Rundu council launches commercial arm to boost revenue

The Rundu Town Council has established a wholly council-owned commercial company to generate new revenue streams as the rapidly growing town places increasing pressure on municipal infrastructure and service delivery.

The council on Friday launched Rundu Town Council Commercial Services (Pty) Ltd, a subsidiary tasked with pursuing viable business opportunities, investments, partnerships and joint ventures.

The initiative comes as Rundu’s population has grown to more than 180 000 people, increasing at an annual rate of 5.5%, according to the council’s strategic executive for community services, Francisca Kupembona.

Rapid population growth is placing growing demand on water, electricity and other municipal infrastructure, while the council’s revenue base has struggled to keep pace with the town’s expanding needs.

“So you can see that we continue to grow,” Kupembona said. “The revenue versus the population is not matching,” she added.

Council’s integrated strategic business plan, adopted in 2022, identified the need to broaden and diversify its revenue base, leading to the establishment of the commercial subsidiary.

The company's proposed areas of activity include land and terminal development, housing and apartment projects, commercial property, shopping and retail developments, infrastructure development, energy generation, supply and distribution, materials supply, tourism and hospitality.

The subsidiary will pursue both new ventures and opportunities linked to existing developments, including projects undertaken in partnership with private investors.

Kupembona said the partnership model would allow the council and potential investors to contribute different resources to commercial projects.

As a shareholder, the council could contribute land, existing facilities and infrastructure, municipal commercial opportunities and stakeholder oversight, while private partners could provide capital, technical expertise, development capacity and operational capacity.

“The mission is to be a catalyst for commercial revenue generation with a long-term view that supports service delivery and sustainability of the Rundu Town Council,” Kupembona said.

Legal provisions in place

Kupembona said the establishment of the company is supported by the legal framework governing local authorities.

She said the Local Authorities Act 23 of 1992, as amended, provides for local authorities to enter into partnerships and joint ventures.

The council approached the Office of the Attorney General on 17 November 2023 for a legal opinion on the proposed subsidiary.

According to Kupembona, the opinion confirmed that the council could establish a subsidiary for commercialisation, subject to the applicable commercialisation framework, approval by the responsible minister and any conditions imposed.

The company’s operational structures and board of directors have not yet been announced, with the council indicating that these arrangements still need to be deliberated on as part of the subsidiary’s governance framework.