Director of Proceedings,
Directors of Livingstone & Leandy Incorporated,
The legal fraternity,
Members of the Media,
Ladies and Gents
Protocol is observed.
We are extremely delighted to our host, Livingstone & Leandy for affording us this opportunity to address this august business breakfast on behalf of eThekwini Municipality. We are particularly excited because this address takes place during May, which is recognised as Africa Month, when we recommit ourselves to the renaissance of our Continent.
Mindful that most of us still have a long day ahead of us, we shall sparingly use this time to raise only few pertinent issues to stimulate the much needed dialogue about the future development trajectory of our City.
What then should be the context of our dialogue? The first important context is the realisation that we live in a changing geo-political, social and economic milieu. Notwithstanding that we have become accustomed to this change the velocity at which this change is taking place confounds us. At the heart of this change is the phenomenon of Globalisation which is having a profound impact on the subject of economics as a whole – to such an extent that it has become the defining process of the present age. Some economists such as Frankel view globalisation as being one of the most powerful forces to have shaped the world economy during the past 50 years. The driving forces behind economic globalisation are:
- A reduction in transport and communication costs in the private sector.
- Reduced policy barriers to trade and investment by the public sector.
- An increase in the availability of and access to information and technology.
- The speed with which information and technology can be transmitted across national boundaries.
The second context that immediately needs to be lifted is that of increasing levels of poverty, unemployment and income inequality, which characterise the South African society. It is clear that achieving the United Nation’s Millennium Development Goals, the international community’s unprecedented agreement on targets towards the eradication of extreme poverty and hunger will depend to a large extent on how well developing country governments manage their cities.
The third context to note is that of rapid urbanisation. Cities are currently home to a nearly half of the world’s population and over the next 30 years most of the two billion-plus person increase in global population is expected to occur in urban areas in the developing world.
The UN forecasts that 61% of the world’s population will be urban by 2030. In contrast, before 1850, urban population of the world was less than 7%. The Cities Alliance predicts that: ‘In absolute numbers, Asia is the epicentre of this urbanisation surge. China will add at least 342 million people to its cities by 2030; India, 271 million; and Indonesia 80 million…Sub-Saharan Africa will add 495 million people over the same period, which equates to 112% of current population.” Undoubtedly, this urbanisation trend has massive policy implications for Cities. For example, we are already experiencing the stresses of this urbanisation pattern. Our City has an estimate of 410 000 informal settlements.
These informal settlements correlate with high concentration of urban sprawl, crime, unhygienic conditions, health and environmental hazards, but more importantly, high incidents of HIV/AIDS and TB, poor education, urban poverty and hunger. At current funding levels and housing delivery patterns, it will take us in excess of 30 years to redress the situation. This is a major challenge that calls for a fundamental rethinking about densities of our settlement patterns closer to employment opportunities and transport nodes and to capitalise on existing infrastructure.
If we continue to build single stand housing as we have been doing, chances are that we will be no land available to build houses. High rise buildings are therefore an answer and these should also accommodate different housing markets, including the gap market.
The last context is that within strategy management literature, there is widespread agreement that most business decision-making does not take place under conditions of certainty. Shifts in consumer demand and preferences that affect the systemic risk in the economy, un-anticipatable events in a firm’s environment, poor understanding of cause-and-effect relationships in a firm’s business activities, and information-processing limitations of human beings, all make it impossible for the outcomes of many business decisions to be known with certainty at the time they are made.
To avoid this uncertainty, to survive and prosper under conditions of constant change, the City of Durban needs to develop what Helfat and others refer to as the “dynamic capabilities” to create, extend, and modify the ways in which it is making business (Dynamic capabilities: Understanding Strategic Change in Organisations.)
Against this backdrop, as a City we need to create five dynamic capabilities:
- Strategy Capability to develop foresights and futures about the city, its spaces and peoples;
- Operational and maintenance Excellence Capability to execute strategy and perform specific actions on time, within scope, budget and based on high levels of quality through established processes, standards and systems;
- People Capability to develop, nurture and attract new talent AND capability to motivate people to take actions that result in dramatic changes in their own lives;
- Place Management Capability to plan for a place and be responsive to citizens’ needs and to manage a specific area on a holistic basis and across boundaries; and
- Utility Management Capability to manage trading services and corporatized entities through compacts, asset management and corporate governance
The development of these capabilities will enable the City to be more resilient even in the face of uncertainty. Having dealt with the context issues, there are five themes that we need to engage you on. First, let us start with a confession. We face serious challenges around the question of democratic governance. We have observed that the modes of traditional community participation in the development process are no longer adequate.
