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Financial Sustainability - Local Governments Of Swaziland

Financial Sustainability - Local Governments Of Swaziland. By: Ms. Gciniwe Fakudze Matsapha Town Board, Town Clerk / Chief Executive. General Principles Financial Sustainability and Local Governance General Principles in Practice About Royal Kingdom of Swaziland

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Financial Sustainability - Local Governments Of Swaziland

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  1. Financial Sustainability - Local Governments Of Swaziland By: Ms. Gciniwe Fakudze Matsapha Town Board, Town Clerk / Chief Executive

  2. General Principles • Financial Sustainability and Local Governance • General Principles in Practice • About Royal Kingdom of Swaziland • State of Local Governments in Swaziland • Route to Financial Sustainability Presentation Outline

  3. Definition by the South Australian Financial Sustainability Review Board FSRB (2005b, 10) : • A council’s long-term financial performance and position is sustainable where: • There is a continuation of the council’s present spending and funding policies; • Likely developments in the council’s revenue-raising capacity and the demand for and costs of its services and infrastructure are relatively at par; and • Normal financial risks and financial shocks, altogether are unlikely to necessitate substantial increases in council rates (or, alternatively, disruptive service cuts). • Requirement therefore - a shift from short term perspective associated with annual budgeting to 5 – 10 year perspective General Principles

  4. Answer 3 Questions: • Firstly, does local council’s expenditure on service provision and local infrastructure meet with current and future revenue flows? • Secondly, what is the optimal manner of remedying a potential ‘mismatch’ between expenditure and revenue; and • Finally, should grants from higher tiers of government then be relied upon to reduce any such financial mismatches? General Principles in Practice

  5. Size: 17 363 sq km • Population: 1.2 million • Urban Population: 26% national population • Local Authorities: 12 municipalities. • 2 Municipal Councils • 3 Town Councils • 7 Town Boards • Governance: Ministry of Housing and Urban Development About Swaziland

  6. Operational Budget • 85% Rates • In most municipalities Government is the highest rate payer • Some municipalities are dependant on government funding • Government remains the highest defaulter, in spite the fact that Government always pays, non payment at stipulated time affects cash flow • Ineffective debt collection – irrecoverable debts and the legal rates recovery process is “political time bomb” State of Local Government

  7. Operational Budget • 10% Government Subvention • Not equitably distributed / allocated by Government (National Treasury) • Thus it has remained unchanged for years • 5% Service Charges • Approval and Amendment by National Parliament • Approval process can take over 1 year • Cost of providing service not considered in tariff setting Capital Budget • Equitable Capital Grants

  8. Currently local government is directly affected by the Central Governments cash flow challenges which are a result of reduction in SACU revenue, which constituted 60% of the national budget; • Due to crisis - local government allocations were cut by 10%, Minister of Finance preparing a supplementary budget cut down by over R800 Million; • Local government’s are no longer receiving grants for capital infrastructure programmes.; • This is very difficult for local government to carry out its mandate effective and efficient. State of Local Government

  9. Out-dated Legislation • Urban Government Act, 1969 • Financial Regulations, 1969 • Human Resources • Proportionally high ratio of employee costs to operating expenditure • Some municipalities have turn around strategies • Competent & well trained and experienced staff for big municipalities thus there is need for training • Retention a major challenge • Chief positions are filled immediately when vacant State of Local Government

  10. Route to Financial sustainability

  11. Over the past year Local Governments have shifted from short term to long term budgeting and Management as follows: • Formulation of clear 5 year Integrated Development Plans, which ensures participatory budgeting and prioritisation – approved by the Minister for Housing and Urban Development • Cash flow management strategy and plan - approved by the Minister for Housing and Urban Development • Submission of quarterly performance reports, which include financial performance to the Minister and Parliament • Financial Sustainability Planning and Management • Monthly financial statements are submitted to Council

  12. Effective Rates Collection • Rates Collection Strategies submitted to the Minister for approval and monitored • Accurate Billing is done • Improving means of rates payment by exploring and introducing a single rating system in the Kingdom • Aligning rates payments to utility service payment i.e. water & electricity and Swaziland Revenue Authority • Practising Corporate Governance • Continuous training and development for Councillors and staff • Environmental Management and Sustainability

  13. Increasing the means of income generation / Revenue streams for municipalities, while service charges are being levied – other sources of income are being explored • Private Public Partnership’s for service provision • Utilising loan financing from development banks to finance infrastructure development with longer repayment periods • Best Practice Sharing and Learning • Twinning Regionally and Internationally • MOU SALGA and SWALGA • Membership IMFO and other professional bodies • Outsourcing some municipal services (cost, delivery)

  14. Thank You

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