per cent;
b. Electricity R7.3 billion or 62.6 per cent;
c. Waste water management R847 million or 59.6 per cent; and
d. Waste management R731.9 million or 69.1 per cent.
9. Aggregate municipal consumer debts were R84.2 billion as at 31 March 2013. National and provincial government debt accounts for 4.7 per cent or R3.9 billion of this amount. At R54 billion, (64.1 per cent) households account for the largest proportion of consumer debt.
10. As at 31 March 2013, outstanding debt due to Metropolitan municipalities increased by 6.8 per cent to R48.1 billion from the third quarter of the 2011/12 financial year. The City of Johannesburg’s share was R16.8 billion or 34.9 per cent of all metros.
11. Outstanding consumer debt in secondary cities totalled R15.1 billion as at 31 March 2013. This represents an increase of 11.9 per cent from the R13.5 billion reported in the corresponding period in the 2011/12 financial year. Household debt accounts for R10.6 billion or 70.6 per cent of the total outstanding debt. Of the total debt, R12.1 billion or 80.3 per cent has been outstanding for more than 90 days.
12. The creditor age analysis shows R16.8 billion is owed by municipalities as at 31 March 2013. North West now has the highest percentage of creditors outstanding for more than 90 days at 67.1 per cent, followed by Limpopo at 66.0 per cent and Free State at 65.5 per cent. Concerning is the fact municipalities in only two provinces appear to be managing their creditors well – Gauteng and the Western Cape.
13. Analysis indicates that while municipalities have adjusted their collection rate to 92.5 per cent, the year-to-date figures indicate an actual collection of billed revenue of 90.1 per cent. The fact that some municipalities bill yearly property rates in July distorts this analysis.
a. The metros adjusted their collection rate to 93.3 per cent and achieved an actual
collection of 94.3 per cent; 1 per cent higher than the target; and
b. The secondary cities reported collection against billed revenue at 87.9 per cent which is significantly less than the adjusted target of 91.3 per cent.
14. Information on municipal borrowing detailing borrowing instruments by municipality is available every quarter. As at 31 March 2013, the total of all borrowing instruments issued by municipalities amounted to R36.5 billion. However, compared to the second quarter reporting, 41 less municipalities reported on the borrowing instruments.
15. Monthly repairs and maintenance figures reported by municipalities are now included in the Section 71 publication. Two dimensions are reported: per asset class and operational expenses.
Conditional Grants
16. The Division of Revenue Act, 2012 (Act No.5 of 2012) allocated R35.5 billion worth of conditional grants (both direct and indirect transfers) to municipalities. This amount includes R7.4 billion for the Urban Settlements Development Grant (USDG) allocated to metropolitan municipalities and R330 million unallocated Disaster Management Grant (MDG).
17. The RSC Levy replacement grant, support for councillor remuneration and the sharing of the fuel levy are classified as unconditional grants and municipalities can appropriate the grants as own revenue and subsequently do not have to report on specific performance.
18. From the R35.5 billion allocated to municipalities for 2012/13 financial year, R30.1 billion (including the USDG) of conditional grants IS CASH TRANSFERS TO municipalities and R5.1 billion is allocations in-kind.
19. Of the R330 million worth of Disaster Management Grant (MDG), only R57.7 million was allocated to Limpopo and Eastern Cape municipalities.
20. By the end of March 2013, national departments had transferred R22.7 billion to municipalities which constitutes 98.9 per cent of the total direct conditional grant allocations. According to expenditure reports provided by the national departments, only 46.1 per cent of the transfers had been spent as at 31 March 2013.
21. Based on reports from the municipalities, an average of 49.3 per cent, or R10.3 billion, of the R22.9 billion of the grants received had been spent by the end of March 2013. This expenditure excludes the data from metropolitan municipalities who received the USDG grant (R7.4 billion) and all schedule 7 grants.
22. Third quarter performance continues to indicate low performance with both the 2011/12 and 2012/13 financial years indicating expenditure less than 50 per cent. Over the years municipalities struggled to improve the grant performance because they are still confronted by poor multi-year planning, technical delays, supply chain management challenges and other external factors that delay the implementation of projects, particularly infrastructure related projects.
Further details on this report can be accessed on the National Treasury’s website.
