4.3 Funding mechanisms

Appropriate economic instruments should be evaluated and implemented.

A critical precondition for the successful implementation of IWMPs is access to sufficient funding to carry out the plan. Funding will be required for inter-alia: building capacity within the municipality; the development and implementation of by-laws; development and implementation of IWMP; development, operation and maintenance costs of waste management facilities; and the design and commissioning of new waste management facilities.

Different sources that a municipality could potentially obtain funding from could include Equitable Share Funding, grant allocation, revenue from rates and tariffs, revenue from fines. For once off projects, funding sources could include the Municipal Infrastructure Grant (MIG) funding for infrastructure related projects, donor funding to fund certain aspects to the delivery of waste services.

It must be noted that not all funding sources are sustainable, for example donor funding is sometimes only available for a limited period.

In order for municipalities to have sustainable sources of revenue, a full cost accounting of how much it realistically costs them to deliver waste management services should be developed. Once developed, municipalities will then be able to charge tariffs that are reflective of the cost of rendering waste management services and will generate accurate revenue for the waste services rendered. Municipalities will also be able to determine whether there is under-recovery of waste collection revenue from its customers or not.

Below are some examples of economic instruments that could be considered for funding the various aspects to waste management.

1. Funding mechanisms for recycling

   Recycling initiatives could be funded through public-private initiatives whereby the municipality could provide receptacles for separation at source by households and a recycling company could, at their cost, collect the recyclables.

   Another scenario could be that of Community based recyclers; wherein they could organize themselves and with the help of a municipality participate in recycling where they could be the ones employed in carrying the further sorting of recyclables in an buy back centre which could then be sold to recycling companies as a way of generating income to sustain the program.

   Further, the following funding models could be employed in order to ensure the financial sustainability of waste management initiatives:

   • Fiscal funding allocation
   • User charges e.g. volumetric charging
   • Revenue collection from penalties, fines or levies
   • Establish partnerships with industry wherein the industry may finance aspects of recycling i.e. fund the transport costs to carry out recycling (the NWMS has identified the Packaging industry as one of the industries that must develop an Industry Waste management plan which should stipulate how it will deal with packaging waste in order that it should not land up on waste disposal facilities)

2. Funding mechanisms for waste collection and transportation

   To facilitate the funding of waste collection and transportation, possible sources of funding for waste collection and transportation could include:

   • Payment for services rendered (full cost accounting will ensure that appropriate fees are charged) in order that waste management services are delivered sustainably, cross-subsidisation could be explored whereby poor communities could be subsidised by paying households in order that basic services are rendered to indigent households;
   • Local government budgetary allocations (from Equitable share funding allocation); and
   • Use of public-private partnerships.

3. Funding mechanisms for waste disposal

   The cost associated with general waste disposal will mainly be funded by user fees or as part of waste charges for local authority's general waste disposal sites. The introduction of waste disposal tariffs at all waste disposal facilities, reflecting the real cost of waste disposal, should be encouraged.

   Public-private partnerships may be established for the development and operation of waste facilities including regional waste disposal facilities. In this type of partnership a memorandum of understanding/agreement could be signed between a municipality and a private company wherein it will be agreed on whether the private company will make an upfront payment towards the establishment of the waste disposal facility and once in operation the private company will utilize the disposal facility and in turn instead of being charged disposal fees the municipality would deduct from the amounts already paid in advance.

   Mbombela Local Municipality is one such an example whereby this Municipality entered into a joint venture with a private company for the establishment of its waste disposal facility and the private company made an upfront payment to this municipality and every time the company uses the waste disposal facility deductions are made from the upfront payment that was used to establish the site until such a time that there amount has been used up.