DURBAN CHAMPIONING THE INDIGENT MAXIMISING SERVICE DELIVERY

1. DURBAN CHAMPIONING THE INDIGENT MAXIMISING SERVICE DELIVERY CREATING HIGH-QUALITY LIVING ENVIRONMENTS DRIVING INVESTMENT IN PUBLIC INFRASTRUCTURE MANAGING PUBLIC FUNDS PRUDENTLY A PREVIEW OF THE 2008/2009 MUNICIPAL BUDGET

2. CONTENTS WE CARE, WE BELONG, WE SERVE

3. FOREWORD FROM THE LEADERSHIP Year-on-year, the challenges faced by metropolitan authorities in South Africa becomes increasingly more complex. Cities are seen as havens for jobs, better livelihoods, access to superior public infrastructure and business opportunities by rural communities. Yet, it is cities that face the biggest hurdles with this population migration. The need for services increases dramatically, placing great strains on already-stretched municipal budgets. With this rise in city populations, there is little corresponding increases in terms of income for the Municipality. Revenue increases from rates and our trading services like water and electricity are quite rightly capped within acceptable national limits. Thus, our challenges as a metro are immense. The demands created by basic human needs are high, straining the resources of a low-growth base in real terms. Into our ninth year of the new millennium, many indigent people still do not have access to acceptable housing, water supply, sanitation and electricity. It is within these limiting financial constraints that eThekwini continues to provide a vast array of public services including: housing, transport, water, sanitation, roads, security, refuse removal, emergency services, libraries, clinics, social services, economic infrastructure and even opportunities to local SMME’s. Concomitantly, our budgets are developed with a specific pro-poor focus. At the same time, we are committed to enhancing our enabling environment to support business and attract investment. Accordingly, we have created the relevant platform infrastructure over the years as well as increased bulk services for business to utilise or access. Further to this, we have a significant capital expenditure spend of over R50 billion projected over the next ten years. In addition, for the 2008/2009 financial year, the repairs and maintenance portion of the budget is 10.8%, which is well above the norm for any other local metro. As promised in our inaugural brochure last year, we endeavour to provide an annual update on our budget and its related processes. Every year, we will choose a specific aspect of our budget to highlight. Due to the current discussions around the new Municipal Property Rates Act (MPRA), which comes into operation in the 2008/2009 financial year, we will focus on providing some background information on the Act and its implications for the Municipality and the ratepayers of Durban. As expected, misinformation has circulated, creating dissent about the re-assessment of properties from certain quarters. As we have been reiterating, this process will provide market parity in evaluations within the city. eThekwini is a complex organisation as can be gleaned by the services we provide, in addition to us managing a R23 billion budget, and with over 18000 workers in our employ. Our budget process is consultative and our strategic intent in terms of the Integrated Development Plan (IDP) is developed with all our stakeholders. Thus, despite the sometimes overwhelming impediments that face us in making Durban the most liveable city in Africa, we always strive to create solutions that benefits all our citizens. DR. MICHAEL SUTCLIFFE MR. KRISH KUMAR CITY MANAGER CITY TREASURER There are a number of interventions that government, at all levels, has introduced to better the lives of the poor and disabled. Recently, the national Minister of Finance lessened their financial burden by increasing their grants. We have incorporated this principle into our 2008/2009 budget. Some 108000 households will be exempt from paying rates as opposed to the 72000 households previously. Further, government subsidises these households in respect of free basic services. About 227000 (55%) of households will receive a reduction in rates. Properties valued less than R400000 according to the latest property valuations will be exempt from rates if those households are headed up by children or pensioners. Higher-valued properties owned by this demographic will have rates levied on the portion that exceeds R400000. This consideration has also been extended to those who are boarded on medical grounds or receive government disability grants, allowing for a more equitable and effective system of taxation. Our Long-Term Development Framework (LTDF) clearly maps out the strategy for the City over the next twenty years. In an effort to achieve our 2020 vision, the LTDF details the complex development priorities facing us. The essence of the LTDF is to achieve a balance between meeting basic needs, strengthening the economy, developing people skills, and creating a technology base for the future. In an effort to achieve our 2020 vision, these four Strategic Focus Areas of intervention need to be balanced and integrated. It is mandatory that the City’s budget be a pro-growth one that meets basic needs and builds on existing skills and technology. We will continue to balance the requirements of having a pro-poor budget whilst funding infrastructure that facilitates the creation of a strong economy. MR. OBED MLABA MAYOR

