To provide municipal services LAs need to be appropriately funded. The Urban Government Act, Section 86 provides sources of revenue for a Council as well as Chapter XIV of the National Constitution. These sections explicitly provide for own sources of revenue as well as Government transfers to LAs. In addition Local Authorities have the power to borrow provided ministerial approval is obtained.
However, with all these provisions, the revenue base of LAs remain narrow. Councils rely heavily on Property Taxes (Rates) for the bulk of their revenue (>70%) This is followed by Government Subventions at just over 10% and the rest is miscellaneous income primarily from user fees and charges.
Slow down in economic activity - drastic decline in global demand resulting in closure of some companies Lay-off from work Stagnant city tax base as a result of fewer rateable properties coming on stream (insignificant new investment) Ability to pay property taxes affected resulting in an increase in rate payers defaulters.
A reduction in the rates collected reduces the ability of an LA to deliver services by the factor of uncollected rates. There is a mismatch between the demand for services (both in level and quality) and actual provision due to inadequacy of funding. The rates levied and other income are not sufficient to provide the required services to the satisfaction of not only the ratepayers but all residents as well.
Given this situation the Municipal Council formulated a turnaround strategy Strategy meant to be rescue plan for the municipality and make it financially and operationally viable Restore confidence in the municipality by all stakeholders especially the citizens and central government.
The municipal council of Mbabane will cease to exist and would be subsumed into government The people of Mbabane will suffer the most and we will have betrayed them There could be high turnover of good people The image of the city will be tarnished and will be difficult and expensive to restore People will loose faith, investors will relocate and potential investors will look elsewhere. There will be conflict and instability and blaming across the board We rather not start than start and fail.
Reduction of departmens from seven to four Rationalisation of functions in the municipality according to team approach to work. Outsourcing non-core functions based on efficiency gains principles.
Expenditure reduction budget (20%) Cut down on in-house wastage Eradicate duplicate spending Improve and tightened financial controls (new FMS) Improved efficiency spending Deal with pilferage
Business Process reengineering Asset protection Establish service level standards Build Strong Management Team Conclude Performance Management Agreements with senior Management Review and implement customer/ citizens relations management systems
Engage central Government to increase IFTS Diversification and increase of sources of revenue Define and seek funding for unfunded mandates Seek greater autonomy from Government