EDITORIAL: How the ANC broke SA’s small towns

While not quite as lavish in scale as usual, this year’s Tour de France will cut its course across the whole of France, through villages, towns and cities, mostly picturesque, some not, to (socially distanced) cheering spectators and a battery of news media.

Now picture the same event in SA. Aside from the DA-run Western Cape, a cross-country of small-town SA would take riders and viewers through cavernously potholed roads, disintegrating pavements, streets seeping raw sewage and melodic drifts of litter. The one silver lining would be that those riders who continued at night would most likely be spared the sight, thanks to the fact that SA’s streetlights are now mostly broken.

It’s a grim prospect, and underscores how SA’s municipalities are a wreck — both in their provision of services and in their finances, which have become even more shambolic than they were last year. It’s a decline that is grotesquely tabulated in the auditor-general’s latest report.

The report reveals that only 27 of the 257 municipalities received clean audits. And, auditor-general Tsakani Maluleke said, audits in 57 municipalities were not even completed.

Or, put another way, in their present state of collapse, R5.5bn could simply disappear from our municipalities without any paperwork to suggest its whereabouts, while R26bn is estimated to have been spent irregularly countrywide.

After Eskom, this frightening decline should be the single most pressing task for President Cyril Ramaphosa’s administration. In part, this is because it wasn’t something he simply "inherited" — when his "new dawn" came into power, 37 municipalities got clean audits. It has got worse.

According to economist Mike Schüssler, about 7% of GDP spend goes towards our towns and cities which, were they run properly, would be able to deliver better services, and, crucially, at a far lower price. Municipalities are where citizens meet their government — they affect everyone, every day, and when they fail, like when they can’t provide clean water or electricity, there is very little alternative.

It means residents have to pay more for diminishing services, as their rates are used to pay salaries to inept officials who, all things being equal, would have been fired years ago.

It’s why the City of Joburg, for example, can, without shame, implement a raft of increases for services this month to cover for its woeful mismanagement: water is going up by 6.8%, refuse by 4.3% and electricity by 14.59%.

Schüssler estimates that 40% of Joburg’s water is lost through maladministration. Fix that, and you wouldn’t have to hike rates. Municipal profit margins are also too fat, while labour costs are 50% higher than they were 15 years ago. It’s an unconscionable racket.

As SA Property Owners Association CEO Neil Gopal told Moneyweb, if investors have no control over their property rates, water or power bill, nor any guarantee of supply, "where exactly is the value proposition?"

Business lobby group Sakeliga told the FM that the implosion of municipalities — if not arrested now — will spark a fiscal crisis in SA, in which towns become unable to pay their debts as businesses and residents flee. Dairy giant Clover recently quit a major investment near Lichtenburg in North West, and it won’t be the last.

But fixing the problem, on the other hand — installing competent staff, keeping proper records — would bring a huge rebound in confidence. Schüssler argues that growth could hit 5% in SA if accompanied by broader economic reforms.