4. AN INCLUSIVE BUDGET The creation of our municipal budget is a consultative process. As this entails the management of council funds, we liaise with civil society and business. The budget is developed within the framework of the Municipal Finance Management Act. Added to this, it must align with the City’s Integrated Development Plan (IDP). Below is a description of the process. Refinement of Operating Budget at Each Stage CIVIL SOCIETY COUNCIL In compliance with the Municipal Structures Act (1998) and Municipal Financial Management Act (2003), our city budget is informed and aligned to the IDP objectives. The IDP determines and prioritises the needs of the community. The budgetary allocations for both the capital and operating expenditure are undertaken in a manner that will not only ensure that our IDP outcomes are achieved but also to ensure that our city’s 2020 vision is realised. We have come a long way in capital budgeting, away from departmental budgeting. Currently the capital budget is allocated according to the IDP eight-point plan. During the 2008/09 IDP revision process, this allocation process was further entrenched through committing to make hard choices. In terms of the operating budget we have made an excellent start but are now more committed than ever to ensure that critical operating budget resources are prioritised in terms of stated IDP outcomes. More importantly, the Performance Management System (PMS) allows the municipality an opportunity to monitor and evaluate individual and organisational performance in meeting our IDP outcomes and vision. BUDGET LEGISLATION ADMINISTRATION BUSINESS THE BUDGET IS AN INTEGRATED PRODUCT DEVELOPED WITH INPUT FROM MAJOR STAKEHOLDERS

5. WINNING BECAUSE WE DELIVER Best Municipality in Africa – Afriglobe Awards. United Nations Public Service Award – Water services debt relief scheme. Diamond Arrow Award for bringing investment to the Province (DIPA). SAICE Golden Arrow award for the Marianhill Landfill Conservancy project Silver Gilt Award – Chelsea Flower Show. Silver Gilt Award – Chelsea Flower Show. Award for technical excellence for the Umhlanga Rocks Pier. Winner of the Vuna Awards for being the best performing Metro in the country (financial viability), for the third consecutive year. Professional Management Review Award for most Proactive Mayor. • DID YOU KNOW THAT WE? • Delivered of 75000 housing units during the five year period 2002-2007. • Provided 6kl of free basic water per month to 965480 households (including apartments) in 2007. • Extended water and sanitation (new service) to 18000 households per annum • Constructed 32km of new roads, 165km of sidewalks, 201km of gravel to ‘black-top’ roads and • 33 pedestrian bridges 2002-2007. • Extended refuse-removal (new service) to 159000 households per annum during the five year • period 2000-2005. • Provided 155188 new electricity connections 1997-2007 and built 15 new major sub-stations • 2003-2007. The Municipality kept its winning ways throughout 2007. Some of the achievements being: -

6. A LONG-TERM VISION CITIZENS LIVING IN HARMONY. A CARING CITY. A CITY THAT WE ARE PROUD OF. Quality Living Environments: Financial Viability and Stability: Economic Development and Job Creation: Good Governance: Support Services and Other: Safe, Healthy and Secure Environments: Embracing Our Cultural Diversity: Sustaining Our Built and Natural Environment: Empowering Our Citizens: R 3 896 404 910 R 15 191 422 960 R 147 136 000 R 780 798 095 R 223 680 969 R 148 484 220 R 992 223 561 R 343 322 820 INTEGRATED DEVELOPMENT PLAN OUR IDP VISION R 1 676 437 225 The above pillars serve as the core guides in the design of our operating and capital budgets for 2008/2009.

7. A COMPLEX OPERATING BUDGET KEY ISSUES • RATES AND GENERAL • Salary increase of 8.75%. • Provision for critical vacancies – R80 million (includes 200 Trainee Constables, Fire Safety, IT, Health, Skills, Municipal Court, and Planning & Development Staff. • Interest on loans increased due to additional loans from DBSA being taken (R35m). • Provision for Bad Debts (Increased by R200m). • Additional Repairs and Maintenance (R157.9 million). • 95% collection rate. • WATER • Bulk purchases tariff increase – 2% . • Provision for Bad Debts – R107 million. • Salary increase of 8.75%. • Impact of Capital Projects (R1040.7m) on operating, e.g.. Western Aqueduct (R250m), Replacement of pipes (R100m). • Water loss is currently at 36%, targeting 30% for 2008/09. (9% of the 36% represents leakage from mains and this is being addressed through the AC mains replacement project.) • 95% collection rate. • ELECTRICITY • Eskom bulk purchase tariff increase – 15.2%. • Salary increase of 8.75% and recruitment of skilled professionals. • Provision for Bad Debts increased by R20m • Rollout of Infrastructure to new areas / developments • No provision for REDS implementation • Levy of 2 cents per kwh. An additional R228.5m will be levied to consumers on behalf of SARS. • 98% collection rate. TOTAL OPERATING BUDGET = R17.470 billion.

