South Africa is paying a heavy price for dysfunctional local government

Violent protests over the poor delivery of basic municipal services occur frequently in South Africa.
EPA/Kim Ludbrook

South Africa’s Minister of Cooperative Governance and Traditional Affairs, Dr Zweli Mkhize, recently painted a bleak picture about the state of local government. It should worry all South Africans, not only those suffering as a consequence of dysfunctional municipalities.

In his budget speech in Parliament in May Mkhize said that 87 municipalities – about a third of South Africa’s total of 257 – “remain dysfunctional or distressed”. He identified two problems. One set is systemic and relates to the size and structure of municipalities. The other is mismanagement due to “political instability or interference, corruption and incompetence”.

Whatever the causes of the dire state some municipalities are in, it is evident that this situation has a huge negative impact on society.

South African municipalities form the third sphere of government after the provinces and national government. In accordance with the Constitution, they must be democratic, accountable institutions that provide a range of basic services to local communities, such as water and electricity.

They are also key institutions for the promotion of social and economic development, given their direct link to local communities. Successful municipalities are essential for the country’s prosperity.

What dysfunctional looks like

A number of characteristics are evident in dysfunctional municipalities. Firstly, there is very poor or no service delivery – in other words rubbish isn’t collected and basic services such as water supplies are patchy or non-existent. Another feature is that they suffer from serious financial problems such as low debt collection and huge overdue creditors’ payments. There is also always evidence of infrastructure, such as roads, deteriorating at a fast pace.

Communities in these areas often experience a range of problems that reflect this state of dysfunctionality. These include potholes; significant water losses due to infrastructure not being maintained; an increasing backlog in new infrastructure; financial mismanagement as well as fraud and corruption.

A second important impact is that service providers are affected. If a municipality doesn’t collect all the revenue due to it, it can’t pay its creditors or takes a very long time to do so.

An example of this is the R16 billion owed by municipalities at the end of 2017 to Eskom, the country’s power utility. Smaller service providers, some of which are small and medium enterprises, could face serious liquidity problems if they don’t get paid. At worst they could go under.

The effect of all this is often civil unrest. In the longer term consequences will be increasing uncertainty or even instability in affected communities and a spiralling financial crisis. And financial problems will have a snowball effect. This is because investors won’t be interested in investing and current businesses might decide to move elsewhere. This will mean that local economic development and much-needed job creation won’t get off the ground.

What needs to be done

In addressing systemic issues, there needs to be a thorough investigation into the structure, size and types of municipality and their governance structures. This should ideally be done by independent experts on behalf of the government.

This should be directed to the overall improvement of the design of local government. And it should also take into account the fast-changing, technology-driven environment in which we live.

In reflecting on the current state of affairs two potential scenarios – which I name after Beatles songs – are presented.

The first is a low road scenario. I have called this “Crying, Waiting, Hoping”. The other is a high road scenario, which I have named “We can work it out”.

In the first scenario, bad governance continues. On the financial side this involves financial mismanagement, tender fraud, corruption, low debt collection and very slow payment of creditors. In this scenario services will deteriorate. Refuse will be collected less frequently and there will be more water losses due to old infrastructure not being maintained. In addition, more potholes will lead to more claims due to accidents. And finally, increasing dissatisfaction among the citizens which lead to more civil unrest.

If this went on for a prolonged period of time it could lead to the total collapse of a municipality. This in turn would require a long time and significant funding to get it into an acceptable functional state again.

The “We Can Work It Out” scenario envisages the successful prosecution of corrupt officials and councillors, cooperation across the political spectrum to create a stable organisational basis and a serious attempt by communities to help solve municipalities’ problems. They can do this by providing expertise and participating constructively in the rebuilding of their society.

In this scenario all available resources from all three spheres of government, the business community, academia and citizens would be used in a spirit of cooperation to work out solutions that can benefit society.

Dirk Brand, Extraordinary Senior Lecturer at the School of Public Leadership, Stellenbosch University

This article was originally published on The Conversation.

