Changing the face of Johannesburg

Geoffrey Makhubo, MMC for finance in Johannesburg

Geoffrey Makhubo, MMC for finance in Johannesburg

At his budget speech in May, Geoffrey Makhubo, member of the mayoral committee for finance of the City of Johannesburg, announced a budget that exceeded R40-billion, the bulk of which consisted of focusing on operational issues.

"We are taking the unprecedented step to become the first municipality in South Africa to present a multi-year capital budget of R30.1-billion to the council for approval. It should be noted that the self-funding part of this budget will grow to above 65% from a current average of 39%," he said during his speech.

This has been achieved despite the challenging global and regional economic environment. In the current year, the finances of the city have strengthened, bolstered by financial strategies and forward thinking, he said.

"We attribute these achievements to effective financial management and sound planning of our operations.
Within the city there is a strong commitment to prudent financial management at all levels, ensuring tightened controls, strengthened policies and procedures, and the attainment of a clean audit.

Targeted approach
He said that four of the key ratios that measure financial management have improved.

"These are solvency, debt to revenue, net operating margin and cash coverage. It is on the base of the surplus of R4.9-billion and cash equivalents of R2.2-billion achieved in 2012, that we are able to increase our capital budget by more than 60% for the 2013/14 financial year.

"This has resulted in the city, intent on reshaping its urban form, to make a decisive break from the past and construct a new development future that is built on not only sound economic principles, but also accessibility.

"At the core of this approach is the emphasis on our 'corridors of freedom'. Through this transit oriented development, we will knit the urban form together and facilitate the mass transit of people and goods along corridors that strengthen the connectedness of different parts of the city."

He said that the corridors will be developed to support inclusive, high-density, mixed-use developments to reduce commuting times and costs.

"Through this new approach we will also slow down the process of urban sprawl and the uncontrolled spread of low-density developments on the fringes of the city.

"Johannesburg will become an urban environment characterised by walkability, accessibility and safe neighbourhoods, and where we will promote and support cycling and the use of non-motorised transport in the city."

Future growth
He said one of the bridges to the future that the City is building is the introduction of technology and systems to enable residents, business and industry to control and manage their own water and power consumption.

"Over the next three years, City Power will continue with the rollout of a R1.25-billion smart electricity meters initiative. These will eventually replace the conventional meters that are currently in use in households, businesses and industry across the city.

"In determining the tariffs for the new financial year, we had to ensure that they are affordable yet at the same time contribute to the sustainability of service provision.

"We are keenly aware of the fact that, in the current economic environment, households are faced with very real challenges with regards to disposable income and our tariffs need to respond to these pressures."

To this end, the city has limited some of the increases following a public consultation process. Several concessions have been made to assist households in paying for essential services:
• Electricity tariff increases have been limited to 7.3%;
• The first R200 000 of the value of all residential properties is exempted from rates;
• Pensioner owners with a monthly income of less than R7 000 are given a 100% rebate, while those earning between R7 001 and R12 000 qualify for a 50% reduction. The 100% exemption is also given to pensioners over 70 years who live in a home under R2-million;
• Organisations responsible for animal protection and those involved in youth development programmes are fully exempted from rates and private sports clubs receive a 40% rebate; and
• Properties valued at less than R200 000 will continue to receive free refuse removal services. This threshold has been increased from R150 000.

"It should also be taken into account that more than 120 000 households in Johannesburg currently receive completely free water, electricity and waste removal services from the City in terms of our expanded social package policy.

"The budget presented will result in fundamental changes to the financial structure of Johannesburg and enable us to change our course towards the type of city we desire. We desire a city that is developmental in nature, spatially integrated and united, liveable, embraces inclusive economic growth and allows us to remake ourselves as a city," said Makhubo.

Corridors of freedom
A big part of the future of the city is what has been dubbed the "corridors of freedom".

They are well-planned transport arteries linked to interchanges where the focus will be on mixed-use development.

This includes high-density accommodation that will be supported by office buildings, retail development, and opportunities for leisure and recreation.

"These corridors will provide citizens of the city with the ability to live closer to their workplace and be able to work, stay and play without having to use private motorised transport. Safe, affordable and convenient busses, cycling and pedestrian activity will all form a part of this future," said Makhubo.

The corridors of freedom will transform entrenched settlement patterns which have shunted the majority of residents to the outskirts of the city, away from economic opportunities and access to jobs and growth, he said.

This will give rise to a people-centred city where the needs of communities, their safety, comfort and economic well-being are placed at the core of planning and delivery processes.

This concept will result in the reduced poverty for the majority of the citizens who are currently spending a large percentage of their income on transport, Makhubo said.

"The new city skyline will consist of high-rise residential developments growing around the transit nodes, gradually decreasing in height and density as it moves further away from the core. Social infrastructure, schools, clinics, police stations and government offices will be strategically located to support the growing population."

Makhubo feels that the location of resources must respond to the vision.

"Everything will be based on the backbone of transport such as the Rea Vaya bus rapid transit system. The high-density developments built around the transport nodes will see us meeting the accommodation demands of our citizens with low-cost housing, rental accommodation and offerings for entry-level home owners.

