With the country’s economy struggling to perform optimally, it is critical that government pays special attention to its revenue generation streams.
“We are committed to harnessing the full potential of these assets in a sustainable manner to generate enough revenue for the province, while also transforming ownership patterns of the past,” says MEC for the Department of Economic Development, Environmental Affairs and Tourism (DEDEAT), Mlungisi Mvoko.
According to MEC Mvoko, the Province’s fiscal framework is only dominated by national transfers in the form of Provincial Equitable Share (PES) and Conditional Grants, hence the importance of diversifying revenue sources.
Mvoko was speaking at the inaugural Eastern Cape Property Conference that took place in East London International Conference Centre yesterday, 31 March 2022.
According to MEC Mvoko, the extent of the government’s property portfolio in the province necessitates that a multi-lateral approach is adopted to maximise the benefits of this asset class.
The multi-lateral approach envisages a combination of a public and private investment to elevate this asset base to a level where it is fit for purpose in terms of commercial and industrial requirements in order to maximise revenue generation opportunities.
As such, the government has on its end made a commitment to refurbish its property asset base and has allocated funding through various departments for this purpose.
Private sector investment is viewed as the other critical enabler for the development of the government’s property asset base.
“We understand that security of long-term tenure through long term leases is required to attract private investment and afford sufficient time to realise attractive returns on investment for the private sector,” says Mvoko.
He called on the private sector to partner in the sustainable and profitable development of its diverse property asset base located across the Eastern Cape Province, adding that the basis of engagement between government and the private sector will include long term triple net leasing and other forms of contracting that will allow for constructive, practical and profitable business transactions.
Turning to his portfolio, Mvoko says the provincial government is affording Eastern Cape Development Corporation (ECDC) the support in its efforts to organise and update its property portfolio to strategic economic growth and development assets. ECDC owns approximately R1.3 billion in property assets across the province.
The decision to search for more revenue sources from the government saw the Executive Council (EXCO) commissioning a revenue study through the University of Fort Hare on how the Province can enhance its revenue generation.
The study presented the province with various prospects to grow its own revenue generation base to R7.6 billion.
The revenue potential was mainly identified in the departments of Public Works and Infrastructure (DPWI) with potential collections of R6.094 billion and to a lesser extent from the departments of Transport, Health and Economic Development, Environmental Affairs and Tourism.