The first virtual budget speech for the 2020/2021 financial year was presented by eThekwini Mayor, Cllr Mxolisi Kaunda today, 29 May 2020 and adopted.
In his address, Mayor Kaunda said this was a “Year of Unity, Socio Economic Renewal and Nation Building” as declared by the National Government.
Kaunda brought to the fore the extraordinary effects of the Covid-19 pandemic and the need to reprioritise and remodel the budget to lay a solid foundation for the evolution and reindustrialization of the City’s economic trajectory.
The consolidated tabled 2020/21 eThekwini Municipality Budget of R49 billion makes provision for an operating budget of R44.1bn and a capital budget of R4.8bn.
Operating Budget: R 44.1 billion.
- Water Services: R 9.9 billion
- Cleansing and Solid Waste (CSW): R 2.5 billion
- Sanitation: R 2.4 billion
- Electricity Service: R 15.6 billion
- Engineering Services: R 2.5 billion
- Community and Emergency Services: R 4.5 billion
Capital Budget: R 4.8 billion
Major capital projects include:
- Human Settlements: over R1 billion
- Water infrastructure: R381 million
- Sanitation infrastructure: R294 million
- Engineering, Roads and Storm Water infrastructure: R468 million
- Public Transport Infrastructure: R 675 million
- Electricity infrastructure: R464 million
- Economic Development and Planning including Catalytic Projects: R325 million
The budget is set against the background of the current state of the economy that has significantly impacted on the finances of the City. The COVID-19 outbreak, low growth rate, high unemployment, and load shedding are impacting on the ability of consumers to pay their municipal accounts. The city is working hard to stimulate growth, as well as retain and grow existing businesses.
The biggest bearing of the budget was to ensure the city maintains service delivery whilst assisting poor residents who cannot afford to pay for municipal services.
“As a caring government, we are working hard to ensure that even during this tough economic climate, our residents are not severely strained. We have tried to put in place measures to ensure that our tariff increases are realistic and affordable, “added Kaunda.
The Tariff increases for the next financial year starting 1 July 2020 is as follows:
- Electricity- 6.22%
- Water – 9.9%
- Refuse Removal- 6.4%
- Property Rates-4.9%
The increases are in recognition of the state of the current economy and the hardship felt by our residents and businesses taking cognizance of representations that have been made during the budget consultation process.
“Every single tariff has been decreased in real terms. Contrary to the alternative narratives, this municipality subscribes to the pro-poor policies in tangible and meaningful ways,” said Kaunda.
“We are committed to assisting our poor residents who cannot afford to pay for municipal services. At the same time, we plead with those who can afford to pay to honour their obligations by paying for the services rendered on time,” he added.
The budget also makes provision to further assist the City’s residents during these tough economic times. The City, in February 2020, approved a new Indigency Policy which will provide a welcome relief to those living on properties valued under R500 000.
Kaunda added, “This is a huge increase in the qualifying threshold property value from R230 000 last year. The income per household has been capped at R3 600 per month to ensure that we target the right households.”
Residents will have to make an application to be part of the indigent register that will be evaluated by utilizing the OSS and Statistics SA data.
COVID-19 PANDEMIC ECONOMIC RECOVERY STRATEGY
Kaunda spoke of the COVID-19 Pandemic Economic Recovery Strategy developed together with social partners that will be key and central pillars to the Radical Socio-Economic Transformation Programme.
The interventions to drive socio-economic recovery are as follows:
• Through the collaboration with our Special Economic Development Zone, we must actively increase manufacturing capacity by participating in equity equivalent deals to attract investment and support local manufacturers.
• A minimum of 30% percentage of the city’s procurement spend must be utilized to establish a sustainable social solidarity economy driven by social enterprises.
• Introduce Infrastructure Procurement Reforms to drive Emerging Contractor Development Programmes.
• We must establish a Supplier Payment Dispute Unit to pay Suppliers within or less than 30 days and manage all payment disputes processes.
• Implement an aggressive Oceans Economy Business Strategy.
• Reduction of fruitless and wasteful expenditure of public funds by implementing an online reverse auction tender system.
• Establish a BBBEE Council to monitor the implementation, performance and enforcement of Sector BBBEE Charters in the Metro.
• Establish an Enterprise and Supplier Development Fund to drive value chain beneficiation, support the informal & township economy, SMME and Social Enterprise Development.
• Implement a skills revolution master plan, syndicate Skills Development Funds across government, private sector and donors focusing on the skills for the future.
• Align key economic sectors to higher education institutions to create specialized centres of excellence in the production of skills for the new economy.
• Collaboration with the Government Warehouse Platform to support the local informal, township and rural economy.
• Align the Implementation of Agri Parks Programme with rural economic development initiatives.
• Develop appropriate stimulus packages focused on reducing the cost of doing business for destressed sectors such as tourism sector and manufacturing.
• Implement aggressive Energy Reforms driven by Renewable Energy.
• Utilize the Green Economy to create jobs and support Social Enterprises.
These interventions are expected to reduce the impact of the;
• Estimated 327 000 jobs losses projected in the second quarter of 2020.
• The under collection of municipal rates and services which has dropped from 94% to 56% in April, resulting in a R1.5bn of revenue shortfall and we should not expect any change in collections of rates in the short-term outlook.
• The loss of 165 000 visitors during the Easter Season, resulting in a decline of R300 million in direct spend; R600 million in contribution to the GDP; and 1 400 in employment opportunities as well R39 million in government taxes.
• The suspension of major events such as the Vodacom July, Africa’s Travel Indaba, Rugby and Football events as well as the Comrades Marathon.
• The loss of revenue generation potential of our hospitality and leisure sector of an accumulative total of over R4,7 billion
“Our New Normal will require collaboration between all sectors of society and strong leadership by government. In a society with deep social and economic divisions, neither social nor economic transformation is possible without an effective government intervention. Under this new normal, the city must provide the institutions and infrastructure that enable the economy and society to flourish, added Kaunda.
Despite increasingly challenging circumstances, the budget is geared to ensure service delivery will continue to be sustained by reprioritising expenditure to ensure key objectives are achieved.
Whilst the budget presented is a balanced & fully funded budget, close monitoring of the operating expenditure and income will be undertaken to ensure sustainability. Austerity measures need to be further considered to ensure affordability of services to consumers and ratepayers. Improved productivity and value for money needs to be driven by management.