8. GOING BEYOND OUR MANDATE Salaries and Allowances This expenditure is continually being reviewed and as a result the percentage of Salaries and Allowances of the total Operating Budget has declined steadily over the years to an acceptable level of 27.6%. The placement of staff in accordance with the recent restructuring process is near completion. However, the Municipality will continue to look at new ways of doing business, improving productivity, implementing Business Process Re-engineering (BPR) and undertaking restructuring initiatives in order to maintain this expenditure at acceptable levels. Furthermore, in terms of the placement policy negotiated with Labour, temporary Council contract employees who were employed for a continuous period of two and a half years (30 months) as at 1 April 2003 may be placed in permanent positions. KEY ISSUES AFFECTING THE OPERATING BUDGET Unaccounted for Water (Loss in Distribution) Unaccounted for water is determined by comparing the water purchase volumes with sales volumes. It is estimated that for the 2008/09 year, the targeted loss in distribution will be a reduction to 30% from current level of 35%. The water loss intervention programme to reduce the water loss to more acceptable levels is continuing with further funding provided to appoint specialist consultants to assist the process and the replacement of ageing infrastructure. Every possible measure will be taken to curb the water loss as this has an impact on the setting of an affordable water tariff. The effectiveness of the measures put into place will be reviewed on an ongoing basis. Unfunded Mandates The eThekwini Municipality provide Health Services, Libraries, Museums, and Housing. The reduction or non-payment for these services by other tiers of government requires the Municipality to allocate its own resources to make up the shortfall. Load Shedding - Electricity The recent load shedding experienced throughout the country also poses a challenge. As a broad assumption, a 5% reduction in energy (consumption/purchase) will reduce the units gross income margin by R 95 million. In order to cover this potential shortfall in income, Council will be implementing a surcharge of 3% on electricity consumption with effect from 2008-07-01. Council is in the process of carrying out a load shedding-awareness campaign to reduce consumption by 10%. In addition, more energy-saving light bulbs will be distributed and the likelihood of load-controlling geyser switches will be phased in this year. The rollout of energy saving light bulbs has already saved about 130MW for the City. Regional Electricity Distributors (REDS) The necessity for RED’S is appreciated by Council. However, the institutional framework i.e. the public entity model may impact on the Municipality’s funding given the significant reliance in terms of both income and leverage for credit control. The Council, however, supports the SALGA position in this matter i.e. there must be no impact on the finances of the Municipality and it must not adversely impact on the customer’s payment for services.

9. PLATFORM INFRASTRUCTURE Infrastructure Provision and Repairs and Maintenance continues to draw a large proportion of our budgets. Total expenditure for 2008/2009 is R1.62 billion: - OUR REPAIRS AND MAINTENANCE PORTION OF THE BUDGET IS 10.8%, WHICH IS HIGHER THAN ANY OTHER METRO

10. PROVIDING RESOURCES • The hiring of new staff for critical vacancies and salary increases of 8.75% with effect from 1 July 2008 takes up a significant proportion of the Operating Budget. • This expenditure is continually being reviewed and as a result the percentage Salaries and Allowances of the total Operating Budget has declined steadily over the years to an acceptable level of 27.6%. The placement of staff in accordance with the recent restructuring process is near completion. Whilst provision has been made in the budget for the review and revision of grades, the full impact can only be determined once the grading process has been completed. However, the Municipality will continue to look at new ways of doing business, improving productivity, implementing Business Process Re-engineering (BPR) and undertaking restructuring initiatives in order to maintain this expenditure at acceptable levels. • Furthermore, in terms of the placement policy negotiated with Labour, temporary Council contract employees who were employed for a continuous period of two and a half years (30 months) as at 1 April 2003 may be placed in permanent positions. This expenditure has been partially funded based on the anticipated effective date of placement. • As a result of the annualised effect of vacancies filled during 2007/2008, the use of temporary and agency staff and the provision for task regarding, the year on year increase on employee related costs is 13.1%. • The Salaries and Allowances Task Team will continue to monitor the top 150 earners and staff that receive overtime in excess of 50% of their basic salary. In order to comply with the Basic Conditions of Employment Act, staff that work more than 10 hours overtime per week will be investigated in order to reduce overtime costs. The table below details the additional posts and related operations that need to be filled /undertaken in the 2008/2009 financial year (R300 million)

