Durban: Msunduzi Municipality’s revenue collection is expected to take a massive hit in the coming weeks and months owing to the looting of businesses and shopping malls in July.
Three malls and several other shops were vandalised in the unrest, placing nearly six thousand jobs at risk.
Msunduzi Municipality Chief Financial Officer (CFO) Nelly Ngcobo said this will have a bearing on municipal coffers, as businesses pay for monthly rates and municipal services.
In an executive committee meeting last week, she also pointed out that the burning of the malls would also place a huge burden on the residents from townships and rural parts of the KwaZulu-Natal capital.
“It must be indicated that the aftermath of the riots will also affect the revenue of the municipality, in that the affected businesses, especially small businesses, will struggle to pay for rates and services. Some households in the townships will also struggle to pay for services, due to the job losses caused by the damage to businesses,” said Ngcobo.
A report titled Impact On Revenue Due to Unrest in July, gives a detailed breakdown of the extent of the damage in Pietermaritzburg, highlighting:
– 155 businesses were looted
– 5 245 employees were affected
– Numerous buildings and equipment belonging to the municipality had been damaged.
The total impact of the damage is estimated to be R6 billion.
“The above stated figures have a severe impact on the economic growth of the City of Pietermaritzburg, although big businesses were affected, the people who will feel the aftermath of the riots, are those from the townships and our rural areas. The economic centres in our township that were feeding even our rural communities were the most affected by the riots. This means that unemployment in these areas is going to increase exponentially,” said Ngcobo.
She noted that although big businesses were affected and needed assistance, focus should also be given to small and uninsured businesses.
“Given that business makes up around 39% of the total receipts per month, consideration must be given to giving incentives to help these businesses get back on their feet quickly,” the CFO said..
The list of measures to assist businesses would include:
* Seeking and advancing small business start-ups to create jobs
* Reducing red tape in the process of demolishing buildings
* Introducing rates rebates during demolishing and reconstruction phases
* Introducing incentives such as reduction in electricity and water connection fees for the affected businesses.
DA councillor Sibongiseni Majola said they welcomed the report, as it was comprehensive and provided a clear picture of the challenges faced by the municipality following the riots.
“In principle, businesses should be assisted as they provide at two levels namely, in paying the municipality for services rendered, as well as providing employment to people who are the source of income because they come from households,” said the DA caucus leader.
He maintained that the party would like to see leaders being held accountable, especially those in the security cluster.
Mayor and ANC leader in the municipality Mzimkhulu Thebolla admitted that the capital city had been badly hit by the riots at a time when it was still trying to recover from a bad financial position.
“We welcome the report in that it is frank. Given our financial position, it is clear that we will need a lot of assistance from both the provincial and national spheres of government,” he said.
The assistance of businesses, he added, was crucial if the city was to recover and be financially viable.
The municipality was placed under administration in April 2019 after experiencing governance problems, and this led to the axing of city manager Sizwe Hadebe and the demotion of mayor Themba Njilo in August 2019.
KwaZulu-Natal Department of Cooperative Governance and Traditional Affairs spokesperson Senzelwe Mzila said the department has deployed technical experts in the field of municipal finances to assist in assessing and turning around the situation following the unrest.
“The municipality has made submissions to the National Treasury for authority to review its 2021/2022 budget, due to the impact of the recent civil unrest. The department, together with Provincial Treasury, are supporting the municipality in this regard,” said Mzila.