If a municipality is to engage in partnerships with the private sector it is important that it develops a sound financial base, especially if such partnerships are to be sustained through a revenue stream from the municipality in return for services rendered. Staff must have skills in revenue mobilisation, accounting and administration (see also Chapter 12).
The bulk of tax receipts in most municipalities derive from property taxes that are commonly based on annual rental values, but many properties remain unassessed and therefore outside the tax base. There is a distinct capacity requirement for municipalities to ensure that all properties are assessed and any exemptions are clearly listed. It may be necessary temporarily to add to revenue staff to enable them to undertake this task, preferably on a routine basis or at least as part of a periodic revenue drive.
In a similar manner, other revenue could be significantly improved in areas such as water charges by ensuring that all water connections and standposts are properly listed and assessed. Water rates and charges need to be set at a rate that will recover the cost of operations and maintenance.
Accounts staff may need to strengthen their capacity to operate accounting systems that improve the overall management of income and expenditure. Accounts staff should be able to highlight deficits in the capital account, revenue surpluses that can be used to meet such deficits; they should be able to operate accrual-based accounting systems to present a complete picture of assets and liabilities. Manual book-keeping methods persist, and staff may not have access to the computer-based accounting systems that would structure and maintain their accounts in a more efficient manner. In the absence of such systems and without adequate training, accounts staff may not be able to provide an adequate picture of cash flow or undertake bank reconciliation on a routine basis.