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REPORT TO BCMM COUNCIL: 29 JUNE 2020 


BUFFALO CITY METROPOLITAN MUNICIPALITY’S INTEGRATED 
DEVELOPMENT PLAN REVIEW, MEDIUM TERM REVENUE AND 
EXPENDITURE FRAMEWORK (MTREF) AND BUILT ENVIRONMENT 
PERFORMANCE PLAN (BEPP) FOR 2020/2021 


[File No: 4/3/2/1] 
[Author: EM (Xola Pakati)/as] 


1. PURPOSE 

The purpose of this report is for Council to adopt the 2020/2021 Integrated 
Development Plan (IDP) Review and Medium-Term Revenue and Expenditure 
Framework (MTREF) and Built Environment Performance Plan (BEPP). 

2. AUTHORITY 

Buffalo City Metropolitan Council. 

3. LEGAL / STATUTORY REQUIREMENTS 

3.1. The Constitution of the Republic of South Africa, Act 108 of 1996 

3.2. The Municipal Systems Act no. 32 of 2000, as amended; 

3.3. The Municipal Structures Act no. 117 of 1998; 

3.4. The Municipal Finance Management Act no. 56 of 2003; and 

3.5. MFMA Budget Circular 98 and 99 

3.6. The Disaster Management Act no. 57 of 2002 and Regulations 

4. BACKGROUND 

4.1 Integrated Development Plan (IDP) Review 

Council adopted an IDP/Budget/Performance Management System (PMS) 
Process Plan, in compliance with section 28 of the Municipal Systems Act no. 
32 of 2000 as amended. In the time schedule required in accordance with 
s21(1)(b) of the MFMA the Budget, IDP and Performance Management 
processes have been integrated with the IDP Process to ensure greater 



alignment, and efficient, effective and cost saving processes. The plan outlines 
the process to be followed in reviewing Buffalo City Municipality Metro’s 
Integrated Development Plan (IDP) and Budget. 

In terms of section 30(c) of the Municipal Systems Act, the Executive Mayor of 
a municipality must submit the Integrated Development Plan to the municipal 
council for adoption. 

Section 34 of the Municipal Systems Act 32 of 2000 as amended, further states 
that a municipal council must review its integrated development plan: 

(i) Annually in accordance with an assessment of its performance 
measurements; and 

(ii) To the extent that changing circumstances so demand. 

In compliance with the above, Buffalo City Metropolitan Municipality has 
embarked on a review to further develop its IDP and Budget towards the 
2020/2021 financial year in accordance with the requirements set out in the 
Municipal Systems Act 32 of 2000 as amended, the Local Government: 
Municipal Planning and Performance Management Regulations 2001 & 2006 
and the Municipal Finance Management Act 56 of 2003. 

Annual revisions allow the municipality to expand upon or refine plans and 
strategies, to include additional issues and to ensure that these plans and 
strategies inform institutional and financial planning. The review and 
amendment of the IDP thus, further develops the IDP and ensures that it 
remains the principal management tool and strategic instrument for the 
Municipality. 

In compliance with the above provisions, the Buffalo City Metropolitan 
Municipality’s 2020/21 reviewed IDP has been prepared and submitted to 
Council for adoption, kindly refer to table 1 below for the structure of the revised 
IDP. Refer to attached annexure A for the 2020/2021 Buffalo City Metropolitan 
Municipality Integrated Development Plan. 



Table 1: Structure of Revised IDP 2019/2020 


SECTION A 

INTRODUCTION 

Provides an outline of the legislative imperatives which guide the review of the integrated development 
plan. An overview of national and provincial plans which were taken into consideration during the 
development of the plan. It also outlines the process that was followed in the review of the IDP. 

SECTION B 

SITUATIONAL ANALYSIS 

This section provides an overview of the municipality focusing on the current situation, key challenges 
and opportunities in terms of each key performance area. Service delivery backlogs and level of access 
to municipal services is also outlined. This section also depicts the metro's first attempt at presenting a 
cohesive footprint of the whole of government's investment into the development of the metro, as guided 
by the Cabinet approved District/Metro Development Model initiated during 2019. 

SECTION C 

SPATIAL DEVELOPMENT FRAMEWORK 

This section details BCMM's current reality and a new vision for spatial development. It also outlines 
spatial development objectives and strategies as well as special development areas. 

SECTION D 

DEVELOPMENT OBJECTIVES, STRATEGIES, INDICATORS AND TARGETS 

Contains Council’s development objectives, strategies, indicators and targets for the entire term of 
Council. 

SECTION E 

BUDGET, PROGRAMMES AND PROJECTS 

This section details the capital budget which is aligned to IDP Objectives as well as programmes and 
projects. 

SECTION F 

FINANCIAL PLAN 

A strategic framework for financial management, key financial policies and strategies are outlined in 
this section. 

SECTION G 

BCMM OPERATIONAL PLAN 

This section outlines the structure of the municipality providing a breakdown for each directorate. 


4.2 Medium Term Revenue and Expenditure Framework (MTREF) Budget 

Section 16(1) of the Municipal Finance Management Act (MFMA) stipulates 
that the Council of the municipality must for each financial year approve an 
annual budget for the municipality before the start of that financial year. Section 
16(2) stipulates that in order to comply with subsection (1), the mayor of the 
municipality must table the annual budget at a council meeting 90 days before 
the start of the budget year. 

Section 22 of the MFMA states that immediately after an annual budget is 
tabled in a municipal council, the accounting officer must make public the 
annual budget and documents in terms of Section 17; invite the local 
community to submit representations in connection with the budget; and submit 
the annual budget to the National Treasury and the relevant Provincial Treasury 
in printed and electronic formats. 









