THE FINANCING OF CITY SERVICES IN SOUTHERN AFRICA Preface
A follow-up of a previous report published by the SACN in 2008, this publication examines the challenge of financing infrastructure in the Southern African region. Infrastructure investment in Southern Africa and the rest of the continent is of particular significance, as it is increasingly recognised as pivotal to the goals of economic growth and tackling poverty. The geographical spread of the project included ten city municipalities across the countries of Botswana, Mozambique, Mauritius, Tanzania, Namibia, Zambia and Malawi. The research involved city visits, where interviews with key individuals were conducted, and an in-depth analysis of their financial statements, as well as plans and policies relating to infrastructure and services.
This project had a number of key activities. One was to understand the financial health of these municipalities, which was linked to providing credit assessments for all the municipalities visited, allowing them to rate their ability to borrow in order to meet some of their infrastructure needs. This publication, with its detailed financial profiles and analysis of major issues relating to city finances, is a primary product of this aspect of the project. Another aspect of this project was to conduct financial capacity building in a selected number of these municipalities, providing senior managers with focused training on enhancing city creditworthiness. The project culminated in a knowledge dissemination event in Johannesburg South Africa on 25 May 2011, at which the publication was launched, broad findings of the project were discussed and city officials were invited to share financial management lessons learnt within their organisations.
Acknowledgments
This publication was written by Roland Hunter of Hunter van Ryneveld, based on his research work done in conjunction with Johan Kruger of AfCap Consulting. The project was managed by Michael Kihato of the South African Cities Network (SACN), joint sponsors of the project together with the Public Private Infrastructure Advisory Facility (PPIAF) and the World Bank.
We would like to acknowledge the role of Ntombini Marrengane and David Savage, who served as external readers to the initial draft of the work. Special thanks to the city officials in Arusha, Dar es Salaam, Maputo, Windhoek, Lusaka, Ndola, Lilongwe, Blantyre, Gaborone and the Municipal Council of Port Louis for putting aside time to interact with the research team and for providing the information necessary for the creation of this publication.
Editorial and design Editing: Write to the Point Design and layout: HotDog Designs
2 Foreword
It has been slightly over two years since the SACN was last involved in a regional project of this nature, and the challenge of municipalities meeting their obligations in terms of delivering infrastructure and services still persists. According to the report Africa’s Infrastructure: A Time for Transformation, to meet Africa’s infrastructure needs will require an annual investment of US$93 billion, of which two-thirds will be spent on capital expenditure and the balance on operations and maintenance. Much of this expenditure needs to happen in cities, as cities are (and will increasingly be) the drivers of social and economic development. It is with this understanding that the SACN is producing this publication that seeks to contribute, in its own small way, to helping to understand and deal with the enormous challenges facing Southern Africa’s cities.
SACN transferred to this phase of the project the lessons learned during previous work carried out in a number of Southern African municipalities. One important lesson is the critical need for capacity building around financial issues, if municipalities are to be capable of better financing their infrastructure and service needs. A municipality’s ability to collect its own revenues, operate in a financially efficient manner and be creditworthy is largely dependent on its internal capacity to manage its finances. In the long term, at the heart of financial health is the institutional strength of municipalities. In recognition of this, SACN made capacity building a primary output of this project. Through a series of interactive, capacity-building workshops with selected members, various areas of improvement to financial management were discussed and highlighted.
It would be remiss not to mention a number of issues that emerged during the interaction with over ten municipalities in the Southern African region. We often forget that we belong to a diverse continent with varying histories, needs and experiences. In this respect, some useful lessons and experiences of innovation in financial management are supplied by the cities, as they deal with local challenges to provide for the needs of their citizens. For example, interesting practices around revenue collection and maintenance emerged. Then again, issues can also be remarkably similar. The worsening international economic conditions in the period since the previous work highlighted a common vulnerability among our diverse cities. We also all share the universal need to live in a financially well-managed city that provides services to all. To achieve this, many of the municipalities and their respective national governments need to tackle a number of common challenges. Municipalities need to be enabled with sufficient financial and decision-making autonomy to adequately deal with the growing urban demand for services. Greater effort also needs to be expended at revenue collection.
It is hoped that with this work, SACN has contributed meaningfully to the body of research aimed at progressively dealing with challenges of financing infrastructure and services in the continent. Sithole Mbanga CEO South African Cities Network
3 Contents
Preface...... 2 Acknowledgements...... 2 Foreword...... 3 1. Introduction...... 5 2. Economic and demographic profiles...... 8 3. City government responsibilities...... 22 4. Financial profile of the cities...... 31 5. City finances in Southern Africa...... 41 6. Conclusion ...... 45 Annexure A: Summary tables and statistical considerations...... 47 Annexure B: City annual financial statements...... 49 Annexure C: Interviewees...... 70 Annexure D: Reports and documents consulted...... 72
4 THE FINANCING OF CITY SERVICES IN SOUTHERN AFRICA
1. Introduction
In 2010 the South African Cities Network (SACN), in conjunction with the World Bank Institute (WBI) and the Public Private Infrastructure Advisory Facility (PPIAF), implemented a project to support the emergence of a sustainable municipal finance market in Southern Africa.
The aim of the project was to promote more effective city financial planning and management, better credit ratings and improved access to capital markets for infrastructure investment purposes. The project involved conducting a series of shadow credit assessments of city governments in Southern Africa and developing a customised, financial management capacity- building programme for senior city management teams.
This report is one of the ‘knowledge products’ of the project and presents an overview of city government finance in ten cities in Southern Africa outside of South Africa (SA). It draws heavily on the research interviews conducted, documents obtained and credit assessment reports produced during the course of the project.
The report is also a companion to The State of the City Finances 2011, which deals with the financial position and performance of the nine largest South African cities, all members of the SACN. That report is a comprehensive update of an earlier SACN publication, The State of the City Finances 2007, and other, briefer accounting and chapter-length financial updates produced during the intervening years.
While the original intention was to produce a single report covering city financial issues across Southern Africa including SA, it was decided that on balance two separate volumes would be better, for two major reasons:
5 1. South African city governments are starkly different from their counterparts elsewhere in Southern Africa, especially in their legal mandates, intergovernmental financial and administrative systems, and almost every financial indicator. A single report would inevitably be dominated by this divide, which would tend to push other critical matters into the background. Furthermore, the financial and economic information available on South African cities is substantially more detailed and reliable than that on other Southern African cities, which would greatly complicate the task of using common information categories in a single report.
2. Two separate reports allow for a comprehensive update of the earlier SACN report on South African cities (State of the City Finances 2007) and for an adequate presentation of information on and analysis of city financing issues affecting Southern African cities outside of SA. The major advantage of a single report is retained by both reports using a common perspective on city financing and common templates to present the financial information.
Information was gathered during a series of visits to city governments across Southern Africa. As Figure 1 shows, a total of 14 city municipalities in nine countries were visited. The cities were chosen using considerations of city size, geographical spread, potential creditworthiness, and project logistics and budget. The approach used was to interview senior management at each subject council, particularly the most senior officials responsible for the administration, financial and engineering services, using a structured questionnaire of over one hundred subjective and objective questions. Financial and planning documentation was collected, and financial information was captured and analysed over multiple financial years.
6 The current report deals in particular with ten city governments in Southern Africa: (1) Dar es Salaam City Council, (2) Municipal Council of Port Louis, (3) Lusaka City Council, (4) Windhoek City Council, (5) Gaborone City Council, (6) Maputo City Council, (7) Arusha City Council, (8) Lilongwe City Council, (9) Blantyre City Council and (10) Ndola City Council.
Figure 1: Location of cities visited
No claim is made that these cities constitute a fully representative sample of city governments in Southern Africa outside SA. In particular, the inclusion of Harare, Bulawayo and Luanda would have been useful to improve the geographic spread and thematic representivity, while a visit to Lumbumbashi could have permitted more insights into city finance in mining towns, which is a theme that will certainly increase in importance. Nevertheless the information assembled is of sufficient breadth and depth to allow for generalisation and analysis, to consider cross-cutting issues and to suggest directions for potential improvement.
Report structure The diversity of cities poses special challenges for this report. Countries and cities need to be introduced before dealing with city finance as such. Financial data collected from varied local formats must be presented in a common format and in a common currency, which is calculated at the appropriate exchange rate per year and avoids situations where exchange rate variations mask domestic trends.
Accordingly, the report starts in Section 2 with brief economic and demographic profiles of the relevant countries and cities. Section 3 positions the city governments within their national constitutional and legal frameworks, presenting a spectrum of the powers and functions of city governments in Southern Africa. It then becomes possible, in Section 4, to present meaningful comparative financial information on the selected cities and, in Section 5, to explore some of the cross-cutting themes that emerge. The concluding Section 6 offers some considerations for city and intergovernmental reform in Southern Africa.
Summary tables and statistical notes, extracts of annual financial statements for each of the cities, a list of interviewees, and reports and documents consulted are included as Annexures.
7 2. Economic and demographic prof iles
City governments in Southern Africa make up a diverse group. They vary considerably in size, support very different local economies (in both nature and scale), and operate within a range of constitutional and legal frameworks. They have varied expenditure responsibilities and revenue powers, as well as different internal administrative and financial capacities. While many common themes are apparent in Southern African city finance, uncovering them requires first that the essential demographic and economic information about the sample cities and their nation states be considered.
After setting out some basic information about the subject cities and their global and especially South African comparators, brief demographic and economic profiles of the relevant countries and cities are presented (alphabetically by country). The section is supported by tables in Annexure A, which provide comparative cross-sectional data on a selection of Southern African countries, including the seven that are home to the ten sample cities.
The cities and their global and South African counterparts In 2007 the world contained 23 ‘megacities’, or metropolitan areas with a population of over 10 million, and 45 ‘large middleweight’ cities containing populations of 5–10 million inhabitants. Southern African cities start featuring only in the third category – ‘midsize middleweight’ cities of 2–5 million people, of which there are 143 around the world, including eThekwini, Johannesburg, Dar es Salaam, Cape Town and Ekurhuleni. Apart from Dar es Salaam, all the cities considered in the report belong to the fourth category – ‘small middleweight’ cities of between 150 000 and 2 000 000 people (McKinsey Global Institute 2011, p.13).
8 Figure 2: Population of SA and SADC cities (thousands)
Although medium and small in global terms, the subject cities include some of the largest cities in Southern Africa: Dar es Salaam, at around three million people, is of comparable size to eThekwini, Johannesburg and Cape Town, while Lusaka and Maputo are both slightly larger than Nelson Mandela Bay. Blantyre and Lilongwe are in the same size range as Buffalo City, Msunduzi and Mangaung. The remaining cities in the sample (Ndola, Arusha, Windhoek, Gaborone and Port Louis) are all smaller than any of the SACN member cities (see Figure 2).
Southern African cities are of similar demographic scale to their counterparts in SA, but their local city economies are all considerably smaller:1 the city economy of Dar es Salaam is of a similar scale to that of Nelson Mandela Bay, Port Louis and Lusaka are comparable to Msunduzi, Windhoek is similar to Buffalo City, and Gaborone is akin to Mangaung. The remaining five Southern African cities (Maputo, Arusha, Lilongwe, Blantyre and Ndola) have local economies that are smaller than any of the SACN member cities.2
Figure 3: Estimated 2008 city GDPs (PPP basis, in constant 2005 US$)3 1 This is simply the urban counterpart to the relative scale of their respective national economies: SA accounts for over three-quarters of the collective GDP of the eight countries concerned. 2 Thorough and reliable estimates of city GDP (gross domestic product) or gross value added are not available for Southern African cities; the data presented here are author estimates: see Annexure A. 3 Note: PPP means ‘purchasing power parity’ and refers to an exchange rate calculated on the basis of what the currency will buy, rather than the actual quoted exchange rate.
9 Botswana Botswana is Africa’s longest-standing multiparty democracy. It is a large, semi-arid country, where around two million people live in an area of 600 370 square kilometres. Mining represents 40% of real GDP (2008), and the country has one of the world’s three richest diamond-bearing formations and rich reserves of nickel and copper at the Selibe Pikwe mines. Traditionally 10% of the workforce is employed in South African mines.
From 1967–2006, economic growth averaged 9% per year, but slowed during 2007 and 2008 to only 3% before contracting by an estimated 4–5% in 2009. The government has maintained a sound fiscal policy and has negligible foreign debt. In July 2010 foreign exchange reserves were estimated to be US$7.85 billion, or approximately 19 months’ worth of imports of goods and services. Botswana abolished foreign exchange controls in 1999, has a low corporate tax rate (15%) and no prohibitions on foreign ownership of companies. The government reports that the average year-on-year annual inflation rate dropped from 12.6% in 2008 to 8.2% in 2009. It is classified as a middle-income country.
In 2010 Moody’s, the credit rating agency, downgraded Botswana’s rating from an ‘A’ grade to an ‘A-’, but revised its outlook from ‘negative’ to ‘stable’. Botswana remains one of the best credit risks in Africa and is on a par with many countries in central Europe, East Asia and Latin America.
The HIV/Aids pandemic has hit Botswana particularly hard, and an estimated 23.9% of all adults aged between 15 and 49 are HIV positive. However, Botswana has been highly proactive in stemming the pandemic: the country’s president is automatically the head of the national HIV/Aids body, and 79% of HIV-infected people receive antiretroviral treatment. Although recent reports point to a levelling out of the incidence of the disease, the country faces the multiple challenges of fewer productive members of society, a reduced tax base and a duty to provide shelter and subsistence to the many children left orphaned and vulnerable in the wake of the pandemic.
In 1965, at independence, Gaborone became the capital of Botswana. The population, which was under 4 000 people in 1964, rose to 224 000 by 2001. Gaborone now doubles in size roughly every ten years. The city has about 58 476 households and is home to about 10% of the country’s population. Gaborone has good transportation linkages, including rail links to Cape Town in the south and to Bulawayo and Harare in Zimbabwe, as well as an international airport. Located at the nexus of the Trans-Kalahari highway, the A1 highway and the Cairo–Cape Highway, the city is linked to all other major centres by road. Buses and minibus taxis provide public transport. However, water tariffs are considered high, due to the cost of transporting the water to Gaborone.
Since its inception in 1964, Gaborone City Council has laid out the city with mixed-income neighbourhoods, in an effort to avoid polarisation between income classes within the city. Neighbourhoods have been planned carefully, which is a factor that supports the provision of services within the city.
Botswana remains one of the best credit risks in Africa and is on a par with many countries in central Europe, East Asia and Latin America.
10 Malawi Malawi is a small, landlocked country, classified as one of the world’s least-developed countries. Its relatively modest economy is based mainly on agriculture, tourism and a uranium mine. The population is approximately 13 million people, of which 90% can be regarded as rural. The capital city is Lilongwe, and the largest city and commercial capital is Blantyre. There appears to be a gradual but sustained move of commercial businesses from Blantyre to Lilongwe.
The currency is the Malawi kwacha (MWK), which in August 2010 was worth approximately MWK 150 per US dollar and MWK 20 per South African rand (ZAR).
The national GDP is estimated to be US$12.52 billion. Approximately 36% of national economic product is derived from agriculture, 18% from mining and manufacturing and 46% from services, including government services. Malawi is very dependent on (and vulnerable to) the tobacco sector, which accounts for 60% of foreign earnings, and on aid inflows from international donors, the World Bank, as well as support from the International Monetary Fund (IMF). The average GDP per person is US$963. Since 2003 inflation has hovered around 8% – in February 2010 the estimated inflation rate for 2010 was 8.5%.
The serious problems that the country faces, especially since the droughts of 2006, include food security, endemic poverty, HIV/Aids, and the need to upgrade the education system and to attract foreign investment. New HIV infections appear to have stabilised recently, but the estimated infection rate of 14% is high compared to other countries. The average life expectancy of 43 years significantly hampers skills development.
An inland port is due to open shortly at Nsanje on Lake Malawi, which is anticipated to boost the national economy. In addition, substantial hydro-electric potential exists that, if developed, could provide an economic stimulus.
In Malawi, the financial markets consist of a number of institutions regulated by the Malawi Reserve Bank, including commercial banks (11 in 2009), finance houses, merchant banks (a number of which are related to foreign banks), savings and credit institutions, insurance companies, and a stock exchange with brokers and asset managers. Through the Reserve Bank, the Malawi government has embarked on a comprehensive reform programme of the whole financial sector.
11 Blantyre has long been the commercial capital of Malawi. Originally established as a centre for the ivory trade, the city is older than Johannesburg, Harare and Nairobi and has one of the oldest municipalities in Southern Africa, incorporated in 1885.
The city is currently the main manufacturing centre in Malawi and contains factories that produce plastics, shoes, and cotton and metal products. The city has eight designated industrial areas, two of which are for heavy industry and host more than 30 companies between them.
Blantyre is well-connected by road, rail and air links to all parts of the country and to its neighbouring countries. It is home to important national institutions, such as the Supreme Court, the state broadcaster, and several tertiary educational institutions. It is the capital of the Southern Region and the Blantyre District.
Institutions involved in the overall management of Blantyre as a city include the Blantyre City Council (City Assemblies in Malawi were recently renamed City Councils), the Blantyre Water Board, the Electricity Supply Commission of Malawi, the Malawi Housing Corporation, the Ministry of Local Government and Rural Development, the Ministry of Lands and Valuation, the Ministry of Works, the National Roads Authority, and also national departments concerned with health, education and policing.
Lilongwe has a population of approximately 700 000 and an additional daily commuter Blantyre … is older than population of about 300 000. Around 70% of the city population live in unplanned areas. Johannesburg, Harare and Lilongwe’s high population growth rate is Nairobi and has one of the oldest due mainly to in-migration, which poses a substantial challenge for city financing of municipalities in Southern Africa, future services, as the average income of the incorporated in 1885. migrants is relatively low. As the national capital, Lilongwe is a government city, and national government departments contribute around 8% of the city’s property tax income. Of the estimated 50% of the adult population who is formally employed, about one-quarter are civil servants. The city has good transport links, including by road, rail and air.
Lilongwe has a relatively clean appearance, although accumulated refuse is visible in the older parts of the city. Management regard service quality as poor, and frequent service disruptions occur.
The city contains substantial areas of open land suitable for development, which is owned by national government. Therefore, the Lilongwe City Council must apply to be allocated vacant land for development as required, and, according to the Chief Executive, any such request is likely to be granted.
Mauritius Mauritius, which occupies a strategic position in the Indian Ocean, was originally settled by the Dutch, who first introduced sugar cane, a crop that remains a mainstay of the economy. Successive French and British colonial administrations gave way in 1968 to independent Mauritius, and the country became a republic in 1992.
Mauritius has made substantial long-term efforts to diversify its economy in order to reduce its reliance on sugar exports. Efforts and investments have focused on tourism (already well developed), information technology (two Cyber City towers are already in place), trade services (a commercial free-trade zone was established in 1992) and financial services (19 international banks have a presence on the island).
12 The Board of Investment runs an apparently sophisticated marketing and development strategy, which promotes medical tourism, information technology services such as media and digital entertainment, the Freeport and international financial services, as well as fashion design and textiles, clothing and accessories.
The national currency is the rupee (MUR), and in November 2010, ZAR 1 was worth MUR 4.2. Mauritius has recently seen an economic growth rate of around 4.1%, while inflation has averaged around 6.8% per year.
General elections are held every five years. The national assembly consists of 60 members plus six ‘best loser’ appointees. The country is a member of the African Union (AU), Southern African Development Community (SADC) and Common Market for Eastern and Southern Africa (COMESA).
Port Louis reflects the cultural and religious diversity of Mauritius as a whole and is where all the major historical, political and social developments in Mauritian history occurred.
The Municipal Council of Port Louis serves an area of 45.5 square kilometres, which is inhabited by 150 000 people. However, the concentration of economic activity in the city means that the daytime commuter population can amount to an additional 300 000 people. Unlike many other SADC cities, Port Louis has an increasing daily commuter population, not a growing residential population, which has significant implications for planning and road congestion.
