29 June 2016
Financial census of municipalities for the year ended June 2015
According to the Financial Census of Municipalities results released by Statistics South Africa today, for the financial year ended 30 June 2015, municipalities across South Africa had received an income of R309 billion from all sources of income, this represented an increase of R25,5 billion compared with R283,5 billion in 2014. The largest contributor to municipal revenue was ‘grants and subsidies received’ (31,0%), followed by ‘electricity sales’ (28,3%), ‘property rates received’ (14,7%), ‘other revenue’ (11,2%) (which consists of fines, licenses and permits, public contributions and donations, etc.), ‘water sales’ (8,5%), ‘sewerage and sanitation charges’ (3,7%), and ‘refuse removal charges’ (2,8%).
Municipal expenditure patterns
The results showed that municipalities spent a total of R289,3 billion in 2015. The largest contributor to municipal total operating expenditure was ‘employee-related costs’ (25,6%), followed by ‘electricity purchases’ (21,7%), ‘depreciation and amortisation’ (9,3%), ‘other expenditure’ (9,1%) (which consists of collection costs, loss on disposal of property, plant and equipment, impairment loss, etc.), ‘bad debts’ (7,3%), ‘general expenditure’ (5,4%) (which consists of accommodation, travel and subsistence costs, audit fees, bank charges, consultancy and professional fees, fuel and oil, hiring of equipment, insurance costs, subscriptions and membership fees, telecommunication costs, etc.), ‘water purchases’ (5,4%), ‘contracted services’ (5,0%), ‘repairs and maintenance’ (5,0%), ‘interest paid’ (2,7%), ‘grants and subsidies paid’ (2,4%), and ‘remuneration of councilors’ (1,2%).
Disposal of property, plant, and equipment and other assets
The report further showed that out of total asset disposals of R1,9 billion, ‘infrastructure assets’ (which consists of roads, sewerage mains and purifications, electricity mains and generation, water reservoirs etc.) contributed the highest proportion (47,8%), followed by ‘other assets’ (which consists of landfill sites, office equipment, motor vehicles, refuse tankers, councilors’ regalia etc.) (27,8%), and ‘land and buildings’ (10,7%).
Municipal total liabilities
On 30 June 2015, municipalities owed their suppliers and other creditors an amount of R197 billion, 11,6% more than in 2014. The provinces which showed the highest percentage increases between 2014 and 2015 were Free State (40,4%), North West (18,3%), Gauteng (17,2%) and Mpumalanga (13,9%). The provinces which contributed the least to the increase in total liabilities between 2014 and 2015 were KwaZulu-Natal (0,5%), Western Cape (3,9%), Eastern Cape (5,6%) and Limpopo (6,6%).
Purchases and sales of water and electricity
Purchases of water increased from R13,8 billion in 2014 to R15,3 billion in 2015 (11,0%), while sales of water reflected an increase from R23,4 billion to R25,8 billion (10,1%) over the same period. Purchases of electricity increased from R58,5 billion in 2014 to R61,9 billion in 2015 (5,9%), while sales of electricity reflected an increase from R80,8 billion in 2014 to R86,1 billion in 2015 (6,6%).
Acid test ratio and current ratio
Municipalities throughout the country recorded the acid test ratio of 1,1:1 during the two financial years ended 30 June 2014 and 30 June 2015. Over the same period, municipalities had a current ratio of 1,2:1.
The full statistical release is available on the Statistics South Africa website: www.statssa.gov.za
Note to editors:
Please note the following definitions:
Acid test ratio: The acid test ratio is calculated as current assets minus inventory divided by current liabilities. The accepted acid test ratio is considered to be 1:1. In other words, the entity is able to meet its current credit obligations without disposing of its inventory.
Current ratio: The current ratio is calculated as current assets divided by current liabilities. This ratio measures the extent to which current or short-term assets can be disposed to liquidate the current or short-term liabilities
Issued by Statistics South Africa