A ballooning wage bill at the Mandela Bay Development Agency (MBDA) is expected to cost the once-prized entity more than half of its budget in the next two financial years.
This came to light in the MBDA’s draft business plan for the 2018/2019 financial year, in which the agency is described as financially unsustainable.
It also highlights that the agency is failing to perform key mandates such as creating a safe environment in Helenvale through the Safety and Peace through Urban Upgrading (SPUU) programme.
Despite a budget of R98m from the municipality, the agency plans to end a security contract in the city centre to cut down on costs.
At present, its wage bill takes up 38% of its operational budget, far exceeding the 30% National Treasury guideline.
It is expected to jump a lot higher – to 54% over the next two financial years.
The business plan, which was meant to be approved by the board in May, lists other risks the agency faces.
They include:
● An ineffective capital programme due to a misalignment between budget and performance reporting and community protests;
● The absence of an existing human capital strategy because of a lack of funding;
● Uncertainty around the Uitenhage Science and Technology Centre and;
● The lack of financial sustainability of the Nelson Mandela Bay Stadium.
The agency intends to roll over some of its unspent money to the current financial year.
This money was meant for the Vuyisile Mini Node, St Peter’s Church remedial work, the Singaphi Street upgrade and the New Brighton swimming pool.
MBDA spokesperson Luvuyo Bangazi said on Friday a workshop was under way between various role-players to discuss implementation models for the plan.
He said he would provide comprehensive comment on Monday.
Meanwhile, a major organisational review has taken place at the MBDA, where a revised executive management layer has been added comprising the chief executive, chief financial officer, and operations and compliance and corporate executives.The additional positions will add value to the MBDA, according to the draft business plan. “The costs to implement the new organisation are high and will need to be responsibly managed and phased in,” it says.
“Presently, there are insufficient budget funds available for such purposes and cognisance needs to also be taken of the National Treasury benchmark.”
According to the business plan, this was part of MBDA CEO Ashraf Adam’s plan to make the entity an “employer of choice”.
“This will in time also attract new mandates from the parent municipality as well as attracting funding from various sources over and above the parent municipality.
“Importantly, over time, there must be less reliance on external professional consultants on capital projects and the internal capacity developed.”
Adam declined to comment further on the document on Sunday.
According to the draft plan, additional positions meant certain budgetary sacrifices would have to be made.
“The cost of implementing such a structure, albeit in a phased in approach, will result in certain budget needs being sacrificed.”
The MBDA hopes to replace the security in the central business district with metro police until more money is found.
“The agency does not have its own revenue streams other than investment income earned from its short-term investments as well as income from rental of the Tramways [building] and other sundry outcome,” the report says.
“With the planned improvements of its capital expenditure programmes, investment is expected to reduce considerably.”
For 2018/2019, the agency has budgeted to collect R2m in revenue which will be directed towards operational costs.
“The MBDA will lobby more aggressively for funding from the likes of the [Eastern Cape Development Corporation] and various other funders in the form of supplementing the parent municipality so that the entity can be less dependent on the municipality and more financially sustainable.”
Newly appointed economic development, tourism and agriculture political head Rano Kayser said he had not seen the business plan but would prioritise the agency going forward.
“It is a concern that there is a report that says the MBDA is not performing to its optimum.
“The MBDA plays a very critical and strategic role in terms of social and spatial development in our city.
“I will intervene and ensure that the MBDA continues to perform its functions and execute its mandate.”
Kayser said he would also take the necessary actions to come up with a turnaround strategy for the agency.
“Under the circumstances, the MBDA is doing quite well.
“We have seen a vast improvement in relation to stadium management – as the political head, I will try to turn around the situation,” he said.