Why South Africa's main opposition isn't gaining traction against the ANC

Democratic Alliance leader, Mmusi Maimane is struggling to grow the party further.
EPA/Nic Bothma

After more than two decades in power, South Africa’s ruling party, the African National Congress (ANC) is in severe trouble. The euphoria around the appointment of the new president Cyril Ramaphosa is rapidly fading as he increasingly encounters resistance from within the party to a thorough cleansing of the state.

On top of this the financial crises in key public utilities seem to be getting worse while key economic indicators like unemployment, production and inflation are rapidly deteriorating.

You would think that amid all of this the prospect of the official opposition, the Democratic Alliance (DA), displacing the ANC at the next election would be getting better. But the latest polls indicate that the DA’s support has shrunk since the last election. The party’s prospects of equalling its performance at the last national poll – when it obtained 23% of the national vote – look dim.

What, then, is going on?

There are a whole host of reasons to point to. The first is that Ramaphosa, despite his initial post-Zuma popularity having been punctured, remains a far more impressive and weighty figure than the DA’s leader, Mmusi Maimane.

Part of Maimane’s problem is that DA’s attraction to many has been its claim to represent cleaner and more efficient government. But these claims are being severely tested as it faces the dilemmas and temptations of running the three major metros it took control over after the 2016 local government elections.

It gained control by forging awkward coalitions with the Economic Freedom Fighters (to whose principles it’s bitterly opposed) and other smaller parties. This has meant that its hold on power has often looked fragile, and it’s had to engage in all sorts of wheeler-dealing. Necessary, but not good for the image. Meanwhile, the party allowed its fight with its Cape Town mayor, Patricia De Lille, to drag on for far too long.

And then of course there is the issue of race, which divides the party all the way to the very top.

The DA was founded on principles of liberalism. Its ideological position comes with the assertion that the individual, not the group, is the primary unit of society, and that freedom and equality are realised through the freedom of the individual. That’s not sitting very well within many of its newly found black supporters.

On top of this, the DA’s classic liberalism has run up against the problem of how to address racial disadvantage on an individual basis in a society where fundamental rights and material goods have been allocated by race historically. Either the DA breaches its liberal principles by accepting the need to address racial disadvantage frontally. Or, if it doesn’t, it sends out the message to black voters that it’s not really committed to addressing racial inequality.

This tension played out recently when the party became embroiled in an internal spat over whether or not to support Black Economic Empowerment, an affirmative action policy.

Growth or principles?

Until recently the DA’s share of the vote in the country has increased with every election. That growth came at the cost of having to dilute its core liberal principles, as it sought to expand its appeal beyond its white base to black, coloured and Indian voters.

In 2013 the party accepted that race should become a basis for redress. In 2015, it adopted freedom, fairness and equality of opportunity into its constitution.

Subsequently Maimane has also suggested the party needs to adopt affirmative action by pushing hard for the DA to accept the need for “greater diversity” in its composition. This was a way of saying that more black people are needed in leadership positions without actually using those words.

The more recent internal spat about Black Economic Empowerment also points to these tensions.

Head of policy Gwen Ngwenya announced that the DA has ditched Black Economic Empowerment in favour of real empowerment from the bottom. But many among the party’s newer influx of members realise that they would never be where they are today if it was not for a policy engineered by the ANC – for all its failings.

True, the DA pumps out the message that the children of a black millionaire do not deserve a special hand up from the state. However, without a clearly stated policy about how it is going to pave the way for “equality of opportunity”, it’s going to have to work hard to rid itself of its unwanted reputation of being primarily a party protective of white interests.

Liberalism, conclude many black people, works for white people only.

No easy way out

The problem for the DA is that there is no easy way out of the dilemmas it faces. It comes with the territory of being the major party of opposition and drawing the major body of its support from a white racial minority. Its problem is that on the route to power, principle is always likely to become fudge.

This points to the still greater problem that the DA has to confront (and this is the great unsayable). No opposition party in any country in southern Africa has yet managed to displace a liberation movement. This is despite the fact that the record in government of the region’s liberation movements has been dismal, and the vehicle for the rise of corrupt “party-state” elites. Look no further than Zimbabwe, where in 2008, the opposition Movement for Democratic Change won a parliamentary majority before crashing into the rocks of ZANU-PF intransigence.

