NEWS & ANALYSIS

Our growing urban crisis

RW Johnson says the insatiable demands of local ANC political machines have sucked our towns and cities dry

Over the past year or two South Africans have been slowly waking up to the country’s growing urban crisis. In fact it has been a long time coming and you could have seen the problem ten or fifteen years ago if you had looked at, say, Butterworth in the Eastern Cape.

You’d have seen cracked and overgrown pavements, potholes, leaking pipes and taps, local electrical installations from meters to substations, that did not work – in a word, the visible decay of public facilities deprived of repair and maintenance. On the other hand you’d have seen the mayor, the city manager and the councillors driving around in expensive cars.

This told you all you needed to know. Local government was an intrinsic part of the ANC patronage system and a small local elite was creaming off all it could, neglecting capital investment and maintenance and leaving water and electricity bills unpaid so as to maximize the amount which the mayor, the councillors and their BEE friends could appropriate for themselves. Even then the result was a ruined town and a small number of fat cats.

Even at that stage it was possible to see the same processes at work in the larger towns and cities but there the process was masked by the fact that historically such places had been better maintained than a town like Butterworth ever had been. In addition, they enjoyed a vastly greater income from rates and sometimes even had capital reserves painfully built up by prudent management in the past.

However, in larger towns the municipal workers were a major force and, like their public service colleagues, demanded and got inflation-plus wage increases year after year. In addition, of course, the municipal tenders and contracts were a major source of corruption.

Under these pressures more and more small towns became bankrupt. Even in larger towns like Howick or Grahamstown/Makhanda virtually all the town’s income was spent on salaries while the ratepayers stared in dismay at potholed roads, leaking pipes and broken sewage systems. A cheer would go up when ratepayers won their case against the deficient council – as in Makhanda or Standerton - but no one really imagined that this would result in the restoration of decent municipal services.

In the latest phase of this road to ruin Pietermaritzburg has been put under administration for the second time and there are increasing worries about the financial stability of Joburg. Pretoria, Durban, Port Elizabeth and Ekurhuleni – that is to say, all the metros save Cape Town. According to the recent Ratings Afrika report, 78% of municipalities are now in a “concerning” financial state or require urgent intervention – and the rate of decline is fastest of all in the metros.

On average municipal creditors now have to wait six months to get paid and most towns and cities are managing only by borrowing from their next year’s income to pay this year’s bills. The only towns and cities in a reasonably healthy state are Midvaal and those in the Western Cape.

This is the background to the impending collision with the municipal workers union, Samwu. Currently the minimum wage for a municipal worker is R8,330 a month. Samwu is demanding an 80% increase to R15,000. This amount, says Samwu spokesman, Papiki Mohale, “is achievable. It is an amount government can afford” (though government doesn’t pay his workers, ratepayers do).

In addition, Samwu demands the introduction of a R3,500 (per month) housing allowance for all workers, an ex gratia payment of R36,000 per worker for Covid risk, six months maternity and one month paternity leave for all parents, all on full pay, an 80% employer contribution to medical aids and a 25% employer contribution to pensions.

It is difficult to believe that these demands are being made in a country whose GDP fell 7.2% last year. Part of the problem is that municipal wages are centrally determined by the SA Local Government Association (SALGA), a ludicrous situation since there are huge discrepancies between one town and another in their ability to pay.

Last year SALGA agreed a municipal pay increase of 6.25% - flatly against the recommendation of the national Treasury. It is striking that Moody’s, which has just down-graded Pretoria’s credit rating again, has done so specifically because the city paid that 6.25% increase – which it couldn’t afford to do. This means Pretoria will have to pay higher interest charges on its debt, which it also can’t afford. This is what comes of taking one’s lead from SALGA.

This year SALGA is offering an increase of 2.8% (which Samwu terms “an insult”) though fully three quarters of municipalities can’t afford to pay any increase at all. In effect the assumption made is that ratepayers can always pay more.

This principle has already been worked to death so that in many towns the fixed charges on many buildings (rates, water, electricity) are so high that no one wants to tenant (or buy) those buildings. The buildings then stand empty and no rates at all are collected from them. Towns where rates rise to such heights soon enter a death spiral.