11. SUPPORTING OUR COMMUNITIES The following are selected highlights from the departmental operating budgets for 2008/2009- Free Basic Electricity Our Indigent Policy enables us to provide free 50 kwh of electricity to those customers who consume less than 130 kwh per month. We adopted a self-targeted approach whereby customers who believe themselves to be indigent can apply, provided their average past 6-month consumption is below the 150 kwh threshold. Zibambele Poverty Alleviation The Council ensures the empowerment of people in the community by providing small municipal contracts for grass-cutting, verge clearance, etc. There is also a platform that the Council operates for small co-operatives, providing administrative assistance, along with guidance on business issues. Refuse Removal We have extended provision of the service to newly-incorporated areas by using community-based contractors. Rehabilitation of Landfill Sites Planning and development of regional landfill sites continue to demand a substantial investment by the Municipality to ensure that waste is appropriately disposed off. Critical Staff Vacancies We have provided for R300 million for new employees with related operations, including critical staff (R80m). This is to increase our service delivery to the public. Security staff is a large proportion of this total. Soup Kitchens This is one of our poverty-alleviation programmes. We provide free meals to the poor. We are currently servicing 18 sites. Special Events We cater for a number of events annually, including local and international events. These include all our 2010 functions. This includes your One Nations Cup, Durban Beach Festival and Comrades Marathon, etc. Some events are hosted in partnership with other entities, including Provincial Government and the 2010 LOC. Interest on Loans The interest is paid on an additional DBSA loan of R950 million. IT Network This cost is for the management and maintenance of the IT infrastructure network throughout the Municipality for the purposes of using excess capacity to provide competitive data and voice services to the general public. Harbour Widening This includes a portion of the cost for the demolition of the old sub-aqueous tunnel. Repairs and Maintenance Overall repairs and maintenance amounts to R 1.62 billion for the year, which represents 10.8% of the total budget, which is above most metros in the country.

12. A DIVERSE RANGE OF LINE SERVICES

13. KEEPING TARIFFS REALISTIC • In the light of the significant challenges in the roll out of basic services to all our citizens, tariff increases have been moderately above inflation. • The spikes in water supply tariff increases are attributed to a high water loss and increases from our bulk water supplier • The significant increase in electricity expected in 2008/2009 includes a 3% surcharge to cover the shortfall attributable to load-shedding. • As a result of ongoing, fruitful negotiations with Government departments a higher collection rate is anticipated. Good progress has also been made with collection of old debts (including government departments), which is also reflected in this projection. • Due to a focus on government departments and businesses that owe large amounts a higher collection rate is anticipated. • A programme has been put in place to encourage water customers to pay their current accounts in return for a reduction in the debt they have incurred. The approach targets the poorer section of our society that own properties valued at or less than R100000. Due to this programme an improved collection rate is anticipated.

14. A SIGNIFICANT CAPITAL BUDGET KING TO PLACE PIE GRAPH OF CAPITAL BUDGET HERE. WHERE THE MONEY COMES FROM PTIF (R492.0M) MIG (R445.8M) Other (R292.0M) 8.2% 7.4% 4.8% Equitable Share (R314.5M) 5.2% Dept of Housing (R816.0M) 13.5% Council (R2350.5M) 2010 Stadium, 39.0% National Treasury, KZN, Council (R1318.9M) 21.9% TOTAL DRAFT CAPITAL FUNDING R5. 9297 BILLION FUNDING SOURCES (2008/2009) • Did you know that… • We have the largest capital budget spend of any municipality in South Africa. • We ensure communities become and remain sustainable in terms of livelihood is becoming one of the greatest challenges for the municipality. It is clear that sufficient resources are not available to eliminate all backlogs at the current service levels. Without additional sources of revenue, the Municipality had to consider alternative options. Various alternative funding options are being considered for inclusion in the Long Term Financial Strategy. Borrowings of R 950 million will be made during the year in order to accelerate the capital program, in an attempt to eliminate the backlogs. • The projected capital expenditure budget for the 2008/2009 financial year period is R 5.93 billion (2007/08: R 4.20 billion ) which is a growth of 41.2 % on that of the previous year. TOTALS R 4 765 R 3 583 R 3 380

