Drakenstein Municipality’s 2023/24 annual budget focuses on enabling economic development to stimulate job creation, alleviate poverty and improve people’s lives, while at the same time maintaining financial sustainability.
“We want to grow Drakenstein as a thriving, caring and highly efficient city, for our people to live, work and play in," said Alderman Conrad Poole, Executive Mayor of the Municipality, in his Budget Speech on Tuesday, 30 May 2023.
He tabled the R3.4 billion budget, the Municipality's largest to date, at a Council Meeting in Paarl. It comprises of a R3 billion operating and R457.5 million capital budget. The majority of Council voted in favour of the budget.
Renewed focus on promoting development and investment, and on revenue enhancement
“Drakenstein continues to experience noticeable economic growth despite the glaring structural challenges the South African economy faces with rolling Eskom loadshedding and unfavourable labour reforms. The national economy is in distress and the Real GDP growth is expected to moderate to 1.4% in 2025," the Executive Mayor pointed out.
The growth in Drakenstein's top economic sectors namely finance, real estate, insurance and business services (currently valued at a combined R6.8 billion); wholesale, retail trade, catering and accommodation (currently valued at a combined R3.9 billion); and manufacturing (currently valued at R3.6 billion) testifies to the Municipality's drive to position the area as investment friendly.
“These statistics reflect that we are reaping rewards from our efforts in the investment promotion and ease-of-doing-business space, such as the launch of our Development and Investment Prospectus, establishment of a dedicated Investment Desk and the Drakenstein Property Development Forum, and the implementation of a focused Investment Area Management function to ensure business retention and to build business confidence," said Alderman Poole.
The Municipality's continued focus on revenue enhancement and protection, as well as cost containment initiatives are also yielding positive results. In 2022/23, the Municipality's ratio (liquidity) improved from 1.57 in July 2022 to 2.17 in April 2023. “In the new financial year, we won't take up any new external loans to fund capital projects. This will ensure that our current gearing ratio decreases to an estimated 46.9% in 2023/24 and to an estimated 22.3% in the 2027/28 financial year, which is well below the national norm of 45%," the Executive Mayor assured the meeting.
“Drakenstein Municipality has many times been criticised for taking up large external loans a few years ago to invest in bulk infrastructure to ensure that development opportunities were unlocked in the area. This decision was not taken willy nilly, but was based on our long-term vision to create an area where people can live, work and play knowing that its growing demands are being met. The decision to invest R1.55 billion in infrastructure development over the past 12 years unlocked huge returns such as an additional R243 million which is generated from rates and services at residential and commercial developments. Today, I can say with confidence that the revenue from property rates and the revenue received from new developments are sufficient to cover the Municipality's capital and redemption loan payments," said the Executive Mayor.
During 2022/23, the Municipality granted land use development rights to 1 536 m2 of new commercial developments, 10 998 m2 of new industrial developments, and 384 new residential developments. In addition, land use rights applications for 48 249 m2 of new commercial land and 2 801 new residential opportunities are currently being processed. A total of 1 474 building plan approvals, with a combined value of R2.3 billion, were granted from 1 July 2022 to date.
Growth in the business, commercial and manufacturing sectors continues to stimulate the local economy. Eleven new businesses opened their doors in Drakenstein with a total of 836 new job opportunities created to date.
Excellent service delivery remains main objective
“While the Municipality keeps on focusing on growing the economy and upholding financial stability, our main objective is and will always be to deliver excellent services to all our residents," said Alderman Poole.
The 2022/23 financial year's service delivery highlights include:
- Budget allocations to the Vlakkeland Housing Project have contributed to the servicing of 942 sites and construction of 454 houses since the project's start;
- The Simondium Housing Project will become a reality, improving the living conditions of people residing in the Simondium catchment area. The Municipality has been allocated R40 million for the development of bulk services here and plans to break ground early in the new financial year;
- Basic and internal bulk infrastructure services were constructed at the Schoongezicht emergency site at an estimated cost of R8.2 million;
- An estimated R31 million was spent on upgrading water and wastewater systems in Paarl and Wellington, while stormwater systems throughout Drakenstein were upgraded at a cost of R5 million;
- Roads across Drakenstein were upgraded and resealed at an estimated cost of R5 million, with an additional R7.9 million allocated specifically to rebuild Drommedaris Road in Paarl;
- The Oosbosch Road class 3 dual carriageway project from the Berg River Boulevard to the R301 was completed with a 20% contribution from the Municipality out of the total cost of R198.8 million over the past four financial years. This project was largely funded by the Western Cape Government;
- Sporting facilities at Fairyland, Gouda, Boy Louw, Faure Street and De Kraal were constructed and upgraded at a cost of R4 million. These are multi-year projects to enhance the standard of the facilities; and
- As part of the Municipality's partnership with the City of Neumarkt in Germany, a special project was implemented to revitalise the Paarl Arboretum and create a Climate Smart Park at a cost of R2.6 million. This includes the construction of a green classroom and the upgrading of the walkways along the Berg River.