The great question which hangs over South African politics is what the ANC would do if it really did lose its majority.





How the DA resolves its dilemmas around race will dictate how it will react in such a situation, for without mass black support it would lack any chance of confronting the ANC were the latter to trash the constitution and maintain its hold on state power.

Roger Southall, Professor of Sociology, University of the Witwatersrand

This article was originally published on The Conversation.

Southern Africa's liberation movements: can they abandon old bad habits?

Both South African President Cyril Ramaphosa and Zimbabwean counterpart Emmerson Mnangagwa need to reform their parties. GCIS

Until recently, southern Africa’s political and economic outlook seemed to be moving in a promising direction. The highlights were provided by Zimbabwe and South Africa with the displacement of Robert Mugabe by Emmerson Mnangagwa in November 2017 and Jacob Zuma by Cyril Ramaphosa earlier this year. Both were to pronounce the inauguration of new eras for their countries, and to promise political and economic reform.

Prior to this, there were presidential changes in the three other countries ruled by the region’s liberation movements. Hage Geingob succeeded Hifekepunye Pohamba in Namibia in March 2015; Filipe Nyusi succeeded Armando Guebeza in Mozambique in January 2017; and Joao Lourenco succeeded Eduardo Dos Santos as Angola’s state President after legislative elections last year.

All five new leaders were younger than their predecessors, three of them (Ramaphosa, Nyusi and Lourenco) by ten years or more. This diluted – but far from dissipated – the tendency towards gerontocracy.

And there was more. While Mugabe was ousted by virtue of a “military assisted transition” the other four incumbent presidents were constrained to stand down because their terms in office were expiring.

Taken together, the changes in leadership, combined with initiatives of economic reform, seemed to bode well for the region as a whole. And to bring new hope to the 100 million people who live in their countries.

These events may yet result in outcomes that are progressive politically and economically. But, for all the commitment to renewal, doubts are beginning to accumulate that the region’s liberation movements are capable of turning away from the bad habits and practices of the past.
This has been brought home in dramatic fashion by the controversies surrounding the Zimbabwean election.

Signs of renewal

The region’s national liberation movements became increasingly aware that after decades in power they were losing popularity. They were confronting a crisis of legitimacy. Signs that commitments to reform and renewal were meaningful were most apparent in Angola, Zimbabwe and South Africa.

In Angola, Lourenco was quick to move against the political and financial empire constructed by Dos Santos. He sacked Isabel Dos Santos, daughter of the former president and widely known as the richest woman in Africa, as head of Sonangol, the state oil company. The large corporation is a fulcrum of the economy, responsible for about a third of GDP and 95% of exports.

Citing misappropriation of funds, he followed this up by dismissing Jose Filemento, Dos Santos’ son, as head of the nation’s $5 billion sovereign wealth fund. He also had brushed aside restrictions on his ability to appoint new chiefs of the military, police and intelligence services by appointing his own security chiefs.

In Zimbabwe, the popular enthusiasm which greeted Mugabe’s ousting and Mnangagwa’s elevation was to be somewhat dimmed by the choice of his cabinet. The mix of military coup-makers, Mugabe left-overs and ZANU-PF re-treads rather than reaching out to the opposition to form a transitional coalition government did not go down well.

Nonetheless, Mnangagwa’s early initiatives offered promise of more rational economic policies. Above all, he indicated that he was bent on entering negotiations with the international financial agencies and other creditors to re-schedule payments due on Zimbabwe’s massive debt.

This was combined with a three-month amnesty to allow individuals and companies who were reckoned to have illegally exported some US$1.8 billion to bring it back into the country. Third, Mnangagwa announced a series of measures to boost agriculture and mining.

All such measures were designed to encourage an inflow of foreign investment, that had slowed to a trickle because of the arbitrariness of Mugabe’s rule.

Opposition parties felt that Mnangagwa’s initiatives fell far short of what was required. Nonetheless, they were buoyed by his recognition that if Zimbabwe was to be restored to something approximating economic health, he would have to call an early election whose result would be accepted internationally as legitimate.