In terms of section 23(2) of the MFMA, after considering all the budget 
submissions, the Council must give the Executive Mayor an opportunity: 

(a) To respond to the submissions; and 

(b) If necessary, to revise the budget and table amendments for 
consideration by the council. 

In terms of section 24 of the MFMA: 

1) “The municipal council must at least 30 days before the start of the 
budget year consider approval of the annual budget. 

2) An annual budget— 

(a) must be approved before the start of the budget year; 

(b) is approved by the adoption by the council of a resolution referred 
to in section 17(3)(a)(i); and 

(c) must be approved together with the adoption of resolutions as 
may be necessary— 

(i) imposing any municipal tax for the budget year; 

(ii) setting any municipal tariffs for the budget year; 

(iii) approving measurable performance objectives for 
revenue from each source and for each vote in the budget; 

(iv) approving any changes to the municipality’s integrated 
development plan; and 

(v) approving any changes to the municipality’s budget- 
related policies. 

3) The accounting officer of a municipality must submit the approved 
annual budget to the National Treasury and the relevant provincial 
treasury.” 



5. EXPOSITION OF FACTS 


5.1 INTEGRATED DEVELOPMENT PLAN (IDP) REVIEW 
5.1.1 PROCESS UNDERTAKEN 

Section 28 (1) of the Municipal Systems Act requires each municipality to 
adopt a process in writing to guide the planning, drafting, adoption and 
review of its integrated development plan. In compliance with this 
requirement Buffalo City Metropolitan Municipality undertook the following 
activities (table 2 below) in line with the IDP review towards 2020/21 
financial year: 


Table 2: IDP Review Process Undertaken 


IDP/BUDGET/PMS PROCESS FOLLOWED 

NO ACTIVITY/TASK 

PURPOSE 

DATES ACHIEVED 



PREPARATION PHASE 


1 . 

Top Management 

Considered and recommended the 2019/2020 Capital Roll- 
Over Adjustment Budget & the 2018/2019 Fourth Adjustment 
budget 

5 August 2019 

2. 

Budget Steering Committee 

■ Recommended that IDP/Budget/PMS Process Plan 
and IDP/Budget/PMS Time Schedule (at least 10 
months before the start of the budget year) be 
approved by Council 

■ Considered 2019/2020 Capital Roll-Over Budget (to 
be tabled before 25 August 2019) & the 2018/2019 
Fourth Adjustment budget 

13 August 2019 

3. 

IDP/OPMS Portfolio Committee 

Portfolio Committee recommended that IDP/Budget/PMS 
Process Plan and IDP/Budget/PMS Time Schedule (at least 
10 months before the start of the budget year) be approved by 
Council 

1 August 2019 

4. 

External 1 DP/Budget Representative 
Forum 

Stakeholders engaged on the Draft IDP/Budget/PMS Process 
Plan and Time Schedule 

21/08/2019 

5. 

Top Management Technical Planning 
Session 

Top Management reflected on progress made with 
implementation of strategic priorities during preceding 
financial years and reviewed strategic priorities for Council's 
consideration through Mayoral Lekgotla and Councillors and 
Traditional Leaders’ Lekgotla 

11-13/09/2019 

6. 

Council 

■ Approved IDP/Budget/PMS Process Plan and 
IDP/Budget/PMS Time Schedule (at least 10 months 
before the start of the budget year) 

23 August 2019 
















IDP/BUDGET/PMS PROCESS FOLLOWED 
NO ACTIVITY/TASK 


PURPOSE 


DATES ACHIEVED 




■ Approved the 2019/2020 Capital Roll-Over Budget 
(to be tabled before 25 August 2019) and the 
2018/2019 Fourth Adjustment budget 


7. 

Alignment of planned BCMM Catalytic 
Programmes with Grant funds, 
Provincial Infrastructure Plans within 
BCMM and initiatives of State-Owned 
Enterprises. 

Submitted all BCMM Catalytic Programmes to Provincial 
Treasury for alignment with the Provincial budgeting 
processes. 

15 August 2019 

PHASE 1: INSTITUTIONAL, COMMUNITY AND STAKEHOLDER ANALYSIS 

8. 

IDP/Budget Workstream meetings 

■ Conducted SITUATIONAL ANALYSIS which will 
guide strategic priorities for the 2020/2021 financial 
year 

■ Reflected on the progress made with key priorities 
since the adoption of the MGDS 

■ Discussed key considerations for strategic priority 
choices towards implementing MGDS and the IDP 

■ Did initial identification of possible Programmes, 
Projects and Key initiatives 

6 September 2019 

9. 

Community Needs Analysis 

Ward Councillors reviewed current ward priorities and ward 
plans 

09/09/2019 

27/09/2019 

PHASE 2: STRATEGIES 

10. 

Executive Mayoral Imbizo 

Executive Mayor and Council interacted with ward 
communities to listen to needs and concerns; and provide 
feedback on approved programmes and projects for 
2019/2020 

2 October 2019 - 
Inland Region (King 
William’s Town) 

3 October 2019 — 

Midland Region 

(Mdantsane) 

4 October 2019 — 

Urban Coastal 

Region 

5 October 2019 - 

Coastal Rural 

Region 

11. 

BCMM Technical IGR Forum - 

■ Deliberated on BCMM situational analysis and 
reflected on the submission of priority requests to 
Provincial Government State-owned Enterprises, 
including BEPP requests 

■ Presented IGR transversal issues and feedback to 
be presented to Mayoral Imbizos throughout BCMM 

20 September 2019 

12. 

