Unlocking Msunduzi's Potential
Local government faces the enormous challenge of expanding infrastructure in the face of shrinking revenue streams. The stark reality is that the vast majority of people cannot afford to pay for the services they are receiving. For Msunduzi’s municipal manager, Rob Haswell, the greatest stumbling block in dealing with backlogs is that disadvantaged communities cannot contribute anything near to the revenue needed to sustain infrastructure. On top of this, the city needs to source sufficient funding to maintain its assets in developed areas. “In our honest and realistic attempts to address backlogs, South African cities have been skimping on maintenance to the point that our existing infrastructure has been stretched to the limit. “Roads, electricity networks and buildings have to be properly maintained. Water and sewage pipes all have to be replaced and tested on a regular basis. If this is not done, we run the risk of collapsing the whole system.” Haswell estimates that almost two thirds of Msunduzi’s 600 000 population live in townships or rural areas and do not contribute much to the revenue base. The city’s resources are placed under further strain by about 100 000 people who daily travel into the city from the neighbouring areas.
“The fundamental challenge is how to identify additional sources of revenue”
“Realistically, we need about R500 million to be able to deliver the necessary services to underdeveloped areas and maintain the current infrastructure. Our current capital budget is only half that. So, like every other city, the fundamental challenge is how to identify additional sources of revenue.”
Public private partnerships between a maintenance-focused, efficient municipality and a booming, confident private sector will deliver the best of both worlds.
For Haswell, the answer lies in engaging the private sector. In his view, public private partnerships (PPP) between a maintenance-focused, efficient municipality and a booming, confident private sector will deliver the best of both worlds.
“The partnerships I have in mind have to be more than some kind of discussion or alignment between public and private sectors. I think it is going to require contractual commitments by both sectors if we are to address the backlogs, maintain existing infrastructure and move the city forward all at once. No municipality in this country
can do it alone.”
The ultimate goal of the partnerships is to unlock the potential of the city’s land assets using the financial muscle of the private sector. Although the initiative is still in its concept stage, Haswell says that response has been positive.
“People are looking for solutions and they recognise that there has to be shared growth. We need to bring tribal and township areas out of the periphery and into the modern economic system.”
He adds that now is the right time to be looking at large scale PPPs, because the city’s economy has never been healthier. Civic pride is on the increase as residents recognise that Msunduzi is on a new trajectory.
Msunduzi was given a serious boost when it was confirmed as the capital of KwaZulu-Natal. Since then, government departments have been moving into the city, which has led to the rejuvenation of the CBD and pushed property prices to record levels. There are also plans afoot to improve the airport, hotels and conference facilities to respond to the growing numbers of people travelling to the city to do business.
The other key factor is Msunduzi’s proximity to Durban. According to Haswell, the futures of the cities are becoming more intertwined.
“People are looking for solutions and they recognise that there has to be shared growth. We need to bring tribal and township areas out of the periphery and into the modern economic system.”
“Our location just 40 minutes outside of Durban means that we are becoming one city region. The N3 is an important corridor connecting the two cities and the next three years will see major improvements to the intersections and bridges. The land alongside the highway has been identified as high-value area by investors.”
He adds, though, that the city also has a real interest to see that other areas are developed. In his view, Msunduzi has been a single CBD city for far too long and there is a huge need to develop economic nodes in the townships. The city is in the process of coming up with a genuine post-apartheid spatial development framework.
“The current situation is that the townships function like dormitories, with the poorest people having to travel furthest to work every day. The rule of thumb is that a rand is spent once in the townships whereas it changes hands seven times in town. We need to change that. Money needs to be spent in the townships to build up the economic base in those areas.”
The city plans to create business nodes in townships and improve the road system to facilitate the movement of people and goods. It has also adopted the expanded public works programme to facilitate the transfer of skills and work to local contractors and subcontractors.
“Msunduzi is not just a little colonial outpost anymore. It is a modern South African city that has to rise up and deal with the disparities of the past. We cannot merely continue to milk people of their money when they come into town to shop.”
"Msunduzi is not just a little colonial outpost anymore - it is a modern South African city"
Tourism has been identified as another means to transfer wealth into township areas. For many years, Msunduzi exclusively promoted its Victorian heritage. The new realisation is that the city's mix of cultures makes for a much more exciting experience.
"Msunduzi is the city of Nelson Mandela, Harry Gwala, and Mahatma Ghandi. There is a strong liberation heritage that will be a great tourism product once it has been properly packaged."
The city is also looking at ways to further capitalise 011 the major international events it hosts: the Duzi and the Comrades Marathon. The aim is to increase the amount of time people spend in the town.
Other than tourism, the manufacturing sector remain important to Msunduzi's economy, contributing 35% to the city's gross domestic product.
"Msunduzi has substantial manufacturing sector in terms of value. There are a number of companies producing high-value products like carpets, aluminium, furniture, and footwear. It is not inconceivable that thE city could become and automobile manufacturing centre in the near future. We are already making 40 parts of an automobile."
Logistics and services too are becoming key sectors and Haswell sees much room for growth as the knowledgE economy takes hold in the city.
"Our vision is to be a smart city and I think we have made huge strides towards this goal. Call centres are beginning to look at the city as a favourable place to establish their businesses."
In fact, the city is doing a lot to encourage investment. Soon after its first investment conference in 2000, it implemented a generous and flexible package of concessions to investors looking to expand existing businesses or develop new businesses.
Concessions include discounts on electricity, water, sewage, refuse removal as well as refunds 011 rates and building plans. The city will also consider special concessions in response to investors' specific requirements.
"The programme has been extremely successful. III the past three years, we have granted 5O concessions to new businesses and 5O to expanding businesses In the process, we have developed a reputation as all investor-friendly city."
The city has established an investment facilitation team that meets twice a month. The team is responsible for looking after potential investors and doing all it call to smooth the process.
"Should a developer come to us with a proposal, We pride ourselves on providing an 'in principle' answer within 20 minutes. A project champion is identified, who then liaises with the developer to ensure the process runs smoothly from that point on.
"The fact is that the municipality does not survive financially by having vacant land. We survive because the land is developed. It creates a demand for water, electricity and services. It creates employment and leads to a development cycle, which is ultimately what will drive the city forward."
Haswell also takes a progressive approach to managing the informal economy, saying that it plays a vital role in poverty alleviation.
"The people trading on the streets are not nuisances. They are breadwinners, helping many thousands of families survive. We need to look at the situation positively and determine opportunities for growth rather than trying to chase them off the streets."
His view is that the focus should really be on transforming street traders into small, micro and medium enterprises. The Freedom Square development will do this through a small trader mall adjacent to the taxi rank. Haswell estimates that over 120 informal traders will be given the skills, resources and facilities to become small businesses.
The city is also engaged in a project to transform 200 disused stables into small shops where African and Indian arts, craft music and food can be sold. The advantage is that the stables are situated in the CBD extension node, where there is good access to high-value trade.
"Too often, municipalities make the mistake of moving informal traders out of sight and away from foot traffic when they try to formalise the sector. This only condemns them to bankruptcy. Both the Freedom Square mall and the stables will give traders good access to pedestrian flow."
He adds that the core philosophy underpinning these and other solutions is that the municipality owes its existence to the citizens of the town.
"Bathu pele is not about being nice to our customers in an abstract way. We work for the people. South African cities need to recognise this and react with determination and imagination if they are to move effectively into the post-apartheid era. I believe that Msunduzi is well on its way."
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