Cape Town. Picture" SHARIEF JAFFER
Cape Town. Picture" SHARIEF JAFFER

The latest municipal financial sustainability index (MFSI) from Ratings Afrika confirms that the Western Cape, with an average score of 53, was the best performing province in SA in 2020.

The other provinces’ scores ranged from 39 for KwaZulu-Natal and 32 for Gauteng, to the Eastern Cape’s 25, North West’s 21 and the Free State’s 17.

This performance is not only testament to good governance and sound financial management in municipalities in the Western Cape, but an unwavering commitment to effective oversight and accountability.

The MFSI is an independent analysis and assessment of the financial sustainability of a municipality and not only indicates its ability to deliver services and absorb financial shocks, but is also a helpful indicator for businesses looking for opportunities to invest.

As in the case of Astral Foods, which recently won a court order over a lack of service delivery in the Lekwa local municipality in Standerton, municipal failure can come at great cost to local businesses. Which is why in the Western Cape we are focused on service delivery that enables the economy and supports job creation.

Because attracting investment to the province is central to our economic strategy, we are proud of the latest MFSI rankings, which also revealed that of the 113 municipalities included in the study, the top five in the country are all in the Western Cape. They are Mossel Bay, Saldanha Bay, Cape Town, Swartland and Overstrand. 

Mossel Bay municipality is considered the most financially sustainable municipality in SA with a score of 74, while Cape Town remains the most financially sustainable metro in the country with a score of 71. The next most financially sustainable municipality in the country in 2020 was Midvaal in Gauteng, with a score of 70. 

We are also proud of those Western Cape municipalities that have improved their scores over the past five years, such as Oudtshoorn, which achieved a score of 48 in 2020 from 17 in 2016; Theewaterskloof, which achieved a score of 60 in 2020 from 32 in 2016; and Overstrand, which got 71 in 2020 from 59 in 2016.  

The provincial treasury works hard to support municipalities in the Western Cape to achieve financial stability through multiple activities, including: 

  • Assessments of draft municipal budgets to ensure they are financially sustainable and responsive to community and economic needs. 

  • Monthly monitoring and feedback on municipal budget implementation. 

  • Publication of the annual Municipal Economic Review and Outlook that provides economic intelligence to inform municipal planning and socioeconomic profiles for local government, which provide a municipal-specific focus on the factors that impact local economies in each municipality.

  • Guidance and assessment of progress in improving governance practices and performance through technical integrated municipal engagements.

  • Multiple intergovernmental forums to improve co-ordination and knowledge-sharing, such as the mayoral committee members for finance, CFOs, chief audit executive and chief risk officer forums, supply chain management forums and others. 

  • Facilitation of training for municipal officials, including on revenue management and on the implementation of the municipal standard chart of accounts reform. 

  • Support in response to specific queries from municipalities on supply chain management, accounting, audit and budgeting queries.  

  • Granting funding for selected projects to improve municipal financial performance.   

  • Facilitation for the payment of government debts owed to municipalities. 

While Western Cape municipal finances are broadly in good health, several municipalities are vulnerable, and the provincial treasury, together with the local government department, will continue to work closely with them to manage risks and improve their financial stability through, among other things:  

  • Financial health assessments that include recommendations on how to improve the financial health of the municipality.  

  • Assistance in preparing and monitoring budget funding plans in those municipalities that adopt unfunded budgets.

  • Assistance in preparing and monitoring financial recovery plans for those municipalities under intervention in terms of section 139 of the constitution.  

In addition, we will not hesitate to take action if there are allegations of corruption in municipalities in the Western Cape. For that reason we have allocated R8.6m over the medium term to strengthen the forensic investigation capacity of the local government department. 

We are grateful to all our municipalities for their continued efforts to consistently prioritise good governance and improve their financial management of public finances, which will not only ensure good service delivery but also attract investment to our municipalities so we can create jobs and grow the economy in the Western Cape. 

We are proud to have maintained our reputation as the best performing province in SA and will continue to work hard to deliver clean governance for all those living in the Western Cape.

Maynier is Western Cape finance and economic opportunities MEC, responsible for the provincial treasury, and the economic development and tourism department.

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