FISCUS: Good financial management enables municipalities to fulfil their obligations and be accountable to their communities

By Isaac Moledi

Government’s debt bailout plan for Eskom is  key to resetting financially strained municipalities. This was said by Munsoft CEO, Nicolas Maweni, who believes that the debt relief programme by government is a once-in-a-lifetime opportunity for cash-strapped municipalities.

According to Maweni, failing to take advantage of this debt relief programme would be a serious own goal for South African municipalities that are buckling under financial pressure, which has  effectively led to the collapse of service delivery in  many parts of the country.

The programme was first announced by Finance Minister Enoch Godongwana during the  National Budget speech earlier this year and referenced again during his recent presentation of the  Medium-Term Budget Policy Statement (MTBPS)  last month.

The programme provides a much-needed bailout for the 136 (out of a total of 257) municipalities that collectively owed Eskom R58.5 billion in  arrears debt as of 31 March 2023, according to the  National Treasury.

To participate, municipalities must apply and  comply with a series of set conditions. Despite  the lifeline this could offer to many, Godongwana revealed in the MTBPS that the response from  municipalities had been sluggish, with only 67 applications received by the National Treasury by October, with the deadline for applications set for the end of that month.

Through this debt relief mechanism, Godongwana noted, the state’s ultimate goal is to ensure  the “profound transformation of these municipalities, by empowering them to build financial resilience, amplify their capacity to generate sustainable revenue and rekindle a culture of paying for  services rendered”.

Maweni believes that the debt relief programme  is a once-in-a-lifetime opportunity for municipalities to reset their financial well-being, but the low  application rate is concerning.

“For many of these municipalities, the amounts  they owe to Eskom account for the majority of their  entire debt, so the Eskom debt relief programme  would have a material impact on their financial situations and would allow them to focus on ensuring  service delivery.”

The fact that only about 50% of the indebted  municipalities applied for the programme since its  announcement in February this year is of concern.

A chance like this to lighten the financial burden is  unlikely to come along again.  According to the MTBPS, the programme’s  ultimate goal is the profound transformation of  these municipalities, by empowering them to build  financial resilience, amplify their capacity to generate sustainable revenue, and rekindle a culture of  paying for services rendered.

However, to have their Eskom debt written off  over three years and in equal annual tranches, municipalities must comply with certain conditions,  namely enforcing strict credit controls, enhancing  revenue collection and being up to date with the  payment of their Eskom monthly current account.

Maweni notes that there are specialist companies that can help municipalities meet these conditions and thus keep their heads above water. These  solution providers can essentially offer a 360 service that can help municipalities tighten their financial controls, manage their money efficiently  and create new income streams. His  company currently provides financial management  software and related services to more than 70 municipalities nationwide.

“Financial management lies at the heart of  overall municipal management, as it enables municipalities to plan, mobilise and utilise their financial resources efficiently and effectively, as well  as to fulfil their obligations and be accountable to  citizens,” says Maweni.

Implementing the right municipal financial  management solutions can be key for municipalities to become financially stable and sustainable,  thus positioning themselves to be a driving force  for the country’s economic prosperity.

He points out that without the appropriate financial controls and systems, municipalities cannot  hope to function optimally and effectively deliver  services to communities. Failure to put financial  management systems in place will thus result in a continuation  of inadequate service delivery which will continue to affect the lives of South Africans.

‘’While many of our municipalities are seriously struggling  financially, the solution is not to just throw more money at the problem, as this will not have a sustained impact. What we really need to do is focus on fixing the existing systems and processes so that these can be leveraged to ensure  effective financial management.’’

TECHNOLOGY FIRMS LAUNCH SATELLITE SERVICES TO CONNECT BUSINESSES DURING LOADSHEDDING

Lost: Unemployment is a silent crisis which could result in 860 000 jobs being lost this year due to persistent loadshedding

By Isaac Moledi

Businesses in Africa are now able to remain  connected even during the hours of load-shedding,  thanks to collaboration between a pan-African  technology group Liquid Dataport and Intelsat,   two of the world’s largest satellite services providers.

The  technology giants announced an initiative to make available the fast and reliable connectivity in Africa during power disruptions. One  key aspect of this collaboration is Liquid Dataport’s service  called ‘Service Continuity’.

Using the service, organisations can maintain critical business applications during times when there are power cuts by   accessing Liquid Dataport’s low-power satellite  equipment that runs off solar panels or small generators.

These services are already being provided  in South Africa, with an emphasis on mitigating  load-shedding challenges.

This year, South Africa  is set to brace itself for potential job losses of  around 860 000 and a financial hit estimated at a jawdropping R1.6 trillion as a result of persistent loadshedding. This is a hefty R400 billion more than  last year’s tally, according Loadshedding.com, an  organisation that provides users with real-time updates on the load-shedding schedule.

According to the site, South Africa’s unemployment has become a silent crisis. With a staggering unemployment of nearly 33% – the highest  globally – the country faces an immense challenge.

The youth unemployment figure is  even more alarming with 75. 1% out of the labour  market.

The United Nations Development Programme  (UNDP) has warned on this issue, highlighting the potential for social unrest.

According  to the UNDP report, “youth unemployment in  South Africa is a multipronged challenge …. there  is no doubt that the high unemployment rate is a  ticking time bomb.”

During a lecture recently held at the University of Pretoria, Electricity Minister Kgosientsho Ramokgopa  shed light on the grim economic repercussions of  load-shedding.

“Eskom’s inability to meet  electricity demand reliably is detrimental to the  government’s ability to help the poor.”

David Eurin, CEO of Liquid Dataport,  load-shedding distributes demand for electrical power across multiple power sources and is used to relieve stress on an energy source when demand for electricity is greater than supply.

“Access to high-speed connectivity is critical to the digital transformation in Africa, as the continent works towards becoming a digital economy.

However, the impact of intermittent availability of  electricity in recent years is a major hurdle in Africa becoming a digital economy.”

Eurin says the collaboration between the two  companies can now help businesses remain connected even during the hours of load-shedding.

“This project will prove to be a key asset to bridge the digital divide as businesses will no longer be impacted by connectivity downtime.

The benefits of satellite technology are limitless, says Rhys Morgan, general manager at EMEA  Media and Networks Sales at Intelsat. “Leveraging  our global network, we look forward to supporting  Liquid Dataport’s efforts for businesses in South  Africa in minimizing disruptions caused by load  shedding.”

Liquid Dataport is reinforcing its commitment to diversifying its product  offering and extending its reach into more markets  and regions, including those that lack access to reliable power. “This joint relationship enhances our  customers’ ability to operate anywhere on the continent and contributes to Africa’s digital transformation, speaking to Liquid’s vision of a digitally  connected Africa that leaves no one behind.”