Presentation to the Select Committee on Finance Oversight visit to the province city of caPE TOWN BUDGETARY PERFORMANCE AND SUPPORT PROVIDED AS AT THE END OF THE SECOND quarter FOR the 2016/17 financial year Presentation to the Select Committee on Finance Parliament Mr A Dyakala 31 January 2017

Presentation Outline Introductory remarks Presentation by the Provincial Treasury Summary YTD budget performance as at 31 December 2016 Operating Revenue Budget Performance Operating Expenditure Budget Performance Capital Budget Performance Debtors Closing remarks by the MEC: Finance Budgetary Performance & Support provided as at the end of the Second Quarter for the 2016/17 financial year

Introductory remarks

OVERSIGHT RESPONSIBILITIES IN RESPECT OF THE MFMA The Minister of Finance is responsible for administering the MFMA in its totality. In order for the effective and holistic operation of the MFMA, the Minister of Finance delegated certain responsibilities to the MECs for Finance in all provinces, relating to support, oversight and administrative procedures in respect to municipalities within their respective provinces. The National Treasury however retained the monitoring and administrative oversight role in relation to the largest municipalities in each province, which include the City of Cape Town in the Western Cape. The Provincial Treasury plays a supporting role to the National Treasury in its oversight responsibilities. Budgetary Performance & Support provided as at the end of the Second Quarter for the 2016/17 financial year

City of Cape Town Section 71 : Municipal Budget Performance as at 31 December 2016

Introductory remarks Financial information contained in the presentation is sourced from the section 71(1) of the Municipal Finance Management Act (Act 56 of 2003)(MFMA) as at 31 December 2016 (also known as the In-Year monitoring (IYM) reports) On a monthly basis, the accounting officer of a municipality must by no later than 10 working days after the end of each month submit to, amongst others, the relevant provincial treasury a statement in the prescribed format on the state of the municipality’s budget Budgetary Performance & Support provided as at the end of the Second Quarter for the 2016/17 financial year

Summary of the Second Quarter Financial Outcome as at 31 December 2016 Description R'000 Original Budget Adjusted Budget YTD Actual YTD Budget YTD % of Adjusted Budget YTD Variance YTD Variance % Full Year Forecast Total Revenue (excluding capital transfers and contributions) 34 520 879 34 928 751 18 234 351 17 533 393 52% 700 958 4.00 Total Expenditure 34 796 423 34 956 651 15 264 631 16 119 674 44% (855 043) (5.30) Surplus/(Deficit) (275 544) (27 900) 2 969 719 1 413 718 1 556 001 110.06 Transfers recognised - capital 2 177 040 2 186 477 835 225 579 120 38% 256 105 44.22 Contributions recognised- capital and contributed assets - (16 512) 34 995 (51 507) (147.18) Surplus/(Deficit) after capital transfers & contributions 1 901 496 2 158 577 3 788 433 2 027 833 1 760 599 86.82 Share of surplus/(deficit) of associate Surplus/(Deficit) for the year Capital expenditure 6 774 256 6 904 724 2 361 262 1 987 738 34% 373 524 18.79 Total sources of capital funds Total outstanding debtors 7 577 148 Total outstanding creditors 256 654 Budgetary Performance & Support provided as at the end of the Second Quarter for the 2016/17 financial year

Operating Revenue Budget Performance The City is well on track with the implementation of the operating budget and on aggregate the operating revenue budget performance for the period up to 31 December 2016 amounts to 52 per cent of the total adjusted budget of R34.93 billion An under performance is noted on the Fines revenue collected to date. The YTD collection is only at 29 per cent Below is a representation of how the YTD revenue has been collected Budgetary Performance & Support provided as at the end of the Second Quarter for the 2016/17 financial year

Operating Expenditure Budget Performance Operating expenditure amounts to 44 per cent of the total adjusted budget of R34.96 billion and the spending performance is affected by the annual processing of non-cash items The YTD performance on transfers and grants reflects an underspending as it is only at 36.78 per cent Below is a representation of how the YTD budget has been spent Budgetary Performance & Support provided as at the end of the Second Quarter for the 2016/17 financial year

Capital budget performance Funding composition of the YTD capital expenditure YTD Capital Expenditure per Vote The YTD capital expenditure amounts to 34.2 per cent Progress on the top 10 capital projects are being tracked on a monthly basis by Provincial Treasury Budgetary Performance & Support provided as at the end of the Second Quarter for the 2016/17 financial year

Debtors The total outstanding debtors amounts to R7.58 billion of which the most significant income sources contributing to total debt are Water services and Property rates The total outstanding debtors, older than 90 days, amounts to R5.31 billion and it equates to 70 per cent of the total aggregated outstanding debtors Households reflect the largest over 90 day’s customer category with the largest overdue debt relate to water (38.4%) and property rates (16.88%) Budgetary Performance & Support provided as at the end of the Second Quarter for the 2016/17 financial year

Creditors The total accounts payable at 31 December 2016 amounted to R256.65 million The negative amount is due to legal dispute that awaits legal directive Budgetary Performance & Support provided as at the end of the Second Quarter for the 2016/17 financial year

Cash flow The monthly cash coverage is 1.20 times as at the end of December 2016. This indicates that the cash inflows exceed cash outflows. The cash coverage year-to-date is 1.01 and the short term debt will be met for the year ahead The closing balance on the Investment Portfolio indicates an amount to R9.85 billion as at end of December 2016 The closing balance indicates an amount of R6.51 billion as at end of December 2016. Included in this amount, the municipality has external loans of R2.31 billion and Bonds (Local Registered Stock) of R4.20 billion. Sinking Fund amount to R2.06 billion for the month C Budgetary Performance & Support provided as at the end of the Second Quarter for the 2016/17 financial year

Support provided to the City of Cape Town

Towards strengthening evidence-based planning… economic intelligence Regional economic review Sectoral growth, employment and skills per municipal area Value Chains Infrastructure spending - review and analysis Municipal socio-economic analysis Budgetary Performance & Support provided as at the end of the Second Quarter for the 2016/17 financial year

Broadband Penetration Towards strengthening evidence-based planning… socio-economic intelligence SEP-L Demographics Education Health Poverty Basic Services Safety and Security Economy Broadband Penetration Budgetary Performance & Support provided as at the end of the Second Quarter for the 2016/17 financial year

In support of Integrated Development Planning IDP Structure Vision Demographics Powers and Functions Development Process Spatial Economy Status Quo Assessment Objectives Sector Plans Budgetary Performance & Support provided as at the end of the Second Quarter for the 2016/17 financial year

Support package: Other WORK STREAM INITIATIVES MGRO BTO Capacitation and Development Compliance with Municipal Regulations on Minimum Competency Levels, 2007 Customisation of NT internship guidelines Revenue Management Government Debt Reduction and E-services facility Expenditure Management Expenditure Management Charter: Focus is on the continuous improvement and learning. Supply Chain Management Compliance with NT Instruction. Registration of Suppliers on the Central Supplier Database (CSD) Cash Management Organisational performance management BEPP Infrastructure Provides information to the City of its investments over the MTEF in Education, Health, Human Settlements, Roads and General Infrastructure, including regeneration projects C Budgetary Performance & Support provided as at the end of the Second Quarter for the 2016/17 financial year

Mr Andile Dyakala Chief Directorate : Local Government Public Finance +27 (0)21 483 8255 +27 (0) 21 483 4411 mfma.mfma@westerncape.gov.za