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eThekwini Municipality > City Government > Administration > Office of the City Manager > City Managers Blog > Posts > Address By City Manager, Sibusiso Sithole, On The Ocassion Of A Breakfast Function Hosted By Livingstone & Leande At The Durban Country Club, 25 May 2012
May 29
Address By City Manager, Sibusiso Sithole, On The Ocassion Of A Breakfast Function Hosted By Livingstone & Leande At The Durban Country Club, 25 May 2012


Director of Proceedings,
Directors of Livingstone & Leandy Incorporated,
The legal fraternity,
Business Leaders,
Members of the Media,
Ladies and Gents
Protocol is observed.

We are extremely delighted to our host, Livingstone & Leandy for affording us this opportunity to address this august business breakfast on behalf of eThekwini Municipality. We are particularly excited because this address takes place during May, which is recognised as Africa Month, when we recommit ourselves to the renaissance of our Continent.

Mindful that most of us still have a long day ahead of us, we shall sparingly use this time to raise only few pertinent issues to stimulate the much needed dialogue about the future development trajectory of our City.

What then should be the context of our dialogue? The first important context is the realisation that we live in a changing geo-political, social and economic milieu. Notwithstanding that we have become accustomed to this change the velocity at which this change is taking place confounds us. At the heart of this change is the phenomenon of Globalisation which is having a profound impact on the subject of economics as a whole – to such an extent that it has become the defining process of the present age. Some economists such as Frankel view globalisation as being one of the most powerful forces to have shaped the world economy during the past 50 years. The driving forces behind economic globalisation are:
  • A reduction in transport and communication costs in the private sector.
  • Reduced policy barriers to trade and investment by the public sector.
  • An increase in the availability of and access to information and technology.
  • The speed with which information and technology can be transmitted across national boundaries. 

The second context that immediately needs to be lifted is that of increasing levels of poverty, unemployment and income inequality, which characterise the South African society. It is clear that achieving the United Nation’s Millennium Development Goals, the international community’s unprecedented agreement on targets towards the eradication of extreme poverty and hunger will depend to a large extent on how well developing country governments manage their cities.

The third context to note is that of rapid urbanisation. Cities are currently home to a nearly half of the world’s population and over the next 30 years most of the two billion-plus person increase in global population is expected to occur in urban areas in the developing world.

The UN forecasts that 61% of the world’s population will be urban by 2030. In contrast, before 1850, urban population of the world was less than 7%. The Cities Alliance predicts that:  ‘In absolute numbers, Asia is the epicentre of this urbanisation surge.  China will add at least 342 million people to its cities by 2030; India, 271 million; and Indonesia 80 million…Sub-Saharan Africa will add 495 million people over the same period, which equates to 112% of current population.” Undoubtedly, this urbanisation trend has massive policy implications for Cities. For example, we are already experiencing the stresses of this urbanisation pattern. Our City has an estimate of 410 000 informal settlements.

These informal settlements correlate with high concentration of urban sprawl, crime, unhygienic conditions, health and environmental hazards, but more importantly, high incidents of HIV/AIDS and TB, poor education, urban poverty and hunger. At current funding levels and housing delivery patterns, it will take us in excess of 30 years to redress the situation. This is a major challenge that calls for a fundamental rethinking about densities of our settlement patterns closer to employment opportunities and transport nodes and to capitalise on existing infrastructure. 
If we continue to build single stand housing as we have been doing, chances are that we will be no land available to build houses. High rise buildings are therefore an answer and these should also accommodate different housing markets, including the gap market.

The last context is that within strategy management literature, there is widespread agreement that most business decision-making does not take place under conditions of certainty. Shifts in consumer demand and preferences that affect the systemic risk in the economy, un-anticipatable events in a firm’s environment, poor understanding of cause-and-effect relationships in a firm’s business activities, and information-processing limitations of human beings, all make it impossible for the outcomes of many business decisions to be known with certainty at the time they are made.

To avoid this uncertainty, to survive and prosper under conditions of constant change, the City of Durban needs to develop what Helfat and others refer to as the “dynamic capabilities” to create, extend, and modify the ways in which it is making business (Dynamic capabilities: Understanding Strategic Change in Organisations.)

Against this backdrop, as a City we need to create five dynamic capabilities:
  • Strategy Capability to develop foresights and futures about the city, its spaces and peoples;
  • Operational and maintenance Excellence Capability to execute strategy and perform specific actions on time, within scope, budget and based on high levels of quality through established processes, standards and systems;
  • People Capability to develop, nurture and attract new talent AND capability to motivate people to take actions that result in dramatic changes in their own lives;
  • Place Management Capability to plan for a place and be responsive to citizens’ needs and to manage a specific area on a holistic basis and across boundaries; and
  • Utility Management Capability to manage trading services and corporatized entities through compacts, asset management and corporate governance  
The development of these capabilities will enable the City to be more resilient even in the face of uncertainty. Having dealt with the context issues, there are five themes that we need to engage you on. First, let us start with a confession. We face serious challenges around the question of democratic governance. We have observed that the modes of traditional community participation in the development process are no longer adequate.