SALGA has been heavily responsible for this disaster. How can it be rational in a country in which everyone is on average 7.2% poorer than last year to recommend even a 2.8% increase for Samwu, especially when public service workers are being offered 0%?

Because of the municipal habit of borrowing from next year’s income to pay this year’s bills in reality the municipal sector is R51 billion in debt. Naturally, this leads to demands that the national government must somehow “find” R51 billion with which to bail out municipalities. This seems most unlikely to happen.

The result is a national and growing urban crisis. We have become used to articles in the media drawing attention to the deplorable state of city roads, traffic lights, sewage systems and so forth. Already Joburg’s slogan of being “a world class African city” seems laden with unconscious irony.

Similarly, the ANC decision to rename Port Elizabeth Gqeberha merely means that many South Africans and all tourists will be unable to pronounce the city’s name at all. The decision to rename one of Joburg’s main arteries after a well-known infanticide is a similar hostage to fortune.

The growing urban crisis is one of the biggest problems that the government faces but in practice it seems to have decided to ignore it. Indeed, one has the impression that the government takes the same attitude to any really big problem.

Take the fact that 2021 is the seventh consecutive year of falling real GDP per capita incomes. Thus far the government’s response is Expropriation without Compensation and Thulas Nxesi’s Employment Equity Amendment Bill. Both these measures will do great economic damage which is the last thing one can afford in light of falling per capita incomes.

So, if a policy of benign neglect is followed, what happens to the urban crisis? Probably the first major casualties will be dying smaller and middle-sized towns. Already Grahamstown/Makhanda is full of pleasant but unsell-able houses. People have heard all about the town’s problems and no one wishes to move there, which in turn means that those who live there can’t move away. This probably spells doom for Rhodes University, the town’s largest employer, though it is doubtful if the town could survive without Rhodes.

What is true of Grahamstown will doubtless apply to East London/Buffalo City and Pietermaritzburg ere long. All the towns in the North West and the Free State are vulnerable. But the real drama lies in the three Gauteng metros and Durban, all of which are fragile, monstrously ill-governed and subject to dramatic inner-city decay.

Typically, in such metros, one finds upper middle class islands which remain viable because of an entirely privatized environment – Dainfern, Umhlanga, Centurion – and so forth – but even many once solid suburbs have frayed badly.

And, of course, urban decay and falling real incomes lead to worse crime. Crime Index 2021 ranks the world’s most dangerous cities – 1. Caracas, Venezuela 2. Port Moresby, New Guinea 3. Pretoria 4. Durban 5. Joburg...7. Pietermaritzburg....14. Port Elizabeth....19. Cape Town....31. Damascus....55. Baghdad.

South Africa’s metros have large settled populations but as urban decay and crime worsen they will be highly vulnerable to the outward movement of upmarket professionals, who can most easily emigrate or semigrate to the Western Cape. The rise of work-from-home already offers tempting opportunities for this group, which pays most of the rates and taxes. But the Western Cape appeals to lower and middle groups as well. Because it is the only province which does a decent job of running its public schools and hospitals it appeals strongly to those who can’t afford private schooling or medical care. The province’s main problems stem from its success in attracting only too many newcomers.

The fact that most of the Western Cape’s towns and cities continue to be reasonably governed means that the contrast between them and the rest of the country will continue to sharpen. Already it is obvious that for a multinational envisaging setting up in South Africa, Cape Town is becoming a more natural base than Joburg. Amazon has just decided to place its African HQ in Cape Town – a R14 billion development which will ultimately create some 19,000 jobs. Amazon’s power-hungry data centre will be fed with electricity from a specially dedicated solar energy farm in the Northern Cape.

Once, it would have been axiomatic that such a multinational HQ would have been in Joburg; not now. It seems likely that we will see other companies relocate from Joburg to Cape Town. This could cause friction. Cape Town’s growth rate and unemployment rate are both already better than the rest of the country and a further flow of people and jobs there would be such a clear verdict on the relative benefits of ANC and DA rule that it would not pass unobserved. Equally, the Western Cape’s relative success will increase demands for its greater autonomy so as to avoid being dragged down by the failures to its north.

