Chief Albert Luthuli Local Municipality

Mr Vusumuzi Nelson Mpila,
Municipal Manager

Welcome to Chief Albert Luthuli Local Municipality’s official Commonwealth profile.

Our vision is to establish Chief Albert Luthuli as a transparent, innovative and developmental municipality in South Africa; a municipality that consistently strives to improve the quality of life for its citizens. We are determined to promote an enabling environment within which the economy of our municipality can thrive.

It is for this reason that we are opening up the untapped resources of Chief Albert Luthuli for international investment and partnering and, as a proud partner of the Commonwealth, I invite you to bring your business to South Africa and see it to fruition.

Invest in Chief Albert Luthuli; invest in people.

Chief Albert Luthuli Local Municipality is located in the Gert Sibande District, Mpumalanga Province.

Agriculture, mining and manufacturing are among the municipality’s main economic sectors. The mining of precious stones and coal is prevalent in the area, particularly around Carolina, accompanied by a significant amount of farming activity.

Contact

PO BOX 24,

Kerk Street,
Carolina,
1185,
Mpumalanga

Tel: +27 17 843 4000

Our mission

To provide a transparent and accountable government by: –

• rendering affordable and sustainable services, and
• encouraging economic and social development through community participation.

The New Growth Path

This National Policy framework deals specifically with issues such as creating decent work, reducing inequality and defeating poverty through “a restructuring of the South African economy to improve its performance in terms of labour absorption as well as the composition and rate of growth”. Of practical consequence to local government, are the specific job drivers that have been identified:

1. Substantial public investment in infrastructure both to create employment directly, in construction, operation and maintenance as well as the production of inputs, and indirectly by improving efficiency across the economy.

2. Targeting more labour-absorbing activities across the main economic sectors – the agricultural and mining value chains, manufacturing and services.

3. Taking advantage of new opportunities in the knowledge and green economies.

4. Leveraging social capital in the social economy and the public services.

5. Fostering rural development and regional integration. As a first step, it is proposed that efforts to support employment creation in the following key sectors should be prioritised:

• infrastructure
• the agricultural value chain
• the mining value chain
• the green economy
• manufacturing sectors, which are included in IPAP2, and
• tourism and certain high-level services.

Financial Strategy

It must be noted that not all municipalities are the same and this should be kept in mind when assessing the financial health of, and the setting of benchmarks for a municipality.

With the demands for growth, come risks that need to be managed. Wherever possible, the municipality will set benchmarks appropriate for a developing – growing municipality and strive to achieve these benchmarks within the medium-term.

The priority from the financial perspective is the viability and sustainability of the municipality. The financial plan and related strategies will need to address a number of key areas in order to achieve this goal. The areas, which have been identified, are detailed below.

The Financial Management Framework

It is essential that the municipality has access to adequate sources of revenue, from both its own operations and intergovernmental transfers, to enable it to carry out its functions. It is furthermore necessary that there is a reasonable degree of certainty with regard to source, amount and timing of revenue.

Sustainability

The municipality needs to ensure that its budget is balanced (income covers expenditure). As there are limits on revenue, it is necessary to ensure that services are provided at levels that are affordable, and that the full costs of service delivery are recovered. However, to ensure that households, which are too poor to pay for even a proportion of service costs, at least have access to basic services, there is a need for subsidisation of these households.

Effective and Efficient Use of Resources

In an environment of limited resources, it is essential that the Council make maximum use of the resources at its disposal by using them in an effective and efficient manner. Efficiency in operations and investment will increase poor people’s access to basic services.

Accountability, Transparency and Good Governance

The municipality is accountable to the people who provide the resources, for what they do with the resources. The budgeting process and other financial decisions should be open to public scrutiny and participation. In addition, the accounting and financial reporting procedures must minimise opportunities for corruption. It is also essential that accurate financial information is produced within acceptable time-frames. The municipality has received a Disclaimer opinion for 2010/2011 financial from Auditor General, and action plan has been put in place to address the management issues.

Equity and Redistribution

The municipality must treat people fairly and justly when it comes to the provision of services. In the same way the municipality should be treated equitably by national and provincial government when it comes to intergovernmental transfers. The ‘equitable share’ from national government will be used primarily for targeted subsidies to poorer households. In addition, the municipality will continue to cross-subsidise between highand low-income consumers within a specific service (e.g. electricity) or between services.

Development and Investment

In order to deal effectively with backlogs in services, there is a need for the municipality to maximise its investment in municipal infrastructure. The other funding mechanism that will be explored will be

Borrowing

The strong capital market in South Africa (banks and other lending institutions like DBSA, INCA etc.) provides an additional instrument to access financial resources. However, it is clear that the municipality cannot borrow to balance its budget and pay for overspending. The municipality’s credit rating should also looked at.

Strategies and Programmes

Strategies and programmes will be identified to form part of the financial plan to achieve the desired objective of improved financial viability and sustainability of the municipality. Time frames will be developed for each of the projects that have been identified.

Revenue Enhancement Strategy

The Council has developed revenue enhancement strategy. The strategy estimate annual revenues through a conservative, objective and analytical process based on realistically expected income. The municipality will consider market rates and charges levied by other public and private organizations for similar services in establishing rates, fees and charges.

The municipality will implement a new valuation roll based on market values of all properties within its boundary as well as periodically review the cost of activities supported by user fees to determine the impact of inflation and other cost increases. Fees will be adjusted where appropriate to reflect these increases.

Tariffs have been set to reflect the development and social policies of the Council. The municipality will continue to identify and pursue grants and appropriations from Province, Central Government and other agencies that are consistent with the Council’s goals and strategic plan. The Council will follow an aggressive policy of collecting revenues.