15. MANAGING LEGISLATIVE CHANGE Section 3(1) of the Local Government Municipal Property Rates Act, 2004 (Act 6 of 2004) and section 62 (1)(f) of the MFMA determines that a municipality must adopt and implement a rates policy on the levying of rates on rateable properties. The new rates policy was approved by Council on the 11 February 2008 and complies with the Municipal Property Rates Act. Thus, the levying of rates will have an impact on the rates individual property owners will pay with effect from 1 July 2008. As properties are now being assessed based on the market value there is a shift in incidence. The cent in the rand (randage) has been adjusted downward to compensate for the higher values. In addition, the impact on the indigent, pensioners, disability grantees and lower and middle-income ratepayers was considered to ensure a limited impact. Revenue neutrality has been maintained using existing income per category of property as a base to calculate the rate randage for the new year. The rating of property based on market value has resulted in a minimal shift in incidence between the different categories of property. State property is now rated in accordance with usage resulting in a shift to other property categories particularly business, commercial, as well as vacant land.

16. A GOOD FINANCIAL RECORD * FINANCIAL STATISTICS 2007/2008 * MONTHLY BILLING VERSUS PAYMENTS 2007/2008 Despite the increase in debtors, the payment/cash collection rates have increased. The debtor increase is due to interest charges and penalties from historical debt and higher levels of poverty. • The Municipality has yet again managed to maintain its excellent credit rating of A1+ (short-term) and AA (long-term) for the third year in succession, as published by the Global Credit Ratings Company. These short and long- term ratings are amongst the highest ratings accorded to local authorities in South Africa and naturally it will provide the Municipality with a sound financial platform to meet its economic challenges and service delivery targets. • The factors influencing the strong credit ratings are as follows: - • The significant progress that we have made since transforming into a metropolitan municipality, supported by the Municipality’s experience and capable management team, and the prudent judgment displayed by the political leadership. • The substantial and increasing level of spending by Council on the World Cup related and socio-economic projects, and the associated longer term benefits thereof. • The Municipality continues to display a robust financial profile, characterised by strong cash generation and high liquidity levels. • Key debtors ratios have remained fairly stable in recent years, while collection levels have improved. * DEBT & LIQUIDITY 2007/2008 * NOTE: MUNICIPALITIES MAY DIFFER IN THE METHOD USED TO DETERMINE KEY STATISTICS.

17. COMPARING WITH OUR COUNTERPARTS The following tables give a comparable indication of residential tariffs between the various metros for 2008/2009: - WE PROVIDE A COMPARABLE BASKET OF SERVICES WITH OTHER CITIES

18. UNQUALIFIED FINANCIAL STATEMENTS • RATIOS AND BENCHMARKS • Assets/Liabilities Ratio: 1.8/1.0 • Favourable and stable from previous year. • BENCHMARK: 1.0:1.0 • Current Ratio: 1.4/1.0 • Favourable and has improved from previous year. • BENCHMARK: 2.0:1.0 • Gearing Ratio 1.4/1.0 • Favourable and has increased from previous year. • BENCHMARK: 1.0:2.5 • Consumer Collection Rates: • Rates: 95.8% • Water: 92.8% • Electricity: 98.0%