Executive Mayoral Lekgotla 

Mayoral Committee reviewed strategic objectives for service 
delivery and development 

24-25 October 2019 

























IDP/BUDGET/PMS PROCESS FOLLOWED 

NO ACTIVITY/TASK 

PURPOSE 

DATES ACHIEVED 

13. 

IGR Catalytic Programme 

Submission of priority requests to provincial sector 
departments and State-owned Enterprises, including Built 
Environment Performance Plan (BEPP) requests 

9 November 2019 

14. 

IDP Technical Workstream meetings 

Workstreams prepared action plans to Mayoral Lekgotla 
priorities identified for submission to Council Lekgotla 

21 November 2019 

15. 

Council Lekgotla on outcomes of the 
Mayoral Lekgotla 

Council reflected on their desired key outcomes over the 
remainder of its 5-year term based on its deep understanding 
of current and emerging City trends and realities 

28 November 2019 

16. 

Council Budget Workshop 

Council deliberated on the 2018/2019 Fourth Adjustment 
Budget and 2019/2020 First Adjustment Budget 

16 August 2019 

17. 

Budget Workshops with all 
directorates 

■ Considered strategic IDP priorities and community 
needs for budgeting purpose; 

■ Prepared submissions for Mid-year adjustment 
budget; and 

■ Identified service delivery target amendments in 
accordance with budget adjustments 

18 to 22 November 
2019 

PHASE 3: PROGRAMMES AND P 

ROJECTS (Identifying, prioritising, costing programmes and projects) 

18. 

SDBIP Revision Sessions 

Reviewed Key Performance Indicators and Targets contained 
in the SDBIP and IDP 

06/01/2020 

28/02/2020 

19. 

Council Meeting 

Council considered 2018/2019 Draft Annual Report before 
advertising it for public comment 

29 January 2020 

20. 

Council Workshop 

Council deliberated on the 2019/2020 Mid-year Adjustments 
Budget 

17 February 2020 

21. 

Council Meeting 

Council considered and adopted 2019/2020 Mid-year 
Adjustments Budget 

26 February 2020 

PHASE 4: INTEGRATION 

22. 

BCMM Technical IGR Forum 

Provincial Sector Departments and State-owned Enterprises 
informed BCMM of provincial budgetary allocations 

21 February 2020 

23. 

National Treasury Mid-year Budget 
and Performance Assessment Review 

National Treasury conducted a mid-year assessment of the 
municipality in preparation for the adjustment budget in terms 
of section of MFMA. 

13 February 2020 

PHASE 5: APPROVAL 

24. 

Budget Steering Committee 

Considered 2019/2020 Mid-year Adjustments Budget (to be 
tabled before 28 February 2020) 

31 January 2020 

25. 

Council Workshop 

Council deliberated on the 2019/2020 Mid-year Adjustments 
Budget 

17 February 2020 

26. 

Top Management 

Considered Draft (Revised) 2020/2021 IDP and 2020/2023 
MTREF 

16 March 2020 





































IDP/BUDGET/PMS PROCESS FOLLOWED 

NO ACTIVITY/ TASK 

PURPOSE 

DATES ACHIEVED 

27. 

Budget Steering Committee 

Considered Draft (Revised) 2020/2021 IDP and 2020/2023 
MTREF 

20 March 2020 

28. 

Budget Steering Committee, 

IDP/OPMS Portfolio Committee and 
Finance Committee meetings 

Considered Draft (Revised) 2020/2021 IDP and 2020/2023 
MTREF 

15 May 2020 

29. 

Councillors and Traditional Leaders’ 
Workshop 

Deliberated on the 2020/2021 Draft IDP, Draft 2020/2021 
MTREF Budget, Draft BEPP and draft policies. 

4 June 2020 

30. 

Municipal Budget and Benchmark 
Engagement by National Treasury 

Performed the monitoring and oversight function on the 
proposed 2020/21 MTREF budget of the Buffalo City 
Metropolitan Municipality required in terms of section 23 of the 
MFMA. 

10 June 2020 

31. 

Council Meeting 

■ Approved the 2020/2021 Draft IDP, Draft 2020/2021 
MTREF Budget, Draft BEPP and draft policies. 

■ Approved the proposed budget of the entity and 
assessed the entity's (BCMDA) priorities and 
objectives and made recommendations. 

12 June 2020 

32. 

Virtual IDP/Budget Roadshow 

Consulted the 2020/2021 Draft IDP, Draft 2020/2021 MTREF 
Budget, Draft BEPP and draft policies with the public. 

14-15 June 2020 

33. 

Councillors & Traditional Leaders' 
Workshop on Revised Budget Related 
Policies for the 2020/2021 MTREF 

Presented the Revised Budget Related Policies for the 
2020/2021 MTREF Budget to Councillors and Traditional 
Leaders. 

18 June 2020 

34. 

Top Management Meeting 

Considered and recommended the Final 2020/2021 revised 
IDP, 2020/2021 MTREF Budget and Policies, after 
considering the submissions made by the local community, 
National or Provincial Treasury, national or provincial organs 
of state or neighbouring municipalities. 

19 June 2020 

35. 

Budget Steering Committee Meeting 

Considered and recommended the Final 2020/2021 revised 
IDP, 2020/2021 MTREF Budget and Policies, after 
considering the submissions made by the local community, 
National or Provincial Treasury, national or provincial organs 
of state or neighbouring municipalities. 

19 June 2020 

36. 

Council Meeting 

Adopted the Final 2020/2021 revised IDP, 2020/2021 MTREF 
Budget and Policies, after considering the submissions made 
by the local community, National or Provincial Treasury, 
national or provincial organs of state or neighbouring 
municipalities. 

