North Coast business sector proposes rates increase solutions to KwaDukuza Municipality

The North Coast business community has submitted firm solutions to the KwaDukuza Municipality (KDM) to ease proposed rates increases to the benefit of cash-strapped residents.

As the budget for the 2023/24 financial year nears approval stage at Council next week (May 25), it is pertinent to review the comments of local stakeholders to see what changes, if any, are made by KDM.

The iLembe Chamber of Commerce and Dolphin Coast Residents and Ratepayers Association (Docrra) both prepared submissions that are meant to be representative of their constituent memberships.

Of primary concern was the various proposed rates increases, which include property rates (7%), refuse rates (10%) and electricity tariffs (15%).

These are due to further constrain both residents and the business community that already have to deal with skyrocketing prices in their grocery basket, fuel, associated loadshedding costs and a weakening Rand.

According to Docrra, the property rate increase could be reduced to at least 4% if KDM properly planned for the extra revenue generated by 4 000 new properties set to start paying rates in the 2023/24 financial year.

The Chamber referred to the rapid appreciation of property values, specifically within the Ballito UIPs area of operation, that have had the effect of raising rates.

Rates revenue in the UIP precinct increased by 127% between 2016 and 2021.

“It is proposed that KDM quantify the related rates revenue increases that relate to property value increases, and consider using that as buffer to further curtail the proposed 7% increase in property rates – in specially rated areas precincts at least,” said the Chamber.

This talks to a wider comment from both groups, which is their position that KDM should consider utilising its cash backed accumulated funds which have arisen from previous budget surpluses.

Over the past three financial years, KDM has over-budgeted on its operational expenditure – when excluding bulk electrical purchases.

“As a result of this, KDM has accumulated significant cash arising from surpluses due to underspending of budgeted operational and capital expenditure, as well as better than expected revenue collection. This causes significant hardship on residents,” said Docrra.

Using said surpluses to fund the budget is permissible by the Municipal Financial Management Act, and Docrra suggested that R50-million should be reduced in the budget and funded in this way which could ease rate increases.

Both Docrra and the Chamber found the refuse rates increase to be abnormal and without proper justification and requested renegotiation of the deal to avoid passing the cost onto consumers.
In terms of electricity tariffs, the consistent issue within KDM has been massive, far above industry norm energy losses.

KDM reached an average of 26% in energy losses in the 2022/23 financial year, which is significantly higher than the national average of 8-10%.

“If electricity losses were reduced to general norms, KDM would save around R100- to R150-million and be able to afford granting residents a very low or nil increase in electricity tariffs,” said Docrra.

The Chamber echoed the sentiment, urging the municipality to consider reducing connection costs while making strides to reduce future losses.

The North Coast business community believes there are clear steps that can be taken to reduce the cost on consumers, but it remains to be seen whether these proposals will be taken on board by KDM.

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