The eThekwini Municipality is confident that they will meet the requirements, by next month, to qualify for a R476 million from the National Treasury (NT) to improve water services in the Metro.
The NT grant is dispersing R54 billion over 6 years to improve trading services in municipalities. Ethekwini stands in line to receive R476 million for 2025/ 2026 while Johannesburg will receive R561 million and Cape Town R479 million.
However, these provisional allocations will be confirmed based on independent assessments of metros meeting the performance targets in their approved performance action plans. The release of the grant funding is expected in September this year.
To qualify there are 30 performance indicators, including 8 minimum commitments for the Performance Improvement Action Plan (PIAP). The last step is for the eThekwini Council to adopt the eight minimum commitments before the end of June, said Simon Scruton, the eThekwini Municipality deputy head of engineering and data services. He was updating the eThekwini Executive Committee (Exco) on Tuesday on the City’s commitments under the NT metro trading services program.
The eight minimum access conditions are:
- delegations
- organisational structure
- trading service leadership
- Service compact
- financial transparency
- budget
- business and investment planning
- change management capacity
Scruton said trading services were in distress around the country and that National Treasury launched an incentive based reform programme which amounts to R54 billion over 6 years.
“It is not a silver bullet but will transition the units into sustainable efficient ones providing the desired level of services,” he said.
Scruton said that the Ethekwini Water Services (EWS) completed 3 of the 4 steps towards meeting the requirements.
“Trading services are large, infrastructure-intensive operations which need to be managed in an integrated business approach,” Scruton said.
Challenges
Scruton said a structural problem contributes to a split in accountability, contributes to lack of financial transparency and results in a lack of management accountability. He said that governance failures contribute to loss of management skills and inefficiencies and leakages
“There are low cash revenues because of governance failures and structural problems. Low investment, due to inappropriate allocation of available grants and inefficient expenditure and the inability to raise loan finance,” Scruton said.
Scruton said business turnarounds are needed in almost all municipalities to stop the decline and improve services and there are five conditions that are needed to achieve and sustain business turnarounds:
“There needs to be a single point of management and accountability, turnaround in cash revenue, a financial surplus and defined relations between service and city and a fit for purpose organisational structure,” Scruton said.
The grant is meant to improve the performance, efficiency, reliability and financial sustainability of water and sanitation.
Scruton said that the eThekwini Council approved a Turnaround Strategy (TAS) in April 2023 to improve the efficiency of the Unit.
The TAS addresses 13 key areas of the water business over the short and medium term. A cornerstone of the strategy is to improve the financial position of EWS as this will enable the improved maintenance and replacement of assets. The non-revenue water (NRW) target for the next 3 years is to lower the NRW from 58% to 45%.
Themba Mvubu, EFF Exco member, said it was important that councillors conduct follow-ups and play a crucial role in oversight so that the unit does not “drop the ball”.
“The unit must not disappoint us in terms of not being able to spend this money. This is a very important process with the National Treasury so that we can turn the corner and make progress,” he said.
Nkosenhle Madlala, ANC Exco member, commended the team for working around the clock to ensure the municipality was compliant with the guidelines.
“In every executive meeting we should have the issue of water as a standing item. We must not miss the opportunity come June. We fully support this plan as most of the councillors have seen first hand the water crises in our constituencies,” he said.
Ethekwini Mayor Cyril Xaba said that the municipality’s water department is getting closer to a single point of management and accountability and that they were moving in the right direction.
“The structure of the unit needs to be discussed. They need to appoint competent people to the positions,” Xaba said.