29 June 2020 





















5.1.2 KEY INFORMANTS 


IDP review towards the 2020/2021 financial year has taken cognisance of 
both internal and external factors which include the above-mentioned 
process as well as the following key informants: 

Assessment Issues 

■ The comments on the last adopted IDP provided by the MEC for 
Local Government in accordance with Sections 31 and 32 of the 
Municipal Systems Act; 

■ Findings contained in the National Treasury Benchmarking Report 
on their assessment of the metro’s Budget; 

■ Findings contained in the Auditor General’s Report of the previous 
financial year/s; and 

■ Shortcomings and weaknesses identified through self-assessment. 

Review of the Strategic Elements of the IDP in terms of priorities of Council 
and the objectives of Management 

» Review of the Strategic elements of the IDP and integrating the 
strategic intent throughout the budget process, including mSCOA 
alignment, and finalizing of the Service Delivery and Budget 
Implementation Plan (SDBIP); 

■ Amendment of the Spatial Development Framework (currently being 
revised); 

■ Review of the Disaster Management Plan (currently being revised); 

■ Review of the Integrated Waste Management Plan (currently being 
revised); and 

■ Update of Financial Plan and other Master Plans and Sector Plans. 

Inclusion of new information where necessary 

■ Addressing areas requiring additional attention in terms of legislative 
requirements not addressed during the compilation of the 2016/17- 
2020/2021 IDP and all following revisions conducted in accordance 
with the relevant legislation (i.e. MFMA Regulatory Circulars), 




5.1.2.1 


particularly to those applicable to the declaration of a National State 
of Disaster as was done in terms of Section 27 of the Disaster 
Management Act No. 57 of 2002 due the Global Pandemic of Covid- 
19; 

■ Update of the Socio-Economic Profile (BCMM Situational 
Analysis/Profile); and 

* Public Participation Input and revision of Ward Priorities. 

Institutionalising of Planning Reforms 

■ BCMM is a keen participant in the Institutionalising of Planning 
Reforms processes led by National Treasury, Department of 
Planning, Monitoring and Evaluation, Department of Cooperative 
Governance and Department of Agriculture, Land Reforms and 
Rural Development. 

■ Key guiding principles for this IDP Review emanates from the 
following policy/guiding processes: 

o Integrated Planning Framework Bill 

o Memorandum: Rationale for Transitioning out of Planning 
Reforms and BEPPS to Sharpen the Planning Tools 
o Revision of IDP Guidelines for Metropolitan Municipalities 
o District/Metro Development Model 

BCMM priorities from the Executive Mayoral Lekgotla 

Council’s Ten-Point Plan 

The BCMM Council Lekgotla held on 9 November 2018 considered and 
confirmed the outcomes of the Executive Mayoral Lekgotla, and as a 
result the 10-Point Plan emanating from the Mayoral Lekgotla of 2017 
were endorsed. At a Councillors’ Workshop held over two days (15 and 
19 March 2019) further amendments were considered and approved 
impacting on the broad strategic framework of the municipality. 


Council’s Ten-Point Plan 



Figure 1: Council's Ten-Point Plan 


Mavoral Lekaotla Priorities 2019 

Whilst Council remains focused on the Ten-Point Plan as a strategic 
directive for its term of office, the Executive Mayoral Lekgotla (held on 
24-25 October 2019), followed by the Council and Traditional Leaders’ 
Lekgotla (held on 28 November 2019) further identified strategic 
priorities and action plans that will propel the city towards its strategic 
objectives for the medium to long-term. 

These Mayoral Lekgotla Priorities, arranged in accordance with the 
BCMM Metro Growth and Development Strategy (MGDS) and Integrated 
Development Plan, are aligned with the National and Provincial Policy 
Directives through the Medium-Term Strategic Framework (MTSF) 
2019/2024 and Provincial Development Plan (PDP) 2030. 

5.1.3 BCMM KEY AMENDMENTS FOR IDP REVISION 2020/2021 

5.1.3.1 Proposed High-Level Changes 

All processes undertaken above contributed to the IDP/Budget review 
towards the 2020/2021 financial year. During the review process 
BCMM’s vision, mission and key strategic focus areas were revisited. 
Consequently, the vision, mission, values council’s ten-point plan, 
strategic outcomes, strategic objectives and key focus areas 
encapsulated in the IDP and MGDS remain unchanged for this review. 




A graphic representation of the confirmed building blocks is depicted as 
follows: 


5.1.3.2 


VISION 


MISSION 


5 STRATEGY OUTCOMES 


5 STRATEGIC OBJECTIVES 


COUNCIL TEN-POINT PLAN 


47 KEY FOCUSAREAS 

fKPAtl 


V 


MEUUflENEMT: KPla i 

*— - liitnifi —_ —. 



RESULTS 


Figure 2: IDP Building Blocks 


A. 


v' 



IDP Review Recommendations 

In summary, the IDP Review Recommendations to Council are to: 

a) Retain the Vision Statement of the 5-year IDP and Long¬ 
term MGDS; 

b) Retain the Mission Statement of the 5-year IDP and Long¬ 
term MGDS; 

c) Retain the Core Values; 

d) Retain the 5 Strategic Outcomes in the 5-year IDP and 
Long-term MGDS; 

e) Confirm Council’s Ten-point Plan as the political directive 
for all strategic choices; 

f) Retain the 47 Key Focus Areas; 
























g) Approve the 30 top priorities as arranged in accordance 
with the respective Strategic Outcomes of the MGDS and 
IDP, for the Revised IDP for 2020/2021; and 

h) Approve that the proposed projects, programmes and key 
initiatives aligned with the top 30 priorities be duly 
considered as priority interventions that must be taken into 
account during the budgeting process. 

