 | Defying SA’s economic odds, Drakenstein Municipality finds winning recipe
13 June 2024 | Press Releases |
11 June 2024
The South African economy might have narrowly escaped a technical recession after shrinking by 0.2% in the third quarter of 2023 and growing by a mere 0.1% in the fourth quarter, but in Drakenstein in the Western Cape, the area's economy is experiencing the exact opposite.
Growing by leaps and bounds, Drakenstein (covering Paarl, Wellington, Mbekweni, Gouda, Hermon, Saron and Simondium) continues to see residential developments mushrooming, economic infrastructure being expanded and upgraded, and new businesses opening their doors.
Delivering his first Budget Speech on 30 May 2024, Councillor Stephen Korabie, new Executive Mayor of Drakenstein Municipality, said: “The latest data by (the economic and financial data consultancy) Quantec indicates that the Drakenstein economy is valued at approximately R30 billion (2023), a significant increase from just over R25 billion recorded in 2020. All 10 sectors of our economy have reported growth in income and employment between 2022 and 2023, signalling a positive recovery from the impact of the COVID-19 pandemic."
He tabled the Municipality's R4.1 billion budget for the 2024/25 financial year, its largest to date, comprising a R3.3 billion operating budget and a R766 million capital budget. The majority of Council voted in favour of the budget.
In 2023, South Africa's economy recorded a modest growth of 0.6% on the back of energy supply challenges, rising food and fuel prices, and the impact of the Russia-Ukraine war and Israeli-Palestinian conflict, among others. “The country's economy remains under strain, with Real GDP growth forecasted at 1.0% in 2024 and 1.2% in 2025," said the Executive Mayor.
In Drakenstein, however, it is a whole different story. In 2022/23, employment saw an upturn, with the most opportunities created in the area's wholesale, retail trade, hospitality sector (2 319 jobs); followed by agriculture, forestry and fishing (1 614 jobs); finance, insurance, real estate and business services (845 jobs); community, social and personal services (311 jobs); manufacturing (222 jobs); transport, storage and communication (219 jobs); and construction (139 jobs).
“Although not officially recorded, many more jobs have been created in the informal sector. Drakenstein supports over 300 informal traders, each of whom employs at least one individual," explained Councillor Korabie.
“The steady economic sectoral growth and the reduction of the official unemployment rate demonstrate that Drakenstein's investment promotion efforts are reaping rewards. Drakenstein remains well positioned, through its innovative institutional reforms, to attract investment in alignment with the Western Cape Government's Growth for Jobs Strategy and Vision. The recent large-scale investments in tourism, manufacturing (agro-processing) and real estate also provide locals with a diverse range of sustainable job opportunities," he said.
R2.94bn's building plans (mostly residential) approved in last financial year
One of the Municipality's key revenue enhancement initiatives has been a renewed focus on promoting development and investment in Drakenstein. During the past financial year, 1 291 new residential opportunities, 20 702 m2 of new commercial development, and 1 040 m2 of new industrial developments were granted land use development rights. “In addition, land use rights applications for 1 679 new residential opportunities, 24 659 m2 of new commercial land and 44 679 m2 of new industrial developments are being processed," said the Executive Mayor.
Altogether 1 420 residential, commercial, agricultural, industrial and other building plan approvals were granted from 1 July 2023 to date, with a total value of R2.94 billion. Of these, 1 241 were residential building plans to the combined value of R2.49 billion.
Executive Mayor Korabie believes this is a clear sign that a healthy investment climate had been created in Drakenstein.
“The Municipality has often come under scrutiny for taking up large loans to invest in bulk infrastructure to ensure that development opportunities are unlocked. This decision was not taken lightly, but was based on our long-term vision to create an area where people can live, work, and play, knowing its growing bulk infrastructure demands are being met.
“The decision to invest in infrastructure development over the past 12 years unlocked unimaginable returns, where an additional R304.6 million is currently billed and received annually for rates and services at new residential and commercial developments - sufficient to cover the Municipality's loan payments," he said.
Drakenstein Municipality finds the winning recipe
The Executive Mayor believes Drakenstein Municipality has found the winning recipe, i.e.: By consistently applying sound financial management, good governance, fiscal discipline, and performance management at all levels, the Municipality ensures its finances remain stable and in good health. This is not only reassuring for its local community and business sector, but also has great appeal for investors and developers.
With the same vigour the Municipality rolls out the red carpet for investors and developers, ensuring ease of business, guaranteeing swift land use and building plan approvals, and making sure the Municipality has the required infrastructure and bulk services in place for new developments.
