Comment annual report 2015

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eThekwini Municipality Annual Report 2013/2014
Some commentary
The Durban Chamber of Commerce and Industry welcomes the opportunity to comment on the
eThekwini Municipality’s 2013/2014 Annual Report and wishes to raise specific concerns before
commenting generally.
i. Non-revenue water (NRW) losses
The Chamber is concerned about the high level of NRW at 39,2% as water is an increasingly
scarce resource. While taking cognisance NRW losses result from several factors including
inadequate planning, insufficient municipal resources (financial constraints and inappropriate
human resources), theft and poor asset maintenance, equally vital is effective billing and
metering. The Municipality has consistently emphasised its ability to provide services depends
on generating revenue and the Chamber stresses it must make a concerted effort to ensure
proper monitoring and evaluate water infrastructure while promoting a culture of payment for
services to ensure the expectations of business and citizens are met.
The Chamber acknowledges the Municipality has instigated several interventions to deal with
NRW losses including installing pressure-reducing valves, a Leak Detection and Repair Strategy
and registering connection in COINS and encourages the Municipality to effectively implement
these solutions in addition to continuous planning, budgeting and maintaining water
infrastructure. The Chamber recommends the Municipality embark on a water conservation
strategy to raise awareness among residents and businesses about the quantity of water they
consume and install consumption reduction technologies. A campaign informing citizens of the

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costs of water losses and theft may also improve water security and minimise losses inherent in
NRW. The Chamber believes the city has the capacity to avert a potential water crisis.
ii. Illegal electricity connections
Illegal electricity connections pose a significant challenge. Not only are they a public safety
hazard, but also represent a significant revenue loss and have an indirect cost on local
businesses. After identifying an illegal connection, nearby businesses are left without power
while the connection is rectified. This is both inconvenient and a revenue loss for those
businesses unable to afford the outlay to procure and use generators. The Chamber suggests the
Municipality prioritise its activities to identify and rectify illegal connections to ensure both not
foregoing essential revenue and securing electricity supply.
In reducing illegal connections, the Chamber suggests the Municipality roll-out a solar energy
lighting programme to identified households in informal settlements. This will increase the
electricity provision reach and reduce the likelihood of illegal connections.
In preventing electricity and water theft, the Chamber suggests the Municipality undertake an
awareness and enforcement campaign educating the public on the risks associated with stealing
these utilities.
iii. Supply chain management
The Chamber applauds the Municipality’s efforts to curb illegal expenditure in its supply chain
management (SCM) system and its interest in acquiring an ISO 9001 accreditation. Much of the
Chamber’s concern about the municipal SCM process focused on awarding tenders to
companies either unfit for the purpose or based on personal relationships between the
company’s personnel and municipal officials. The Chamber supports the need for greater
company pre-screening before registering on the SCM database and emphasises the conflict of
interest task team be allowed to seamlessly conduct its work and recommend corrective action.
The Chamber stresses the Municipality must ensure these recommendations are followed.
A new SCM intervention the Chamber recommends demands the Municipality prioritises local
company procurement. Proposed as part of the tender evaluation criteria is providing for local
content and manufacturing. By leveraging its procurement policy to support local businesses,
the Chamber believes the Municipality can provide stability for the demand for goods and/or

