By PHILIP MACHANICK
President Ramphosa recently said, “You have been talking about state capture and, in fact, we are finding that the real capture is happening at local government level, where certain interests just capture the entire municipality and they purportedly then provide every service.”
It’s all very well to say that, but why is it happening?
He also said, “The Auditor-General is not writing fiction novels. They follow what really happens; therefore, you should take them seriously.” Here in Makana, our last audit was a travesty, yet the Municipal Manager claims no one is to blame! So clearly, failure is part of the job description.
So let’s go to first principles and try to determine what is going on.
If we view South Africa as a developmental state, it is not hard to see it as a failed state. Infrastructure and service delivery are failing and attempts to improve end up making things worse.
A Greek word, telos, is worth bearing in mind. Telos means the fundamental purpose of something: what it is really for.
What is the telos of the South African state? If it is poverty reduction, inequality reduction, serving the poor, etc., it is clearly a failure. If, however, it is delivering patronage, it is doing quite well.
The ballooning cost of the James Kleynhans Water Treatment upgrade
Take Makana’s water infrastructure as an example. In February, MCF councillor Lungile Mxube wrote to the parliamentary portfolio committee on Water and Sanitation, pointing out that some R600 million had been allocated to projects for the James Kleynhans Water Treatment works since 2010, and yet things were not improving.
Since then, the main contractor has been liquidated, and new tenders will have to be awarded, so the total expenditure will only go higher. From a developmental state point of view (and logic), this is a catastrophic failure. In January 2019, Rhodes University threatened to send its students home unless at least ten megalitres of water per day could be guaranteed. This has never been achieved consistently. In response to this risk, the government promised to fast-track the resumption of the James Kleynhans upgrade project, which had failed in 2018.
By January 2020, the only part that had been completed was refurbishing the existing plant, and even this was not a total success as there were still breakdowns. Now, as we head to the end of 2022, nearly four years after the promise to fast-track the project, it is still not complete, and we now have the promise to complete it by June 2023.
In the meantime, the rest of our water infrastructure has gone backwards. Around 2015, a local engineering firm was contracted to fix leaks and improve the management of the grid. They fixed about 900 leaks and put in zonal valves that allow control of water flows – which reservoir feeds which region, closing off a local area for repair.
Now, it is as if this never happened. If there is a pipe burst, significant sections of the grid are cut off. Recently, we have seen “water hammering” in official announcements. The correct spelling is “water hammer”: an effect of rapid changes in pressure, including when a valve is closed too fast. Why did the municipal water team only discover this now? This is not a new concept.
Remember the great Worcester Street leak and how long that took to fix?
Patronage incentivises failure
There is no commitment to sustainably solving problems – and that brings me back to telos. If the fundamental goal is not development but patronage, failure is incentivised.
If everything runs smoothly, the municipality operates on its normal budget. If there are significant failures, more money comes in. The province can make various interventions short of a Section 139(1)(c) dissolution of the council. It can appoint an administrator (remember Pam Yako?) or institute a Financial Recovery Plan. The national government can fund projects (such as upgrading a water plant or resurfacing a road).
When extra money comes, it creates the opportunity to dispense patronage. Big projects have a 30% local content component, a key target of patronage networks. Rather than award the main contract to the best contractor, the target is the contractor most pliable to benefiting patronage players. A big incentive to fail is that a project for essential infrastructure must be repeated if it all goes wrong. And if it goes wrong, it reduces other economic activity, giving patronage an uncontested space.
A similar argument applies to roads. Fixing potholes is far cheaper than resurfacing a road. But these costs come out of the usual municipal budget, and municipal employees do the work, so patronage options are limited. Neglect the roads and win a project of R20 million, and you are in the game. In case government is slow to react, neglect all of the roads, so the problem is so bad it can’t be ignored.
What can be done?
Is there any way out of this? Section 32 of the Municipal Finance Management Act allows the recovery of fruitless, wasteful and irregular expenditures from senior figures. However, the MFMA does not define criminal sanctions, so this is not a police matter. Some municipalities have policies to recover such wasted expenditure, but what do you do if the culprit is also the enforcer?
An alternative I would like to see more often used is going after responsible officials and politicians in their personal capacity in civil cases. There are many of these around the country arising from municipal failures. If they are contested without any merit, those who decided to contest them should pay, not ratepayers.
Public Audit Amendment Act 2018 includes powers for such cost recovery, but the process for getting to a certificate of debt is lengthy and can only start once the Auditor General is aware of the issue, which could be a year or more after the event. I would like to see this happen, but it is a long way off.
Yet another idea is appointing a Special Master, a court-appointed supervisor, to ensure that court order is carried out. This has been in the news lately related to former-president Trump but is a thing in South Africa too. The Concourt has upheld the appointment by the Land Claims Court of a Special Master. A high court action to appoint a special master to oversee water infrastructure projects would be worth trying.
Ultimately though, the government needs to change the system of incentives. It is not a bad idea to couple a large project with a fund for local economic development. But does that “local content” portion have to be part of the larger project? Breaking this connection will reduce the effect of patronage on scuppering essential infrastructure projects.
Changing what the government does is a big ask. The system is how it is because it has benefited those in charge. Instead, civil society can take up the challenge. Look for leverage to change the state’s telos. It can be done. The Treatment Action Campaign completely changed the state’s fundamental purpose in dealing with HIV. But we need to understand the problem to get the right leverage.