The city’s economic base is as diverse as the national economy (still largely dependent upon sugar exports) can allow. It is the national centre for all government, industry, financial and other business activities, and home to many institutional, social and welfare organisations. In 2005 the banking sector, which employs 5 500 people, contributed approximately 7% to the GDP. The Mauritius Stock Exchange is the second most active exchange in Africa.
The city is as well-connected by air and sea links to other continents as permitted by its fundamental location on a relatively remote island. Port Louis is the only port on the island, which does not have a railway line.
The municipality has invested considerable energy in establishing international relationships and currently has twinning relationships with eleven cities, including Tshwane and Maputo, and is affiliated with seven local government associations (including the African Union of Local Authorities and the Union des Villes Africaines).
Mozambique Mozambique is a multiparty democracy with a population of 20 million people. After independence from Portugal in 1975, FRELIMO established a one-party state allied to the Soviet bloc, but first Rhodesia and then SA supported rebel activity and sabotage to undermine the new state. Civil war and economic collapse characterised the first decade of Mozambican independence. Changes in the international and domestic environment led to the ending of the civil war and the first multiparty elections in the early 1990s.
13 In 1992, at the end of the civil war, Mozambique was one of the poorest countries in the world and is still ranked among the least-developed nations with very low socio-economic indicators. The past 15 years have seen the implementation of numerous economic reforms, including the corporatisation or privatisation of 1 200 state-owned enterprises. Tight fiscal and monetary policy has reduced the inflation rate from 70% in 1994 to below 5% in the late 1990s. The country has been granted substantial debt relief, and remaining foreign debt is within normal IMF bounds, at around 12% of GDP.
The economic reforms and commodity boom have resulted in strong economic growth for Mozambique, albeit off a low base. Between 1994 and 2006, average annual GDP growth was approximately 8%. Although devastating floods in 2000 slowed GDP growth to 2.1%, by 2008 the average growth rate was at 6.5%. According to the IMF, in 2010 Mozambique’s economy grew by 6.5% and stronger growth is expected in 2011. The inflation rate remains in the single digits.
The national currency is the Mozambican metical (MLM) which during 2010 could be exchanged at a rate of MLM 34,200 per US dollar and MLM 4,450 per South African rand.
Future strong expansion requires continued economic reforms, major foreign direct investment and the resurrection of the agriculture, transportation and tourism sectors. Although more than 80% of the population are involved in small-scale agriculture, the sector suffers from inadequate infrastructure, commercial networks and investment.
Maputo is a city of about 1.1 million people. However, if the many informal settlements on the outskirts of the city are included, the population is estimated to be more than 1.3 million people. In 2003 almost 70% of the city population were reportedly living below the poverty line.
Maputo’s spatial design consists of square blocks with wide avenues, and colonial-era architecture is still very much evident. Many buildings remain derelict, as people prefer to establish new developments rather than refurbish existing housing. Although the city suffered low investment during the civil war, the pre-war city infrastructure remains essentially intact.
In 2007 the municipality embarked on the ‘Pro Maputo’ development plan, which is a ten-year plan to increase the coverage and quality of municipal services offered to residents of Maputo. Its aim is to strengthen institutional and financial capacity of the City Council of Maputo and consequently improve service delivery.
The city has benefited immeasurably from the Mozal aluminium smelter, in terms of job creation and foreign earnings, and from the Maputo Development Corridor Project, which is conducted in collaboration with the Mpumalanga Government. This has led to the development of road and rail transportation linkages. The transport logistics company Grindrod has undertaken a deepening of the Maputo harbour, which could accelerate trade. On the outskirts of Maputo, the Belulane
14 Industrial Park remains largely unutilised due to lack of infrastructure to the industrial park, while elsewhere the city supports manufacturers of cement, pottery, furniture, shoes and rubber.
Namibia Namibia is an arid land of approximately 823 000 square kilometres. It is a sparsely populated country with the second-lowest population density in the world at 2.6 people per square kilometre. A German colony until 1919, the country was thereafter administered by SA, virtually as a fifth province, until it gained its independence in March 1990 and became the Republic of Namibia.
Namibia’s population of 2.1 million inhabitants (2008) is relatively youthful and is growing at around 1.6% per year. Namibia is the world’s fifth largest exporter of uranium and has other substantial mineral resources, including diamonds, silver, lead and tin.
In 2008 the major contributors to the GDP of US$12.394 billion (PPP basis, in constant 2005 US dollar) were: mining (12.4%), fishing (3.4%), agriculture (9.6%), manufacturing (15.4%) and services including tourism and government (56.2%). The 2008 GDP per person was US$5,863 (similar to that of Angola).
Economic, institutional and commercial structures still reflect the historical links with SA. These include a very unequal income distribution (Gini coefficient estimated at 0.71) and an infrastructure of exceptional standard, which to the credit of Namibia has been generally well maintained.
Namibia has a well-developed financial sector, which includes four commercial banks (three with South African links), a dedicated agricultural bank, a development bank, finance houses, savings and credit institutions, and insurance companies (two with substantial SA links). The Namibian Stock Exchange is the second largest in Africa in terms of market capitalisation and has brokers and asset managers. The Bank of Namibia, the Namibian central bank, plays the regulatory role, and the capital markets are readily accessible by creditworthy borrowers both through bond issues and loans.
The country faces some serious problems, including food self sufficiency, endemic poverty (55% of the population live below the United Nations Development Programme poverty line of US$2 per day), unemployment (estimated as 51.2%) and HIV/Aids (incidence estimated at around 9% of the population).
The economy is vulnerable to fluctuations in a few key export sectors (minerals, tourism and livestock), as well as to drought. The country has also been traditionally quite dependent on transfers from the customs pool, but these have been decreasing steadily.
The currency is the Namibian dollar (NAD), which in June 2010 was worth approximately NAD 7.93 per US dollar and NAD 1 per South African rand. The currency appreciated by 8.4% against the US dollar in the three years to June 2010.
Windhoek has a population of approximately 330 000 and an additional daily commuter population of about 50 000. The area of Windhoek City Council’s jurisdiction is 112 square kilometres. As the national legislative and commercial capital, Windhoek is the centre of both
Namibia is the world’s fifth largest exporter of uranium and has other substantial mineral resources, including diamonds, silver, lead and tin.
15 government and commerce and plays a fairly dominant role in Namibia’s economy. The city has good transport links, including by road, rail and air.
The availability of sufficient water has long been a matter of concern for the city, but the problem has been addressed for the foreseeable future through the Nam water scheme that transports water from the better-endowed north of Namibia.
Like other cities in the region, Windhoek has to contend with an influx of migrants seeking employment. The demand for middle-income housing is also substantial. As large areas of open land (some owned by the city) are suitable for development, the municipality is able to use township development as an additional source of income.
Windhoek is a very clean city and has adopted innovative ways of utilising local communities for solid waste collection and removal. The neatness and orderliness of the municipal offices and other facilities visited reflect not only good management, but also the serious attention paid to maintenance.
The city may account for as much as an estimated 43% of national GDP, or US$5.96 billion. The total revenue for Windhoek is approximately US$200 million, which suggests that the municipality uses approximately 1.2% of the tax base to provide municipal services. Therefore, some scope exists for increasing the share of the income generated in the city.
Windhoek is relatively unique in the SADC context outside SA for two major reasons.
●● It receives no support from government, either for capital expenditure or operational expenditure, despite being the capital city and carrying the burden of the government.
●● It is the only city outside of South African cities that has retained the responsibility for trade services such as electricity, water and sanitation. This reflects markedly when budget size, staffing and the like are compared. Despite the responsibility for trade services, the total staff complement is relatively small, amounting to only 439 per 100 000 population.
Current national policy is to excise the electricity distribution function from the city responsibilities, which is likely to have a significant impact on the financial viability of the city. City governments which present a combined bill to local consumers and tax payers are effectively able to use electricity service terminations to assist in enforcing payment for all services.
A further serious challenge for the Windhoek City Council is an unplanned settlement of approximately 40 000 people near Katutura to which services must be extended. Extending services, at the standards requested by national government, is likely to threaten seriously the financial sustainability of Windhoek, if no support is forthcoming from national government.
16 Tanzania Tanzania is a country of 886 square kilometres, with (in 2008) a population of approximately 42.5 million, growing at a higher-than-average rate of 2.9% per year. Dodoma is the capital of Tanzania, and Dar es Salaam is its largest city, followed by Arusha. In 2008 Tanzania’s GDP was US$49.5 billion in 2005 values, and its GDP per person was US$1,167 (World Bank 2010). This is among the lowest figures in the SADC and in the same range as Lesotho and Zambia.
The economy relies overwhelmingly on agriculture (58% of GDP), with mining and quarrying contributing another 5%. Manufacturing accounts for approximately 12% of GDP and public administration and defence for 9%. Until the international financial crisis, annual GDP growth had been high, averaging 7.1% per year in the five years to 2008. Therefore, even with the relatively high population growth, GDP per person grew at around 4.1% per year over the same period.
The national currency is the Tanzania shilling (TZN) which, in June 2010, was worth approximately TZN 1,480 per US dollar and TZN 193 per South African rand. The currency depreciated by about 22% against the US dollar in the three years between June 2007 and June 2010. The annual rate of inflation has been rising from 5% per year in 2005 and exceeded 10% in 2008.
In 2008 the urban population of the country was recorded as approximately 10.8 million people, only 26% of the national population, which is among the lowest urban populations in the SADC region. However, and perhaps not surprisingly, Tanzania has one of the highest urban population growth rates in the region, at an extremely rapid 4.6% per year (World Bank 2010).
Dar es Salaam is home to one-tenth of the national population, with a current population of above three million (almost eight times larger than Arusha, the next largest city). It is one of Africa’s fastest-growing cities with a population growth rate of nearly 5% per year, accounts for around 40% of Tanzania’s GDP and is home to about half of Tanzania’s manufacturing employment.
As the country’s administrative and trade centre, it is the hub of national and international road and rail networks and has a port that serves a wide hinterland in East Africa.
The city faces substantial service delivery challenges: more than 70% of the city’s population lives in unserviced and unplanned settlements; more than 60% of solid waste is not collected; massive traffic bottlenecks are caused by the absence of secondary roads; and a lack of surface water drains leads to regular flooding with the associated public health risks (Dar es Salaam City Council 2010a).
The city has a two-tier system of local government: the Dar es Salaam (DSM) City Council constitutes a relatively small metropolitan tier, while the municipal councils of Ilala, Kinondoni and Temeke make up the lower tier and are the local governments responsible for direct service delivery. The relative scale of the different components of local government in the city is illustrated in Table 1.
Table 1: Relative scale of local government components in Dar es Salaam (US$ m)
Recurrent expenditure of which Development Total Other Total of which Council Education Health personnel expenditure expenditure recurrent recurrent other costs costs Ilala MC 16.719 8.519 13.752 38.991 23.338 15.653 10.116 49.106 Kinondoni MC 25.678 4.464 6.846 36.989 23.442 13.547 8.873 45.862 Temeke MC 14.787 5.466 6.231 26.483 17.089 9.394 13.016 39.498 DSM CC 0.000 0.204 3.782 3.987 1.318 2.668 16.599 20.586 DSM Region 57.184 18.653 30.611 106.449 65.187 41.262 48.604 155.053
17 In addition, numerous other national and regional agencies play a significant role in the management of city services. These include the Dar es Salaam Water and Sewerage Authority; the Dar es Salaam Water and Sewerage Corporation; the Dar es Salaam Rapid Transit Authority; the Ministry of Lands, Housing and Human Settlements Development; the Tanzania Roads Authority; the Tanzania Electricity Supply Corporation; and the Surface and Marine Transport Regulatory Agency. Collectively the local government authorities and these institutions comprise the overall urban management system that must adequately plan and manage the rapid growth of the city.
In May 2010 the four local government authorities launched a Dar es Salaam Infrastructure Development Programme report, which proposed spending US$375 million to address major city challenges, including improvements to roads (US$110 million), storm and road drainage systems (US$69 million), solid waste management systems (US$42 million), community infrastructure upgrading (US$135 million) and city revenue systems (US$19 million). However, the programme has yet to be funded.
Arusha has a population of approximately 400 000, with an additional daily commuter population of about 80 000. The area of the Arusha City Council’s jurisdiction is 93 square kilometres, which increased to 208 square kilometres when two recently gazetted new wards were added. The annual population growth rate is reported to be 5.4%, which exceeds that of Dar es Salaam.
The city is well connected by road and air and, as a transit point for tourists bound for game viewing and mountain climbing activities, plays a significant role in Tanzania’s tourism industry.
Like in Dar es Salaam, city built environment functions are the responsibility of many agencies, including the district/regional administration; the Ministry of Lands, Housing and Human Settlements Development; the Tanzania Roads Authority; and the Tanzania Electricity Supply Corporation.
Arusha has a relatively clean appearance, although accumulated refuse is visible on the back streets. Rapid population growth is increasing pressure on (and demand for) services, while offering limited ability to raise revenues to pay for the expanded services.
Zambia Zambia is a sparsely populated nation of some 13.2 million people living in a landlocked area of 752 614 square kilometres. It is highly urbanised, with 44% of the population concentrated in a few urban areas and along major transportation corridors – mainly around Lusaka in the south and in the Copperbelt in the north. The population growth rate is estimated at 2.3%. Rural populations are sparsely settled and represent subsistence farmers.
In 2000 agriculture represented 20% of the Zambian economy and 85% of the formal and informal employment of the country. Maize is the principal cash crop. Soybean, cotton, sugar, sunflower seeds, wheat, sorghum, pearl millet, cassava, tobacco and various vegetable and fruit crops are also produced. Only 20% of Zambia’s agricultural land is cultivated, which presumably represents a growth opportunity. Tourism is centred on Victoria Falls and North and South Luangwa national parks.
About 68% of Zambians live below the poverty line, with rural poverty rates at 78% and urban rates at 53%. According to the United Nations Human Development Index, Zambia is the ninth poorest country in the world. Average life expectancy at birth is around 41 years, and maternal mortality is 830 per 100 000 pregnancies. The collapse of the copper price in the 1970s, combined with years of inappropriate policy, led to per person incomes of around US$395 (half to two-thirds the income level at independence). The economy has suffered from high transportation costs, the effects of HIV/Aids on the labour force and the impact of the civil wars in Angola and the Congo. In 2007 the World Economic Forum’s Global Competitiveness Index
18 ranked Zambia 117th out of 128 countries and 115th out of 135 countries in 2010.
The national currency is the Zambian kwacha (ZMK), worth approximately ZMK 4,740 per US dollar and ZKW 630 per South African rand at the end of December 2009.
Although Zambia was once the world’s third- largest copper producer – exporting more than 700 000 tonnes per year – low copper prices, minimal reinvestment in the mines and inefficiencies in the Zambia Industrial and Mining Corporation all contributed to a long- term decline. Copper exports dropped to a low of 228 000 tonnes in 1998. After the sector was privatised in 2002, annual production increased to 337 000 tonnes and is now over 720 000 tonnes. Copper production currently represents 10% of the country’s GDP and 80% of its foreign exchange earnings.
Indian, Swiss and especially Chinese companies have made substantial investments in copper mines. As at December 2009, total Chinese investment amounted to US$1 billion and had created 15 000 job opportunities. In March 2010 Zambia concluded an Investment Promotion and Protection Agreement with the Zhougui Mining Group for an expected investment of US$5 billion. However, because of the generous tax concessions made to the investing companies for terms of 10 to 15 years, government revenues from copper have been very low: US$70 million on copper sales of US$3 billion, or 2.3% of the sale value.
A further negative development is the ‘casualisation’ of employment, where mines avoid full-time employment contracts and hire miners on a casual and often seasonal basis. In addition, mine effluent from old state mines represents a significant environmental and social hazard.
To reduce the economy’s reliance on the copper industry, Zambia is pursuing an economic diversification programme, which seeks to exploit other components of the country’s rich resource base by promoting agriculture, tourism, gemstone mining and hydro-power.
Lusaka is the national capital of Zambia and is centrally located in a farming and cattle ranching region, at the crossroads of the Great North and Great East Roads. The city is a commercial centre, as well as centre of government, and has a reported high literacy rate of 95%. In 2000 it had a population of 1.084 million, which had risen to 1.46 million by 2010 and is currently estimated at over two million people according to some government reports. Its current population growth rate – around 3.2% per year – is one of the highest in the region.
The city accounts for an increasing portion of Zambia’s urban population and is a growing and significant destination for employment, education and higher wages in the nation. About 65% of the local economy of the city is in the informal sector. Nearly one-quarter of Lusaka’s inhabitants were not born in the city, 70% of the city population are below the age of thirty, and 57% are below the age of twenty (Lusaka City Council 2008). The rapid growth of the city is associated with more informal settlements and a general degradation of the quality of the urban environment. Slum dwellers make up 57% of the urban population in Zambia a nd by inference Lusaka.
19 Lusaka is a relatively dense city, covering 21 896 square kilometres (World Bank 2002, p.6). Obtaining additional land for expansion remains a major challenge, and the new Lusaka Integrated Development Plan seeks to encourage land development in the belt between the city and the airport.
The city has a significant infrastructure backlog: in 2003, 74% of residences had no access to piped water, 82% had no access to sanitation and 56% had no power (UN-HABITAT 2008). In 2005, 56% of the estimated 200 000 households used charcoal, kerosene and wood as fuel. The lack of infrastructure is put down to a lack of investment into the city during the years of economic decline in the 1970s and 1980s.
Lusaka consumes about 220 000 cubic metres of water a day and is estimated to have a daily water deficit of 80 000 cubic metres. Access to water and sanitation has deteriorated, and access to power remains at a low level.
Located just 10 kilometres south of the border with the Democratic Republic of Congo (DRC), Ndola is Zambia’s third largest city and functions as a distribution centre for the Copperbelt and for northern Zambia. A dual carriageway runs between Ndola and Kitwe, currently the Copperbelt’s major city, and national roads link to Mufulira and Lusaka. The city also has a mainline railway connection to Lusaka and branch lines for freight to other Copperbelt towns and to Lubumbashi in the DRC, as well as an international airport.
The Ndola City Council’s jurisdiction extends 1 124 square kilometres and serves a population of between 450 000 and 500 000 (the 2000 census results counted 373 000 people). According to management, the number of daily commuters is negligible.
Ndola came into being in 1907, when the Rhodesia Railways mainline connected Ndola with Cape Town. The railway line was later extended into the DRC and then to the Lobito Bay port on the Atlantic which was used to export Zambia’s copper.
Ndola was once Zambia’s largest industrial centre, home to a Land Rover vehicle assembly plant, a Dunlop Tyre manufacturing plant, as well as factories operated by Johnson & Johnson, Colgate-Palmolive and Unilever. Following liberalisation in 1991, the local economy declined, and today the town contains many unoccupied plants and factories. However, the local economy is improving, thanks to sustained demand for copper produced elsewhere on the Copperbelt. The Ndola copper refinery and the Indeni Oil Refinery (fed by a pipeline from Dar es Salaam) play important roles in the Zambian national economy. The city also has two cement works and a lime works that exploits rich local limestone deposits. Banking, insurance and retail businesses have developed around the logistical and cement industries.
The central areas of Ndola appear relatively clean, but accumulated refuse is visible in the outer areas, and streams running through the city are heavily polluted.
Categories of Southern African cities Based on the demographic and economic profiles, as summarised in Table 2, what emerges is that the cities fall into three categories.