The Integrated Development Plan (IDP) is the overall strategic 
development plan for a municipality, prepared in terms of the Municipal 
System Act, Act 32 of 2000, that guide decision-making, budgeting and 
development in the municipality. The Spatial Development Framework 
presents the long-term vision of the desired spatial form of the 
municipality. The SDF is thus a critical component to the IDP to direct 
municipal and private sector spending and investment by providing 
spatial proposals and strategies (thus the location and nature of 
development) which will support economic growth and integrated human 
settlements. The Spatial Development Framework adopted by Council 
in November 2013 is hereby submitted together with the IDP in 
accordance with Section 32 of the Municipal Systems Act, Act 32 of 2000 
and the Spatial Planning and Land Use Management Act, 16 of 2013 
which confirms in Section 20(2) that a municipal SDF must be prepared 
‘as gart of ’a municipal IDP. The Spatial Development Framework 2013 
is currently being reviewed and Council is expected to adopt the 
amended SDF within the first quarter of the 2020/2021 financial year. 

5.1.3.3 Community Consultation Process on the 2020/2021 IDP and MTREF 
Budget 

The draft 2020/2021 Integrated Development Plan review and MTREF 
Budget as well as BEPP were tabled to Council on 12 June 2020. 
Thereafter the draft documents were made available to the community 
via the municipality’s website. Due to COVID-19 Regulations in place at 
the time, the City embarked on an IDP/Budget Virtual Roadshow during 



which the draft IDP and Budget were presented via radio and social 
media platforms on 14 and 15 June 2020. The members of the public 
were awarded an opportunity to submit their inputs via a WhatsApp line 
created for this purpose, on live radio and social media comments 
options. Further to this an e-mail address was created through which 
the metro received numerous submissions on the draft IDP and Budget 
until the deadline of 19 June 2020. The City considered all public inputs 
in the compilation of this final IDP, BEPP and 2020/2021 MTREF Budget 
document. Refer to Annexure AB for the detail of comments received 
from public. 

5.2 MEDIUM TERM REVENUE AND EXPENDITURE FRAMEWORK 
(MTREF) BUDGET 

5.2.1 NATIONAL TREASURY BENCHMARK ENGAGEMENT 

The Benchmarking Engagement Exercise was held with National Treasury 
for the assessment of the draft IDP, BEPP and 2020/2021 MTREF Budget. 
The purpose of the engagement was to assess the alignment between 
planning, budgeting and reporting, and to determine if the City is financially 
sustainable. Comments were received from National Treasury, which are 
summarised below: 

o Credibility 

- Budget assumptions are credible 

- Operating budget is multi-year 

- Capital budget is multi-year 

- Communities are still to be consulted on the budget as the budget 
is not yet tabled 

o Relevance 

- There is Strategic Alignment between Medium Term Strategic 
Framework (National) 2019/2024, Provincial Development Plan 



2030, BCMM Metro Growth and Development Strategy 2030 and 
2020/21 I DP 

- Principles set in National and Provincial Government are equally 
applicable in BCMM 

- Circular 98 and 99 were considered when compiling the budget 

o Sustainability 

- City’s budget is funded over the MTREF; however, low consumer 
collection rate remains a threat towards the sustainability of the 
City 

5.2.2 NATIONAL TREASURY MFMA CIRCULARS 

National Treasury issued MFMA Circular No. 98 on 6 December 2019 and 
MFMA Circular No. 99 on 9 March 2020 to guide the compilation of the 
2020/2021 MTREF. On 8 April 2020, National Treasury issued an annexure 
to MFMA Circular 99. Some of the key issues highlighted by the circulars 
are as follows: 

South Africa’s public finances deteriorated over the past decade; a trend 
that accelerated in recent years as low growth led to large revenue 
shortfalls. For 10 years, the country has run large budget deficits. 

The 2020 Medium Term Expenditure Framework (MTEF) includes large 
reductions in planned transfers to municipalities. The implication of these 
reductions is that municipalities will be required to reprioritise projects. 

The declining economic growth which might be impacted on further by the 
Corona virus pandemic and international companies closing down as a 
result, the deteriorating state of the finances for state-owned entities, 
continued high unemployment and water and electricity shortages will put 
pressure on the ability of municipalities to raise revenue. In this context, 
municipalities are therefore advised to follow a conservative approach when 



projecting their revenue and to eliminate any waste and unnecessary 
expenditure by implement stringent cost containment measures. 

The CPI rates are estimated at 4.5% in 2020/21 and 4.6% in both 2021/22 
to 2022/23 financial years. 

5.2.3 BUDGET GUIDELINES AND PRINCIPLES 

The following budget principles and guidelines informed and provided the 
bases for the compilation of the 2020/2021 MTREF budget: 

i. The 2019/2020 mid-year adjustment budget and actual figures were 
used as the baseline for the 2020/2021 MTREF budget. Further, 
reassessment of activities was undertaken to determine if there have 
been any changes of circumstance that have impact on the 
compilation of the budget, 

ii. The reassessment of activities was also undertaken in order to revise 
the baseline where circumstances have changed, this also includes 
the implications of COVID-19. 

iii. The service charge tariffs have been calculated taking into 
consideration the input costs of generating the services. 

iv. Ability to maintain and renew existing assets whilst also addressing 
the backlogs was part of the consideration. 

v. The affordability of the service charges to the consumers was one of 
the guiding principles. 

vi. The budget must be funded as per MFMA Circular 42; 

vii. Projects and programmes must be within affordability limits. 

5.2.4 MTREF BUDGET (2020/2021 - 2022/2023) 

Section 17(1) of the MFMA requires that the annual budget of the 
municipality be in the prescribed format; 

■ Setting out realistically anticipated revenue for the budget year from 
each revenue source. 

