The Local Government Municipal Finance Management Act (2003) requires that a municipality establish an appropriate and effective cash management and investment policy. Within this
policy the municipality must:

• conduct its cash management and investments; and
• invest money not immediately required.
  
  

Surplus cash refers to money that is not immediately required for expenditure; this surplus
could include income from rates and services, rents, fines, grants, subsidies, levies and
interest earned on investments.

Investments are placed with credit–worthy institutions with an investment grade rating of A
or better from national or internationally recognised credit rating agencies.

The department reports regularly to the Executive Mayor, the Finance Portfolio Committee,
the Auditor General and the national Treasury, in order to assess the performance of the
investment portfolio and to ensure that the investments comply with policy objectives,
guidelines, applicable laws and regulations.