In particular, we have noted with trepidation that professionals like you are totally disengaged and your contributions and voices are conspicuously missing in this dialogue about where the City should be positioned in future. Our Mayor, Councillor James Nxumalo, has challenged us to come up with innovative community mobilisation processes and stakeholder management drives. We want to hear how we can meaningfully benefit from your intellectual capital for betterment of society as a whole -- how you propose to play your civic role in the interest of the poorest section of our community is going to be critical for the City?
We want to provide you with space to strategically engage and constructively influence us on the future planning and development issues facing the City and sustainable solutions for overcoming challenges.
Secondly, our challenge is to improve the integrity profile of our City. In the past few Months we have been in the front pages for wrong reasons. I want to assure you that that season is behind us now.
For example, whereas between July and December 2011, the use of regulation 36 of SCM was about R500 million, in the third quarter this has been slashed to under R50 million and all for genuine circumstances where deviations from SCM have been justified. This clearly indicates that our commitment to clean governance is paying dividends. In all cases of irregular spending internal disciplinary and civil recovery processes are being pursued. In addition, the Anti-Corruption Task Team has been roped in to do criminal investigations on all suspicious transactions and to do lifestyle audits on all suspicious individuals. For this reason no one should doubt our resolve to uproot corruption from whatever quarter it emanates.
The third theme on which I want spend a bit of time relates to budgeting processes. We are in a process of approving our budget of R31, 2 billion for the 2012/2013 Financial Year. This is made up of an Operating Budget of R26 billion and R5, 2 billion of Capital Expenditure. National Treasury has reviewed our proposed tariffs and they found them reasonable and affordable to ratepayers. They were concerned that in terms of revenue foregone as a result of rates rebates, we may be giving too much than is warranted.
In comparison with other Cities, we still lead in terms of best practice on the mix of capital spend, while other Cities have become completely depended on grants for their capital projects. We need to engage with business and other stakeholders to demystify the idea that Durban is uncompetitive City. Rather we must engage on what needs to be improved going forward in terms of sustaining the collection rate and keeping our gearing ratios under constant check.
The fourth theme relates to the challenge of building human capital and social cohesion. We must make our schools to work. We must produce enough maths and science, technology and business management graduates. For this to occur, we must be involved in matters of education and training and provincial, local and school levels. We must contribute resources to programmes aimed at assisting disadvantaged learners to improve their performance rates in terms of gateway subjects.
Very shortly, we will be launching a Winter School Programme in collaboration with the Universities around Durban. We hope this will be an annual event and appeal for business to be partner with us to massif the number of students who participate in maths, science, technology and business studies.
Our society remains divided along racial lines. Events of the past few weeks involving DA and COSATU and the recent saga about painting of the President illustrate how fragile our nation-building project remains. We must do more to build and promote a non-racial society. We cannot afford to see our hard won gains been sacrificed by insensitive creatures. The disrespect shown to President Zuma cannot be condoned no matter how far we want to stretch the notion of artistic freedom.
The last theme is a reflection that if well managed cities offer important opportunities for economic growth and social development. In the next financial year we will open a dialogue about the City Development Strategy up to 2030. This will be an important opportunity to address the content of what this strategy should entail and the infrastructure development priorities and flagship projects that must be implemented to catalyse development along the Corridor to Richards Bay, Portshepstone, Pietermartitzburg and Gauteng.
We do everything in our power to improve the climate for doing business in Durban and to make our City competitive in terms of retention of existing businesses and attracting new business especially in the renewable energy and green economy space. We must unleash the entrepreneurial potential of our young people to obviate dependency on social grants.