20 Table 2: Comparison of the ten cities
City GVA City GVA/person Population (2005 US$ m) (2005 US$)
1 Dar es Salaam 9 139 3 000 000 3 046
2 Port Louis 6 145 146 000 42 087
3 Lusaka 5 576 1 461 000 3 817
4 Windhoek 4 414 330 000 13 375
5 Gaborone 3 593 237 000 15 161
6 Maputo 1 956 1 245 000 1 571
7 Arusha 979 400 000 2 448
8 Lilongwe 868 700 000 1 240
9 Blantyre 760 800 000 950
10 Ndola 257 495 000 520
TOTALS AND AVERAGES 33 688 8 814 000 3 822
The three groups of cities discerned from the data in Table 2, and illustrated in Figure 4, are: a) small population, relatively large local economy (Port Louis, Gaborone, Windhoek) b) medium population, small local economy (Arusha, Ndola, Lilongwe, Blantyre, Maputo) c) large population, relatively large local economy (Dar es Salaam, Lusaka)
The value of these groups, which is explored later, relates both to the spending-side challenges (higher populations and larger economies require more and higher-order services) and to the potential local tax resources available to meet those challenges (a larger local economy should in principle be capable of yielding higher city government incomes, provided its revenue powers are adequate).
Figure 4: Relationship between city population (m) and economy size (US$ b)
The relationship between city population and estimated city economy size is depicted graphically in Figure 4. The area of the bubbles is proportional to the city population, which is also given in millions next to the city name. The estimated size of the local city economy is given on the vertical axis, in US$ billions.
21 3. City government responsibilities
Southern African countries each have their own constitutional framework and system of intergovernmental fiscal relations. The formal and legal position of city governments, and their expenditure responsibilities and revenue-raising powers, reflect the economic, social and political histories of the countries concerned. Thus, Maputo operates within a lusophone legal framework and tradition, which is very different to the anglophone equivalent that applies in Blantyre. The city government’s position also clearly reflects the approaches and decisions adopted by the relevant national government in the generation or more since independence.
As it is not possible to deal exhaustively with the historical development, this section aims to provide brief overviews of the legal-expenditure mandates and revenue-raising powers of city governments in each country. Amid the tedious details of specific city government mandates, structural variety can be detected along two major dimensions: the nature and the scale of the city service offerings.
Starting with the nature of the services provided, broadly speaking the city governments provide some or all of a defined range of services relating to: a) The built environment: controlling, managing and servicing the high-density constructed environments of cities. b) Certain administrative services: notably licensing and registration of city businesses (more a revenue source than a service) and registration of births, marriages and deaths (civil administration). c) The social services: pre- and primary educational services; primary health care services and general health care campaigns, notably those relating to HIV/Aids; welfare services such as homes for the elderly; and, in some cases, community and cultural services such as sports facilities, community halls and museums.
22 By treating the administrative services more as ‘social’ than ‘built environment’ services, two broad groups of services can be used to categorise city government service offerings.
Turning to the scale of the service offering, city governments can be regarded as full, moderate and minimal providers of each category of services, according to the number (and budgetary scale) of specific services.
For example, a full range of services could include:
For built environment: For social services:
●● Town planning and building control ●● Civil administration (birth/death/marriage registration) ●● Municipal policing (by-law enforcement) ●● Health care services (primary/clinics/vaccination ●● Supply of water campaigns etc) ●● Sanitation (sewerage) ●● Educational services (pre-school) ●● Roads and storm-water drainage ●● Educational services (primary school) ●● Traffic lights and street lights ●● Educational services (secondary school) ●● Refuse collection and disposal; street sweeping ●● Housing rental (if practised, it is subsidised) ●● Environmental health services ●● Social welfare (centres for orphans etc) ●● Emergency services (ambulances, fire) ●● Business registration and licensing ●● Supply of electricity and gas ●● Cemeteries, parks and sports facilities ●● Bus and taxi ranks; markets ●● Public transport services
Table 3 suggests a grouping of the city governments according to the nature (built environment vs social services) and the scale (full, moderate, minimal) of their assigned expenditure responsibilities:
Table 3: Classification of city governments according to nature and scale
Social services THE NATURE AND SCALE OF CITY EXPENDITURE RESPONSIBILITIES Minimal Moderate Full
Lusaka Dar es Salaam Minimal Ndola Arusha Built Lilongwe Blantyre environment Moderate Maputo services Gaborone Port Louis
Full Windhoek
Windhoek has by far the most substantial ‘built environment’ mandate. Lilongwe, Blantyre, Gaborone and Maputo are not responsible for water and for electricity distribution, but are responsible for sanitation (sewerage).
At the other extreme, although Dar es Salaam and Arusha are described as having responsibility for district roads, they spend an ever-smaller fraction of their budgets on roads, so can be seen as offering minimal built environment services. Lusaka and Ndola also have a minimal built environment mandate, since they are not responsible for sewer functions.
On the other hand, Dar es Salaam and Arusha have the most substantial social services mandates, including provision of primary, and even some secondary, schooling services, as well as primary health care services. Despite offering a fairly extensive social services package, Gaborone is grouped here with cities offering pre-school and educational support services (Lusaka, Ndola and Port Louis) as ‘moderate’ providers of social services.
23 Overview of constitutional and legal frameworks
Botswana Botswana is a unitary state in which local governments have no constitutional standing, but are established through ordinary Acts of Parliament, the most important being the Township Act (Chapter 40:02) and the Local Government (District Council) Act (Chapter 40:01) of 1965. In terms of this legislation, the Gaborone City Council’s major responsibilities are to provide primary health care and primary education services, public health and sanitation services, roads, and social welfare and community development services.
The Gaborone City Council is an elected body, headed by an elected mayor, and has a town clerk as head of administration. Matters relating to local government accounting and auditing, including the roles and responsibilities of the council and the Auditor General, are set out in the Town Council Regulations Cap 40:02 of 1966.
City government services are funded primarily through an operating grant (a revenue support or ‘deficit’ grant), capital (development) grants, and own-revenue sources. Councils have the power to make by-laws and prescribe licence requirements and fees, but no by-law is of any force unless signed (and gazetted) by the relevant national minister.
Malawi Government in Malawi has two tiers: national and local. Municipalities are established in terms of the Constitution and the Local Government Act, No 42 of 1998 and are supervised by the Ministry of Local Government and Rural Affairs. City governments are responsible for many built environment functions, including roads and storm-water drainage, waste removal and disposal, and sanitation (sewerage). However, water supply and electricity distribution are the responsibility of national utilities.
24 City councils can engage in housing development (with ministerial sanction). Registration of births and deaths is also a municipal function, and councils are responsible, on an agency basis, for primary schooling. Their major revenue sources are property taxes, operating grants, business licence fees and income from commercial undertakings. Capital finance is from capital grants or operating surpluses.
Mauritius Local authorities in Mauritius fall under the Ministry of Local Government and operate in terms of the Local Government Act, which provides for five municipal councils, four district councils and 126 village councils. However, long predating this is local government in Port Louis, where the first municipality was established in 1790. The major built environment responsibilities of the Port Louis City Council are roads, drains, canals, pavements, bridges and riverbeds; refuse collection and disposal and street sweeping; and cemeteries and cremation grounds. Public markets and bus stations must be managed, hawkers controlled, and lighting provided for roads and public places.
The municipality also has some social responsibilities, including the provision of social centres, public libraries, theatres, nurseries for infants, pre-primary schools, general health programmes, as well as sports and swimming facilities. Revenue sources include property taxes, business taxes and licences, market and bus stall fees, advertising revenues and government operating grants. Capital funding is from government capital grants or from operating surpluses.
Mozambique In Mozambique, Articles 188 and 189 of the Constitution provide for the application of local power to local community issues and for local authorities to represent the interests of local communities without reference to national priorities. Two forms of local government are cited: the ‘proacaos’, which corresponds to the territories of de-concentrated arms of national government; and the municipalities, which correspond to the territories of towns or villages. Each municipality has an assembly, with deliberative and oversight powers, and an executive organ, which answers to the assembly. Members of the assembly are elected by universal secret ballot in a proportional representation system. The president of the local authority (an executive mayor post), as head of the executive organ, is also directly elected by universal secret ballot.
25 Local governments are responsible for about one-fifth of all public expenditure in Tanzania.
In terms of Article 193, each local authority has its own assets and finances, which are to be governed according to law. The State guarantees a just distribution of nationally collected public resources for the necessary correction of disequilibria.
Article 194 emphasises that all local authorities fall under the administrative supervision of the State, for example to ensure verification of the legality of administrative procedures. However, their financial autonomy extends to their plan of activity and budget, collection and use of their own revenues, the organisation and processing of their expenses, the management of their assets, the compilation and presentation of their accounts, and to borrow, subject to the law (Law 11/97, pp.29,105).
Article 13, of the Law on Local Power of the Republic of Mozambique, deals with municipal revenues. It specifies that municipalities have the following revenue sources: citizens’ personal tax, property tax, fee for economic activity, citizens’ commerce and industry tax, and tax on wages. Therefore, the revenue streams of municipalities comprise all their ‘own’ revenues (ie the list above) plus a percentage of nationally collected revenues, an additional percentage of nationally collected wages (on request and subject to approval), licence fees, charges for services, penalties and fines, and public donations.
Article 14 permits municipalities to borrow as an extraordinary measure, in order to invest in reproductive, social and cultural infrastructure, or to address expenses arising from a natural disaster. Article 15, which deals with short-term borrowing to address cash flow challenges, permits municipalities to have short-term debt subject to a limit of one-twelfth of the annual state transfer and to the debt being fully settled by financial year-end.
Article 16 requires that any borrowing for more than one year must be approved by the minister responsible for planning and finance.
Article 23 confirms that a municipal assembly may authorise borrowing by the municipality provided it is well motivated and its financial implications (ie its interest and redemption costs, etc) are clear.
The core built environment functions exercised by Maputo City Council are roads and storm- water drainage, refuse collection and disposal, sanitation (sewerage), and cemeteries, markets and parks. No social services are provided. Revenue sources include property taxes, business taxes (such as on taxis), waste collection charges and citizens’ personal tax. In due course, a share of vehicle taxes is to be devolved. Capital finance is from government grants, international donor grants and operating surpluses.
Namibia Namibia has a two-tier system of government: national and regional/local. Local governments are established in terms of Article 102(1) of the Constitution and governed in terms of the Local Authorities Act, No 23 of 1992. A Regional Councils Act, No 22 of 1992 governs regional authorities. Both are administered by the Ministry of Local Government and Housing.
According to this legislation, city governments should provide a full suite of built environment services, including roads and storm-water drainage, waste collection and disposal, water and sanitation, electricity distribution, bus and taxi ranks, markets, parks and cemeteries, and public
26 transport services. The social services that local governments must provide include primary health care services and cover certain educational support costs. The legislation also authorises municipalities to operate stone and sand quarries; to construct and operate abattoirs, aerodromes, dipping tanks, museums and libraries, pounds, and nurseries; and to create bands and orchestras, most of which the Windhoek City Council is not doing.
The major revenue sources are property taxes, service charges and business licences and fees. Capital investment is funded from own resources, as part of a (financially sustainable) township development programme, or by borrowing. Windhoek must be fully self-reliant, as it receives no operating or capital grants.
The legislation makes provision for both an elected (the Windhoek City Council) and an executive structure, with the executive reporting to and falling under the authority of the council. The area of jurisdiction of Windhoek overlaps with the area of jurisdiction of the Khomas Regional Council, and some functions appear to be duplicated. In terms of the legislation, the Windhoek City Council has substantial autonomy in its areas of responsibility, although certain matters are subject to ministerial approval. The Act also prescribes certain delegation frameworks.
Tanzania Urban local government in Tanzania consists of five city councils (including Dar es Salaam and Arusha), six municipal councils and 11 town councils. These 22 urban ‘local government authorities’, plus their 92 rural counterparts, account for the 114 councils operating on mainland Tanzania. After an early period of local government during the colonial era, from 1972 urban areas were under direct central government administration. However, starting in the 1980s and especially from the mid-1990s, local government has developed into its current form, which, while apparently intending substantial political, financial and administrative decentralisation, remains a strongly centralised system.
The legislative framework for local government4 is provided in particular by: ●● Constitution of the United Republic of Tanzania, 1977 ●● Local Government (Urban Authorities) Act, No 8 of 1982 ●● Local Government Finance Act, 1982 ●● Urban Authorities (Rating) Act, 1983 ●● Regional Administration Act, 1997 ●● The Local Authorities Provident Fund Act, No 6 of 2000
This legislation is administered by the minister of state in the Prime Minister’s Office – Regional Administration and Local Government (PMO-RALG). The PMO-RALG is responsible for ensuring the proper management of the finance of the local government authorities and has a well-established system of budget guidelines, capacity building, technical support and online reporting technologies for local governments.
The functions of local government are broadly defined and include facilitating the maintenance of peace, order and good governance; regulating and improving agriculture, trade, commerce and industry; and enhancing health and education, and social, cultural and recreational life.
Local governments are responsible for about one-fifth of all public expenditure in Tanzania. About three-quarters of local government expenditure is for ‘concurrent’ responsibilities, ie provided by the local government essentially on an agency basis with central government funding
4 This review does not cover the situation in Zanzibar, which has a separate legislative and administrative framework.
27 and regulation (for example primary education, local health services, local road maintenance and water supply, all of which are grant-funded). Exclusive functions, such as refuse collection and local government administration, account for the remaining quarter of overall local government spending (Dar es Salaam City Council 2010a).
Local governments raise about 5% of all public revenues; the major own-source revenues are property taxes, land rents, development levies, city service levies, and licence fees and other charges. One-third of all local government own-source revenues is raised in Dar es Salaam (Dar es Salaam City Council 2010a). In theory, local government functions are not replicated at regional level. However, the Regional Administration Act, No 19 of 1997 states that the Regional Secretariat should facilitate the functions of the local government authorities within the region, which can be interpreted to mean providing technical advice and support and exercising supervision over local governments. Regional administrations (regional commissioners, secretaries and officials), like local governments, are responsible to the minister for local government and regional administration, and are often in a position to exert pressure on local governments to amend their development plans and programmes (Shadrack 2010).
The built environment functions for which the city and municipal councils in Dar es Salaam are responsible include: district roads; refuse collection and disposal, and street sweeping; and cemeteries, markets and parks. Major roads, water and sanitation, and electricity distribution are all the responsibility of agencies other than the four council administrations in the city. However, the council administrations do have responsibility, on a concurrent basis, for primary and some secondary schooling, and for primary health care. The municipal councils have direct delivery responsibility for the major services, while the city council is described as performing ‘a co- ordinating role, and attends to issues that cut across the three municipalities’ (Dar es Salaam City Council 2010a).
Revenue sources include selective property taxes and land rents, development levies, city service levies, licence fees and other charges, bus parking rentals and street parking. Collectively these are dwarfed by the reliance upon government operating grants. Capital infrastructure is financed through government capital grants and operating surpluses.
Zambia Local government in Zambia is governed through the Local Government Act, which provides for the establishment of councils, their functions, finance, regulation and by-laws, and appointment of local officials. Section 61 of the Act lists 63 functions of local authorities. Additional functions of local authorities are promulgated in Cabinet Office Circulars, such as No 1 of 1995 and No 10 of 2002.
Other relevant legislation includes the Local Government (Amendment) Act, No 6 of 2010 (Local Government Service Commission), the Rating Act Cap No 12 of 1997 as amended in 1999, the Local Authority Superannuation Fund Act and the Trades Licensing Act Cap 393 (new).
Zambia has nine provinces and 72 local governments, of which four – Lusaka, Ndola, Kitwe and Livingstone – have the status of city councils. These have responsibility for roads and storm-water drainage, refuse removal and disposal, markets and bus and taxi ranks, and cemeteries and parks. Social services provided include pre-school education and civil administration (registration of births, deaths and marriages).
28 Revenue sources are property taxes, business licence fees and a personal levy. Capital investment is funded by national grant or directly from operating surpluses.
For city councils in Zambia, unfortunate legislative contradictions currently exist, whereby the Local Government Act of 1991 assigns functions, including utility services, to municipalities, but later legislation (such as the Water and Sanitation Act of 1997) re-assigns those powers, although the Local Government Act has not correspondingly been amended. The prospect of being sued by a resident for service failures for which they are legally responsible, yet have no actual responsibility, clearly exercises the minds of senior managers at city councils.
Urban local government in Zambia tends to be characterised by tension between the local municipality and the district administration (District Commissioner’s Office), which is responsible for central government functions in the district (UN-HABITAT 2009, p.13).
Comparison of the cities To conclude this review of the cities’ legal mandates, the cities are compared across two indicators: annual per person city expenditure and the share of city expenditure accounted for by own-city revenues. The first indicator is suggestive of the extent of the city government mandate relative to the city population, while the second is indicative of the extent to which revenues raised from the local economy are financing the services provided. The data for 2009 is found in Table 4.
Table 4: Comparison of annual per person expenditure and own-city revenue share
Per City City Total city Total city City-own City-own person opex capex spend spend revenue revenue % of city city (2009 (2009 (2009 (% of (2009 (% of spending spend US$ m) US$ m) US$ m) city GVA) US$ m) city GVA) (US$) 1 Dar es Salaam 101 46 147 1.6 49 22 0.2% 15 2 Port Louis 18 2 20 0.3 140 8 0.1% 40 3 Lusaka 17 1 18 0.3 12 18 0.3% 100 4 Windhoek 147 13 160 3.6 484 139 3.1% 87 5 Gaborone 35 0 35 1.0 148 8 0.2% 23 6 Maputo 12 15 27 1.4 21 11 0.6% 43 7 Arusha 11 2 13 1.4 33 3 0.3% 21 8 Lilongwe 7 2 9 1.0 12 8 0.9% 89 9 Blantyre 7 1 9 1.2 11 9 1.2% 102 10 Ndola 9 2 11 4.1 21 7 2.9% 70 TOTALS AND AVERAGES 365 84 449 1.3 51 233 0.7% 52
With its small population and substantial built environment mandate, Windhoek has by far the largest expenditure per person, at around US$484 in 2009. Gaborone and Port Louis, both small cities with moderate social services mandates, spend around US$140 per person per year.
The cities with the most substantial social services mandates – Dar es Salaam and Arusha – spend only US$49 and US$33 per person respectively. The other cities, which have minimal and moderate built environment and social environments, spend as little as US$11 to US$21 per person per year.
Blantyre, Lusaka and Windhoek funded all their 2009 spending from own-revenue sources, while Lilongwe and Ndola raised as much as 89% and 70% of their spending respectively from their own sources. The remaining cities all raised less than half of their expenditure from their own resources.
29 Figure 5: Percentage of 2009 expenditure covered by own revenues
Figure 5 locates each city according to the percentage of its 2009 expenditure that was covered by own revenues (vertical axis and first number under the name). The size of the bubble is proportional to the city expenditure per person (given as the second number under each name).
30 4. F inancial profile of cities
Having considered the functions and mandates of the city governments, a comparison of their financial position and performance becomes more meaningful.
City government staffing The first step is to get a perspective on the staff complements employed by the various city governments to fulfil their legislative mandates. Figure 6 illustrates the reported staff numbers employed by the ten city governments, where the vertical position of the bubble shows the number of staff per 100 000 city population (the first number under each city name), and the size of the bubbles is proportional to the total staff employed (the second number under each city name).
Figure 6: Number of staff employed compared to population
31 Cities with the largest social services mandates are clearly the largest employers. Dar es Salaam city government (including all four local government authorities) has a substantial social services responsibility and is also by far the largest, employing over 15 400 people in 2007. The city is served by 514 city employees per 100 000 people, whereas Arusha, which has a similar mandate, employs 750 people per 1 000 city population.
Port Louis has an extremely high staff per 100 000 population figure. However, even if the daily commuter population, which doubles the pressure on services, is taken into account, the municipality would still be positioned very close to Gabarone. Both municipalities are significant social services providers and large employers.
For most cities in the group with minimal and moderate built environment and social services mandates, staff complements vary between 135 (Ndola) and 271 (Blantyre) per 100 000 population. In comparison, Windhoek, which has a full built environment mandate, uses around 532 staff per 100 000 of city population.
City expenditures City expenditures are compared based on three fundamental expenditure categories: expenditure on employees, on other operating costs and on capital investment.
