Gauteng Provincial Government led by the Department of Local Government (DLG) in partnership with Gauteng Treasury (GT) launched an initiative in 2006 to enhance the revenue of all local municipalities and the metros in the province. PSU International was appointed to work on this project.
A Baseline data extract from the financial system – an extraction of all billing related data including static debtor and meter information and transactional data (levies, payments, readings) – was done for all eleven municipalities which formed the basis for the development of implementation strategies for each site. The implementation phase was designed as a hands-on support phase with the aim to achieve easy realisable results with the opportunity to expand the intervention with more targeted, complex and intricate activities as a way to ‘complete’ the revenue enhancement initiative on site.
The negotiated scope of work that was developed for this Programme had four broad objectives:
The purpose of the implementation strategies was to outline a comprehensive plan for the achievement of short- and long-term objectives. The overall objective was to establish a sound institutional and operational basis for the management of the local revenue environments into the future. Strategies were aligned and integrated with the objectives of other municipal revenue enhancement and related initiatives in order to maximise benefits from coordinated implementation processes.
The table below summarises the benefits that accrued to the municipality – directly and indirectly. Direct benefits relate to the immediate and tangible results that were achieved including monetary payments of arrears and reduction of debt through write-off. Indirect benefits refer to those benefits which were obtainable pending final intervention by municipalities, for instance by updating the financial systems with additional information and parameters that would result in improved billing, collection of levies and so on.
Summary of Benefits to Municipalities (in R-millions)
| Municipality | Government Debt Payments | Indigent Expansion | Direct Collections | Indirect Collections | Debt Write-off | New Revenue (annual) | Total Benefit |
|---|---|---|---|---|---|---|---|
| Metros | 172.6 | 863.5 | 0 | 17.9 | 17.2 | 36.7 | 1 107.8 |
| LMs | 35.4 | 123.9 | 18.5 | 68 | 781.5 | 25.8 | 1 053.1 |
| Total |
207.9 | 987.4 | 18.5 | 85.6 | 798.6 | 62.5 | 2160.9 |
The Revenue Protection & Enhancement Programme in Gauteng has shown a huge potential in improving the financial viability of municipalities. Apart from the direct cash benefits that were achieved through the collection of government and other arrears, the expansion of indigent management to include data from the Department of Social development as well as the improved management of water and electricity services can have further substantial financial impact on municipal finances.
The success of this provincial initiative was dependent on the ongoing support from the provincial stakeholders as well as the participation and co-operation of all the municipalities and their staff. PSU International would like to thank all the municipalities and the various Gauteng Provincial Government Departments that participated in the project to produce the results of a total financial benefit of just over R2bn. PSU International is proud to be associated with this project and all of it’s partners.