Larry Bossidy and Ram Charan argue that “Leadership without the discipline of execution is incomplete and ineffective. Without the ability to execute, all other attributes of leadership become hollow.” (Execution: The Discipline of Getting Things Done). The biggest challenge for Durban to shift from a Good to a Great City is always going to be whether we have the right skills mix to implement our programmes. We need people with the right mindset and technical capabilities to drive us forward.
This is task that we hope to adequately address in the institutional review that is currently underway. From there we will also ensure that we have the right people on the bus to collectively take drive us to the right direction that our City desperately needs.
In closing, we believe that our future is bright. The ball is in our court to make things happen and to translate our vision into reality. Thank you for taking care to wake up early this morning to engage in a dialogue with us about how we propose to address the multiplicity of challenges facing the City of Durban and all her people.
God Bless You!
Your Worship, the Mayor of eThekwini Municipality, Councillor James Nxumalo;
Her Worship, the Deputy Mayor of eThekwini Municipality, Councillor Nomvuzo
The Speaker of eThekwini Municipality, Councillor Logie Naidoo;
Representatives of the Demarcation Board;
Members of the Executive Committee;
Chief Whip, Councillor Stanely Xulu,
Officails of eThekwini Municipality;
Members of the Media; and
All members of the general public
It is an honour and privilege to welcome the delegation from the Demarcation Board to Durban on this occasion when the Demarcation Board is conducting public hearings regarding its intention to incorporate some areas falling outside the boundaries of eThekwini Municipality into our jurisdiction.
As eThekwini Municipality we are aware that demarcation issues are highly sensitive and have in the past led to discontentment where the public„s views have been ignored. On the other hand, we are also mindful that under certain circumstances demarcation processes have become an important instrument for remedying anomalies that impact on service delivery and unifying divided communities, especially in Traditional Areas, and this needs to be supported.
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Statement by City Manager, Mr Sbu Sithole.
On the 26 February 2012 Council took a decision to proceed with disciplinary action against Senior Managers reporting to the City Manager. Consultation has already taken place with the affected individuals, except one who is currently indisposed, around this process.
In this regard, Advocate Van Niekerk has been appointed as Evidence Leader and Mr Philani Shangase, a Labour Lawyer, has been appointed Presiding Officer.
The position at this stage is that nobody has resigned or had any of their services terminated. Council believes that all affected individuals must be subjected to fair and unbiased disciplinary processes and they must be presumed innocent until proven otherwise.
We want to reiterate that no one will be given any favours in this process and that all officials will be treated equally. Therefore, any insinuations that may be created that no one will face the music in relation to the Manase findings are completely unfounded.
The public should note that disciplinary processes for officials reporting to the City Manager are handled differently from the normal procedures regulated by collective bargaining agreements.
Council also took note that there are issues related to the contract of employment of Mr Derek Naidoo, Deputy City Manager: Procurement and Infrastructure, that is unique in that it expired in 2007 and he has continued to work for the Municipality on a month-to-month contract basis. Failure to deal with this matter may not have been Mr Naidoo’s fault. As such we are creating space to also formally discuss this issue with Mr Naidoo.
We appeal to the media not to sensationalise and speculate on issues that are unfounded but rather await processes to unfold. Such speculation may negatively affect families of individuals affected.
Since the beginning of January 2012, eThekwini Municipality has been haunted by the spectre of allegations of corruption, maladministration and fraud.
The Auditor-General’s report on irregular spending amounting to R1, 3 billion for the 2010/2011 Financial Year and the tabling of the Manase Report into allegations of maladministration, fraud and corruption by the MEC for Cooperative Governance and Traditional Affairs, Ms Nomsa Dube, have raised alarm bells about lapses in our supply chain and people management processes. Critical to note is that the Ngubane Report has long before alerted the City leadership and the general public about the same irregularities.
The reputation of the City of Durban has been seriously dented and it will take bold actions to undo the damage that this has had on the City. Understandably, the general public and our stakeholders are concerned about what we intend to do about all these reports. Questions are being asked: Will the alleged culprits face their music? Will there be a cover up?
