Budget Speech by the Executive Mayor of Garden Route District Municipality

30 May 2023

Honourable Speaker, Deputy Mayor, Councillors, Municipal Manager, officials, and members of the public, I want to welcome you at this stage of the tabling of my budget.

It is privileged to be here and to table the 2023/24 MTREF Budget to the council for approval. It is my pleasure to present to you a fully funded budget, given the Municipality’s financial position. The MTREF budget is projecting a deficit of R5.7m (2023/24), R6,2m (2024/25) and R7,7m (2025/26). However, it is comforting that although we are budgeting for a deficit the budget is fully funded, through the cash-backed reserves.

The total budgeted revenue for the Municipality is R526m and the total budgeted expenditure is R R532m. Our two main sources of income are the Equitable Share, which is R178m, and the Roads function allocation of R193m. This means that more than 70% of our income is derived from these two allocations. The roads allocation can only be used to finance Roads Department activities, which include resealing, re-graveling, maintenance, and upgrading of roads.

The budgeted road allocation includes capital project allocations of R 91m. The breakdown of these is as follows:

The remaining amount of R R101m will cover operational expenditure for the Roads and Transport department.

On 15 May 2023, I and the Provincial Minister of Infrastructure, Tertuis Simmers, visited the Gwaiing Project and we were all happy with the progress on the construction of this road. It was agreed that the project will be fast-tracked to ensure that it is delivered earlier than planned but within the available budget.

I was personally pleased to see considerable investment in EPWP workers. These projects are not only about building roads but do create much-needed employment within the region. Our EPWP workers are also being upskilled and enrolled on NQF level 2 Road Construction Course, as well as Learners and Driver’s Licenses. This project alone created 40 EPWP working opportunities. In essence, it has put bread on the table of 40 families. This process of appointing EPWP’s is replicated in other projects as well. At this stage, I would like to show gratitude to all our roads staff, from the Executive Manager to the person in his or her little corner. We are one of the best-performing roads department, although as others, we do face challenges.

The other functions and projects of the GRDM are financed mainly from the Equitable Share Allocation of R178m. This allocation will never be adequate to finance our ambitious programs or merely our function as envisaged by Section 84 of the Municipal Structures Act. The equitable share over the MTREF period grows at a slow pace. The Equitable Share only increases by about 3% per annum (R5.6m), and that is not sufficient to ensure the financial sustainability of this municipality, as it is below the annual CPIX.

If one excludes the Roads income from our budget, the remaining main revenue source to finance projects outside the roads department is R333m. More than 50% of this income is from the Equitable Share.
In addition to the Equitable Share, we apply for and received conditional grants to the value of R40m. This brings the number of Transfers from National and Provincial Governments to R220m. This means that 66% of the revenue to finance GRDM is from transfer income. This excludes the income from various SETAs which is about R15m. The reality is that the Municipality must continue to explore alternative sources of income in order to deliver on its legal mandate. This is exactly what we have been busy doing over the past few years

Our limited revenue resources have compelled the GRDM to pursue additional income sources in order to deliver the services in the region and this remains a challenge as we have limited own income sources. Turnaround strategies are compiled for properties and resorts and alternative revenue enhancement strategies are being explored – for example becoming a water services authority.
The GRDM has developed an investment prospectus containing regional catalytic investment opportunities across the Garden Route. The purpose of the prospectus is to display the region’s investment-friendly climate and its economic activities and opportunities to the national and international business community and in so doing, attract new investments and retain and expand existing investments in the Garden Route region.

The prospectus includes the investment opportunities of all seven (7) municipalities within the boundaries of the region, as well as the District Municipality’s specific opportunities. The investment opportunities identified for our region amount to more than R508 billion. These projects are classified as medium to long-term projects. As can be seen from the value of these projects, they cannot be financed through the current municipal resources. A task team will be established to ensure that credible business plans are compiled and submitted to relevant private (local and abroad) and public institutions for possible investments.

This prospectus can be accessed here https://invest.gardenroute.gov.za

Having been faced with the above challenges we have managed to allocate funding to various projects that are key to our communities. We have made available R4,2m to fund the EPWP projects. I have already explained the importance of this funding. In the LED and Tourism section, we will be providing much-needed assistance to the SMME’s to the tune of R600 000, amongst few projects in this area. An allocation of about R 15m has been made to create employment and provide skills to our youth, through our Skills Mecca projects. Thanks to various SETAs and various government departments for their financial contributions to this project. Further details about this exciting project can be found in our investment prospectus above.

Part of our strategy is to ensure that we turn around our resorts to generate much-needed revenue for the GRDM. We have therefore made provision for R9.5m for the resorts. We have also budgeted R14m income from the same.

Our Capital projects amount to R159m. The major projects are the construction of the Regional Landfill site and the Fire Station. Both these projects are regional projects, and they will be serving the region. The Construction of the Fire Station is at the advanced stage and the Landfill site will be starting in June 2023.

The GRDM embarked on a procurement process to obtain borrowing to finance the landfill site construction. An intensive tender adjudication process was followed. Consequently, after consultative process with all the participating municipalities to analyse and determine the best and most appropriate tendered loan option, it was collectively decided that the preferred option of the tenders offered would be clearly the 10-year loan. This loan will have an all-in floating rate of 6.89% and is offered by Standard Bank.

GRDM has negotiated service-level agreements with participating b-municipalities. It is imperative that the participating local municipalities provide a signed SLA, indicating the participation for 10 years. The tariffs are included in the GRDM tariff structure to cater to the provision of this service. A Regional Waste Management Facility Project Steering Committee has been established, consisting of various sections to provide inputs and assist the project manager to ensure that the project will commence and be completed as per the timeframes set up.

Finally, I would like to thank the Municipal Manager and his management team for the sterling work they have done in ensuring a funded budget for the institution. There is still a lot of work ahead in order to realise the projects that are part of our investment prospectus. To that end, a task team will be established to ensure that credible business plans are compiled and submitted to relevant private (local and abroad) and public institutions for possible investments.

The attached detailed budget is therefore submitted for approval by this council.

Yours in Governance,
Alderman Memory Booysen