19. STIMULATING THE LOCAL ECONOMY The Durban ICC continues to be foremost convention centre in Africa. Durban certainly set the trend, as other cities in the country and the continent at large, began to construct their own centres. Further to this, the Durban ICC ranks in the Top Ten in the world, having brought a number of delegates to Durban through its hosting of seminars, conventions and other functions. Effectively, the ICC has paid for its construction and its operating costs many times over through its multifarious effects on the local economy through spurring secondary tourism. Beyond just municipal coffers in terms of increased revenues, local hotels, restaurants and other tourist-related infrastructure have seen significant growth in turnover that can be indirectly attributable to the ICC. Effectively, it is a key marketing tool in the City, that places us on the global map. As with any infrastructure, evolution is key to maintaining the superiority of its product. Concomitantly, the ICC has nearly completed its expansion. It has effectively doubled its convention space, and can also be used as an indoor sporting facility as well as a venue for musical concerts on a larger scale. The total economic impact flowing from the ICC business for the financial year was R565.5m. Based on a multiplier of 4, which is the commonly used factor in the meetings industry, the total economic impact of the business generated by the ICC equates to R1.068billion. This effectively means that the contribution of the Centre to the GDP of the KZN province is almost 1% (0.58%). Foreign exchange earnings to the tune of R81million and a total direct spend estimated at R267million were generated from conference delegates. Overall financial performance for the year was better than budget, with total revenue at R73.3m against a budget target of R54.9m. This was largely driven off business levels for the first and second quarters of the financial year. The Municipality contributed R22m in the 2007/2008 financial year to the ICC. This project has unlocked more than 160 ha of low yielding sugar cane land, enhancing the concept of the activity corridor as a business activity node. It has effectively brought the workplace closer to the workforce. It has promoted spatial efficiency with regard to KwaMashu, Inanda & Ntuzuma and unlocked the development node of Phoenix. The industrial usage of the area has higher economic benefit than agricultural use and has had a positive effect on land values of the surrounding areas. The project created some 3500 jobs during the construction phase and some 13500 new jobs post development is expected in the long-term. From 2004 to 2005, uShaka was instrumental in catalysing the growth of stagnant housing prices in the Point area, which was experiencing spiralling urban decay. Because of the Municipality’s intervention, growth in the area exceeded the national housing price index. In a period of two years, increases of 200% was achieved in the area. uShaka has catalysed further growth in the area, specifically the sweeping development of the Point Waterfront, Canal System and the Small Craft Harbour. Because of municipal intervention, an area that was once in a state of decay, has now become an integrated residential, recreational, tourist and soon-to-be shopping destination. Over and above these sweeping positive effects, uShaka continues to receive international accolades for its truly innovative design and world-class facilities. Employing approximately 750 staff (including the South Association for Marine and Biological Research) , uShaka MARINE WORLD achieved 90% of its budgeted footfall into the paid environment in its first year at 1.2 million guests and 3.8 million guests into the whole park. On 19 September 2007 the controlling shareholder, eThekwini Municipality, invested a further R157m into the theme park for which 1617 shares will be issued. These funds were used to settle the outstanding capital loans with Citibank (R88m as of 30 June 2007) and the Development Bank of Southern Africa.

20. READINESS FOR 2010 The new Moses Mabhida stadium will be a world-class facility. Most prominent feature of the new stadium, to be built on the site of the existing football stadium, will be the 30-storey arch stretching its entire length. Stadium will be built on the site of the existing King's Park stadium and has been designed as a first-class multi-purpose sporting facility. The 100m high arches will mark the centre of Durban's growing Sports City Complex. Stadium will have a seating capacity for 70000 people. Arches will have a cable-car erected. Stadium will cover 320 x 280 square metres and will be 45m in height. Parking for 10000 cars. • COST IMPLICATIONS • Will have a major impact on spending for the Municipality. • Total cost of stadium: R2.6 billion. • National Government: R 1.8 billion. • Provincial Government: R 0.3 billion. • eThekwini: R 0.5 billion. • Financial impact of related infrastructure: R4.0 billion. (Still under discussion with FIFA LOC and National Treasury.) Stadium Funding Infrastructure Transport. ICT. Upgrading / Improvements. Operating costs.

21. MEASURING THE ECONOMY The local economy is affected by the performance of the national economy, although recent indicators suggest it is outperforming the national one in terms of the Gini Coefficient, unemployment rate and the Gross Domestic Product. The national economy continued to enjoy growth of around 4.7% during 2006 and is starting to reap the benefits of sustained sound macroeconomic management and structural reforms. In addition to achieving the Accelerated and Shared Growth Initiative (ASGISA) target of 4.5% per annum, the country has also experienced 36 quarters of uninterrupted economic growth. Presently South Africa is ranked as the 18th most attractive destination for Foreign Direct Investment according to a recent international survey. Massive infrastructure investment plans have been announced by both the private and public sectors for public transport, new power plants and township renewal growth. Unemployment remains high, but job prospects are amongst the highest in the world for the second year running, creating 200000 jobs between March 2006 and 2007. In the first phase, between 2005 and 2009, ASGISA seeks an annual growth rate that averages 4.5% or higher. In the second phase, between 2010 and 2014, an annual average growth rate of at least 6% of GDP is targeted. GDP growth in Durban has grown at an average annual rate of 3.9% over the period 1996-2006 and has been consistently strong and lagging slightly behind Johannesburg and Cape Town. As reflected in the graph below, the manufacturing sector in Durban is the biggest contributor to the GDP growth, followed by finance, trade and then transport. When deconstructing the manufacturing sector in Durban, the success is due largely to the chemical, automotive, pulp and paper, wood and wood products, and food and beverages components. The City’s Economic Strategy acknowledges the importance of these sectors’ potential for growth, job creation and global competitiveness, and has aligned appropriate medium-to-long-term plans for further enhancement. The National Government’s new industrial-policy framework that re-emphasizes the development of the country’s manufacturing sector as the cornerstone of the economy will also contribute to this sectors growth. The introduction of the Dube Trade Port and King Shaka International Passenger Airport, the 2010 World Cup Soccer Competition, and the major expansion plans around the Port of Durban are the three main projects that will act as a major catalyst to the City’s economy over the next ten years.

