ZDME:
ZULULAND DISTRICT MUNICIPALITY 2009/2010 TABLED BUDGET
PART 1
1. Demographic Information
The Zululand District Municipality is one of the ten district municipalities in KwaZulu Natal. It
operates in the northern part of the province. Approximately half the area is under the jurisdiction
of traditional authorities while the remainder is divided between commercially-owned farns and
conservation areas. The area is predominantly rural and the population is sparsely dispersed over
14 810 km². The major towns forming part of the district are eDumbe, Abaqulusi, Nongoma,
Pongola and Ulundi.
The district serves a population of 964 005 people of whom 74.6 % reside in the rural areas, with
the balance in the urban and/or per-urban areas. The district is characterized by high
unemployment and poverty and, as such, the Zululand District Municipality has been identified as a
Nodal Point.
The municipality is isolated from the national economy mainly due its location in relation to
transport and distance from major centres. The traditional areas are poverty-stricken and depend
upon the little economic output that is generated in the towns that are situated within the district.
Despite this negative backdrop against which the Zululand economy has to perform, there are
unique characteristics that present a range of economic development opportunities in the district.
These are in relation to tourism and agriculture. The former has started to play a larger role in the
economy of area, although this does not fill the gaps caused by the closure of the mines. The
mines have significant forward and backward linkages on all the economic sectors, particularly in
Vryheid and the surrounding areas.
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MAP OF THE ZULULAND DISTRICT MUNICIPALITY
The table below shows the population distribution per local municipality
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Total Households count per Local Muncipality
2001
2007
LM Name
Abaqulusi
eDumbe
Nongoma
Ulundi
uPongola
LM
KZ263
KZ261
KZ265
KZ266
KZ262
Households
32312
11611
27947
27957
16289
Households
36044
15025
34043
35319
22112
116116
142543
Number of people
243766
101614
230233
238862
149543
964018
Growth
% Growth
3732
3414
6096
7362
5823
26427
14%
13%
23%
28%
22%
100%
A few key statistics are summarised hereunder:
INDICATOR
ZULULAND
Area
Population (2007)
Households
People per Household
% Urban Households
% Rural Households
Gender breakdown
14 810 km²
964 005 people
142 543
6,763
25,4%
74,6%
Males 46,5 %
Females 53,5 %
0 – 14 38,9%
15 – 64 56,9%
65 +
4,2%
Age breakdown
Source: Zululand DM GIS 2008
Table 2
Total Rural Household count per category per Local Muncipality
2001
2007
LM Name CATEGORY
Abaqulusi
Rural
eDumbe
Rural
Nongoma
Rural
Ulundi
Rural
uPongola
Rural
Households
18666
11097
27105
25260
13359
Households
15714
9843
33289
29269
18165
95487
106280
Table 3
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% of Total
Growth % Growth
14.8
-2952
8%
9.4
-1254
9%
31.3
6184
12%
27.5
4009
12%
17.0
4806
14%
100.0
10793
11%
Total Urban Household count per category per Local Muncipality
2001
2007
LM Name
Abaqulusi
eDumbe
Nongoma
Ulundi
uPongola
CATEGORY
Urban
Urban
Urban
Urban
Urban
Households
13646
514
842
2697
2930
20629
Households
% of Total Growth % Growth
20330
56.1
6684
15%
5181
14.3
4667
101%
753
2
-89
9%
6052
16.7
3355
22%
3947
10.9
1017
13%
36263
100
15634
18%
These figures shown in the tables illustrate a tendency for a reduction in the Rural Population in
Abaqulusi and eDumbe with significant growth in the urban areas. The other municipalities have
all experienced rural growth with only Ulundi showing significant urban growth. The official Stats
SA figures show that in 2005 there were 144 000 households within Zululand and 964 005 people.
This gives an average of 6.763 people per household. The aerial count conducted, shows there is
a total of 142 543 households in 2007. If we take the official figure of 6.763 people per household,
and multiply it with 142 543, it brings the total number of people in Zululand to 964 005.
