City lauded by Ratings Afrika

26 Jun 2022 in Where We Govern

The City of Cape Town consistently ranks among the top performing municipalities in South Africa according to Ratings Afrika’s annual Municipal Financial Sustainability Index (MFSI) report. The City is the only metro still considered to be financially stable for 2021 with a score of 67, outperforming the rest of the metros by a large margin.

Cape Town is the only metro to remain stable in its financial sustainability over the year in review, which speaks volumes of what the City is doing.

Ratings Afrika’s Municipal Sustainability Index looks at operating performance, liquidity management, debt governance, budget practices, affordability and infrastructure development. It then gives a score out of 100. The City’s scored 67 and is the only metro that is still considered to be financially sustainable.

‘Most municipalities in the country, outside of the Western Cape, are showing worrying operating deficits and working capital shortfalls, as well as low revenue collection rates. In contrast, the City of Cape Town has maintained a consistently high revenue collection rate (98,5%), sound liquidity position, and robust investment in our capital programme.  This underlines that prudent financial management is at the core of governance, planning and programme implementation within the City. Because of this, the City is able to continue delivering services and developing infrastructure, while at the same time maintaining the reserves required to absorb financial shocks. Even though the last of the Covid-19 pandemic-related restrictions have finally been lifted, we have to be prepared for and mitigate against future shocks and stresses.

‘While the consolidated national results and findings are alarming, the MFSI’s results for the City of Cape Town continue to demonstrate that our prudent financial management is at the core of our governance.

‘Noting the slight decrease of the MFSI for the City for 2021 as analysed by Ratings Afrika, our Corporate Finance Department has undertaken an extensive independent analysis and has concluded that the financial sustainability of the City is not decreasing and our financial health remains stable and sustainable over the medium- to long-term.

‘The analysis and financial model of Ratings Afrika primarily focuses on a profit orientated outcome while the City’s modelling includes budgetary strategies such as financing, cash management and capital investment. Ratings Afrika would not have had insight into these budgetary strategies when undertaking their analysis.

‘The City continues to welcome independent analysis of not only the budget but also actual financial performance in strengthening oversight and will continue to work closely with rating agencies and other commentators such as the National Treasury and the Western Cape Government is striving for continuous improvement,’ said the City’s Mayoral Committee Member for Finance, Councillor Siseko Mbandezi.