Among the city governments, Windhoek and Dar es Salaam are the largest spenders and, at around US$150 million, far outstrip Gaborone and Maputo’s expenditure of between US$25 and US$35 million respectively. The remaining cities each spend between US$10 million and US$20 million per year. For Windhoek, this expenditure reflects its position as a near-full built environment function municipality, while Dar es Salaam, which is ten times the size of Windhoek, spends on social services rather than on built environment services.
Figure 7: City government expenditures including Windhoek and Dar es Salaam (US$ m)
32 Figure 8: City government expenditures excluding Windhoek and Dar es Salaam (US$ m)
The variety of expenditure profiles in the snapshot year (2009/10) is immediately obvious from Figures 9 and 10. For example, for staff costs (which in Figure 10 are compared with operating costs rather than all spending including capital investment), the city governments fall into two groups: those that spend more than half of their operating budgets on staff (from Arusha at 67% down to Maputo at 59%) and those that spend between 33% and 42% of their operating budgets on staff costs. Lusaka at 50% sits alone between the two groups.
Since health and education are people-intensive services, Dar es Salaam (and Arusha) would be expected to spend relatively more on salaries than, for example, Windhoek. The other operating expenses (‘other opex’) in Windhoek represent a large share of the budget because the category includes the purchase of bulk water and electricity supplies for distribution and sale, an item which does not appear on the books of any of the other city governments considered.
Staff costs constitute a relatively low share of total operating expenses (opex) in Ndola, Lilongwe and Blantyre, but a relatively high proportion in Gaborone, Port Louis and Maputo. A probable explanation for this is that the first group all have fairly limited overall mandates, so that council and administration costs (also staff intensive) weigh relatively heavily upon their limited operational services, whereas the latter group have more extensive mandates.
Figure 9: City government expenditures by major category (%)
33 Figure 10: Share of staff costs in total operating costs (US$ m and %)
Capital spending (capex) ranges from nearly 0% (Gaborone and Lusaka) to 31% (Dar es Salaam) and 55% (Maputo), but for most city governments capital spending is 10%–20% of their total expenditure. This capital spending generally exceeds the capital grants received by the city governments, implying a degree of self-financing of capital infrastructure. However, very high capex spending relies on grant funding, so it is not surprising that Maputo and Dar es Salaam are the cities with the highest capital expenditure ratios.
City revenues The main revenue categories to consider are: a) Own revenues, as these are paid by the local tax base and therefore express an accountability relationship between the city government and the city residents and businesses. b) Operating grants, which are often essential supplements to own-source operating revenues. c) Capital grants, which should be used for capital investment only and not to cover operating costs.
City revenues, like expenditures, reflect the constitutional and legal assignments of powers and mandates to the sample cities. Again, the much greater scale of Windhoek and Dar es Salaam, when compared to the other city governments, stands out.
Figure 11: City revenues by major category including Windhoek and Dar es Salaam (US$ m)
34 Figure 12: City revenues by major category excluding Windhoek and Dar es Salaam (US$ m)
However, Figures 13 and 14 also reveal the stark division between those cities that are overwhelmingly reliant upon their own-revenue sources (Windhoek, Ndola, Lusaka, Blantyre and Lilongwe) and those city governments that derive half or more of their revenues from operating and capital grants. The city governments that are heavily reliant on operating grants include Dar es Salaam, Port Louis, Gaborone and Arusha.
The two biggest-spending cities are at opposite poles of this spectrum: Windhoek is entirely self- funded and Dar es Salaam has the highest grant share.
Figure 13 : City government revenues by major category (US$ m)
35 Figure 14: Share of own revenue in total city revenues (US$ m and %)
City operating surpluses/deficits The operating surpluses or deficits in the snapshot year (2009/10) are set out below, first in US dollars and then as the percentage of total operating revenues. Six of the ten city governments finished the year with operating deficits: Windhoek and Gaborone had by far the largest dollar deficits, although the most serious deficits in terms of percentage of income were Ndola and Dar es Salaam.
Figure 15: Operating surplus (deficit) (US$ m)
36 Figure 16: Operating surplus (deficit): % of operating income
The operating results for the snapshot year presented do not necessarily represent the typical position. For example, Lusaka’s deficit in 2009 comes after a four-year trend of rising operating surpluses between 2005 and 2008. Port Louis has a similar pattern: surpluses between 2006 and 2008, followed by a deficit in 2009. Dar es Salaam City Council has also seen a shift from surplus in 2007 through balance in 2008 to deficits in 2009 and 2010. Collectively the four council administrations reported deficits for 2010.
However, for Windhoek (deficits between 2005 and 2008), Gaborone (deficits in 2006, 2009 and 2010) and Ndola (deficits in 2006 and 2007; surplus in 2008, deficit in 2009), the results shown for the snapshot year are more representative.
37 Dar es Salaam Port Louis
Lusaka Windhoek
Gaborone Maputo
Arusha Blantyre
38 Lilongwe Ndola
Figure 17: Operating surpluses (deficits) of city governments (US$ m and % of operating income).
City governments with a sustained pattern of operating surpluses include Lilongwe and especially Blantyre, both of which showed operating surpluses each year for 2006–2010.
For Maputo (balanced between 2005 and 2007; surpluses in 2008 and 2009) and Arusha (deficits in 2006 and 2007; surpluses in 2008 and 2009), the results shown represent recently improved trends.
Windhoek has clearly been under significant and continuing financial stress, and moreover has yet to produce secure financial results for more recent financial years. Gaborone, too, is clearly on a financially unsustainable track: its financial records were secure to the end of financial 2006, but thereafter absent for two years; and more recent results indicate significant challenges.
Facile explanations of these results should be avoided. The results depend upon circumstances and reflect anything and everything, from the constitutional allocations of expenditure responsibilities and revenue powers, to improving and worsening management capacity in the city governments, the political economy of city revenue policy and administration, and the international financial crisis.
Worsening international circumstances may be a convincing explanation for city governments, whose operating results worsened after September 2008, and yet some city governments improved their results over the same period. Sustained annual deficits clearly point to more fundamental challenges, such as in intergovernmental political and fiscal relations; or city mandate, structure and effectiveness; and usually in revenue credibility and effort. In contrast, if well managed, sustained annual surpluses should permit an increasing ability to invest or expand services.
City debtors and cash Good city operating results may not mean healthy cash balances, as much depends on whether income is received as cash. Therefore, two further comparative indicators are explored: the year- end cash balances held and the debtor’s days (the number of days’ worth of revenue represented by the total amounts owing to the city government).
The year-end cash balances are reasonably healthy for Dar es Salaam, Lusaka, Gaborone and Maputo, at around two to four months of expenditure, but are of concern or negative for the others, which all have less than six weeks of cash expenditure .
The debtor’s days are not really of concern for Dar es Salaam, Arusha and Port Louis. Generally, the city governments have large debtor’s balances, equal to as much as a year’s worth of income in the case of Blantyre and Ndola. However, as a warning against simple comparisons, Maputo does not have a figure, partly because no personal tax debtors are recorded – the effective liability for personal tax persists only during a given financial year, and not thereafter.
39 Figure 18: Year-end cash balances – months of expenditure
Figure 19: Debtor’s days
40 5. City finances in Southern Africa
This section discusses some of the cross-cutting financial issues and themes affecting Southern African city governments. Although the diversity of the cities prevents too ambitious a discussion, some generalisations are recognisably true of many, if not most, of the city governments contained in this report.
The perspective adopted is that cities make possible the clustering of complementary economic activities, intellectual and financial capital, and cultural and entrepreneurial energy, thus raising overall productivity and under-pinning long-term social and economic development. A successful and well-functioning city needs effective infrastructure and built environment services over the entire spectrum; in turn, this requires sound organisational and governance arrangements and adequate resourcing.
What follows is an outline of city finance themes, which can be argued to be of concern to many or most of the city governments under discussion. As the limited financial capacity of the cities has already been covered in the previous section, the themes covered here are (a) limited city powers and functions, especially in relation to the built environment; (b) limited city human resource capacity; (c) limited city decision-making and autonomy; and (d) limited revenue effort.
Limited city government powers and functions In Southern Africa, the weak social and especially built environment expenditure responsibilities of most city governments (with the exception of Windhoek – see Section 2) mean that city governments are not responsible for many of the built environment functions. For example, many national governments choose to allocate water and electricity distribution responsibilities to national utilities rather than to city governments.
In fact, a trend in several countries has been to systematically strip functions from city governments. For example, until 1972 local governments in Zambia generally had little difficulty in fulfilling their expenditure obligations, due to a strong capacity to generate their own revenue from many significant sources including electricity distribution, water supply, rentals and other sources (GRZ 2000, p.10). There followed a long period of local government decline, which was due to multiple factors including: the removal of income-generating functions, without compensation; the assignment of additional expenditure responsibilities, without concomitant revenue resources; urbanisation, which has tended to increase local fiscal pressures, again disregarded by national government; and declining management capacity among municipalities (GRZ 2000, p.11).
41 Thus, in 1971 electricity distribution was removed from city councils. Then in 1996/97 water- supply functions were moved into regional utilities, housing stock was sold off at below market value by central government decree and responsibility for general health services was removed from city councils. Zambia has concurrently long had an official policy of decentralisation. Similarly in Namibia, current national policy is to remove electricity distribution from city responsibilities, the net impact of which is likely to be financially negative for Windhoek, as discussed in Section 2.
This functional and financial emasculation of city governments can be ascribed to many causes. Government may argue that the most effective way to deliver those services is through national utilities, and there may be a lack of confidence in city councils. In some cases national governments may have systematically weakened city governments because of the potential for urban voters to elect opposition parties. Furthermore, the establishment of new utilities may provide opportunities for well-connected elements in the local business class. Alternatively, this emasculation may simply be due to a general lack of appreciation of the importance of effective city government.
Limited city human resource capacity Almost all the city governments acknowledged significant human resource capacity constraints and skills deficits, particularly in specific, often technical, areas. Yet there was almost no sense of a significant programme to address this gap. Instead city governments tend to ‘live with’ their skills and capacity shortages.
The problems arise when senior administrative positions are filled on an ‘acting’ basis for extended periods. This phenomenon is almost universal:
●● In Port Louis, the position of deputy chief executive is vacant and filled on an acting basis. The Chief Engineer is currently filling the post on an annual renewable contract, after retiring from a long-standing permanent appointment. Two deputy engineer positions are also filled on a temporary basis only, as the permanent appointees have been lost to other employers who offer easier working conditions.
●● In Lilongwe, a number of positions are currently being filled in an acting capacity, including the Director of Finance.
●● In Arusha, both the Chief Executive and the Treasurer are in their posts in ‘acting’ capacities.
42 This phenomenon seemed less prevalent in Windhoek, although a number of senior City governments officials with long experience in in Southern Africa do not technical services are approaching retirement and may not be easy to come close to maximising the replace. cash revenues available to them with their existing revenue powers. Limited city decision- making and autonomy All the city governments must have their budgets approved by national government, and they all also have various external reporting requirements. City government borrowing almost always requires national government approval, and tax and tariff decisions frequently need central approval (Malawi, Mozambique).
Central decision-making on city issues can also extend further, to staffing and tariff decisions. In Malawi, a Local Government Service Commission makes all city staff appointments, the national president appoints city Chief Executives, and tariff increases require national approval.
In Mauritius, the authority for recruitment, dismissal and promotion of council employees lies not with the municipality but with the Local Government Service Commission, whose members are government appointees. Staff remuneration levels are similarly set centrally.
In Tanzania, senior officials (department heads and key professionals) are appointed by central government. The Public Service Act, No 8 of 2007 requires that appointments for municipal posts take place through a central government Recruitment Secretariat, a system which started operating during 2010. All municipal employees can be transferred at any time by central government.
The effect of managing human resources in this way is to make city governments extensions of central government, particularly when senior-level staff are re-assigned around the country and between government bodies. It reduces management understanding of, and commitment to, solving city issues, and may also weaken accountability and concern for the weak financial and service delivery position of the city government.
Centralised financial decision-making can have other effects on city government issues. For example, implicit or explicit national restrictions on tax rates and tariffs weaken city revenue flows. Ideally city governments should manage their own relationship with their residents, including the setting of tariffs.
Furthermore, a requirement that national government approve a new loan may provide an implicit national government guarantee to the city government, which again tends to weaken local accountability for any funds raised.
Limited city revenue effort In general, city governments in Southern Africa do not come close to maximising the cash revenues available to them with their existing revenue powers. Most of the cities have very high debtors (see Section 4), but even the billing can be short. Take the case of property taxes, which play a critical role in the own revenues of city governments (in particular those that cannot rely upon government grants) and yet in most instances should clearly be yielding considerably more revenue than they do at present.
43 For example, Lilongwe derives 70% of its income from property tax alone. The valuation roll currently lists about 35 000 properties, and city management indicates that perhaps another 45 000 properties should be on the valuation roll but are not. Depending on the value of the unlisted properties relative to those on the roll, this suggests substantial potential exists to increase property tax billings by two-thirds or more, by ensuring that the valuation roll is complete and accurate.
Ndola is in a very similar position, relying on property taxes for up to 72% of total income. The approximately 41 400 properties on the municipal property tax roll have a total assessed value of ZMK 3,384.5 billion. The assessed value derives from residential (56%), industrial (20%), commercial (9%), mines (9%), and government (6%) properties. The average tax rate applied is 0.61 ngwee per ZMK, so the total assessed value should generate approximately ZMK 20.8 billion (approximately ZAR 32.9 million) per year in property tax revenues. In contrast to the position in Lilongwe, city management indicates that only an insignificant number of properties are not yet on the valuation roll, but Ndola’s debtors are especially high.
In Port Louis, property tax is collected on the basis of ‘net annual value’ (NAV), which is assessed by a central Land Administration and Valuation Service. The valuation roll contains about 38 000 properties, and city management indicates that 5–10% of the city’s properties are not on the valuation roll, and are lower-value properties. Property tax policy is strongly progressive, and (unusually) no account is taken of the use of the property (residential, commercial, etc). The assessed NAVs are divided into 20 bands, each with a specific tax rate. The first six bands are exempt from property tax and account for almost one-third of the properties, but only 3% of the total NAV. The next 13 bands, which account for two-thirds of the properties and 48% of the NAV, collectively pay 32% of the total property tax. Finally, the last band constituting only 571 properties, accounts for 49% of the NAV and pays 68% of the total property tax.
Table 5: Port Louis valuation roll profile
VALUATION ROLL PROFILE No of properties Total NAV (MUR m) Total payable (MUR m) Bands 1–6 12 027 32% 15 3% 0.0 0% Bands 7–19 25 248 67% 242 48% 32.0 32% Band 20 571 2% 242 49% 67.9 68% TOTAL 37 846 100% 499 100% 99.8 100%
Property tax rates are approved by council on an annual basis and are subject to ministerial approval. Central government grants to the municipalities are currently being curbed as a result of the impact of the international recession on the national budget. Accordingly, reserves are being used to balance the budget.
Arusha contains approximately 20 000 properties, but only 7 000 of these are taxed. Property tax invoices are hand delivered annually in December, and property owners are given three months to pay. The overall collection rate is estimated at around 30%, and efforts to improve this rate have focused on an annual Revenue Task Force which goes from house to house enforcing collections.
The fact that existing revenue sources, such as property taxes, should be yielding considerably more cash revenue than they do at present is one of the more critical issues facing many city governments in Southern Africa. This involves more than just weaknesses in revenue administration – instead, it reflects profound governance issues, including the weakness of the relationship between city government as service provider and the resident or business as service recipient and payer of taxes and service charges.
44 6. Conclusion
City governments in Southern Africa vary in population and economic size, and in government expenditure and revenue assignments. Recent financial performance, and indeed potential creditworthiness, also varies greatly, ranging from cities where a weak economic base and poor governance arrangements would lead to poor ratings, to cities with stronger local economies and better administrative and governance arrangements that should be able to sustain better creditworthiness.
However, a number of themes appear to be characteristic of many or most of the city governments discussed, with some exceptions. The following can be said to characterise many of the city governments in Southern Africa that formed part of this study: ●● Under-empowered with respect to built environment services ●● Under-resourced, yet inadequate revenue effort (underperforming revenue administration) ●● Under-capacitated with respect to key skills, yet no significant programme to address this ●● Over-controlled with respect to staff appointments, tariff increases, etc
While consisting of apparently unfathomable detail, the many numbers and charts in the report in fact reveal the considerable social and political challenges that cities are facing. From the detail can also be drawn the following comparatively simple propositions about financing city services in general:
45 ●● Cities are already, and will increasingly be, the critical sites and drivers of social and economic development. Such development requires and depends on effective urban services for city inhabitants and businesses.
●● Built environment functions are essential city government functions, necessary to support city residents and city economies, and city governments should have clear and substantial built environment mandates.
●● City governments, more than other municipalities, should be able to finance much of their built environment services through appropriate local revenue resources and should accordingly be allocated sufficient local revenue authority, including taxes on property and local business activity, and services charges.
●● City governments need to develop and maintain an implicit social contract with city households and businesses, in terms of which the full potential of assigned revenue sources is achieved (ie taxes and service charges are paid) and good quality services delivered.
●● City governments need an adequately funded capital investment plan, ideally from own- revenue sources. Intergovernmental fiscal arrangements should provide strong incentives to maintain capital assets.
●● Although often under-rated, good financial management and creditworthiness are worthy objectives for city governments and together can improve access to capital infrastructure funding.
●● For city governments to be truly financially resilient, administration and service delivery, together with an effective city social contract, should create the correct environment and platform for social development and economic growth. In many cases, this will require a city leadership with the political stature and maturity to be able to drive through administrative, financial and revenue reforms.
These straightforward suggestions are presented as a framework for understanding the financial challenges that face city governments in Southern Africa.
46 Annexure A: Summary tables and statistical considerations
1. Demographic and social data and indices of selected Southern African countries
2008 Demographic Area 2008 2008 age 2008 life 2007 people Estimated population 2007 people and social (‘000 of population dependency expectancy living with Gini co- growth living with Aids indices sq km) (m) ratio at birth Aids (m) efficient rate
0 Africa 29 367 983.0 2.3% 80% 55
1 Angola 1 247 18.0 2.7% 91% 47 0.2 1% 0.59
2 Botswana 567 1.9 1.3% 60% 51 0.3 16%
3 Lesotho 30 2.0 0.5% 78% 43 0.3 13% 0.53
4 Mozambique 786 21.8 1.9% 90% 42 1.5 7% 0.47
5 Mauritius 2 1.3 0.6% 43% 72 0.0 1%
6 Malawi 94 14.3 2.6% 98% 48 0.9 7% 0.39
7 Namibia 823 2.1 1.6% 69% 53 0.2 9%
8 Swaziland 17 1.2 1.4% 76% 73 0.2 16% 0.51
9 Tanzania 886 42.5 2.9% 91% 55 1.4 3% 0.35
10 South Africa 1 214 48.7 1.7% 54% 50 5.7 12% 0.58
11 Congo (DRC) 2 267 64.2 2.9% 98% 46 0.44
12 Zambia 743 12.6 2.5% 97% 45 1.1 9% 0.51
13 Zimbabwe 387 12.5 0.1% 79% 44 1.3 10%
Sample totals/ave 9 064 243.0 2.3% 51.5 13.1 5%
Source: World Bank (2010) Africa Development Indicators (ADIs), online database at http://data.worldbank.org/data-catalog/africa- development-indicators updated 15th March 2010, downloaded 5th November 2010.