The following should be noted with regards to the population of this district:






Abaqulusi (243766) and Edumbe (101607) local municipalities are home to the highest and
lowest proportions of Zululand District’s population, respectively.
In terms of geographic area, Abaqulusi is the largest (4184 km²), Ulundi (3256 km²), uPhongolo
(3236 km²), Nongoma (2185 km²) and eDumbe (1948 km²).
Low levels of urbanization, approximately 68.79% of the people in the District are located in
rural areas.
A female population (53.5%) that is significantly higher than the male population (46.5%) which
could be attributed to migration patterns in the province in general.
There are large disparities in settlement concentrations such that Ulundi and Edumbe are home
to the highest and lowest proportion of population, i.e. 26% and 10% respectively.
Urbanization rates among the local municipalities indicate that Abaqulusi Municipality has the
highest rate of urbanization i.e. 56 %, Ulundi follows with 16% and Edumbe at 8%. uPhongolo
has 8% urbanisation rate, and Nongoma have a negative urbanization rate.
2. Medium term service delivery objectives as stated in the Integrated Development Plan
(IDP):
a. The medium term service delivery objectives of Zululand District Municipality includes
the following strategic focus areas and objectives:
i. Service delivery- Primarily focusing on the eradication of water and sanitation
backlogs through the implementation of regional schemes. Our ultimate
objectives are to progressively provide a cost effective, reliable water services
at a good quality to all potential consumers in the district.
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ii. Economic development- The objective is to improve the economy of the
district through the creation of job opportunities and additional economic
activities.
iii. Social development- The objective is to reduce the occurrence and impact of
HIV/Aids and to develop and empower youth, gender and communities in the
district.
iv. Institutional development- The focus is on employment equity with the
objective of transforming the municipality and capacity development for
effective service delivery.
v. Financial management- our objective is to ensure sound financial
management by promoting good financial practices with a view of ensuring a
financially viable municipality.
vi. Good governance and public participation- The objectives are to promote
good governance, accountability and transparency; to operate the municipality
at a minimum risk level.
vii. Other focus areas include:
1. Municipal airports
2. Municipal roads
3. Regulation of passenger transport services
4. Fire fighting
5. Disaster management
6. Solid waste
7. Municipal health services
8. Regional fresh produce markets & abattoirs
9. District cemeteries
10. District tourism
3. Financial implications of the medium term service delivery objectives:
As a water services authority ZDM spends a substantial portion of the municipal
infrastructure grant (MIG) on water and sanitation projects. The recovery rate of water tariffs
is very low due to the fact that the population within the district is predominantly rural and
poor such that the level of service in these areas take the form of communal stand pipes.
As a result, the water is provided as a free basic service with no recovery at all.
As a rural node, the district does not have major industries and economic hubs. As a result,
unemployment is rife and cross subsidization is not possible. Therefore, the district is
heavily dependent on grant funding to implement its mandate in terms of the constitution of
the Republic.
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4. The 2009/2010 budget
4.1.
Legislative framework
The 2009/2010 budget is prepared in accordance with the Local Government; Municipal
Finance Management Act, 2003 Draft Municipal Budget and reporting regulations issued by
the Minister in terms of Section 168(1) of the Act. In terms of these regulations a multi-year
budget spanning over three (3) years is prepared. It needs to be noted that the figures for
2010/2011 and 2011/2012 are indicative in terms of the medium term expenditure
framework. The functions have been ring-fenced in terms of the Council vote structure
4.2.
Linkages between the budget, the IDP and political priorities
Firstly, the budget timetable and the IDP process plan are aligned through an integrated
time schedule.
Secondly, the IDP is prepared and the projects therefrom are included in the budget with
each project properly reference per IDP reference number.
Moreover, the financial plan comprising the total budget, among other items, is included in
the IDP.
Finally, the implementation of water and sanitation projects and other assigned functions
through the structures Act constitutes compliance with National, Provincial and Local
development goals to eradicate backlogs of the past.
