Jozini Municipality from a financial perspective is a municipality that remains dependant on grants and shall remain so for the foreseeable future as such until alternative revenue sources are created to enhance the current constrained own revenue sources. Approximately 86% of Council revenue comes from National Transfers. There is little scope for cross subsidisation given the limited business sector and therefore increases in tariffs impacts directly upon domestic consumers and hence almost immediately burdens the municipality’s cash flow. Increased taxation will invariably mean increased non-payment hence the tariffs have only been increased by the proposed NT 5, 6%.
The priorities reflected within this budget are aligned with the strategy and priorities of the Municipality. Whilst changes in policy and direction cannot simply happen overnight there have been significant shifts in Council thinking whilst maintaining at all times synergy with the Constitutional requirements of Local Government in respect of basic services and within the general dictates of the National treasury guidelines.
Ward upliftment projects (former known as poverty reduction projects): part of other expenditure is the service delivery base projects which the municipality in its IDP planned to hand over to the community as per their suggestions during public participation meetings that took place as per Budget and process plan.
The indigent policy: The Municipality has an indigent policy and indigent register in place. These were approved in June 2021 and are currently under review, they will be approved end of June 2022.
Jozini Municipality was characterized by high levels of unemployment and poverty Unemployment was recorded at 41% in 2016, and youth unemployment stood at 53%. Jozini had a total of 692 (1,8%) households headed by children and 54% of households headed by women. The average household income was 47 018, with almost 80 000 households earning R1 600 or less.
The municipality has allocated budget for free basic services which is made up of community bursaries, indigent register, indigent support, burial assistance and free basic energy (FBE). The budget for indigent relief is R1 000 000.00.
The municipality has also allocated budget for people with disabilities. There are programmes/ plans to utilise this budget and monitoring for this is done through quarterly reports/ assessments.
Revenue Raising Stategies
The municipality has a Revenue Enhancement Strategy. There is a real challenge when it comes to Revenue collection since most of our communities are indigent and the municipality mostly relies on grants. The other factor which contributes to this is that the municipality does not own the land and that makes it difficult to collect property rates.
The following has been planned:
- Collection of 40% of monthly billing by 30 th of the following month
- Implementation of debt collection and credit control policy.
- Monitoring and management of deliverables of the appointed debt collector each month.
- Reduction of long outstanding debt
- Implementation of credit control policy to allow proactive approach to dealing with defaulting debtors
- Implementation of credit control policy to provide for arrangements and concessions’
- Data cleansing exercise
- Engagements with business owners
- Waste collection in rental housing and business
- Make traffic department to be fully fledged
- Land acquisition
The municipality holds meetings with government debtors and top 10 debtors. This has helped a lot as the departments are now paying.
The Strategy has somehow assisted the municipality in revenue collection through agreements with some debtors. The municipality even has potential investors through this initiative.
The Municipality is facing a challenge of Aging Debtors with a huge amount of R189 million. Some of the debtors are non-traceable which makes it difficult to follow up and issue out demand letters. Approximately 93.45% of the total debtors are over 90 days, budget has been accordingly adjusted to cater for such provision for doubtful debts. Majority of the long outstanding debtors for Households relates to indigent customers, and they will be written off upon completion of the indigent register. Organs of State balance is made up of National Public Works properties, which are still being verified by agents appointed by Works.
The municipality has procurement plans that were prepared by departments and are in-line with the Budget and SDBIP. The municipality uses these procurements plans when implementing the SDBIP.
The challenges faced with SCM are as follows:
Inefficiency of the advanced procurement system we end up doing manual orders The unit is short-staffed.
SCM management practices and principles are designed around issues of the Batho Pele Principles and the main Core objectives of providing service delivery.
The municipality has deviation forms. On emergency and urgency cases the municipality does deviate and a well-informed reason is required to be filled in the deviation forms.
Measures to address SCM challenges:
- Implementation of advanced procurement system.
- Filling of vacant positions
- Strict monitoring of the implementation of the Procurement plan.
The SCM Policy makes provision for disabled to qualify for tenders.
One of the objectives of the policy is:
To spend a minimum of 40% of its annual procurement budget with Historically Disadvantage, youth, women, people with disabilities within the jurisdiction of Jozini Municipality, through the application of Preferential Procurement Policy and relevant policies.
- 40% Youth
- 40% Women
- 20% People living with disabilities
Assets and Infrastructure
The municipality in its capital budget has made provision for repairs and maintenance during the 2021/22 financial year.
Various initiatives to address the maintenance of assets were explored in the previous years; and will still be explored during the 2021/22 financial year these will include implementation of the asset management plan that is in place. The municipality also has dedicated asset management officials whose responsibility is to oversee the entire asset management function and ensuring that this function is not left to chance.
National Treasury has indicated that a minimum of 40% of the capital budget should be for renewal as opposed to new infrastructure. It is important to however note that in the case of Jozini Municipality there exists enormous infrastructure backlogs where the municipality is having to almost start from scratch in the provision of the infrastructure requirements, with the development of a comprehensive asset management plan it is anticipated that it will provide a clear directive in terms of identification of assets due for renewal ensuring that the renewal of assets is not a by chance initiative but one that is deliberate one informed by a long term strategic view.
Loans / Borrowing and Grant Dependency
Jozini municipality has over the recent years remained relatively financially stable. Continuous efforts are made to comply fully with the MFMA and other legislations directly affecting financial management. Jozini municipality cannot afford salaries that are prerequisite to GRAP due to the inability to attract the suitably qualified accountants at the skill required by GRAP as well as given the current limitation as it relates to the geographical location of our municipality. It is therefore highly unlikely that qualified accountants are going to respond given the current salaries that we offer, however we remain committed to muddling through these deep waters the best way we know how in order to respond to the concerns raised by the AG regarding the skills levels of the BTO.
The municipality’s grant dependency is at 86%.
The municipality does not have any borrowings at the moment.
Auditor General's Opinion
The financial statements were audited by the Auditor-General in terms of section Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA). The results are therefore included below. Jozini Municipality received an Unqualified audit opinion in the 2020/21 financial year. Below is an action plan to address all Auditor General findings as per the management report.
AG Action Plan
Management has been monitoring the implementation of the above plan in ensuring that all findings by Auditor-General as per management report for the financial year 30 June 2021 are addressed. Furthermore, review of internal controls by management will be undertaken to ensure full compliance with all municipal finance prescripts.