22. INVESTMENT IN THE CITY Spinoffs from Dube Trade Port Maintain a positive operating cashflow, Lowest cost package of municipal services Significant opportunities for 2010 All reserves are cash-backed. Capital expenditure of (R50 Billion in ten years) Large pool of skilled workers Low cost of industrial land Modern IT and Telecom networks Excellent transport infrastructure Critical indicators to benchmark our productivity. Finance capital projects mainly through internal funds. We have a 5-point plan as our approach in managing the Municipality’s finances: - Most important port in Africa Business & Investment Marketing: - Other targets & channels engaged; Products developed & distributed; Effective budget allocation in synergy with other Units. Existing Business Retention and Expansion: - BR&E rollout continues; South Durban Basin (SDB) Area 1 in conclusion; SDB Area 2 launched; Multiple Chamber partnership projects continue; Strategic businesses & flagship investment projects in ongoing engagement/aftercare. Foreign Investor Support: - Leveraging targeted work with other spheres & Agencies; several fdi engagements held; 3 large fdi enquiries converted; 2 incubated on site; bids for more in progress. Business Development in R293 Townships: - Draft strategic outline developed, but due to changes in Project Managers, progress is slowed. Create a Business-Friendly Environment: - Ad hoc interventions continue on a case by case basis, but formal project outline now completed (National Government assistance) & project manager engaged for roll-out, but progress has slowed. Under-Capitalised Investment Development: - 3 projects being developed: One in multiple location aquaculture; the other a large Umlazi Business Service Centre; the 3rd in computer & TV assembly. Business Investment & Targeted Incentives Strategy: - Draft outline developed, & 1st City work shop held but due to change in Project Manager, plus HR constraints, progress has slowed. AgriBusiness Forum: – PPP Forum established; Summits held; Market Days launched; Strategy refined; Amakhosi projects progressed; Newsletter launched; breakfast workshops held; new staff capacity engaged. 2010 Eco-Dev & Bus. Opportunities Workstream: - Team sourced & developed; Strategy presented & agreed; authorised engagements held; action plan presented & in roll-out; partnerships with chambers & other government spheres developed; new staff capacity engaged.

23. CARING FOR ALL OUR CITIZENS • Ideally the City would like to deliver 20000 units annually to deal with the housing backlog, however, due to yearly limitations on housing subsidies this is not achievable. Accordingly, the Municipality is in the process of developing an Accelerated Housing Delivery Model, which would involve securing funding from a range of sources which would inter alia involve the major financial institutions as well as the private sector and social housing institutions. • The basic social package is an affirmation of the Municipality’s commitment to push back the frontiers of poverty by providing a social welfare to those residents who cannot afford to pay, because of adverse social and economic realities. The social package will also assist the municipality in meeting its constitutional obligations. However, in order for us to continue to deliver these services in a financially sustainable manner, all residents will have to pay for services over and above the free basic services provided. • The estimated cost of the social package (i.e. income foregone) amounts to approximately R1074.8m for the 2008/09 budget year. This is mainly funded from the R1.6 billion equitable share from national government. DESPITE OUR SUCCESSES, THE CHALLENGE TO PROVIDE EQUALITY FOR ALL STILL EXISTS, BUT WE ARE DETERMINED TO MAKE DURBAN A LIVEABLE CITY FOR EVERYONE.