For the 2023/24 financial year, these are some of the budget allocations that have been made:
- R81 million for land use and urbanisation development, including improving informal settlements; servicing housing sites and building new houses; installing bulk and internal services, manholes and sewer connections; and maintaining ageing municipal rental stock and rectifying structural defects;
- R303 million for water and sanitation services, including upgrading basic services, pump lines, pumpstations and bulk sewers; rehabilitating and upgrading the Paarl Wastewater Treatment Works; replacing water networks and equipment; constructing the Southern Paarl Bulk Sewer; and installing a UV Disinfection System and flow meters at the Wellington Wastewater Treatment Works;
- R40.3 million for electricity infrastructure projects, including replacing ageing equipment; increasing existing low-, medium- and high-tension network capacity; upgrading bulk electricity; repairs following vandalism and theft of infrastructure; and electrifying some informal settlements;
- R6.8 million for waste management projects and equipment, including additional skips, and constructing organic waste diversion infrastructure to comply with new waste legislation;
- R34.6 million for maintenance of roads and stormwater infrastructure, including resealing roads; upgrading the municipal stormwater system; tarring sidewalks; and upgrading traffic signals and providing UPS (uninterrupted power supply) systems. The upgrading of Main Road 201 to a dual carriageway between the N1 and the Kliprug Road is well underway, and the Municipality will contribute R10 million in 2023/24 to the project's total cost of R196 million. Most of the funding will be provided by the Provincial Government;
- R9.4 million on infrastructure for sport, parks and cemeteries, including upgrading the Dal Josaphat Athletics Stadium's parking area; further developing the De Kraal Sport Complex; and establishing the new Nieuwedrift Cemetery;
- R5.5 million on replacing an ageing municipal fleet; and
- R8.2 million on community and social development, including upgrading soup kitchens and the night shelter; purchasing fire safety vehicles and equipment, and tools of trade; and investing in information technology infrastructure.
Other 2023/24 budget focus areas include:
- a renewed drive to establish Paarl-Welllington as a premier tourism destination for sport, wellness, wine and adventure;
- establishing a new dedicated municipal Department of Public Safety with a northern and southern precinct presence which will allow for more focused and visible law enforcement;
- gender-based violence initiatives; and
- establishing and managing more overnight shelters for street people in Wellington and Paarl.
Tariff increases for 2023/24
“It is important to understand municipal tariffs in the context of the normal inflation rate (CPI) and the municipal inflation rate. Currently, the normal inflation rate is 7.1% and all projections are that it will not decrease soon. Municipal inflation, however, is affected by factors such as the cost of electricity, fuel, material, equipment, and more. The estimated municipal inflation rate is between 10% and 15%," explained Alderman Poole.
Despite these high inflation rates, Drakenstein Municipality's tariff increases for 2023/24 are:
- Water and Sanitation – 6.5%;
- Refuse Removal – 6.9%;
- Property Rates – 3.9%; and
- Electricity – 15.1%.
Caring for Drakenstein's indigents, youth and unemployed
More than 60% of Drakenstein's residents are indigent and at 30 April 2023, the Municipality had 14 597 indigent households on its database. “The equitable share allocation we receive from National Government does not sufficiently address the plight of our people and that is why we will continue to support our indigent households. It must be mentioned that Drakenstein Municipality's indigent support is more than twice the national norm and significantly higher than that of our neighbouring municipalities."
The new financial year's indigent benefits, according to a sliding scale, are:
- 6 Kilolitres of water every month;
- 85 Electricity units (for Category A and B consumers) and 50 units (for Category C and D consumers) every month, plus basic charges for up to 30 Amp single phase pre-paid or conventional electricity meters;
- Refuse removal charges (once a week for one refuse bin);
- Sewerage charge levy for one toilet plus basic charges for an erf size up to 550 m2 every month;
- Assessment rates charge on valuation limited to R700 000 per erf; and
- Municipal rentals rebate equivalent to the maximum amount of the total basket of free basic services.
The Municipality also provides free basic service (water, sanitation and refuse removal) in Drakenstein's 43 registered informal settlements.
The Executive Mayor said it was important to facilitate the creation of job opportunities and recruitment in a fair and transparent manner. The budget allocation for the Municipality's Expanded Public Works Programme (EPWP) implementation provides for approximately 500 job opportunities at an estimated cost of R21.8 million. The National Department of Transport and Public Works' EPWP Grant contributes R4.3 million, while Drakenstein Municipality contributes R17.5 million.
“The Municipality is working tirelessly to provide opportunities for our youth. During the first three quarters of the 2022/23 financial year we provided vocational, soft skills and work placement interventions for 156 unemployed youth from Drakenstein. During the next financial year these interventions will again be prioritised," he said.
Currently the Municipality supports 132 registered Early Childhood Development Centres (ECDs) across Drakenstein - from Simondium to Saron.
Staying Eskom loadshedding resilient
The Executive Mayor acknowledged the severely negative impact Eskom's persistent and high-stage loadshedding has on Drakenstein's households and businesses, as well as different sectors of its economy.
“Therefore we have prioritised our resources and are reinforcing our three-pronged Eskom Loadshedding Resilience Plan, which focuses on: sustainable service delivery; protecting revenue; and investigating ways of generating or purchasing alternative and renewable energy."
During 2022/23, the Western Cape Government awarded Drakenstein Municipality an Emergency Municipal Loadshedding Relief Grant (EMLRG) of R6 million, to be spent on back-up generators at key water and wastewater infrastructure installations. The Municipality allocated another R6 million to extend the mitigation of possible service delivery disruptions, and to safeguard municipal infrastructure. A further R2.8 million has been allocated for 2023/24 to continue with this initiative.
“To mitigate the impact of Eskom loadshedding, we have upgraded almost all our primary signalised traffic intersections with UPS systems to ensure free traffic flow, to the amount of R3 million. This is bringing huge relief to our road users and helps to minimise the risk of road accidents," said Alderman Poole.
The Executive Mayor concluded his Budget Speech by thanking the Drakenstein ratepayers for honouring their commitments and paying their municipal accounts. “The quality of services we render is only possible thanks to the co-operation of our community."
The Municipality's Final Reviewed 2023/2024 Integrated Development Plan (IDP); Reviewed Drakenstein Spatial Development Framework (SDF) 2023/2024; Disaster Management Plan; as well as budget-related policies were also approved at the Council meeting on 30 May 2023.
For the Executive Mayor's full speech, please click here.
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