A record budget to fund economic growth

City of Johannesburg. (Supplied)

City of Johannesburg. (Supplied)

With the City abling a record combined operational and capital budget of R47.1-billion for the year, Geoffrey Makhubo, MMC for Finance, said that the 2014 budget has a greater focus than ever before on meeting the needs of citizens and on stimulating the necessary economic investment and growth. 

“While the City has embarked on major capital expenditure programmes in the past, including preparations for 2010 and the upgrading of Soweto’s commercial areas. This is the first major, long-term and intensive capital expenditure programme that transcends two political terms. 

“This programme, including the Corridors of Freedom, is the culmination of plans that have been brewing for a long time and are now coming to fruition,” he said.

With broad-ranging projects in the pipeline, the City is in its best financial shape ever, said Makhubo. “Our financial performance over the past three years has given us the opportunity to accelerate delivery to the people of Johannesburg,” he said. 

In his State of the City address this year, Executive Mayor Parks Tau in his state of the City address this year said: “The City is financially in the best shape yet with a net surplus of R3.4-billion at the end June 2013. We continued the upward trend of increasing the City’s total assets to R60.1-billion up from R56.37-billion in 2011/12. 

“We concluded the year with a progressive increase in cash and cash equivalents of R5.4-billion. Our capital investment in the City continues to rise significantly. At the beginning of our term we started with a capital budget of R3.9-billion. Currently it stands at R7.6-billion and is projected to grow to R10.9-billion in the next financial year. We have successfully redeemed R1.9-billion since the inauguration of the municipal bond market that the City pioneered — including R900-million in the past 12 months. 

“Earlier this year, we released an unqualified report from the Auditor General. This was the strongest indication yet that our governance is in good shape and that this is indeed a well-run City which adheres to the highest standards of corporate governance and financial controls.”

Makhubo said that the massive infrastructure investment which will be implemented up to 2040 is aimed at both improving the quality of life for Joburgers and helping South Africa maintain its place as an economic leader in Africa. 

“As the country’s economic hub, we are responding to what we should be doing to maintain our lead in the Province, the country and sub-Saharan Africa as a whole,” he said. “We should not forget that we are now competing with major cities across the continent for investment, therefore we need to invest in the necessary infrastructure, mobility, broadband, power and water stability and more. 

Maintaining a world-class City

“While South Africa is being surpassed by Nigeria as sub-Saharan Africa’s largest economy, our country remains a launchpad into the continent in the eyes of global investors. With world-class financial services and the region’s largest stock exchange hosted in Johannesburg, the City has to invest in retaining its place as a world-class destination for investors.”

Makhubo says despite monthly expenditure of R2.2-billion, the City has a monthly cash balance in excess of R5-billion. The capital budget has grown from R4.5-billion in 2012/ 2013 to over R10-billion for the coming financial year. This, he notes, gives the City the means to improve service delivery and change the environment for the better. He said that while the City has made progress in improving the lives of those who live in it, more needs to be done. 

In his budget speech, he noted: “There can be no doubt that the twin challenges of rapid urbanisation, and the massive and unprecedented influx of people into Johannesburg over the past two decades, from all over the country, within the continent and further afield, has presented us with much greater and complex challenges. Of all the people who live in the City, 46% were not born here. 

“Despite the impact of rapid urbanisation, we have achieved momentous changes over the past two decades and we have indeed built a better life for our people in this City. We have come a long way. There is a good story to be told. However, we still have a long road to travel, that we do not deny.”

The 2014 budget, he said, aims to support the City’s 2040 Strategy, which has as its ten key priorities:

  • Financial sustainability and resilience;
  • Good, decent, affordable and sustainable human settlements;
  • Agriculture and food security;
  • SMME and entrepreneurship development and support;
  • Active and engaged citizenry;
  • Resource resilience;
  • Smart City;
  • Investment attraction, retention and expansion;
  • Green economy; and 
  • A safer City

Makhubo said: “The City will focus on driving a caring, responsive, efficient and progressive developmental approach. The City is working towards a future of vastly improved socioeconomic conditions, through a targeted focus on poverty reduction and food security development initiatives. We continue to build self-sustainability, improved health and life expectancy, social inclusivity and social justice. By 2040, the City will achieve a substantially enhanced quality of life for all.

“The City is establishing sustainable and eco-efficient infrastructural solutions (housing, transport, energy, water, waste, sanitation and information and communications technology, among others), to create a landscape that is liveable, environmentally friendly, resilient, sustainable and supportive of low carbon economy initiatives for a healthier future for all. 

“The City will continue to focus on supporting the creation of a more competitive, ‘smart’ and resilient economy, when measured in relation to national, continental and global performance standards. The City continues to promote economic growth, social inclusion and sustainability through the meaningful consultation and mobilisation of all who work and live here. We continue to collaborate with all stakeholders to build job-intensive long-term growth and prosperity, from which all can benefit.” 

Key focus areas

Makhubo highlighted a key intervention currently underway — the development of the Corridors of Freedom — a long-term development programme. Three key development priority areas have been identified under the Corridors of Freedom project — linking the CBD with Alexandra via Louis Botha Avenue, linking Soweto with the CBD along Empire Road and Perth Street, and development in the Turffontein node.

“We are also on track with our programme to invest over R100-billion in infrastructure over a 10-year period,” said Makhubo. 

From the 2012/13 financial year the City began to scale up capital investment with a budget of R4.5-billion, which increased to R7.7-billion in 2013/14 and will exceed R10-billion for 2014/15. Since 2012/13 its capital budget has increased by more than 100%. This capital investment, he said, is a key tool for improving service delivery and transformation of the urban environment through infrastructural development. 

A key feature of this year’s budget is significant investment in new and upgraded infrastructure and housing development. The City’s Housing Department has been allocated a three-year capital budget of R6.2-billion for the upgrading of existing informal settlements, hostel refurbishment and the development of mixed-use precincts in the inner City and urban core.

Included in the R172-million capital budget for the Health Department over the next three years are allocations for a number of new clinics and the upgrading of existing medical facilities, such as Mountain View Clinic in Finetown, the Mpumelelo Clinic in Ivory Park and in Zandspruit.

Crime prevention is also a focus area, with an operating budget of R2.6-billion for the Public Safety department, which includes funding for expansion of the Joburg 10 Plus programme of activities aimed at crime prevention, traffic management and by-law enforcement.

Johannesburg City Parks and the Johannesburg Zoo will receive a three-year capital budget of R368-million, which will include the funding of new park developments in Ivory Park, Orange Farm extension 2 and the Turffontein Corridor of Freedom.  

“This budget will fund the implementation of our basic programmes and the new ideas for which Johannesburg is renowned. It will also speed up the fundamental transformation of this City and make every citizen proud of living, working and playing here,” said Makhubo. 

However, he noted that the City sits at a combined collection of around 93%, with 20% to 30% made up of arrears, and that payment security is a challenge. 

“We urge citizens to consume responsibly and place the City at the top of budgets. Let’s all participate in the growth of Johannesburg and its infrastructure, and bequeath to our children and grandchildren a world-class City that delivers excellence in services and quality of life,” he said.

This article has been paid for by the City of Johannesburg. Contents and pictures were supplied and signed off by City of Johannesburg.