Struggling municipalities thrown economic lifeline

Swazi municipalities struggling with dwindling resources have been thrown a lifeline through a new policy that enables them to raise funds independently of the national tax collection system. Deteriorating social service delivery in Mbabane and Manzini, the country's two major urban centres, has been linked to the sluggish performance of the economy in recent years - the Central Bank noted a downturn in gross domestic product (GDP) from 3.6 percent in 2002 to 2.5 in 2003. Municipalities generate revenue from a mix of property taxes, government grants and user fees, but the small number of urban residents who own property have had to shoulder the bulk of the tax burden. "2005 will see a new policy we've needed for a long time. Seventy percent of city revenues come from property ratepayers; only 10 percent of city residents own property, and it is unfair that this 10 percent pays 70 percent of city expenses, because the cities are for everybody," the principal secretary at the Ministry of Housing and Urban Development, Mbuso Dlamini, told IRIN. Municipalities can now actively solicit additional funds from banks to support major projects, and the government is also expected to step in and provide each town board or municipality with a flat subvention, or financial assistance package, of R500,000 (US $83,000). The lion's share of government grants for urban development has usually gone to Mbabane and Manzini, the country's industrial centre, with the rest divided between the nine other recognised urban areas. But the Central Bank of Swaziland has reported that, despite government assistance, smaller towns have been unable to implement some of their major projects, and the new municipal financing policy is also expected to bolster local government capacity. Bheki Dlamini, director of urban government at the ministry of housing, highlighted that "special grants" had funded the establishment of an abattoir in Mbabane, while Manzini had used government aid to build a satellite bus rank, relieving congestion at the main bus station. Although efforts were underway to improve service delivery, municipal authorities have had to contend with indigent property owners who refused to pay taxes. "We have one advantage with ratepayers over Manzini, because we are the capital city," said Mbabane public relations officer Bongani Dlamini. "We have many government buildings here, and we don't have to chase government around to pay. With the homeowners and individual ratepayers we still have a problem. In 2005 we will have to crack down; we will have to auction off the properties of longstanding rates defaulters." With foreign investment in the country at a standstill, and GDP growth reaching only 1.2 percent last year, an increasing number of Swazis, who cannot dodge income tax because it is automatically deducted from salaries, are opting to avoid paying property taxes. In Siteki, provincial capital of the eastern Lubombo Region, the small number of private property owners - just 437 - owe more than US $165,000 in arrears. The World Bank has also assisted in infrastructure improvements for both Manzini and Mbabane, underwriting the expense of road rehabilitation and the construction of a solid waste dump. With continued donor assistance, the government's new funding plan for municipalities, and the added option of borrowing from the private sector, officials are hopeful that the burden on a handful of city ratepayers will be eased, and badly needed civic improvements made.