Stable credit rating to spark investment in Tshwane
Several improvements in the metro’s revenue and debt management have led to a stable outcome from the credit ratings agency, Moody's.
The Tshwane metro’s affirmed credit profile by Moody’s, which comes with a stable outlook, has been hailed as a potential catalyst for future investment and economic growth in the metro.
This comes after Eugene Modise, the Deputy Mayor and MMC for Finance, confirmed that the metro’s financial standing reflects resilience, prudent fiscal management, and growing investor confidence.
Moody’s noted that the capital city has managed to maintain a moderate level of debt while steadily improving its operating performance.
Modise said that despite a constrained financial environment, the metro has exhibited signs of recovering operating performance and is illustrating financial resilience.
The metro’s operating margin rose to 11.7%, up from 10.1% in 2023; liquidity ratio improved to 4.4, debt-to-operating revenue dropped to 20.8% while interest expense remained stable at 5.5% of operating revenue.
These improvements, along with disciplined capital spending and steady intergovernmental transfers, suggest a solid foundation for growth.
Modise emphasised that Tshwane’s economic diversity, combined with improved service charge collections and increased electricity consumption, has played a key role in bolstering financial stability.
“Key considerations that underpin this credit profile include the capacity to provide for infrastructure needs, particularly in addressing the maintenance of water and electricity assets and equipment to render quality services.
“The metro maintains a moderate level of indebtedness, which is a credit strength, and it is managing its finances prudently to avoid financial distress,” said Modise.
He said the municipality’s economy is characterised by diversity, which contributes to its ability to withstand economic pressure.
Modise said the constant and continuous monitoring of revenue has provided a degree of financial flexibility and stability.
“Cash financing surplus remains stable at 3.3% of total revenue. Intergovernmental transfer holds steady at 14.5% of operating revenue.
Capital expenses have been disciplined, making up 4.3% of total expenses.
The metro is actively implementing by-laws through the Reclaiming Our City and Tshwane Ya Tima initiatives, which aim to introduce additional revenue streams.”
He said the municipality remains dedicated to building a fiscally responsible and thriving city.
“A sustained improvement in operating performance will result in enhanced liquidity and a significant reduction in the backlog of commercial liabilities accumulated over the years.
“A sovereign credit rating upgrade would likely have a positive influence on the metro’s credit rating.”
The metro hopes that a sustained improvement in operating performance could eventually lead to a credit rating upgrade, paving the way for larger-scale development and foreign direct investment.
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