AG gives Joburg thumbs up …again
29-01-2015
Johannesburg has received an unqualified audit report for the second year in a row. “This is a remarkable achievement for the City and the strongest indication yet that Johannesburg’s finances are in excellent shape,” says the Member of the Mayoral Committee for Finance, Geoff Makhubo.
“Investors, the business community and city residents can be assured that this is a well-run city which is committed to a clean administration and quality corporate governance.”
The Auditor General’s Report for the 2013/14 financial year forms part of the Integrated Annual Report presented to the Mayoral Committee at the end of January.
MMC Makhubo, who is also Second Vice-President of the Metropolis Global Funds for Cities’ Development (FMDV), says the achievements in governance are supported by a positive financial performance in a tough and unstable global climate. The City’s Financial Development Plan continues to deliver positive results.
This is welcome news which coincided with the City’s hosting the FMDV, a funding symposium bringing together municipalities from around the world from 28 to 30 Jan.
A surplus of R4-billion was achieved which was redirected to the capital budget to accelerate service delivery.
The highlights of the financial year included:
• Healthy levels of liquidity were maintained and listed bonds amounting to R663-million were redeemed. In addition the City raised more than R2-billion of new funding in loans and bonds during the year.
• Cash and cash equivalents at the end of the financial year amounted to R5.3-billion – despite an increase of more than 70% in the capital budget.
• The increased capital budget of R7.7-billion demonstrates the City’s commitment to use capital investment as the key tool for improving service delivery and transforming the urban environment.
• The City collected more than 94% of revenue billed – and pending billing issues which featured prominently in previous AG reports were kept to a minimum.
MMC Makhubo says the Annual Financial Statements reflect a stronger financial position for Johannesburg with total assets increasing by 5% to R66.6-billion. Total income grew by 13% to R39.5-billion, driven largely by revenue generated from the distribution of water and electricity to consumers in the City. Operational expenditure increased by 10% to R34.6-billion.
During the financial year the City became the first local government in South Africa to list a Green Bond on the Johannesburg Securities Exchange (JSE). “The market welcomed this innovation and the 10-year Green Bond of R1.5-billion was oversubscribed to the tune of 150%,” says MMC Makhubo.
“We remain committed to the prudent management of the City’s finances,” he says. “Our Financial Development Plan will ensure continued fiscal sustainability and effective planning through judicious borrowing, the generation of annual operating surpluses and the creation of cash reserves to increase the level of spending on infrastructure.”
MMC Makhubo commended a number of entities and departments in the City who have improved the quality of their audit outcomes during the financial year – most notably the Johannesburg Roads Agency, the Johannesburg Market – the largest fresh produce market in Africa – and City Theatres, which underwent a merger and restructuring during the year under review.
The City continues to work towards a ‘clean audit’ report and special attention is given to resolve the remaining issues raised in the AG’s report – which pertain predominantly to compliance issues and annual targets that were narrowly missed.