Unpacking KwaDukuza budget red flags with the iLembe Chamber

The Citizen

02-05-2025

Concerns over KwaDukuza municipality's proposed 2025/26 budget are mounting, with the iLembe Chamber of Commerce warning that key risks could impact the municipality's financial stability.
According to the chamber, one of the biggest issues is the ongoing shortfall in KwaDukuza's electricity department, with a projected deficit of R160.3-million for 2025/26. Despite plans to introduce smart metering and upgrade infrastructure, the chamber noted that no clear targets for reducing electricity losses had been set in the new budget.
In the past financial year, 25.67% of electricity distributed was lost through technical failures and theft, costing the municipality R321.2-million. This continued inefficiency not only erodes revenue but also threatens the municipality's sustainability.
The chamber warned that KwaDukuza's financial health remains heavily dependent on high revenue collection rates and the successful rollout of revenue-enhancement strategies.
Worryingly, the municipality's ongoing reliance on internal reserves to fund capital projects poses a long-term risk to its financial future.
Chamber CEO Cobus Oelofse said the projected 161.8% increase in cash reserves for 2025/26 appeared 'unrealistic' and would likely come at the cost of critical spending.
'Chasing cash reserve targets without investing adequately in capital projects, repairs and maintenance puts essential services at risk,' said Oelofse.
Capital investment plans also face major setbacks. The budget outlines a 76% drop in capital expenditure, reflecting falling national government grants and limited borrowing capacity. This despite deputy mayor Sicelinjabulo Cele's call for more infrastructure investment at last week's mayoral imbizo at Umhlali Prep.
Oelofse said declining capital spend, combined with missed infrastructure project targets and procurement delays, raised serious doubts about the municipality's ability to deliver on its own plans.
Repairs and maintenance spending also remains critically low, budgeted at just 2.6% of the value of municipal property and equipment – far below the 8% national benchmark.
The chamber also expressed disappointment over governance and security plans. Despite the major theft from KwaDukuza's bank account earlier this year, the budget shows no significant investment in strengthening internal audit capacity or IT security. Outsourced internal auditing has been reduced, and there is no mention of an IT system audit.
It was also noted that ratepayers would bear the cost of ongoing fraud investigations, with the investigation budget jumping from R1.5-million to R12-million.
The chamber warned that without urgent changes, the budget risks weakening essential services and undermining public trust.
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