state of the municipality address by the mayor of

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SPEECH BY HIS WORSHIP THE MAYOR OF KWADUKUZA MUNICIPALITY, COUNCILLOR RICARDO MTHEMBU, ON THE OCCASION OF THE PRESENTATION OF THE MEDIUM-TERM REVENUE AND EXPENDITURE FOR 2018/2021 – NKOBONGO SPORTS GROUND 31 MAY 2018

SPEAKER OF COUNCIL, COUNCILLOR PHUMLILE ZULU

DEPUTY MAYOR, COUNCILLOR DOLLY GOVENDER

AMAKHOSI ASENDLUNKULU

COLLEAGUES IN THE EXECUTIVE COMMITTEE

FELLOW COUNCILLORS

THE ENTIRE MANAGEMENT LED BY THE MUNICIPAL

MANAGER

DISTINGUISHED GUESTS

MEMBERS OF THE MEDIA

LADIES AND GENTLEMEN

It is a great honour for me to stand before all of you to deliver

the budget as required in terms of the Municipal Finance

Management Act for the upcoming 2018/2019 financial year.

Madam Speaker my presentation coincides with a historic and

important centenary in the life of the South African struggle as

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well as to our democracy. We celebrate the lives of

Isithalandwe Nelson Mandela and Mama Albertina Sisulu –

comrades who sacrificed their entire lives to the struggle for the

liberation of black people, Africans in particular.

Honourable Councillors, justice would not be served if one

proceeds to discuss the future without looking at where we

come from as well as what is yet to unfold.

For the sake of time, I will not go through the whole list of

completed projects. I will touch on some of the critical work we

have done in this particular cluster specifically here in Ward 08

and Ward 23:

In Ward 08: (1) The community requested an intervention regarding

access flooding and we rose to the task and upgraded the

storm water facilities as well as constructed a new storm

water pipeline so that access floods would be channelled

away from homes.

(2) Secondly, we constructed a wooden bridge to improve

access for the many residents who have to walk to school

and to the various bus stops to reach work.

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In Ward 23: (1) We upgraded 480m of gravel roads to 5.5km in total of tar

roads.

(2) We also, constructed a state of the art sports complex to

accommodate Table Tennis, Volleyball, Basketball,

Karate, Boxing and Netball sports codes.

(3) This will enable the youth within this zone and

KwaDukuza at large to have access to an excellent

facility, which will familiarise them a professional setup in

their different codes, some of them will live to become

professionals.

The task does not end here. In the near future, we plan to do more. Here in Ward 08:

(1) We have allocated R400 thousand to sort out the

Nkobongo Cemetery Storm water Management issue.

This is to afford and ensure our peoples dignity Madam Speaker.

(2) Furthermore, we will add and maintain streetlights to

safeguard our peoples safety.

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In Ward 23: (1) We have allocated R1 million to upgrade the Shayamoya

Road, we have heard your cry and we are responding.

(2) We will also add and maintain streetlights to safeguard our

peoples safety.

Ladies and Gentlemen, today, we officially launched a portion

of the Vlakspruit Cemetery.

It should be brought to your attention that the project is not yet

completed, but owing to the reality that the burial space is no

more available at the Lindelani Cemetery Council to a decision

that partial hand over must be done thereby allowing the public

to use the facility for its intended use.

The newly established Vlakspruit Cemetery has a total of

17000 grave sites which includes approximately 2500 for

children’ as well as 2500 grave sites to be known as

KwaDukuza’s Heroes Acre a section that will be set aside for

burial of heroes of KwaDukuza.

It anticipated that 17000 graves sites should give Council a

burial space for at least nine years based on the average

burials that the Municipality handles a month.

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The total capital investment for the development of Valkspruit is

approximately R49 million for four phases and the remaining

phase will be the crematorium with supporting amenities.

We have connected 1 172 households on the electricty grid

from our projected target of 1 322, our shortfall Madam

Speaker was 144 and we want to assure the house that we are

working hard to ensure that we decrease on having to report

about shortfalls.

Council has indeed done marvellous work when it comes to institutional development and transformation performance.

