Buffalo City Metro’s Kiwane Beach Resort, which cost taxpayers more than R25m in upgrades, is operating at a loss and has failed to bring much-needed revenue for the city.
The resort, which BCM said offered world-class accommodation, was officially launched in September 2019 by former mayor Xola Pakati.
The purpose of the resort was to enhance rural development and bring revenue to the city.
It is meant to offer leisure activities and to host events such as corporate functions and weddings.
But according to documents, which the Daily Dispatch is in possession of, the resort only managed to generate revenue of R1.1m for the 2022/2023 financial year.
In the same year, it spent R1.6m on stipends for workers, electricity, security, laundry services and cleaning material.
Lack of a proper road from the R72 to the resort and unreliable internet connections are some of the challenges that contributed to the resort being less attractive to holidaymakers.
This was revealed last week when the directorate of economic development and agencies appeared before the BCM’s municipal public accounts committee (MPAC) in a session held at the East London City Hall.
According to the directorate, the resort offered limited activities for holidaymakers.
“The municipality is in the process of purchasing equipment for indoor and outdoor games and these include a pool table, table tennis, chessboard and beach volleyball,” the directorate said, adding it was also in the process of constructing a swimming pool.
On Monday, a BCM employee who answered the phone at the resort said there were still lots of rooms available — something unusual for most coastal accommodation establishments during the Easter holidays.
Contacted again on Wednesday, the receptionist said there was still space. The receptionist said a chalet, which accommodates four people, costs R1,600 a night.
When the resort was launched, the metro promised it was going to look into the state of a stretch of gravel road to the resort — which has not been done.
Shortly after the launch, BCM reported the theft of quad bikes, which were later recovered.
According to the metro's website, the resort is situated close to nature walks and wildlife trails and with direct access to both the Kiwane estuary and river, as well as the pristine Kiwane beach.
The resort, graded as a three-star self-catering facility, offers “unlimited opportunity for water sport activities, including angling, kayaking, surfing and windsurfing”.
BCM’s mayoral committee member for economic development and agencies, Sixolisiwe Ntsasela, told MPAC that the resort was able to accommodate 84 people.
“When it was launched, we could not operate as we wanted in [2020] because of Covid-19,” Ntsasela said.
“We took the decision of [upgrading] that resort in Kiwane because we want to develop rural communities.”
Department for economic development and agencies head, Noludwe Ncokazi, said: “On the operational costs, we have developed a very lean model to ensure that we don’t overspend and that there is recovery [on money spent] as a result of investment to the resort.
“As opposed to a very heavy structure [workforce], we are utilising EPWP [Expanded Public Works Programme] workers who are paid stipends.
“We are contributing quite meaningfully to the revenue of the municipality,” Ncokazi said.
She told MPAC that infrastructure maintenance at the resort included the construction of the restaurant, landscaping, electricity, fencing, CCTV cameras and furniture which amounted to R26.7m.
MPAC member Anathi Majeke said they were concerned about how the resort was being run.
“We don’t get the statistics that show the return on investment to the municipality. We also don’t have information that states how many people have booked at the resort?” Majeke said.
“As the DA ,we have raised issues pertaining to the access road to the resort. It seems as if the metro was in a rush to build the resort.
“We understand it is meant to be enhancing rural development and to bring money [for the city], but we need to know how effective the local economic development had been to make sure that the resort is operational.
“We believe, as the DA, that a lot more could be done to ensure we have a tangible return on investment.
“We do not believe that the resort is advertised optimally to ensure that people are aware of it.”
BCM spokesperson Samkelo Ngwenya said the city had witnessed a “significant rise” in revenue from the Kiwane resort post the Covid-19 pandemic.
“[However,] it is not at the desired level,” Ngwenya said.
“The [aim] is for the resort to have at least an 80% occupancy rate. The resort is usually fully booked during weekends, especially when there are specials.
“The festive season has also seen a rise in occupancy rates.”
Ngwenya said there was huge interest from religious groups, who used the entire resort when they booked.
“The resort has also gained traction for family events such as weddings, anniversaries and baby showers.
“The city is marketing the resort on various platforms to make sure that it is known,” he said.
Ngwenya admitted there were problems with internet connectivity at the resort.
“The issue of connectivity is being taken care of by the city.”
He said the issue of the access road was being attended to by the metro in collaboration with the transport department.
“The most sensitive parts [of the road] have already been resurfaced.
“The metro would like to have a private partner in the future to expand the facility and cater for larger events and international tourists.” — Additional reporting by Ziyanda Zweni
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