SOUTH AFRICAN CITIES NETWORK

FINANCING CITY INFRASTRUCTURE

Presentation:Mr Y. RamoogurMr R. Gangadeen

MUNICIPAL COUNCIL OF PORT-LOUISMAURITIUS

SOUTH AFRICAN CITIES NETWORK1Republic of MauritiusA small island in Indian OceanFormerly it was a British colonyIndependent since 1968Acceded to status of republic in 1992A democratic island statePopulation - around 1.2 millionOfficial language: EnglishSpoken language:French,Creole, other oriental languages

Local Government in MauritiusGoverned by Local Government Act 1989 and Local Govt Act 2003 partly proclaimedMunicipal and District Council elections are held every 5 yearsMinistry of Local Government which monitors and controls Local Authorities in MauritiusLocal authorities are autonomous and Ministry acting as a facilitatorDecentralised services provided by local authorities

Local AuthoritiesMUNICIPAL COUNCILS5 municipal councils for urban areas-Municipal Council of Port Louis- Municipal Council of Beau Bassin/Rose Hill-Municipal Council of Curepipe- Municipal Council of Quatre Bornes- Municipal Council of Vacoas/ Phoenix 24 elected Councillors for each Municipal Council except Port Louis having 30 Councillors

4District Councils 4 District Councils in Mauritius , especially rural areasPamplemousses /Riviere du Rempart District CouncilMoka/Flacq District CouncilGrand Port/Savanne District CouncilBlack River District Council 36 elected Councillors for each D.C.

Municipal Council of Port LouisPort Louis is the capital city of MauritiusOnly port in MauritiusStrategic position in the Indian OceanMany sea routes pass through Port LouisMajor economic activities (banking,shipping,Central Bank) take place in Port LouisIt is also a historical, commercial and touristic cityNational Assembly , Prime Ministers Office and most of the Ministries are found in Port Louis

Meetings and proceedingsAll decisions are taken at committee levelStanding Committees (quorum 5 members) Finance committee Works Committee Public Health Committee Welfare Committee Committee of the Whole Council ( quorum 13 members )Four Quarterly council meetings also held every yearCouncil may set up other committees to dispense its businessPermits and Business Monitoring Committee set up by the Business Facilitation Act 2006

Port Louis and its Population1990 population was 133,0732000 population dropped to 127,8552011 Estimated population- around 128,000Fall in population since 1990 explained by lack of space with no possibility of expansionRapid development of habitations outside the boundaries of Port LouisCity centre mainly used as commercial, economic and touristic activitiesA city of different cultures

Port Louis, a metropolitan cityDaily roving population and visitors more than 100,000 .Various governmental services are offered in Port LouisPort Louis obliged to meet peoples demand in addition to its existing population

Port Louis and Municipal InfrastructuresCentral MarketOther markets and fairsA city for sports- ( volley ball, basket ball, handball, etc ...)Social and Community and day care centresFootball grounds with lighting facilities and seating accommodation swimming pools

Departments of the CouncilChief Executive DepartmentWelfareWorksHealth and EnvironmentPlanningFinancial ControllersLibraryParks and Gardens

Duties and responsibilities of the councilTo provide good living and working environmentProvision of key servicesPromote welfare of citizensEnsure social and economic progress Services offered to both inhabitants and roving population and visitors, tourists etc..

Main services offeredCollection and disposal of solid wasteLighting of highways /roads and public placesConstruction,, maintenance and cleaning of public infrastructures such as roads, storm drains, canals, pavements, bridges, riverbedsResurfacing of roads

Provision and control of public markets and fairs as well as places of public auction

Main services offered( continued)Provision, management and maintenance of social amenities such as social centres, public libraries, theatres, nurseries for infants, kindergartens , cemeteries, cremation grounds

Issue of building/development permits (commercial, industrial, professional activities)

Control of parking spacesControl of movement of street hawkersControl and maintenance of bus stationsOrganization of welfare, sports and leisures and artistic/cultural activitiesAny undertaking approved by the Minister of Local Government Programme-Based Budget

All services are financed by recurrent budgetThe programme-based budget Funds are earmarked based on programmes/outcomeResult orientedResources earmarked accordingly

