Infrastructure development and the proper maintenance of existing infrastructure will serve as key ingredients for social cohesion. This is according to Mandla Nkomfe Gauteng MEC for Finance. Addressing members of mayoral committees responsible for finance, accounting officers and other finance professionals and finance stakeholders, Nkomfe appealed for creativity, resilience and prudence among municipalities if they are to survive the difficult times.
The Finance Municipal Indaba is a forum convened by the Gauteng Department of Finance to ensure there is constant engagement between the provincial government and the local sphere on matters of mutual interest. Nkomfe, in his capacity as Finance MEC, tables the resolutions of the indaba to the Premier’s coordinating council.
Nkomfe called on municipalities to take some practical actions such as reducing costs on non-core expenditure without hampering service delivery, focus leverage on other resources and revenue streams for enhanced service delivery. The current challenge faced by Gauteng municipalities is that their tariff structures do not comprehensively appreciate the cost of providing services, particularly the labour cost as an input factor.
The hike in electricity prices will not make the mission easier. The South African increase in demand for electricity is correlated to the rate of economic growth. Currently Gauteng has 15 distributors that contribute to the supply value chain and municipalities are the key drivers in managing both the supply and demand sides.
Given the current economic climate it is likely that electricity will play the role of subsidiser for other services adds Nkomfe. However the higher inflation increases may see the shift in cash revenue from other services to electricity as an essential service.
Whilst Eskom has established a demand side programme, Nkomfe is concerned that the role played by municipalities has been minimal. This then may have not addressed an important gap in the analysis; that looks at all services, establish the extent to which tariffs cover municipal overheads and the extent of cross subsidisation by electricity services.
Enquiries:
Khusela Sangoni
Cell: 079 510 5408
E-mail: gsscmedia@gauteng.gov.za