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services from these local enterprises. The Chamber believes while public sector procurement is a
powerful means of facilitating black economic empowerment, it must be used effectively.
The Chamber also recommends in reviewing its procurement policy, the Municipality both
award tenders to local small businesses and manufacturers and encourage their development.
Contracts can be broken into smaller parts within the capacity of small businesses or larger
contracts be awarded to companies outsourcing to acceptably capable enterprises and/or
adopted programmes to ensure skills transfer.
iv. Bad debt written-off
The Chamber is alarmed by the unacceptably high R533 million (2013: R185 million) debt write-
off for the year. While the Municipality provides for writing off irrecoverable debt and focuses
efforts on recoverable debt, the Chamber urges the Municipality to explore all feasible debt
collection methods to minimise the amounts written off. The Chamber emphasises that writing
off bad debt diverts resources from productive uses like funding capital projects and improving
municipal service provision (the annual report highlights the significant backlog in this arena).
Should the Municipality write off the bulk of this debt, it faces tough decisions between
borrowing to fund key capital projects and municipal services or wholly foregoing these projects
and services.
v. Red tape
The excessive red tape and associated costs pose a pressing issue for foreign and domestic
businesses and developers wishing to establish local enterprises. The Chamber acknowledges
the Best Practice City Commission's (BPCC) role in navigating these obstacles, but is disappointed
the entity still does not operate at full capacity. While acknowledging the motivation for the City
Planning Commission, the Chamber believes the BPCC can sufficiently perform the requisite
functions to take the city forward and urges the Municipality to actively remove obstacles to the
BPCC's functioning. The Chamber supports the BPCC’s mandate to encourage foreign direct
investment, but urges it not to lose sight of local investment growth. The Chamber is aware the
Municipality is currently exploring a range of destination investment incentives, but cautions
incentives alone are insufficient to encourage growth and development.
The city also has unprecedented development in its peripheral areas and the costs of delivering
bulk services and other infrastructural assets so far from the city centre are inhibitive and give
rise to controversy on who should bear the costs. Levies, development charges and mobility

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tariffs are unpopular solutions from business's viewpoint. Large developments recoup thecity's
capital investments via property rates and consideration must be given to why developers
should bear infrastructural development costs. They cannot afford delays when facing financial
commitments and the Municipality should recognise the contribution to its infrastructure base
and provide retrospective concessions. Constructive solutions must be found sooner not later,
specifically within public private partnerships as there are unexplored options on forging these
collaborations. A framework will obviate approaching each development ad hoc and avoids the
Municipality imposing charges which, while deemed necessary for the fiscus, inhibit
development.
vi. Tourism
The Durban beachfront upgrade into an attractive and functional infrastructure boosting the
beachfront experiences must be enhanced to attract more people, including local residents.
Unfortunately, there is inadequate beachfront precinct management for maintaining a pristine
environment to attract tourists, especially international ones. The sea water quality is not
consistently acceptable and the Chamber has received complaints from people noticing the litter
and other filth in the water and on the shore. Public amenities are not well–maintained and
crime is a constant concern when visible policing is not available around the clock. The
beachfront also fails to offer a variety of entertainment appealing to all ages - simply put, it lacks
fun. While some of the local public find the promenade ideal for walking or cycling, others
including tourists find it dull with little drawing them there, particularly after dark.
The Chamber’s vision for the beachfront is a clean, safe amenity where bathers and beachgoers
have the assurance of high water quality afforded by Blue Flag status; clean and accessible public
toilets and amenities; uncompromising safety and security; facilities including umbrellas,
deckchairs and loungers; a variety of eateries, fun attractions and regular events and an after-
dark atmosphere characterising Durban's outdoor and laid-back lifestyle.
Notwithstanding the beach's prominence in the city’s hospitality and tourism products, there is a
need to identify and nurture other significant, complementary attractions that holistically
provide a rewarding visitor experience. Events beyond the beachfront must be encouraged as
they facilitate meaningful social cohesion. The Community Tourism Organisations (CTOs)
network is a key vehicle for promoting tourism across the city and it deserves tangible and

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financial encouragement. It must be able to stimulate and uncover new products while relying
on a central agency like Durban Tourism to market these offerings to visitors and local residents.
vii. Urban rejuvenation
Abandoned, derelict and dilapidated buildings in the inner city are occupied by illegal
squatters or, via unscrupulous landlords, rented to foreigners illegally operating businesses
from these premises. These typically unsafe and unsightly buildings encourage unfavourable
activities like drug trafficking and prostitution and as part of an urban rejuvenation project,
the Municipality is conducting an audit on the buildings' rightful ownership. Owners must
act more responsibly, something the Municipality can achieve either via incentives or by
invoking the law. The Municipality must encourage converting these buildings into either
residential units in line with the inner city residential policy or business premises. The tax
concessions in terms of the government’s Urban Development Zone (UDZ) project require
more aggressive marketing and direct engagement with owners on the benefits accrued
from investing in building improvement. The Chamber stresses the Municipality’s Better
Buildings project must be accelerated via additional resources.
Converting buildings into residential units means residents have an easy access to work or
commute to shops and reduced transport costs as they walk around the city. A vibrant
residential community also promotes commercial activity.
The Municipality must engage with the private sector to convert inner city buildings into
office space. Formulate a policy to ease problems associated with inner city parking, as the
current system honours more in the breach than the observance - a bad advert for a well-
run city. While car guards offer a valuable service, it must be co-ordinated and formalised
not to disadvantage these individuals but because the system can potentially offer more
than mere security comfort to motorists.
viii. Informal trading
While the city’s informal trading policy was considered enlightened and progressive when
implemented, it now appears outdated as the pavements and streets are more congested
following the rise in traders. Products sold are also mostly cheap imports or fake brands;
traders do not have access to suitable amenities, boosting littering and dumping and the