In response, let us articulate four cardinal principles that will explain our position on corruption in general and to provide a sense of how we hope to confront current challenges facing the City:
· We view corruption as a cancer that needs to be uprooted within our society. As the leadership of eThekwini Municipality we ought to take lead in fighting against this blight;
· There must be no compromises when confronting corruption-- we need to act swiftly against this scourge irrespective of the race, gender, seniority, motives or political connectedness of individuals who are alleged to have acted irregularly. People must know that there are and there will always be consequences for corrupt or irregular practices;
· All affected individuals will be dealt with through the due process and all their legal rights will be respected; and
· Our ultimate objective is that the root causes of corruption must be attacked in their entirety so that the same irregular practices do not recur in other camouflages;
Based on the afore-mentioned principles, we want to assure all our citizens and stakeholders that we will do everything in our power to make sure that we rid the eThekwini Municipality of corruption and to reclaim our reputation as Africa’s Best Managed City.
We are encouraged by the stance taken by our Mayor, Councillor James Nxumalo and all members of the Executive Committee across all political parties, that no stone should be left unturned to address issues raised by the Manase Report once and for all.
We are equally heartened by the fact that our stance against corruption resonates with the positions already articulated by President Jacob Zuma and Premier of KwaZulu-Natal, Dr Zweli Mkhize, that we must give corruption no quarters. We ask you to join forces with us as we embark on this important journey of our life-time to ensure the moral renewal of our City and all its peoples. Let our innate goodness prevail!
The new City Manager of eThekwini Municipality Sibusiso Sithole has promised to tighten all oversight structures within the Municipality, saying this will be accompanied by the implementation of early warning signs to detect when things are likely to get out of hand.
Sithole takes over from Mike Sutcliffe on 3 January 2012 and is expected to hit the ground running. In an interview with Ezasegagasini Metro, Sithole who was born in Johannesburg but grew up in Harrismith in the Free State before moving to Durban post matriculation said, his priority is to make sure that the Municipal finances are used prudently.
“Firstly I will need to assemble a team that will complement my weaknesses and strengths. And I don’t want people who will not challenge me. When I am saying something that is not really right I need a person who will tell me that I am wrong,” said the ardent Orlando Pirates fan.
Sithole is not a stranger in eThekwini as he was once appointed acting Municipal Manager in 2000 following the death of Felix Dlamini. After he gave the reigns to Sutcliffe as City Manager, Sithole said in 2002 he was “retrenched” for operational reasons.
“After leaving the City I worked as a local government consultant and at some stage I was a General Manager within the Corporate Services at Umngeni Water,” he said.
Apart from acting in eThekwini nearly ten years ago, former chief executive of the former Centrals Council and first Deputy City Manager under Dlamini, Sithole has an extensive policy and planning background with a plethora of qualifications in Law studies, Policy and Industrial Relations from local universities and abroad.
He was recently applauded by everyone in the local government sphere for taking uMsunduzi Municipality “out of the ICU” after he turned around the financial affairs of the Municipality that was in the brink of collapse. Now he leaves the Municipality with the bank balance boasting more than R270 million. In eThekwini, Sithole said all that is needed is to go back to the basics and make sure that everything is done correctly.
“The Supply Chain Management needs to be looked at along with the use of section 36. We must put internal controls and look at the tendering system. We should also scrutinise the bid committees and make sure that they are made up of people who are ethical and have the interest of the City at heart,” Sithole said.
EThekwini is well positioned economically, boasting one of the busiest ports in Africa. Sithole said he wants eThekwini to continue being the leading City in Africa. “We must put people first in all that we are doing because this is their City,” he said. Speaking shortly after the announcement of Sithole as the new Municipal Manager, Mayor James Nxumalo said, the whole Executive Committee had confidence in him and believed that he would do the job well. “Sithole satisfied the panel as the best candidate for the job,” Nxumalo said.
We live in crazy times. Water makes up most of the surface are of Planet Earth. Our bodies are made up mostly of water. We depend on water for our existence. But as I write this, the supply of water in eThekwini for the next few years, and indeed in most of our country, is not that certain.
The reasons are complex. In part we have not been very successful in prosecuting illegal connectors. As a result, water losses from illegal connections have only reduced marginally and we have only had around 2ooo customers coming forward to ask for their connection to be regularised.
The other 25 000 unmetered customers that we know of continue to waste water. This means that each day more than 70 million litres of water is wasted in Durban through illegal connections. If we add to this the fact that Government should have completed the Spring Grove dam in 2008 and it is 5 (five) years behind programme, this means that we have not had the benefit of the additional 60 million litres per day (Mld) it would have added to our supplies.