(1) More than 250 staff members were trained on various

skills through the Workplace Skills Plan to the tune of R2 million.

(2) Council has during the current financial year gave a very

clear directive to the Municipal Manager that in the

appointments of all posts especially at management level,

50% gender representation cannot be compromised.

(3) Council has also in its commitment and drive to implement

the manifesto of the governing party, the African National

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Congress, consulted widely with organised labour

(SAMWU and IMATU) which has resulted in the

formalization of the shift work system.

(4) The shift work system will ensure that communities are

able to receive basic services conveniently.

(5) Council has also during the current year adopted the KDM

Internship and In-Service Training Policy developed

internally by management which will then see a spike in

the number of KwaDukuza youth to be part of these

programmes annually.

(6) We have developed and reviewed more than 15 policies

without having to use the external consultants which come

at a price in the past. This shall ensure that council

reinforces internal controls as well as intensify service

delivery to communities.

(7) We have developed the Overtime Management Procedure

to curtail on unnecessary overtime including potential

abuse.

(8) Council has also prioritised good governance during the

current financial year and such a commitment has given

rise to the development of systems and procedures to

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ensure clean and good governance at KwaDukuza

municipality.

(9) Among the controls council has put in place the adoption

of the councillor report back decorum which outlines the

roles and responsibilities of the ward councillor, ward

committee, municipal officials, office of the Speaker and

members of public when the ward councillor conducts the

report back meetings.

(10) As part of deepening institutional development,

transformation and good governance; KDM council has

also started cultivating the culture of consequence

management through the draft framework which has been

developed by management and now awaiting council

workshop and final adoption in the new financial year.

(11) Council as part of ensuring clean governance through

intensifying a fight against corruption and fraud, has also

developed and adopted the KDM Hotline/Whistle blowing

policy and system which is independently managed by an

external service provider called “Whistle Blowers”.

(12) The anonymous reporting number is (0800 111 509)

where one can report issues of unethical behaviour, Fraud

and Corruption without disclosing their identity.

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(13) Council has also taken a decision to consider expanding

its assets base by acquiring office space that will be

owned by the municipality rather than leasing them and

this strategic investment shall bear fruits going forward in

that the municipality shall accrue savings on monthly

rentals.

Through our Community Safety Business Unit, which is

charged with the responsibility of ensuring that, we provide for

a safe environment to live, work and play. We have achieved

the following milestones:

(1) Successfully charged 146 drunken drivers.

(2) Made 245 arrests.

(3) Apprehended 24 bandits with Warrants of Arrest.

(4) Achieved Zero drowning on the main beaches. Recorded

only one drowning at Tinley Manor tidal pool during

December 2016.

(5) Performed 1 490 Rescues at the beaches, and treated 3 090 First Aid cases.

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ON YOUTH DEVELOPMENT The KwaDukuza Council took a strategic decision of putting

more focus on youth empowerment due to the fact that youth

make up two-thirds of the KwaDukuza Population. The council

decision was to establish a stand-alone Youth Development

Business Unit that will be led by an Executive Director who will

report directly to the Municipal Manager. The following can be

reported to date:

(1) The process of recruiting the Executive Director is

currently underway and we hope a suitable candidate will

be appointed to take the council vision forward on youth

development.

(2) The council also during the next Financial year will be

approving KwaDukuza Youth Development Strategy. The

final draft strategy is in the process of final refinement

before it is submitted to council for approval.

(3) We also commit ourselves as this council to ensure that

the resolutions of the Youth Summit held in April 2018,

find expression on our service delivery approach.

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(4) As part of 2018/2019 Budget, council has committed

resources towards the rolling out of the following

programmes targeted youth of our municipality,

(4.1) Mass Skilling Programme – providing assistance to

youth that requires drivers licence. The municipality

have a limited budget it will be assisting 62 people.

(4.2) Tertiary Registration assistance programme –

council will continue to apply the phasing out

approach on this programme due introduction of

FREE Education for students coming from poor

families. We have halved our budget as part of phase

out approach.

(4.3) We will continue to work with the National Youth

Development Agency (NYDA) to promote youth entrepreneurship. We are calling all aspirant youth

entrepreneurs to enlist on our database at Youth

Office.