In particular, we have noted with trepidation that professionals like you are totally disengaged and your contributions and voices are conspicuously missing in this dialogue about where the City should be positioned in future. Our Mayor, Councillor James Nxumalo, has challenged us to come up with innovative community mobilisation processes and stakeholder management drives. We want to hear how we can meaningfully benefit from your intellectual capital for betterment of society as a whole -- how you propose to play your civic role in the interest of the poorest section of our community is going to be critical for the City? 

We want to provide you with space to strategically engage and constructively influence us on the future planning and development issues facing the City and sustainable solutions for overcoming challenges. 

Secondly, our challenge is to improve the integrity profile of our City. In the past few Months we have been in the front pages for wrong reasons. I want to assure you that that season is behind us now.

For example, whereas between July and December 2011, the use of regulation 36 of SCM was about R500 million, in the third quarter this has been slashed to under R50 million and all for genuine circumstances where deviations from SCM have been justified. This clearly indicates that our commitment to clean governance is paying dividends. In all cases of irregular spending internal disciplinary and civil recovery processes are being pursued. In addition, the Anti-Corruption Task Team has been roped in to do criminal investigations on all suspicious transactions and to do lifestyle audits on all suspicious individuals.  For this reason no one should doubt our resolve to uproot corruption from whatever quarter it emanates.

The third theme on which I want spend a bit of time relates to budgeting processes. We are in a process of approving our budget of R31, 2 billion for the 2012/2013 Financial Year. This is made up of an Operating Budget of R26 billion and R5, 2 billion of Capital Expenditure. National Treasury has reviewed our proposed tariffs and they found them reasonable and affordable to ratepayers. They were concerned that in terms of revenue foregone as a result of rates rebates, we may be giving too much than is warranted.

In comparison with other Cities, we still lead in terms of best practice on the mix of capital spend, while other Cities have become completely depended on grants for their capital projects. We need to engage with business and other stakeholders to demystify the idea that Durban is uncompetitive City. Rather we must engage on what needs to be improved going forward in terms of sustaining the collection rate and keeping our gearing ratios under constant check.

The fourth theme relates to the challenge of building human capital and social cohesion. We must make our schools to work. We must produce enough maths and science, technology and business management graduates. For this to occur, we must be involved in matters of education and training and provincial, local and school levels. We must contribute resources to programmes aimed at assisting disadvantaged learners to improve their performance rates in terms of gateway subjects.

Very shortly, we will be launching a Winter School Programme in collaboration with the Universities around Durban. We hope this will be an annual event and appeal for business to be partner with us to massif the number of students who participate in maths, science, technology and business studies.

Our society remains divided along racial lines. Events of the past few weeks involving DA and COSATU and the recent saga about painting of the President illustrate how fragile our nation-building project remains. We must do more to build and promote a non-racial society. We cannot afford to see our hard won gains been sacrificed by insensitive creatures. The disrespect shown to President Zuma cannot be condoned no matter how far we want to stretch the notion of artistic freedom. 

The last theme is a reflection that if well managed cities offer important opportunities for economic growth and social development. In the next financial year we will open a dialogue about the City Development Strategy up to 2030. This will be an important opportunity to address the content of what this strategy should entail and the infrastructure development priorities and flagship projects that must be implemented to catalyse development along the Corridor to Richards Bay, Portshepstone, Pietermartitzburg and Gauteng.

We do everything in our power to improve the climate for doing business in Durban and to make our City competitive in terms of retention of existing businesses and attracting new business especially in the renewable energy and green economy space. We must unleash the entrepreneurial potential of our young people to obviate dependency on social grants.

Larry Bossidy and Ram Charan argue that “Leadership without the discipline of execution is incomplete and ineffective. Without the ability to execute, all other attributes of leadership become hollow.” (Execution: The Discipline of Getting Things Done). The biggest challenge for Durban to shift from a Good to a Great City is always going to be whether we have the right skills mix to implement our programmes. We need people with the right mindset and technical capabilities to drive us forward.

This is task that we hope to adequately address in the institutional review that is currently underway. From there we will also ensure that we have the right people on the bus to collectively take drive us to the right direction that our City desperately needs.

In closing, we believe that our future is bright. The ball is in our court to make things happen and to translate our vision into reality. Thank you for taking care to wake up early this morning to engage in a dialogue with us about how we propose to address the multiplicity of challenges facing the City of Durban and all her people.

God Bless You!


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