Buffalo City Metro may be forced to effect minimal electricity tariff increases in the future in a bid to encourage investors to remain in the city.
Premier Phumulo Masualle said effecting such guidelines was the only solution following discussions between his office and the business sector on the reasons why some investors were leaving the Eastern Cape for provinces such as Gauteng, KwaZulu-Natal and the Western Cape.
He said when they used a similar strategy in Nelson Mandela Metro earlier this year, when investors threatened to pull out due to high municipal bills, the industry reacted positively.
“We’ve got to look at those and make amends even in BCM,” Masualle said.
Key to the discussions are ways of dealing with unemployment in the province, especially in BCM as unemployed people from rural areas flock to major cities seeking job opportunities.
The latest StatsSA reports show that the province’s unemployment rate is 42.5%, the highest in South Africa.
BCM is one of the municipalities which are hit hardest as 35% of the workforce among the metro’s 755200 residents are jobless and 45.1% of Buffalo City’s youth are unemployed.
Masualle said: “In Port Elizabeth we have had to negotiate and say, look you can’t be expecting this much higher from these people because then they can go to Lesotho…to Botswana where they have far less to pay.
“They would rather settle there. I think it’s something that requires all of us to put our heads together. We have begun doing that. It’s going to be one of our foremost priorities in the coming year on how we tackle unemployment.
“It’s a matter that we want Buffalo City to also focus on in the coming year.”
National African Federated Chamber of Business provincial chairman Phumzile Ndendela confirmed the discussions with the provincial government through the Eastern Cape Socio-Economic Consultative Council (Ecsecc), saying Masualle’s decision to intervene “was most welcome”.
“We sit in the Ecsecc board and the issue of high tariffs has been a major concern to business and we have been pleading with government to try and create an enabling environment for investors to make the Eastern Cape, and our metros, the destination of choice to open their businesses. So this is a step in the right direction,” Ndendela said.
Masualle said the increases in tariffs had more to do with the flawed way in which municipalities were budgeting, “because sometimes they frame their budgets and expect certain revenues”.
In July last year electricity tariffs alone increased by 12.2% while the previous year (July 2014) electricity increased by 8.5%, refuse 12.5%, sewerage 10.5% and the fire levy 9.5%.
The Dispatch reported at the time that cries from opposition parties fell on deaf ears, with COPE’s Khayalandile Twalingca describing the increase as “anti the poor and workers”.
The DA’s Lance Weyer said the three-year trend of tariff hikes would do worse than scare new investors off.
“We are not only driving business away but increasing the number of defaulters…many of the city ratepayers cannot afford to pay,” Lance warned the council at the time.
The Dispatch reported last September that Bhisho’s executive council had assigned economic affairs MEC Sakhumzi Somyo to craft an intervention plan to save more than 800 jobs.
This after Ecsecc alerted the provincial government that three companies were on the verge of closing and moving to more viable cities.
Ecsecc identified Seating (Pty) Ltd, Vektronix (Pty) Ltd and Time clothing, a textile company based in East London, as needing urgent intervention.
It was unclear whether such discussions yielded any positive results. But the premier cited unaffordable rates increases in the province’s municipalities as the root cause of the exodus of business from the province.
Masualle said: “When you take away something, you have to give something. In that discussion with BCM, we will have to have a win-win situation.
“We can’t afford losing industrialists and investors…because there is a lot to gain even for Buffalo City when more employment is created here.”
Border-Kei Chamber of Business (BKCOB) head Les Holbrook said it had been monitoring BCM tariff increases and when the metro decided in 2012-13 to top up Nersa’s recommended increases, “we objected because we felt the increase was sufficient”.
“However, the BKCOB agreed to waive further protests because we acknowledged that more needed to be spent on maintenance and replacement of old infrastructure,” he said.
Overall, Holbrook said, doing business in the metro remained a serious challenge.
BCM looks at minimal electricity tariff hikes
Premier Phumulo Masualle said effecting such guidelines was the only solution following discussions between his office and the business sector on the reasons why some investors were leaving the Eastern Cape for provinces such as Gauteng, KwaZulu-Natal and the Western Cape.
He said when they used a similar strategy in Nelson Mandela Metro earlier this year, when investors threatened to pull out due to high municipal bills, the industry reacted positively.
“We’ve got to look at those and make amends even in BCM,” Masualle said.
Key to the discussions are ways of dealing with unemployment in the province, especially in BCM as unemployed people from rural areas flock to major cities seeking job opportunities.
The latest StatsSA reports show that the province’s unemployment rate is 42.5%, the highest in South Africa.
BCM is one of the municipalities which are hit hardest as 35% of the workforce among the metro’s 755200 residents are jobless and 45.1% of Buffalo City’s youth are unemployed.
Masualle said: “In Port Elizabeth we have had to negotiate and say, look you can’t be expecting this much higher from these people because then they can go to Lesotho…to Botswana where they have far less to pay.
“They would rather settle there. I think it’s something that requires all of us to put our heads together. We have begun doing that. It’s going to be one of our foremost priorities in the coming year on how we tackle unemployment.
“It’s a matter that we want Buffalo City to also focus on in the coming year.”
National African Federated Chamber of Business provincial chairman Phumzile Ndendela confirmed the discussions with the provincial government through the Eastern Cape Socio-Economic Consultative Council (Ecsecc), saying Masualle’s decision to intervene “was most welcome”.
“We sit in the Ecsecc board and the issue of high tariffs has been a major concern to business and we have been pleading with government to try and create an enabling environment for investors to make the Eastern Cape, and our metros, the destination of choice to open their businesses. So this is a step in the right direction,” Ndendela said.
Masualle said the increases in tariffs had more to do with the flawed way in which municipalities were budgeting, “because sometimes they frame their budgets and expect certain revenues”.
In July last year electricity tariffs alone increased by 12.2% while the previous year (July 2014) electricity increased by 8.5%, refuse 12.5%, sewerage 10.5% and the fire levy 9.5%.
The Dispatch reported at the time that cries from opposition parties fell on deaf ears, with COPE’s Khayalandile Twalingca describing the increase as “anti the poor and workers”.
The DA’s Lance Weyer said the three-year trend of tariff hikes would do worse than scare new investors off.
“We are not only driving business away but increasing the number of defaulters…many of the city ratepayers cannot afford to pay,” Lance warned the council at the time.
The Dispatch reported last September that Bhisho’s executive council had assigned economic affairs MEC Sakhumzi Somyo to craft an intervention plan to save more than 800 jobs.
This after Ecsecc alerted the provincial government that three companies were on the verge of closing and moving to more viable cities.
Ecsecc identified Seating (Pty) Ltd, Vektronix (Pty) Ltd and Time clothing, a textile company based in East London, as needing urgent intervention.
It was unclear whether such discussions yielded any positive results. But the premier cited unaffordable rates increases in the province’s municipalities as the root cause of the exodus of business from the province.
Masualle said: “When you take away something, you have to give something. In that discussion with BCM, we will have to have a win-win situation.
“We can’t afford losing industrialists and investors…because there is a lot to gain even for Buffalo City when more employment is created here.”
Border-Kei Chamber of Business (BKCOB) head Les Holbrook said it had been monitoring BCM tariff increases and when the metro decided in 2012-13 to top up Nersa’s recommended increases, “we objected because we felt the increase was sufficient”.
“However, the BKCOB agreed to waive further protests because we acknowledged that more needed to be spent on maintenance and replacement of old infrastructure,” he said.
Overall, Holbrook said, doing business in the metro remained a serious challenge.
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