ON SPORTS DEVELOPMENT We will continue to work with all sports federation to futher

develop sports in our area. We would like to rebuild and

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strengthen our federations so that they become leading agents

of sports development.

We are calling private sector to partner with us on the sports

development and supporting our federations.

ON RADICAL ECONOMIC TRANSFORMATION As KwaDukuza Municipality, we are unapologetic that we need

to see significant changes on the business ownership and new

entrepreneurs from the previously disadvantaged groupings;

tapping into various public and private sector opportunities. As

part of the public sector business opportunities, we have done

the following:

IMPROVED OUR SUPPLY CHAIN MANAGEMENT POLICY The approved Supply Chain Management Policy of council sets

a clear process of targeted procurement, which is known as Set

Asides.

We have set aside the following opportunities to be accessed

by local youth owned businesses, women owned business and

cooperatives. Those tender opportunities are:

(1) Plot clearing.

(2) V-drain construction.

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(3) Building maintenance.

(4) Supply of infrastructure for the site offices during the

construction processes.

(5) Cleansing material.

(6) Catering.

(7) Potholes maintenance and Drain cleaning.

The supply chain policy of council also advocates that all work

that is above R4 million, a portion of that shall be sub-

contracted to local pre-selected contractors.

We are also expecting both the LED unit and SCM unit to finalis

the Pre-Qualification Standard Operating Procedure which will

be critical at ensuring that we are able to sub-contract

opportunities for local companies.

PRIVATE SECTOR OPPORTUNITIES AND THREATS TO INVESTMENT: Radical transformation is a non-negotiable issue for us as the

council. We are expecting that the local businesses and

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investors take the issue of economic transformation as part of

their business case.

We want to see business who subscribe on the concept

of “SHARED VALUE” and “INCLUSIVE GROWTH’. In the

next six months, I am expecting that KwaDukuza Municipality

Shared Growth Framework will be developed and approved by

the council.

This policy will ensure that there is a clear process of engaging

with investors and construction companies who are appoint to

sub-contract and develop capacity of local businesses within

various value chain.

We want to be very clear to all those so-called ‘Business

Forums’ who go around and disrupt construction sites in the

name of radical economic transformation, that we are against

all forms of criminal approaches in our projects. They should

refrain on disrupting sites as well as extorting money from

various contractors.

ON THE LOCAL ECONOMIC DEVELOPMENT PLAN The municipality will be developing a Local Economic

Development Plan (LED Plan) for 2018-2022, which I believe

will further assist us in shaping on the kind of the economy and

city we want to see.

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This plan will further consider the changing economy with an

emphasis on reviving some economic sectors e.g. Agriculture,

promote industrialisation of our economy and embraces the

opportunities presented by the Fourth Industrial Revolution.

NOKUKHANYA LUTHULI TOURISM PRECINCT PROJECT The process of appointing the service provider is underway to

develop a tourism project that enhances the Luthuli Museum

and benefits local people. We are expecting that both the

feasibility study and business plan will confirm opportunities for

this area.

STAKEHOLDER MANAGEMENT KwaDukuza Municipality is in the process of establishing the

Local Economic Development Forum. We are calling all

interested parties to register their interest before 10 July 2018.

This forum will facilitate dialogue amongst the economic

stakeholders including government departments.

CLIMATE CHANGE Climate Change remains a key threat to the world peace and

development. KwaDukuza Municipality continues to be a

championed of low carbon development.

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I am proud to announce that KwaDukuza Municipality has been

selected to participate on the Urban Low Carbon Emission

Strategies (Urban LEDS) Phase 2, which is the programme,

which will be implemented in only six countries in the world. We

are part of the seven selected municipalities in South Africa that

will participating in this initiative for the next 4 years. As the Mayor of KwaDukuza, I have committed this council through the Compact of Mayor to become a champion of climate change programmes. As part of my commitment, I would like to call our community to do the following: (1) To embrace the use of energy efficiency household

supplies including energy lighting.

(2) To support the implementation of adopted council Green

Building Guidelines.