This, as it turns out, was too tall an order.

Round about the same time Ramaphosa was embarking upon his own programme of reform in South Africa. His triumph in the battle for the party leadership, achieved at the African National Congress’s (ANC) five yearly national congress in Johannesburg in December, had been narrowly won.

During his years in power, Zuma transformed the ANC, the state and state-owned companies into a massive patronage machine for looting the fiscus. This was to become known as “state capture”. Much of it was engineered by or in league with the immigrant Indian Gupta family.

Accordingly, Ramaphosa’s mission was to “re-capture” the state. War was declared on corruption, commitments made to cleaning up the state owned enterprises, to re-configuring state departments and restoring collaborative relations with business (which had been severely undermined under Zuma).

Ramaphosa’s efforts continue to be impressive. They have included appointing respected technocrats to key government positions as well as dismissing, prosecuting or sidelining a slew of Zuma acolytes.
He also cleared the way for an extensive judicial review of the state-capture project (which Zuma had done his best to obstruct). And he initiated extensive re-structuring of failing state owned enterprises and state agencies, notably the South African Revenue Service.

Doubts are mounting

However, it has not been plain sailing.
The Zimbabwean election went into meltdown with accusations of a rigged election. The military is seen as being in firm alliance with Zanu-PF, ready to step in if its rule is threatened.

Meanwhile in South Africa Ramaphosa has increasingly run up against the constraints imposed by the continuing political weight of the Zuma faction in an ANC which has remained deeply factionalised. He has struggled to forge party unity to prepare for the 2019 election. And he is most particularly challenged by the strength of the Zuma faction in KwaZulu-Natal.

A poor election result for the ANC in 2019 will severely undermine his political authority, and hobble his attempts to restructure the state and economy.

Elsewhere, cynicism is gaining ground. Many doubt Lourenco’s capacity to systematically deconstruct the powerful network which has supported and defended the Dos Santos family for decades. The view among some is that it will only re-engineer the political dominance of the ruling MPLA.

In both Namibia and Mozambique, critics suggest that changes in the presidency have led to little more than business as usual – and that in both countries the ruling party elites remain deeply enmeshed in corruption.

Parties of liberation no more?

The rule of liberation movements in southern Africa rule has been increasingly challenged by economic failure, rising popular discontent, the alienation of young people and yawning internal divisions. This has led to multiple suggestions that their time span is limited, and that their rule will give way as a result of internal division, electoral defeat or other unforeseen events.

They have responded with promises that they will embark on “renewal”.
But, so far the evidence is mixed. They may well retain their capacity to hang on to state power. But their capacity for significant and far-reaching reform remains severely constrained.
Roger Southall, Professor of Sociology, University of the Witwatersrand
This article was originally published on The Conversation.

Changes to the Constitution may boost, not weaken, South African property rights

South African President Cyril Ramaphosa is walking a tight on land reform.
GCIS

The South African government’s plan to change the constitution to mention land expropriation without compensation could, ironically, end up strengthening the property rights on which investment depends.

Pressure to change the Constitution to allow the government to expropriate land without compensation is currently the country’s most contentious issue. Supporters insist that the measure is essential to end racial land ownership patterns which continue to favour whites a quarter century after the end of apartheid. Critics insist that this will threaten property rights and choke off investment.

President Cyril Ramaphosa has now announced that the governing African National Congress will support a change to the constitution’s property clause. This was greeted with predictable anxiety among pro-business commentators. But their fear that the change will weaken property rights seems misplaced. To see why, we must look at what property rights are, what the constitution says and what Ramaphosa and the ANC leadership may have in mind.

Much of the fear seems based on a view of property rights which sounds credible but does not describe reality in market economies. It sees property rights as the right to do whatever you like with what you own. The philosopher CB MacPherson pointed out four decades ago that this is not how property was understood until fairly recently, and not how property rights actually operate.

