Despite near bankruptcy at the Ilembe District Municipality, mayor Sduduzo Gumede is confident he and his team can turn things around.
In an exclusive interview with the North Coast Courier on Monday, mayor Gumede shared some insight into the municipality’s financial troubles and their strategies to overcome them.
Admitting that poor planning and financial management was the main cause of Ilembe’s problems, Gumede, who has been in his position since August last year, said he was working closely with councillors and the municipality’s finance team on a three-year turn around plan.
One of their strategies to improve revenue collection was to change the sewage tariff system from consumption-based to property evaluation.
This came into effect from July 1.
“We maintain that those who can afford to pay must pay.
“The new tariffs basically see that people with larger properties pay more than those with smaller ones.
“This will work in the municipality’s favour, although some businesses with large properties were unhappy. If you take a house in Stanger Manor for example, which is worth say about R1 million, they will be paying a lower tariff fee than what they previously paid when tariffs were based on consumption.
“Another advantage is that the fee is now set which makes planning easier for both the rate-payer and the municipality. Previously, people of lower and middle income were actually paying more than those with a high property value which is strange as far as I am concerned.”
The mayor also confirmed that the municipality is still engaging with businesses on the matter.
“The higher you go, the more expensive it becomes in terms of property evaluation. That is why we are looking into capping the fee at around R5 million.
“What we want to achieve is to recover what we are spending annually on the sewage system which is about R57 million.”
Despite cost cutting measures, Gumede said it would take a while before the municipality became financially stable.
“We inherited a municipality that was already in trouble and we are trying to fix it. Just because we get a clean audit does not mean we are stable. It means we know what we are doing with our money.
“What was seen as a budget always presented problems. When you draft a budget you estimate and Ilembe’s projections were way above what they managed to collect. If you took away the grant funding, there would not be a municipality.”
For years, one of Ilembe’s main problems was the low revenue collection rate which has recently started to improve from around 55 per cent to about 70 per cent in the current financial year.
The drought and continuous challenges with providing water added further fuel to fire. Hiring of water tankers during the drought cost the municipality about R82 million in unplanned expenses.
“Our core function is to provide water and sanitation and the focus is on the rural areas. There are still many people who do not have basic services.
“Our water coverage is about 70 per cent as we cannot count boreholes which dry up periodically. Water is a big challenge in Maphumulo and Ndwedwe.
We still have tankers travelling to and from these areas to deliver water.”
Another cost saving drive relates to the municipality’s human resources.
According to the mayor the municipality employs about 600 staff and about 34 per cent of the collected revenue goes toward salaries.
However, the municipality has frozen the external hiring of employees, choosing rather to look at transferring staff internally or up-skilling to fill vacancies.
The municipality is also clamping down on illegal electricity connections that set them back around R75 million in the previous financial year.
“Those who can afford to pay must pay and those who cannot will be subsidised by government” said Gumede.
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