(3) To promote urban agriculture.

(4) To plant both fruit and indigenous trees in their yards.

(5) To reduce the use of plastics.

(6) To sort their waste and promote recycling,

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I do believe that all of us have a responsibility to reduce the

impact of climate change.

Undeniably, we have achieved a lot in a short space of time. Which is what brings us here today, to chant a way forward of how we plan to get through the 2018/2019 financial year.

Ladies and Gentleman the total budget for the 2018/2019

financial year is R1,8 billion (R 1, 869 530). The total

operational expenditure is R1,5 billion (R 1, 524 768).

The capital final capital budget amounts to three hundred and forty-four million seven hundred and sixty-two thousand seven hundred and forty-three (R 344, 762 743).

The capital budget relates to projects for which the Council will

be securing the available funding sources either through

borrowings, internal capital funds, grants or other sources.

I am well aware that my presentation comes amidst the release

of the AG’s report that has put KwaDukuza Municipality as one

of three municipalities in KwaZulu-Natal which were liable for

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R1 billion (41%) of the total irregular expenditure incurred in the

2016-2017 financial year.

I want to assure you that I am confident that MFMA Report for

the 2017/2018 financial year will represent a better picture as

per our commitment to addressing shortcomings highlighted by

this report.

We have been hard at work and we have committed to: (1) Monitor and improve internal controls to address gaps in

internal controls, financial management, and related

aspects of MFMA compliance.

(2) Focus on identifying and addressing gaps identified in

supply chain management as well as strengthening supply

chain management processes and procedures to deal

with, and report irregular expenditure.

(3) Developing audit action plans to address findings and

recommendations by the Auditor General.

This is no task for one political party or official to champion, it

requires our collective effort for the interest of all our residents

and this beloved institution. It requires us to have a dream.

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Madam Speaker allow me to borrow the wise words from Poet,

Richard McWilliam from his poem entitled, WHAT IS A DREAM?

“What is a dream?

What is a dream?

A dream is a goal, an inspiration;

A dream is where Hopes Live”

If McWilliam is right in saying that a dream is where hopes live,

then what I am about to present today is our dream because it

is where our hopes will live, it is where the hopes of the

thousands of people of KwaDukuza live and will live for the next

twelve months.

And if indeed this is their dream as I have no doubt that you will

agree with me, we dare not fail them.

During the course leading up to today, we have met as EXCO,

together with Management to look at the draft budget.

Simultaneously we held public participation meetings with the

civil society, sector departments, industry, NPO’s and NGO’s

as well as the Traditional Leadership.

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For the past few months, the Executive Committee,

Chairperson of MPAC, Speaker, Chief Whip, Local Labour

Forum together with the Senior Management held meetings,

where inputs, comments and various options were taken into

consideration.

These meetings were not attended to, as a matter of

compliance, but were done in a manner that would ensure that I

budget yethu ixhaswe yimibono yazo zonke izisekelo nabantu

ba KwaDukuza.

When we left these meetings, it was clear that there was still a lot of work to be done.

There has been consensus across political parties when it

came to resolving to recommend both the IDP and Budget for

approval by Council. It is therefore my sincere hope that the

spirit that prevailed will infuse in this Council meeting as well.

I am stating this, with no intention to supress any dissenting

view, but to indicate that we have consulted extensively during

the budget preparation process.

It is against this background Madam Speaker and Fellow Councillors that as I stand before all of you today to present

the peoples budget.

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LEGISLATIVE REQUIREMENTS Speaker, Section 6(1) of the Municipal Systems Amendment

Act states “a municipality’s administration is governed by the

democratic values and principles embodied in section 195(1) of

the Constitution”. Section 6(2) (a) further requires each

municipality “to be responsive to the needs of local community

and to facilitate a culture of public service and accountability

amongst staff”

Section 21 of the MFMA requires the Mayor of a Municipality to:

“(a) coordinate the process for preparing the annual budget and

for reviewing the municipality’s IDP and budget related policies

to ensure that the tabled budget and any revisions of the IDP

and budget-related policies are mutually consistent and

credible”

Fellow Councillors, I have only mentioned the Constitution, the

Systems Amendment Act and the MFMA. It is however, a harsh

reality that there are more other pieces of legislation which call

for compliance during the budget preparation process.