There is no unlimited right to property anywhere. People who own homes cannot use them to make banned substances or to fire missiles at neighbours. People who own factories cannot use them to enslave labourers or to pump poisons into the air and water. If owners ignore these rules, they will be forced to give up some of their property. Some might even lose the property – think of restaurant owners whose businesses are closed down by health authorities to protect consumers.

None of this is inconsistent with a market economy. On the contrary, these rules are essential to markets. A good analogy is a set of traffic lights. They limit what car and truck owners can do with their property, but they are essential to keeping the property safe.

The property rights of owners are, therefore, strong enough to allow them to invest with confidence when they know what the rules are which decide whether they keep their property.

Certainty is the key – not a blank cheque.

The Constitution

Section 25 of the South African Constitution, which is often held up by friends and foes as a cast-iron guarantee of property rights, is nothing of the sort. It does say the state can expropriate property only if it pays compensation and lists criteria which courts must take into account when deciding compensation. But clause (8) says:

No provision of this section may impede the state from taking legislative and other measures… to redress the results of past racial discrimination

That’s if it complies with Section 36(1) which says the measure must be:

reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom.

So the Section does allow expropriation without compensation – but the wording spelling out when it is allowed is vague. If the government were to test this in court, different judges would inevitably come to different conclusions. This gives owners no certainty and so they don’t know whether their property is safe.

If the constitution is changed to make clear which property may be expropriated without compensation, property rights would be stronger because it would be clear to owners whether their property is safe and what to do to keep it that way.

This is what Ramaphosa and his party say they have in mind. His announcement did not say the constitution should be changed to allow expropriation without compensation – he said that it already does this. The aim, he said, was a clause which “outlines more clearly the conditions under which” land can be expropriated without compensation – in other words, to provide the clarity the current clause lacks.

If he makes good on his promise, the effect will be to strengthen property rights by making it much clearer when the state can take land without compensation. The wording of the clause will be crucial – if it’s too vague and allows the state too much latitude, it will not strengthen property rights. But it’s unlikely that it will seriously threaten these rights because this would place the property of every home-owning ANC voter at risk.

Ramaphosa’s change of view

But, whatever the effect of this particular change, a look at why Ramaphosa made the announcement shows that the right to property in South Africa will be challenged until and unless inequality and economic exclusion are tackled far more vigorously than they are now.

He clearly did not want to change the constitution. After a previous ANC summit on land issues, in May, it insisted that it would not change the constitution. It would, rather, pass an Expropriation Bill and test whether the land redistribution it planned was possible within the current wording.

His announcement this week sounded reluctant: he said that the current constitutional wording does allow expropriation without compensation and then insisted on the need to change it – there was no logical connection between the two.

This strongly suggests that he was forced to change position. Since the change came after a meeting called by the ANC’s National Executive Committee, it was surely pressure from this body which forced a change. This is confirmed by a report claiming that he shifted because the faction within the National Executive Committee which supports former president Jacob Zuma is using the land issue to embarrass him and his faction.

It’s easy to see why Ramaphosa and his allies had no answer to this. Inequality and economic exclusion remain deeply entrenched – the well-off are no longer all white but the poor are still almost all black.

Many black professionals and business people believe the economy is still controlled by the white minority. Given all this, no politician whose support base is overwhelmingly black can deny the need for change without facing the same ridicule as Congress of the People leader Mosiuoa Lekota, whose opposition to land expropriation has politically isolated him .

Realities need to change

South African economic realities mean that rejecting economic change is simply not an option for politicians who seek a large black support base. It will be hard for them to insist on strong safeguards for property when many of their voters do not own any.

The obvious way to change this is to change these realities – to begin to negotiate economic changes which will open the mainstream economy to millions who now languish on its fringes while securing property rights for all.

Steven Friedman, Professor of Political Studies, University of Johannesburg

This article was originally published on The Conversation.

Ramaphosa's efforts will fail unless corrupt officials are brought to book

South African President, Cyril Ramaphosa, has a tough job of convincing investors that the country has turned the corner. GCIS

South Africa’s new President, Cyril Ramaphosa, has been showered with praise for his early moves of fighting corruption. But he will need to do much more to win back investor confidence.