47 2. Economic and urban data and indices of selected Southern African countries
2008 % of 2006 2008 2008 GDP 2007 total 2008 urban imputed Imputed urban Economic and economic 2008 urban 2008 urban (PPP: employment population urban GDP urban share population urban indices density population population US$ m) (m) growth rate (2005 of GDP (%) with water (US$/sq km) US$ m) access 0 Africa 863 827 29 415 342.9 385.5 3.4% 39% 84% 1 Angola 98 250 78 808 7.2 10.2 4.2% 57% 17 921 18% 62% 2 Botswana 23 580 41 607 0.6 1.1 2.5% 60% 7 186 30% 100% 3 Lesotho 2 960 97 529 0.7 0.5 3.4% 25% 1 962 66% 93% 4 Mozambique 17 220 21 898 9.2 8.0 4.0% 37% 3 385 20% 71% 5 Mauritius 14 167 6 978 590 0.5 0.5 0.8% 42% 7 229 51% 100% 6 Malawi 11 044 117 385 5.3 2.7 5.2% 19% 3 136 28% 96% 7 Namibia 12 394 15 055 0.5 0.8 3.2% 37% 5 885 47% 99% 8 Swaziland 5 320 309 284 0.3 0.3 2.5% 25% 3 432 65% 87% 9 Tanzania 49 593 55 987 17. 9 10.8 4.6% 26% 13 056 26% 81% 10 South Africa 454 902 374 568 13.6 29.6 2.5% 61% 348 199 77% 100% 11 Congo (DRC) 19 076 8 414 21.8 21.8 4.7% 34% 1 776 9% 82% 12 Zambia 15 815 21 274 4.0 4.5 2.9% 35% 8 579 54% 90% 13 Zimbabwe 4.9 4.7 1.4% 37% 34% 98% Sample totals/ave 724 320 676 700 86.7 95.5 3.7% 39%
48 Annexure B: City annual financial statements
●● Dar es Salaam City Council
●● Municipal Council of Port Louis
●● Lusaka City Council
●● Windhoek City Council
●● Gaborone City Council
●● Maputo City Council
●● Arusha City Council
●● Blantyre City Council
●● Lilongwe City Council
●● Ndola City Council
49 DAR ES SALAM Tanzania Shilling (TZS) 2006 2007 2008 2009 2010 Budget Exchange Rate [30 June] TZS per US$ 1,293 1,281 1,208 1,337 1,480 Exchange Rate [30 June] TZS per ZAR 186 178 152 166 193 Income Statement Revenue Rates and taxes Non-tax revenue - Other operating revenue 3,771,932,881 2,238,505,000 2,118,580,000 2,932,191,000 Grants, Transfers, Subsidies for Operating Expenditure 699,334,039 2,281,130,000 1,462,930,000 1,660,250,000 Total operating revenue - 4,471,266,920 4,519,635,000 3,581,510,000 4,592,441,000 - Interest income - Grants, Transfers, Subsidies for Capital Expenditure - - 87,317,000 Other nonoperating revenue 488,309,000 1,851,994,000 1,571,039,000 TOTAL REVENUE - 4,471,266,920 5,007,944,000 5,433,504,000 6,250,797,000 - BUDGETED REVENUE 6,456,250,000 6,380,820,000 - Expenditure Employee-related costs 1,666,377,000 2,767,431,000 2,610,356,000 Electricity - Repairs and maintenance 688,583,000 762,210,000 955,843,000 Other operating expenditure 3,817,957,684 2,189,508,000 1,511,154,000 1,290,162,000 Total operating expenditure - 3,817,957,684 4,544,468,000 5,040,795,000 4,856,361,000 - Interest expense 226,000 526,000 546,000 Depreciation and amortisation 666,045,480 1,598,505,000 1,477,140,000 1,499,601,000 Other expenses - TOTAL EXPENDITURE - 4,484,003,164 6,143,199,000 6,518,461,000 6,356,508,000 - PROFIT (LOSS) BEFORE TAX - (12,736,244) (1,135,255,000) (1,084,957,000) (105,711,000) - PROFIT (LOSS) FOR THE YEAR - (12,736,244) (1,135,255,000) (1,084,957,000) (105,711,000) - Balance Sheet Assets Current Assets Cash and Cash equivalents 934,878,062 1,513,718,000 496,292,000 1,286,803,000 Net Trade Receivables [Debtors] 264,274,269 400,394,000 142,160,000 45,507,000 Inventory 226,400,883 153,723,000 125,904,000 160,626,000 Short-term investments Other current assets 39,655,487 - 1,465,208,701 2,067,835,000 764,356,000 1,492,936,000 - Non Current Assets Long-term investments 1,917,409,450 1,870,862,000 1,988,881,000 2,518,189,000
Property Plant and Equipment [Fixed Assets] 20,815,662,367 18,120,845,000 18,425,363,000 18,509,302,000 Other non-current assets 100,093,000 301,172,000 301,172,000 - 22,733,071,817 20,091,800,000 20,715,416,000 21,328,663,000 - TOTAL ASSETS - 24,198,280,518 22,159,635,000 21,479,772,000 22,821,599,000 - CHANGE IN CASH RESERVES 934,878,062 578,839,938 (1,017,426,000) 790,511,000 (1,286,803,000) Liabilities Current Liabilities - Bank overdraft - Short-term borrowings & current portion of borrowings - interest bearing Short-term borrowings & current portion of borrowings - non interest bearing Tax liability Other current liabilities 657,910,287 671,474,000 744,159,000 1,204,092,000 - 657,910,287 671,474,000 744,159,000 1,204,092,000 - Non Current Liabilities - Non current liabilities - interest bearing Non current liabilities - non interest bearing Provisions 10,222,406,944 10,683,322,000 1,345,661,000 2,031,504,000 - 10,222,406,944 10,683,322,000 1,345,661,000 2,031,504,000 - Equity Reserves 12,384,498,000 12,384,498,000 12,384,498,000 12,384,498,000 Accumulated profit (loss) - 933,465,287 (1,579,659,000) 7,005,454,000 7,201,505,000 - TOTAL EQUITY & LIABILITIES - 24,198,280,518 22,159,635,000 21,479,772,000 22,821,599,000 -
50 DAR ES SALAM Tanzania Shilling (TZS) 2006 2007 2008 2009 2010 Budget Surplus after tax for the year - (12,736,244) (1,135,255,000) (1,084,957,000) (105,711,000) ------Interest recognised in profit and loss - - 226,000 526,000 546,000 - Depreciation - 666,045,480 1,598,505,000 1,477,140,000 1,499,601,000 - Provisions Movement in working capital 424,533,004 (10,223,000) 213,368,000 432,661,000 Other non cash items 335,433,000 (597,094,000) (795,566,000) Cash Generated From Operations - 1,413,275,240 453,253,000 8,983,000 1,031,531,000 - Interest paid and received - - (226,000) (526,000) (546,000) -
NET CASH FLOWS FROM OPERATING ACTIVITIES - 1,413,275,240 453,027,000 8,457,000 1,030,985,000 - Cash From Investing Activities Purchase of fixed assets (301,951,589) (154,994,000) (824,804,000) (83,939,000) Proceeds from the sale of fixed assets Purchase of investments (320,951,589) (201,079,000) - Proceeds from the sale of investements 529,308,000 Other cash inflows from investing activities Other cash outflows from investing activities - CASH FLOWS FROM INVESTING ACTIVITIES - (622,903,178) (154,994,000) (1,025,883,000) 445,369,000 -
Cash From Financing Activities Proceeds from borrowings Repayment of borrowings - Other cash inflows from financing activities Other cash outflows from financing activities (193,041,782) 280,807,000 (685,843,000) CASH FLOWS FROM FINANCING ACTIVITIES - (193,041,782) 280,807,000 - (685,843,000) -
Other cash inflows or outflows (163,346,448) (62)
NET INCREASE OR DECREASE IN CASH AND CASH - 433,983,832 578,839,938 (1,017,426,000) 790,511,000 - EQUIVALENTS FOR THE YEAR Cash and Cash Equivalents at the Beginning of the Year 500,894,230 934,878,062 1,513,718,000 496,292,000 YEAR END CASH BALANCE - 934,878,062 1,513,718,000 496,292,000 1,286,803,000 - - - - - BUDGETED CASH INFLOW - - - 6,456,250,000 6,380,820,000 - BUDGETED CASH OUTFLOW 6,356,508,000 BUDGETED CAPITAL EXPENDITURE - -
Ratios Cost and e fficiency Electricity cost as % of total operational costs 0.00% 0.00% 0.00% 0.00% Salary cost as % of total operational costs 0.00% 36.67% 54.90% 53.75% Maintenance cost as % of total operational costs 0.00% 15.15% 15.12% 19.68% Actual capital expenditure as % of budgeted Capital expenditure as % of total expenditure 7.33% 3.30% 14.06% 1.70% Debtor’s days (Collection period) [Days] 21.57 32.34 14.49 3.62 Operating cost coverage ratio (OCCR) 1.17 0.99 0.71 0.95
Financial performance Total annual cash expenditure including capital - 4,119,909,273 4,699,688,000 5,866,125,000 4,940,846,000 - expenditure Total capital expenditure - 301,951,589 154,994,000 824,804,000 83,939,000 - Debt service ratio 2,050.78 746.60 2,553.91 Debt to equity ratio - - - - Current ratio 2.23 3.08 1.03 1.24 Surplus or deficit for the year - (12,736,244) (1,135,255,000) (1,084,957,000) (105,711,000) - Return on assets -0% -5% -5% -0% Donor dependency - capital expenditure 0.0% 0.0% 0.0% 104.0% Donor dependency - operational expenditure 18% 50% 29% 34%
51 PORT LOUIS Mauritius Rupee (MUR) 2005 2006 2007 2008 2009 Budget Exchange Rate [30 June] MUR per US$ 29 31 32 29 33 Exchange Rate [30 June] MUR per ZAR 4 4 4 4 4 Income Statement Revenue Rates and taxes 77 075 908 79 359 922 79 789 568 80 184 082 Non-tax revenue 51 478 126 54 857 050 63 491 824 71 523 500 Other operating revenue 67 850 994 83 003 849 83 654 100 109 231 805 Grants, Transfers, Subsidies for Operating Expenditure 262 191 000 257 041 000 268 871 862 344 726 235 Total operating revenue - 458 596 028 474 261 821 495 807 354 605 665 622 - Interest income 1 687 572 5 096 360 4 077 352 3 052 961 Grants, Transfers, Subsidies for Capital Expenditure Other non-operating revenue 9 487 483 6 517 234 4 741 461 6 000 528 TOTAL REVENUE - 469 771 083 485 875 415 504 626 167 614 719 111 - BUDGETED REVENUE Expenditure Employee-related costs 254 635 320 268 448 964 275 193 874 367 878 588 Electricity - Repairs and maintenance - Other operating expenditure 192 260 347 197 371 384 202 568 412 239 816 017 Total operating expenditure - 446 895 667 465 820 348 477 762 286 607 694 605 - Interest expense Depreciation and amortisation Other expenses TOTAL EXPENDITURE - 446 895 667 465 820 348 477 762 286 607 694 605 - PROFIT (LOSS) BEFORE TAX - 22 875 416,0 20 055 067,0 26 863 881,0 7 024 506,0 - PROFIT (LOSS) FOR THE YEAR - 22 875 416,0 20 055 067,0 26 863 881,0 7 024 506,0 - Balance Sheet Assets Current Assets Cash and Cash equivalents 33 450 613 93 190 947 99 532 415 112 026 400 Net Trade Receivables [Debtors] 96 344 320 88 733 616 115 291 518 107 897 448 Inventory 10 209 330 10 352 661 10 549 609 10 703 566 Short-term investments Other current assets - 140 004 263 192 277 224 225 373 542 230 627 414 - Non Current Assets Long-term investments 110 000 000 110 000 000 180 000 000 251 000 000 Property Plant and Equipment [Fixed Assets] 834 763 532 849 776 479 894 506 822 918 236 005 Other non-current assets - 944 763 532 959 776 479 1 074 506 822 1 169 236 005 - TOTAL ASSETS - 1 084 767 795 1 152 053 703 1 299 880 364 1 399 863 419 - CHANGE IN CASH RESERVES 33 450 613 59 740 334 6 341 468 12 493 985 (112 026 400) Liabilities Current Liabilities - Bank overdraft Short-term borrowings & current portion of borrowings - interest bearing Short-term borrowings & current portion of borrowings - non interest bearing Tax liability Other current liabilities ------Non Current Liabilities - Non-current liabilities - interest bearing Non-current liabilities - non interest bearing Provisions ------Equity Reserves Accumulated profit (loss) - 1 084 767 795 1 152 053 703 1 299 880 364 1 399 863 419 - TOTAL EQUITY & LIABILITIES - 1 084 767 795 1 152 053 703 1 299 880 364 1 399 863 419 -
52 PORT LOUIS Mauritius Rupee (MUR) 2005 2006 2007 2008 2009 Budget Surplus after tax for the year - 22 875 416 20 055 067 26 863 881 7 024 506 ------Interest recognised in profit and loss - (1 687 572) (5 096 360) (4 077 352) (3 052 961) - Depreciation ------Provisions Movement in working capital 36 220 155 34 198 234 29 963 195 19 598 047 Other non-cash items Cash Generated From Operations - 57 407 999 49 156 941 52 749 724 23 569 592 - Interest paid and received - 1 687 572 5 096 360 4 077 352 3 052 961 -
NET CASH FLOWS FROM OPERATING ACTIVITIES - 59 095 571 54 253 301 56 827 076 26 622 553 - Cash From Investing Activities Purchase of fixed assets (31 906 076) (14 823 495) (51 242 587) (73 583 731) Proceeds from the sale of fixed assets 638 118 - 1 142 000 - Purchase of investments (135 000 000) (110 000 000) (180 000 000) (228 500 000) Proceeds from the sale of investements 85 000 000 110 000 000 110 000 000 207 500 000 Other cash inflows from investing activities Other cash outflows from investing activities - CASH FLOWS FROM INVESTING ACTIVITIES - (81 267 958) (14 823 495) (120 100 587) (94 583 731) - Cash From Financing Activities Proceeds from borrowings Repayment of borrowings - Other cash inflows from financing activities Other cash outflows from financing activities 7 431 960 17 969 000 22 560 499 34 525 407 CASH FLOWS FROM FINANCING ACTIVITIES - 7 431 960 17 969 000 22 560 499 34 525 407 - Other cash inflows or outflows 2 341 528 47 054 480 45 929 756 NET INCREASE OR DECREASE IN CASH AND CASH - (14 740 427) 59 740 334 6 341 468 12 493 985 - EQUIVALENTS FOR THE YEAR Cash and Cash Equivalents at the Beginning of the Year 48 191 040 33 450 613 93 190 947 99 532 415 YEAR END CASH BALANCE - 33 450 613 93 190 947 99 532 415 112 026 400 ------BUDGETED CASH INFLOW BUDGETED CASH OUTFLOW BUDGETED CAPITAL EXPENDI TURE Ratios Cost and efficiency Electricity cost as % of total operational costs 0,00% 0,00% 0,00% 0,00% Salary cost as % of total operational costs 56,98% 57,63% 57,60% 60,54% Maintenance cost as % of total operational costs 0,00% 0,00% 0,00% 0,00% Actual capital expenditure as % of budgeted Capital expenditure as % of total expenditure 6,66% 3,08% 9,69% 10,80% Debtor’s days (Collection period) [Days] 76,68 68,29 84,87 65,02 Operating cost coverage ratio (OCCR) 1,03 1,02 1,04 1,00 Financial performance Total annual cash expenditure including capital - 478 801 743 480 643 843 529 004 873 681 278 336 - expenditure Total capital expenditure - 31 906 076 14 823 495 51 242 587 73 583 731 - Debt service ratio Debt to equity ratio - - - - Current ratio Surplus or deficit for the year - 22 875 416 20 055 067 26 863 881 7 024 506 - Return on assets 2% 2% 2% 1% Donor dependency - capital expenditure 0,0% 0,0% 0,0% 0,0% Donor dependency - operational expenditure 59% 55% 56% 57%
53 LUSAKA Zambia Kwacha (ZMK) 2005 2006 2007 2008 2009 Budget Exchange Rate [31 December] ZMK per US$ 3 458 4 289 3 897 4 955 4 747 Exchange Rate [31 December] ZMK per ZAR 540 604 567 495 632 Income Statement Revenue Rates and taxes 32 518 788 000 37 677 915 000 43 572 441 000 50 106 580 000 51 226 830 000 Non-tax revenue 817 635 000 764 934 000 959 727 000 1 205 811 000 1 141 978 000 Other operating revenue - Grants, Transfers, Subsidies for Operating 2 474 535 000 540 852 000 2 057 645 000 6 224 803 000 8 831 017 000 Expenditure Total operating revenue 35 810 958 000 38 983 701 000 46 589 813 000 57 537 194 000 61 199 825 000 - Interest income 76 790 000 195 377 000 508 999 000 1 030 099 000 788 732 000 Grants, Transfers, Subsidies for Capital - Expenditure Other non-operating revenue 11 571 811 000 11 512 275 000 11 741 798 000 20 103 341 000 32 834 276 000 TOTAL REVENUE 47 459 559 000 50 691 353 000 58 840 610 000 78 670 634 000 94 822 833 000 - BUDGETED REVENUE 91 658 700 000 88 844 000 000 - Expenditure Employee-related costs 23 195 433 000 23 848 883 000 25 812 863 000 32 899 697 000 41 196 039 000 Electricity - Repairs and maintenance - Other operating expenditure 10 294 833 000 11 840 736 000 15 891 378 000 19 542 918 000 22 995 430 000 Total operating expenditure 33 490 266 000 35 689 619 000 41 704 241 000 52 442 615 000 64 191 469 000 - Interest expense 229 944 000 265 003 000 321 546 000 606 023 000 Depreciation and amortisation 1 287 852 000 2 080 064 000 2 196 267 000 2 304 505 000 2 685 426 000 Other expenses 6 260 244 000 26 668 220 000 11 476 486 000 11 162 242 000 15 014 995 000 TOTAL EXPENDITURE 41 038 362 000 64 667 847 000 55 641 997 000 66 230 908 000 82 497 913 000 - PROFIT (LOSS) BEFORE TAX 6 421 197 000 (13 976 494 000) 3 198 613 000 12 439 726 000 12 324 920 000 - PROFIT (LOSS) FOR THE YEAR 6 421 197 000 (13 976 494 000) 3 198 613 000 12 439 726 000 12 324 920 000 - Balance Sheet Assets Current Assets Cash and Cash equivalents 6 619 681 000 8 199 465 000 9 839 360 000 19 146 745 000 30 509 850 000 Net Trade Receivables [Debtors] 28 464 851 000 11 940 970 000 11 733 731 000 11 826 384 000 15 545 376 000 Inventory 560 169 000 801 600 000 999 586 000 1 149 147 000 1 236 822 000 Short-term investments Other current assets 35 644 701 000 20 942 035 000 22 572 677 000 32 122 276 000 47 292 048 000 - Non Current Assets Long-term investments 3 000 000 2 000 000 000 2 000 000 000 2 000 000 000 2 000 000 000 Property Plant and Equipment [Fixed Assets] 17 299 024 000 34 616 104 000 35 189 226 000 35 099 455 000 36 071 128 000 Other non-current assets 17 302 024 000 36 616 104 000 37 189 226 000 37 099 455 000 38 071 128 000 - TOTAL ASSETS 52 946 725 000 57 558 139 000 59 761 903 000 69 221 731 000 85 363 176 000 - CHANGE IN CASH RESERVES 1 569 250 000 1 548 851 000 9 293 625 000 11 221 260 000 (30 252 667 000) Liabilities Current Liabilities Bank overdraft - 10 534 000 101 578 000 115 338 000 257 183 000 Short-term borrowings & current portion of 1 185 080 000 367 035 000 2 558 980 000 1 460 834 000 borrowings - interest bearing Short-term borrowings & current portion of borrowings - non interest bearing Tax liability Other current liabilities 44 478 559 000 42 005 967 000 41 210 823 000 41 724 014 000 39 636 791 000 44 478 559 000 43 201 581 000 41 679 436 000 44 398 332 000 41 354 808 000 - Non Current Liabilities - Non-current liabilities - interest bearing Non-current liabilities - non interest bearing Provisions ------Equity Reserves 8 468 166 000 14 356 558 000 18 082 467 000 24 823 399 000 44 008 368 000 Accumulated profit (loss) ------TOTAL EQUITY & LIABILITIES 52 946 725 000 57 558 139 000 59 761 903 000 69 221 731 000 85 363 176 000 -