Whilst we are trying to address these issues, we have to accept that we are playing catch-up. We hope to get our legal team enforcing more rigorously. We hope to look at the possibility of a desalination of our municipality, which would give us some 140Mld additional capacity. We are also working on recycling sewage and this will give us around 110Mld. We have the Western Aqueduct project underway and will soon launch the Northern Aqueduct project. These will go a long way to ensure everyone gets access to water.
But we cannot afford to fail in our endeavours to ensure that our city has adequate water supplies going forward. We have already started working with the Durban Chamber of Commerce and Industry, Sapoa and other role players to assist us to deliver. But individually, each of us can also play our part, through voluntarily finding ways to use less water and start treating it as a scarce resource. If we don't increase our supplies and also ensure that we conserve water, then we will find ourselves in serious trouble.
We will not be able to allow further economic development if we do not have guaranteed supplies. We will have to start introducing mandatory restrictions. And we will find ourselves in a Catch-22 situation, not being able to continue to give poor people access to water, the lifeblood of our nation. So the next time you turn on the tap, think about this scarce resource and what you need to do to ensure that we have enough water available for future generations to prosper.
AT THE end of 2009 the first Institute of learning for local government practitioners driven by local government on the continent was launched by eThekwini Municipality. The Municipal Institute of Learning (Mile) aims to be at the forefront of learning and sharing of information and innovation on the continent in order to advance the development of the continent. Mile was launched out of a recognition that many innovative practices existed within the Municipality and these should be shared with others, just as eThekwini benefits from the work of others.
Mile has gone from strength to strength, assisting municipalities across the world, hosting elegations visiting our Municipality to learn from us, planning and holding Master classes for middle to senior managers on a wide range of topics, and doing whatever it can to build municipal capacity. We have much to be proud of. The 2010 and beyond eventing strategy meant that whatever we built for the Fifa World Cup was also geared to what would happen afterwards. As a result we have received awards, not only for the incredible construction and designs of the Moses Mabhida Stadium and other infrastructure, but we were the first city to host a carbon-neutral World Cup and we implemented many practices which are ensuring environmental, economic and social sustainability going forward.
Environmental innovations are found, for example, at the Green Hub, launched as a green technology demonstration building. The first green roof on a South African municipal building was launched in May 2009 as part of eThekwini Municipality's Municipal Climate Protection Programme. We have recognised the importance of food security, especially in responding to climate change, and have established an Agricultural Management Section to start tackling issues of access to food by empowering local communities in sustainable agricultural and organic practices.
Our Energy Office is the first of its kind in South Africa, tasked with project conceptualisation and implementation in all areas dealing with energy efficiency. Among many other innovations, converting methane gas at landfill sites into energy is an innovative project implemented by the Municipality to curb the effects of climate change.
In 2006 eThekwini embarked on an initiative to develop a long term plan for the city of Durban. A visionary and extensive consultative approach, including engaging school children, was used to develop a 50-year plan that prescribes actions for each sector of the population, including civil society, business, individuals and government, in achieving a truly sustainable city. Financially, innovative programmes and software has been introduced to increase procedural efficiency and customer service.
Our Quality Circles programme employs self-managed teams of operational-level staff to examine and be responsible for recommending improvements for procedures related to quality, cost, delivery, safety and morale. Our accessible, one-stop, walk-in Sizakala Centres provide places where residents are able to access various municipal services and pay municipal accounts, all at one location. These are but some of the innovative and leading practices that are currently taking place within the eThekwini Municipality by local government practitioners.
Building the economy is one of the most important, yet most challenging, areas of activity we are engaged in. For without a growing economy we will not be able to absorb the increasing number of people entering the economy each year, we will not be able to provide for the poor and starving in our society and we will not be able to deal with the growing number of social problems besetting our city.
For eThekwini, we have taken the stance that Local Economic Development (LED) is the primary responsibility of all sector departments in the city. Our Integrated Development Plan provides a number of examples:
- The Engineering unit are spending over R100 Million to facilitate the development of infrastructure that would be used for economic development projects;
- The Skills Development Unit have invested in training and Adult Basic Education courses;
- Development Planning Unit has identified future growth and development areas for economic development.