Critically, Ramaphosa needs to display that wrong doers of former President Jacob Zuma’s era are going to be held accountable through prosecution. Numerous academic studies, including mine, show that investors consider the effective execution of law and order as an indicator of property rights protection.

For South Africa, this means that stabilising government debt and attracting much needed investment will entail both the investigation of corruption as well as prosecution of those implicated. Achieving this will prove impossible if investors aren’t convinced that the rule of law is alive and well.
Ramaphosa has started well. He devoted a great deal of his early days to removing compromised and corrupt elements in key leadership positions, including government departments, state owned enterprises and in security and justice agencies.

He followed up by setting up outwardly focused initiatives to attract investment. These include the establishment of special envoys to attract $100 billion of investment into the country.

These measures will go some way to fixing the wrongs of the past but they are far from sufficient. It’s not enough for politicians who oversaw and actively contributed to the decimation of the country’s social and economic fabric to simply retire from politics, move to new positions in the African National Congress (ANC), or be moved to other state departments. Similarly, reversing Zuma’s legacy of state capture won’t be possible unless the officials appointed by his ministers are also investigated and prosecuted.

Significant damage

The economic damage caused during the Zuma years is huge. The latest economic growth numbers are not encouraging. Gross domestic product shrank by 2.2% during the first quarter of this year and is expected to remain muted for the rest of the year.

The latest reviews from global rating agencies are also unflattering. For example S&P has noted that South Africa’s fiscal and economic trajectories are still very weak. As a result, the country is vulnerable to investor sentiment. This is being reflected in the weakness of the country’s currency as investors dump domestic equities and bonds.

The damage is especially prevalent in public institutions. The extent of the damage is reflected in the latest report of the auditor-general, Kimi Makwethu. Irregular expenditure, which includes payments made for contracts awarded unlawfully or without necessary approvals, rose by 75% compared with the previous financial year. Fruitless and wasteful expenditure, which are payments made in vain, increased by 71%.

The Auditor General notes that municipal corruption had been steadily increasing for over a decade but that the problem had rapidly worsened over the past five years. The key reason for the deterioration in state finances was that corrupt officials increasingly believed that they were immune to prosecution. That does not bode well for investor confidence.

Does the state have the means?

A troubling problem is that the country might not have the ability to effectively deal with the litany of ills bequeathed by Zuma. The country has limited resources available for a prosecution process that is going to be long and laborious.

The prosecuting capability of the state was in the spotlight recently when a court ruled against the state’s Asset Forfeiture Unit in a case against the Gupta family. The judgement shows that the country’s prosecuting institutions have been systematically compromised.

And although a commission of inquiry into state capture has been set up under Judge Raymond Zondo, it’s unlikely to wrap up its work in under two years.

This suggests that, despite the optimism, realistically South Africa may not have the institutional capacity to fight systemic corruption and prosecute those involved at a pace sufficient to convince domestic and foreign investors that their investments are safe from ongoing corruption.

Accountability

While there are many leaders with large public profiles that need to be investigated thoroughly for corruption, it isn’t enough to fixate on the “top of the pyramid” only.

Massive corruption needs many enablers, in both the private and public sector, to either actively participate in the wrongdoings or, at the very least, look the other way. This means that although a few high profile arrests and convictions can be useful signals to investors that concrete steps are being taken to reclaim the state, a much more robust process is needed to shore up the economy and South Africa’s crucial institutions.

This raises an essential question: how much pain is the country prepared to endure in the short term to fully excise the rot of corruption, creating more sustainable prospects for the country?

Recent experiences from Brazil show that inquiries into state corruption can profoundly complicate economic recovery. That’s more so if the slow pace of the court processes mean that politicians, officials and directors are not held to account expeditiously.

Ramaphosa has done well in turning the ship of state over the last 100 days, but eradicating and rectifying the legacy of state capture will need immense political will and institutional capability. Without visible accountability, corruption will just decentralise into the shadows and South Africa will once again be in peril.
Sean Gossel, Senior Lecturer, UCT Graduate School of Business, University of Cape Town and Timothy London, Senior Lecturer, University of Cape Town
This article was originally published on The Conversation.