24. PROVEN CAPABILITIES • SOME IT STATISTICS • No. of faults processed per month: 2 500 • No. of change requests processed per month: 500 • No. of PC users: 7 000 • No. of daily transactions processed: 1 000 000 • No. of internet users 2 000 • No. of bills / inserts printed per month: 2 000 000 • No. of fines processed per month: 85 555 • A TECHNOCRATIC CITY… • OUR GLOBAL POSITIONING • Sister cities twinned with Durban: 12 • Active projects with sister cities: 39 • Incoming international delegations: 50 • Meetings with consular corps: 26 • CIFAL training sessions held: 2 • A COSMOPOLITAN CITY… • WATER AND SANITATION • 11 000 km of pipelines. • 725 000 units connected. • 220 reservoirs. • 8 000 km wastewater pipes. • 27 wastewater treatment works. • 280 pumpstations. • A CITY THAT PROVIDES… • LINKING WITH THE PRIVATE SECTOR • About R3.1 billion S.A. company new investments/expansions thus far. • Business Retention and Expansion (BR&E) project roll-out in SDB Area: 2 of 3 in South Durban Basin (950 businesses directly assisted; 16 Action Teams launched; new Business tools distributed). • R1.7 billion foreign investment already confirmed/secured thus far + another R2.5Bn being sourced/facilitated at present. • Full investment promotion marketing: plans converted and products rolled out for full Council benefit. • Agri-Business Forum expanded & various projects initiated. Ramping up to capitalise on Dube TP & other flagship projects. • Three new business development projects of R1.7 billion being progressed. • 2010 Eco-Dev & Bus. Opportunities Work Stream plan confirmed, resourced & being rolled out through partnerships. • A CITY THAT ENGAGES WITH BUSINESS… • LIGHTING UP THE CITY • Major Substations 99 • Distributor Substations 631 • Mini Substations 5461 • Brick Substations 2736 • Pole Transformers 4350 • Streetlights 200 000 • A CITY THAT BRIGHTENS YOUR DAY… WE ARE A COMPLEX ORGANISATION THAT DEALS WITH COMPOSITE SOCIAL, TECHNICAL, FINANCIAL AND ECONOMIC ISSUES… • FLEET AND PLANT • Total vehicles serviced: 2939 • Number of the targeted services: 3696 • Ratio of artisans to vehicles:. 1:103 • Average vehicle availability: 94% • Number of vehicles licenced: 1695 • Income from hire pool: R6.45m • Income from disposal of vehicles: R2.3m • A CITY THAT WORKS… • SOLID WASTE • No. of tons removed and disposed: 1 418 264 tons • No. of houses serviced: 1.1 million • No. of refuse bags distributed: 43 million • No. of commercial customers: 31 000 • No. of wheeled containers & skips: 80 000 • No. of landfill sites: 3 • No. of transfer stations: 8 • No. of garden refuse sites: 12 • Vehicle fleet complement: 424 • No. of re-cycling drop-off centres: 15 • No. of re-cycling buy-back centres: 7 • A CLEAN CITY…

25. THE BUILDING-BLOCKS FOR SUCCESS WE HAVE STRONG, PRAGMATIC MANAGEMENT LEADERSHIP WITH PROVEN EXPERTISE IN MUNICIAL SERVICE DELIVERY. WE HAVE A STABLE EXPERIENCED ADMINISTRATION. WE HAVE A PRO-POOR FOCUS IN TERMS OF SERVICE-DELIVERY. WE HAVE CONSISTENTLY APPLIED A STRATEGIC SPLIT BETWEEEN OUR SOCIAL AND ECONOMIC EXPENDITURE. WE HAVE ACHIEVED CONSISTENT UNQUALIFIED (CLEAN) AUDIT REPORTS. WE HAVE THE HIGHEST CREDIT-RATING AWARDED IN THE MUNICIPAL SECTOR. WE HAVE A DEBTORS’ COLLECTION RATE CONSISTENTLY ABOVE 95%. WE HAVE ACHIEVED MORE THAN 95% CAPITAL SPEND PER ANNUM. WE RECEIVE REVENUE & ELECTRICITY FROM LANDFILL SITES, SIMULTANEOUSLY USING SUSTAINABLE DEVELOPMENT METHODOLOGIES. WE HAVE A STRATEGIC PARTNERSHIP WITH THE PORT TO INCREASE EFFICIENCIES IN THE HARBOUR AREA. WE WERE THE FIRST MUNICIPALITY IN SOUTH AFRICA TO ESTABLISH AN INTERNATIONAL CONVENTION CENTRE. WE HAVE REVERSED URBAN DECAY IN MANY AREAS IN THE CITY.

26. A METRO THAT IS OPEN TO DISCUSSION • Call us for discussions / advice on: - • Investor Services • Business Support. • Economic Services. • Logistics Information. • Land Acquisition. • Infrastructure Provision. OUR COMMITMENT TO YOU: WE WILL RESOLVE EVERY QUERY FROM THE PUBLIC AND BUSINESSES