City's capped budget safe for residents
Minister says the municipality's revised budget proposals do not 'make economic sense'.
03 February 2019 | Government
If I sign a blank cheque for N$1.5 billion, the City will become bankrupt, Peya Mushelenga, minister
Rural and urban development minister Peya Mushelenga confirmed this week that the painstaking and nearly six-month approach he adopted before he approved the city's capital budget, was in the best interest of residents and the most sensible economic option for the city.
In December, after the city had revised their initial N$934 million capital expenditure budget submitted in July, to N$632 million following an initial meeting with Mushelenga, the minister approved N$83 million on 12 December last year.
This was in stark contrast with the previous year's approved capital projects budget of N$716 million which had been approved by council before the approval of budgets was shifted to ministerial level.
In July the City received approval for the N$4.9 billion operational budget.
Mushelenga this week explained that after scrutinising the details of the initial budget submitted, he was seriously concerned about the N$1.5 billion deficit and asked the City to revise their budget.
“I am not your minister to just get things on the table and sign them. I went through the budget item by item,” he said, adding that at a subsequent meeting later that year, the City was still unable to explain how they would manage the budget economically.
“N$1.5 billion is not a joke. If I as a minister sign a blank cheque for N$1.5 billion, what will happen is that the City will become bankrupt and it will not function.”
He added that the City's revised budget proposals, like the initial submission, did not “make economic sense.”
He said he limited the capital expenditure budget to N$83 million in order to ensure that rate payers are not exposed to risky financial manoeuvres. “If I had not done that, perhaps by now you would have had your water, or electricity shut down, or your rates and taxes tripled because there are no revenues,” the minister explained.
In terms of funding strategies to boost the available capital expenditure budget, City spokesperson Harold Akwenye said the “immediate solution is to freeze and cut expenditures to create capacity for taking of external loans to fund capital projects”.
Other plans could include emergency and security levies, he added.
The available capital budget has been divided into N$29.4 million for land development, N$20 million for electricity projects, N$17 million towards motor vehicles and other equipment, N$10 million towards roads, sewer and water infrastructure and N$7.1 million for other projects.
The delays have not affected expansion projects in terms of land development, as these projects are handled currently through private-public partnerships, the City explained.
Informal settlement electrification was partly affected however, and is progressing at a slower speed than desired.
To date, N$22 million has been spent on capital expenditure, of which N$8.4 million was spent on electricity-related capital expenditure in respect of informal settlements.
Akwenye says that while new development of land in the short term is not affected by the limited capital budget, “improvement of existing and development of infrastructure and planning of new areas is affected as it is wholly financed by the city”, through residents and “trivial government assistance”.
He said a top priority for the city for the next five years is to find ways to make the City financially sustainable in the long run while continuing with maintenance of existing infrastructure to ensure continuation of service delivery to residents.
He added that the City will continue to focus on government engagement “for government to play its appropriate role especially when it comes to informal settlement, infrastructure development and public services”, including the City Police and emergency services.
Following a meeting between City managers and councillors with the head of state, President Hage Geingob, on Tuesday, a City manager pointed out that the limited capital expenditure budget will have a “definite impact” on addressing the crisis of informal settlements, which has been pushed onto the national agenda this week.
“There are land delivery projects that were part of the budget plans that cannot proceed,” he said.
The official added that the meeting with Geingob on the humanitarian crisis of informal settlements offered the city a chance to show that available resources are “being stretched to a limit.”
He said the research presented by the City shows clearly that informal settlements will double in less than a decade and pose a major threat to the city's stability. “All statistics indicate that unless there is a serious and committed engagement to assist and complement what the City is doing, we are heading for bad times. As we sit, we can't manage this problem now. We need to put a plan on the table to at least have projects in place to arrest the situation.”