54 LUSAKA Zambia Kwacha (ZMK) 2005 2006 2007 2008 2009 Budget Surplus after tax for the year 6 421 197 000 (13 976 494 000) 3 198 613 000 12 439 726 000 12 324 920 000 ------Interest recognised in profit and loss (76 790 000) 34 567 000 (243 996 000) (708 553 000) (182 709 000) - Depreciation 1 287 852 000 2 080 064 000 2 196 267 000 2 304 505 000 2 685 426 000 - Provisions Movement in working capital 13 809 858 000 (785 891 000) 270 977 000 (5 893 890 000) Other non-cash items Cash Generated From Operations 7 632 259 000 1 947 995 000 4 364 993 000 14 306 655 000 8 933 747 000 - Interest paid and received 76 790 000 (34 567 000) 243 996 000 708 553 000 182 709 000 - NET CASH FLOWS FROM OPERATING 7 709 049 000 1 913 428 000 4 608 989 000 15 015 208 000 9 116 456 000 - ACTIVITIES Cash From Investing Activities Purchase of fixed assets (1 701 412 000) (2 385 376 000) (2 769 389 000) (2 214 734 000) (3 657 099 000) Proceeds from the sale of fixed assets 265 375 000 12 690 000 Purchase of investments (1 997 000 000) Proceeds from the sale of investements Other cash inflows from investing activities Other cash outflows from investing activities CASH FLOWS FROM INVESTING ACTIVITIES (1 436 037 000) (4 369 686 000) (2 769 389 000) (2 214 734 000) (3 657 099 000) - Cash From Financing Activities Proceeds from borrowings 1 185 080 000 2 191 945 000 Repayment of borrowings (818 045 000) (1 098 146 000) Other cash inflows from financing activities 801 761 000 Other cash outflows from financing activities (206 992 000) (242 893 000) CASH FLOWS FROM FINANCING ACTIVITIES - 1 185 080 000 (16 284 000) 1 984 953 000 (1 341 039 000) - Other cash inflows or outflows (1 886 840 000) 2 840 428 000 (274 465 000) (5 491 802 000) 7 102 942 000 NET INCREASE OR DECREASE IN CASH AND 6 273 012 000 (1 271 178 000) 1 823 316 000 14 785 427 000 4 118 318 000 - CASH EQUIVALENTS FOR THE YEAR Cash and Cash Equivalents at the Beginning 2 233 509 000 6 619 681 000 8 188 931 000 9 737 782 000 19 031 407 000 of the Year YEAR END CASH BALANCE 8 506 521 000 5 348 503 000 10 012 247 000 24 523 209 000 23 149 725 000 - BUDGETED CASH INFLOW 91 658 700 000 88 844 000 000 BUDGETED CASH OUTFLOW 71 007 660 000 88 844 000 000 BUDGETED CAPITAL EXPENDITURE 7 325 259 000 13 518 446 000 - Ratios Cost and efficiency Electricity cost as % of total operational costs 0,00% 0,00% 0,00% 0,00% 0,00% Salary cost as % of total operational costs 69,26% 66,82% 61,90% 62,73% 64,18% Maintenance cost as % of total operational 0,00% 0,00% 0,00% 0,00% 0,00% costs Actual capital expenditure as % of budgeted 30,23% 27,05% Capital expenditure as % of total expenditure 4,10% 3,67% 4,93% 3,35% 4,38% Debtors days (Collection period) [Days] 290,13 111,80 91,93 75,02 92,71 Operating cost coverage ratio (OCCR) 1,07 1,09 1,12 1,10 0,95 Financial performance Total annual cash expenditure including capital 41 451 922 000 64 973 159 000 56 215 119 000 66 141 137 000 83 469 586 000 - expenditure Total capital expenditure 1 701 412 000 2 385 376 000 2 769 389 000 2 214 734 000 3 657 099 000 - Debt service ratio (50,74) 5,23 46,85 9,16 Debt to equity ratio - 0,08 0,02 0,10 0,03 Current ratio 0,80 0,48 0,54 0,72 1,14 Surplus or deficit for the year 6 421 197 000 (13 976 494 000) 3 198 613 000 12 439 726 000 12 324 920 000 - Return on assets 12% -24% 5% 18% 14% Donor dependency - capital expenditure 0,0% 0,0% 0,0% 0,0% 0,0% Donor dependency - operational expenditure 7% 2% 5% 12% 14%
55 WINDHOEK Namibian Dollar (NAD) 2004 2005 2006 2007 2008 Budget Exchange Rate [30 June] NAD per US$ 7 7 7 7 8 Exchange Rate [30 June] NAD per ZAR 1 1 1 1 1 Income Statement Revenue Rates and taxes Non-tax revenue Other operating revenue 799 167 979 834 573 054 913 135 730 1 010 258 955 1 113 487 964 Grants, Transfers, Subsidies for Operating Expenditure - - - - - Total operating revenue 799 167 979 834 573 054 913 135 730 1 010 258 955 1 113 487 964 - Interest income - - - - - Grants, Transfers, Subsidies for Capital Expenditure - - - - Other non-operating revenue - - - - TOTAL REVENUE 799 167 979 834 573 054 913 135 730 1 010 258 955 1 113 487 964 - BUDGETED REVENUE - Expenditure Employee related costs Electricity Repairs and maintenance Other operating expenditure 787 055 544 841 327 991 948 515 897 1 085 310 062 1 178 607 979 Total operating expenditure 787 055 544 841 327 991 948 515 897 1 085 310 062 1 178 607 979 - Interest expense Depreciation and amortisation Other expenses TOTAL EXPENDITURE 787 055 544 841 327 991 948 515 897 1 085 310 062 1 178 607 979 - PROFIT (LOSS) BEFORE TAX 12 112 435 (6 754 937) (35 380 167) (75 051 107) (65 120 015) - PROFIT (LOSS) FOR THE YEAR 12 112 435 (6 754 937) (35 380 167) (75 051 107) (65 120 015) - Balance Sheet Assets Current Assets Cash and Cash equivalents 38 775 41 575 52 575 44 075 54 074 Net Trade Receivables [Debtors] 290 743 475 312 516 274 324 531 170 329 261 332 358 806 497 Inventory 14 587 709 18 481 636 14 167 540 23 131 995 22 953 370 Short-term investments Other current assets 305 369 959 331 039 485 338 751 285 352 437 402 381 813 941 - Non Current Assets Long term investments 109 449 503 88 458 543 130 846 078 119 259 673 152 015 870 Property Plant and Equipment [Fixed Assets] 1 820 235 222 1 987 027 701 2 136 618 006 2 291 363 746 2 395 861 196 Other non-current assets 97 298 639 101 422 826 107 499 629 101 903 283 108 810 096 2 026 983 364 2 176 909 070 2 374 963 713 2 512 526 702 2 656 687 162 - TOTAL ASSETS 2 332 353 323 2 507 948 555 2 713 714 998 2 864 964 103 3 038 501 103 - CHANGE IN CASH RESERVES 15 972 283 14 539 237 (66 383 820) 76 334 322 25 749 949 Liabilities Current Liabilities - Bank overdraft 66 250 746 50 281 263 35 753 026 102 128 346 25 804 023 Short-term borrowings & current portion of borrowings - interest bearing Short-term borrowings & current portion of borrowings - non interest bearing Tax liability Other current liabilities 155 728 585 237 178 900 301 868 583 361 207 525 471 682 580 221 979 331 287 460 163 337 621 609 463 335 871 497 486 603 - Non-Current Liabilities - Non-current liabilities - interest bearing 447 601 231 455 406 955 455 006 240 434 066 088 410 757 767 Non-current liabilities - non interest bearing Provisions 12 516 598 12 318 090 17 654 677 17 400 126 17 467 232 460 117 829 467 725 045 472 660 917 451 466 214 428 224 999 - Equity Reserves 1 584 508 875 1 711 033 056 1 871 568 778 1 971 043 709 2 208 932 888 Accumulated profit (loss) 65 747 288 41 730 291 31 863 694 (20 881 690) (96 143 387) - TOTAL EQUITY & LIABILITIES 2 332 353 323 2 507 948 555 2 713 714 998 2 864 964 103 3 038 501 103 -
56 WINDHOEK Namibian Dollar (NAD) 2004 2005 2006 2007 2008 Budget Surplus after tax for the year 12 112 435 (6 754 937) (35 380 167) (75 051 107) (65 120 015) - Interest recognised in profit and loss ------Depreciation ------Provisions (198 508) 5 336 587 (254 551) 67 106 Movement in working capital 51 659 402 50 912 080 51 240 672 74 201 701 Other non-cash items Cash Generated From Operations 12 112 435 44 705 957 20 868 500 (24 064 986) 9 148 792 - Interest paid and received ------NET CASH FLOWS FROM OPERATING ACTIVITIES 12 112 435 44 705 957 20 868 500 (24 064 986) 9 148 792 - Cash From Investing Activities Purchase of fixed assets (166 792 479) (149 590 305) (154 745 740) (104 497 450) Proceeds from the sale of fixed assets Purchase of investments - (42 387 535) 11 586 405 (32 756 197) Proceeds from the sale of investements 20 990 960 Other cash inflows from investing activities Other cash outflows from investing activities - CASH FLOWS FROM INVESTING ACTIVITIES - (145 801 519) (191 977 840) (143 159 335) (137 253 647) - Cash From Financing Activities Proceeds from borrowings 7 805 724 Repayment of borrowings (400 715) (20 940 152) (23 308 321) (410 757 767) Other cash inflows from financing activities - Other cash outflows from financing activities - CASH FLOWS FROM FINANCING ACTIVITIES - 7 805 724 (400 715) (20 940 152) (23 308 321) (410 757 767)
Other cash inflows or outflows (78 324 406) (22 697 138) 94 079 313 54 216 509 104 781 534 410 757 767 NET INCREASE OR DECREASE IN CASH AND CASH 12 112 435 (93 289 838) (171 510 055) (188 164 474) (151 413 175) (410 757 767) EQUIVALENTS FOR THE YEAR Cash and Cash Equivalents at the Beginning of the Year 65 747 288 41 730 291 31 863 694 20 881 692 YEAR END CASH BALANCE 12 112 435 (27 542 550) (129 779 764) (156 300 780) (130 531 483) (410 757 767)
BUDGETED CASH INFLOW BUDGETED CASH OUTFLOW BUDGETED CAPITAL EXPENDITURE Ratios Cost and efficiency Electricity cost as % of total operational costs 0,00% 0,00% 0,00% 0,00% 0,00% Salary cost as % of total operational costs 0,00% 0,00% 0,00% 0,00% 0,00% Maintenance cost as % of total operational costs 0,00% 0,00% 0,00% 0,00% 0,00% Actual capital expenditure as % of budgeted Capital expenditure as % of total expenditure 0,00% 16,54% 13,62% 12,48% 8,14% Debtor’s days (Collection period) [Days] 132,79 136,68 129,72 118,96 117,62 Operating cost coverage ratio (OCCR) 1,02 0,99 0,96 0,93 0,94 Financial performance Total annual cash expenditure including capital 787 055 544 1 008 120 470 1 098 106 202 1 240 055 802 1 283 105 429 - expenditure Total capital expenditure - 166 792 479 149 590 305 154 745 740 104 497 450 - Debt service ratio (88,29) (3,58) (2,79) - Debt to equity ratio 0,27 0,26 0,24 0,22 0,19 Current ratio 1,38 1,15 1,00 0,76 0,77 Surplus or deficit for the year 12 112 435 (6 754 937) (35 380 167) (75 051 107) (65 120 015) - Return on assets 1% 0% -1% -3% -2% Donor dependency - capital expenditure 0,0% 0,0% 0,0% 0,0% Donor dependency - operational expenditure 0% 0% 0% 0% 0%
57 GABORONE Botswana Pula (BWP) 2006 2007 2008 2009 2010 Budget Exchange Rate [31 March] BWP per US$ 6 7 7 8 7 Exchange Rate [31 March] BWP per ZAR 1 1 1 1 1 Income Statement Revenue Rates and taxes 42 263 461 - 40 908 725 Non-tax revenue 20 190 006 Other operating revenue 70 726 384 22 282 013 Grants, Transfers, Subsidies for Operating Expenditure 107 883 191 147 075 603 160 533 551 176 202 379 141 296 941 Total operating revenue 170 336 658 147 075 603 160 533 551 246 928 763 204 487 679 - Interest income Grants, Transfers, Subsidies for Capital Expenditure Other non-operating revenue TOTAL REVENUE 170 336 658 147 075 603 160 533 551 246 928 763 204 487 679 - BUDGETED REVENUE 166 753 410 192 264 770 Expenditure Employee-related costs 106 955 561 172 307 343 183 897 540 Electricity Repairs and maintenance Other operating expenditure 87 724 555 87 878 642 89 574 321 Total operating expenditure 194 680 116 - - 260 185 985 273 471 861 - Interest expense 4 040 007 Depreciation and amortisation Other expenses TOTAL EXPENDITURE 198 720 123 192 985 282 211 087 581 260 185 985 273 471 861 - PROFIT (LOSS) BEFORE TAX (28 383 465) (45 909 679) (50 554 030) (13 257 222) (68 984 182) - PROFIT (LOSS) FOR THE YEAR (28 383 465) (45 909 679) (50 554 030) (13 257 222) (68 984 182) - Balance Sheet Assets Current Assets Cash and Cash equivalents - - 78 715 212 Net Trade Receivables [Debtors] 38 253 716 76 189 952 68 688 893 Inventory 2 854 813 11 128 323 13 128 449 Short-term investments 340 474 Other current assets 41 449 003 - - 87 318 275 160 532 554 - Non Current Assets Long-term investments Property Plant and Equipment [Fixed Assets] 453 060 756 726 577 486 999 505 690 Other non-current assets - 453 060 756 - - 726 577 486 999 505 690 - TOTAL ASSETS 494 509 759 - - 813 895 761 1 160 038 244 - CHANGE IN CASH RESERVES 17 523 172 - (11 002 047) 89 717 259 (78 715 212) Liabilities Current Liabilities - Bank overdraft 17 523 172 11 002 047 - Short-term borrowings & current portion of borrowings - - interest bearing Short-term borrowings & current portion of borrowings - non interest bearing Tax liability Other current liabilities 14 028 388 19 817 793 58 734 326 31 551 560 - - 30 819 840 58 734 326 - Non Current Liabilities - Non-current liabilities - interest bearing 20 607 699 31 639 807 Non-current liabilities - non interest bearing Provisions - 20 607 699 - - - 31 639 807 - Equity Reserves 442 350 500 783 075 921 1 069 664 111 Accumulated profit (loss) - - - (0) - - TOTAL EQUITY & LIABILITIES 494 509 759 - - 813 895 761 1 160 038 244 -
58 GABORONE Botswana Pula (BWP) 2006 2007 2008 2009 2010 Budget Surplus after tax for the year (28 383 465) (45 909 679) (50 554 030) (13 257 222) (68 984 182) ------Interest recognised in profit and loss 4 040 007 - - - - - Depreciation ------Provisions Movement in working capital Other non- cash items Cash Generated From Operations (24 343 458) (45 909 679) (50 554 030) (13 257 222) (68 984 182) - Interest paid and received (4 040 007) - - - - - NET CASH FLOWS FROM OPERATING ACTIVITIES (28 383 465) (45 909 679) (50 554 030) (13 257 222) (68 984 182) - Cash From Investing Activities Purchase of fixed assets Proceeds from the sale of fixed assets Purchase of investments - Proceeds from the sale of investements Other cash inflows from investing activities Other cash outflows from investing activities - CASH FLOWS FROM INVESTING ACTIVITIES ------Cash From Financing Activities Proceeds from borrowings Repayment of borrowings Other cash inflows from financing activities Other cash outflows from financing activities CASH FLOWS FROM FINANCING ACTIVITIES ------Other cash inflows or outflows 10 860 293 45 909 679 50 554 030 2 255 175 147 699 394
NET INCREASE OR DECREASE IN CASH AND CASH (17 523 172) - - (11 002 047) 78 715 212 - EQUIVALENTS FOR THE YEAR Cash and Cash Equivalents at the Beginning of the Year YEAR END CASH BALANCE (17 523 172) - - (11 002 047) 78 715 212 ------BUDGETED CASH INFLOW BUDGETED CASH OUTFLOW BUDGETED CAPITAL EXPENDITURE Ratios Cost and efficiency Electricity cost as % of total operational costs 0,00% 0,00% 0,00% Salary cost as % of total operational costs 54,94% 66,22% 67,25% Maintenance cost as % of total operational costs 0,00% 0,00% 0,00% Actual capital expenditure as % of budgeted Capital expenditure as % of total expenditure 0,00% 0,00% 0,00% Debtor’s days (Collection period) [Days] 81,97 - - 112,62 122,61 Operating cost coverage ratio (OCCR) 0,87 0,95 0,75 Financial performance Total annual cash expenditure including capital 198 720 123 192 985 282 211 087 581 260 185 985 273 471 861 - expenditure Total capital expenditure ------Debt service ratio (6,03) Debt to equity ratio 0,05 - 0,03 Current ratio 1,31 2,83 2,73
Surplus or deficit for the year (45 909 679) (50 554 030) (13 257 222) (68 984 182) - (28 383 465) Return on assets -6% -2% -6% Donor dependency - capital expenditure Donor dependency - operational expenditure 55% 68% 52%
59 MAPUTO Mozambique Metical (MLM) 2005 2006 2007 2008 2009 Budget Exchange Rate [30 June] MLM per US$ 24 854 27 285 25 920 24 182 26 701 Exchange Rate [30 June] MLM per ZAR 3 678 3 920 3 611 3 043 3 309 Income Statement Revenue Rates and taxes 21 498 200 000 23 493 510 000 28 226 810 000 58 717 500 000 78 943 500 000 177 791 730 000 Non-tax revenue 23 972 622 000 22 579 993 000 34 270 151 000 104 595 700 000 119 609 600 000 160 527 910 000 Other operating revenue 70 154 193 000 91 190 366 000 125 390 815 000 88 684 400 000 102 545 400 000 148 510 240 000 Grants, Transfers, Subsidies for Operating Expenditure 50 543 990 000 60 602 272 000 64 517 410 000 100 216 400 000 107 856 700 000 137 166 710 000 Total operating revenue 166 169 005 000 197 866 141 000 252 405 186 000 352 214 000 000 408 955 200 000 623 996 590 000 Interest income Grants, Transfers, Subsidies for Capital Expenditure 43 681 532 000 33 002 909 000 117 333 370 000 332 912 500 000 316 796 899 430 1 107 831 760 000 Other non-operating revenue 1 073 000 000 3 364 700 000 TOTAL REVENUE 209 850 537 000 230 869 050 000 369 738 556 000 686 199 500 000 729 116 799 430 1 731 828 350 000
