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THE DAWN OF A NEW ERA

Adjustment budget speech by the Executive Mayor, Dr Ruben Richards, delivered at a sitting of a Special Council meeting of the Cederberg Municipality held 28 February 2024 in Clanwilliam Council Chambers.

Honourable Speaker, Municipal Manager, Councillors, Officials, and members of the public.

The primary purpose of this Special Council meeting is the tabling for adoption by council the Adjustment Budget in terms of Chapter 4, section 28 (2) (a), (b) and (d) of the Municipal Finance Management Act - MFMA (Act 56 of 2003).  With that context in mind, it is my privilege to table the Revised Budget for 2023/24.

Honorable Speaker and Councilors, as you are aware, our budget was unfunded when it was tabled in May 2020 already - long before the current council was inaugurated. Consequently, the municipality was required by National and Provincial Treasury to develop a Budget Implementation Plan, the objective of which was to ensure that we incrementally get to a position of a funded budget and ensure the financial viability of our Municipality.

During the compilation of this adjustment budget we had to balance financial sustainability with the demands of service delivery in a difficult economic environment.  Our main focus was to create a sound and stable financial position. 

On 1 March 2023, one of the first decisions of the new council under our leadership was to adopt the Section 154 Support Plan in conjunction with the Budget Funding Plan and Cost Containment measures as imposed by Provincial and National Treasury.  So, for the past year, we have religiously adhered to all the regulations and provisions of these plans.  As a consequence, I am proud to announce today that we can table a funded adjustment budget.

Honourable Speaker, allow me to thank our councilors and administration for their sterling efforts and hard work.  I also want to thank residents who have regularly paid their bills. I particularly want to thank the chairperson of our Finance Portfolio Committee, Cllr Johan van Heerden, for his unwavering dedication and punctilious financial eye for detail, together with the other members of that committee including the CFO, Nico Smit and the MM, Gerrit Matthyse.

The councillors and administration have collectively joined hands and through their hard work and diligence have achieved the five (5) pillars of a funded budget which I would like to summarise just briefly.

Pillar 1: Positive cash flows with a focus on revenue from trading services

Positive cash flow on nearly all trading services has increased and due to diligent credit control measures the revenue base of the municipality has increased.

Pillar 2: The implementation of cost containment measures

Strict cost containment measures have resulted in a saving of nearly R2 million in the first half of this financial year.

Pillar 3: Realistic debtors’ collection rate

The administration has succeeded in achieving a 94% debt collection rate which is outstanding against the background of the municipality’s socio economic environment.

Pillar 4: Creditor payments

Outstanding creditors have been reduced from R104m in 2022 to a mere R24m in 2024 with special reference to our adherence to the Eskom Debt Relief programme in which the municipality has succeeded and even reduced its obligations to Eskom.

Pillar 5: Ring fencing of conditional grants

We have ensured that conditional grant funding is ring-fenced and is cash backed.  At present all our conditional grants are cash backed and strengthened by our own cash reserves.

Speaker allow me to bring to your attention four other major changes to the adjustment budget which are worth noting:

• First, our revenue increased with 11% and our expenditure only with 7.2% from the original budget.

• Second, at the start of the financial year we had budgeted for an accounting / operating deficit of R23m.  That deficit has been reduced to R6m. 

• Third, at the start of the financial year we budgeted for a cash shortfall of R81m.  With this adjustment budget we have managed to reduce that shortfall and are projecting a surplus of R113,000 (one hundred and thirteen thousand rand).

• Fourth, trade payables/creditors have decreased from the original amount of R103m to only R23m in this adjustment budget. This is due to daily cash flow monitoring and strict credit control measures.

Honourable Speaker, in essence the municipality succeeded in a very short period to enhance all our liquidity ratios to such a level that we are soon to reach the national norms and standards.  More about that in due course.

Honourable Speaker, with this short background, I hereby present the February Adjustment Budget for 2023/24 for Council consideration and approval.  We have indeed entered the dawn of a new era for the Cederberg Municipality.

I thank you.