Umzimkhulu Local Municipality Integrated National Electrification Programme

uMzimkhulu Municipality is a local municipality in the southern part of KwaZulu-Natal. It is one of four (4) local municipalities of the Harry Gwala District Municipality. 

Introduction

uMzimkhulu Municipality is a local municipality in the southern part of KwaZulu-Natal. It is one of four (4) local municipalities of the Harry Gwala District Municipality. Approximately 90.8% of the population is un-urbanised and resides in rural areas, with backlogs of 4 355 households without access to electricity in 2013/14. The purpose of this case study is to illustrate the impact of the DBSA frontloading through the integrated national electrification programme (INEP) in the uMzimkhulu LM. The primary objective is to showcase how the programme benefitted the rural communities while transforming lives permanently. This was achieved through the INEP and partnerships with other stakeholders. The programme has linkages to other local developments in the community such as an increase in access to affordable energy, stimulating economic development and entrenching a culture of learning. From 2011 to 2016, the Bank bridge financed Municipal Infrastructure Grants (MIG) and Integrated National Electrification Program (INEP) allocations for several municipalities to the value of R20 million. The frontloading was aimed at accelerating infrastructure roll out thereby increasing access to services and reducing backlogs, stimulating local economies and creating opportunities for jobs. uMzimkhulu is chosen as a case study for the roll out of INEP allocations because of the combined impact that the project has had on the beneficiary communities and the linkages of the project to other local developments in the community.

Unemployment is high and poverty way above both provincial and national levels. In 2015 the DBSA approved the bridging of the municipality’s future INEP allocations to accelerate the electrification for the households. In addition to the reduction of the electrification backlogs through improved access to electricity, the bridging of the INEP allocations was aimed at reducing poverty and creating safe spaces in the communities. 

Project Financing
Public
E&S Risk category
Category 3
DBSA Involvement

In order to deliver the frontloading of the INEP program, the DBSA made available its full project value chain support packages to the municipality. In 2015, the DBSA approved a R20 million facility to frontload electrification of households in two villages. In addition to the funding the DBSA provided technical support for the implementation of the projects. The technical support involved the DBSA Project Preparation Unit and DBSA project managers assisting the municipality to manage the implementation of the projects, thus ensuring that the projects are completed on time, on budget and to specifications.

Sustainability impact

The project was completed on time and on budget in two villages with the result that 1 211 households were connected. The estimated development impact contribution associated with the DBSA bridging loan for the programme was as follows: 

  • Number of jobs created: 61 jobs (22 direct, 25 indirect and 14 induced); 
  • Impact on provincial GDP: R9.3 million; 
  • Impact on provincial capital formation: R37.8 million; 
  • Additional household income: R4.9 million; 
  • Electricity backlogs reduction: decreased backlogs by 16% of the total; 
  • Increased matric pass in schools (students had access to night classes); and 
  • Decrease in crime rate. 

Key lessons 

Three key lessons can be derived from this intervention: 

  • First and foremost is that frontloading is a powerful instrument for accelerating service delivery on a mass scale to make sustainable developmental impact in the lives of citizens 
  • Second, small scale projects like the uMzimkhulu INEP have the highest degree of making sustainable and impactful change and can contribute to resolving social ills 
  • Finally, innovative financial instruments like frontloading have the potential to significantly increase the scale with which infrastructure backlogs can be reduced
Stats
Number of jobs created

61 jobs (22 direct, 25 indirect and 14 induced)

Impact on provincial GDP

R9.3 million

Impact on provincial capital formation

R37.8 million

Additional household income

R4.9 million

Electricity backlogs reduction

decreased backlogs by 16% of the total

R20.00m
100%