`Density of GDP TEXT BOX GDP per square kilometre
The world at night Light indicates development?
Southern Africa
State of Cities Finances 2007 Tshwane Ekurhuleni Johannesburg Mangaung Msunduzi ethekwini Buffalo City Nelson Mandela Bay Cape Town
SADC cities 1 st round Dar es Salaam Lilongwe Nampula Lusaka Blantyre Windhoek Maputo Mbabane Manzini Maseru
SADC cities 2 nd round? Luanda Kinshasa Dar es Salaam Ndola Lilongwe Nampula Lusaka Blantyre Harare Bulawayo Beira Swakopmund Windhoek Gaborone Maputo Mbabane Manzini Maseru Antananarivo Port Louis
29 cities across the region Luanda Kinshasa Dar es Salaam Ndola Lilongwe Nampula Lusaka Blantyre Harare Bulawayo Beira Swakopmund Windhoek Tshwane Gaborone Ekurhuleni Johannesburg Maputo Mbabane Mangaung Manzini Maseru Msunduzi ethekwini Buffalo City Nelson Mandela Bay Cape Town Antananarivo Port Louis
Purpose Analyse the state of finances, creditworthiness and borrowing in Southern African municipalities. Support the emergence of a sustainable Support the emergence of a sustainable municipal finance market in Southern Africa by promoting more effective management and planning of financial activities, better credit ratings and the ability to access capital for investment purposes
Approach Desk research Examination of financial statements, management information, budgets, strategic plans etc as supplied by the municipalities Interviews Structured interview questionnaire Analysis Workshop Report
The credit assessment tool Multi-year scope Considers financial, management, political, strategic, and economic aspects Based on hard data from the financials (ratio analysis) the subjective perspectives of interviewees Generates a assessment of creditworthiness a reform agenda (internal and external) Intended to assess the financial status of a municipality
Subject cities for 2008 Blantyre, Malawi Dar es Salaam, Tanzania Lilongwe, Malawi Lusaka, Zambia Manzini, Swaziland Maputo, Mozambique Maseru, Lesotho Mbabane, Swaziland Nampula, Mozambique Windhoek, Namibia
Basic information Population served Area served (sq km) National GDP/capita 1 Blantyre 1,000,000 220 5,962 2 Lilongwe 700,000 456 5,962 3 Lusaka 1,400,000 360 9,543 4 Manzini 80,000? 38,993 5 Maputo 1,100,000 383 7,194 6 Maseru 230,000 136 38,993 7 Mbabane 60,000? 38,993 8 Nampula 475,000 402 7,194 9 Windhoek 300,000? 47,370 10 Ezulwini 2,000? 38,993
Populations of SADC municipalities 1400000 1200000 1000000 800000 600000 400000 200000 0 3 cities of larger than 1 million people
For which services are municipalities responsible? Bus and taxi ranks Bus services Business registration and licensing Cemeteries Electricity distribution Environmental health services Housing rental Markets Other transport infrastructure Parks Policing general and criminal Refuse collection Refuse disposal Road and storm-water construction Road and storm-water maintenance Sanitation (ie sewerage) Street sweeping Town planning & building control Traffic policing & traffic lights Water reticulation Water production (egpumping from rivers) Windhoek provides a full range of services, including trading services
For which services are municipalities responsible? Bus and taxi ranks Business registration and licensing Cemeteries Civil administration Environmental health services General health services Markets Parks Refuse collection Refuse disposal Road and storm-water construction Road and storm-water maintenance Sanitation (ie sewerage) Street sweeping Town planning & building control Other municipalities provide a much more limited range of services
What are the main sources of operating revenues? Property taxes Personal taxes Business licensing and taxes Service charges Operating grants
What are the main sources of infrastructure finance? Capital grants Donor grants Government loans Private loans Operating revenues
Municipal expenditures 2007 (R m) Annual operating expenditure Annual capital expenditure Total annual expenditure 1 Blantyre 46.260 1.790 48.050 2 Lilongwe 5.310 0.120 5.430 3 Lusaka 123.750 9.540 133.290 4 Manzini 45.230 17.850 63.080 5 Maputo 82.700 35.320 118.020 6 Maseru 54.900 0.230 55.130 7 Mbabane 47.480 10.430 57.910 8 Nampula 20.170 18.540 38.710 9 Windhoek 910.080 186.760 1,096.840 10 Ezulwini 3.190 0.030 3.220
Expenditures of SADC cities (R 000) 1 200 1 000 800 Annual capital expenditure Annual operating expenditure 600 400 200 -
Expenditures of SA cities 05/6 (R 000)
Share of capex in total spend 120.0% 100.0% Annual operating expenditure Annual capital expenditure 80.0% 60.0% 40.0% 20.0% 0.0% Nampula Lusaka Manzini Maputo Blantyre Lilongwe (2008) Mbabane Windhoek (2006) Ezulwini Maseru (2008)
