uMsunduzi fumbles and pulls local (B&B) Business off the scene!

My Observation of the Electricity Problem

*this comes after the Msunduzi Municipality hiked services tariffs for the local B&B s, forcing a lot of them out of business. I was recently asked to conduct research on the subject as part of our 'course assessments'.* 

“The Municipality seems to fail in tracking and dealing with unpaid prepaid electricity bills by some unscrupulous members of society.

Though it must be noted that not all of them do so on purpose – some are sincerely overwhelmed by poverty, such that they resort to stealing electricity and saving themselves a lot of money, and there are just those who simply cannot afford it. There are also those who steal electricity merely because it is now an incredibly simple and common thing to do, and so paying towards their bill will insinuate that they have a lot to spend, and also not forgetting the ‘sheep factor’ theory – they feel obliged to do what everyone else is doing.

Walking along the Edendale road – along the ‘Greater Edendale Mall’ and ‘Edendale Crossing Mall’, past the hospital, I noted a sight that shocked me – almost every street lamp was dangling on it, wires that were carelessly connected and then channelled underground towards the growing number of shacks across the street. I saw all this in-passing, how come the electricity personnel have not picked this up? Made me wonder how many other illegal connections were out there – not Edendale alone but across the board.

The sad eventuality, (as noted by Andrew Layman, former PCB CEO) is that those who pay for these services now have to take all this burden and get slapped with hefty tariff hikes to try and make up for the lost revenue!”

 I had also spoken to the ‘Msunduzi Pietermaritzburg Tourism Association’s’ Accommodation consultant, Nhlakanipho Mdunge.

He broke into the conversation by shedding light at to what he believes is the source of the problem, and this is what he said – in isiZulu.

“You will remember that here (gesturing towards the side of the municipality), there was rampant corruption recently (which indeed was public information), so since the new council took office, they have been trying very hard to recover the lost funds and are putting in measures to also milk this money from the public.”

He also alluded to the fact that the Bed & Breakfasts were now required to forge out a huge tariff to the council. He explained this, “In the past, B&Bs were taxed on the owner’s personal capacity – a Sole proprietorship, but now what they (council) say is they want to start taxing B&Bs like all business – a business tax.

This means that if the B&B had paid about R 2000 to obtain its work permit, they will start calculating these monthly R2 000 charges, from inception up until now – and the B&B is expected to pay that balance!”

He also concluded by saying that this is fast killing all B&Bs in the city and leaving the rest bankrupt. He also explained that, recently, with the spate of events coming down into the city all simultaneously, he – as the ‘consultant’ who receives all queries and bookings from the visitors, was forced to plead with the local public to open their doors to the visitors – as the accommodation was extraordinarily scarce and demand rocket-high.

I then wrote numerous e-mails to a pool of possible stakeholders and the affected B&Bs, and received the following responses:

    Jean-Lee Info info@jeanlee.co.za   sent to me: wed/20/June/2012 (12:56pm)

 Hi Sanele

Thank you for your email.  I am one of the B&Bs which is part of the PMB B&B Network.  I am also the Chairperson of the Midlands B&B Association [MIDBABA].

From the Network's perspective, we have 13 B&Bs who are part of this Network.  Two of our Network members have resigned and closed their B&Bs directly as a result of the increase of municipal tariff & rate increases.  The tariffs made them unprofitable to run as the increases added as much as R2000.00 per month to expenses and profit margins are small.  This means the 2 owners are now effectively unemployed and cleaning and gardening staff have had to be retrenched,

 In terms of MIDBABA, other B&Bs have also closed, thus resulting in loss of jobs.  Those who have remained open have had to increase rates but what created a bigger problem is that the Municipality gave no notice of the increases or made any suggestion that they would do so and then backdated the increases, which resulted in huge bills being received.  In addition, not all B&Bs were initially charged the increases and there are still B&Bs not being charged.  The registered B&Bs have increased but the majority of B&Bs in the City are not registered and therefore are not paying the increased tariffs and therefore are able to offer cheaper rates.  There are a number of other charges that B&Bs who wish to be legal need to pay and one is doubtful whether the unregistered B&Bs are paying these as they probably believe they are above the law.

Although the tariffs are supposed to be for all home-based businesses, one is left wondering whether all such businesses are paying.

 Regards

DES

 The Jays Guest House info@thejays.co.za      (2:19pm)

The Msunduzi Municipality has not only raised    the electricity tariffs but has imposed huge increases of service    charges across the board, including the rates. Comparing the average    of the first 3 months of last year (R2000) and the same for this    year (R3800), our total service bill has increased by 90%    (3800/2000).

We estimate that 50% of our property is residential and the other    50% is used for business purposes. If 50% of the property attracts a    charge of R1000, then the other 50% being used for business purposes    has gone from R1000 to R2800 = 280%.

 For smaller B&B's which only have 1 or 2 rooms which only make    up 10-20% of the total property, the increase caused by the business    portion amounts to about 800%. The average increases for 20 B&B's comes to 80%. You then divide this figure by the    percentage used for business purposes (10% for a 1 bedroomed    B&B) = 80%/10% = 800%.

 So, what do the smaller B&B's do? Of course they all close down.    We expect all the 1 & 2 bedroomed B&B's to close and many of    those also with 3 bedrooms will close if they are not doing a lot of    business. Our estimate is that eventually 50% of all B&B's will    close.

The Jays Guest Hose.

Penny Hatting foodwithfinesse@absamail.co.za  sent to me: Wed/20/June/2012 (9:36pm)  

Good day Sanele,,

Thank you for asking, As I am in despair!. I was one of the few B&B who were targeted in 2010. I was land with an enormous bill and back paid to July 2010. The Municipality have made empty promises of going to correct this in justice – BUT TO DATE NOTHING. If I refuse to pay (which I should –I get cut off . I provide jobs for 10 ten women – that means that I look after ten families. The profits from this business are so small that it cannot sustain me on its own . I am not alone . The municipality is killing this industry , If  I did not have another form of income I would have had to reconsider the viability of this business( and I am one of the older well established B&B).

Yours,

Penny Hatting

Heritage Guest House

This is sadly impinging on the city’s potential to successfully hosting a number of iconic sites and events that the city so proudly boasts with. There is also huge potential for more of these sites and events based on the ‘interpretive’ aspect of tourism – despite the Voortrekker Museum, Pietermaritzburg Botanical Gardens, Gandhi Statue, Butterflies for Africa, Tatham Art Gallery, and many other.