1.3 EXECUTIVE SUMMARY 1
1.3.6 FINANCIAL PERFORMANCE (2013/14 AND 2014/15): PARENT MUNICIPALITY
The municipality is committed to ensuring that backlogs in the provision of infrastructure are removed and as such has embarked on a Municipal Infrastructure Investment Framework. Emphasis is given to the eradication of rural basic service backlogs especially water and sanitation. In urban areas, the primary intervention is the eradication of informal settlements through the provision of housing and a package of household services as well as the provision of interim services to improve living conditions in the settlements. The municipality has continued to fast-track the delivery of houses despite some of the compliance challenges that have been encountered in the past.
The Informal Settlement Programme is the major focus of eThekwini Housing. The principle intention is to upgrade informal settlements wherever possible and to only relocate residents if upgrading is impossible for health, safety or technical reasons. The expected results are that the municipality will be able to accelerate its informal settlement and upgrading programmes by adopting new and innovative, integrated, sustainable planning, participating and financing approaches for informal settlements. In view of the large housing backlog, a rapid accelerated delivery mechanism is required by the city in addressing the housing needs that will provide larger housing delivery outputs. In line with the strategy of accelerating delivery incorporated in the Governments vision for sustainable Human Settlements, a pilot project using alternate building technology is underway to fast-track the general housing backlog within the city.
The municipality acknowledges that it will take many years to eradicate the housing backlog. However, to offer some improvement to the quality of life in informal settlements in the short term, interim measures such as ablution blocks, refuse removal services, pedestrian paths with storm water channels, limited road access for emergency and solid waste vehicles, fire breaks, and a labour-based maintenance programme are being rolled-out to informal settlements. From a quality of life perspective and in line with its vision of being the most caring city, the municipality aims to rapidly up-scale the delivery of interim services to informal settlements over the next few years. The provision of interim services as opposed to the provision of low income subsidized houses with services is highly cost-effective. With the high backlogs in basic service provision and the severe impact on households that do not have basic services, a programme that leads to rapid delivery of these services will have significant social justice benefits.
As part of the municipality’s programme to unlock backlogs in the provision of basic services and provide interim services to informal settlements and transit camps, containerised sanitation facilities are being rolled out. The project has already benefitted about 200 000 people with access to proper sanitation and ablution facilities. In addition, there is an increased budget allocation for the acceleration of the provision of ablution facilities in informal Settlements over the medium term. The municipality is working with the Department of Energy to provide electricity to about 300 000 informal dwellings in the municipal area as part of the Integrated National Electrification Programme. In a bid to streamline and fast track the delivery of electricity to informal settlements, the municipality has waived the deposit fee required for electricity to be connected to an informal dwelling.
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The municipality’s financial performance and position is sound mainly due to the following factors:
· Budgets are balanced, being financed from the current financial year’s revenues from all sources.
· The municipality operates within its annual budget, as approved by council.
· The municipality maintains a positive cash and investments position.
· Consistently high revenue collection rates are being achieved.
· The municipality has maintained a favourable credit rating
1.3.6.1 OPERATING BUDGET
In respect of the 2013/14 financial year, expenditure in the amount of R 23.8 billion was fully funded from the municipality’s revenues and grants and subsidies from National and Provincial Government.
Operating Budget Performance (Current Year)
The financial performance for the six month period ending December 2014 is summarised in the table below:
Summary Statement of Financial Performance (Parent Municipality)
Description
2014/15 Budget R’000
December YTD Budget
R’000
December YTD Actual
R’000
Forecast
R’000
Total Revenue By Source (Excluding Capital Transfers) Total Operating Expenditure
(26 361 927)
26 361 927
(13 654 356)
12 449 682
(13 941 886)
12 691 270
(26 337 847)
26 337 847
SURPLUS 0 (1 204 674) (1 250 616) 0
Operational Income Performance (2014/15) Income:
· A proportionate increase in the Water-Service Charges (R 159m) and Sanitation Services charges (R 24m) is mainly attributable to the new housing development at Cornubia.
· The proportionate increase of R 12m in interest earned in outstanding debtors is as a result of adverse economic conditions impacting negatively on timeous payment of debt by consumers.
· Increase in interest earned on external investments to date (R 23m) is as a result of increased investment.
Operational Expenditure Performance (2014/15)
The actual expenditure for December is 2% lower than the proportionate budget. However, 48.14% of the total expenditure budget has been spent for the six month period ending 31 December 2014. Revenue (including capital grants) received for the same period increased by 6% when compared to the proportionate budget. Repairs and maintenance expressed as a percentage of Operating Expenditure is 11.48 %.
1.3.6.2 CAPITAL BUDGET
The capital budget totalled R 5.4 billion in 2013/14. This was funded by National and Provincial grants in the amount of R 3.1 billion and R 1.3 billion being funded from Council’s internal sources, with the balance of R 1 billion from external funding.
Capital Budget Performance (Current Year)
The capital performance for the six month period ending December 2014 is summarised in the table below
Summary Statement of Capital Expenditure : December 2014
Description 2014/15 Budget (R’000)
YTD Budget (R’000)
YTD Actual (R’000)
Forecast (R’000)
Total Capital Expenditure
Total Capital Financing
5 613 077
5 613 077
1 964 015
1 964 015
2 767 960
2 767 960
6 667 199
6 667 199
49 Progressive Capital Budget vs. Actual
The following Chart compares the actual spend on capital against the total approved capital budget of the Parent municipality
Capital expenditure reflects a higher spending for the first six months (49.31%), when compared to the same period last year (38.76%). However, as is the case in past years there would be an acceleration of spending in the ensuing months. The forecasted spend is anticipated to be 118.8% of the original budget.
Conditional Grants
Approximately R 2.3 billion from all sources have been received to date which represents 38.9% of the amount budgeted for.