CFO Kagiso Lerutla unpacks some of the initiatives that have contributed to the City of Ekurhuleni recently achieving its third consecutive clean audit.
Municipalities in South Africa are under intense scrutiny where neglect and lack of service delivery in some areas have tarred them all with the same brush. But this year the City of Ekurhuleni is the first municipality that has received three clean consecutive audits from the Auditor General of South Africa.
One of the forces responsible for the clean audit is Kagiso Lerutla, the youngest CFO to be hired by a municipality. At the age of 33, he is working with business and the community to bring stability and security to one of the many regions that were hit hard and almost crippled by the Covid-19 pandemic.
He says that, while running a municipality is a big task, it’s one he can tackle with the current senior management.
Mind over matter
Kagiso’s first point of action was building the correct professional and personal mindset within the municipality.
“It's important for our vision that we need to professionalise local government because, for the longest time, a better reputation in terms of the capacity of individuals within the local government has been needed.”
Previous issues with funds not being spent correctly was a challenge that Kagiso had to address.
He says the vision was to get the right competencies and qualifications in the institution that will assist them in dealing with governance issues. “We prioritised looking for talent with solid accounting knowledge, deep financial analysis and data-driven decision-making acumen. It’s crucial for us to forecast effectively, especially concerning cash flow.”
Equally important is clear communication skills, which aid in translating financial complexities into understandable terms to all stakeholders, Kagiso adds. “And, given today’s uncertain economic landscape, a keen eye for investment opportunities is essential for our sustained growth and risk management.”
This approach will work hand-in-hand with the right policies, procedures and all the controls that are needed for people who have these capabilities to ensure that they are able to implement those tools.
“Our primary challenge was harmonising our record-keeping across departments. What truly stood out, however, was the unwavering teamwork of all the departments, underpinned by the astute leadership of our city manager,” Kagiso says.
He explains that this process showcased the team’s dedication and resilience, became an avenue for adopting best practices for the future, and fostered a deeper culture of transparency, accountability, and pride across the municipality.
“I think that we have done very well because we're able to directly audit findings now, even during the current period where the government has been under serious threat and people were abusing the agency.”
Bringing the youth to government
Kagiso is determined to bring fresh young talent into the municipality. He is actively recruiting more young people, with a keen eye on those who want to be in a strategic position.
“I made a commitment to myself that I wanted to be an example for any young person,” says Kagiso, who believes that if he fails at his current position it could make other municipalities or businesses more cautious about hiring young people.
However, he adds that simply including younger professionals in the municipality would remove balance and also would lead to the loss of institutional knowledge. He explains that it is about balancing the new ideas that young entrants bring in with the expertise that employees who have been there for years, to ensure that these projects are successful.
“Young people when they are full of ideas, they are very innovative and all of that but you have to balance because you are moving in an area where you find people that have been in an institution for quite some time that have institutional memory with years of experience and wisdom,” he says.
Staying on the right track
Financial stability was not an easy task to come by, either. “During the pandemic, it was very difficult because our biggest revenue stream comes from businesses and many of them had closed. We had to revise our budget and cut costs wherever it was possible. We were able to honour salaries of employees and payments to big service providers,” says Kagiso.
He adds that unfortunately South Africa also faces other challenges that affect the amount of income a municipality can earn. “The impact of loadshedding has created a liquidity challenge,” he says.
Kagiso and his team came up with an idea to create new opportunities to earn revenue and opened the doors for collaboration opportunities with businesses.
Using a transparent tender process the city opened its doors to proposals from business. The model is to allow businesses more opportunities to earn revenue by investing in the city’s assets, thereby sharing the risks and rewards.
For the two businesses that were awarded the tender, the city invested in both companies to assist in identifying where higher revenues can be generated and how to enhance income.
This initiative added an additional R700 million to the municipality’s coffers.
The City of Ekurhuleni is also enhancing tax collections, leveraging grants like the Social Housing Regulatory Authority Grant, as well as utilising technology, like red-light cameras for example, to bolster traffic violation detections.
The municipality is also currently proposing initiatives like amnesty programmes for parking fines and fees for garden waste disposal.
“Additionally, we're driving growth through the corporatisation of the Ekurhuleni Fresh Produce Market to bolster support for local farmers,” Kagiso added.
Kagiso was nominated for the 2022 CFO Awards for the work he has done at the City of Ekurhuleni.
All eyes on Ekurhuleni
During its oversight visit to the City of Ekurhuleni in July 2023, the Parliamentary Select Committee on Co-operative Governance and Traditional Affairs, Human Settlements, Water and Sanitation stated that it is the best run municipality in the country.
Kagiso explains that the visit went so well, in fact, that the committee is considering inviting the municipality to Parliament to share its initiatives with the municipalities in the country.
Now that the City of Ekurhuleni passed its budget with a clean bill of financial health, all eyes will be on Kagiso and his team and the initiatives that they implement to hold their position as a success story in South Africa.