A ten-year Long-Term Financial Plan, calibrated on audited figures, that tells Council how much capital investment your municipality can genuinely afford each year.
Long Term Financial Models
How much can we actually afford to build?
Budgets are set on an annual cycle and a three-year Medium Term Revenue and Expenditure Framework (MTREF), while the obligations they create — asset renewal, debt redemption, the operating cost of new infrastructure — land well beyond that horizon. Under the status quo the long-term consequence of a current decision is simply not visible, so shortfalls and mounting debt surface only once corrective action has become expensive. This balancing act cannot be done overnight, under duress, on a spreadsheet, with the benefit of only budgetary figures in hand.
Novus3 populates and calibrates a long-term financial model against five years of audited financial statements, so the base case reflects how the organisation has actually performed rather than how it intended to. Revenue and operating expenditure are then forecast line item by line item, with economic indicators, tariff policy, collection performance and the operating consequences of planned capital investment carried through. From that base, an affordable funding envelope is projected across four sources: fiscal grants, developer contributions, own cash resources, and external borrowing tested against gearing, liquidity and debt-servicing capacity.
Your municipality ends up with a Council-adoptable Long-Term Financial Plan built on a sixteen-column model — five audited years, the adjustment budget, three MTREF years and seven forecast years — supported by projected statements of financial performance and position, a cash flow forecast, the funding mix for the capital budget and a full ratio annexure. Instead of guessing how much infrastructure can be built, Council has a defensible figure for the affordable capital programme each year, and the model itself is handed over populated with your data.
Our approach
- Calibration — The latest audited financial statements are loaded, baseline parameters set and the model validated so it reproduces past financial trends and current conditions, then calibration is workshopped with your finance team.
- LTFM Update — Assumptions are revised against economic indicators, tariff and policy changes and any shift in strategic direction, and revenue and operating expenditure are forecast per line item over the full ten-year horizon.
- Funding Envelope — The affordable envelope for capital investment is quantified per year across grants, developer contributions, own cash resources and borrowings, with borrowing capacity tested rather than assumed.
- Scenario Workshop — Preferred and alternative forecast paths are worked through with officials, including the effect of implementation capacity on how much of the programme can realistically be spent.
- First Draft — Projections, the funding strategy and the narrative sections are drafted, internally reviewed and submitted as the first deliverable.
- Incorporation of Comments — Feedback from the project team, the accounting officer and oversight structures is documented and worked into the model and the document.
- Final Draft — Final revisions, quality assurance and formal submission with all annexures, ready for tabling and adoption by Council.
Key benefits
- The financial plan your Integrated Development Plan is required to contain: The Municipal Systems Act and the Municipal Planning and Performance Management Regulations require budget projections, a statement of the financial resources available for capital project development, and a financial strategy — this plan supplies all three.
- Measured against official norms, not opinion: Forecasts are tested each year against the full set of National Treasury and Municipal Finance Management Act (MFMA) ratio norms — liquidity, collection, remuneration, debt and asset maintenance — so affordability is assessed on published benchmarks rather than in-house assumptions.
- Access to the debt market on credible terms: A calibrated ten-year forecast with a tested gearing and debt-servicing position is what lenders and development finance institutions ask for, so borrowing can be used to accelerate the capital programme rather than avoided by default.
- Directly usable in the budget process: Outputs follow National Treasury conventions and Municipal Standard Chart of Accounts (mSCOA) classification, and the affordability envelope feeds straight into the Capital Expenditure Framework and the MTREF rather than sitting in a separate report.
Why Novus³
- Long-Term Financial Plans delivered for municipalities across South Africa, including plans compiled in the same engagement as the Spatial Development Framework and Capital Expenditure Framework — one team, one set of numbers, no reconciliation between three consultants.
- More than 50 Capital Expenditure Frameworks and work across more than 80 municipalities, giving the model a project-level view of capital demand rather than budget totals.
- The National Treasury Built Environment Performance Plan guidelines specifically encourage the use of tools such as CP3 (Collaboration, Planning, Prioritisation, Performance) in conjunction with a long-term financial model — the combination Novus3 works in.
- Novus3 keeps the vocabulary honest: the strategy, the plan and the model are distinct instruments, and the model is handed over populated and editable so the plan can be updated in-house.
Get in touch
Gauteng
Cnr. Lynnwood & Botterklapper St., Die Wilgers, Pretoria, 0081
Western Cape
97 York St, Dormehls Drift, George, 6529