BUDGETED REVENUE 266 736 200 000 302 033 030 000 548 580 000 000 105 335 200 000 1 279 997 870 000 1 731 828 350 000 Expenditure Employee-related costs 106 665 583 000 117 464 782 000 140 495 954 000 162 346 000 000 188 828 800 000 260 474 580 000 Electricity Repairs and maintenance Other operating expenditure 57 207 915 000 77 193 699 000 111 736 091 000 108 129 000 000 128 552 600 000 195 656 390 000 Total operating expenditure 163 873 498 000 194 658 481 000 252 232 045 000 270 475 000 000 317 381 400 000 456 130 970 000 Interest expense Depreciation and amortisation Other expenses TOTAL EXPENDITURE 163 873 498 000 194 658 481 000 252 232 045 000 270 475 000 000 317 381 400 000 456 130 970 000 PROFIT (LOSS) BEFORE TAX 45 977 039 000 36 210 569 000 117 506 511 000 415 724 500 000 411 735 399 430 1 275 697 380 000 PROFIT (LOSS) FOR THE YEAR 45 977 039 000 36 210 569 000 117 506 511 000 415 724 500 000 411 735 399 430 1 275 697 380 000 Balance Sheet Assets Current Assets Cash and Cash equivalents 7 742 582 000 9 347 920 000 19 131 935 000 55 781 890 370 112 930 189 980 Net Trade Receivables [Debtors] Inventory Short-term investments Other current assets 7 742 58 2 000 9 347 920 000 19 131 935 000 55 781 890 370 112 930 189 980 - Non Current Assets Long-term investments Property Plant and Equipment [Fixed Assets] Other non-current assets ------TOTAL ASSETS 7 742 582 000 9 347 920 000 19 131 935 000 55 781 890 370 112 930 189 980 - CHANGE IN CASH RESERVES 1 605 338 000 9 784 015 000 36 649 955 370 57 148 299 610 (112 930 189 980) Liabilities Current Liabilities - Bank overdraft Short-term borrowings & current portion of borrowings - interest bearing Short-term borrowings & current portion of borrowings - non interest bearing Tax liability Other current liabilities ------Non Current Liabilities - Non-current liabilities - interest bearing Non-current liabilities - non interest bearing Provisions ------Equity Reserves Accumulated profit (loss) 7 742 582 000 9 347 920 000 19 131 935 000 55 781 890 370 112 930 189 980 - TOTAL EQUITY & LIABILITIES 7 742 582 000 9 347 920 000 19 131 935 000 55 781 890 370 112 930 189 980 -
60 MAPUTO Mozambique Metical (MLM) 2005 2006 2007 2008 2009 Budget Surplus after tax for the year 45 977 039 000 36 210 569 000 117 506 511 000 415 724 500 000 411 735 399 430 1 275 697 380 000 ------Interest recognised in profit and loss ------Depreciation ------Provisions Movement in working capital Other non-cash items Cash Generated From Operations 45 977 039 000 36 210 569 000 117 506 511 000 415 724 500 000 411 735 399 430 1 275 697 380 000 Interest paid and received ------NET CASH FLOWS FROM OPERATING ACTIVITIES 45 977 039 000 36 210 569 000 117 506 511 000 415 724 500 000 411 735 399 430 1 275 697 380 000 Cash From Investing Activities Purchase of fixed assets (58 171 801 000) (32 844 681 000) (107 722 496 000) (389 127 772 650) (392 727 010 070) (1 275 697 390 000) Proceeds from the sale of fixed assets Purchase of investments - Proceeds from the sale of investements Other cash inflows from investing activities Other cash outflows from investing activities - CASH FLOWS FROM INVESTING ACTIVITIES (58 171 801 000) (32 844 681 000) (107 722 496 000) (389 127 772 650) (392 727 010 070) (1 275 697 390 000) Cash From Financing Activities Proceeds from borrowings Repayment of borrowings Other cash inflows from financing activities Other cash outflows from financing activities CASH FLOWS FROM FINANCING ACTIVITIES ------Other cash inflows or outflows 19 937 344 000 (1 760 550 000) 10 053 228 020 38 139 910 250 NET INCREASE OR DECREASE IN CASH AND CASH 7 742 582 000 1 605 338 000 9 784 015 000 36 649 955 370 57 148 299 610 (10 000) EQUIVALENTS FOR THE YEAR Cash and Cash Equivalents at the Beginning of the Year 7 742 582 000 9 347 920 000 19 131 935 000 55 781 890 370 YEAR END CASH BALANCE 7 742 582 000 9 347 920 000 19 131 935 000 55 781 890 370 112 930 189 980 (10 000) - - - - - BUDGETED CASH INFLOW 266 736 200 000 302 033 030 000 548 580 000 000 105 335 200 000 1 279 997 870 000 1 731 828 350 000 BUDGETED CASH OUTFLOW 1 053 352 000 000 1 279 997 870 000 1 731 828 360 000 BUDGETED CAPITAL EXPENDITURE 763 352 000 000 918 999 870 000 1 275 697 390 000 Ratios Cost and efficiency Electricity cost as % of total operational costs 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% Salary cost as % of total operational costs 65,09% 60,34% 55,70% 60,02% 59,50% 57,11% Maintenance cost as % of total operational costs 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% Actual capital expenditure as % of budgeted 50,98% 42,73% 100,00% Capital expenditure as % of total expenditure 26,20% 14,44% 29,93% 58,99% 55,31% 73,66% Debtor’s days (Collection period) [Days] ------Operating cost coverage ratio (OCCR) 1,01 1,02 1,00 1,30 1,29 1,37 Financial performance Total annual cash expenditure including Capital 222 045 299 000 227 503 162 000 359 954 541 000 659 602 772 650 710 108 410 070 1 731 828 360 000 expenditure Total capital expenditure 58 171 801 000 32 844 681 000 107 722 496 000 389 127 772 650 392 727 010 070 1 275 697 390 000 Debt service ratio Debt to equity ratio - - - - - Current ratio Surplus or deficit for the year 45 977 039 000 36 210 569 000 117 506 511 000 415 724 500 000 411 735 399 430 1 275 697 380 000 Return on assets 594% 387% 614% 745% 365% Donor dependency - capital expenditure 75,1% 100,5% 108,9% 85,6% 80,7% 86,8% Donor dependency - operational expenditure 31% 31% 26% 37% 34% 30%
61 ARUSHA Tanzania Shilling (TZS) 2005 2006 2007 2008 2009 Budget Exchange Rate [30 June] TZS per US$ 1 165 1 293 1 281 1 208 1 337 Exchange Rate [30 June] TZS per ZAR 171,30 186 178 152 166 Income Statement Revenue Rates and taxes 1 819 927 884 2 318 216 857 2 951 865 000 3 322 450 000 Non-tax revenue - Other operating revenue 39 864 000 45 106 000 Grants, Transfers, Subsidies for Operating Expenditure 4 643 495 834 7 003 638 418 7 963 725 000 10 935 067 000 Total operating revenue - 6 463 423 718 9 321 855 275 10 955 454 000 14 302 623 000 - Interest income - Grants, Transfers, Subsidies for Capital Expenditure 1 153 664 015 1 300 150 837 494 780 000 658 176 000 Other non-operating revenue 208 538 000 344 160 000 TOTAL REVENUE - 7 617 087 733 10 622 006 112 11 658 772 000 15 304 959 000 - BUDGETED REVENUE 12 807 449 000 - Expenditure Employee-related costs 6 308 391 000 9 954 571 000 Electricity - Repairs and maintenance 942 469 000 810 425 000 Other operating expenditure 7 203 206 042 9 579 479 358 2 707 083 000 2 581 566 000 Total operating expenditure - 7 203 206 042 9 579 479 358 9 957 943 000 13 346 562 000 - Interest expense 2 863 000 1 723 000 Depreciation and amortisation 368 628 049 587 445 380 811 114 000 1 078 977 000 Other expenses - TOTAL EXPENDITURE - 7 571 834 091 10 166 924 738 10 771 920 000 14 427 262 000 - PROFIT (LOSS) BEFORE TAX - 45 253 642 455 081 374 886 852 000 877 697 000 - PROFIT (LOSS) FOR THE YEAR - 45 253 642 455 081 374 886 852 000 877 697 000 - Balance Sheet Assets Current Assets Cash and Cash equivalents 510 595 390 965 014 983 1 733 696 000 1 756 187 000 Net Trade Receivables [Debtors] 97 553 320 120 776 520 617 498 000 1 572 642 000 Inventory 21 919 500 45 073 675 77 793 000 225 352 000 Short-term investments Other current assets 44 584 579 62 628 081 - 674 652 789 1 193 493 259 2 428 987 000 3 554 181 000 - Non Current Assets Long-term investments Property Plant and Equipment [Fixed Assets] 9 371 823 231 10 860 519 250 11 268 675 000 13 505 670 000 Other non-current assets 356 535 200 366 535 200 743 803 000 755 070 000 - 9 728 358 431 11 227 054 450 12 012 478 000 14 260 740 000 - TOTAL ASSETS - 10 403 011 220 12 420 547 709 14 441 465 000 17 814 921 000 - CHANGE IN CASH RESERVES 510 595 390 454 419 593 768 681 017 22 491 000 (1 756 187 000) Liabilities Current Liabilities - Bank overdraft Short-term borrowings & current portion of borrowings - interest bearing Short-term borrowings & current portion of borrowings - non interest bearing Tax liability Other current liabilities 82 716 617 134 113 994 934 602 000 1 859 607 000 - 82 716 617 134 113 994 934 602 000 1 859 607 000 - Non Current Liabilities - Non-current liabilities - interest bearing Non-current liabilities - non interest bearing Provisions 6 093 385 - 7 793 731 000 9 341 573 000 - 6 093 385 - 7 793 731 000 9 341 573 000 - Equity Reserves 10 268 947 576 11 786 098 698 Accumulated profit (loss) - 45 253 642 500 335 017 5 713 132 000 6 613 741 000 - TOTAL EQUITY & LIABILITIES - 10 403 011 220 12 420 547 709 14 441 465 000 17 814 921 000 -
62 ARUSHA Tanzania Shilling (TZS) 2005 2006 2007 2008 2009 Budget Surplus after tax for the year - 45 253 642 455 081 374 886 852 000 877 697 000 ------Interest recognised in profit and loss - - - 2 863 000 1 723 000 - Depreciation - 368 628 049 587 445 380 811 114 000 1 078 977 000 - Provisions Movement in working capital (64 420 877) (89 953 000) (253 886 000) Other non- cash items (230 656 990) (553 933 000) (570 722 000) Cash Generated From Operations - 413 881 691 747 448 887 1 056 943 000 1 133 789 000 - Interest paid and received - - - (2 863 000) (1 723 000) -
NET CASH FLOWS FROM OPERATING ACTIVITIES - 413 881 691 747 448 887 1 054 080 000 1 132 066 000 - Cash From Investing Activities Purchase of fixed assets (1 800 180 417) (1 536 685 000) (3 315 972 000) Proceeds from the sale of fixed assets Purchase of investments (10 000 000) (10 000 000) Proceeds from the sale of investements Other cash inflows from investing activities Other cash outflows from investing activities CASH FLOWS FROM INVESTING ACTIVITIES - - (1 810 180 417) (1 546 685 000) (3 315 972 000) - Cash From Financing Activities Proceeds from borrowings Repayment of borrowings Other cash inflows from financing activities 1 517 151 122 1 261 286 000 2 206 397 000 Other cash outflows from financing activities CASH FLOWS FROM FINANCING ACTIVITIES - - 1 517 151 122 1 261 286 000 2 206 397 000 -
Other cash inflows or outflows 96 713 699 1 NET INCREASE OR DECREASE IN CASH AND CASH - 510 595 390 454 419 593 768 681 000 22 491 000 - EQUIVALENTS FOR THE YEAR Cash and Cash Equivalents at the Beginning of the Year 510 595 390 965 015 000 1 733 696 000 YEAR END CASH BALANCE - 510 595 390 965 014 983 1 733 696 000 1 756 187 000 ------BUDGETED CASH INFLOW - 12 807 449 000 - BUDGETED CASH OUTFLOW 13 348 285 000 BUDGETED CAPITAL EXPENIDTURE - - Ratios Cost and efficiency Electricity cost as % of total operational costs 0,00% 0,00% 0,00% 0,00% Salary cost as % of total operational costs 0,00% 0,00% 63,35% 74,59% Maintenance cost as % of total operational costs 0,00% 0,00% 9,46% 6,07% Actual capital expenditure as % of budgeted Capital expenditure as % of total expenditure 0,00% 15,82% 13,37% 19,90% Debtor’s days (Collection period) [Days] 5,51 4,73 20,57 40,13 Operating cost coverage ratio (OCCR) 0,90 0,97 1,10 1,07 Financial performance Total annual cash expenditure including Capital - 7 203 206 042 11 379 659 775 11 497 491 000 16 664 257 000 - expenditure Total capital expenditure - - 1 800 180 417 1 536 685 000 3 315 972 000 - Debt service ratio 594,07 1 136,62 Debt to equity ratio - - - - Current ratio 8,16 8,90 2,60 1,91 Surplus or deficit for the year - 45 253 642 455 081 374 886 852 000 877 697 000 - Return on assets 0% 4% 6% 5% Donor dependency - capital expenditure 72,2% 32,2% 19,8% Donor dependency - operational expenditure 64% 73% 80% 82%
63 BLANTYRE Malawi Kwacha (MWK) 2006 2007 2008 2009 2010 Budget Exchange Rate [30 June] MWK per US$ 143 143 143 147 154 Exchange Rate [30 June] MWK per ZAR 21 20 18 18 20 Income Statement Revenue Rates and taxes 940 366 000 737 001 000 898 470 408 1 164 266 278 1 157 101 225 1 751 381 644 Non-tax revenue 79 584 000 168 822 522 72 108 288 110 058 684 216 478 731 700 234 748 Other operating revenue 116 000 302 000 140 020 522 16 360 593 - Grants, Transfers, Subsidies for Operating Expenditure 22 395 000 24 525 478 107 075 048 66 059 197 81 053 474 120 281 110 Total operating revenue 1 042 461 000 930 651 000 1 217 674 266 1 356 744 752 1 454 633 430 2 571 897 502 Interest income 194 000 7 808 000 3 794 428 1 548 800 - Grants, Transfers, Subsidies for Capital Expenditure - 13 167 000 46 322 082 151 771 996 163 650 000 98 181 818 Other non-operating revenue 2 297 000 2 654 000 3 710 224 1 173 452 - TOTAL REVENUE 1 044 952 000 954 280 000 1 271 501 000 1 511 239 000 1 618 283 430 2 670 079 320 BUDGETED REVENUE 2 361 195 924 2 670 079 320 Expenditure Employee-related costs 214 137 000 211 677 000 217 741 000 351 017 000 487 868 727 595 430 198 Electricity - - - Repairs and maintenance 20 831 000 31 509 000 29 059 004 13 093 642 40 849 256 463 144 207 Other operating expenditure 545 123 000 487 577 867 780 897 621 553 445 522 625 297 731 1 203 119 997 Total operating expenditure 780 091 000 730 763 867 1 027 697 625 917 556 164 1 154 015 714 2 261 694 402 Interest expense 32 468 000 38 741 957 44 514 730 49 213 486 - Depreciation and amortisation - - - - - Other expenses - TOTAL EXPENDITURE 812 559 000 769 505 824 1 072 212 355 966 769 650 1 154 015 714 2 261 694 402 PROFIT (LOSS) BEFORE TAX 232 393 000 184 774 176 199 288 645 544 469 350 464 267 716 408 384 918 PROFIT (LOSS) FOR THE YEAR 232 393 000 184 774 176 199 288 645 544 469 350 464 267 716 408 384 918 Balance Sheet Assets Current Assets Cash and Cash equivalents 200 000 93 588 000 92 430 000 45 486 000 Net Trade Receivables [Debtors] 731 508 000 776 799 000 904 338 000 1 311 486 000 Inventory 2 487 000 2 579 000 2 259 000 2 147 000 Short-term investments Other current assets 734 195 000 872 966 000 999 027 000 1 359 119 000 - - Non Current Assets Long-term investments Property Plant and Equipment [Fixed Assets] 437 118 000 468 321 000 600 555 000 770 314 000 Other non-current assets 437 118 000 468 321 000 600 555 000 770 314 000 - - TOTAL ASSETS 1 171 313 000 1 341 287 000 1 599 582 000 2 129 433 000 - - CHANGE IN CASH RESERVES 87 412 000 (11 860 000) (37 762 000) (32 856 000) - Liabilities Current Liabilities - Bank overdraft 5 134 000 11 110 000 21 812 000 12 630 000 Short-term borrowings & current portion of 170 523 335 196 609 518 222 038 630 borrowings - interest bearing Short-term borrowings & current portion of borrowings - non interest bearing Tax liability Other current liabilities 385 824 000 210 466 665 242 390 482 213 444 370 390 958 000 392 100 000 460 812 000 448 113 000 - - Non Current Liabilities - Non-current liabilities - interest bearing Non-current liabilities - non interest bearing 112 918 000 108 718 000 112 918 000 112 918 000 Provisions 112 918 000 108 718 000 112 918 000 112 918 000 - - Equity Reserves 667 437 000 840 469 000 1 025 852 000 1 568 402 000 Accumulated profit (loss) ------TOTAL EQUITY & LIABILITIES 1 171 313 000 1 341 287 000 1 599 582 000 2 129 433 000 - -
64 BLANTYRE Malawi Kwacha (MWK) 2006 2007 2008 2009 2010 Budget Surplus after tax for the year 232 393 000 184 774 176 199 288 645 544 469 350 464 267 716 408 384 918 ------Interest recognised in profit and loss 32 274 000 30 933 957 40 720 302 47 664 686 - - Depreciation ------Provisions 567 955 000 150 226 000 143 498 913 21 017 063 Movement in working capital - (220 740 335) (95 295 183) (435 982 112) Other non-cash items Cash Generated From Operations 832 622 000 145 193 798 288 212 677 177 168 987 464 267 716 408 384 918 Interest paid and received (32 274 000) (30 933 957) (40 720 302) (47 664 686) - - NET CASH FLOWS FROM OPERATING ACTIVITIES 800 348 000 114 259 841 247 492 375 129 504 301 464 267 716 408 384 918 Cash From Investing Activities Purchase of fixed assets (18 110 000) (31 203 000) (132 234 000) (169 759 000) (191 559 544) (553 911 818) Proceeds from the sale of fixed assets Purchase of investments - Proceeds from the sale of investements Other cash inflows from investing activities Other cash outflows from investing activities - CASH FLOWS FROM INVESTING ACTIVITIES (18 110 000) (31 203 000) (132 234 000) (169 759 000) (191 559 544) (553 911 818) Cash From Financing Activities Proceeds from borrowings - 4 200 000 Repayment of borrowings (174 723 335) (26 086 183) (25 429 112) Other cash inflows from financing activities Other cash outflows from financing activities - CASH FLOWS FROM FINANCING ACTIVITIES - (174 723 335) (21 886 183) (25 429 112) - - Other cash inflows or outflows (849 815 000) 179 078 494 (105 232 192) 27 921 811 (305 564 172) NET INCREASE OR DECREASE IN CASH AND CASH (67 577 000) 87 412 000 (11 860 000) (37 762 000) (32 856 000) (145 526 900) EQUIVALENTS FOR THE YEAR Cash and Cash Equivalents at the Beginning of the 62 643 000 (4 934 000) 82 478 000 70 618 000 32 856 000 Year YEAR END CASH BALANCE (4 934 000) 82 478 000 70 618 000 32 856 000 - (145 526 900) BUDGETED CASH INFLOW 2 361 195 924 BUDGETED CASH OUTFLOW 2 008 965 468 BUDGETED CAPITAL EXPENDITURE 590 784 000 553 911 818 Ratios Cost and efficiency Electricity cost as % of total operational costs 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% Salary cost as % of total operational costs 27,45% 28,97% 21,19% 38,26% 42,28% 26,33% Maintenance cost as % of total operational costs 2,67% 4,31% 2,83% 1,43% 3,54% 20,48% Actual capital expenditure as % of budgeted 32,42% 100,00% Capital expenditure as % of total expenditure 2,18% 3,90% 10,98% 14,94% 14,24% 19,67% Debtors days (Collection period) [Days] 256,13 304,66 271,08 352,82 - - Operating cost coverage ratio (OCCR) 1,34 1,27 1,18 1,48 1,26 1,14 Financial performance Total annual cash expenditure including capital 830 669 000 800 708 824 1 204 446 355 1 136 528 650 1 345 575 258 2 815 606 220 expenditure Total capital expenditure 18 110 000 31 203 000 132 234 000 169 759 000 191 559 544 553 911 818 Debt service ratio 8,16 1,05 3,45 7,95 Debt to equity ratio 0,17 0,33 0,30 0,21 Current ratio 1,88 2,23 2,17 3,03 Surplus or deficit for the year 232 393 000 184 774 176 199 288 645 544 469 350 464 267 716 408 384 918 Return on assets 20% 14% 12% 26% Donor dependency - capital expenditure 0,0% 42,2% 35,0% 89,4% 85,4% 17,7% Donor dependency - operational expenditure 3% 3% 10% 7% 7% 5%