By enabling investment and development, stimulating job creation, and generating a larger municipal income, the Municipality can assist its indigent consumers better and lighten their load.
Looking back at 2023/24, the Executive Mayor singled out service delivery highlights such as:
- Budget allocations to the Vlakkeland Housing Project to date contributed to servicing 942 sites, and the construction and occupation of 704 houses since the project's start. Both the Dalweiding electricity substation and Vlakkeland switching station's capacity was increased to supply Vlakkeland, at an estimated R8.7 million;
- The Western Cape Government transferred R20 million to Drakenstein Municipality for the development of bulk infrastructure services at the Simondium Housing Project;
- Basic and internal bulk infrastructure services were constructed at the Schoongezicht emergency site at an estimated R3.8 million;
- Basic services were upgraded in informal settlements at R7.2 million;
- An estimated R277 million was spent on upgrading water and wastewater systems in Paarl and Wellington, while stormwater systems throughout Drakenstein were upgraded at R5.6 million; and
- Roads across Drakenstein were upgraded and resealed at an estimated R9.6 million, with an additional R8.7 million allocated specifically to rebuild Drommedaris Road, Paarl.
For the 2024/25 financial year, budget allocations such as the following have been made:
- Creating over 470 EPWP (Expanded Public Works Programme) jobs at an estimated R19.4 million;
- A grant allocation of R44.9 million has been awarded to the Municipality, of which the bulk will be used to service sites at the Simondium Housing Development;
- R567 million to keep on providing clean drinking water and sanitation, including: rehabilitating and upgrading the Paarl Wastewater Treatment Works at R482 million; upgrading the Southern Paarl Bulk Sewer at R39.8 million; providing R20 million's bulk services for Simondium; and replacing water networks at R11.6 million;
- R35.7 million for electricity infrastructure projects, such as replacing old equipment; increasing existing low-, medium- and high-tension network capacity; upgrading the Dalweiding Substation and switchgear; repairs following vandalism and theft of infrastructure; and electrifying some informal settlements;
- Waste management projects, including R5.6 million to finalise the construction of organic waste diversion infrastructure to comply with new legislation, and R2 million for purchasing skips and wheelie bins to ensure that more formalised areas dispose of waste;
- R63.1 million for roads and stormwater infrastructure maintenance, such upgrading Oosbosch Street, resealing roads, refurbishing stormwater systems, upgrading traffic lights, and tarring sidewalks;
- R14.8 million for sport, parks and cemeteries infrastructure, including upgrading the Dal Josaphat Athletics Stadium's parking area, further establishing the new Nieuwedrift Cemetery, and upgrading facilities at Orleans Park; and
- Enhancing the quality of life of Drakenstein's vulnerable residents by upgrading soup kitchens and transforming the Paarl Night Shelter to the combined value of R1.2 million.
Indigent support twice the national norm
Drakenstein Municipality has one of the largest poor communities: over 60% of its households are classified as poor, with 16 372 indigent households currently registered on the municipal database.
“This year we will spend an estimated R183 million on indigent benefits to assist the poorest of the poor, which excludes the provision of free refuse removal, sanitation, and water to our 43 registered informal settlements," said the Executive Mayor. “Our 2024/25 budget will provide indigent assistance per household of up to R1 560 per month - more than twice the national norm and significantly higher than that of our neighbouring municipalities."
Fair and affordable tariffs for 2024/25
“Robust internal and external financial discussions took place, as well as benchmarking exercises with neighbouring municipalities, to ensure that we implement fair and affordable tariffs," he said.
The following tariff increases were approved for 2024/25:
- Water and Sanitation – 6.7%;
- Refuse Removal – 6.7%;
- Property Rates – 4.9%; and
- Electricity – 8.56%.
“I want to thank our ratepayers for honouring their commitments and paying their municipal accounts. The quality of services we render is only possible thanks to our community's cooperation."
Conclusion
The Executive Mayor concluded by saying the Municipality's main objective remains to deliver excellent and affordable services to all its residents.
“Building on our successes of the past five years, the 2024/25 budget focuses on enabling economic development to help stimulate job creation, alleviate poverty, and improve people's lives while maintaining financial sustainability. We want to grow Drakenstein as a thriving and highly efficient city, where our people can live, work and play," he said.
For the Executive Mayor's full speech, click 
here.
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Issued by: Communication and Marketing, Drakenstein Municipality
