Buffalo City is definitely a metro and is viable

YOUR leader page article “Metro label incongruous” by Glen Hollands published on June 8, gave one some food for thought.

The article is an interesting mixture of fact, non fact, opinion and dinner table gossip, which leads one to have the need to at least correct the facts.

There is little we can do to correct the dinner table gossip but hopefully if you focus on the present reality of Buffalo City, there will be a clearer focus on what is developing in our municipality.

Possibly the most important issue which needs clarity is: “What is a metro?”

This is a hotly debated issue in BCMM. The answer has nothing to do with the amount of the city’s budget but everything to do with its nature. A metro is a category A municipality and is clearly defined in the Municipal Structures Act Chapter 1 section 2 as:

“A conurbation [city] featuring areas of high population density, an intense movement of people, goods and services, extensive development and multiple business districts and industrial areas;

A centre of economic activity with a complex and diverse economy;

A single area for which integrated development planning is desirable, and

Having strong interdependent social and economic linkages between its constituent units.

When this definition is applied to the BCMM it is clear that when taken as a whole East London, Mdantsane, Beacon Bay, Gonubie, West Bank, King William’s Town and Bhisho meet the requirements for being classed a metro.

In fact Buffalo City has in reality been a metro since 2000 but political decisions were taken that certain provinces such as the Western Cape, Eastern Cape, KwaZulu-Natal and the Free State would have only one metro. This has now been rebolster viewed, hence the existence of BCMM.

The second issue on which Hollands spends some effort is the financial viability of BCMM. Bear in mind this is not a comparative study but a specific one.

The question to be asked is: “Is BCMM financially viable?”

There are two approaches to answer this question. The first is to use an independent assessment by the agency “Ratings Africa” which issues an annual report.

It calculates the Municipal Financial Stability Index (MFSI) in which it defines financial sustainability for a municipality as “the financial ability to deliver services, develop and maintain the infrastructure required by its residents without unplanned increases in rates and taxes or a reduction in the level of services and the capacity to absorb financial shocks caused by natural, economic and other adversities without external financial assistance”.

Its table of individual scores of metros makes interesting reading. The rating of the eight metros is as follows in descending order of sustainability: 1. Cape Town 63 2. Buffalo City 59 3. eThekwini 53 4. Ekurhuleni 47 5. Manguang 43 6. Nelson Mandela Bay 36 7. Tshwane 32 8. Johannesburg 26 This table is very encouraging and is current. Hollands’ article spans a number of years and (as is the habit of people at dinner tables) dwells on those issues and facts which project a negative picture to his premise that BCMM is in dire straits.

Let us rather focus on the positive. The present ANC led council has been in power for a year. During that time it has taken an in-depth look at our situation.

Under the leadership of the mayor, deputy mayor, chief whip and speaker the council has worked with officials under the municipal manager to review policies and address problems.

Areas which have been addressed are the supply chain process, revenue enhancement and credit control, capital spending, repairs and maintenance and an effective staff structure which will promote teamwork between officials and the councillors.

A closer look at the 2012/13 budget will be most instructive – in the interests of brevity I will list some highlights.

• The budget is cash backed – all items in it can be paid for from available cash.

• Cost coverage is that length of time a municipality could meet its financial obligations if it had no income. In some of the metros this time is as little as a week; in BCMM’s case it is 3.4 months – a very healthy position.

• Provisions for bad debts and depreciation are cash backed.

• General expenses have been increased in total from this year’s budget only by fuel increases and contractual increases.

• Repairs and maintenance for roads have been increased by 30% over the 2012/13 year.

• Repairs and maintenance are being moved towards the 10% level of revenue and increased in total by 20, 17% in the 2012/13 budget.

• The surcharge on electricity will be ring-fenced for improvements to the main network.

• Trading services are being brought to the position that they have a balanced revenue budget, in other words they raise what they cost to operate.

• Employee costs are held at 26% of operating expenditure.

• R174-million of capital and operating projects are paid for by own funds generated by the municipality (cash).

Much is made of a tariff increase above a 6% inflation figure and there is a demand to keep increases to 6%.

If one factors in the fuel increases and realises the city is expanding rapidly at present, logic would indicate the city’s finances would deteriorate rapidly as the income would not meet the rising costs, therefore larger increases are planned.

The total budget for 2012/13 is R4.715billion. The city is a big business which needs to be well managed.

We have gone through a rocky road to reach where we are and there is much that is still wrong and needs to be corrected. The process is not easy, and particularly the cleanliness of the city needs urgent attention.

There is a confidence in council we are on the right track and this next year will bring further improvement.

Hollands might want to note the graduation of audit opinions from worst to best is as follows: a disclaimer, an adverse opinion, qualified opinion and unqualified opinion. Two years ago we had a disclaimer in which the AG said he could not give an opinion; last year it was an adverse opinion which is an improvement but nowhere near where we want to be.

We have an audit strategy developed in close cooperation with the auditor-general’s staff which I am sure will yield positive results.

Our city is a wonderful place and we need to accept the responsibility to improve it for our children.

John Badenhorst is a BCM councillor