65 LILONGWE Zambia Kwacha (ZMK) 2006 2007 2008 2009 2010 Budget Exchange Rate [30 June] ZMK per US$ 3 634 3 972 3 315 5 152 5 203 Exchange Rate [30 June] ZMK per ZAR 522 553 417 638 678 Income Statement Revenue Rates and taxes 712 273 746 695 343 905 2 637 781 396 698 583 952 1 008 249 520 Non tax revenue 92 278 566 174 449 552 93 408 852 136 069 328 163 874 198 Other operating revenue - Grants, Transfers, Subsidies for Operating Expenditure 30 284 160 19 960 000 44 977 351 48 004 216 61 210 064 Total operating revenue 834 836 472 889 753 457 2 776 167 599 882 657 496 1 233 333 782 - Interest income - Grants, Transfers, Subsidies for Capital Expenditure 12 000 000 - 145 000 000 163 650 000 Other non operating revenue - TOTAL REVENUE 834 836 472 901 753 457 2 776 167 599 1 027 657 496 1 396 983 782 - BUDGETED REVENUE 854 622 000 1 050 030 000 2 731 205 911 2 320 680 525 - Expenditure Employee related costs 210 244 250 183 650 551 148 222 866 327 399 855 437 530 172 Electricity - Repairs and maintenance 81 692 762 73 995 281 101 720 621 53 030 382 48 799 662 Other operating expenditure 317 521 146 386 180 709 567 491 868 403 866 838 574 905 716 Total operating expenditure 609 458 158 643 826 541 817 435 355 784 297 075 1 061 235 550 - Interest expense - Depreciation and amortisation - Other expenses - TOTAL EXPENDITURE 609 458 158 643 826 541 817 435 355 784 297 075 1 061 235 550 - PROFIT (LOSS) BEFORE TAX 225 378 314 257 926 917 1 958 732 244 243 360 421 335 748 232 - PROFIT (LOSS) FOR THE YEAR 225 378 314 257 926 917 1 958 732 244 243 360 421 335 748 232 - Balance Sheet Assets Current Assets Cash and Cash equivalents 205 739 299 225 400 824 354 816 877 19 770 491 Net Trade Receivables [Debtors] 2 536 600 356 2 712 441 632 4 441 780 838 300 000 000 Inventory Short-term investments Other current assets 38 768 780 53 035 008 131 000 579 81 151 226 2 781 108 435 2 990 877 464 4 927 598 294 - 400 921 717 - Non Current Assets Long-term investments Property Plant and Equipment [Fixed Assets] 129 667 036 124 684 343 171 408 964 Other non current assets 129 667 036 124 684 343 171 408 964 - - - TOTAL ASSETS 2 910 775 471 3 115 561 807 5 099 007 258 - 400 921 717 - CHANGE IN CASH RESERVES 20 335 883 119 835 484 (345 236 308) 19 770 491 (19 770 491) Liabilities Current Liabilities - Bank overdraft 674 358 - 9 580 569 - Short-term borrowings & current portion of borrowings - interest bearing Short-term borrowings & current portion of borrowings - non interest bearing Tax liability Other current liabilities 46 281 336 44 390 681 44 390 681 46 955 694 44 390 681 53 971 250 - - - Non Current Liabilities - Non-current liabilities - interest bearing 65 689 529 65 689 529 65 689 529 Non-current liabilities - non interest bearing Provisions 65 689 529 65 689 529 65 689 529 - - - Equity Reserves 2 798 130 248 3 005 481 597 4 979 346 479 Accumulated profit (loss) - - - - 400 921 717 - TOTAL EQUITY & LIABILITIES 2 910 775 471 3 115 561 807 5 099 007 258 - 400 921 717 -
66 LILONGWE Zambia Kwacha (ZMK) 2006 2007 2008 2009 2010 Budget Surplus after tax for the year 225 378 314 257 926 917 1 958 732 244 243 360 421 335 748 232 ------Interest recognised in profit and loss ------Depreciation ------Provisions Movement in working capital Other non-cash items Cash Generated From Operations 225 378 314 257 926 917 1 958 732 244 243 360 421 335 748 232 - Interest paid and received ------NET CASH FLOWS FROM OPERATING ACTIVITIES 225 378 314 257 926 917 1 958 732 244 243 360 421 335 748 232 - Cash From Investing Activities Purchase of fixed assets (35 465 877) (106 054 785) (218 711 571) (254 597 006) Proceeds from the sale of fixed assets Purchase of investments - Proceeds from the sale of investements Other cash inflows from investing activities Other cash outflows from investing activities - CASH FLOWS FROM INVESTING ACTIVITIES - (35 465 877) (106 054 785) (218 711 571) (254 597 006) - Cash From Financing Activities Proceeds from borrowings Repayment of borrowings - Other cash inflows from financing activities Other cash outflows from financing activities CASH FLOWS FROM FINANCING ACTIVITIES ------Other cash inflows or outflows (20 313 373) (202 125 157) (1 732 841 975) (369 885 158) (61 380 735) NET INCREASE OR DECREASE IN CASH AND CASH 205 064 941 20 335 883 119 835 484 (345 236 308) 19 770 491 - EQUIVALENTS FOR THE YEAR Cash and Cash Equivalents at the Beginning of the Year 205 064 941 225 400 824 345 236 308 0 YEAR END CASH BALANCE 205 064 941 225 400 824 345 236 308 0 19 770 491 - - (0) 0 0 (0) -
BUDGETED CASH INFLOW 854 622 000 - 1 050 030 000 2 731 205 911 2 320 680 525 BUDGETED CASH OUTFLOW 854 662 000 1 195 006 000 2 938 505 057 2 545 540 581 BUDGETED CAPITAL EXPENIDTURE 8 000 000 337 470 000 951 961 746 606 485 000 - Ratios Cost and efficiency Electricity cost as % of total operational costs 0,00% 0,00% 0,00% 0,00% 0,00% Salary cost as % of total operational costs 34,50% 28,52% 18,13% 41,74% 41,23% Maintenance cost as % of total operational costs 13,40% 11,49% 12,44% 6,76% 4,60% Actual capital expenditure as % of budgeted 0,00% 31,43% 22,97% 41,98% Capital expenditure as % of total expenditure 0,00% 5,22% 11,48% 21,81% 19,35% Debtor’s days (Collection period) [Days] 1 109,03 1 112,71 583,99 - 88,78 Operating cost coverage ratio (OCCR) 1,37 1,38 3,40 1,13 1,16 Financial performance Total annual cash expenditure including capital 609 458 158 679 292 418 923 490 140 1 003 008 646 1 315 832 556 - expenditure Total capital expenditure - 35 465 877 106 054 785 218 711 571 254 597 006 - Debt service ratio Debt to equity ratio 0,02 0,02 0,01 - Current ratio 59,23 67,38 91,30 Surplus or deficit for the year 225 378 314 257 926 917 1 958 732 244 243 360 421 335 748 232 - Return on assets 8% 8% 38% 84% Donor dependency - capital expenditure 33,8% 0,0% 66,3% 64,3% Donor dependency - operational expenditure 5% 3% 6% 6% 6%
67 NDOLA Zambia Kwacha (ZKW) 2005 2006 2007 2008 2009 2010 Budget Exchange Rate [30 December] ZKW per US$ 3 458 4 289 3 897 4 955 4 747 Exchange Rate [30 December] ZKW per ZAR 541 606 567 495 632 Income Statement Revenue Rates and taxes 8 447 060 350 8 896 931 076 46 461 137 452 25 307 400 885 21 556 449 129 Non-tax revenue 4 153 033 423 4 835 343 374 7 377 652 272 9 807 730 518 3 289 430 029 Other operating revenue - Grants, Transfers, Subsidies for Operating Expenditure - - Total operating revenue - 12 600 093 773 13 732 274 450 53 838 789 724 35 115 131 403 24 845 879 158 Interest income - - Grants, Transfers, Subsidies for Capital Expenditure 14 815 000 1 540 000 000 390 000 000 2 942 099 725 862 000 000 Other non-operating revenue 358 288 155 81 586 090 14 086 000 6 693 750 - TOTAL REVENUE - 12 973 196 928 15 353 860 540 54 242 875 724 38 063 924 878 25 707 879 158 BUDGETED REVENUE 13 631 708 948 24 575 013 242 40 548 365 879 25 707 879 158 Expenditure Employee-related costs 7 235 582 221 8 263 705 221 12 946 386 173 13 590 210 309 10 462 016 720 Electricity - Repairs and maintenance 285 429 203 Other operating expenditure 8 421 236 071 6 770 202 130 15 809 851 959 25 605 864 100 14 527 642 636 Total operating expenditure - 15 656 818 292 15 033 907 351 28 756 238 132 39 481 503 612 24 989 659 356 Interest expense - - - - - Depreciation and amortisation 244 200 000 152 142 000 382 790 924 1 279 845 000 - Other expenses 666 558 683 842 515 837 5 274 773 595 899 638 349 718 219 802 TOTAL EXPENDITURE - 16 567 576 975 16 028 565 188 34 413 802 651 41 660 986 961 25 707 879 158 PROFIT (LOSS) BEFORE TAX - (3 594 380 047) (674 704 648) 19 829 073 073 (3 597 062 083) - PROFIT (LOSS) FOR THE YEAR - (3 594 380 047) (674 704 648) 19 829 073 073 (3 597 062 083) - Balance Sheet Assets Current Assets Cash and Cash equivalents 687 775 765 507 085 247 330 752 890 501 798 998 Net Trade Receivables [Debtors] 8 614 212 496 11 145 279 575 30 565 412 274 40 306 783 591 Inventory Short-term investments Other current assets - 9 301 988 261 11 652 364 822 30 896 165 164 40 808 582 589 - Non Current Assets Long-term investments 76 090 660 000 76 090 660 000 76 325 660 000 74 525 660 000 Property Plant and Equipment [Fixed Assets] 5 766 781 000 5 693 624 000 6 274 214 800 16 285 494 000 Other non-current assets - 81 857 441 000 81 784 284 000 82 599 874 800 90 811 154 000 - TOTAL ASSETS - 91 159 429 261 93 436 648 822 113 496 039 964 131 619 736 589 - CHANGE IN CASH RESERVES 67 359 199 (226 922 739) (589 761 107) 237 020 486 512 304 161 Liabilities Current Liabilities - Bank overdraft 620 416 566 666 648 787 1 080 077 537 1 014 103 159 Short-term borrowings & current portion of borrowings - interest bearing Short-term borrowings & current portion of borrowings - non interest bearing Tax liability Other current liabilities 15 780 911 540 18 986 603 528 19 055 983 323 33 890 488 209 - 16 401 328 106 19 653 252 315 20 136 060 860 34 904 591 368 - Non Current Liabilities - Non-current liabilities - interest bearing Non- current liabilities - non interest bearing Provisions ------Equity Reserves 88 553 878 101 88 477 035 262 88 404 772 257 94 646 621 438 Accumulated profit (loss) - (13 795 776 946) (14 693 638 755) 4 955 206 847 2 068 523 783 - TOTAL EQUITY & LIABILITIES - 91 159 429 261 93 436 648 822 113 496 039 964 131 619 736 589 -
68 NDOLA Zambia Kwacha (ZKW) 2005 2006 2007 2008 2009 2010 Budget Surplus after tax for the year - (3 594 380 047) (674 704 648) 19 829 073 073 (3 597 062 083) ------Interest recognised in profit and loss ------Depreciation - 244 200 000 152 142 000 382 790 924 1 279 845 000 - Provisions Movement in working capital 7 166 699 044 674 624 909 (19 350 752 904) 5 093 133 569 6 416 295 382 Other non-cash items Cash Generated From Operations - 3 816 518 997 152 062 261 861 111 093 2 775 916 486 6 416 295 382 Interest paid and received ------NET CASH FLOWS FROM OPERATING ACTIVITIES - 3 816 518 997 152 062 261 861 111 093 2 775 916 486 6 416 295 382 Cash From Investing Activities Purchase of fixed assets (5 522 581 000) (225 299 000) (197 799 876) (8 731 434 200) (2 664 000) Proceeds from the sale of fixed assets Purchase of investments - (235 000 000) 1 800 000 000 Proceeds from the sale of investements Other cash inflows from investing activities Other cash outflows from investing activities - CASH FLOWS FROM INVESTING ACTIVITIES - (5 522 581 000) (225 299 000) (432 799 876) (6 931 434 200) (2 664 000) Cash From Financing Activities Proceeds from borrowings Repayment of borrowings - Other cash inflows from financing activities Other cash outflows from financing activities - CASH FLOWS FROM FINANCING ACTIVITIES ------Other cash inflows or outflows (153 686 000) (1 018 072 324) 4 392 538 200 (5 901 327 221) NET INCREASE OR DECREASE IN CASH AND CASH - (1 706 062 003) (226 922 739) (589 761 107) 237 020 486 512 304 161 EQUIVALENTS FOR THE YEAR Cash and Cash Equivalents at the Beginning of the Year 1 773 421 202 67 359 199 (159 563 540) (749 324 647) (512 304 161) YEAR END CASH BALANCE - 67 359 199 (159 563 540) (749 324 647) (512 304 161) ------BUDGETED CASH INFLOW - 13 631 708 948 24 575 013 242 40 548 365 879 25 707 879 158 BUDGETED CASH OUTFLOW 10 660 911 534 24 575 013 242 37 948 365 879 28 371 879 158 BUDGETED CAPITAL EXPENDITURE 756 080 000 489 198 000 2 590 000 2 664 000 Ratios Cost and efficiency Electricity cost as % of total operational costs 0,00% 0,00% 0,00% 0,00% 0,00% Salary cost as % of total operational costs 46,21% 54,97% 45,02% 34,42% 41,87% Maintenance cost as % of total operational costs 0,00% 0,00% 0,00% 0,72% 0,00% Actual capital expenditure as % of budgeted 29,80% 40,43% 337121,01% 100,00% Capital expenditure as % of total expenditure 25,28% 1,40% 0,58% 17,78% 0,01% Debtor’s days (Collection period) [Days] 249,54 296,24 207,22 418,96 - Operating cost coverage ratio (OCCR) 0,80 0,91 1,87 0,89 0,99 Financial performance Total annual cash expenditure including Capital - 21 845 957 975,00 16 101 722 188,00 34 228 811 603,00 49 112 576 161,00 25 710 543 158,00 expenditure Total capital expenditure - 5 522 581 000,00 225 299 000,00 197 799 876,00 8 731 434 200,00 2 664 000,00 Debt service ratio Debt to equity ratio - - - - Current ratio 0,57 0,59 1,53 1,17 Surplus or deficit for the year - (3 594 380 047,00) (674 704 648,00) 19 829 073 073,00 (3 597 062 083,00) - Return on assets [%] -4% -1% 17 % -3% Donor dependency - capital expenditure [%] 0,3% 683,5% 197,2% 33,7% 32357,4% Donor dependency - operational expenditure [%] 0% 0% 0% 0% 0%
69 Annexure C: Interviewees
WINDHOEK (22nd July 2010) 1 Mr Roger Gertze Strategic Executive: Finance City of Windhoek 2 Mr G Esterhuyzen Costing & Budgeting City of Windhoek 3 Mr Deon Gerber Manager - Cash Management & Statements City of Windhoek LILONGWE (8th August 2010) 4 Mr Kelvin Mmangisa Chief Executive Lilongwe City Council 5 Mr Kalimujiso Banda Manager, City Development Strategy Lilongwe City Council 6 Mr Julius Tsogolani Director Engineering Lilongwe City Council 7 Mr Jones K Gondwe Controller of Audit Services Lilongwe City Council 8 Mr Kondwani Santhe Acting Director of Finance Lilongwe City Council 9 Mr Vincent Mujure Chief Accountant (Debt Management) Lilongwe City Council 10 Mr George Ndhlovu Chief Accountant Lilongwe City Council 11 Mr Vitto Mulala Director Health & Social Welfare Services Lilongwe City Council 12 Mr Yewo Nyirenda Deputy Director Engineering Lilongwe City Council 13 Mr Dalitso Mpoola Director Planning & Development Lilongwe City Council 14 Mr Jan Erasmus Central Strategy Unit City of Johannesburg GABORONE (13th August 2010) 15 Mr Lebuile Israel Deputy City Clerk Gaborone City Council 16 Ms Unami S. Tadubana CFO - PO Gaborone City Council 17 Mr Godiramang M. Koongse Town Treasurer Gaborone City Council 18 Mr Ussia Lesetlhe City Engineer Gaborone City Council 19 Mr K Hobona Agt PEHO II Gaborone City Council 20 Mr TH Tshoawane PEP - Economist Gaborone City Council BLANTYRE (30th September 2010) 21 Mr Mr Alfred Chanza Acting Chief Executive Blantyre City Council 22 Mr Alex P Mshali Acting Director Finance Blantyre City Council 23 Mr K L A Kantwela Director Engineering Services Blantyre City Council 24 Mr Emmanuel V Chiputula Asst Accounting Officer, Budgets & Acc Blantyre City Council LUSAKA (30th August 2010) 25 Ms Gladys Manzi Deputy Director HR Lusaka City Council 26 Mr Peter Kashiwa Director HR Lusaka City Council 27 Ms Grace Ushibantu Director Finance Lusaka City Council 28 Mr Simasiku Malemo Director Engineering Lusaka City Council 29 Mr Michael Kabungo Head: PMU Lusaka City Council NDOLA (31st August 2010) 30 Ms Charity Mpande Nanda Town Clerk Ndola City Council 31 Mr Victor L Mazimba Director of Finance Ndola City Council 32 Mr Alex Mwansa Director of Administration Ndola City Council 33 Mr Gilbert Sendama Director of Engineering Services Ndola City Council 34 Ms Judith Chintu Sinkala Director of Development Planning Ndola City Council
70 DAR ES SALAAM (11th October 2010) 35 Mr Fadhili Izumbe City Treasurer Dar es Salaam CC 36 Mr Mussa Natty City Engineer Dar es Salaam CC 37 Ms Sarah G. Rusabi City Economist Dar es Salaam CC 38 Mr Mheziwa Bundala Senior Economist Dar es Salaam CC 39 Ms Oriver Vavunge City Human Resource Officer Dar es Salaam CC ARUSHA (12th October 2010) 40 Mr Estominh F Chang’ah Acting Director Arusha MC 41 Mr C L Mbarakai Acting Treasurer Arusha MC 42 Mr L Pallangyo Economist Arusha MC 43 Mr A M Lamsy Municipal Engineer Arusha MC PORT LOUIS (9th November 2010) 44 Sheikh Mukhtar Hossenbocus Lord Mayor MC of Port Louis 45 Mrs Mirella Palmmyre (Begue) Deputy Lord Mayor MC of Port Louis 46 Mr Jean Francois Dorestan Chief Executive MC of Port Louis 47 Ms Rita Moheeputh Assistant Chief Executive MC of Port Louis 48 Mr R Gungadeen Financial Controller MC of Port Louis 49 Mrs Reshma Bukhory-Bahadoor Accountanty MC of Port Louis 50 Mr Mr Sakyadev Soratun Principal Accountant MC of Port Louis 51 Mr Hassen Soobrattee Head Works Department MC of Port Louis MAPUTO (10 September 2008) 52 Mr Rogerio Nkomo Director for Finance Maputo Municipality 53 Mr Mario Jorge Joaquim Pinheiro Macaringue, Councillor for Infrastructure Maputo Municipality 54 Mr Egidio Ernesto Director: Finance Maputo Municipality
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