- The potential of Sport and Recreation as a lead sector has also been identified as an opportunity;
- Developing our Green economy provides for a more sustainable future;
- The roll out of Fibre Optic Networks creates an electronic platform for business to access both local and international markets; and
- The role of Fibre optic connectivity and education at schools is also a programme that is being developed within the municipality.
These are but some ways in which we are promoting Local Economic Development.
Of course, there are many bigger initiatives we are involved in. We are looking at what to do around Cato Ridge as some of the adjacent locations are starting to reach capacity in terms of space availability for commercial and industrial development. These include places like Hammarsdale.
Another multi-billion project, Cornubia, is a mixed-use and mixed income development spanning over 20 years and will the home of the next major industrial area in the north of Durban. The 1,200 hectare development will provide 240 ha of industrial and commercial space. This is a key industrial area with linkages to the new international airport. It will also comprise fully subsidised low-to-middle income houses.
The old airport site represents 300 hectares of developable land and a dugout port is being considered. This would greatly assist the Port of Durban to meet the growth in containerised traffic.
The outlook for tourism is also brighter given the trends of recent months. There has been improved sentiment about inflation; however this has been affected by the recent announcement of the increases in the cost of electricity.
The challenge locally would be to get the correct kind of industry-led growth, investment and job creation as the national government's target of 7% per year may not necessarily help to reduce unemployment. In the past there was economic growth but a decline in productive capacity, so it is crucial that the right sectors are targeted.
It is incumbent on all of us to find ways, in which we grow the economy, create jobs and ensure that we have food security, healthier people and a safer city.
We are certainly living in tough and unpredictable times. Who would have thought a few years ago that Climate Change was no longer simply speculation but now part of our reality. It certainly seems like the weather patterns are changing – rain when we least expect it, snow blanketing the midlands, beautifully crisp and sunny winter days followed by very, very cold conditions! And stock markets taking a real beating internationally, but leading to our own blue chip companies being on the receiving end of problems created elsewhere in the world.
Every day new theories abound on the relative strength of the PIGS (Portugal, Italy, Greece and Spain) and with the downgrading of the USA credit rating, the world as we know it seems to be turning upside down. Our national leadership, quite correctly I believe, are ensuring that we focus on what most economists view as the future direction the world is taking where the lead comes from the Brazils, Indias, Chinas and Russia of the world. And so for us, IBSA, BRICS and such combinations will hopefully allow us to weather the economic storms raging on the world markets. Balance In eThekwini we have to be mindful of these global shifts as we try and model the best financial scenarios going forward for our city.
We certainly know that it is not just the poor that require developmental solutions from us, but the many middle-income ratepayers are feeling quite stretched in meeting their everyday costs. We have tried our best to ensure, however, that we provide realistic solutions going forward. We firmly believe that our focus on trying to find the best financial balance between the economic, social and Environmental needs of our city when coupled with ensuring that we increase our provisions for maintenance place us in the best and most realistic and advantageous position going forward. Cost Comparison Having said this, it was good to also see that compared with other metropolitan areas in South Africa, we come out very favourably in a municipal cost comparison. National Treasury, in their 2011/2012 assessment of municipal expenditure compared average costs in each of the metropolitan areas.
If we take the three largest cities – eThekwini, Johannesburg and Cape Town— the average costs of monthly household bills (see sidebar) are R2083.56, R2153.55 and R 3080.51 It is not simply the fact that eThekwini is the lowest average monthly cost per household that we should be noting, but that included in our costs are provisions already made for reducing future increases to the extent that we can. For example, over the past three years we have spent over R3 billion in gutting and replacing our water pipeline, something no other city has done.
This is already reducing nonrevenue water loss and will be of great benefit going forward as other cities try and address their old infrastructure. And our budget of more than R3 billion we are spending on upgrading our electricity infrastructure will show great dividends in the next few years.Best governed Johannesburg's billing challenges around rates and consolidated billing may well impact on their rates going forward. Having said this we are trying to do everything we can to keep cost increases within reason and hope that going forward we remain South Africa's best financially governed municipality.
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