4.3. The budget is summarized in more detail in the attached budget schedules.
However, the comments on the budget are as follows:
MAIN BUDGET SUMMARY
2008/2009
2009/2010
% CHANGE
Total operating budget
Capital budget
R213 246 141
R239 240 600
R213 243 337
R205 935 650
-14
Total budget
R452 486 741
R419 178 987
-7
The total budget decreased by R 33 307 754.
With the above background, it is important to highlight the major causes for such decreases
in both the operating and capital budgets. This will be done through the highlights section.
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Firstly, the operating budget will be reviewed. Thereafter, the Capital budget will be
subjected to a review. The comments are as follows:
5.
HIGHLIGHTS OF THE EXPENDITURE
5.1.
OPERATING EXPENDITURE
 Employee Related Costs
The employee related costs comprises 30% of the total operating budget. This
represents an increase of the salary component from R57 309 231 (2008/09) to
R66 457 991(2009/2010). The primary reason for the increase is the annual across
the board increment of 12.8%. The increment is based on the high inflation level and
the indicative bargaining council figures. Secondly, new positions have had to be
provided for as a result of the increased functions. The new positions included in the
operating budget are as follows:


Secretary- Community Development
HOD-Community Development
 Remuneration of Councilors
A 12.8% increment for Councilor’s remuneration is provided for.
Repairs and Maintenance
Vehicles
This is provided for due to the high expenditure on maintenance of the water tankers
and the poor conditions of vehicles. New vehicles were budgeted for to replace
existing vehicles that should be replaced in terms of council policy.
Preventative Maintenance & Services
The budgeted amount is primarily decreased due to the decrease of DWAF grant.
Operation Rural Water Schemes
These funds are set aside for the maintenance of rural water schemes and to ensure
sustainability of such schemes.
Operation and Maintenance of Sport field and Swimming Pool.
Provision is made for the maintenance of Ulundi Regional Sports stadium and
Swimming Pool.
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 Bulk Water Purification and Sewerage Treatment
Bulk sewerage treatment and bulk water purification is based on the existing contract
and there are no major increases.
Bulk electricity has also increased as a result of the expected above average
increment estimated at 25% by Eskom.
 Grants and Subsidies Paid
The Grants and Subsidies have been phased out as there are no more grants
received as part of equitable share. The only grants that are still payable to the local
municipalities are the Tourism grants and the WSP grant to Abaqulusi local
municipality.
 General Expenses
The major items that have increased during the 2009/10 in this category
include:
Fuel & Oil – The increase is based on actual petrol card consumption and provision
for the new vehicles to be purchased.
Operation and Maintenance of the airport. The amount is based on the R 4.8m
grant actually receivable from the Office of the Premier for the operation and
maintenance of the airport.
Items with direct impact on communities include the following:
Poverty alleviation
LED
Community Development
Emergency water
Youth Affairs
Disaster Management centre
Budget and IDP community participation
Women’ day celebration
Annual report back
Elderly function
Kids Christmas party
Ingoma Dance Competition
Musical festival
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R 1,264,000
670,000
1,528,000
13,680,000
447,000
1, 264.800
3, 162,000
495,000
421,000
895,000
316,200
279,574
527,000
Marathon
KwaNaloga Games
Youth Summit
Women Summit
Community participation
Ward projects (81 x 50,000)
Widows & Orphans (81x20, 000)
Total Community and Social Expenditure
540,000
1, 297,000
230,000
230,000
1, 897,200
4, 050,000
1 ,620,000
R34, 813,774
5.2. CAPITAL EXPENDITURE
The capital projects budgeted for are as follows:
Revenue contributions (own funds)
Vehicles
Furniture and Equipment
Computers
Software & Licences
New offices
Community hall
Electronic Document Management System
Sub Total
DWAF-Funds
Mandlakazi
Usuthu
Water and Sanitation @ Schools & Clinics
Sub Total
3, 730,000
192,844
870,000
1, 507,806
7, 000,000
2, 500,000
4, 000,000
16, 475,650
11,077,000
11,077,000
5,918,000
28,072,000
DWAF has decreased from R89, 918,000 to R28, 072,000
MIG Funds
Mandlakazi
Coronation Enyathi
Hlahlindlela/ Emondlo
Khambi
Simdlangentsha Central
Simdlangentsha East
Osuthu Regional
Rudimentary
Simdlangentsha West
Nkonjeni
Upgrade Sports complex
Rural sanitation
14,174,626
1 21,000
11,000,000
7,586,883
5,000,000
5,000,000
31,014,151
17,003,792
4,301,000
29,483,720
8,437,145
20,000,000
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Sub Total MIG
161,388,000
MIG has increased from R127, 541,000 to R161, 388,000
TOTAL CAPITAL
205,935,650
3. HIGHLIGHTS OF INCOME
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3. 1 OPERATING INCOME
The sources of funding are important to ensure that the budget is actually funded and
cash backed. The following items warrant specific mention:
 SALE OF WATER AND SEWERAGE FEES
Sale of water increased due to the proposed change in tariff structure wherein alone
water schemes (not part of an ordinary network) stand. The amounts budgeted for
has not taken into account the payment level and as a result, a 25% provision for
working capital reserve (provision for non collection) has been made. The R1.89
sewer excess on water consumption above 40kl be discontinued and the basic
charge be increased by R4, 00 per household per month.
