BRUCE WHITFIELD: Why companies are ditching useless municipalities
‘There’s raw sewage everywhere, and electricity and water are intermittent, so it’s an unacceptable environment not only for businesses to operate in, but for people to live in’
The decision by Israeli-controlled, JSE-listed Clover to shut SA’s biggest cheese factory in Lichtenburg, and spend R1.5bn relocating to Queensburgh near Durban, has shades of the long-running battle between Astral Foods and the Lekwa municipality around Standerton.
Both are symptomatic of a broader collapse of smaller municipalities, destroyed by a mix of incompetent political deployees in jobs they are not trained or suited for, rising corruption and factional ANC battles.
The government is finally beginning to admit the magnitude of the problem — but the visible influx of economic migrants to larger municipalities is unlikely to be stemmed any time soon. And this puts considerable pressure on bigger metros already stretched to breaking point.
The Clover decision comes after years of failed discussions over water and power shortages in the North West town. The decision to move the Lichtenburg plant to KwaZulu-Natal would not have been taken lightly. But Clover already has an operation in Queensburgh and has found eThekwini to be more capable than Lichtenburg’s Ditsobotla municipality.
The point, however, is that this comes at a cost of 330 local jobs directly. And the problem is far bigger than that: it’s unclear how many local businesses have failed due to similar issues in a municipality riven by division and an internecine battle between two ANC factions.
In May, the Sunday Times described that battle in these terms: “Two mayors, two speakers, municipal premises barricaded to shut out rivals, frozen bank accounts — and the collapse of service delivery in broken towns. This is the battered face of local government in the North West, where wrangling over the spoils of office between feuding ANC factions has run some already dirt-poor municipalities into the ground.”
None of these towns will be getting any new investment any time soon. But despite that, the Ditsobotla municipality’s website remains effusive in its praise of mayor Tebogo Buthelezi: “With quite an impressive and rather substantial CV, it is impossible to sum Hon Mayor Buthelezi up in just one page.”
It then rabbits on for a page about his five tertiary qualifications, sporting prowess, family life and commitment to church activities. It says nothing about his mayoral record, which, on the face of it, appears to be woeful.
Buthelezi and his rival, Tsholofelo Moreo, are embroiled in a destructive battle for control of the municipality in a tug-of-war that would have the makings of a great soap opera were its consequences for residents not so serious.
Buthelezi has already been removed once by the council following a no-confidence vote, but he succeeded in being reinstated by a court. He was then removed again by the ANC caucus and Moreo was installed. Other municipalities in the area are going through similar tribulations.
“Potholes aren’t the issue,” Municipal IQ economist Karen Heese told me on The Money Show on 702 and Cape Talk last week. “There actually just aren’t roads to have potholes. There’s raw sewage everywhere, and electricity and water are intermittent, so it’s an unacceptable environment not only for businesses to operate in, but for people to live in.”
Finance minister Tito Mboweni has admitted that SA’s economy cannot recover unless dysfunctional municipalities are fixed. Last week, his deputy, David Masondo, admitted that Astral Foods’ court victory, which put the Lekwa municipality under the administration of the National Treasury, was a “wake-up” call to the government.
Astral began its legal action against the municipality in 2018 and only in 2021 did it secure the court order. Imagine how many jobs were lost in that time.
But the years of municipal mismanagement had cost Astral — which processes more than 3-million chickens a week at the site — millions of rand as the company was forced to create its own infrastructure, including its own water purification plant.
Masondo said last week that there are 39 municipalities in dire straits like Lekwa, 163 in financial distress and 108 which had passed unfunded budgets.
He added that municipalities were failing in their constitutional and developmental mandate and, it seems, the Lekwa order would not be the last of its kind.
Last week, seasoned administrator Johann Mettler, the former city manager of Nelson Mandela Bay, quietly took control of Lekwa under a Treasury mandate to assess just how dysfunctional the municipality had become, and to draw up a plan for the future.
Mettler received a sizable payout from that municipality after he was removed when former mayor Athol Trollip was ousted. The DA subsequently tried to have him reinstated, but he has now accepted a critical position at Lekwa which, if it all turns out well, could provide a model for future municipal turnarounds.
“We will give him sufficient time to find his feet and engage with him and his new team to assist in drafting a plan and road map to try to save whatever is left of the infrastructure,” Astral CEO Chris Schutte said last week.
“Astral will diligently support any effort made by the administrator to secure sustainable infrastructure to benefit both businesses and residents, [and we] will make financial contributions if required.”
With local elections scheduled for October 27, the government will need to tread carefully if it doesn’t want to be seen to be meddling in a democratic process which finally might just see voters choosing representatives who will address their problems, rather than more of the same.
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