As I stand here, I want to assure you that we have done

everything possible that we could do during the time available

to us to ensure that we comply with all legal requirements.

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The budget and treasury office has complied with the new

budget formats. Where provincial treasury has provided

recommendations and enhancements to the relevant formats,

these have been incorporated as far as practicable.

In addition, the amendments to the IDP have been considered

in the completion of the 2018/2019 budget. A series of

alignment sessions were under taken between the various

business units, IDP and Budget Offices. A separate item

dealing with the IDP has been tabled for consideration.

TARIFF MODELING AND BUDGET PREPERATION ASSUMPTIONS Madam Speaker, we are proposing that the Municipality levies different rates for different categories of properties for the 2018/19 financial year as follows: (1) 0.74 cents in the Rand on the market value in respect of

residential properties (including bed and breakfast

establishments consisting of three bedrooms or less), and

property categories not stated hereunder.

(2) 0.81 cents in the Rand on the market value in respect of

residential properties used for commercial purposes

(including bed and breakfast establishments comprising

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more than 3 bedrooms, apartment and villa

establishments, and guesthouses of up to six rooms).


agricultural properties and public service infrastructure

properties.


industrial, business and commercial properties, vacant

properties, public benefit organisations, properties owned

by an organ of state and used for public service purposes,

and properties used for worship.


guesthouses of more than six rooms.

(6) An additional 0.36 cents in the Rand on the market value

in respect of commercial properties situated within the

Special Rating Area as designated by Council.

(7) That, in respect of improved residential properties, in

addition to the statutory reduction of R15 thousand, a

further reduction of R85 thousand is approved for

property values exceeding R130 thousand. Persons

owning improved residential property with a rateable value

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of R130 thousand and below will be not be liable for the

payment of rates.

(8) That improved residential property with a rateable value of

R130 thousand and below, owned by registered indigent

beneficiaries be exempt from the calculation of rates.

(9) That the first R50 thousand of all vacant residential

properties owned by registered indigent beneficiaries be

exempt from the calculation of rates.

(10) The first 30% of all Public Service Infrastructure (PSI)

properties be exempt from the calculation of rates.

The following pertinent issues are highlighted for Councils information:

(1) In order to negate the effects of various pricing increases

the average consumer is faced with, the municipality has

maintained a 6% rebate on rates randages from the

2017/18 tariffs.

(2) The main driver of service charges is the increases in the

electricity tariffs. Electricity tariffs have increased by

6.84%. This percentage increase is informed by

consultation papers issued by NERSA.

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(3) Employment costs appear to be increasing at a faster rate

than the growth rate of the municipal revenue base.

There is a danger to the long term financial sustainability

of the municipality should this trend continue. Overall

Employment costs represent 25% of total expenditure.

(4) Depreciation and asset impairment is expected to

increase significantly as a result of the completion and

commissioning of various completed capital projects.

The main challenges experienced during the compilation of the 2018/2019 MTREF can be summarised as follows:

(1) Producing a balanced, credible and funded budget taking

into account realistically anticipated revenues under these

on-going difficulties in the national and local economy.

(2) The need to reprioritise projects and expenditure within

the existing resource envelop given the cash flow realities

and declining cash position of the municipality.

(3) The increased cost of bulk purchases (Electricity) due to

the tariff increase from Eskom which is placing upward

pressure on service tariffs to residents.

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(4) Salaries increases for municipal staff that continue to

exceed consumer inflation as well as the need to fill the

critical vacancies.

(5) Availability of affordable capital or borrowings.

(6) Producing the budget that ensures the delivering quality

services on the ground.

(7) Debt recovery as well as asset management.

The following budget principles and guidelines directly informed the compilation of the 2018/2019 MTREF. (1) The fixed operational cost and contracted services

expenditure to take presiding in the allocation of available

budget.

(2) Review of revenue generation calculation projections to

ensure that all contributing factors are taken into account.

