Ratings Afrika recently published its latest Municipal Financial Sustainability Index, revealing the best and worst municipalities in South Africa. The report evaluates the operating performance, liability management, budget practices and liquidity position of each municipality and then scores them out of 100.
Only 22 municipalities out of 100 reported operating surpluses, with the remaining 78 reporting deficits. The combined profits of those with a surplus amount to only R1 billion, whereas the combined losses amount to R15.3 billion.
“The problems start mainly with inadequate budget planning and lack of financial discipline that cause these municipalities’ expenses to exceed their income, resulting in operating losses,” Ratings Afrika said.
Across the eight major metros, only Cape Town and Tshwane had an operating profit (of R3.36 billion and R730 million, respectively), while the rest had a combined operating loss of R5.14 billion.
Provincially, the Western Cape has maintained its leading position for the second year in a row, after taking the top spot from KwaZulu Natal in 2016/17.
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