In February 2019, South Africa\u2019s political parties responded in parliament to President Cyril Ramaphosa\u2019s State of the Nation Address, in what is known as the Sona debate.<\/p>\n
During the lively session Mmusi Maimane, leader of the official opposition Democratic Alliance<\/a>, made a claim about the\u00a0City of Tshwane\u2019s<\/a>\u00a0finances.<\/p>\n The \u00a0metropolitan municipality<\/a>\u00a0is in Gauteng province. It is the home of the country\u2019s administrative capital, Pretoria.<\/p>\n \u201cIn Tshwane, we inherited a deficit of over R1 billion and in one year in office we\u2019ve already turned that into a surplus,\u201d he\u00a0said<\/a>.<\/p>\n The DA was elected to govern Tshwane in August 2016. That month it took over the running of the municipality from the\u00a0African National Congress<\/a>, South Africa\u2019s ruling party.<\/p>\n What remained in the city coffers when the ANC left office? We took a closer look at the financial statements.<\/p>\n Claim not the first of its kind<\/strong><\/p>\n Other DA officials have made similar claims.<\/p>\n In January 2018, then mayor of Tshwane Solly Msimanga released a\u00a0press statement<\/a>\u00a0claiming his administration had clawed the city back from \u201cfinancial ruin\u201d. He said a deficit of R1.3 billion had been reversed.<\/p>\n A year later, DA member of parliament Phumzile Van Damme\u00a0tweeted<\/a>\u00a0that her party had inherited a \u201cR2bn deficit from the ANC\u2026 by the end of the first financial year in office, under DA-governance, it was corrected, with a surplus\u201d.<\/p>\n But the ANC has repeatedly refuted the claim, arguing that it left behind a substantial surplus.<\/p>\n \u201cIn Tshwane, the ANC-led government left a surplus of R736 million in 2016\/17,\u201d\u00a0said<\/a>\u00a0Gauteng\u2019s head of social development, Nandi Mayathula-Khoza, during the Sona debate.<\/p>\n ANC regional chairperson Kgosi Maepa\u00a0reportedly<\/a>\u00a0gave the same figure for the surplus.<\/p>\n Revenue less expenditure = surplus<\/strong><\/p>\n A\u00a0deficit<\/a>\u00a0occurs when any government spends more money than it collects, according to\u00a0a guide<\/a>\u00a0to South African government budgets.<\/p>\n Money is\u00a0spent<\/a>\u00a0mainly on salaries and services like water and electricity. Money is\u00a0collected<\/a>\u00a0from residents paying for services, rates, licences and fines, as well as from interest and investments.<\/p>\n A surplus is the opposite: more money is collected than is spent.<\/p>\n The formula \u201ctotal revenue minus total spending\u201d calculates whether there is a deficit or a surplus.<\/p>\n Surplus when ANC left office?<\/strong><\/p>\n We contacted the DA\u2019s media office for the source of its claim and were directed to Samkelo Mgobozi, then the Tshwane mayor\u2019s spokesperson. (He has since been\u00a0removed<\/a>\u00a0from the position.)<\/p>\n Mgobozi told Africa Check the figures were from the\u00a0auditor general<\/a>\u2019s 2016\/17 report on the municipality.<\/p>\n In an\u00a0executive summary<\/a>, the report says that at the end of the 2015\/16 financial year, the City of Tshwane had a surplus of R884.3 million.\u00a0(Note: The end of the city\u2019s financial year is 30 June. The DA took office in August 2016.)<\/i><\/p>\n But the city\u2019s audited annual financial statements give a\u00a0restated surplus<\/a>\u00a0of R1.1 billion. This figure includes\u00a0corrections<\/a>\u00a0of accounting errors identified later.<\/p>\n Carlene van der Westhuizen is a research analyst at the\u00a0International Budget Partnership in South Africa<\/a>, a network that aims to make public finance systems more transparent. She told Africa Check the restated surplus was the best figure to use.<\/p>\n \u201cIt is the same as the amount stated in the\u00a02018\/19 budget<\/a>,\u201d she said.<\/p>\n So how did the DA calculate a deficit?<\/p>\n \u2018Surplus\u2019 included national government grants<\/strong><\/p>\n Mgobozi referred us to a 2018\u00a0press statement<\/a>\u00a0by Msimanga, which he said we could use to \u201ccross check\u201d the figures. It included a table calculating the financial performance of the municipality.<\/p>\n The figures are for the municipality\u2019s operating budget and exclude \u201ccapital transfers recognised\u201d.<\/p>\n Capital transfers are funds national treasury gives all municipalities. They are also known as\u00a0equitable share<\/a>, or \u201cgrant money\u201d, according to the treasury\u2019s director of local government budget analysis, Jordan Maja.<\/p>\n In\u00a02016\/17<\/a>, the city collected 80% of its income from residents and received 20% in grants from the treasury.<\/p>\n \u201cAs a principle, we at national treasury always emphasise that when you are talking about deficit and surplus, we look at the operating side,\u201d Maja told Africa Check.<\/p>\n \u201cYou cannot include capital [transfers], as most of it is not your own money.\u201d<\/p>\n Van der Westhuizen directed Africa Check to the 2018\/19 medium-term revenue and expenditure framework for the City of Tshwane for these figures.<\/p>\n When capital transfers from the treasury (some\u00a0R2.45 billion<\/a>) are excluded from the 2015\/16 calculation, the result is an operating deficit of R1.4 billion.<\/p>\n In other words, the municipality run by the ANC spent more money than it collected.<\/p>\n Surplus in 2016\/17<\/strong><\/p>\n After almost a year of DA administration, the City of Tshwane recorded an operating surplus of\u00a0R730 million<\/a>\u00a0for the 2016\/17 financial year.<\/p>\n Conclusion: Tshwane had a deficit in 2015\/16 and a surplus in 2016\/17.<\/strong><\/p>\n The leader of the opposition Democratic Alliance claimed that when it took over government of the City of Tshwane from the African National Congress in August 2016, the municipality had a deficit of over R1 billion.<\/p>\n The DA said it turned that deficit into a surplus within a year.<\/p>\n But the city\u2019s financial statements show a surplus of R1.1 billion in 2015\/6, the year before the ANC left office.<\/p>\n However, that figure includes capital transfer grants from the national treasury. If the grants are excluded, the ANC left Tshwane with a deficit of R1.4 billion.<\/p>\n In 2016\/17, when grants are also excluded, the DA administration collected a surplus of R730 million.<\/p>\n We therefore rate the DA\u2019s claim as correct.<\/p>\n In summary:<\/strong><\/p>\n This article was first published by AfricaCheck – you can read the original article here.<\/a><\/strong><\/em><\/p>\n
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