Path to financial sustainability for Beaufort West approved
The Western Cape Government took coordinated action this week to assist Beaufort West Municipality to address its financial crisis and put it on the path to financial sustainability and improved service delivery.
On 7 March 2022, the Minister of Finance, David Maynier, formally approved the Financial Recovery Plan (FRP) for the Beaufort West Municipality, thereby fulfilling his duties with respect to a mandatory FRP in terms of section 143(2) of the Municipal Financial Management Act, 2003 (Act No. 56 of 2003).
The FRP, which was prepared by the Municipal Financial Recovery Service at National Treasury, is the result of extensive consultations, online, in-person meetings and workshops with the Municipality, the Municipality’s principal creditors, community members, Provincial Treasury, Department of Local Government, Organised Labour, and the South African Local Government Association.
The FRP adopts a strategic, focused approach which is time-bound yet comprehensive enough to ensure that the underlying causes of the financial crisis are adequately addressed. To achieve this objective, the FRP presents a phased approach to recovery, differentiating between issues to be addressed in the short, medium, and long term.
The FRP is divided into three distinct but interdependent phases. These include a Rescue Phase (Phase 1) which focuses primarily on cash and restoring the cash position of the municipality, followed by a Stabilisation Phase (Phase 2) which expands on the financial indicators to be monitored and emphasises key governance and institutional issues which must simultaneously be addressed and finally, a Sustainability Phase (Phase 3) to secure the gains of the FRP and ensure the long-term financial sustainability of the municipality.
The financial model in the FRP shows that if the measures in the plan are successfully implemented then the municipality can achieve a cash-backed funded budget position within three years.
The Minister of Local Government, Environmental Affairs and Development Planning met with Beaufort West’s Mayor, Gideon Pietersen, the Deputy Mayor, the mayoral committee, and senior managers of the Municipality earlier this week. The visit was arranged on request by Minister Bredell.
The meeting was held in a positive spirit, during which the Municipality made a comprehensive presentation on the financial challenges being experienced. Detailed discussions subsequently provided further context to these challenges, identifying solutions to address same. Discussions were held in an open and frank manner with the aim of agreeing on a way forward, putting Beaufort West Municipality on a recovery road.
It was agreed that a task team be established under the guidance of the Acting Municipal Manager and the Head of Department: Local Government with the purpose of developing a support plan, prioritising the most urgent challenges.
The support plan will supplement the Financial Recovery Plan, compiled by the Provincial and National Treasuries. The Financial recovery Plan will address the persistent financial challenges in the Municipality. Together these plans will contain comprehensive support to improve good governance, financial stability, service delivery and the functionality of the Municipality.
Source: Government of South Africa