Limpopo cleanup welcomed by South Africa’s property sector

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South Africa’s former ambassador to the Ukraine, Stanley Mathabatha, in July was sworn in as the new premier of Limpopo. South Africa’s former ambassador to the Ukraine, Stanley Mathabatha, in July was sworn in as the new premier of Limpopo.

Radical changes in the Limpopo Provincial Government by Cabinet’s recent announcement of new administration for five departments has been welcomed by the South African Property Owners Association (SAPOA).

The national cabinet ordered that five provincial government departments including, education, treasury, public works, health and roads and transport be placed under section 100 (1) (b) of the Constitution since December 5, 2011 to prevent bankruptcy.

SAPOA has responded positively to national government’s recent announcement that it will start handing over the administration of five departments of Limpopo to the province’s new premier‚ Stanley Mathabatha, and his new executive.

“While we’re pleased that Limpopo is undergoing this transformation, we do still find the reported staggering R2 billion worth of theft and wastage, incurred by the previous administration extremely concerning and totally unacceptable,” says Neil Gopal, CEO of SAPOA.

This six month transitional period comes after a national government team took over the administration of the afflicted provincial departments two years ago, after it emerged that not only was the province burdened by an overdraft of R1.7 billion, but that its ability to provide services and pay salaries was under threat.

It has been reported that at end-July 2013, Limpopo had achieved a R3.3 billion credit balance, largely due to corrective measures taken by national government during its intervention.

Cabinet has also agreed further investigations should continue into any irregularities, particularly where procurement procedures were being contravened.

“We hope the new premier undertakes to keep the province from slipping into this state of collapse once again and look forward to proper procedures being followed in the employment of personnel, tender administration and safeguarding of taxpayers’ money,” says Gopal. “Unfortunately, the burden this has already placed on taxpayers and businesses is immeasurable and will take years to overcome.”

SAPOA is pursuing several property issues that are damaging to commercial and industrial sector in Limpopo province.

An ongoing challenge which is hurting the business community, stopping important funds from reaching municipal coffers, contributing to unemployment and hampering economic development in the province is illegal land use.

This means allowing property to be used for business it isn’t zoned for.

“A province that turns a blind eye to illegal land use is unappealing to developers and represents high risk for investors. This has knock-on effect for the regional economy and joblessness. Municipalities also lose rates income from illegal land use,” explains Gopal.

“It is unacceptable for the municipality to now increase the burden on law-abiding legal businesses with a 40% rates increase. They should rather take the time to identify illegal land use, correct zoning levy rates accordingly.”

Gopal adds that it is in the region’s best economic interest for the various municipalities in Limpopo to take illegal land use to heart and give it their full attention.

Gopal also notes that local authority services in the province aren’t commensurate with the ever-increasing rates and taxes charged. “The impact of this on the property sector is significant with operating costs on certain portfolios as high as 40%. This will in no way attract investments, leading to higher unemployment.”

He adds that increasing electricity tariffs, in particular, are squeezing margins, to the point they are disappearing for some retailers. “These costs are having significant impact on the sustainability of businesses and the ability to keep tenants in properties, with SMMEs being the worst affected,” concludes Gopal.

SAPOA is pursuing a meeting with the local authority for Polokwane, the province’s capital city, to discuss issues impacting the region’s commercial property market and hopes to work closer with both the provincial and local government.


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