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Insight into financial stability - Hypenica and CBN meet with Western Cape municipalities

Amoung others, the team met with the Theewaterskloof municiplaity to find out what measures they are taking to collect revenue and become financially stable. Amoung others, the team met with the Theewaterskloof municiplaity to find out what measures they are taking to collect revenue and become financially stable.

From 1 - 3 July, a team from Hypenica and Cape Business News embarked on a road show around the Western Cape interviewing certain district and local municipalities in the area.

Over the three days they managed to speak to over 10 municipalities in the Western Cape and gather valid insight into what measures they are taking to collect revenue and become financially stable as well as what challenges they face and what assistance and technology they would like to see moving forward

The first municipality visited was Drakenstein Municipality in Paarl where they met Jacques Carstens and Deon Heyns, Chief Financial Officer and Operations Revenue Manager respectively. They commented that their revenue management was looking promising, with debt sitting at R247m as of the end of May, down from R334.9m from the beginning of the year. They have managed to reach these by incentivising regular rate payers and clients as well as managing correct use of the subsidiary and rebate scheme.

They also mentioned that with the introduction of systems like Easypay and Payat it offers customers more outlets to pay their rates like Pick 'n Pay Supermarkets, Spars, Shoprites and Checkers. This has made payment accessible and easy.

When meeting with Kobus Kritzinger, the Chief Financial Officer of Witzenberg Municipality in Ceres, he mentioned that in order to be financially stable you need to be harsh and tough on ratepayers and need the correct data to bill them correctly. Witzenberg Municipality also have an in house service provider that does revenue collection on their behalf as well as having a debt lawyer that works out of their offices for one week of every month to help them speed up the judicial system and process.

Witzenberg are also in the process of piloting a new project in collecting revenue, where they will partner with employees companies and the companies will pay the municipality on the employee's behalf. Companies are incentive to do this by charging a admin fee.

While at Langeberg Local Municipality in Robertson we managed to sit down with Municipal Manager Mr Soyisile Mokweni who commented on the economic crisis affecting unemployment rates in his municipality and this having a direct effect on ratepayers defaulting on payments. Because the area is an also an agricultural area they have seasonal employment and during times of high unemployment, payment is low.

Even with this they have a revenue collection rate that sits at around 97% and they find it easy to monitor non-payment as they are the electricity service provider for the region and if residents don’t meet the payment terms and conditions they are able to cut the power to these properties.

They also have an extremely small tax base that they collect from therefore it is hard for them to plan financially for the future. They are collecting from a few contributors and only 11% of their municipality revenue comes from this small tax base.

John Tesselar from Overberg Municipality in Bredasdorp, said that in his mind eTHekwini and Midvaal Municipality are best performing municipalities at the moment and in terms of using technology in the most effective way he thinks that Bitou is using the Syntell sms revenue collection product very effectively in collecting revenue. He feels that the best way for smaller municipalities to collect revenue is to follow the traditional and conventional routes of sending statements and waiting for payment.

The Director of protection services at Overstrand Municipality in Hermanus felt that safety plays a major role in financially sustainable municipalities. He wants to look at other avenues of revenue generation for municipalities other than the norm (etc. fines) and wants municipalities to sweat their current assets to generate revenue and offer police, fire and traffic services to private events and functions, where they can add tangible value.

Stan Wallace municipal manager of Theewaterskloof Municipality in Caledon thinks that  the one of the biggest problems that municipalities suffer from, is who controls the electricity supply to that municipality area and towns. It is shown that towns that supply their own electricity and are able to turn off electricity to certain residents that don’t pay have colection rates around 95% but towns that Eskom supplies, collection rate drops to 65% due to the lengthy legal procedure that they have to go through.

He went on further to discuss that factors that affect revenue collection are; nature of the community, economic profile of the municipality, satisfaction/dissatisfaction of service delivery and that non-payment culture is still high in certain areas

Christa Liebenberg, the Municipal Manager for Stellenbosch Municipality finds that political instability in her municipality has been a massive problem with frequent changes to the municipality manager and board of directors over the last 5 years, however it is starting to stabilise now. In terms of technology Stellenbosch is very behind and everything is done manually with no or very little use of technology. Christa would like to use app technology to correct all the municipality data and use it as a portal to start conversations, pay accounts and offer services.

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