CREDIT- RATING TO UNLOCK FINANCE IN EZULWINI

Vusi M. Matsebula

Town Clerk

Credit Rating to unlock finance in Ezulwini

• Ezulwini is a small predominantly residential town in Swaziland

•It is located along the Mbabane – Manzini corridor where Matsapha

the industrial hub of Swaziland is also located

• Whilst Mbabane is the Capital City, Manzini the economic hub and

Matsapha the industrial town, Ezulwini can be classified as a tourism

hub of Swaziland.

Background

hub of Swaziland.

•Houses the largest number of hotels, tourist attraction sites, close to

nature conservation reserves, cultural centres and other buildings of

national importance.

•The town has a day time population of about 4, 000 and a night time

population of about 2, 000.

Existing Land Use Map

1

Source: Ezulwini Town Board Town Planning Scheme, 2008

Ezulwini Town Board - Background

Ezulwini in Comparison with other Town Boards & Town Councils in Swaziland

Status TownArea (ha)

PopulationPopulation Density

(people/ha)Distance from Ezulwini (km)

To

wn

C

ou

ncil Nhlangano 1,217 9,071 7 113

Siteki 759 8,238 11 90

Pigg's Peak 857 6,212 7 73

Mankayane 807 1,011 1 46

Lavumisa 1,021 1,232 1 163

To

wn

B

oard

Lavumisa 1,021 1,232 1 163

Vuvulane 120 580 5 124

Hlathikulu 1075 1,993 2 86

Matsapha 1,258 13,432 11 22

Ngwenya 535 1,529 3 30

Ezulwini Urban Area 1,719 2,000 0.8 0

Ezulwini Developable Area

1,119 2,000 1.3 0

[1] Based on Swaziland National Population Census Provisional Figures (2007)[2] Of the 1,719 hectares of total urban area (jurisdiction area) of Ezulwini, approximately 600 hectares are identified as non-developable and include theexisting Conservation Areas, Steep Mountain areas (above 25%) and areas along the various drainage lines traversing the urban area.

Services provided by the Local Authority

•Environmental Health Services

•Refuse Collection and Disposal

• Road and Storm Water construction

• Street sweeping

•Town Planning and Building Control

•Parks

•Markets

• Bus and taxi ranks

• Cemeteries

• Animal Pounds

Ezulwini Town Board Challenges

• Lacks infrastructure such as a well developed road network, street

lights, sewerage system and water supply

• Land is owned by few individuals who are disposing it in piece meal

subdivisions

• Central government subventions and funding for Capital Projects is

calculated using the night time population of the various towns incalculated using the night time population of the various towns in

Swaziland

• Funding for any additional projects is through the local banks

• Existing infrastructure needs refurbishment

On going Capital Project (Loop Road)

Ezulwini Town Board Opportunities

• Rapidly growing town with great potential due to its relief and climate

• Most of the population is from the high income group and majority of

households are formal

• Houses most of the leisure lodges in the country with 1, 567 beds

available for tourists

• Is drained by four perennial rivers

• Located between Manzini and Mbabane

• A few minutes drive to Mlilwane Nature reserve, Mantenga Nature

Reserve, Mantenga Cultural Village, Hot Springs, Houses of Parliament,

Ludzidzini Royal Residence and National Stadium etc.

• Surrounded by high populated informal settlements

• Located next to the MR 3 highway

Ezulwini Town Board

• Currently very liquid in terms of finances and we are striving to

maintain this continuously over time.

• Operation finances funded through property taxes, service charges &

operating grants.

• Capital projects are funded through Capital grants, private loans and• Capital projects are funded through Capital grants, private loans and

operating revenues.

• Population mostly from the high income category as a result payment

of property taxes is not been a problem as such 77 % of the Local

Authority finances is obtained from property taxes.

Ezulwini Town Board

•Rapidly growing (two major commercial centres and five

residential townships currently proposed and studies are underway)

• Still has a number of opportunities for new businesses to diversify

the economy of the town

• The Central Government through the Ministries of Housing and• The Central Government through the Ministries of Housing and

Urban Development and Economic Planning and Development is

supporting the move to assist local authorities approach markets for

financing, and there has also been a buy – in from the Councillors

How Credit Rating will assist unlock

financing in Ezulwini

• Credit rating will assist the Local Authority access local markets for

funds to finance its Capital Projects at negotiated and justifiable rates.

• The infrastructure developments will be paid for by spreading the

costs to the tax payers more evenly over a reasonable period.

• There will be less reliance on the Central Government since the local• There will be less reliance on the Central Government since the local

authority will be able to raise its own capital funds by borrowing in the

market place at the best possible interest rates in order to lower the

cost of borrowing.

• Since spending on large items of infrastructure tends to be ‘lumpy’,

borrowing will provide large capital sums for immediate use.

How Credit Rating will assist unlock financing in

Ezulwini (cont..)

•The resulting longer term debt can be serviced from a regular stream

of municipal income whether directly from revenue resulting from the

investment or indirectly through increased tax revenues.

• Credit rating will also assist the Central Government in its drive to

decentralize service delivery.

• Borrowing funds for infrastructure, and repaying them over a number

of years, introduces an element of “intergenerational equity”.

• With the introduction of the new Retirement Funds Act 2005, which

states that Insurance Companies need to invest at least 30 % of their

funds in the country it means there are funds in the local market for the

Local Authority to access.

“Since the life of an infrastructure asset could be thirty years or more,

why should today’s taxpayers meet the full cost and later generations

reap the benefit?

Repaying a long term debt means that those who benefit from the asset

will also contribute to its cost”.

Barry M. Jackson – Obtaining a Municipal Credit Rating, a

brief overview

I thank you.