"It will also lead to open spaces that will see the building of shopping centres, clinics, schools and other points of community that will contribute to this vision," he said.

Targeted areas
The city will be working closely with its citizens and other stakeholders to finalise the routes and nodes of its corridors of freedom. However, in the medium term leading up to 2016, several priority routes have been identified including Soweto to the Central Business District (CBD), the CBD to Alexandra and Alexandra to Sandton.

Makhubo said that the city has been left with sprawling low-density areas without viable public transport systems.

"The majority of working class and poor citizens are still living on the fringes of the city and have to commute long distances to access work and economic opportunities. Private car use is a significant driver of energy consumption and greenhouse gas emissions in the city.

"Future planning must address both the issues of sustainability and inequity. The most efficient urban form is compact, mixed land-use with an extensive public transport network that includes high intensity movement corridors with attractive environments for walking and cycling," he said.

He cited the existing health and education belt that starts at Empire Road with Brenthurst Clinic, moving through to Wits and covering areas such as KPMG, the University of Johannesburg, Milpark Hospital, Helen Joseph Hospital and uses the Rea Vaya system through Industria into Soweto.

"The transport in that node is such that it knits Soweto with the inner city of Johannesburg. It is now easy for people to have access to a range of facilities thanks to the improved transport offering. I used to be a student at Wits while living in Soweto. It was a nightmare to get taxis and to get to classes on time.

"With the infrastructure now in place, students can get to classes much more easily," said Makhubo.

Expense highlights
On the expenditure side of the 2013/2014 Budget, Makhubo focused on several highlights. The Sustainable Services Cluster, which oversees and co-ordinates the bulk of the city's service delivery obligations, receives R21.9-billion, more than half of the total operating budget of the city.

This cluster will take the lead in the planning and implementation of the corridors of freedom through the planning and construction of transport arteries and mixed-use nodes surrounded by high-density residential accommodation.

The capital budget for the cluster amounts to R17.3-billion for the next three years. Within this cluster, City Power receives an operating allocation of R13.2-billion and capital budget amounting to R6.8-billion.

Capital investment will focus on the improvement of the quality of supply and quality of service as well as key projects such as the continuing rollout of the pre-paid system, introduction of smart meters, the upgrading of the electrical network in various areas and substations such as Wilro Park, Fleurhof, Lehae and Cydna.

"The budget for Johannesburg Water consists of an operating budget of R5.9-billion and R3.7-billion for capital projects in places such as Orange Farm, Doornkop West, Protea Glen, Roodepoort, Diepsloot, Sandton, Alexandra and Bramfischerville.

"We are continuing with maintenance to the network to reduce the losses to 22% by 2016 (from the current 30%) and strengthening our ability to respond timeously to leaks and disruptions of services.

"The department of housing receives an operating budget of R634.1-million and capital budget of R2.4-billion.

"Joshco (a provider of affordable and quality rental housing to the people of Johannesburg) has been allocated a capital budget of R1.8-billion, while Pikitup receives an operating budget of R1.6-billion to enable it to continue its focus on the collection of refuse, street and inner city cleaning, separation at source, the cleaning of informal settlements and addressing illegal dumping.

"We are providing for a range of capital projects in the medium term, which include the upgrading of community facilities such as recreation centres, swimming pools, libraries and sports grounds.

"In the health sector we are providing for the construction of the new Freedom Park clinic in Devland as well as substantial upgrades to various clinics across the city," said Makhubo.

The Economic Growth Cluster receives an operating budget of R3-billion and a capital budget of R9.1-billion.

"You will note that the projects and programmes initiated by this cluster are designed towards stimulating economic growth through targeting labour-absorbent activities as well as the promotion of innovation through 'green economy' initiatives.

"There is also a strong emphasis on the city's vital economic infrastructure, the resurfacing of roads, the maintenance of storm water and traffic signals and the roll-out of our broadband network," Makhubo said.

The key spending priorities for the financial year
In addition to the corridors of freedom, the city has announced 10 key priorities that will serve as the building blocks for its 2040 vision:
• Financial sustainability and resilience;
• Sustainable human settlements;
• Food security;
• Engaged citizens;
• SMME and entrepreneur support;
• Smart city;
• Resource sustainability;
• Investment attraction, retention, and expansion;
• Green economy; and
• Safer cities.

"These spending priorities are in line with the priorities of the City. For example, substantial funding has been made towards improving our infrastructure through Johannesburg Water and City Power," said Makhubo.

He said that R450-million of the budget will be used to implement a Revenue Generation Efficiency Project that will see the installation of semi-automated and automated pre-paid smart meters. There will also be a number of additional projects coupled to the more efficient delivery of electricity and water in the city.

The Sustainable Human Settlements Urbanisation Plan and the Inner City Roadmap are two examples of programmes that have been developed to respond to the rapid urbanisation in the city and address the current lack of affordable rental accommodation in Johannesburg.

Balancing act
"It remains a balance to provide the building blocks that will carry the present through to the future. The city has to respond to the daily needs of its citizens. If people are concerned about a lack of access to transport, affordable housing, running water, sanitation and so on, then we simply have to respond," he said.

