Speech Alderman Ian Neilson, Executive Deputy Mayor and Mayoral Committee Member for Finance, City of Cape Town, to the Government Meets Business Forum, Wednesday, August 26 2015

Good morning to everyone.

I am sure we are all aware of the business mood in the country at the moment:

A feeling of despair on a sense of decline due to international downturns in economic growth, this time emanating from China, and thus lower demand for South Africa’s commodities

A collapsing currency

The country’s own-goals on issues such as visitor visas

An uncertain and unstable energy supply

Endemic corruption in the public sector – with yet another parastatal under the spotlight this week

But it is not like that everywhere in South Africa. And moments of vulnerability also signal the opening of opportunity for those who have prepared well. Necessity really is the mother of invention and disruptive technology too provides the basis for new industry.

What am I talking about?

Well, just as the failure to invest in infrastructure takes time to show itself in failure, as we see in much of the parastatals and national agencies, so too does ongoing investment in infrastructure and systems take time to show its value.

In the City of Cape Town, we have spent the past nine years on an ongoing basis paying sustained attention to dealing with our basic infrastructure, initiating and driving new projects, attending to a City legislative and policy process, and driving improvements to our systems and data sets. You may not see much in one year, but over a decade, a firm foundation has been laid that can project this rapidly growing city into the future.

Let us start with infrastructure. We have spent R40 billion on capital funding for infrastructure in nine years. But that is not all. We have grown spending on repairs and maintenance at a rapid rate – much higher than the growth in the city’s overall income. In the past four years alone, we have grown the repairs and maintenance spending by 90%, to R3,6 billion per year.

I think the results can be clearly seen. The streetlights work. The traffic lights work. Potholes are repaired within 72 hours. The water and sanitation systems continue to supply demand. The electricity system has few faults and supplies you when Eskom lets us.

We do have some major new investment requirements for both water and sanitation systems, but these are being planned for. The fact that both the electricity and water departments are profitable ensures that we have the means to plan for successful implementation of the required investment in infrastructure.

We know that there remain some key road congestion areas in the city, most notably in the eastern part of the city where there has been recent rapid development, in the far south, and in the Blouberg/Atlantis corridor. We are paying high attention to these needs and have just allocated an additional R40 million to bolster our response this year.

There are two new areas of infrastructure that we have also devoted considerable attention to since 2008.

The first is public transport. It is a matter that was neglected for decades in the City. Focus since the 1960s was on roads for motor cars, but it is clear that this is not a sustainable strategy, especially in the way that roads and parking gobble up land, and that we have to ensure that a much greater proportion of our public moves around on public transport rather than in motor cars.

We had to choose a technology appropriate for our current city configuration, inherited from an apartheid past, of low density and long commuter distances. We chose, I believe correctly, a bus rapid transit system, rather than higher order rail systems.

Phase 1 of the MyCiTi network, from Atlantis to Hout Bay via the CBD, is now fully operational together with express services to Khayelitsha and Mitchells Plain from the CBD. The success of the system can be clearly seen from the uptake by the public. For example, the Table View to CBD trunk system now moves more people in the peak hour (with a bus every three minutes) down the single red bus lane than vehicles that move down the two other lanes. And we get them to the city faster, taking 35 minutes in the all-stops service and 20 minutes in an express bus, compared with 45 to 55 minutes by car.

We had 1,3 million passenger journeys on MyCiTi last month. There are 215 buses operational in the peak hour.

We are currently planning the implementation of Phase 2, which will see Khayelitsha and Mitchells Plain connected to Wynberg and Claremont – a key missing link in our public transport network.

Another success has been our City-owned broadband network, also started by Helen Zille when she was Mayor. We now have 789 km of fibre-optic cable installed in our comprehensive network, connecting City and Western Cape Government-owned buildings. We make capacity on our network available to the private sector and have eight licenced third party service providers utilising the network, who are providing internet services to customers through fibre and through Wi-Fi hotspots. We continue to roll this network out further and have plans to connect to the West African Cable System at Yzerfontein.

