The following section provides a brief overview of the comments, inputs and suggestions made on the IDP and Budget of the Buffalo City municipality for the 2026/27 review period.

IDP

1. ECONOMIC DEVELOPMENT AND SOCIO-ECONOMIC CHALLENGES

The municipality has experienced an increase in poverty levels, which has risen from 55.5% in 2014 to 69.6% by 2024, affecting over 600,000 residents. High unemployment, especially in disadvantaged areas like Mdantsane and Chalumna, exceeds 40%, with more than 55% of households relying on social grants. The IDP lacks a cohesive economic strategy that integrates infrastructure, planning and sector priorities, limiting the potential of key assets like the East London Industrial Development Zone. Service delivery failures and urban management issues exacerbate the investment climate, resulting in declining property demand and consumer spending in retail, particularly in low-income areas. A lack of measurable economic development programmes reduces the IDP’s effectiveness, making it difficult to gauge the success of interventions and resource allocation. SAPOA recommends targeted development interventions, investment incentives, a PPP platform and an integrated economic strategy linking planning and sector growth.

2. INFRASTRUCTURE BACKLOGS AND SERVICE DELIVERY FAILURES

The services backlog s and failures create significant challenges for economic performance, investor confidence, and property sector sustainability. The IDP identifies road infrastructure as the top concern affecting 39 wards, with deteriorating conditions leading to increased logistics costs and reduced connectivity, particularly in peri-urban areas. Additionally, challenges in water and sanitation provision, pollution in river systems and electricity losses further undermine service delivery. The IDP lacks clearly defined infrastructure upgrade projects, hindering effective backlog management. SAPOA recommend prioritising the infrastructure investment plan, implementing maintenance programmes and strengthening asset protection against vandalism.

3. HOUSING. INFORMAL SETTLEMENTS AND LAND USE CHALLENGES

The municipality struggles with land invasions and unregulated growth in areas such as Mdantsane and Qonce, straining infrastructure and undermining urban development efforts. This slow progress in formal housing delivery results in inefficient, reactive development patterns. From a property market viewpoint, issues around land availability and zoning create uncertainty, resulting in risks for long-term investments. To address these challenges, SAPOA recommends expediting the release of serviced land, enhancing informal settlement programmes, and boosting intergovernmental coordination to improve service delivery in human settlements.

4. URBAN MANAGEMENT, SAFETY AND CBD DECLINE

Urban management in the municipality faces significant challenges, notably crime, deteriorating infrastructure and weak regulatory enforcement. The IDP emphasises rising contact crimes, particularly violent offences in key areas like Quigney and Southernwood, adversely affecting the urban economy. Poor urban management practices contribute to visible decay, prompting businesses to relocate, which increases vacancies. Despite recognising these issues, there is a lack of structured interventions to reverse urban decline. SAPOA recommends establishing CID’s, strengthening law enforcement and better coordination among municipal departments.

5. INSTITUTIONAL CAPACITY AND GOVERNANCE CONSTRAINTS

The IDP indicates significant vacancy rates, especially in technical roles, which limit infrastructure planning and implementation. Issues related to financial management and oversight further weaken governance. These problems lead to project delays and reduced stakeholder confidence. Recommendations from SAPOA include prioritising critical vacancies, improving coordination and ensuring alignment between capacity and development targets.

6. FINANCIAL SUSTAINABILITY AND REVENUE WEAKNESS

Rising operational costs restrict funds for infrastructure, while tariff hikes burden consumers and businesses. High outstanding debts hinder stable revenue streams, impacting infrastructure funding and external financing access. The IDP review reveals a lack of a comprehensive financial sustainability strategy, which limits long-term development support. From the property sector’s view, financial instability affects tariff predictability and service reliability, influencing investment decisions. Recommendations from SAPOA include enhancing revenue collection, reducing outstanding debt, and diversifying revenue sources.

7. INFRASTRUCTURE MAINTENANCE AND ASSET MANAGEMENT

The ongoing deterioration of the municipality’s infrastructure, exacerbated by inadequate maintenance and asset management, leads to frequent service disruptions in water, sanitation, and electricity. Ageing infrastructure, vandalism, and insufficient maintenance funding contribute to issues like water leaks, sewer overflows, and power outages, negatively affecting residents and businesses. The IDP reveals weaknesses in asset management systems, including poor asset registers and lifecycle planning, hindering effective resource allocation and infrastructure renewal. A concerning trend is the prioritisation of new infrastructure development over maintenance, resulting in a backlog of deteriorating assets and a reactive approach to maintenance. For property owners and investors, this unreliability increases operational risks and diminishes the municipality’s appeal as an investment destination. Recommendations include developing a comprehensive maintenance strategy, securing funding for repairs, adopting lifecycle asset management, implementing predictive maintenance, and enhancing security to combat vandalism.

8. ACCESSIBILITY OF THE DRAFT IDP DOCUMENT

Access was only achieved through direct communication with the Municipality. This lack of accessibility may hinder stakeholder engagement, as the public may be unaware of the draft IDP’s availability during the participation period. Recommendations include improving the prominence and searchability of documents on the website, introducing standardised access protocols, enhancing communication with stakeholders and ensuring compliance with transparency legislation.

