Statements and Communications

by the Executive Mayor (Dr Ruben Richards)  

delivered at a sitting of council held on 14 May 2024, Clanwilliam Council Chambers

Item 7 of the Agenda

Title of Speech delivered by the Mayor

FROM BANKRUPTCY TO A FUNDED BUDGET:

The intricate balance between economic growth, fiscal sustainability, and service delivery excellence.

Salutation

Mr Speaker, fellow councillors, representatives of the administration, members of the public, residents of the Cederberg at large, ladies and gentlemen.

Good morning.

A noisy global and local environment

This council meeting takes place on the eve of our country’s national elections scheduled for 29 May 2024, just over two weeks away.  The South African atmosphere is saturated with the noise of promises made by competing political parties.  This 2024 national election is historic for a number of reasons worth mentioning. First, it is historic because it allows independent candidates to compete on the ballot paper. Second, it is historic because of the number of political parties competing. Third, it is historic because for the first time there will be three ballot papers. 

It is a sobering and disturbing fact that 350 South African political parties registered with the IEC for this 2024 election.  The USA with almost five times the population of South Africa only has two political parties.  Fortunately, after processes of verifications and objections received by the IEC, only 70 political parties, and 11 independent candidates were published as final contestants in these upcoming elections.  I think we will need a week of public holidays just to recover from the voting process.  

Of course, we in the Cederberg have also had our fair share of political noise.  We have just come through a by-election in Ward 3 (Clanwilliam) with Cederberg Eerste coming out the winner in that by-election.

Mr Speaker, in addition to our local challenges, this council meeting takes place at a time when the world is in turmoil.  No sooner had the world readjusted and recalibrated itself to a post-Covid situation, when many conflicts around the world suddenly reignited rendering Covid an inconvenient interruption rather than a wakeup call to the fragility of life.  The current and disastrous Middle-East Israel-Hamas conflict dominates news headlines much like the Russia-Ukraine war still does. Other geo-political dramas, horrific killings, senseless violence and ethnic-based conflict in places such as DR Congo, Libya, Sudan, Yemen, Somalia, Myanmar and elsewhere combined with the impact of climate change and an increase in food insecurity are all the factors competing for our attention and emotion as we try to live “normal” lives. 

Good news: Cederberg has turned the corner

Mr Speaker, I mention these contextual matters because I fear that the good news I have to share today may well be drowned out by the noise of the upcoming election and the ongoing global conflicts.  Nevertheless, today I want to share good news with the residents of the Cederberg municipality. And Mr Speaker, I am not referring to the new garbage truck and the ten new bakkies which we have been able to purchase and which I received on behalf of the municipality in the last few weeks.  And no, Mr Speaker, I am not referring to the yellow fleet of digger loaders, bulldozers, skip bins, and skip bin truck which we have also received to enhance our ability to deliver basic services to our people. Instead Mr Speaker, my good news today is that as the Executive Mayor, I am pleased to table a funded budget for consideration and approval by council.

For many years the Cederberg Municipality has been a sinking ship, barely afloat and drifting perilously close to the rocky shores of total bankruptcy.  Today I am happy to announce that the ship has finally turned.  Today, I am happy to announce that we have charted a new course – indeed we have a new fiscal roadmap for our beloved Cederberg Municipality.  I table this roadmap – this funded budget - with a sense of pride and determination.  Mr Speaker, this budget is not merely a financial document, but a testament to our resilience, prudence, and unwavering commitment to the prosperity of our community in the Cederberg.

Mr Speaker, you will recall that in February 2024, when I tabled the adjustment budget to council, the title of my speech was “The Dawn of a new Era”.  We had then begun to see signs of a better fiscal situation for the Cederberg and we have worked tirelessly since then to be able to present to council today a funded budget.  Mr Speaker, the record will show that most of my speeches to council and Mayco over the past two years focussed on our collective and desperate efforts to move the municipality away from bankruptcy a situaion of financial sustainability.

The words Cost Containment and Budget Funding Plan and 154 Support Plan have become our buzz words over the past few months.  As a result of our collective efforts, both within the municipality and with the help from provincial government we have been able to reach a critical point of sustainability with this budget as presented to council today.  In this regard I wish to thank all who have helped us reach this important milestone in the life of the Cederberg Municipality namely a funded budget.

Mr Speaker, it must be stated that the turnaround performance in the 2023/24 financial year and the tabled budget for this 2024/25 financial year confirms a turning point in the financial position of the Cederberg municipality.  However, it is important to be aware that the budget which I present to council today is the result of an intricate balance between economic growth, fiscal sustainability, and the quest for service delivery excellence.

The current year-end witnessed a commendable improvement in the collection rate, rising to 94% from 91% in the prior financial year. This uptrend aligns with the decline observed in consumer debtors, signifying a positive trajectory. The significance of maintaining a robust collection rate cannot be overstated, as it underpins financial sustainability.

Faced with a myriad of challenges and uncertainties, maintaining the financial sustainability of our municipality has been an arduous task.  Yet, through sheer determination and collective effort, we have persevered. Today, we present a budget that is funded, a budget that reflects our steadfast resolve to navigate the stormy waters of fiscal constraint while charting a course towards sustainable development and growth.

In compiling the budget for the fiscal year 2024/25, the team was guided by a series of critical factors that underscore the intricate balance between the economic growth, fiscal sustainability, and service delivery excellence.Going forward the municipality must keep the focus on cost containment to ensure savings on unnecessary operations.  This will result in a significant improvement in overall operations. 

In the interest of service delivery we have ensured that the repairs and maintenance budget has been optimised to prioritize the curtailing of excessive distribution losses pertaining to water and electricity services. Inclusive is the execution of critical repairs and maintenance, with a prioritisation on improving efficiency and minimizing potential disruptions to service delivery.

