The Municipal Financial Sustainability Index (MFSI) produced by South Africa’ ratings agency
(Ratings Africa) shows continued declines in the performance of municipalities. The MFSI
performance ratings are corroborated by the auditor-general’s report, which found that municipalities
owed creditors a total of R53.5-billion in the 2018/2019 reporting period. The deterioration, as
measured by the MFSI – which focuses on operating performance, liquidity management, debt
governance, budget process, affordability, and infrastructure development – is affecting service
The effect of poor service delivery on companies situated in some of the worst-performing
municipalities is evidenced by Astral Foods’ court victory over Lekwa municipality, in the agricultural
town of Standerton, Mpumalanga (Bisseker, 2021). Lekwa’s municipality scored 13 out of 100 on the
MFSI 2020 measurement. Astral Foods incurred additional costs of R62-million to transport water to
its Standerton poultry processing plant in Standerton in its most recent reporting period (FM, 2021).
This followed additional costs of R162-million in the previous reporting period. From a business
perspective, the lack of service delivery (in this case, of water and electricity), has further financial
and nonfinancial consequences.

Given the challenges flowing from Lekwa municipality’s lack of service delivery,
map Astral Foods’ primary and secondary activities on a value chain. Comment
on the importance of each of these activities to the success of Astral Foods’
strategic objectives amid the challenges encountered in the turbulent
environment that is even more complex now due to Covid-19. Please dont repeat the answer for Question 2A

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