 INTEREST INCOME
Interest Income is expected to increase as a result of higher interest rates, from
R12, 000,000 to R13, 000,000
 EQUITABLE SHARE
Equitable share has been substantially increased from R 127,541,000 to
R 159, 047,000
 WATER SERVICES OPERATING GRANT.
Water services operating grant has decreased from R 5,102,000 to R 4,441,000
 PROVINCIAL GRANTS.
Provincial grants are based on the provincial 2009/10 budget statements.
3. 2 CAPITAL INCOME
The capital expenditure shall be funded as follows:
Own revenue
MIG
DWAF
R
Total
16,460,000
161,388,000
28,072,000
R205, 920,000
4. FREE BASIC WATER
Free Basic Water of 6 kilolitres per household per month is provided for. The present policy
of providing free Basic Water for unmetered rural consumption remains unchanged. Free
Basic Water is also provided in the rural schemes which are not breaking even or where the
cost of billing and collection far exceeds the revenue to be derived from the scheme.
Any other consumption is billed at applicable tariffs.
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5.
PROPOSED TARIFFS
5.1
WATER TARIFFS
The takeover of water services from different municipalities with different tariffs has been
challenging. The ultimate aim of ZDM is to charge a single tariff for the same consumption
throughout the District. However, this cannot be achieved overnight and must be phased in.
As a result, municipalities with lower tariffs need to “catch up” over time. In addition, high
water consumption is charged at a higher tariff so as to discourage excessive water
consumption.
5.2
SEWERAGE TARIFFS
Due to numerous complaints regarding sewer excess, it is proposed that the sewer excess
tariff of R1.89 per kiloliter of water consumption be discontinued and an additional fixed
charge of R4.00 per household per month i.e. tariff be increased from R 42.00 to R46.00.
The applicable tariffs are attached in the budget report.
6.
BUDGET RELATED RESOLUTIONS
 The Full Council resolves that the tabled budget of the municipal for the year 2009/10; and
indicative for the two projected outer years 20010/11 and 2011/12 be approved for public
comments as set-out in the following schedules:










Table A1 Budget Summary.
Table A2 Budgeted Financial Performance (revenue and expenditure by standard
classification).
Table A3 Budgeted Financial Performance (revenue and expenditure by municipal
vote).
Table A4 Budgeted Financial Performance (revenue and expenditure).
Table A5 Budgeted Capital expenditure by vote, standard classification and funding.
Table A6 Budgeted Financial Position.
Table A7 Budgeted Cash Flows
Table A8 Cash backed reserves/accumulated surplus reconciliation
Table A9 Asset Management
Table A10 Basic service delivery measurements
 The Municipal Manager to be authorized to proceed with the procedure as stipulated in the
MFMA and in terms of the guidelines stipulated by the Minister in terms of Section 168(1) of the
Act.
 The grants be accepted and approved with appreciation.
 The staff structure be approved as budgeted for.
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