Ekurhuleni Metropolitan Municipality is set to provide sustainable services to its residents and enhance growth and development.
Based on 20 years of service delivery, this Medium Term Revenue and Expenditure Framework for the period 2014/2015 to 2016/2017 seeks to accelerate social, economic and infrastructure development. We hope to provide sustainable services to improve quality, accelerate the broadening of services and ensure our city is a preferred destination for growth and development.
Our plans for the period ahead are anchored on transformation imperatives that will create work opportunities and build a more equal society.
We remain committed to building the local economy to create employment and sustainable livelihoods, improving the performance of and broadening access to all services, building social cohesion for safer communities, promoting active public participation, and ensuring more effective and accountable local government.
We focus on improving infrastructure that is poorly-located, inadequate and under-maintained, and to re-industrialise our economy through revitalisation of the manufacturing sector.
While our economy has shown resilience in the wake of recent economic difficulties, it is not immune to the consequences of global instability. As with the rest of the country, the City of Ekurhuleni’s economy is still characterised by slow economic growth.
Despite skills, job creation and economic empowerment initiatives, the unemployment rate remains a major concern, particularly the 36.9% youth unemployment.
Our training incentive schemes, empowerment in infrastructure and extended public works programme must target young people.
We also have a duty to broaden opportunities for those who do not have secure income, formal jobs, houses, electricity, water and access to healthcare.
We understand the important role small business plays in job creation. Our intention is to realise 75% procurement of local content.
In support of our developmental growth path, we will also consider protecting well-located public spaces for small businesses to unlock economic opportunities. This will change the spatial landscape, support industrial development and optimise urban development through strategic partnership with the private sector, stimulating growth, job creation and densification of our city.
Our conservative approach since 2011 strengthened our financial position, accumulating just under R1-billion in reserves to fund future infrastructure requirements. We intend building sufficient reserve to maintain this.
Our recent Aa3.za credit rating indicates low exposure to credit risk for servicing long-term debt and the best ability to pay our short-term debt.
Our revenue is R85-billion, comprising R28-billion in 2014/15 and representing an increase of 5.7% annually. This covers R4-billion from assessment rates, R12-billion from electricity sales, R1-billion from refuse collection, R4-billion from water and sanitation, R5-billion from government grants, and R2-billion from other revenue.
To continue providing sustainable services, we propose the following tariff increase: 0% increase on cemeteries and recreational halls, 7.5% on assessment rates, between 6.3% and 7.6% on electricity, 8.1% increase on water for residential and business, 8% on sanitation for residential and business, and between 2.4% and 7.1% on refuse removal for residents and 6% for business.
Social support package
The municipality will provide the following social package relief:
• The first R150 000 on property value is exempted from assessment rates;
• For pensioners, an additional rebate for property assessments ranges from 10% to 100%;
• Churches and NGOs are exempted from assessment rates;
• All households will still enjoy 6kilolitres of water and sanitation service for free;
• Low-end users will continue to receive 100KW of free basic electricity.
Just under R800-million has been allocated to ensure Ekurhuleni’s registered indigents continue receiving 100% rebates on assessment rates, free 9 kilolitres of water, free 9 kilolitres of sanitation, free refuse removal, 100KW free basic electricity, and free burial. R17-million has been set aside for the Grant in Aid programme.
Our collection rate is still below our 93% target, despite high capital pressure for service delivery. The revised revenue protection and enhancement project is designed to improve collection.
Elements include aggressive credit control measures to recover outstanding debt; reduction in the unacceptable levels of water losses; installation of water meters; reinstatement of the interest waiver scheme on outstanding accounts and increased awareness of the need to pay for services.
Our expenditure is R85-billion, comprising R28-billion in 2014/15, representing an increase of 5.7% annually. This covers R10-billion for bulk water, electricity and sewage; R2-billion for repairs and maintenance; R5-billion for personnel costs; R1-billion for bad debt provision; R2-billion for depreciation; and R8-billion for general and grants expenditure.
Our expenditure increase of 5.7% is in line with inflation and operating costs are carefully controlled. Strategic sourcing, long-term contracts and a centralised procurement process will ensure financial resilience.
Ekurhuleni will invest R12-billion over this period. Our long term infrastructure investment is projected to be R85-billion. Our capital investment of R12-billion will be spent as follows:
• R4-billion is allocated to transport, roads and storm water.
• R1.9-billion will be spent on electricity network infrastructure.
• R1.3-billion is allocated for water and sanitation network infrastructure.
• R1.2-billion is allocated for human settlement, including provision of houses, land acquisition, urban renewal, development of social housing, upgrading of council rental stock and mixed-use housing development. (Another R4.3-billion will be added to Ekurhuleni’s capital investment programme once full accreditation is assigned.)
• R891-million is for developmental and renewal of public facilities.
• R661-million is set aside for the safety of Ekurhuleni residents, upgrading policing precincts, new fire stations and the acquisition of additional police vehicles.
• R556-million for upgrading information and communication technology.
• R512-million for environmental resources management and the upgrading of waste management facilities and infrastructure.
• R423-million for health and social development, including the construction and upgrading of clinics.
• R330-million for the construction and rehabilitation of sport, art and recreational facilities and libraries.
Ensuring the budget is spent according to our targets remains challenging. Zero spending impacts the acceleration of service delivery and economic growth of the city. Non-spending will see the removal of performance bonuses, and quarterly budgeting and cash flow management will be initiated to drive capital expenditure.
City planning and economic development
R174-million (R63-million 2014/2015) is allocated to facilitate the city’s economic development, growth and job creation. This includes the refurbishment of Springs Fresh Produce Market; the development of township economy and a township enterprise hub; and the development of township industrial parks.
The investment will be used for skills development programmes, and the mainstreaming of small business and co-operatives into economic opportunities, targeting young people, women and people with disabilities. R120-million is allocated for skills development and bursaries.
Customer relations management
Interfacing with our communities is important, and requires professionalism and properly resourced customer relations facilities. For this we have allocated R60-million, of which R44-million relates to 2014/2015.
Ekurhuleni municipality remains strongly committed to the principles of accountability, transparency, anti-corruption, proper financial management and effective internal control systems.
The journey of fast tracking socio-economic development continues, at the centre of which is the creation of jobs for sustainable livelihoods, reduction of poverty levels, reducing inequality and building a capable, developmental, cohesive and prosperous city.
Through our continued partnership with community members, business sectors, religious and other stakeholders we will move our city forward.
Moses Makwakwa is the MMC for Finance at the Ekurhuleni Metropolitan Municipality.
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