Budget

1. PROPERTY RATES

The Municipality’s proposed 2% increase in property rates for the 2026/2027 financial year is conservative compared to the National Treasury’s CPI benchmark of 3.7%. While it offers relief for households and landlords amid income growth constraints, it also reflects potential revenue collection challenges. The Municipality faces financial pressures that necessitate careful consideration of the sustainability of such increases. Recommendations from SAPOA include improving rate revenue management, enhancing billing accuracy, and strengthening revenue collection mechanisms, while expanding the rate base through formal developments instead of tariff hikes.

2. ELECTRICITY TARIFF

The proposed 11.1% electricity tariff increase for the 2026/2027 financial year exceeds both the CPI benchmark of 3.7% and the NERSA guideline of 9.01%, raising concerns about affordability amid high electricity distribution losses, projected at 27.5%. These losses stem from both technical issues, like aging infrastructure, and non-technical factors, including theft and billing inaccuracies. Despite the Municipality’s initiatives such as network upgrades and revenue protection programs, significant inefficiencies remain unmanageable under current tariff structures, preventing recovery of losses amounting to approximately R547 million, as mandated by NERSA. The tariff hike disproportionately affects lower-income households and pressures businesses with rising operational costs. Recommendations include aligning tariff increases with NERSA guidelines, aggressively reducing losses, enhancing smart metering and revenue protection, and implementing targeted support measures for low-income households.

3. WATER TARIFF

The proposed 8.33% water tariff increase for the 2026/2027 financial year exceeds the CPI benchmark of 3.7%, representing a significant burden for consumers. This increase is partially due to a 5.33% rise in bulk water costs but suggests additional inefficiencies in the system. A major concern is the Municipality’s high 36% Non-Revenue Water (NRW) level, attributed to leaks, illegal connections, and metering issues, leading to financial strain on consumers, especially low-income households. The increase affects multi-residential and commercial properties, raising utility costs in a struggling rental market. Recommendations from SAPOA include aggressively reducing NRW, ensuring tariff increases align with actual costs, improving metering and billing accuracy, and providing targeted relief for vulnerable households.

4. SANITATION TARIFF

The proposed 4.7% increase in sanitation tariffs surpasses the CPI benchmark, indicating added financial pressure on consumers amid rising costs across services. While not as severe as increases for water or electricity, there is a necessity for investment in sanitation infrastructure due to wastewater treatment capacity constraints and pollution risks. The SAPOA recommends linking tariff increases to measurable improvements in sanitation services, enhancing wastewater treatment efficiency, ensuring transparent revenue reporting, exploring cost optimisation, and protecting low-income households through subsidies and equitable tariffs.

5. REFUSE REMOVAL

The refuse removal tariff is increasing by 4.7%, which exceeds the CPI benchmark, adding financial pressure on households and businesses. While the increase is moderate, its cumulative effect, combined with other service increases, significantly impacts affordability. The Municipality is reforming solid waste trading services to enhance financial sustainability and operational efficiency, but these reforms are ongoing, raising questions about the justification for immediate tariff hikes without improved service quality. Recommendations from SAPOA include tying tariff increases to enhanced service delivery, expediting the Solid Waste Performance Improvement Action Plan, improving waste management efficiency, implementing cost recovery for high-waste generators, and increasing transparency in waste management spending.

6. BUDGET SUSTAINABILITY, FINANCIAL MANAGEMENT PRESSURES AND INFRASTRUCTURE INVESTMENT RISKS

The Draft 2026/2027 Medium-Term Revenue and Expenditure Framework (MTREF) of Buffalo City Metropolitan Municipality reveals significant challenges in balancing service delivery demands with financial constraints. Despite nominal alignment between operating revenue and expenditure, structural issues threaten long-term fiscal sustainability and infrastructure development. Notable is an 8.63% decline in capital expenditure, exacerbating existing infrastructure backlogs and undermining the municipality’s ability to grow and maintain critical services. Maintenance expenditure is critically low at about 4% of total operating costs, under the recommended 8-10%, which accelerates infrastructure deterioration. Coupled with a projected revenue collection rate of 77.25%, these factors strain cash flow and necessitate tariff increases, highlighting weaknesses in revenue management. Rising operational costs, especially in bulk purchases and employee expenditures, further constrict financial capacity for infrastructure investment. A reliance on tariff-led models to ensure financial sustainability amidst service delivery inefficiencies presents additional risks. High unemployment and indebtedness compound vulnerabilities in consumer payment capabilities, increasing fiscal uncertainty. This multifaceted predicament indicates a structural mismatch in revenue generation and expenditure priorities, raising concerns for the property sector regarding operational costs and service reliability. Recommendations from SAPOA include prioritising capital investment, increasing maintenance expenditure, improving revenue collection systems, and reducing reliance on tariff hikes through operational efficiencies. Long-term financial strategies, transparency enhancements, and external funding collaborations are advised to improve the municipality’s infrastructure and service delivery framework, ensuring sustainable investment practices.