Other movements make the same point. There is a drift of African IT companies (including South African companies) to Nairobi which is an emerging hi-tech hub. The idea of being upstaged by Nairobi, of all places, in such an ultra-modern field would not have occurred to anyone in earlier times.

The fact that Durban, once Africa’s busiest port, now ranks only third behind Tangiers (Morocco) and Port Said (Egypt) is a similar indicator of South Africa’s slippage under ANC governance. This is, however, pretty much inevitable given South Africa’s steadily falling per capita income. Few other African countries have such a dismal record, after all.

At present the crisis of the metros (other than Cape Town) is usually about potholes, traffic lights, electricity failures, litter, billing failures and so on. But most of these phenomena are due to a generalised failure to maintain existing systems, corruption and the employment of incapable and incompetent staff.

In time these cumulative weaknesses will produce not just daily inconveniences and aggravations but major systemic failures. There will be increasing angry comment to the effect that cities just aren’t an African thing, which is to say a recognition that things are only likely to get worse. At some stage one or more of the metros will go bankrupt or collapse. In addition, of course, the fact that well over half the nation’s sewage treatment plants are not working properly raises the risk of typhoid and other epidemics.

This growing crisis of urban government is due, above all, to the large army of ANC councillors, municipal workers, BEE interests and municipal and provincial bureaucrats who have fastened onto municipal structures as a vast patronage machine, attempting to extract from them far more resources than these structures were ever built to deliver. In effect this has meant re-purposing the whole city: it delivers more and more to those who (theoretically) run it and less and less to the city’s residents.

The central ANC has very little control over this great locust-like army but it is nervously aware that they are a key part of the ANC patronage system and that the collapse of urban governance thus brings major political risks. But the basic fact is that the task of governing South Africa is way beyond the capabilities of the ANC.

It probably has enough capable people to run a country the size of Lesotho with one decent sized town. By taking over the governance of South Africa – a large, complex country with a sophisticated economy and many large urban centres - it has bitten off far, far more than it can chew. And while that extra size has meant wonderful opportunities for the enrichment of a few, it inevitably dooms the larger enterprise to disaster.

What drives this locust-like army – as also the ANC elite in general – is the conviction that liberation is best measured by higher consumption. Thus politics is largely about the extraction of maximum resources from the system, with little or no regard for what the system can bear. There are always the tantalising examples of figures like Ramaphosa or Tokyo Sexwale, ordinary enough cadres not that long ago but now rich beyond the dreams of Croesus. If they could extract such wealth with so little effort, why should not everyone else do the same?

There is, of course, an awareness that the government says that the money has run out but this is tantamount to saying that the whole game has to stop and that is unthinkable. Even so, the fact of higher unemployment and government cutbacks have added an extra air of desperation to the scramble for resources.

This is the key to understanding the almost demented demands now made by the public service and municipal workers’ unions. A fascinating part of the public service worker demands is for large extra bonuses if a worker contracts Covid or suffers gender related violence – and as we have seen, the municipal workers also want bonuses for Covid risk.

Yet what has Covid or gender-related violence got to do with their jobs? The answer, of course, is that the unions are searching for anything which will allow them to depict their members as victims, for in South Africa victimhood brings entitlement and thus an enhanced claim to extra resources.

But the unions are desperate. The sight of government offering 0% increases and simply refusing to

implement increases which it says it can no longer afford, threatens the whole existence of unions. Which in turn means threatening the comfortable livelihoods of union bosses and officials. So although the unions know that they are most unlikely to obtain large wage increases they are desperate to convince their members that unions still have a valuable role to play.

Thus they are making a last desperate lunge, talking about huge increases and undreamt-of allowances for almost anything. They will hope to work their members up enough to be able to stage long and violent strikes, believing that this is the only way to coerce the government to buy them off.

They will doubtless do much harm but they are merely one part of the locust-like army and thus of the onward decline of urban governance. They have long since reached the point where scoring further large increases for their members merely undermines the urban governments on which their jobs depend.

In such circumstances union militancy becomes a kamikaze tactic. The same holds true for all the other myriad interests pushing and shoving to extract more resources from already crippled towns and cities.

The locust swarm eats everything but when their food runs out, the locusts die.

R.W. Johnson