The City’s infrastructure roll-out is not random, but is guided by clear strategies, with the aim of transforming the city over time, away from the low-density apartheid model to one that is more compact and which advances operational efficiencies for service delivery, economic activity and personal time.

Of course we have had to first deal with areas where there are serious backlogs in services, which is why we chose the MyCiTi corridors as we did.

But our forward strategy is focused on transport-oriented development, with the intention to develop urban density along transport corridors. We have chosen the Voortrekker Road corridor and the N2 corridor, both broadly defined, as the focus for our intervention. We ensure that our infrastructure investment prioritises these areas, so that they can grow without hindrance. Thereafter, we focus investment in the secondary transport corridors.

Infrastructure is critical, but it does not alone provide an adequate platform for economic growth. We have to ensure that our regulatory environment is satisfactory and that our institutions of government are adequate and responsive.

As an example of a regulatory response, the City had 27 zoning schemes, each with its own definition of zoning categories and parameters. We have reduced that to a single zoning scheme, with much reduced controls. So, for example, there now much fewer times when applications have to be made for a departure or consent use, thus expanding the opportunities for land use on a particular property, and thus owner risk. We have reduced parking ratios on transport corridors and reduced them even more near stations, so that development costs in our priority development areas are reduced.

We have also instituted an online system of building plan submission. It has the advantage that the plans can be circulated to the various service departments instantly and simultaneously, rather than one after the other through a messenger service. We have set time limits that departments have to comment on the plans, all of which leads to a shorter time for plan approval.

An example of systems and data improvement is what we refer to as the Property Value Chain. We have amalgamated our land-use database and ERP database system so that we can deal with individual properties in a holistic and automated manner. Building plan or rezoning approval leads to an automatic referral to the valuations department to revalue the property and to the revenue department to adjust the rates. When a rates clearance certificate is applied for, it is now done online. The payment schedule can be issued immediately by e-mail, and when the conveyancer pays and uploads the required documents, the clearance certificate can be issued within a few days, online with the required electronic signature, and then printed out in the conveyancer’s office. We aim to get it down to a single day service. We then get daily downloads from the Deeds Office of new registrations and the new owner’s account is automatically created and the seller’s account closed. We are now also implementing automatic payment of credit to the seller via the conveyancer.

Another key usage of data that has helped us plan better is what we call the ECAMP system – Economic Areas Management Plan. We have analysed all our business areas – retail, commercial, office, industrial, by various measures, but principally by potential for development and by actual development rates, which has allowed us to better understand the economic dynamic underlying each business area and fashion the appropriate interventions. Those areas, such as the V&A Waterfront, that have great dynamic, need little intervention, but we have to address their ingoing service needs; while an area such as Atlantis, with great potential but little growth needs a totally different type of intervention.

ECAMP data is all available to anyone online via our website and can be very useful in planning where to locate a business or development.

All of this has, of course, only been possible because the City is strong financially. Our R38 billion a year budget is, in the terms of National Treasury, ‘credible and fully funded’. Our property owners pay their bills, and we have a 96 – 97% collection rate each year. The City funds over 80% of its operating costs and half of its capital budget through its own resources. We have moderate debt levels and the highest local government credit rating in the country. We have 11 years of unqualified audits from the Auditor-General.

I do not have time to sketch the City’s social interventions. These include the provision of a basic package of free services to an extensive part of our population, not limited to water, sewerage and electricity, but also a primary health care system that has over 10 million patient visits per year. We have a very effective law enforcement service and fire service. We have strong anti-drug and anti-crime campaigns.

What I hope I have been able to sketch to you, and it is by no means a complete picture of progress, is that the City Council has not moved backwards as may be experienced elsewhere in the country. Despite our population growing by 30% over 10 years to an estimated 4 million people, the approach of putting our heads down and getting on with it has borne fruit. Despite the many ongoing challenges that will face the city over the coming decade and beyond, physically, operationally and financially, we are in a strong position and provide a strong platform for the city economy to operate.

We are progressively moving the city into the future while driving social stability.

But we can never do it alone, and I thank you all for paying your rates and services, for contributing to City Improvement Districts and for continuing to invest in our economy.

We are making progress possible. Together.

Issued by the City of Cape Town, August 26 2015