Tariffs kill city businesses

2014-01-16 00:00

THE first signs of the negative impact of the Msunduzi Municipality’s massive electricity tariff increases have become evident, with several businesses announcing their immediate or imminent closure.

Michael Selby has a sign outside his Mayor’s Walk Internet cafe, announcing its closure at the end of this month.

He is not the only casualty of the city’s commercial tariff hike of well over 900%.

In downtown Pietermaritzburg, the long-established Popatlall Kara’s is having a closing down sale and Nafique’s Boutique has already closed. Popatlall Kara’s is one of the city’s oldest sari and Eastern wear fashion houses.

Others — like the Soni Jewellers stores, which have been in business in the city for 120 years, and Berjak’s Picture Framing, which has operated for over 46 years — have adopted a wait-and-see attitude.

Chris Berjak is waiting for the National Energy Regulator of South Africa’s (Nersa) decision on the tariff before deciding on whether to close.

Hemantlal Soni joined forces with other businesses and, at a meeting yesterday, a decision was taken to fight the municipality on the tariff issue. “We are not going to sit back and allow the municipality to walk all over us. With these tariffs we can neither balance our books nor can we pass on the increases to our customers, because they are the working class and already burdened,” Soni said.

He added that momentum around their cause was building up. “We already have the full support of attorneys and senior counsel, who are prepared to take our case free of charge,” Soni said.

However, Selby is not prepared to wait; his mind is made up.

“If they are made to change this tariff, they will try to get the money some other way. It is not just the tariffs, it is the way they spend our money. Instead of fixing the potholes or getting more traffic police, our money is being spent on concerts and brick roads. Quite frankly, I am gatvol,” said Selby.

The sign outside his shop says, “We apologise for the inconvenience that will be caused by losing the Internet cafe, but there is nothing we can do, as the municipality is bleeding us dry.”

Four people, including Shelby, will be jobless. “With the rate of unemployment in this country, how can the municipality justify their increases, when all they are doing is adding to the unemployment rate?” he asked.

“I cannot increase my prices as my customers cannot afford to pay the amount that I would have to charge to stay alive,” said Selby.

Fazila Bhamjee has cajoled the downtown business community into fighting the tariff increases.

Bhamjee said that many had no choice but to fight, because their shops were their bread and butter. “We have to fight this or how else are we going to support our families? We don’t have the luxury of being able to close.”

Bhamjee said the business community was infuriated by the lack of feedback from councillors and officials. “In past elections, ANC councillors came to us for funding and support. Now when we call them about this tariff increase, they turn their backs on us. “We are going to fight them for bleeding us dry and killing local business. We are also fed up that this has been dragging on. The municipality is blaming Nersa,” Bhamjee said.

A survey conducted by the SA Chamber of Commerce and Industry (Sacci) found that businesses under pressure from increasing costs might soon start passing the increases to consumers.

Sacci CEO Neren Rau said small and medium enterprises surveyed said they were worried about the high cost of doing business, particularly due to electricity prices, municipal levies and the cost of complying with regulations.

Rau said the national chamber was aware of the local tariff issue and had fully supported the Pietermaritzburg Chamber of Business (PCB) in its representations to Nersa.

He said businesses did not have the capacity to absorb costs in the present economic climate. In Pietermaritzburg, however, the increases were too high to pass on to customers. He said such hikes end up with disastrous consequences: businesses close and jobs are lost.

Rau said municipalities needed money to fund their operations and raising tariffs was an easy way to get that money. However, money could also be found if inefficiencies were addressed.

“There is a need to deal with these inefficiencies as municipalities will reach a point where they simply cannot go on raising tariffs. Communities are also beginning to fight back because they are tired of throwing money that disappears down a bottomless pit, and there is little to show by way of service delivery how the money is being spent,” Rau said.

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