Press briefing by the Executive Mayor of Tshwane, Ald Cilliers Brink
Tshwane House
19 September 2024
The purpose of today’s press briefing is to reflect on what it takes to govern a metro in Gauteng, what we have achieved as the City of Tshwane multiparty coalition and what still needs to be done.
Next week, our coalition faces a motion of no confidence, one of the coalition partners has already withdrawn and there is a great deal of uncertainty and even foreboding about the future.
People have come to understand that changing mayors does not necessarily solve problems or lead to improved service delivery. In fact, political instability often has the opposite effect.
To understand why this is so, you must appreciate what it takes to govern well in our current economic and constitutional context.
The essence of Gauteng’s problem, if you discount governance failures, is that for the past decade our population has grown faster than the economy.
People have flocked to cities like Tshwane in the hope of better life prospects, including better schools and jobs. But they are often disappointed.
Many people end up without reliable income, living in informal settlements or backyard dwellings, and with no access to formal electricity, water and waste collection services.
Without the benefit of economic growth and a growing number of people who pay rates and tariffs, cities cannot keep up with the demand for subsidised services.
It is this backlog of development that drives illegal water and electricity connections, illegal dumping and unhealthy and unsafe living conditions.
There are other factors too, but if you do not understand the pressures a weak economy places on services and infrastructure, you will not understand what must be done.
Cities cannot stop urbanisation and neither would we want to. We do not control the borders. We have much less economic policy-making power than the national government.
But what we can do – what we must do – to resolve development challenges is to build a capable state: A professional, ethical municipal administration that upholds the rule of law.
No mayor, no matter how clever and eloquent, and no coalition, no matter how strong and cohesive, can deliver on a democratic mandate if we do not have the support of honest, hard-working bureaucrats.
But to allow those honest, hard-working people to do their work, you also need effective and stable political leadership that is able to identify problems, determine priorities and drive results.
Eighteen months ago, the City of Tshwane had no Executive Mayor, no permanent top management, a shock adverse audit outcome and a coalition at loggerheads over key policies issues.
The people of Hammanskraal had no prospect of potable water in their taps, while the City and the national government were fighting about the issue instead of taking hands to solve it.
Waste removal contractors were getting away with fielding Nissan 1400 bakkies in the place of waste removal trucks, while the opposition were outraged about dirty streets and public spaces, especially in townships.
Having suffered the shocks of strike-induced salary increases, load-shedding, the COVID-19 lockdown and financially ruinous and unconstitutional provincial administration, the City’s finances just never recovered.
On top of that, the City was saddled by arrear VAT, interest and penalties from the 2012 PEU smart meter contract. But worse of all, there was no sense of how this massive backlog of work was to be cleared to restore confidence in the future of the City.
In the past 18 months, the City has enjoyed a period of remarkable political stability. We have a new top management team which is steadily changing the organisational culture.
We made tough, necessary decisions, such as foregoing salary increases. In the face of a violent, three-month strike, we stuck to the plan.
We resolved all major policy disputes between coalition partners in the government, enabling our mothballed power stations to be made available to independent power producers.
We improved the City’s audit outcome and this year we are so confident of the credibility of our financial statements that we foresee an unqualified audit opinion for the financial year that ended in June 2024.
Earlier this year, the South African Revenue Service granted the City R300 million of relief on the PEU VAT liability, and we are set to clear that bill next year.
Through our robust debt-collection mechanisms, the City collected an extra R1 billion in payments for July and August 2024, compared to the same period last year.
In April 2024, the City of Tshwane retained its ratings with Moody’s Ratings and received an improved outlook from negative to stable.
Moody’s ascribed the City’s stable outlook rating as a reflection of our decreased risk of debt acceleration.
Our efforts to act against the misspending of public money and make concerted efforts at financial recovery have been recognised by the South African Local Government Association as well as ratings agencies.
This year, the City submitted its financial statements to the Auditor-General on time after rigorous quality-checking by our Audit and Performance Committee.
The National Treasury then took the unusual step of publishing the unaudited financial statements of metros for the 2024/25 financial year.
We had to make a Stock Exchange New Services announcement about this, and although I stress that these financials are not yet audited, they do show significant financial recovery.
The unaudited financial statements show a net surplus of R2,5 billion at year end. This is a R1,4 billion increase from the previous financial year.
While not a cash surplus, it is still significant proof of a positive improvement in managing expenses downward and revenue upward.
The total debt owed by the Top 500 accounts fell from R5,3 billion in April 2024 to R4,4 billion by August 2024.
Particularly notable is the reduction of business debt, where 303 business accounts’ debt decreased from R3,3 billion to R2,5 billion on average.
As we rebuilt each aspect of our revenue value chain and review tariffs and charges to be more cost-reflective next year, payment levels and our cash flow will also improve.
To be clear, a lot more must be done to achieve financial recovery: Each part of our revenue value chain is being rebuilt and we need more time.
But on the current trajectory, the City of Tshwane will be cash positive by the end of the next financial year, 2025/26.
This will allow us to clear our debt to Eskom in the medium term, restoring the City’s bankability and our ability to fund service infrastructure.
In April 2024, the City submitted a payment plan to Eskom and, although that plan has not been accepted, the City has kept to it and exceeded our payment commitments.
This included paying the current Eskom bill for the three winter months when the Eskom bill to municipalities is significantly higher than in other seasons.
Our strategy is to keep up current payments for an unbroken period and to use this as a basis for possible settlement of arrear interest.
We have taken hands with the national government and now the people of Hammanskraal have a credible plan for clear water in their taps in the next few months.
In the next few months, the package plant built by Magalies Water on the Pienaars River system will come online in four phases.
This will allow the City time to complete the refurbishment of Rooiwal Waste Water Treatment Plant and consider a new model to manage our water resources.
To ensure that we rebuild the trust relationship with Hammanskraal residents, we will soon make a recommendation to Council to write off water debt for consumers in the City of Tshwane supply area.
The officials responsible for awarding the Rooiwal refurbishment contract to a consortium linked to Edwin Sodi are on suspension and the City is in the Labour Court to have them dismissed.
That consortium and their directors have until 26 September 2024 to give the City reasons why they should not be blacklisted, whereafter a backlisting committee will make a recommendation to the National Treasury.
The City had to restart the whole blacklisting process, because the National Treasury said we missed a few steps. That is fine – we will keep on going until we get it right.
It is important for me to place these achievements on record, because if the progress we have made is to be protected, it must be appreciated.
It does not help to pretend that all Gauteng metros are the same and that all politicians are just playing games.
Speaking in such generalities too often becomes an excuse for bad faith, bad conduct and bad leadership.
The big test for South Africa’s future is whether we can get the economy growing and meet the increased energy demands for that growth.
South Africa’s metros, including our capital city, have a key role to play in the economic growth project.
The current leadership of the City of Tshwane, political and administrative, is committed to contributing to this project and building a capital city that works for all its people.