In its electioneering the Democratic Alliance has argued that Cape Town illustrates a superior delivery model, (with six local municipalities it controls), especially when compared with Johannesburg. Reviewing financial data for South Africa’s largest metros, however, suggests that Cape Town’s delivery record is more ambiguous than the DA implies.
A useful benchmark of performance is spending by a municipality. In The Cape Town Story, the DA refers to actual capital expenditure as a proportion of budgeted figures and how this increased in the city: from 67% (when the ANC governed in 2002-2003) to 83% in 2009-2010 — certainly an indictment of past leadership. But using the latest audited annual figures released by the national treasury, it is clear that capital expenditure in Cape Town in fact dropped by 8% in the last financial year (2009-2010).
While there are good reasons for this and Cape Town is not unique among metros, the data presented by the DA papers over the reality of post-World Cup spending cuts in all metros, including Cape Town. In addition, no metro is immune to the negative financial pressures of the current recession.
Using the same data, it is clear that despite its bad rap in the media, Johannesburg, at R27-billion, still spends more in total than any other metro, with eThekwini coming in second at R23-billion and Cape Town third at R21-billion.
Looking at expenditure per resident, Cape Town, at R5 553, spends the least per resident of the five largest metros and eThekwini, at R6 473, the most (marginally ahead of Johannesburg’s R6 440). Of course, expenditure does not preclude the existence of serious financial problems, but it does suggest a track record of delivery. Cape Town can be justifiably proud that of the largest metros it has the best liquidity, and part of this is informed by the ability to collect revenue.
While Cape Town’s commitment to collecting outstanding debt is commendable, dealing with consumer debt is a priority in other metros too. Indeed, the intention of Johannesburg’s problematic Project Phakama is to consolidate billing through an SAP accounting system — the very system Cape Town employs (although clearly with a more successful introduction). While the levels of total debt between metros vary, collection rates in the largest five metros are all above 90%; and Johannesburg’s collection rate is similar to Cape Town’s at 94%.
Each metro faces a range of challenges, some more pronounced than others, but the financial data shows that no metro is doing dramatically better than any other. Indeed, the challenges that all metros face continue to be similar: finding the fine balance between collecting limited sources of revenue and doling these out in a never-ending list of priorities and, most critically, dealing with a significant proportion of poor people, often in informal settlements, living in squalid conditions and unable to pay for services. In the face of this reality, no party has a silver-bullet solution and all would be foolish to claim otherwise, even in the run-up to an election.
Allan is managing director of Municipal IQ; Heese is Municipal IQ’s economist. Municipal IQ is an independent research and intelligence organisation specialising in analysing local government data