Working to become lean, mean, effective

Posted On Monday, 23 June 2003 02:00 Published by eProp Commercial Property News
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WHILE Ekurhuleni has an overall budget for this year of R9,1bn, it has worked hard to become a lean, mean and effective metropolitan municipality.

Property-Housing-ResidentialIn addition, it is working to keep rate increases at below the rate of inflation.

Leon von Rönge, a member of the mayoral committee responsible for finance at Ekurhuleni, says the merger of nine towns into the greater metropolitan municipality has been completed from a financial perspective, and tariffs across the entire municipality have been equalised.

This year, property tariffs increased from an average of 9,6c in the rand to 10,36c in the rand, an increase of 7,92%, he says.

Boksburg and Lethabong, which were on 8,2 cents in the rand, have had a higher rise due to their previously low tariff structure.

However, some areas have seen a decrease, says Rönge.

Rates increases are being kept below the increase in costs to the municipality.

For example, the increase in the tariff charged to the municipality by Rand Water Board is 8%, but the average budgeted increase passed on to the consumer for water is 5%, he says.

Moreover, Ekurhuleni has increased its maintenance budget by 13% to make up for a backlog of repairs that have accumulated over the years due to a shortage of funds.

"We have experienced an average increase of 12,2% in costs for the entire region. However, across our total basket of services the tariffs charged to consumers have increased at below inflation, at the lower rate of 8,27%," Von Rönge says.

He says savings have been generated through cutting general expenditure and by closely examining real needs.

For example, it has consolidated its debt and reduced interest rates, Von Rönge says.

In addition, the municipality is using its economies of scale to negotiate more effectively with suppliers.

"In our purchases, we are buying in bulk and we are receiving better prices.

"We are running the metro like a business."

Credit control and service delivery has also become a major focus area, even to the extent of making personal calls to businesses that have fallen behind with their payments.

In addition, residential credit control is bearing fruit. For example, in Tembisa about 13000 homes have been converted to prepaid systems. The average payment level was running at 30%, but this has increased to 64,75% in the past months, says Von Rönge.

The spotlight has also turned on wastage within the municipality and assisting consumers to lower consumption.

"Where there are leaks in the water system, for example, we are making repairs. In one household the monthly bill was running well over R1000 and this had been going on for three years. We repaired a leak at a cost of R700 and the bill dropped to around R40 a month," Von Rönge says.

Ekurhuleni's internally funded capital budget has been divided into four segments: municipal infrastructure (R351m), social infrastructure (R88,7m), local economic development (R31,56m) and IT, equipment and vehicles (R51,8m).

The total capital budget for this year is R1072m, including resources from provincial and national government, he says.

"In the past a proposed library or clinic had to compete with electrification or street lighting for funding, creating a situation of unfair competition.

"Now, for example, municipal infrastructure, which includes housing, electricity, storm water, roads and sewage, has its own separate budget. These elements complement one another and a new township development would automatically include all of them.

"At the same time, social infrastructure does not compete with, for example, roads for funding. Therefore, facilities such as clinics will compete with libraries for finance and it provides a more balanced situation," Von Rönge says.

The funding for local economic development has been effectively ring-fenced, he says.

In the past, a developer might have approached the municipality with a proposed industrial park or another development. However, there was no money available to fund the infrastructure and other development requirements.

"Now if there are developments that will stimulate the economy or create jobs, we have the funds.

"In this budget we have set aside funds for the unforeseen, issues that did not receive the attention they deserved in the past. The balance between economic spend and social spend is an art, but our departments are clustered and informed by the integrated development process," says Von Rönge.

"In compiling our budget, the integrated development plan process was an important tool to assess current needs and expectations. Our business plan has the backing of all stakeholders, including the Ekurhuleni Business Association, the umbrella body for organised business in Ekurhuleni," says Von Rönge.

Last modified on Monday, 19 May 2014 10:09

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