Personnel as % of total spend Personnel Total annual expenditure % 1 Blantyre 12.12 44.06 28% 2 Lilongwe 3.60 5.30 68% 3 Lusaka 59.06 121.44 49% 4 Manzini 25.35 44.37 57% 5 Maputo 46.06 82.69 56% 6 Maseru 17.52 53.68 33% 7 Mbabane 25.84 47.47 54% 8 Nampula 11.94 20.14 59% 9 Windhoek 877.40 10 Ezulwini 0.32 0.97 33% On average, personnel comprises 48% of total spending
Expenditure per person total spend R m Population per capita spend R 1 Blantyre 46.3 1,000,000 46.3 2 Lilongwe 3 Lusaka 123.8 1,300,000 95.2 4 Manzini 63.1 80,000 788.5 5 Maputo 46.1 1,100,000 41.9 6 Maseru 34.8 230,000 151.1 7 Mbabane 47.5 60,000 791.3 8 Nampula 45.7 475,000 96.1 9 Windhoek 1,106.0 300,000 3,686.7 10 Ezulwini 1.0 2,000 490.0
Expenditure per person 900 800 700 600 500 400 300 200 100 -
Revenue sources Property tax Business taxes, servi ce charges etc Operating grants Capital Grants Other Total 1 Blantyre 38.52 5.73 1.40 1.67 7.33 54.65 2 Lilongwe 3.38 1.09 4.47 3 Lusaka 37.90 61.80 4.71 30.22 134.63 4 Manzini 35.35 1.58 4.54 1.61 43.08 5 Maputo 11.31 22.97 21.15 38.47 27.35 121.25 6 Maseru 8.71 2.22 19.50 0.25 0.92 31.60 7 Mbabane 36.34 3.09 3.29 11.60 1.69 56.01 8 Nampula 0.19 3.00 6.85 16.54 10.03 36.61 9 Windhoek 104.07 710.00 - - 99.04 913.11 10 Ezulwini 3.60 0.03 0.95-0.08 4.66
Revenue sources (%) Property tax Business taxes, service charges etc Operating grants Capital Grants Other Total 1 Blantyre 70% 10% 3% 3% 13% 100% 2 Lilongwe 0% 76% 0% 0% 24% 100% 3 Lusaka 28% 46% 3% 0% 22% 100% 4 Manzini 82% 4% 11% 0% 4% 100% 5 Maputo 9% 19% 17% 32% 23% 100% 6 Maseru 28% 7% 62% 1% 3% 100% 7 Mbabane 65% 6% 6% 21% 3% 100% 8 Nampula 1% 8% 19% 45% 27% 100% 9 Windhoek 11% 78% 0% 0% 11% 100% 10 Ezulwini 77% 1% 20% 0% 2% 100%
Revenue sources % 1 000 900 800 99 Other 700 600 Capital Grants 500 400 300 200 100-710 104 80 69 62 104 172 Operating grants Business taxes, service charges & license fees Property tax Windhoek (2006) Others
Blantyre operating results 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Revenue Expenditure Surplus 2002 2003 2004 2005 2006 2007 2008
Lusaka operating results 250.0 200.0 Revenue Expenditure Surplus 150.0 100.0 50.0 0.0-50.0 2002 2003 2004 2005 2006 2007 2008
Maputo operating results 120.0 100.0 Revenue Expenditure Surplus 80.0 60.0 40.0 20.0 0.0 2005 2006 2007 2008
Manzini operating results 60.0 50.0 Revenue Expenditure Surplus 40.0 30.0 20.0 10.0 0.0-10.0 2004 2005 2006 2007 2008
Current debt position Total debt outstanding (R m) Annual debt service costs (R m) Debt service costs as % of opex 1 Blantyre 6.23 2.20 5% 2 Lilongwe - - 3 Lusaka 0.84 2.32 2% 4 Manzini 11.08 2.03 5% 5 Maputo - - 6 Maseru 8.60 1.23 2% 7 Mbabane 7.14 2.52 5% 8 Nampula - - 9 Windhoek 451.47 21.10 2% 10 Ezulwini - -
Movement in cash reserves 2005 2006 2007 1 Blantyre - 2.71-1.16 5.06 2 Lilongwe n/a n/a 1.43 3 Lusaka 15.15 18.74 22.28 4 Manzini - 0.04-6.78 1.47 5 Maputo - 2.36 0.53 3.21 6 Maseru n/a n/a n/a 7 Mbabane - 6.61-1.88-1.78 8 Nampula 2.03 1.13-2.10 9 Windhoek - 5.02 56.93-197.23 10 Ezulwini 0.26 1.23 4.05
Common themes 1 Financial strength of local government correlates strongly with density of GDP Weak local economies, poverty, & affordability issues Functions and powers of local government Interface between local and other spheres of government Financial interfaces In some cases municipal borrowing is prohibited
Common themes 2 Political-administrative interface Relationship is only sometimes constructive Correct balancing and separation of political and professional mandates and juristictions Billing, credit control and politics Billing, credit control and politics Billing and collection systems are weak and partial Credit control procedures are expensive and time consuming. Concern about the political implications of credit control action People are genuinely poor
Common themes 3 Skills and training Skills shortage is universally described as `severe Applies especially in technical fields No systematic training is being provided Accounting and controls Could all use some help in taking systems further
Conclusions There is an obvious three-pronged initiative which emerges from this work: Programme of support for turnaround or capacity building strategies Programme of support for borrowing strategies 2 nd round research effort to capture an additional 10 SADC cities
29 cities across the region Luanda Kinshasa Dar es Salaam Ndola Lilongwe Nampula Lusaka Blantyre Harare Bulawayo Beira Swakopmund Windhoek Tshwane Gaborone Ekurhuleni Johannesburg Maputo Mbabane Mangaung Manzini Maseru Msunduzi ethekwini Buffalo City Nelson Mandela Bay Cape Town Antananarivo Port Louis