■ Appropriating expenditure for the budget year under the different 
votes of the municipality. 



■ Setting out indicative revenue per revenue source and projected 
expenditure by vote for the two financial years following the budget 
year. 

■ Setting out the estimated revenue and expenditure by vote for the 
current year and actual revenue and expenditure by vote for the 
current year. 


The following tabulated budget assumptions were used in the preparation 
of the MTREF budget, these are narrated beneath the table: 


Table 3: Budget Assumption 


DESCRIPTION 

2019/2020 

2020/2021 

2021/2022 

2022/2023 

National Treasury Headline Inflation 
Forecasts 

5,20% 

4,50% 

4,60% 

4,60% 

Salaries 

6,70% 

6,25% 

6,25% 

6,25% 

Electricity Purchases 

15,63% 

10,68% 

10,68% 

10,68% 

Water Purchases 

6,85% 

8,28% 

8,28% 

8,28% 

Free Basic Electricity 

50 kwh p.m. 

50 kwh p.m. 

50 kwh p.m. 

50 kwh p.m. 

Free Basic Water 

6 kl p.m. 

6 kl p.m. 

6 kl p.m. 

6 kl p.m. 

Basic Welfare Package 

659,53 

R717.03 

R775.20 

R839.73 

Equitable Share Allocation 

R 847,431,000 

R 911 042 000 

R981 171 000 

R1 048 587 000 

Bad Debt Provision 

7,50% 

9,50% 

7,50% 

7,50% 

Property Rates 

9,00% 

8,50% 

8,00% 

7,00% 

Refuse Tariff 

9,35% 

9,20% 

8,50% 

8,50% 

Sewerage Tariff 

9,40% 

9,20% 

8,50% 

8,50% 

Electricity Tariff 

13,07% 

6,22% 

5,20% 

8,90% 

Water Tariff 

9,40% 

9,20% 

9,10% 

9,10% 

Fire Levy 

9,30% 

8,70% 

8,00% 

8,00% 

Sundry Income 

9,30% 

8,70% 

8,00% 

8,00% 


i. Property Rates are projected to increase by 8.5% for 2020/21 financial year, 
the increase slightly decreases to 8% in 2021/22 and further decreases to 
7% in 2022/23 financial year. 

ii. Refuse Removal has been projected to increase by 9.2% for the 2020/21 
financial year, the increase slightly decreases to 8.5% in both 2021/22 and 
2022/23 financial years. 
























iii. Water Service tariff increases are projected at 9.2%, 9.1%, and 9.1% over 
the 2020/2021 MTREF period respectively. 

iv. On Electricity, the tariff will increase by 6.22% in 2020/21 financial year and 
decreases to 5.2% in 2021/22 and it increases to 8.9% 2022/23 financial 
year. The Electricity tariff applied is in line with the National Electricity 
Regulator of South Africa (NERSA) guideline. 

It must be mentioned that NERSA advised the Metro that it can apply for an 
additional 2% increase - this is to assist the Metro in reducing electricity 
losses. The Metro has only applied for an additional 2% increase in three 
sectors, namely; prepayment domestic, prepayment business and 2A 
business customers. The 2% increase will bring the electricity tariff increase 
in the above-mentioned sectors to 8.22%. Should the additional 2% 
increase on the above-mentioned sectors be approved by NERSA, it would 
be invested in reducing electricity losses. 

v. The Sewerage tariff increase has also been kept below double-digit 
percentage increase, it will increase by 9.2% for the 2020/21; slightly 
decreases to 8.5% in the outer years. 

vi. Revenue Collection Rate of 90.5% has been projected. 

vii. Repairs and maintenance budget is currently 5.3% of the total Operating 
Expenditure Budget. The City is striving towards a 10% repairs and 
maintenance of its total operating budget owing to the aging of the City’s 
infrastructure and historic deferred maintenance. The City’s infrastructure 
repairs and maintenance programme is complemented by the renewal and 
upgrading of existing infrastructure programme as the City is using 
revaluation method to value its infrastructural assets. 

viii. Employee costs as a percentage of total operating cost is 31% over the 
MTREF. Though this rate is still within the norm of 25% to 40% as per 
MFMA Circular 71, it requires close monitoring to avoid an increasing trend. 

ix. An increase of 6.25% was factored in the employee costs in line with the 
Salary and Wage Collective Agreement. 

x. The City has established a Revenue Protection Unit, the main aim of this 
unit is to reduce the losses; however, there is a limit to what can be done 



with limited resources in the short term and the extent to which losses can 
be reduced. 


6. CHALLENGES 

6.1 INTEGRATED DEVELOPMENT PLAN 

The following challenges and proposed solutions regarding the IDP Review 
have been identified: 

Challenges 

i. The strategic and operational priorities for the immediate and mid-to-long 
term for the City have shifted significantly due to COVID-19. The 
economic ramifications have already been enormous and are projected 
to become even more devastating as sectors are coming to grips with 
the effects of the lockdown. There is no doubt that the City will be hit 
hard with the economic crisis and that the context within which the IDP 
Review for the 2020/2021 financial year has been drafted has changed, 
and quite drastically so. 

ii. The IDP/Budget/PMS Process Plan could not be adhered to due to the 
lockdown. 

iii. Possible non-compliance with regulatory timeframe for consultation with 
the public. MSA sec. 42; Local Government: Municipal planning and 
performance management regulations (GNR. 796 of 24 August 2001) 
Reg 15(3) states that a municipality must afford the local community at 
least 21 days to comment on the final draft of its integrated development 
plan before the plan is submitted to council for adoption. Section 4 (2) 
of the Municipal Property Rates Act compels a municipality to, before 
adopting its rates policy, allow the local community to submit comments 
and representations on its draft rates policy within a period of no less 
than 30 days after notice. 



osed Responses 

It is recommended that the City invests time and resources into detailed 
SCENARIO PLANNING for the long-term trajectory as part of the 
2020/2021 strategic planning processes, whilst managing the immediate 
and short-term strategic and statutory processes with as much care as 
possible within these extremely difficult times. 

