SA Municipalities make good progress

Johannesburg - While progress has been made by South Africa’s cities - which are the engines of the economy - backlogs still remain, says Finance Minister Nhlanhla Nene.

Speaking at the Urban Investment Partnership Conference in Midrand, Johannesburg, the Minister said the country needs successful cities as they, like in many other countries, are the engines of the economy.

“The relatively small group of under 27 urban municipalities constitutes 7% of municipalities in the country but generate 80% of our national economic activity,” he said.

The Minister urged the eight metro municipalities gathered at the conference to invest wisely in urban infrastructure to support and enable efficient forms of urban economic and population growth which will be a determinant of South Africa’s economic future.

In addition, cities need adequate and effective investment to ensure that they’re sustainable and economically productive.

“Today the country’s eight metros provide a stable, successful platform of democratic local government that is able to manage ongoing urban growth and economic development. They collect close to 93.7% of their built revenue not withstanding growth in debtors resulting from the economic downturn which government is addressing,” explained Minister Nene.

In the last two years the audit outcomes of cities have improved with metropolitan municipalities experiencing stable political leadership.

In the past when apartheid ended many people worried about the financial health of cities given that they were required to extend services throughout their territories and many of the customers were poor.

These concerns caused most lenders including fund managers and insurance companies who invested for the long term to limit their exposure to municipal markets.

“Now more than 20 years into our democracy the metros have proved themselves. Of course tremendous challenges remain but the fact is that these cities have made remarkable progress in extending the availability of water, electricity and other services.

“Of course some backlogs do remain. Today most of the investment that the metros need is related to growth both economic and population growth and to the renewal of aging infrastructure,” he said.

He said the challenges the country faces in energy supply highlight the importance of investing in strategic infrastructure that supports economic activity.

“Our nation’s economic growth, our ability to create decent jobs, our ability to compete in the global economy all depend on successful cities that are channelling investment into infrastructure."

Cooperative Governance and Traditional Affairs Minister Pravin Gordhan agreed with Minister Nene saying that the metros are growing twice as fast as other cities and towns.

He added that government acknowledges that there exists a gap in dialogue between investors, developers and municipalities on urban development strategies.

Minister Gordhan said government is reaching out to the private sector.

“After 21 years of democracy we are still confronted with many challenges not withstanding our many successes. Our urban areas remain segregated in a significant way and hampered by apartheid spacial planning and its legacy. Our cities continue to face the enormous challenges of service delivery,” said Minister Gordhan.

Minister Nene said the country cannot continue to place poor people on the outskirts of cities far away from jobs and opportunities. “We must integrate our townships into the mainstream,” said Minister Nene.

Director General at National Treasury Lungisa Fuzile said cities have experienced exponential growth and that significant progress has been made in the metros to address basic service backlogs even with ongoing population growth.