Targeting infrastructure and services

The City of Ekurhuleni finds itself in a difficult position: its economy, socioeconomic profile, service delivery challenges and high level of unemployment — particularly among the youth — pose very really challenges that the metro has to overcome. As noted by executive mayor Mondli Gungubele in his state of the city address in April, Ekurhuleni is a microcosm of South Africa and the challenges it faces.

In his address, the mayor highlighted the high levels of unemployment (28%); that 65% of its 3.2 million inhabitants are under the age of 35; its low levels of education (only 35% have a matric certificate and 15% post-matric qualifications) and despite a strong industrial base, employment growth appears stuck in the services sector.

Following on the mayor’s April address, it was up to Ekurhuleni’s finance chief Moses Makwakwa to outline how and where spending would be directed to tackle these challenges. He did so in his budget speech, delivered to a full sitting of the metro’s legislature in Germiston on May 28.

“The service delivery journey is never-ending, but of importance is that there must be hope of a better life. Thus far, we are confident that when looking back at where we are today, there is hope for transformation and development,” he said. “The ANC-led government commits to continuously serve the people and build a public service that is more responsive, transformative and accountable. We shall continue to work tirelessly with our communities to undermine poor service delivery and persistent inequalities.”

He identified the city’s main challenges as poverty and unemployment, low household income, high levels of unskilled and semi-skilled labourers, inequality and procurement spend concentrated on a small number of suppliers and fragmented towns, leading to high cost of investment. 

Reflecting on the work done over past four years to deliver on these promises, Makwakwa said R85-billion had been spent on building the local economy, creating jobs, fighting poverty and creating sustainable livelihoods.

For the 2015/2016 financial year, the city has budgeted R29.5-billion, an increase of around 10% over the past financial period.

The main points in this budget include:

• The capital investment programme (R14.6-billion), of which 40% is earmarked for upgrading and renewing infrastructure, 30% to address spatial challenges and change the city’s landscape and 30% for economic development;

• Electricity infrastructure receives R1.4-billion that will be used to provide street and high mast lighting, upgrading substations, enhancing the power network, and electrifying — including the use of alternative energy sources—- particularly in informal settlement areas;

• R1.2 billion for new and upgraded roads and stormwater infrastructure. More than half of this spend, R675-million, will be directed toward new roads and stormwater infrastructure, pedestrian walkways and bridges, while R555-million will be used to rehabilitate and resurface roads and stormwater structures;

• R1.1-billion for water and sanitation services and infrastructure, of which 53% will be used for maintenance and the remainder for new water and sewerage networks;

• Transport infrastructure receives R825-million, the bulk of which will be used to establish an integrated Rapid Transport Network, with the remainder going to establishing new taxi ranks and procurement of additional Metro buses; and

• The city’s human settlements projects receive R579-million to service stands, refurbish rental houses, urban renewal in township areas and social housing.

Makwakwa said the city remains committed to its poor and needy residents, which is demonstrated by the R2.5-billion allocated to its social package. This spend touches more than 100 000 households, which receive benefits such as 100% rebates on assessment rates, 100kW of free basic electricity, 9kl of free water and an additional 9kl for sanitation, and free refuse removal.

“The ANC-led municipality is always aware of the social plight of Ekurhuleni residents and as a caring government we will continue providing these social packages as relief to indigents and other households,” said Makwakwa.

Delivering these benefits and meeting the expenditure targets in the city’s budget obviously requires the collection of revenue from residents and businesses. Makwakwa said more than 90% of its revenue is generated from within the city, with only R2.9-billion allocated by government.

That being said, he bemoaned the fact that the city was not yet able to collect all the revenue due to it.

“While we acknowledge that our revenue collection is slightly below target, there are encouraging trends and room for improvement. In the midst of the current socioeconomic climate we remain committed to the 93% collection target. The challenging economic times make it urgent for the city to explore alternative sources of revenue.”

This was a point taken up by DA councillors in their response to Makwakwa’s budget speech. Bruce Reid called for robust credit controls to be instituted, saying that the 7% shortfall in collections robbed the city of R1-billion.

“Credit control is not a priority in this metro. We are increasing the bad debt provision by over R200-million when we should be striving and making efforts to have it reduced every year,” he said.

He also called for corrective action to be taken on the under-spending of the city’s capital expenditure budget.

This was a matter that Makwakwa addressed in his speech, saying that the “inconsistent and perpetual under-spending of capital budget is unbearable”. 

“The below 90% spending is working against our political mandate to accelerate service delivery and development in the area,” he said. “During the 2014/2015 budget statement I pronounced that there would be consequences for under-spending. I reiterate this call. In this regard we are closely watching the organisational performance report, which will determine the kind of action to be taken.”

Another sore point raised in the budget responses was the low level of investment in maintenance and repairs. Makwakwa announced that this budget would be increased by 5.7% to R2.7-billion.

PR Councillor Eddie Taylor said this was insufficient. He said that an additional R1-billion should be directed toward these items, thereby allowing the city to not only provide better services, but to then charge and collect for proper service delivery.

The need to balance the budget, collect revenue and invest in critical services is not easy task, and Ekurhuleni residents will have to bear some of that burden. Makwakwa announced tariff increases for assessment rates (7.5%), electricity (12.2%), water (14.5%), sanitation (9.5%) and refuse removal (8%).

“Let me state upfront that in determining our tariffs we took into consideration the socioeconomic condition of our city, including the low levels of disposable income and affordability. Once again, let me confirm that Ekurhuleni remains the most affordable metro in the country to live in. The average monthly household bill only increased by R209 since 2011,” he said.

He concluded by saying that the budget builds on the advances the council has made over the past four years, which has been to establish the building blocks for the future of the city.

“It is my sincere hope that as we look back over the road we have traversed, we should all, with pride, declare that our collective achievements are indeed significant. In this budget we build on our experience of the past four years and aim to do more, better.”