A revised Process Plan was submitted to Top Management, IDP/OPMS 
Portfolio Committee and Council to conclude the I DP Review. 

BCMM requested a waiver or an exemption from National Treasury and 
National COGTA in complying with the above legislations with specific 
reference to the 30 and 21 days public consultation that is prescribed by 
the Municipal Property Rates Act and Municipal Planning and 
Performance Management Regulations respectively, as it is impossible 
to do so without compromising the requirement by the MFMA which 
prescribes that an annual budget must be approved before the start of 
the budget year. 

6.2 MTREF BUDGET 

Finding a balance between endless service delivery needs and setting 
affordable tariffs is always a challenge when compiling a budget and this 
challenge was also experienced in the compilation of the 2020/2021 MTREF. 
The following are the associated risks with achieving the 2020/21 MTREF 
projections: 

i. Higher levels of unemployment are likely to increase levels of 
indebtedness and defaulting on payments as a result of COVID-19. 

ii. Increase in input costs to the provision of basic services could lead to 
trading services operating at a deficit. 

iii. Aging infrastructure is a risk that could disrupt the provision of services 
and cause unhappy consumer that might decide not to honour the 
municipal accounts. 

iv. Electricity and water losses that are above the norm. 




7. STAFF IMPLICATIONS 

None. 

8. FINANCIAL IMPLICATIONS 

The consolidated budget for the 2020/2021 MTREF period is R9.2 billion 
(2020/2021), R9.8 billion (2021/2022) and R10.3 billion (2022/2023) with the 
table below summarising the consolidated overview of the 2020/2021 MTREF 
Budget. A detailed budget report is attached as Annexure B: 


Table 4: Consolidated Overview of the 2020/2021 MTREF Budget 


DESCRIPTION 

2019/2020 

ADJUSTED 

BUDGET 

2020/2021 

FINAL 

BUDGET 

INCREASE 

OR 

(DECREASE) 

% 

2021/2022 

FINAL 

BUDGET 

2022/2023 

FINAL 

BUDGET 

Total Operating Revenue 

7 146 186 183 

7 507 551 640 

5,06 

8 095 037 320 

8 680 319 682 

Total Operating Expenditure 

7 139 981 986 

7 506 952 648 

5,14 

8 093 062 282 

8 679 528 195 

Surplus/(Deficit) for the year 

6 204197 

598 992 


1 975 038 

791 487 

_ 

Total Capital Expenditure 

2 233410 248 

1 660 238 597 

(25,66) 

1 721 705 566 

1 614 507 492 

Total Opex and Capex Budget 

9 373 392 234 

9167191 245 


9 814767 848 

10 294 035 687 


9. OTHER PARTIES CONSULTED 

9.1 Buffalo City Metropolitan Council 

9.2 Mayoral Committee 

9.3 Budget Steering Committee 
9.4IDP/PMS Portfolio Head 
9.5BCMM Top Management 
9.6BCMM Directorates 

9.7 External Stakeholders 

10. RECOMMENDATIONS 

10.1. The Council of Buffalo City Metropolitan Municipality, acting in terms of 
Section 34 of the Municipal Systems Act, 32 of 2000 approves and 
adopts the revised 2020/2021 Integrated Development Plan (IDP) 




















inclusive of the Spatial Development Framework (SDF) as required by 
S32 of the Municipal Systems Act. 

10.2. The Council of Buffalo City Metropolitan Municipality note that, in 
embracing the intention of the District/Metro Development Model , which 
is for all three spheres of government to work off a common strategic 
alignment platform, Section B of the Revised IDP for 2020/2021 is a 
reflection of both the shared intergovernmental situational analysis of 
BCMM and Government’s investment footprint in the metro. 

10.3. The Council of Buffalo City Metropolitan Municipality, acting in terms of 
Division of Revenue Bill (DoRB), approves and adopts the 2020/2021 
Built Environment Performance Plan (BEPP) 

10.4. The Council of Buffalo City Metropolitan Municipality, acting in terms of 
section 24 of the Municipal Finance Management Act, (Act 56 of 2003) 
approves and adopts: 

10.4.1 The consolidated annual budget of the municipality for the 2020/2021 
MTREF and the multi-year and single-year capital appropriations as 
set out in the following tables: 

i. Budgeted Financial Performance (revenue and 

expenditure by functional classification); 

ii. Budgeted Financial Performance (revenue and 

expenditure by municipal vote); 

iii. Budgeted Financial Performance (revenue by source and 
expenditure by type); and 

iv. Multi-year and single-year capital appropriations by 
municipal vote and standard classification and associated 
funding by source. 

v. Budgeted Financial Position; 

vi. Budgeted Cash Flows; 

vii. Reserves and accumulated surplus reconciliation; 

viii. Asset management; and 

ix. Basic service delivery measurement. 



10.4.2 The annual budget of the parent municipality for the 2020/2021 
MTREF and the multi-year and single-year capital appropriations as 
set out in the following tables: 

i. Budgeted Financial Performance (revenue and 

expenditure by functional classification); 

ii. Budgeted Financial Performance (revenue and 

expenditure by municipal vote); 

iii. Budgeted Financial Performance (revenue by source and 
expenditure by type); and 

iv. Multi-year and single-year capital appropriations by 
municipal vote and standard classification and associated 
funding by source. 

v. Budgeted Financial Position; 

vi. Budgeted Cash Flows; 

vii. Reserves and accumulated surplus reconciliation; 

viii. Asset management; and 

ix. Basic service delivery measurement. 