In short, the Cederberg municipality must maximize her revenue generating potential and collect what is due and concurrently, eliminate wasteful and non-core spending.  The municipal budget has been scrutinized to ensure that the municipality adequately provides for her core mandate and to service debt obligations.

We will explore all possible efficiencies including testing the market for service providers who could provide or facilitate the provision of basic and other services at more affordable rates. We will use the mechanism of a Request for Proposals to test the market in this regard as a way to bolster our efforts to build revenue and serve our people at the same time.

Broader economic landscape

Mr Speaker, as we dive into the granular detail of our local budget, it is imperative that we also reflect upon the broader economic landscape that shapes our micro decisions.  The year 2024 brings with it a set of challenges and opportunities that demand our utmost attention and prudence in financial planning.  I would like to highlight five such challenges and opportunities.

1. South African Economy and Inflation Targets: Our nation stands at a crucial juncture where municipalities are tasked with playing a pivotal role in igniting economic growth. It is imperative that we implement initiatives aimed at attracting investments to stimulate our local economy. Despite challenges such as inflationary pressures and global economic uncertainties, we remain steadfast in our commitment to fostering an environment conducive to growth.
2. Global Economic Outlook and Power Challenges: The global economic forecast for 2024 presents a mixed bag of challenges and opportunities. While we anticipate a modest growth trajectory, we must acknowledge the persistent power challenges that have plagued our nation. The power cuts loom large, necessitating a concerted effort to mitigate their impact on our local economy.  Let’s hope that the word loadshedding will soon be removed from our lexicon.
3. Government Fiscal Constraints: The stringent fiscal environment characterized by reduced grant funding and cost containment measures, poses significant challenges for municipalities across the country. As such, we are compelled to maximize our revenue-generating potential while exercising prudence in expenditure management.
4. Financial Risks and Challenges: Despite our best efforts in navigating financial risks, challenges persist, particularly in relation to key infrastructure projects such as the Regional Landfill site and Refuse Transfer Station. It is incumbent upon us to bolster our revenue streams, eliminate wasteful spending, and ensure the prudent allocation of resources to meet our core obligations.
5. Revenue Management and Cost Effectiveness: The efficient management of municipal operations, processes, and procedures are paramount to our financial stability. Any inefficiency in this regard directly impacts our fiscal health, underscoring the need for operational excellence and cost-effectiveness.

Key priorities for Cederberg

In light of these overarching considerations, the budget framework for the fiscal year 2024/25 is structured to address key priorities while maintaining fiscal discipline and sustainability.  I would like to mention four such key priorities.

Expenditure Framework: Our expenditure framework is guided by the principles of fiscal prudence, operational efficiency, and service delivery excellence. We are committed to ensuring a balanced budget, where operating expenditure does not exceed operating revenue, except where supported by uncommitted cash-backed reserves.

Revenue Enhancement and Tariff Rationalization: To bolster our revenue streams, we are adopting a multi-faceted approach that includes the rollout of new projects aimed at increasing revenue, such as the implementation of smart prepaid meters. Furthermore, tariff-setting has been approached strategically to ensure that charges are reflective of the cost of service provision while balancing affordability for all residents.  At the same time we will be exploring the open market for service suppliers using the Request for Proposals approach.   

Indigent Management and Smart Metering: In line with national policy directives, we are expanding our indigent management initiatives to accommodate more households in need. The installation of flow water meters and smart prepaid meters for qualifying households will not only ensure compliance with regulatory guidelines but also enhance revenue collection and mitigate losses.

Tariff Adjustments: Proposed tariff adjustments have been carefully considered to strike a balance between affordability and financial sustainability. Increases in property rates and service charges have been proposed in accordance with National Treasury guidelines, ensuring that the burden is equitably distributed across the community.

Conclusion

In conclusion, Mr Speaker, as custodians of public funds, it is incumbent upon us to exercise prudence, foresight, and accountability in the management of municipal finances. The budget for the fiscal year 2024/25 reflects our unwavering commitment to fiscal discipline, service delivery excellence, and the sustainable development of our beloved Cederberg Municipality.

Together, let us embark on this fiscal journey with determination, integrity, and a steadfast dedication to the prosperity and well-being of all our residents.

Thank you

 https://www.gov.za/news/media-statements/electoral-commission-progress-made-preparation-2024-national-and-provincial

(2022) WHEN THE TAPS RUN DRY IT IS TOO LATE.  STATEMENT AND COMMUNICATION BY EXECUTIVE MAYOR. Item 05 of the Agenda of Special Council meeting held 28 February 2022

(2022) TOWARDS A FUNDED BUDGET AS WELL AS  FOCUSED AND SUSTAINABLE SERVICE DELIVERY:  A call for going Back to Basics in the Cederberg Municipality.   STATEMENTS AND COMMUNICATION BY THE CHAIRPERSON, Dr Ruben Richards (Mayor), submitted to Mayco meeting of 25 April 2022.

(2023) BEING BUSY WITHOUT LOSING FOCUS OF THE VISION:  The challenges of operating in a crisis mode.  Mayoral Speech delivered at Mayco meeting held 23 August 2023, Clanwilliam Council Chambers (by Executive Mayor, Dr Ruben Richards)

(2024)  THE YEAR OF GOOD GOVERNANCE IN THE CEDERBERG: Service delivery protests, Ministerial protests and the quest for clean water.  Mayor’s speech to Mayco 25 January 2024 (10h00)

(2024) THE DAWN OF A NEW ERA:  Adjustment budget speech by the Executive Mayor, Dr Ruben Richards, delivered at a sitting of a Special Council meeting of the Cederberg Municipality held 28 February 2024 in Clanwilliam Council Chambers.

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Week: 17 - 23/ 05 / 2024

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