Officials of the Sol Plaatje Municipality in Kimberley must stop “talk, talk, talk, and rather do, do, do to turn around the municipality and the city”.
This was one of the requests from the Kimberley Large Business Forum (KLBF) who has requested the municipality to urgently amend its 2024-’25 to 2026-’27 draft annual budget to promote growth in the business sector and halt the noticeable and detrimental decline of the city.
The KLBF comprises 12 large businesses and the Sol Plaatje University (SPU), and it confirmed its “firm support for the substantial proposals” for the Integrated Development Plan (IDP), Strategic Economic Development Plan, Bulk Funding for Infrastructure, central business district (CBD) clean-up and upgrades, parks clean-up and greening, as well as repairs and recommission of the Homevale and Greenpoint Wastewater Treatment Plants (WTP).
The KLBF requests that mayor Kagisho Sonyoni review the “flawed and inappropriate” budget before putting it before council for final approval.
‘Steady decline in commercial, industrial sector’
The businesses claim municipal costs to the commercial and industrial sector has caused a steady decline in size and volume for the past two decades and longer, resulting in decreased job opportunities and job losses.
The primary reasons for the decline are the high electricity tariffs, poor service maintenance and repairs to infrastructure (only 15% of the budget is spent on maintenance), employee and councillor related costs (35% of the budget), the municipality’s intolerable debtors (accounts receivable) of R3,7 billion (which if not recovered will be a bad debt expense), as well as electricity and water losses of between 40% and 60%.
Due to past continuous increases, commercial industrial rates are now considerably higher when compared to cities like Cape Town (43% higher), Richards Bay and Durban (49% higher), and Mossel Bay (56% higher), amongst others.
“The excessive effective rate of between R3,50 and R6,50 exclusive of VAT, per kWh is tantamount of being unconstitutional and not sustainable,” the KLBF states in a letter to Sonyoni. It suggests the implementation of a Kimberley Special Economic Zone with special financial attractions and benefits to attract new businesses and promote existing business to grow bigger and stay in Kimberley.
The forum says residential household electricity rates are acceptable and competition measured against the nine highest recorded rates in South Africa, with Sol Plaatje being the tenth most expensive city.
The KLBF claims the high commercial and industrial electricity tariffs will be the death knell for Kimberley businesses using less and more than 200 kVA connections, and these businesses will be forced to relocate to other economically sustainable centres in the country.
Mines will be worked out in 25 years
Ekapa Mining is the largest employer in the city. Its Kimberley mines will be worked out in 25 years, ending 180 years of continuous diamond mining. The remaining 25 years is enough time to allow for and encourage other businesses to grow and prosper to fill the inevitable void.
The municipality is losing hundreds of millions of rands in income due to electricity losses of 40% through illegal connections or bypass cables.
Water losses of 60% in the past also presented a major income deficit. Early in April, a highly successful joint water project was completed by Ekapa Mining and the municipality where Ekapa completely refurbished the four large clarifiers at the Riverton WTP, while the municipality using its grant-funding and contractors, upgraded several sand-bed filters and fixed over ten major feeder pipeline leaks resulting in Kimberley now receiving about 100 megalitres of good quality water per day compared to the past average of only 40 megalitres per day that had resulted in the unacceptable nightly water supply shutdowns.
This lost and new additional water revenue can substantially improve services and infrastructure for the community and business sector.
The debt to Eskom alone is R1 billion. The KLBF suggests that a dramatic debt collection programme be implemented to recover a minimum of 25% of the debt per year over a few years, and uncoverable debt written of. This income will “easily eradicate” all the potholes and increase road paved area coverage in low-income areas.
‘Civil servants unproductive, loitering around’
According to the 2023 Audited Financial Statements, only R129 million of the budget of R2,68 billion was spent on repairs and maintenance of infrastructure, which is “way too little”. It represents 4,8% whereas the norm is 30% for services to be effective. Road maintenance, for instance, was reduced from R104 million in the previous year to R37 million.
Salaries of R820 million are at 33% of the total budget, which is considerably higher than the average of 25% of related municipalities, while civil servants are “unproductive and loitering around”. There are far too few visible traffic officers, resulting in increasing traffic violations and danger to motorists, and a major shortage of skilled engineering and maintenance personnel.
Other government departments found that the municipality has a “loaded staff structure and is unable to appoint qualified directors, management staff and a chief financial officer (CFO); establish a disciplinary board, collect debts, pay its water and electricity. It has a cash flow crisis and limited ability for capital expenditure and maintenance”.
The National Treasury, in its latest review report on credibility, relevancy and sustainability, stated that the municipality’s cash is inadequate to cover creditors and the cash coverage is below the norm. The municipality has a higher risk of defaulting on its debt if the collection rate does not improve to 81%, which is the break-even point to meet its commitments for the 2024-’25 budget.
- A special council meeting was held on Tuesday, 14 May, to discuss the possible amendments and when the budget would be approved and adopted.