10.4.3 The annual budget of the municipal entity (BCMDA) for the 
2020/2021 MTREF and the multi-year and single-year capital 
appropriations as set out in the following tables; 

i. Budgeted Financial Performance (revenue by source and 
expenditure by type); and 

ii. Budgeted Financial Position; 

iii. Budgeted Cash Flows; 

iv. Budgeted Capital by Asset Class and Funding 

10.5. The Council of Buffalo City Metropolitan Municipality, acting in terms of 
section 75A of the Local Government: Municipal Systems Act (Act 32 of 
2000) approves and adopts tariffs effective from 1 July 2020: 

10.5.1 Property rates - as set out in Annexure F 

10.5.2 Electricity - as set out in Annexure F 



10.5.3 Water - as set out in Annexure F 

10.5.4 Sanitation services - as set out in Annexure F 

10.5.5 Solid waste services - as set out in Annexure F 

10.5.6 Other services as set out in Annexure F 

11 To give proper effect to the municipality’s annual budget, the Council of 
Buffalo City Metropolitan Municipality approves: 

11.1 That an indigent subsidy be granted to registered indigents in terms of 
Council’s Indigent Policy. 

11.2 That an indigent consumer be given an average social subsidy package 
on his/her account as contained in table 15 of Annexure B. 

11.3 That free basic electricity be granted for a registered indigent consumer 
of 50KWh per month. 

11.4 That free basic water be granted to a registered indigent of 6KI per 
month. 

12 The Buffalo City Metropolitan Municipality Council, approves and adopts 
the revised budget related policies: 

12.1 Tariff Policy - as set out in Annexure G 

12.2 Property Rates Policy - as set out in Annexure H 

12.3 Supply Chain Management Policy - as set out in Annexure I 

12.4 Budget Virement Policy - as set out in Annexure K 

12.5 BCMM Credit Control Policy - as set out in Annexure M 

12.6 BCMM Indigent Support Policy - as set out in Annexure N 

12.7 Investment and Cash Management Policy - as set out in Annexure T 

13 That Council notes the budget-related policies adopted in the previous 
financial years and where no amendments have been made after review, 
as listed in Section 2.4.1 of Annexure B and are available on BCMM’s 
website at www.buffalo W.aov.za . 

14 The Buffalo City Metropolitan Municipality Council, approves and adopts 
the new policy on Cost Containment Measures attached as annexure U. 



15 That in terms of Section 24(2)(c)(iii) of the Municipal Finance 
Management Act, 56 of 2003, the measurable performance objectives 
for capital and operating expenditure by vote for each year of the 
medium-term revenue and expenditure framework as set out in 
Supporting Table SA7 be approved. 

16 That in terms of Section 24(2)(c)(iv) of the Municipal Finance 
Management Act, 56 2003, the amendments to the Integrated 
Development Plan as set out in the Budget Chapter 17 be approved. 

17 Council notes that the consolidated 2020/2021 MTREF Budget tabled 
for adoption is structured in terms of the Buffalo City Metropolitan 
Municipality votes and functions. 

18 MFMA Budget Circular 98 and 99 for the 2020/2021 MTREF attached 
as Annexure W to be noted by Council. 



EXECUTIVE MAYOR 

BUFFALO CITY METROPOLITAN MUNICIPALITY 



ANNEXURES: 


A: 2020/2021 Revised Buffalo City Metropolitan Municipality Integrated 

Development Plan 

B: 2020/2021 - 2022/23 Buffalo City Metropolitan Municipality Medium Term 

Revenue and Expenditure Framework Budget 

C.1. 2020/2021 MTREF Capital Projects - Per Programme/Project 

C. 2. 2020/2021 MTREF Capital Projects - Detailed Schedule 

D. l. 2020/2021 MTREF Operating Projects-Per Programme/Project 

D.2. 2020/2021 MTREF Operating Projects - Detailed Schedule 

E: BCMM mSCOA Project Plan 

F: 2020/2021 Tariff Book 

G: 2020/2021 Tariff Policy 

H: 2020/2021 Property Rates Policy & Property Rates By-Law 

I: 2020/2021 Supply Chain Management Policy 

J: 2020/2021 Immovable Asset Policy 

K: 2020/2021 Budget Virement Policy 

L: 2020/2021 Funding and Reserves Policy 

M: 2020/2021 Credit Control Policy 

N: 2020/2021 Indigent Support Policy 

O: 2020/2021 Long-Term Borrowing Policy 

P: 2020/2021 Movable Asset Policy 

Q: 2020/2021 Capital Infrastructure & Investment Policy 

R: 2020/2021 Long Term Financial Planning Policy 



S: 2020/2021 Budget Management and Oversight Policy 

T: 2020/2021 Investment & Cash Management Policy 

U: 2020/2021 Cost Containment Policy 

V: 2020/2021 Service Level Standards 

W: MFMA Budget Circular 98 and 99 

X: 2020/2021 Consolidated A-Schedules 

Y: 2020/2021 Parent A-Schedules 

Z: 2020/2021 Municipal Entity D-Schedules (BCMDA) 

AA: 2020/2021 Built Environmental Performance Plan 

AB: Public Participation Written Comments Received on Draft 2020/2021 Revised 
Integrated Development Plan (IDP) and Draft 2020/2023 Medium Term 
Revenue and Expenditure Framework