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informal sector's economic value has been severely compromised, largely hijacked by
immigrants.
While a local population without formal employment engaging in self-employment via street
trading can be over-looked in terms of tax and other regulations and requirement, traders
fronting for larger businesses or shopping mall tenants and who are mostly not South
Africans, should not be allowed to exploit the informal sector in this way. Avoiding value-
added tax (VAT), illegal imports and completely evading the Consumer Protection Act are all
features of the current informal economy dominated by foreigners. In some cases reports
show monthly rentals are being met by foreign countries.
Hence, the municipal policy urgently needs a review to regulate the matter, strictly enforce
the by-laws and preserve the concessions inherent in South Africa's informal economy to
benefit South Africans not formally employed.
The city should provide legitimate traders with mentorship programmes to encourage them
to enter the formal economy. The private sector and business organisations including the
Chamber can assist with the registration of informal traders and engage informal traders
through entrepreneurship mentorship and training programmes to educate them on the
advantages of the formal economy.
ix. Crime and grime
The South African Police Service (SAPS) is primarily responsible for preventing and
prosecuting crime, but the Metropolitan Police's role is equally critical. Its responsibilities lie
in implementing by-laws, particularly road rules, yet in both areas, enforcement has become
generally ineffectual. Illegal parking and stopping, sometimes as a deliberate defiance of the
law, shooting red robots and a host of other offences have become habitual and
symptomatic of a society lacking orderliness and responsibility.
To reduce crime and contribute towards controlling it, the Chamber recommends several
interventions:
 Improve the efficiency and effectiveness of municipal laws and by-law enforcement to deter
crime and grime. This means paying particular attention to illegal trading, dumping, graffiti,
land invasion, public infrastructure vandalism, trading in stolen and counterfeit goods,
vagrancy and loitering and traffic violations.

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 Fully covering the city’s geography through visibility, timely responses and decisiveness from
enforcement agencies to reduce the fear of crime. This will encourage residents and visitors
to use public spaces and amenities.
 The Metropolitan Police and SAPS must enforce zero tolerance policing strategies as proved
successful in the 1990s in New York and Hartlepool. Intelligence-led policing and an
emphasis on minor crime and disorder is at the heart of this strategy. Focus must shift from
preventative patrols, rapid responses and retrospective investigations to aggressive,
preventative tactics. This proactive approach anticipates crimes rather than reacts to crimes
or incidents.
 Mobilise community support and instil trust in the capabilities and integrity of enforcement
agencies.
 Proactively report infrastructure breakdowns and urban decay contributing to crime and
grime. These include broken traffic signals, overgrown grass, illegal dumping, blocked storm
water outlets and water leaks and the city will require an efficient call centre operation in
this regard.
x. Conclusion
The Chamber congratulates the Municipality on the achievements highlighted in this annual
report, but is concerned there are several areas directly impacting on business in eThekwini
that require urgent attention. These include NRW, illegal electricity connections, SCM, bad
debt write-off, red tape, tourism, urban rejuvenation, informal traders and crime and grime.
The Chamber asks the Municipality thoroughly consider these recommendations and
collaborate with the private sector to build a vibrant and value-driven local economy.
Dumile Cele 1 March 2015
Chief Executive Officer
Durban Chamber of Commerce and Industry

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