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Johannesburg - It is not sustainable to expect commercial and certain residential property owners to subsidise a dysfunctional municipal system, according to Izak Petersen, CEO of the JSE-listed Dipula Income Fund [JSE:DIA].
"Something has to give. Many property owners are forced to pay for private sector suppliers to deliver the same services they had already paid municipalities for, but did not receive," said Petersen.
He pointed out that slow economic growth and high operating cost inflation are challenging the commercial property sector and placing strain on South African business.
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Some of the biggest challenges are due to rates, taxes and electricity costs.
"Despite ongoing above inflation increases of charges for services, the continued weak state of service delivery by municipalities means property owners and tenants alike have to dig deeper into their pockets to fill the basic services gap," said Petersen.
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Money paid to municipalities for this purpose appears to be disappearing into a black hole with generally scant, if any, services delivered, in his view.
With Dipula’s exposure to multiple municipalities across all nine provinces, Petersen is clear that this situation is the rule, not the exception.
He is adamant that local governments cannot continue to dodge their responsibilities to deliver services at the cost of business, and a significant improvement is needed quickly.
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