But he cautions that the city must be careful to not be driven by need only, as this will not be helpful for a sustainable future.

"We have to build a model city for the future. Currently, there are 4.4-million people living here. By 2014, that is expected to jump to eight million. So our community-based planning and budgeting efforts need to respond to the immediate demands while at the same time building a bridge for the future.

"There is a current reality to address and people cannot eat dreams. We have been very careful to focus on addressing the billing issue which has received a lot of media attention in the past 18 months. Fortunately, we have overcome this challenge and are now only dealing with a few residual problems around it."

This, according to Makhubo, has enabled the city to have the confidence to present an ambitious and expansionary budget. A budget, he feels, largely driven by its own funds.

"We had two very difficult years but have broken the back of it. This has been done to such an extent that we are sitting on a surplus and building cash reserves for the benefits of our city. This has enabled the City to start dealing with the backlog when it comes to infrastructure development and investing in new economic programmes," he said.

Prioritising safety
But all the development in the world will mean nothing if people do not feel safe.

"A liveable city has to be safe and provide its citizens with the freedom to walk, to cycle and to move freely with little fear of being mugged or worse."

He said the first step was to have visible policing in each ward of the city by increasing the number of police officers.

The second part is to work in tandem with the other priorities of a smart city by implementing things such as closed-circuit TV cameras and improving the response times of police officers.

"We want to show visible deterrents so people will know that they will be arrested if they commit crime. This proactive policing has worked well in cities like Singapore. For example, the streets there are clean not because the janitors there keep it so all the time, but because the people know that if they litter, they face fines or arrests."

Creating a better city, together
Despite having the plans in place for future growth, there are still issues that need to be addressed.

"One of the big concerns is the ability of our citizens to pay for things given the current economic conditions. There are many external factors that affect the size of the average person's wallet. This impacts not only on their ability to pay for services, but it also impacts the ability of the city to execute its long-term plan," said Makhubo.

Another concern is the capacity of the city to carry out the programmes it has put forward.

"We have called on the private sector to assist us not only through tendering for jobs but discussing how we can be joint partners in the development of the city.

"Already, we have seen the big auditing firms come forward and conduct workshops around infrastructure development."

A big positive is that the strategic growth vision of the city is shared by all political parties, the citizens and the private sector.

"All the parties supported our budget and are helping us realise the vision that our children and grandchildren will have a better place than the one we inherited. People believe in things like the smart city project, they believe in fibre and they believe in connectivity."

He said Johannesburg is the only city in the country that has a stock exchange, which puts it in the same league as that of London, New York and Tokyo.

"In the past, the Johannesburg Stock Exchange told us that if a company from another African country wanted to list they had a choice between Johannesburg and London. However, through our fibre roll-out programme, which provides faster and more affordable broadband access, we are making that choice much easier."

Another aspect of the future vision is the greening and restoration of the historical spruits and rivers of the city.

"For example, our greening initiatives at the Braamfontein Spruit have seen residents playing their part. They want to have cycling and jogging lanes around the spruit.

"We have also announced developmental service delivery programmes that will see us working with residents there to beautify the area," he said.

"Ultimately, we want to create an enabling environment for companies across industries in the private sector. We want to provide the infrastructure for workers to arrive on time at their jobs which will increase productivity and access to labour.

"We are also working with our three resident universities (Wits, University of Johannesburg, and Unisa) to identify the kind of skills we need for the economy. We will all work together to make Johannesburg one of the best cities in the world."

Key service delivery objectives for the next year
The city has taken a conscious decision to establish regional service delivery governance, urban management and citizen relationship management functions. They are aimed at achieving service delivery excellence by ensuring that the city is responsive to the needs of the community.

"The partnership with communities has been seen as key to achieving the service delivery objectives. Its drivers are the strengthening of regional co-ordination, integration, monitoring and enforcement of service delivery standards at grass-roots level," said Makhubo.

Some of the programmes that the city will be driving for the next year include:

Integrated law enforcement (Joburg 10 plus)
"This programme marks a paradigm shift in law enforcement towards more systematic, collaborative and cooperative mechanisms across law enforcement disciplines."

Through this programme, the city has deployed at least 10 Johannesburg Metro Police officers a ward. The city will also continue to work with community policing forums, street patrollers, neighbourhood watches and all security sector people based at ward level to strengthen the programme.

Integrated service delivery programme
"This programme is aimed at promoting a ward-based proactive maintenance programme and approach that seeks to address infrastructure service breakdowns contributing to urban decay and environmental disorderliness," Makhubo said.

In the 2012/2013 financial year, the five-priority ward programme was initiated to drive integrated multi-disciplinary ward-specific programmes.

"The target for this financial year is to expand the programme to cover 70 wards across the city with the target of reducing or addressing 70% of recorded service delivery challenges."

Community-based planning
"This is the City's investment in infrastructure and ongoing commitment to addressing service delivery. It also fosters institutionalisation of opportunities, dialogue and partnership which is key to the success of building better communities in Johannesburg."

He believes that the programmes and projects in this sector should create more job opportunities, youth empowerment and social cohesion to address short- to medium-term service delivery challenges.

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