(3) The reduction of variable general expenditure to be in line

with the limited available revenue.

(4) Circular 91 of the MFMA which stipulates that a

municipality that exceeds between 3% and 6% increase in

tariffs should justify such increases.

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(5) Due to such constraints and increasing service delivery

priorities the Tariff of charges for property rates and refuse

will increase by 8% in the upcoming financial year

ensuring that the service delivery standards are

maintained effectively.

Our indigent beneficiaries shall now qualify for 75kWh of free

basic electricity. Child Headed Households shall qualify for 250

kWh of free basic electricity. The municipality is currently

responsible for providing over 17 thousand households with

free basic electricity and over 12 thousand with free refuse

removal.

FUNDING CHOICES AND MANAGEMENT MATTERS Tough decisions on the expenditure side will have to be made

by giving priority to ensure that service delivery is improved in

all aspects as follows:

(1) Supporting of meaningful local economic development

initiatives that foster micro and small business

opportunities and job creation.

(2) Supporting of the day to day operations for provision of

service delivery.

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(3) Expediting spending on capital projects that are funded by

conditional grants and MIG; and

(4) Supporting meaningful special programs for community

groups.

BUDGET RELATED POLICY REVIEW Madam Speaker, the MFMA requires the municipality to review

budget-related policies on an annual basis at the same time

that it is preparing its budget. We have also done as such and

would like to quickly take you through some of the policy

changes that we have reviewed that speak to many of our

constituents:

• Credit Control & Debt Collection Policy: The changes

to the Credit Control and Debt Collection policy

encompass stricter credit control measures. The policy

has been amended to ensure that there are no revenue

leakages within this ambit.

• Rates policy: The changes to the Rates policy are in

terms of the Municipal Property Rates Act and

accommodates the introduction of a reviewed rebate for

developers and special needs households as outlined in

the tariff register. These categories of owners are defined

in the policy.

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• Indigent Policy: The changes to the Indigent Policy are in

terms of National Treasury recommendations. The policy

has been amended to apply the indigent tariffs as

specified. The concessions have been amended as per

National Treasury recommendations.

WORDS OF GRATITUDE Madam Speaker, I want to convey my gratitude to the entire

Management, led by the Municipal Manager, for going beyond

the requirements of section 68 during the budget preparation

process.

The leadership and direction from Chairperson of the Finance

Portfolio Committee, Councillor Jennifer Vallan and Councillors

who serve on the Portfolio Committee during the Budget

process cannot go unnoticed. We also acknowledge the work

of the Budget Steering Committee for its commitment to this

exercise. I also wish to singularly commend the Municipal

Manager, the Chief Financial Officer, the Director: Budget and

Compliance and all the officials who contributed to put this solid

budget together.

If the commitment, unity and selflessness shown by all during

the budget preparation, continues beyond the budget approval,

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I have no doubt that we will be able to implement all projects as

set out in our budget and SDBIP. To the entire administration

thank you very much.

Last but not least, my gratitude goes to all who have taken time

off to look at our IDP, Budget and Policy proposals and

submitted inputs and comments. To all of you thank you very

much, there was no input too small.

CONCLUSION Madam Speaker, Chief Albert Luthuli, former President of the

ANC, addressed the South African Congress of Democrats on

the 1st of February 1958. In his speech entitled, Our Vision is a

democratic Society stated:

“A man has really one speech to make. He may clothe it in

different words, but in essence it is the same speech. Those of

us who are in the freedom struggle in this country have really

one gospel. We may possibly shade it in different ways, but it is

a gospel of democracy and freedom.”

Ladies and gentleman, it is my considered view that the words

of Chief Luthuli, in 1958, remain relevant in 2018. We all have

to preach the same gospel.

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This democracy and freedom should be translated into

uninterrupted effective and efficient delivery of sustainable and

affordable services to all our residents.

Madam Speaker, Fellow Councillors and distinguished guests,

we have just presented a dream, and it is my hope that none of

us will allow this dream to get away.

But that instead, we will turn it into real, measurable and

achievable service delivery targets that will benefit the entire

KwaDukuza general population.

state of the municipality address by the mayor of

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