June 5, 2003
By Thomas Thale
THE City of Johannesburg has fully recovered from the financial crisis it faced in the late 1990s and has successfully reinvented itself as a viable, service driven organisation.
This is the assessment of Pascal Moloi, city manager of Joburg, who describes the city today as a leaner and meaner organisation that is "more responsive to the needs of ratepayers".
Just six years ago, the city was on the brink of financial collapse, unable to service its debts, including loans and call bond facilities, which were given at prohibitive interest rates of some 22%. But within a relatively short space of time, the city has made a turnaround, becoming a more efficient and functional organisation.
"The main indicator of our financial recovery lies in our capital budget. Three years ago, it was projected that without a decisive intervention, the city would have no money to spend on capital investment by 2002," says Moloi.
"Our Capex had at one point shrunk to a mere R84-million. Now our capital expenditure for the 2003 / 2004 financial year stands at R1,1-billion. Now we can literally go into the market and raise funding at below prime rates. The banks no longer doubt our ability to service debts." Moloi also expressed confidence that the city is on track to get a clean audit report by 2005.
The city has also cut its overall staff complement from 27 000 in the late 1990s to 22 000 today. Fortunately, the city did not have to rely on large-scale retrenchments to achieve this target. "We achieved this mainly through natural attrition, and in some cases, through voluntary separations with employees."
A difficult and sensitive part of the process was the migration of staff from previous Metropolitan Local Councils to regions, central departments and companies, a process which was only completed in June 2001.
The city managed to put systems in place to account for all its staff members. "In the past, we had ghost workers in the system who went undetected for long periods. Now we can pick up on them by a simple click of the button." To keep its operating budget low, the city has treaded carefully in the filling of vacancies.
Another crucial intervention was addressing institutional problems that beset the city.
"Igoli 2002 identified financial problems as symptoms of institutional and organizational problems. We set about reconfiguring city borders and reorganising political structures to make the city structures less cumbersome and more responsive to the needs of local communities."
This latter aim was achieved by dividing the city into eleven administrative regions, whose main function is the implementation of policies. In the past, Joburg was divided into five Metropolitan Local Councils, described by Moloi as "dysfunctional. Now we have a single metro-wide political authority under one executive mayor".
A central component of the Igoli 2002 was the corporatisation of city entities, which were converted into autonomous but city-owned Utilities, Agencies and Corporations (UACs). This process has seen 12 city-owned companies being established.
"Now we have an organisation that is unbundled into clearly distinct business units whose sole responsibility is to take advantage of existing legislation which governs companies to fast-track the implementation of service delivery," Moloi says. Some of these companies are now successful business undertakings, but others have only just managed to put systems in place. "It is still early to start judging companies by performance. The process was aimed at getting them established, operating with staff, equipment and infrastructure."
By their very nature, some of these companies are the city's cash cows while others depend on subsidies to render key municipal services.
Companies which traditionally generate income for the city are City Power, Joburg Water, the Johannesburg Development Agency, Joburg Fresh Produce Market and more recently, the Civic Theatre. In the 2002/03 financial year, the Fresh Produce Market recorded profit after tax of R30-million, followed by City Power at R12-million, the Civic Theatre with R5-million and the JDA recorded net profit of about R1-million.
Those that depend on council subsidies are City Parks, Pikitup, Joburg Roads Agency, Metrobus and Joburg Zoo. Joburg Water is however, expected to record a deficit in the coming year, mainly because of "special projects" it will be rolling out. These are projects designed to fast-track the provision of basic infrastructure in disadvantaged areas.
A crucial development was the adoption of an Integrated Development Plan, a plan which outlines the developmental priorities and targets of the city. "We are now able to set targets and set priorities in terms of service delivery. We can determine upfront, the number of new water connections to be made, the number or roads to be tarred, new electricity connections and so on."
Overall, Moloi expresses confidence that Joburg has got all the fundamentals in place and is well on the way to becoming a World Class African City.