PBB- 5 programmes Since the year 2011, the programme-based budget used and funds are provided with respect programmes. These programmes are:Programme 1:Policy and ManagementProgramme 2:Promotion and maintenance of sound and healthy condition in the cityProgramme 3:Provision and maintenance of community-based infrastructureProgramme 4: Promotion of sports, welfare, education and cultural activitiesProgramme 5: Managing development within the Councils boundaries

PBB 2011 Total budget Rs 655 million (approx. R163.5 million) Sources of income:Rs millionGeneral rates96Tenants Tax68Trade fees60Market fees22Other Income44Grants-in-Aid365 Total655

Grant in Aid Central Government finance local authorities by way of grant in aid

Represents about 50% to 55 % of total recurrent revenueHowever as a result of recent global economic crisis , grant in aid has been reducedGovernment policy is to reduce further the grant in aid in the futureCouncil to identify alternative source of finance

Councils own revenue Councils own revenue below represents about 45% of total budget

General ratesTenants TaxTrade feesMarket feesInterest on investmentRentalBus tollAdvertisement and publicity feesOther Income

Financing Municipal InfrastructureCouncils capital expenditure is financed by General Fund, including Budgetary Surpluses, and capital grants from the Central Government known as the Local Infrastructure Fund.

Since financial year 2009, the Central Government has granted Rs 100 million (nearly R25 million) to each local authority including the Municipal Council of Port Louis.Local Infrastructure Fund RsmillionConstruction of roads and drains30Multipurpose complex at Residence Vallijee11Pont de Paris fair11Abercrombie Market/ Fair19Minor Capital Projects10Other upgrading works, incl. Sports grounds19Total100 (Rs 100m=R25m approx.)

Projects financed by LIF and Municipal FundsReconstruction of Abercombie market/fair Local Infrasructure Fund = Rs 34 m Municipal Fund =Rs 20 m

Multipurpose complex at Residence Vallijee Local Infrasructure Fund = Rs 11,462,000 Municipal Fund =Rs 331,500

Project financed by grant from Central Government and Councils contributionRenovation of Port Louis Theatre =Rs 50 million (appr. R12.5 million)Council injected Rs 1 million ( appr. R250,000 )Can Government provide more funds for infrastructures?If Governments budget allows. In the past few years ,it has various projects.In case of national heritage, Central Government funds can be made availableIn the context of save energy programme of the Government, street lighting using solar energy should be encouragedOther projects of public interest may attract Government financingAdvantages of Government Infrastructure financeSuch finances are grants which are not refundableThey often represent huge amounts which allows projects to be easily realisedThe Municipal Council needs not contract bank loans and hence avoid interest paymentWhen Government provides funds for targeted and priority projects , the municipal council can use its own funds to realise other additional projectsDisadvantages of Government Infrastructure financeThe Government can impose its priorities and conditionsGovernment priority may probably not be Councils priority

Projects financed by budgetary surplusesFinancial year 2008/09 = 15 projects realised for value Rs 23.2 millionHalf year ended 31 Dec 2009=6 projects realised for value Rs 9.8 millionF/Y 2010 = Surplus realised Rs 35 million. More capital projects may be realised by 90% of above sum.Given the surplus realised, the municipal council can sustain borrowings to realise income generating projects

Advantage of using municipal fundsCouncil can decide its priorities. No conditions attachedProjects can be realised in short delaysNo interest payment applies

BorrowingsFinancing infrastructures from borrowings have often conditions attached (guaranties ) and not in the interest of the councilHigh interest payment may apply

A New Concept The Way Forward

Funding through C.S.R ( Corporate Social Responsibility ) by Private Firms and CompaniesA big plus (+) towards financing Municipal Infrastructure -Social and Sports projects -Poverty alleviation / Economic empowerment of the poorConclusionIt is in the interest of the municipal council to get financial support from Central GovermentCentral Government and municipal council partnership will always be to the advantage of the citizensProjects requiring massive investments , such as renovation of the Port Louis theatre, being a national heritage, could not have been possible without Government financial support XXXXXXXXThank you.

From Mr Rajcoomar Gangadeen, Financial Controller Mr Yougraj Ramoogur, Engg Assistant Municipal Council of Port Louis, Republic of Mauritius SACN 25 May 2011Worshop on financing of city government services in Southern Africa