eThekwini’s massive budget

2013-05-16 00:00

HALF of eThekwini Municipality’s massive war chest for capital projects in the next financial year is already speeding through the administration’s tender system.

And the other half of the R5,4 billion capex budget — the largest in the country — will be allocated in the next few months.

The bulk of the spending will be on electricity and water, said city treasurer Krish Kumar, addressing members of the Durban Chamber of Commerce and Industry (DCCI) yesterday on the municipality’s forthcoming budget of over R33 billion.

DCCI and its members played a major role in helping formulate the budget, having requested — and been granted — input early on.

“We appealed to the city to allow us to have input before the process began and not when it ended. That was afforded to us in November,” said DCCI chief executive Andrew Layman, adding that their suggestions were largely accommodated.

The key phrase to emerge from these discussions was “balance” — the art of stimulating business while honouring social demands like housing and basic services.

Layman and Kumar said the budget had achieved this difficult aim.

Kumar said the municipality’s much-maligned procurement system had been overhauled to make sure eThekwini got “bang for its buck”.

“From July, tenders will be benchmarked against 100 top items for price and quality. And if any tenders are deemed unnecessarily expensive, the whole process will start again.

“There will be a full audit trail for all contracts and a new quotes management system will help slash the entire process of awarding a tender to about two months.

“Until recently, the norm was six months,” said Kumar.

Presently, the municipality has R5 billion cash on hand, which it is required to hold to ensure it retains strong credit ratings.

Kumar said this did not mean the city was “cash flush”, but that it had liquid reserves for 96 days, a crucial consideration for ratings agencies.

The benefit is seen when it comes to borrowing, allowing for ease of access to loans and better terms.

Kumar said eThekwini has borrowings of R10,6 billion, more than half of that used for water and electricity infrastructure.

Servicing these vast sums works out to seven percent of costs. “Is it sustainable? Yes,” said Kumar.

While the city has seen gains in productivity in its solid waste and water departments, it still faces challenges in the informal business sector, where more than 20 000 enterprises are operating without any direct contributions to the economy through licences or taxes.

This, Kumar said, was being addressed and Layman backed any efforts to level the playing fields for compliant businesses.

Kumar also opened his arms to the business sector, pledging support for projects that promised positive yields.

“Any project that offers return on investment where we spatially need to open up, we will support you. We will find the money.”

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