Ekurhuleni limits tariff increases and invests in small businesses and infrastructure

“We are adapting to new ways of doing things and this is indeed the new normal,” said Dr Nkosindiphile Xhakaza on Friday, 26 July 2020, when he kicked off the City of Ekurhuleni budget webinar with Business Day.

Despite current social and economic uncertainties, the MMC for finance and economic development brimmed with optimism as he delivered the 2020-21 budget. Key highlights include relief from the economic effects of COVID-19 and strategic investments in economic development and infrastructure.

Watch the City of Ekurhuleni’s full budget webinar:

 

Budgeting in the time of COVID-19

“The COVID-19 pandemic has had major health, economic and social effects on every human being here in Ekurhuleni and throughout the world,” Xhakaza said. “The most affected area of our work is revenue collection.”

The city will lose at least R1.2bn in revenue as a result of the pandemic. Therefore, the medium-term revenue and expenditure framework capital expenditure of R7.4bn has been lowered to R4.9bn for the financial year 2020-21.

Xhakaza wants to lessen the economic burden of COVID-19 on communities. “The global growth forecast for 2019 was the lowest since the 2008 financial crisis. We are in a difficult global and domestic environment,” he said.

Of the city’s R149.8bn medium-term revenue and expenditure framework budget, R46.6bn has been allocated to the next financial year. R41.7bn will go to operating expenses (the cost of running the city) and R4.9bn will go to capital expenses (developing the economy and infrastructure).

Tariff relief and increases

Xhakaza said there will be no increases in municipal tariffs under the city’s control, including assessment tariffs, refuse removal, burial and cemetery costs, and the municipal bus service.

For services provided by external stakeholders, the following increases will apply:

  • Water: 15% increase
  • Sanitation: 11% proposed increase
  • Electricity: 6.23 – 8% increase

Xhakaza said the social package will increase by R300m from R3.8bn to R4.1bn. He also announced a relief package for the poor that includes:

  • 100% rebate on assessment rates
  • Free refuse removal
  • 100kWh free electricity a month
  • 9kl of water and sewage free each month
  • Special rates on emergency services
  • Free burial

While the city cannot cancel anyone’s debt, it will suspend interest on debt from 1 April 2020 for six months, extend debt repayment, and offer incentives for people paying their accounts on time.

Creating opportunities

Xhakaza allocated R80m to the Ekurhuleni Community Enterprise Development Fund to support and develop small businesses in the community. The city created 7 086 job opportunities last year and supports 1 148 young people through a community bursary scheme. “When we invest in the skills of young people, we invest in the economy,” Xhakaza said.

“We’re also looking at injecting about R56m in the next week or two to support small businesses ranging from co-operatives to township businesses like spaza shops,” said Caiphus Chauke, head of the department of economic development. Chauke outlined how the city plans to grow the township economy and the manufacturing sector.

A city at work

“The City of Ekurhuleni is an important manufacturing hub in South Africa. We are a city at work,” Xhakaza said. Key budget allocations for the 2020-21 financial year include:

  • 6m to revive the economy
  • 6m towards the Aerotropolis master plan and engineering economic infrastructure in Kempton Park, Benoni, Edenvale, Germiston and Alberton
  • R11m to build the link bridge between Rhodesfield and OR Tambo International
  • 6bn to build houses for people in need
  • 1bn for water and sanitation
  • 2bn to handle power interruptions and outages
  • 2m to the department of health

To read the full budget and to participate in the city’s projects and initiatives, visit www.ekurhuleni.gov.za.

If you have any questions for the City of Ekurhuleni, please feel free to email them on Business@ekurhuleni.gov.za